STACY, C.J., and CONNOR, J., concurring; CLARKSON and BROGDEN, JJ., dissenting. The defendant was indicted and convicted of a breach of the following statute, which was ratified 2 March, 1927:
"An act to prevent the giving of worthless checks.
"Whereas, the common practice of giving checks, drafts, and bills of exchange, without first providing funds in or credits with the depository on which the same are drawn, to pay and satisfy the same, tends to create the circulation of worthless paper, overdrafts, bad banking, and check kiting, and a mischief to trade and commerce; and it being the purpose of this act to remedy this evil,
"The General Assembly of North Carolina do enact:
"SECTION 1. It shall be unlawful for any person, firm or corporation, to draw, make, utter or issue and deliver to another, any check or draft on any bank or depository, for the payment of money or its equivalent, knowing at the time of the making, drawing, uttering, issuing and delivering such check or draft as aforesaid, that the maker or drawer thereof has not sufficient funds on deposit in or credit with such bank or depository with which to pay the same upon presentation.
"SEC. 2. That any person, firm or corporation violating any provision of this act shall be guilty of a misdemeanor.
"SEC. 3. That the word `credit' as used herein shall be construed to mean an arrangement or understanding with the bank or depository for the payment of any such check or draft.
"SEC. 4. That chapter fourteen of the Public Laws of nineteen hundred and twenty-five be and the same is hereby repealed.
"SEC. 5. That this act shall be in full force and effect from and after its ratification.
"Ratified this the 2nd day of March, A.D. 1927." Public Laws 1927, ch. 62.
After verdict the defendant moved in arrest of judgment. The motion was allowed and the State appealed. *Page 500 On 22 March, 1927, the defendant drew a check on the Farmers and Merchants Bank of Louisburg, payable to the order of George C. Green in the sum of $100, which was to be credited on a fee charged the defendant for services rendered in part and in part to be rendered by the payee in the capacity of an attorney at law. When he delivered the check he assured the payee that it would be paid when presented at the bank. On the same day, for a similar consideration, he gave a check to W.H. Yarborough. He had no money on deposit and no understanding or arrangement with the bank for the payment of these checks, and for this reason when presented they were returned unpaid. Thereafter the defendant was indicted for a breach of the statute set out in the statement of facts. At the trial he declined to introduce evidence, and after the State had rested its case he moved to dismiss the action. This motion was denied, and he was convicted. Upon return of the verdict he moved in arrest of judgment on the ground that the indictment charged no criminal offense, and the court being of opinion that the statute denounces as a crime the mere nonpayment of a debt without any finding of fraud or false pretense and conflicts with Article I, sec. 16, of the Constitution, granted the defendant's motion and arrested the judgment. The State excepted and appealed. C. S., 4649.
Under the general rule that judgment may be arrested only for errors which appear on the face of the record, it may be granted that an indictment charging the breach of a statute enacted in disregard of a positive constitutional inhibition manifests such error as will justify refusal to pronounce judgment in case of conviction. The principle is that everything charged in the indictment may be true and yet no criminal offense may have been committed. S. v. Watkins, 101 N.C. 702; S. v.Marsh, 132 N.C. 1000. An unconstitutional law is void and an act which it condemns is not a crime because the organic law is essentially the supreme law. Ex parte Siebold, 100 U.S. 376, 25 Law Ed., 717; Huntington v.Worthen, 120 U.S. 10, 30 Law Ed., 588. But the statute in question is presumed to be valid. Every act of the Legislature is presumed to be in harmony with the Constitution and all doubts are to be resolved in favor of its validity. This Court has said that an act will be declared unconstitutional only when no reasonable doubt exists. S. v. Moss.47 N.C. 66; S. v. Moore, 104 N.C. 714; Coble v. Comrs.,184 N.C. 342. *Page 501
"There shall be no imprisonment for debt in this State, except in cases of fraud." Const., Art. I, sec. 16. If the statute is in conflict with this prohibition it cannot be upheld, for the manifest object of the section, first appearing in the Constitution of 1868, was the abolition of imprisonment for debt which had previously had legal sanction. The former law granted an execution against the body of the defendant in civil actions in which money only was recovered. It was not essential that fraud should be proved. The execution was a writ known as capias ad satisfaciendum, the office of which was to imprison the debtor until he had paid the debt, costs and damages. If he had property when he was taken into custody he could surrender it; if he had none he could take the oath of an insolvent. Laws 1773, ch. 4; Const. 1776, sec. 39; Revised Code, ch. 59; Burton v.Dickens, 7 N.C. 103; Jordan v. James, 10 N.C. 110;Crain v. Long, 14 N.C. 371; McNair v. Ragland,17 N.C. 42; Griffin v. Simmons, 50 N.C. 145. The constitutional provision of 1868 was intended to annul the old law and to interdict imprisonment for debt except in cases of fraud. It has been said that the framers of the Constitution, in forbidding imprisonment for debt, referred to the cause of action as being ex contractu, and thereby implied that imprisonment is not forbidden in every civil action, but may be allowed in actions which are not for debt. Moore v. Green,73 N.C. 394; Long v. McLean, 88 N.C. 3. The section was aimed primarily at the law which gave the right of execution against the body of the defendant in civil actions; and if it be granted that it extends to and forbids criminal prosecutions for simple breach of contract, still we are convinced that error was committed in arresting the judgment.
At common law a fraudulent act was prosecuted as a crime only when it was calculated to defraud a number of people, and for this reason statutes were enacted in England to punish a variety of frauds not previously punishable. Some of these statutes, reenacted here, have been united with the body of our criminal law. Section 4277 of Consolidated Statutes, which denounces as a felony the intentional obtaining of property by false tokens or other false pretenses, was derived from 33 Henry VIII, ch. 1, and 30 George II, ch. 24. S. v. Phifer, 65 N.C. 321. Under this statute and others similar to it the person defrauded must have parted with something of value, as exemplified by a sequence of opinions from S. v. Simpson,10 N.C. 621, to S. v. Roberts, 189 N.C. 93. To this group may be referred the frauds within contemplation of the constitutional provision heretofore set out — a conclusion which, we venture to say, may reasonably be deduced from several of our own decisions. The phrase "in cases of fraud" qualifies the word "debt"; it signifies fraud in making the contract or in attempting to *Page 502 evade performance by the fraudulent concealment or disposition of property or other fraud devised for the purpose of defeating collection of the debt. In Melvin v. Melvin, 72 N.C. 384, "fraud," as used in section 16, supra, was defined by Chief Justice Pearson as "fraud in attempting to hinder, delay and defeat the collection of a debt by concealing property and other fraudulent devices, fraud in making the contract — false representations for instance, and fraud in incurring the liability, for instance, when an administrator commits a fraud by applying the funds of the estate to his own use, paying his own debts and the like." And in Moorev. Mullen, 77 N.C. 327: "It is clear that the words `except in case of fraud' are evidently used in a very restricted sense, such as fraud in procuring a contract to be made, or fraud in attempting to evade performance — as by concealing property, or by attempting to run it out of the State, or by making a fraudulent disposition of it." See Powersv. Davenport, 101 N.C. 286.
It may be conceded that the defendant perpetrated no fraud at the time he engaged the services of his attorneys, and that under the cases last cited he was not culpable in contracting the debt; but this does not imply that a fraudulent act cannot be made punishable as a crime unless it induces or results in simultaneous loss, or that imprisonment for breach of the statute in question is imprisonment for debt, or that the defendant in this action practiced no fraud in giving the check. It is necessary to keep in mind the distinction between cases in which present loss is caused by fraud in contracting the debt, punishable under the provisions of the English statutes which have been reenacted here, and those in which there is subsequent fraud, disconnected with the inception of the debt and punishable under the general police power of the State. Failure to observe this distinction would conveniently destroy the foundation on which the argument in behalf of the State is based. It would assume that the statute penalizes imprisonment for debt; but this assumption, as we understand the law, would be altogether premature. It would be a fair illustration of a syllogism in which the major premise assumes the fact to be proved. This is the very point upon which there is divergence of opinion — the point, in truth, which Chief Justice Pearson thoughtfully clarified. It is difficult to detect in the defendant's execution and delivery of the check any fraud in procuring the contract, making the debt, or evading performance by concealing or disposing of property — elements constituting fraud for which there may be imprisonment for debt. But the recent statute condemns an act which may have nothing to do with incurring the debt or defeating its collection "by concealing property or other fraudulent devices" — an act wilfully done, it may be long after the debt has been contracted, and therefore not within *Page 503 the purview or contemplation of the constitutional inhibition. It follows, in our opinion, that the statute does not conflict with Article I, sec. 16, of the Constitution.
A crime is an act or omission punishable as an offense against the State. 1 McClain on Crim. Law, sec. 4. Crimes mala in se comprise acts which are wrong in themselves, as murder or arson, but acts which are malaprohibita are crimes only because they are prohibited by the common law, by statute, or by ordinance. The Legislature, unless restrained by the organic law, has the inherent power to prohibit and punish any act as a crime. 16 C. J., 60. In Halter v. Nebraska, 205 U.S. 34, 51 Law Ed., 696, 701, the Court in treating the subject expressed this conclusion: "Another vital principle is that, except as restrained by its own fundamental law, or by the supreme law of the land, a State possesses all legislative power consistent with a republican form of government; therefore each State, when not thus restrained, and so far as this Court is concerned, may, by legislation, provide not only for the health, morals and safety of its people, but for the common good, as involved in the well-being, peace, happiness and prosperity of the people."
We recognize the principle that the police power may not be exercised in breach of rights which are guaranteed by the Constitution of the State or Nation; but if, as we have said, the assailed statute is not in conflict with the fundamental law its enactment was a lawful exercise of legislative power. The police power is a necessary attribute of every civilized government; it is not a grant derived from or under any written constitution, but it is inherent in the several States. It is but "another name for that authority which resides in every sovereignty to pass all laws for the internal regulation and government of the States," and by means of it "the Legislature exercises a supervision over matters involving the common weal and enforces the observance by each individual member of society of the duties which he owes to others and to the community at large." 6 R.C.L., 183, sec. 182; 185, sec. 184. So we have held that by virtue of the police power the law-making body may enact laws for the enjoyment of private and social life, the beneficial use of property, the security of the social order, and the prevention and punishment of injuries, as well as for the protection of the life, safety, health, morals, and comfort of the citizen. S. v. Vanhook, 182 N.C. 831. This attribute of sovereignty imports authority, not only to punish an injury which has become a public nuisance, but to punish fraudulent acts which tend to deceive, to destroy confidence, and to injure the public interests. Does the giving of worthless paper tend to deceive? Does the custom of putting it in the market places tend to *Page 504 destroy confidence? The transaction of business is dependent on credit; the basis of credit is confidence. The harmful effect of flooding the channels of commerce with checks and drafts of this character is manifest; it is not restricted to the bare transaction between the maker and the payee; its scope embraces the endorsement and the unrestrained transfer of the paper, releasing it as "a courier without baggage" hastening perchance to the four corners of the country. The offense consists, not in presently obtaining something of value by deceit, but in putting in circulation worthless commercial paper which will ultimately result in financial loss. If we close our eyes to this significant fact we shall fall into the patent error of trying to apply to the case before us the law as announced upon an entirely different state of facts in such cases as S. v. Griffin,154 N.C. 611, and Minton v. Early, 183 N.C. 199.
True, this Court has never held that the mere giving of a worthless check or draft is a breach of the criminal law. The constitutionality of C. S., 4283, or Public Laws 1925, ch. 14, now repealed, has never been determined. S. v. Edwards, 190 N.C. 322; S. v. Corpening, 191 N.C. 751. But the act of 1927 comprises much more than the giving of worthless paper. The offense is complete only when a check or draft is made or drawn, etc., on any bank or depository for the payment of money or its equivalent by one who knows at the time that he has not sufficient funds in or credit withsuch bank or depository with which to pay the paper when presented — "credit" meaning an arrangement or understanding with the bank or depository for the payment of the check or draft.
Can it be said that the issuance of a check or draft under these circumstances is not a false representation of a subsisting fact — the wrong which the statute condemns? Can the maker condone his act on the theory that he did not mean what he said? By the act of issuing the paper does he not aver the existence of funds or credit against which it is drawn? Can a fraudulent act be defined only by the use of the word "fraud"? We have understood the principle to be that in creating an offense the Legislature may define it by a description of the specific act, or as an act which produces or is calculated to produce a described result. 16 C. J., 67. The result contemplated is financial loss. If there be no immediate loss the probability of ultimate loss is sufficiently imminent to warrant the exercise of the police power in behalf of the public good.
A statute almost identical with ours was construed by the Kansas Supreme Court in S. v. Avery, 23 A.L.R., 453. There the first count of the information was based on a check to the Dodge City Wholesale Grocery Company for $133.44. To this count the defendant pleaded *Page 505 guilty and moved in arrest of judgment on the ground that the count did not state facts sufficient to constitute a public offense. The motion was denied and on appeal the ruling was affirmed, the Court saying: "The worthless check must be wilfully drawn, knowing at the time there are no funds on deposit to meet it. Beyond that, the Legislature may, for protection of the public interest, require persons to act at their peril, and may punish the doing of a forbidden act without regard to the knowledge, intention, motive or moral turpitude of the doer. There is no constitutional objection to such legislation, the necessity for which the Legislature is authorized to determine."
With respect to the question of imprisonment for debt it was said: "The defendant contends the statute is in conflict with paragraph 16 of the Bill of Rights, which forbids imprisonment for debt except in case of fraud. It is said the check was given to pay an acknowledged debt, long past due, and neither debtor nor creditor made or lost anything, but the debtor must be imprisoned because the debt was not discharged by the check. The information does not disclose the consideration for the check. It may be conceded, however, the statute applies to a transaction of the character described. Nevertheless, the statute does not impose imprisonment for debt. This subject was considered by the Supreme Court of Georgia, in the case ofHollis v. State, 152 Ga. 182, 108 S.E. 783. The Constitution of the State of Georgia declares `there shall be no imprisonment for debt.' The Worthless Check Act of 1919 resembles the statute of this State, except that the check must be drawn with intent to defraud. The Court said the drawer of the check is not imprisoned for debt, but for fraud, and cited the case of Smith v. State, 141 Ga. 482, 81 S.E. 220, Ann. Cas. 1915 C, 999. In the cited case, the Court had under consideration the act designed to punish fraudulent practices in obtaining board, lodging, and other accommodation at hotels, inns, boarding houses, and eating houses, and held imprisonment was not imposed for debt, but for the forbidden practices. Under the statute of this State, the offense does not consist in nonpayment of debt, but in resorting to a practice which the Legislature regarded as demoralizing to business." See S. v. Torrence, 127 N.C. 550.
The conclusion was that the offense was not committed against the payee of the check only, but consisted in the public nuisance resulting from the practice of putting worthless paper in circulation. This, it would seem, is the accepted position. In the annotation following the case, it is said: "Apparently very few cases have passed directly upon the constitutionality of statutes making it a criminal offense to issue a check without funds to meet it; but the decisions which have been found *Page 506 all upheld such statutes against such constitutional objections as have been made." The decision (it was said) that the wrong need not have resulted in immediate loss rests upon the theory that for the protection of the public interest the Legislature may require persons to act at their peril and may punish the doing of a forbidden act without regard to moral turpitude. Annotation, S. v. Avery, supra.
Many of the cases on which the appellant relies construe statutes in which by express words the criminal intent is required to be shown; our statute has no such requirement; it provides that the making or the issuing of a worthless check or draft by a person who knows that it is worthless is itself an act of such potential evil as to demand its suppression by the exercise of the police power which is inherent in the State. Statutes manifesting an exercise of this power have defined as misdemeanors a variety of acts performed without regard to a specific criminal intent. See C. S., 4429, 4466, 4467, 4709, 4737, 6648; S. v. Yopp, 97 N.C. 477; S. v.Moore, 113 N.C. 698; Shelby v. Power Co., 155 N.C. 196.
It is possible, of course, to depict evils which may spring from the statute and to overlook those which may result from a deluge of valueless commercial paper; but we must assume that the probable effects of the statute were apprehended by the law-making body from which it derived its vitality. Indeed, in the preamble to the statute the evils already experienced are declared to be "the circulation of worthless paper, overdrafts, bad banking, check kiting, and a mischief to trade and commerce."
Bills of exchange are now regarded as representing so much money and as performing the functions of paper currency. They are an indispensable agency in the maintenance of commerce; and in the proportion in which they are spurious the expansion of trade will unavoidably be retarded. These instruments of business intercourse should command public confidence. We are not at all inclined to predict the ultimate effects of the pernicious practice to which we have referred, but it may not be unwise to bear in mind Macaulay's observation in reference to the "clipped coin of the realm": "When the great instrument of exchange became thoroughly deranged, all trade, all industry, were smitten as with a palsy." His. Eng., Vol. 5, page 87. The judgment is
Reversed.