American School of Magnetic Healing v. McAnnulty
Restored to docket for oral argument February 24, 1902.
Argued October 15, 16, 1902.
Decided November 17, 1902.
This is an appeal under § 5 of the circuit court of appeals act of 1891, to review directly the decree of the circuit court of the United States for the western district of Missouri, dismissing the bill of complainants (appellants) on the merits. The bill, as amended by leave of the court, averred in substance that the complainants are, the one a business corporation incorporated under the laws of and doing business in the state of Missouri, and the other a resident and citizen of the state of Missouri; that the defendant was, at the time of the filing of the bill and at the times therein stated, postmaster in charge of the United States postoffice in the city of Nevada, state of Missouri, and a resident and a citizen of that state; that as such postmaster he has the exclusive management of the postoffice in the city of Nevada, and of the receipt and distribution of mail received at that city through the United States mails.
It was further averred that the American School of Magnetic Healing is located and has its chief office and place of business at the city of Nevada, and the complainant Kelly was at the time of the filing of the bill and at all the dates and times mentioned therein secretary, treasurer, and general manager of the corporation. In November, 1897, he located at Nevada, and engaged in the business of healing diseases and ailments of the human family, and the business of teaching the science of healing of human ills, and that in April, 1898, he procured the incorporation of the business under the laws of the state of Missouri, under the name of the American School of Magnetic Healing, and among the stockholders of the company the complainant Kelly was one; that large buildings were erected for such business, and large amounts expended in advertising the same. The bill further averred as follows:
'That in and about their business they carried on and conducted, not only the treating of people afflicted with ills at their establishment at said city, but also engaged in the business of teaching and educating others in the practical science of healing, and that a large amount of their business consists of treatment by letter and advice to people throughout the United States and foreign countries; and in the treatment under said circumstances, they have built up a large and extensive business in the way of receipts of such treatment, received through the United States mail, by letter, registered package, and otherwise, in the nature of checks, drafts, and United States moneys; that said business has grown to such an extent that, immediately and for a long time prior to the grievances hereinafter complained of, the receipts through the United States mails, in the manner aforesaid, for the treatment of persons throughout the United States and foreign countries, have reached and averaged about from $1,000 to $1,600 per day.
'And your orators state that said business is a legal and legitimate business, conducted according to business and legal methods, and is founded largely, and almost exclusively, on the physical and practical proposition that the mind of the human race is largely responsible for its ills, and is a perceptible factor in the treating, curing, benefiting, and remedying thereof.
'And that the human race does possess the innate power, through proper exercise of the faculty of the brain and mind, to largely control and remedy the ills that humanity is heir to and complainants discard and eliminate from their treatment what is commonly known as divine healing and Christian science, and complainants are confined to practical scientific treatment, emanating from the source aforesaid.
'That for a long time previous and prior to the grievances hereinafter mentioned, said corporation has been sending out a large amount of advertising matter through the United States postoffice at said city of Nevada, and that all of its receipts, by checks, drafts, or money orders aforesaid, have been received by and delivered to them through the United States postoffice at the city of Nevada, of which the respondent herein has exclusive charge as postmaster aforesaid, and had, during the time aforesaid, been receiving a large number of letters addressed to said institution and to its office, regarding its treatment and manner of treatment, and business letters pertaining to, and inquiring into, the manner of treatment.
'That all such mail, letters, and communications are generally addressed and directed to the American School of Magnetic Healing at said city, and that in many cases said letters are and may be addressed to said J. H. Kelly, secretary or treasurer or manager, or to J. H. Kelly, individually, or to Prof. J. H. Kelly, or to J. H. Kelly or Prof. J. H. Kelly, secretary, treasurer, or manager of the American School of Magnetic Healing.
'That said Kelly is also receiving, and for a long time past has been receiving, letters addressed to him individually upon social matters from friends and acquaintances, and concerning business not pertaining to or connected with the business hereinafter stated.
'That prior to the grievances hereinafter mentioned, said institute was recdiving in the way of letters addressed to it or to its officers in the manner aforesaid, an average of about the sum of 3,000 letters per day, and ever since the happening of the grievances hereinafter mentioned there have been accumulating in said postoffice letters belonging to your orator, addressed in the manner before stated, probably to the total number of 25,000 letters.
'That all of said letters, as your orators are informed and believe, are duly stamped and ready for delivery to them but for the action of the postmaster and Postal Department hereinafter mentioned.'
It was then averred that persons who were prompted by assumed competitive interference with their business complained to the United States Postoffice Department at Washington that complainants were not engaged in legitimate business, and therefore, on May 15, 1890, the Postoffice Department made the following order:
Washington, D. C., May 15, 1900.
It having been made to appear to the Postmaster General, upon evidence satisfactory to him, that the American School of Magnetic Healing, S. A. Weltmer, president, J. H. Kelly, secretary, and J. A. Kelly, at Nevada, Missouri, are engaged in conducting a scheme or device for obtaining money through the mails by means of false and fraudulent pretenses, representations, and promises, in violation of the act of Congress entitled 'An Act to Amend Certain Sections of the Revised Statutes Relating to Lotteries, and for Other Purposes, Approved September 19, 1900.'
Now, therefore, by authority vested in him by said act and by the act of Congress entitled 'An Act for the Suppression of Lottery Traffic through International and Interstate Commerce and the Postal Service, Subject to the Jurisdiction and Laws of the United States, Approved March 2, 1895,'  the Postmaster General hereby forbids you to pay any postal money order drawn to the order of said concern and persons, and you are hereby directed to inform the remitter of any such postal money order that payment thereof has been forbidden, and that the amount thereof will be returned upon the presentation of a duplicate money order, applied for and obtained under the regulations of the Department.
And you are hereby instructed to return all letters, whether registered or not, and other mail matter which shall arrive at your office directed to the said concern and persons, to the postmasters at the offices at which they were originally mailed, to be delivered to the senders thereof, with the word 'fraudulent' plainly written or stamped upon the outside of such letters or matter. Provided, however, that where there is nothing to indicate who are the senders of letters not registered, or other matter, you are directed in that case to send such letters and matter to the dead letter office, with the word 'fraudulent' plainly written or stamped thereon, to be disposed of as other dead matter, under the laws and regulations applicable thereto.
Ch. Emory Smith,
To the Postmaster, Nevada, Missouri.
Since such order the defendant has refused to deliver any mail whatever to the complainants, and there had, when the bill was filed, as complainants aver on information and belief, accumulated at the postoffice at Nevada letters addressed to them containing checks, drafts, money orders, or money to an aggregate of at least $10,000 in value; that these checks, drafts, etc., came from various customers and clients throughout the United States and foreign countries, who had all been treated and for whom the complainants had performed services, under contracts with such parties, and that the sums were so sent in the respective letters in payment for services performed and rendered to the senders respectively, all of the senders being willing, and at all times have been willing, that their letters containing the remittances should be turned over to the complainants, they making no objection or complaint thereto.
The complainants further averred that they had been informed by the defendant that on Monday, the 28th day of May, then coming, he intended to stamp on each and every one of the letters addressed to the complainants, under any of the designations theretofore mentioned in the bill, the word 'fraudulent' across the face of each letter, without opening it and without knowing what such letter contained, or the nature or character of the contents, and that the defendant would then return the letter to the sender thereof in all cases where, from the outside of the letter or envelope, he was able to determine from whom the same was received, and as to all other letters addressed to the complainants, where he was unable to determine from the outside from whom the letters were sent, the defendant would stamp with the word 'fraudulent,' and send to the dead letter office of the United States Postoffice Department all such letters; and the defendant stated that he would refuse to deliver any further mail or letters to the complainants or either of them, that might be received at his said postoffice addressed to them or either of them.
Complainants then averred that if the respondent were permitted to do these things, and to return the letters, and refused in the future to deliver or allow complainants to receive any letters or mail matter at the post office at Nevada, it would work irreparable injury, loss, and damage to the complainants, and would result in eventually embarrassing, crippling, breaking up, and destroying complainants' legitimate business; and that the complainants had no other legal or adequate remedy by which they could prevent the committing of the acts and grievances complained of than by writ of injunction.
The bill then averred that the action of the defendant was based upon the order of the Postmaster General, above set forth, who assumed to act under §§ 3929 and 4041 of the Revised Statutes of the United States,1 and § 4 of an act approved March 2, 1895, 28 Stat. at L. 963, 964, chap. 191. 
Section 3929 of the Revised Statutes is set forth in the margin.1
Section 4041 is of the same purport as § 3929, except ing that instead of providing for the retention of registered letters, it forbids the payment by any postmaster to the person or company described of any postal money orders drawn to his or its order, or to his or its favor, or to any agent of any such person or company, and it provides for the return to the remitters of the sums of money named in those money orders. Section 4 of the act (Laws of 1895, chap. 191; 28 Stat. at L. 693, 694)  amended § 3929 of the Revised Statutes so as to provide for the retention of all letters, instead of merely registered letters as in the original section.
Before the issuing of the written order by the Postmaster General prohibiting the delivery of mail matter to the complainants, and pursuant to notice from the Postmaster General, the complainants went before that official at Washington and had a hearing before him, and gave their reasons why what is termed a 'fraud order' should not be issued, and that the Postmaster General, after hearing evidence such as in his judgment was contemplated by the sections of the statutes above mentioned, issued the order above referred to, and thereupon the defendant has refused to permit the delivery of the mail, and assigns as his only reason for so doing that it would be in violation of the order of the Postmaster General, founded upon the provisions of the statute already set forth.
The bill then averred that the statutes have no application whatever to the conduct or carrying on of complainants' business, which is a legitimate one, and that no fraud, deceit, deception, or misrepresentation of any kind has ever been practised by them, and that their customers or clients do not claim or assert that the complainants have in any manner practised any fraud, deceit, or misrepresentation at any time in procuring the business from them, or in curing their ills or diseases. Complainants further averred that the provisions of the statutes above mentioned are in violation of the 4th, 5th, and 14th Amendments to the Constitution of the United States, in that they undertake to deprive persons of their property and property rights without due process of law; and, if the statutes were enforced they would place in the power of the postmaster and the Postoffice Department of the United States the sole and exclusive right to pass upon the rights of the complainants, as between themselves and other parties with whom they deal and transact business through the mails, without a hearing; and that the provisions of the statute are void for the reason that they provide for no tribunal, court, or authority to hear or determine any violation of the statute or claimed violation of the statutes, but placed the same absolutely in the power and control of the postmasters and the Postoffice Department; and that the statutes vest an arbitrary discretion in the postmasters and the Postoffice Department or the Postmaster General to determine as he may see fit, whether right or wrong, the question as to who shall or who shall not have and receive mail from the United States Postoffice Department, and who shall and who shall not use the United States mails, and vest in the Department or the Postmaster General if enforced, the power to interdict and absolutely prohibit the carrying on of all commercial and business transactions of the country done through the mailing system, if they see fit to do so, and make the postmasters and the Postoffice Department the sole judges in their own case.
The complainants then asked for an injunction to restrain the postmaster from carrying out the order of the Postmaster General, and that a decree might be entered perpetually enjoining the defendant as prayed for.
The defendant demurred to the complainants' amended bill (1) on the ground that the complainants had not stated any such case as entitled them to any relief; (2) because the complainants had not stated any ground for equitable relief againstthe defendant, and had not shown any reason why an injunction should be granted.
The court sustained the demurrer, and, the complainants declining to plead further, it was decreed by the court that the amended bill of the complainants was insufficient in law and equity, and it was thereupon dismissed at complainants' cost.
Messrs. James K. Harkless, John O'Grady, and Charles S.C.ryster, for appellants.
Solicitor General Richards and Mr. Robert A. Howard for appellee.
Mr. Justice Peckham, after making the foregoing statement of facts, delivered the opinion of the court:
^1 U.S.C.omp. St. 1901, pp. 2686, 2749.
^2 Id. p. 3178.
Sec. 3929. The Postmaster General may, upon evidence satisfactory to him that any person is engaged in conducting any fraudulent lottery, gift enterprise, or scheme for the distribution tribution of money, or of any real or personal property, by lot, chance, or drawing of any kind, or in conducting any other scheme or device for obtaining money through the mails by means of false or fraudulent pretenses, representations, or promises, instruct postmasters at any postoffices at which registered letters arrive directed to any such person, to return all such registered letters to the postmasters
^3 U.S.C.omp. St. 1901, p. 3178. at the offices at which they were originally malled, with the word 'fraudulent' plainly written or stamped upon the outside or such letters; and all such letters so returned to such postmasters shall be by them returned to the writers thereof, under such regulations as the Postmaster General may prescribe. But nothing contained in this title shall be so construed as to authorize any postmaster or other person to open any letter not addressed to himself.