Knoxville Iron Co. v. Harbison

Background

A Tennessee law passed in 1899 required employers who paid workers with coupons, scrip, store orders, or similar tokens to redeem those items for United States money when demanded at a regular pay day or at least thirty days after issuance. The law also allowed an employee or a bona fide holder to sue to recover the face value in money if the employer refused. An employer that issued coal orders challenged the statute, the Tennessee Supreme Court upheld it, and the case came here by writ of error.

Reasoning

The central question was whether the statute unlawfully interfered with private contract rights or denied due process. The Tennessee court found the law general, nonpunitive, and intended to protect laborers who might be disadvantaged by payment in goods. This Court reviewed related precedents and agreed that, within reasonable limits, a State may require cash redemption of such wage orders as a valid exercise of its power to protect public welfare. The bottom line is that the statute is constitutional and enforceable.

Real world impact

Workers who receive wages in scrip or store orders can demand cash instead of being forced to accept goods, and holders who acquire such orders can sue to recover their cash value. Employers may still issue scrip or sell goods at a company store, but they cannot force acceptance when a proper cash demand is made. The Tennessee judgment upholding the law was affirmed and remains effective.

Dissents or concurrances

Two Justices dissented from the judgment; the opinion excerpt here records their dissent but does not state their reasons.