Morey v. Doud

Background

A small partnership that sells “Bondified” money orders and its drugstore agent challenged an Illinois law that required sellers of money orders to get a state license, post bonds, and pay fees. The law explicitly excepted American Express (and a few other large issuers) from those rules. After procedural rulings and a remand, a federal three-judge court found the law violated the Fourteenth Amendment and enjoined enforcement against the partnership and its agent; this Court reviewed that decision and the statutory exception.

Reasoning

The central question was whether singling out American Express’s money orders for an exception denied other sellers equal protection. The Court said yes: the exception created a closed class by naming a single company, and that special treatment was not reasonably tied to the law’s purpose of protecting the public. Because the statute left sales of American Express orders unregulated while subjecting identical local sellers to licensing, bond, and fee burdens, the Court held the Act invalid as applied to the local sellers and affirmed the injunction.

Real world impact

The ruling protects these local money-order sellers from being forced out of retail outlets by a statutory favoritism for one named issuer. It prevents Illinois from enforcing the American Express exception against these plaintiffs and requires that regulatory schemes cannot grant arbitrary, named-company advantages. The Court also relied on the Illinois Supreme Court’s indication that the exception is not severable from the statute, so the federal judgment was affirmed.

Dissents or concurrances

Two Justices dissented, arguing the State reasonably could exempt an exceptionally solvent, nationwide firm like American Express and that courts should be cautious about substituting their judgment for legislative choices about business regulation.