Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 76-C-470 - Prentice H. Marshall, Judge.
Before Fairchild, Chief Judge, Kilkenny, Senior Circuit Judge,*fn* and Bauer, Circuit Judge.
This is an appeal from a judgment wherein a portion of a village code regulating solicitation by charitable organizations was found unconstitutional on its face.
The Village of Schaumburg (hereinafter "the Village"), defendant below and appellant here, is a municipal corporation and home rule municipality located in Cook County, Illinois. Chapter 22 of the Village code regulates the activities of peddlers and solicitors within the Village.
Article II (sections 22-6 through 22-18) regulates the activities of for-profit peddlers and solicitors, defined in section 22-6 as persons who go from place to place to sell or take orders for merchandise or services. A permit is required for such activity, and an application for a permit is to be denied "to any applicant who is not found to be a person of good character and reputation" (section 22-9). The permit may be revoked for violation of any Village ordinance or state or federal law, or when the registrant "shall cease to possess the qualifications and character required . . . for the original registration" (section 22-11). Violators of sections 22-6 through 22-17 are subject to a maximum fine of $500 for each offense (section 22-18).
Charitable solicitations, on the other hand, are regulated by article III (sections 22-19 through 22-24). Section 22-19 defines a charitable organization as "any benevolent, philanthropic, patriotic, not-for-profit, or eleemosynary group, association or corporation, or such organization purporting to be such, which solicits and collects funds for charitable purposes." A charitable purpose is defined as "any charitable, benevolent, philanthropic, patriotic, or eleemosynary purpose." A permit is also required for charitable solicitations, but the requirements for the granting of a permit are different from those for for-profit peddlers and solicitors. For example, the organization must have complied with specified portions of state law relating to charitable solicitations and be recognized as tax exempt under section 501(c)(3) of the United States Internal Revenue Code. Section 22-20(g) requires that 75 percent of the proceeds of solicitations must be used directly for the charitable purpose of the organization. Solicitors' salaries and administrative expenses (which include other employees' salaries) are deemed Not used for the organization's charitable purpose.*fn1
Citizens for a Better Environment (hereinafter "CBE"), plaintiff below and appellee here, is an organization whose stated purpose is the protection and improvement of the Illinois environment. CBE is registered and in good standing with the Illinois Attorney General's Charitable Trust Division, and is recognized as tax exempt and gifts to it as tax deductible under the United States Internal Revenue Code. CBE applied for and was denied a permit to canvass and solicit contributions from door-to-door in the Village and in various other municipalities in the Chicago metropolitan area.*fn2 CBE and two of its officers brought suit against these municipalities for declaratory judgment and injunction.
The portions of the suit against the other municipalities were concluded in various ways. In the action against the Village, the district court, after recognizing that CBE met all other requirements of section 22-20 and the denial of permission to canvass in the Village was based solely on CBE's failure to meet the 75 percent requirement, declared, upon motion by CBE for summary judgment, that section 22-20(g) and the Village's action thereunder were constitutionally impermissible, enjoined further prohibition of CBE soliciting and canvassing in the Village, and ordered the Village to issue a permit to CBE forthwith. The rationale of the district court was that the 75 percent requirement was an impermissible form of censorship and a restraint on the exercise of First Amendment freedoms, and that the Village had no legitimate interest in prescribing such a test.
CBE's failure to qualify for a charitable solicitation permit from the Village was caused solely by its inability to meet the 75 percent requirement, and the decision of the district court was limited to that requirement. Therefore on this appeal we are concerned only with the validity of section 22-20(g).
The Village asserts that summary judgment by the district court was improper because material issues of fact were present. The Village raises a question as to the actual nature of CBE's activities; it asserts that as an organization mainly concerned with providing salaries for its members, CBE's activities are not within the protection of the First and Fourteenth Amendments, and thus the district court lacked jurisdiction to pass on the constitutionality of section 22-20(g). The Village also alleges that the 75 percent requirement is a reasonable way to protect its citizens by distinguishing commercial from charitable organizations, and at a minimum a trial was required to determine that reasonableness.
The Village also argues that section 22-20(g) is not unconstitutional on its face. This argument is based on the Village's evaluation of the provisions of chapter 22 in light of previous cases where the regulation of solicitation was declared unconstitutional, and on the Supreme Court's pronouncement that there is no absolute right to enter on private premises and solicit funds.*fn3 The Village concludes from its evaluation that the fatal flaws of vagueness and impermissible discretion of public officials are not present in chapter 22, that the provisions enjoy a presumption of constitutional validity that has not been overcome, and that any infringement of First Amendment rights is minimal and a result of the Village's legitimate interest in protecting its citizens from fraud by those operating under the guise of charitable organizations.
CBE, on the other hand, argues that summary judgment was proper, alleging that classification of its particular activities is irrelevant to the question of constitutionality. CBE argues that section 22-20(g) is too restrictive of First Amendment freedoms and is thus invalid on its face; it provides an absolute bar to canvassing and soliciting if an organization does not meet the 75 percent requirement, it militates against certain types of organizations, it in effect requests information which has a "chilling effect" on the ...