Tyson & Brother v. Banton

Appellant
Tyson & Brother Co.
Appellees
Joab H. Banton, Vincent B. Murphy
Appellant's Claim
That a U.S. district court erred in upholding the constitutionality of New York's ticket resale law.
Chief Lawyer for Appellant
Louis Marshall
Chief Lawyers for Appellees
Felix Benvenga, Robert P. Beyer
Justices for the Court
Pierce Butler, James Clark McReynolds, Harlan Fiske Stone, George Sutherland(writing for the Court), William Howard Taft, Willis Van Devanter
Justices Dissenting
Louis D. Brandeis, Oliver Wendell Holmes, Edward Terry Sanford
Place
Washington, D.C.
Date of Decision
28 February 1927
Decision
The district court opinion was reversed, thus invalidating the New York law.
Significance
The case was a significant battle in the evolving balance between the rightsof private business and state regulation in the name of public welfare.
"A Public Interest"
During the 1920s, New York city and state officials grew concerned about complaints that ticket resale agencies and "scalpers" were charging the public exorbitant prices for theatre tickets. In 1922, the New York State legislatureacted by passing a law limiting the resale price of any ticket to a theatre or other place of amusement to 50 cents above the original price printed on the ticket. The law was clearly designed as a public service, but it was eventually ruled unconstitutional by a sharply divided Supreme Court.
Even though unlicensed ticket scalpers were major targets of the resale rule,New York's licensed Theatre Ticket Brokers Association decided to contest the new law. One agency, Tyson & Brother, filed suit against the enforcersof the statute, New York County District Attorney Joab Banton and New York State Comptroller Vincent Murphy. An initial challenge failed in the U.S. District Court for the Southern District of New York, which found nothing unconstitutional in the law. Tyson & Brother appealed the decision. They claimedthat the threat of severe resale law penalties prevented the agents from testing the law in court by selling even one ticket, depriving them of their liberty and property without the due process of law guaranteed by the FourteenthAmendment. By making their claim a constitutional issue, Tyson & Brothersucceeded in having their appeal heard by the Supreme Court on 6 and 7 October 1927.
District Attorney Banton's lawyer, Felix Benvenga, argued that widespread abuses by ticket price gougers provided a need for regulation. Comptroller Murphy's attorney, Robert Beyer, defended the state's legislation on broader grounds. Theatres and other places of public amusement were "affected by a publicinterest," which justified the state's rightful exercise of police power. Since reselling tickets was an integral part of the theatre business, it shouldalso be subject to state regulation.
Nevertheless, five of the nine Supreme Court justices voted to reverse the district court's decision, rendering New York's law invalid. In Justice Sutherland's written opinion delivered on 28 February 1927, the state's defense of the law failed on a wide range of points. The Court rejected the notion that theatres were "affected with a public interest." Unlike utility companies or corporations whose conduct affected the lives of millions of people, theatreswere not exclusively devoted to public use. It was true that theatres were required to be licensed and inspected as public places, yet such licenses did not put a theatre owner under the same sort of obligation to provide entertainment that required a public utility licensee, for example, to provide acceptable telephone service.
The majority also agreed with the appellant's contention that the tickets were private property, with which the agents could do as they pleased. Unlike the lower court, Sutherland and the other concurring justices agreed that the Fifth and Fourteenth Amendment protections of property did apply to tickets which the agents had acquired for resale.
A Round of Dissents
The Court's decision was far from unanimous. While a five-vote majority foundnothing in the Fourteenth Amendment to suggest that tickets were not to be protected as property, four dissenting judges could find nothing in the same amendment prohibiting regulation in the public interest. Justice Holmes saw nothing in the entire Constitution that prevented the people of New York from enacting protective regulations like the resale law, if widespread agreement existed that such a law should be passed. Justice Holmes was less concerned with the merits of the New York case in particular than with what he consideredto be the Court's repudiation of the public's will, properly expressed through their legislature. "We fear to grant power," wrote Holmes, "and are unwilling to recognize it when it exists."
Holmes was joined in his opinion by Justice Brandeis, both of whom added their signatures to a separate dissent by Justice Stone. Noting that the resale law did not attempt to set the price of tickets--the law merely required eachticket to have its price printed on its face and limited resale profit to 50cents per ticket, a sum even most licensed agents agreed was the norm--Stonefound no constitutional basis for forbidding regulation.
A third separate dissent was filed by Justice Sanford, who noted that some agents were in collusion with theatre owners willing to sell advance tickets inlarge numbers. While this premature exchange of money benefited owners worried about unsuccessful shows and agents who wanted to monopolize access to thebest theatre seats, the arrangement left the public with no protection against extortionate resale rates. Justice Sanford reminded the Court of its decision in Munn v. Illinois (1876). In that decision, the Court found thatthe price of grain could not be regulated, but because grain elevators controlled public access to the product, they were found to be subject to regulation. Justice Sanford cast the ticket resale agents in a similar intermediary role and believed that the public should not be at their mercy.
The Court's controversial decision was met with predictable approval by the Theatre Ticket Brokers Association, whose members promised not to use the Court's decision as an excuse to inflate the resale price of tickets unfairly. The New York Times was less optimistic about the results of the law's invalidation, responding with an editorial entitled "Ticket Scalpers Win." TheSupreme Court's decision doomed the resale law, but the vigor of New York State investigators remained undiminished, filling the papers with tales of Broadway ticket frauds.
Related Cases

• Munn v. Illinois, 94 U.S. 113 (1876).
  
• Nebbia v. People of New York, 291 U.S. 502 (1934).
  
• Olsen v. State of Nebraska ex rel. Western Reference and Bond Association, 313 U.S. 236 (1941).
  
• New Jersey Association of Ticket Brokers v. Ticketron, 543 A.2d 997 (1998).

Scalping
Touting or "ticket scalping" has been around sporting events as long as theory of supply and demand. "Scalpers" range from street venders trying to make an extra buck to national brokers catering to the elite class of entertainmentseekers. Some national brokers make millions of dollars off of the resale oftickets to sporting events at inflated prices using fax machines and web sites. Ticket scalping is legal in ten states, illegal in nine, and regulated in32 others under certain restrictions. Some argue that ticket scalping is a regrettable aspect of organized sports while others suggest it is merely a function of supply and demand like any other business.
The ticket scalping business soared in the 1990s and with its success came abuses. The most profitable events for brokers are: the Final Four, the Masters, and the Superbowl. In some cases brokers took advanced payments without providing tickets. To prevent such abuses a group of brokers got together to form the National Association of Ticket Brokers (NATB). Members of the NATB encourage ticket buyers to check up on brokers to make sure they belong to the organization before purchasing from them.
Sources
Sports Illustrated, 7 April 1997 Vol. 86, no. 14, p. 102.
The Economist, 25 May 1991, Vol. 319, no. 7708, p. 21.