The Supreme Court considered the validity of the Alabama state court's ruling that Alabama statute (§ 4730 of the Code of Alabama of 1896, as amended in 1903 and 1907) was constitutional. The law read:
Any person who, with intent to injure or defraud his employer, enters into a contract in writing for the performance of any act of service, and thereby obtains money or other property from such employer, and with like intent, and without just cause, and without refunding such money, or paying for such property, refuses or fails to perform such act or service, must on conviction be punished....[2]
Alonzo Bailey was an African American from Alabama who agreed to work for The Riverside Company for one year at $12 per month. He received an advance of $15. After working for a little over a month he stopped work but did not refund any money. According to Alabama law such refusal to work and refund the money was prima facie evidence of intent to defraud. The evidence presented against Bailey at trial was testimony that he stopped working, without cause, failed to repay the $15 advanced to him and that he was a Black man.
The United States Supreme Court found that holding a person criminally liable for taking money for work not performed was akin to indentured servitude, outlawed by the Thirteenth Amendment, as it required that person to work rather than be found guilty of a crime.
Opinion
The Supreme Court began its majority analysis, written by Associate JusticeCharles Evans Hughes, by dismissing any importance of fact that the plaintiff was a Black man. The Court then analyzed the statute at issue using the Alabama Supreme Court's decision in Ex Parte Riley, 94 Ala. 82 (1892) and stated, "To justify conviction, it was necessary that this intent should be established by competent evidence, aided only by such inferences as might logically be derived from the facts proved, and should not be the subject of mere surmise or arbitrary assumption."[3] However, after the 1903 amendment to the Alabama law at issue here, the prosecution no longer had to prove intent to injure or defraud. The Court took issue with that change stating:
Whatever the reason for leaving the service, if, judged by the terms of the contract, it is insufficient in law, it is not 'just cause.' The money received and repayable, nothing more being shown, constitutes a mere debt. The asserted difficulty of proving the intent to injure or defraud is thus made the occasion for dispensing with such proof, so far as the prima facie case is concerned.[4]
The Court continued by stating that without the inference created by statute in this case, Bailey would not have been convicted. The Court then turned to the constitutionality of compulsory service as required by the law.
[A]lthought the statute in terms is to punish fraud, still its natural and inevitable effect is to expose to conviction for crime those who simply fail or refuse to perform contracts for personal service in liquidation of a debt; and judging its purpose by its effect, that it seeks in this way to provide the means of compulsion through which performance of such service may be secured.[5]
The Court continued by discussing the meaning of the Thirteenth Amendment and the broad reading of involuntary servitude. Further, in discussing peonage, stated, "The essence of the thing is compulsory service in payment of a debt. A peon is one who is compelled to work for his creditor until his debt is paid."[6] The Court again discussed the broad interpretation of the Thirteenth Amendment, "in this explicit and comprehensive enactment, Congress was not concerned with mere names or manner of description.... It was concerned with a fact, wherever it might exist; with a condition, however named and wherever it might be established, maintained, or enforced."
Analyzing the law by its effects rather than its pretense, the Court held that a contract may expose a debtor to the responsibility for his debt but not enforced labor.
Finally, the Court states, "what the state may not do directly, it may not do indirectly."[7] Thus, the creation of a statutory presumption to facilitate convictions for failure to pay a debt that could not be otherwise prosecuted was found to be invalid. Further, the peonage laws of Alabama were found to be contrary to the Thirteenth Amendment to the United States Constitution and therefore unconstitutional.
Justice Oliver Holmes dissented in this case. His analysis stated that adding a criminal sanction to a law with civil liability already in place goes to strengthen the law itself. Also, if a fine may be imposed, there must be punishment for nonpayment, which, in this case, is prison. His logic continued by stating that indentured servitude, as a punishment for a crime, is expressly outside the reach of the Thirteenth Amendment:
To sum up, I think that obtaining money by fraud may be made a crime as well as murder or theft; that a false representation, expressed or implied, at the time of making a contract of labor, that one intends to perform it, and thereby obtaining an advance, may be declared a case of fraudulently obtaining money as well as any other; that if made a crime it may be punished like any other crime; and that an unjustified departure from the promised service without repayment may be declared a sufficient case to go to the jury for their judgment; all without in any way infringing the Thirteenth Amendment or the statutes of the United States.[8][9]
Daniel, Pete (1970). "Up from Slavery and Down to Peonage: The Alonzo Bailey Case". The Journal of American History. 57 (3). The Journal of American History, Vol. 57, No. 3: 654–670. doi:10.2307/1917980. JSTOR1917980.
