The State Under its Police Power can Regulate Auctions in Kansas but such power is Subordinate to Constitutional Limitations

The Supreme Court of Kansas in Gilbert v. Mathews, 186 Kan. 672 (Kan. 1960) held that the state under the guise of its police power cannot enact unequal, unreasonable, and oppressive legislation or that which is in violation of the fundamental law.  The police power is wide in its scope and gives the legislature broad power to enact laws to promote the health, morals, security and welfare of the people. Also, sate has discretion to determine for itself what is deleterious to health, morals or is inimical to public welfare.  However, such power is subject to constitutional inhibitions. 
This case raised the question as to whether or not the New Goods Public Auction Law, Kan. Stat. Ann. § 58-1001, et seq. (Supp. 1959) was valid and constitutional.  This case stemmed from the arrest of an auctioneer for the sale of new goods.  Plaintiff is an auctioneer who has been conducting public auction in the State of Kansas for the sale of personal property.  The Auctioneer sold new goods not previously sold at retail at public auction. However, Plaintiff did not have a permanent place to conduct such auctions.  He conducted auctions in different communities of Kansas advertising the time and place of auction. 
Plaintiff advertised and conducted an auction at Cowley County.  Following that, Defendant Mathews, as County Attorney of Cowley County, Kansas, filed a complaint in the City Court of Winfield, Kansas, charging that Plaintiff had conducted a public auction sale of new merchandise without obtaining a license to do so from the County Clerk. Plaintiff was arrested pursuant to said complaint, posted bond for his appearance, and said criminal action now pends against the auctioneer. 
The Auctioneer filed an action challenging the validity of the New Goods Public Auction Law.  The trial court determined that the law was unconstitutional.   Appellant governmental entities challenged this decision.   of the Cowley District Court (Kansas), which granted judgment to appellee auctioneer in his declaratory judgment action challenging the constitutional validity of the New Goods Public Auction Law, Kan. Stat. Ann. § 58-1001, et seq. (Supp. 1959).
The Court stated that there are no Kansas cases specifically in point to the case at hand.  However, it is universally recognized that the business of an auctioneer and of selling merchandise at auction is a legitimate business.  It cannot be prohibited directly or indirectly.  But the right to sell at auction is not absolute but may be withheld unless there is compliance with reasonable regulations. The business affects the interests of the public and hence the state under its police power can regulate auctions to prevent fraud and abuses.  But it is worth noting that this right to regulate and license the business does not, however, include the right to prohibit it directly or, in effect, to adopt unreasonable and unfair regulations, or such regulations as would be oppressive or highly injurious to the business.
The "New Goods Public Auction Law" (Law) purports to be an attempt to exercise the police power of the state. Id. at 678. The Court found that the Law aims to completely eliminate the sale of new merchandise at public auctions by itinerant vendors.  The Court found that certain provisions in the Law cannot be construed unconstitutional.  But there are other provisions in the Law that permeates the entire Law.  The Court referred to the laws from other jurisdictions to decide whether the Law was constitutional or not. 
The Court concluded that the "New Goods Public Auction Law" is unconstitutional and invalid.  The Law places regulations and impositions on the conduct of an auction sale (a lawful business) that are unreasonable and arbitrary. Id. at 686.  The Law is designed to be so oppressive and unreasonable that it prohibits the conduct of such lawful business. Id.  The Court also found the Law to be discriminatory because its bonding requirement was conditioned not only on the payment of damages sustained from dishonest or fraudulent conduct, but also required the auctioneer to guarantee the performance of the manufacturer, a requirement not imposed on other retailers. Id.
Further the Law also denied the Appellee due process and equal protection rights by making it immaterial whether the auctioneer had actual notice of a suit filed against him by providing that the auctioneer had to appoint the county clerk as his agent, that notice of the suit was to be made to the auctioneer by regular mail only, and that failure to mail a copy of the suit to the auctioneer did not affect a court's jurisdiction. Id. at 684, 686.
Overall, the Court found the Law to be violative of the U.S. Constitution and the Kansas State Constitution. Id. at 686.  The Court therefore affirmed the decision of the lower court. Id.