Ferguson v. Skrupa
Encyclopedia
Ferguson v. Skrupa was a case before the United States Supreme Court regarding the constitutionality of prohibiting debt adjustment
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statute makes it a misdemeanor for any person to engage "in the business of debt adjusting" except as an incident to the lawful practice of law, "debt adjusting" being defined as the making of a contract whereby an adjuster, for consideration, agrees to distribute payments by a debtor among his creditors in accordance with an agreed upon plan. The plaintiff, engaged in the business of "debt adjusting," alleged that his business was a useful and desirable one, and that, therefore, an absolute prohibition of the business by the State would violate his rights under the due process clause of the Fourteenth Amendment. The District Court, sitting as a three-judge court, granted an injunction on the statute.
Debt adjustment
Debt adjustment is a form of debt relief that allows a government, organization, corporation, or individual to repay a debt over a longer period of time and with smaller payment amounts than the lender and borrower originally agreed upon. It is an alternative to bankruptcy...
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Background
A KansasKansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
statute makes it a misdemeanor for any person to engage "in the business of debt adjusting" except as an incident to the lawful practice of law, "debt adjusting" being defined as the making of a contract whereby an adjuster, for consideration, agrees to distribute payments by a debtor among his creditors in accordance with an agreed upon plan. The plaintiff, engaged in the business of "debt adjusting," alleged that his business was a useful and desirable one, and that, therefore, an absolute prohibition of the business by the State would violate his rights under the due process clause of the Fourteenth Amendment. The District Court, sitting as a three-judge court, granted an injunction on the statute.
Opinion of the court
On appeal, the Supreme Court of the United States reversed, 9-0. Justice Black held that the statute did not violate the due process clause.- 1) States had the power to legislate against what were found to be injurious practices in their internal commercial and business affairs so long as their laws did not run afoul of some specific federal constitutional prohibition or of some valid federal law. When the subject lay within the State's police power, debatable questions as to reasonableness were not for the courts but for the legislature.
- 2) The Court further held that the statute's exception of lawyers did not constitute a denial of equal protection of the laws to nonlawyers. Statutes created many classifications that did not deny equal protection; it was only invidious discrimination that offended the Constitution.