Tyson & Brother v. Banton

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 legislature acted 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 enforcers of 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 claimed that 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 Fourteenth Amendment. By making their claim a constitutional issue, Tyson & Brother succeeded 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 public interest," which justified the state's rightful exercise of police power. Since reselling tickets was an integral part of the theatre business, it should also 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, theatres were 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.