United States District Court, Northern District of Illinois, E. D
February 4, 1955
GEORGE W. DOUD, DONALD Q. MCDONALD, AND J. WESLEY CARLSON, DOING BUSINESS AS BONDIFIED SYSTEMS, AND EUGENE DERRICK, PLAINTIFFS,
ORVILLE HODGE, AUDITOR OF PUBLIC ACCOUNTS OF THE STATE OF ILLINOIS, LATHAM CASTLE, ATTORNEY GENERAL OF THE STATE OF ILLINOIS, AND JOHN GUTKNECHT, STATE'S ATTORNEY OF COOK COUNTY, ILLINOIS, DE-FENDANTS.
The opinion of the court was delivered by: Schnackenberg, Circuit Judge.
Plaintiffs, George W. Doud, Donald Q. McDonald and J. Wesley
Carlson, as a partnership, and plaintiff, Eugene Derrick,
agent of said partnership, by their amended complaint seek an
injunction restraining the defendants, who are the Auditor of
Public Accounts and the Attorney General of the State of
Illinois, and the State's Attorney of Cook County, Illinois,
from enforcing against said plaintiffs the provisions of the
Illinois Community Currency Exchange Act,*fn1 upon the ground
that said Act is unconstitutional in that, according to
plaintiffs, it denies them the equal protection of the law in
violation of Section 1 of the Fourteenth Amendment to the
Constitution of the United States.
Defendants filed answers and evidence was adduced by the
An amicus curiae makes the contention (which has been
adopted by the defendants) that this court has no jurisdiction
to decide the question of constitutionality raised by
plaintiffs because that question has never been presented to
the Illinois Supreme Court, and hence the federal courts are
without jurisdiction to determine it in the first instance,
citing Spector Motor Co. v. McLaughlin, 323 U.S. 101, at page
104, 65 S.Ct. 152, 89 L.Ed. 101, and Alabama State Federation
of Labor v. McAdory, 325 U.S. 450, at page 471, 65 S.Ct. 1384,
89 L.Ed. 1725.
The amended complaint alleges that the partnership is
organized for the purpose of, intends to engage, and has been
engaging, not in the ordinary business of a currency exchange,
but exclusively in the business of selling and issuing money
orders under the firm name "Bondified Systems" in the Counties
of DuPage and Cook and other portions of the State of
Illinois. That business is to be conducted through agents, who
are principally persons engaged in operating retail drug,
hardware and grocery stores.
It is also alleged by plaintiffs, and proved by the
evidence, that on August 11, 1953, they appointed the
plaintiff Derrick (who conducts a drug store) as their agent
for the sale to the public of postcard checks and money orders
issued by the partnership firm.
Section 1 of the Act*fn2 provides in part:
"§ 1. For the purposes of this Act: `Community
currency exchange' means any person, firm,
association, partnership or corporation, except
banks incorporated under the laws of this State and
National Banks organized pursuant to the laws of
the United States, engaged at a fixed and permanent
place of business, in the business or service of,
and providing facilities for, cashing checks,
drafts, money orders or any other evidences
of money acceptable to such community currency
exchange, for a fee or service charge or other
consideration, or engaged in the business of
selling or issuing money orders under his or
their or its name, or any other money orders
(other than United States Post Office money
orders, American Express Company money order,
Postal Telegraph Company money orders, or Western
Union Telegraph Company money orders), or engaged
in both such businesses, or engaged in performing
any one or more of the foregoing services."
Section 8 of said Act*fn3
provides in part:
"§ 8. A community * * * currency exchange shall
not be conducted as a department of another
business. It must be an entity, financed and
conducted as a separate business unit. * * *"
Plaintiffs contend that the exemption of those engaged in
the business of selling or issuing American Express Company
money orders is "wholly unwarranted" and is "highly
Plaintiffs also contend that "the arbitrary, discriminatory
character of" the Act "as applied to plaintiffs * * * engaged
exclusively in the business of selling and issuing money
orders is further illustrated by the exemption from said
statute of sale of American Express Company money orders by
persons, firms, and corporations whose principal business
consists in the operation of retail drug, hardware and grocery
stores." This contention means briefly that plaintiffs' agent
cannot sell and issue money orders as an adjunct to his drug
store business while an agent of American Express, its direct
competitor, can do just that.
The admissions in the pleadings establish that American
Express Company is an aggregation of individuals operating
under a joint stock company plan. It is not a corporation. It
sells and issues money orders in the City of Chicago,
Illinois, through operators of drug and grocery stores. It
does not operate under any franchise granted by the State of
Illinois and is not subject to regulation by any regulatory
It thus appears that plaintiffs intend to engage in only one
phase of the activities in which a community currency exchange
may engage if licenced under the Act in question; that is, the
business of selling or issuing money orders under their name.
It also appears that American Express Company, which is exempt
from the operation of the Act, is engaging in the same
activity. It further appears that plaintiffs intend to, and
American Express Company does, engage in this business through
agents operating retail stores of the same types.
Plaintiffs argue that "it is the function and duty of this
court to determine whether or not the Act in question violates
the Fourteenth Amendment as applied to these plaintiffs."
On the other hand the amicus curiae and the defendants argue
that it is not the function and duty of this court to
determine that question unless and until plaintiffs secure an
answer to that question from the Illinois Supreme Court.
It would seem that a plausible argument could be made, on
behalf of plaintiffs, to the Illinois Supreme Court,
predicated upon the fact that the identical similarity of the
business conducted by American Express Company, which is
exempt from regulation under the Act, and that in which
plaintiffs intend to engage and which on its face the Act says
must be regulated by the State, is an arbitrary
discrimination. If this argument were made to and accepted as
valid by the Illinois Supreme Court, it might well grant to
plaintiffs the very relief which they are seeking in this
court and hence a suit of this character would be unnecessary.
A three-judge court, in a case involving a similar
situation arising under the Community Currency Exchange Act of
the State of Wisconsin, held that the exemption of American
Express Company rendered the statute discriminatory and
unconstitutional as applied to the plaintiff in that case.
Currency Services, Inc., v. Matthews, D.C.W.D.Wis. 1950,
90 F. Supp. 40, at pages 43, 45. However, there no question was
raised as to the federal court's jurisdiction, such as the
question which now confronts us.
Whether in plaintiffs' situation the Illinois Supreme Court
would hold the exemption of American Express Company from the
application of the Act constitutional or unconstitutional we
do not know. Not having that prescience and being unwilling to
guess as to how the Illinois court would decide this question
when and if it were presented to it, we have no jurisdiction
to make that decision ourselves. Hence we cannot decide the
constitutional question presented in the absence of such
authoritative determination by the Illinois Supreme Court.
Plaintiffs seem to argue that in McDougall v. Lueder, 1945,
389 Ill. 141, 58 N.E.2d 899, 156 A.L.R. 1059, the Illinois
Supreme Court has already, in effect, decided that the
Illinois Act, as to plaintiffs, does not violate the equal
protection of the law provision of the federal constitution,
and, accordingly, this court should grant appropriate relief,
and that no further state court decision is necessary. In so
urging, plaintiffs overlook the plain distinction between the
business of the plaintiffs in the McDougall case and the
business in which they (plaintiffs herein) intend to engage.
That distinction plaintiffs themselves have made and
emphasized. The McDougall plaintiffs were engaged in the
general broad activities of a currency exchange, as
distinguished from the limited activities in which plaintiffs
herein intend to engage. As we have seen, American Express
Company operates only that part of a general currency business
which is limited to the issuing and selling of money orders.
It does it, without a license issued under the Act, within the
same limits plaintiffs wish to operate without being licensed.
The Illinois Supreme Court might find that to deny plaintiffs
that right would be to deprive them of the same protection
which American Express Company enjoys under the law. It well
may be that the Illinois Supreme Court would hold the
exemption of American Express Company unconstitutional as
applied to persons in the position of these plaintiffs and at
the same time adhere to its holding that the exemption is
constitutional as applied to persons in the position of the
McDougall plaintiffs. See: Roberts & Schaefer Co. v. Emmerson,
271 U.S. 50, at page 54, 46 S.Ct. 375, 70 L.Ed. 827, affirming
313 Ill. 137, 144 N.E. 818. The federal courts, before passing
on the question urged by the present plaintiffs, must wait
until the Illinois Supreme Court has spoken in answer to that
It is therefore necessary that the amended complaint be
dismissed for want of jurisdiction. Counsel for defendants
will present an order accordingly within five days.
I am aware of no decision in which the Supreme Court of the
United States has held that a federal district court must, or
even should, refuse to entertain a suit under the
circumstances present here. The jurisdiction of this court is
properly invoked. The plaintiffs, supported by the decision of
another three-judge court in Currency Services, Inc., v.
Matthews, D.C.W.D.Wis. 1950, 90 F. Supp. 40, have raised a
substantial federal constitutional question. The application
of the challenged statute to the plaintiffs is unquestioned,
and the Supreme Court of Illinois has already upheld the
exemption of American Express Company without suggesting that
its decision in any way rested on the nature of the activities
of the plaintiffs in the decided case [McDougall v. Lueder,
1945, 389 Ill. 141, 58 N.E.2d 899, 156 A.L.R. 1059].
The balance between state-federal relations is not so delicate
that it would be upset by this court's consideration of the
merits of the plaintiffs' claim that the Illinois Currency
Exchange Act has deprived them of the equal protection of the
I would grant the prayer of the plaintiffs' amended
HOFFMAN, District Judge (dissenting).