Opinion · Supreme Court of the United States
Tanner v. Little
Tanner v. Little, 240 U.S. 369 (1916)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1916-03-06
- Topic
- general
*380 Mr. Justice McKenna, after stating the case as above, delivered the opinion of the court. The court ruled against the motions, to dismiss, and concurring with the ruling as far as it retained jurisdiction of the suits and the persons of the defendants, we pass to the consideration of the, validity of the statute of the State. Of that it was said: “The court is fully satisfied from a bare inspection of the act without more and without considering the affidavits on file, that ibis and was intended to be prohibitive of the business methods-against which it is directed. It is plainly manifest that no merchant could afford to pay the sum of $6,000 annually for the mere privilege of giving away trading stamps or allowing discount on his cash sales.
Citator
UpLaw has not yet analyzed Tanner v. Little. The absence of a flag is not a finding that it is good law.
- Cited by
- 104 opinions
Headnotes
- Constitutional Law — State Police Power — Trading Stamp Regulation A State may, in the exercise of its police power, regulate the use of profit-sharing coupons and trading stamps and impose license taxes on the privilege of their use; a state statute imposing such license taxes, requiring redemption of coupons in cash or merchandise and fixing a license fee of $6,000, is similar in essential particulars to the Florida statute sustained in Rast v. Van Deman & Lewis and is likewise a valid exercise of the police power. 240 U.S. at 372
- Constitutional Law — Equal Protection The fact that the premium system may be a method of advertising does not deprive the legislature of power to classify it separately for regulation or taxation; classification in law, as elsewhere, is the grouping of things because they agree in certain particulars and differ from others, and the appropriateness of a classification must be judged in light of the power of the legislature over the subject matter, so that where authority to regulate the conduct exists, a classification need not be logically perfect and may be within legislative power even if harsh or oppressive. 240 U.S. at 381-383
- Constitutional Law — Equal Protection So long as the legislature has authority over the subject matter, a classification is sustained when it rests upon a real and substantial difference bearing a reasonable relation to the purpose of the legislation; the classification is not rendered invalid merely because the distinctions drawn may be challenged logically, since the appropriateness of the classification depends upon the object of the legislation and the existence of the power to regulate the conduct at which it is aimed. 240 U.S. at 382-384
- Constitutional Law — Police Power — Regulation of Business Incidents In determining the validity of police-power legislation directed at a particular business system, the incidents of the business — such as giving of trading stamps, discounts, or profit sharing — rather than the business as a whole give character to it, and the separation of a tax on incidents from the underlying business is artificial; the power of the State may be directed at such incidents where the legislature reasonably believes them to be harmful to public welfare, and the determination of the seriousness and extent of the evils to be remedied is for the legislature, whose judgment will not be disturbed unless arbitrary. 240 U.S. at 384-386
- Constitutional Law — Due Process Whether a statute is invalid under the Federal Constitution as interfering with or burdening interstate commerce, impairing the obligation of contracts, denying equal protection of the laws, or depriving persons of property without due process of law must be determined by reference to the settled principle that where a state statute is enacted upon a belief of evils and is within the legislative power over the subject matter, courts cannot measure the extent of the evils against the legislative estimate or substitute their judgment, and such a statute, shown by the generality of similar state legislation not to have been made in mere wantonness, is valid. 240 U.S. at 385-386
TANNERv. LITTLE,240 U.S. 369(1916)
36 S.Ct. 379
TANNER, ATTORNEY GENERAL OF THE STATE OF WASHINGTON,v. LITTLE.
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT
OF WASHINGTON.
No. 224.
Argued October 29, November 1, 2, 1915.
Decided March 6, 1916.
THIS case was submitted withRastv.Van Deman Lewis,
ante, p. 342, and attacks the validity of a statute of the State
of Washington of the same general import and purpose as the
Florida statute passed on in that case,Rastv.Van Deman
Lewis, ante, p. 342.
The statute requires that every person, etc., who shall use or
furnish to any other person, etc., to use in, with, or for the
sale of any goods, etc., any stamps, etc., which shall entitle
the purchaser receiving the same with such sale of goods, etc.,
to procure from any person, etc., any goods, etc., free of
charge, or for less than the retail market price thereof, upon
the production of any number of such stamps, etc., shall, before
so furnishing, selling or using
Page 370
the same, obtain a license from the auditor of each county
wherein such furnishing or selling or using shall take place for
each and every store or place of business in that county, owned
or conducted by such person, etc., from which such furnishing or
selling, or in which such using shall take place.
The statute fixes the license at $6,000, and there is a
prohibition of the use of the stamps, etc., in any town, city or
county other than that in which they are furnished or sold.
Violation of the act is made a "gross misdemeanor."
The complainants are nineteen in number, counting partnerships
as single individuals, and engaged in the business of hardware,
cleaning and dyeing, grocery, soap, canned goods, meats, drugs,
dry goods, boots and shoes, fuel, photography, laundry and wine.
Complainants sue for all similarly situated.
Their allegations, condensed and narratively stated, are as
follows: They carry on their respective businesses at Spokane,
State of Washington, and advertise in various ways, which are
enumerated, including the premium advertising system, so-called,
and have at various times, for the purpose of increasing their
general trade and volume of business, especially their cash
trade, adopted and used a premium advertising system conducted as
follows: with the sale of their goods and merchandise they each
give to their cash customers stamps, tickets or coupons at the
rate of one stamp for each cash purchase of a convenient unit
amount, as one stamp for each 5, 10 or 25 cent cash purchase, as
the case may be, which stamps or coupons entitle their customers
to the choice of a certain cash discount or, free of charge, to
certain articles of merchandise of their own selection, when
presented in certain prescribed numbers for redemption to
complainants who redeem their own stamps or certificates, or to a
third party with whom other of the complainants have contracts,
many of which are still in force, for the use of their premium
Page 371
advertising system, including the use of their trading stamps or
coupons used in connection therewith, and the redemption thereof
in merchandise.
Many of the complainants accept the coupons, at the cash value
thereon printed, in payment or part payment of the cash retail
price of the premium articles.
The stamps and coupons are redeemable in accordance with the
terms of printed catalogues or premium lists. Booklets are
distributed free among complainants' customers and describe the
articles which may be secured by the stamps or coupons and state
the number thereof required to obtain the same. The delivery of
the required number of stamps or coupons set forth in the list is
in full payment for the article specified and no money or other
consideration is charged therefor.
There is no element of chance involved in the system. The
value of each article is fixed as to cash and merchandise
redemption and the right of every holder is secure. The
articles are of sound value and durable manufacture and are open to
inspection during business hours. The premiums are not regularly
dealt in by many of the complainants but are used exclusively in
connection with premium advertising.
A number of complainants have contracts based on the system
running from one to five years for the use of their premium
advertising system, including their trading stamps in connection
therewith, which contracts are now in force and were in force at
the passage of the act, and a large number of stamps are now in
the hands of complainants and if they are prevented from
disposing of them complainants will suffer great and irreparable
loss.
A great many manufacturers of various lines of merchandise,
for the purpose of advertising their businesses and increasing
the volume of their sales, enclose in the packages of their
merchandise coupons and other premium tokens which entitle the
purchaser of such merchandise to
Page 372
other articles of merchandise free of charge. The number of the
manufacturers is given, their names and the articles which they
manufacture.
Complainants have upon their shelves large quantities of
merchandise in which premium tokens are packed, which upon their
sale entitle purchasers to other articles in the manner
described, and in such packages are tobacco and tobacco products,
and the use of the coupons and tickets as described is authorized
and rendered lawful by § 3394 of the Revised Statutes of the
United States and the amendments of that section in 1897, July
24, c. 11,30 Stat. 151, 206, and 1902, July 1, c. 1371,
32 Stat. 714, 715.
The adoption of the premium advertising system enables
complainants to give a discount upon purchases of small as well
as large amounts, one coupon or stamp being given with each 5, 10
or 25 cent cash purchase, or multiple thereof, as the case may
be. And a larger discount in merchandise can be given than
otherwise there could be because as a result of large purchases
of the merchandise given in exchange for the tokens the
articles are secured at much less than the regular retail price. By reason
of the system complainants have been enabled at a moderate cost
to greatly increase their businesses and profits and are
benefited because their articles in the homes of their customers
are a continual advertisement. And the businesses are lawful ones
and not prejudicial to the public health, safety, morals or
welfare.
The statute of Washington violates the provisions of the
Fourteenth Amendment to the Constitution of the United States in
that it deprives complainants of their property without due
process of law and of the equal protection of the laws (a)
because it is not equal and uniform in operation, each of the
complainants paying their taxes as do other merchants engaged in
similar lines of business and who use other and various methods
of advertising and
Page 373
who are not required to pay a license tax of $6000. The statute
is therefore arbitrary and discriminatory. (b) The tax is not
upon the businesses of complainants but upon their incidents and
is an unwarrantable interference with the method and manner of
conducting the same, is arbitrary, oppressive, discriminatory, is
in excess of profits and prohibitive, and, while in the guise of
revenue will produce none. (c) It deprives complainants of their
liberty and property without due process of law inasmuch as they
cannot bestow a gift or give an order upon another merchant for a
gift to a customer, which is the exercise of a natural right,
without paying an onerous and excessive tax. (d) The penalties
and fines are so drastic and excessive that they deter
complainants from violating the act and testing its validity in a
court of law. (e) The statute is in contravention of § 10,
Article I, of the Constitution of the United States in that it
impairs the obligations of contracts with and the right of
complainants to contract with their customers to give trading
stamps and coupons with the purchase of merchandise redeemable in
merchandise heretofore given by them. It also impairs the
obligations of contracts entered into by complainants with third
parties for the use of the advertising system, including the use
of the stamps and coupons and the redemption thereof in
merchandise. (f) The statute is partial, unreasonable,
oppressive, unequal, in restraint of trade and prohibitive of
lawful business. (g) The statute conflicts with § 3394 of the
Revised Statutes of the United States and the amendments thereof.
(h) It is criminal, making a crime of acts the test of which is
incapable of ascertainment, that is, it makes a crime of
furnishing stamps or similar devices which are redeemable "for
less than the retail market price thereof," the premium
article having no definite or fixed retail market price. The statute is
therefore void for indefiniteness and uncertainty; and such
provision is besides prohibitive of the business
Page 374
as the articles are not dealt in by complainants except in
connection with the premium system. And further that the statute
is void because it attempts to fix the price at which
complainants shall sell their merchandise.
The prosecuting attorney of the county threatens to enforce
the provisions of the statute, to bring numerous criminal
prosecutions as well as civil suits to enforce the payment of the
license, and if complainants are forced to discontinue their
business as described they will suffer great and irreparable
damage because they have expended large sums of money in
advertising the premium system, which expenditures would be a
total loss, they having large stocks of merchandise on hand in
which are packed the premium tokens and which cannot be removed
without practically destroying the packages and the value of the
merchandise contained therein, and that therefore if not
permitted to dispose of them complainants will lose a large
amount of money.
Complainants have outstanding in the hands of customers a
large amount of tokens, the result of transactions before the
passage of the statute, and it will be necessary in order to keep
faith with their customers for complainants to redeem such tokens
in merchandise in the future from time to time as the necessary
and requisite number of the same are presented for redemption. If
they fail to do so they will lose many customers and a large
amount of trade and suffer thereby great loss and injury.
Having no remedy at law, complainants pray an injunction,
first temporary and then perpetual.
A temporary restraining order was issued, which the Attorney
General and the prosecuting attorney of Spokane County separately
made motions to quash, each appearing only for that purpose. The
motions asserted exemption from suit of those officers in a
Federal court because the suit was against them as officers of
the State to prevent the enforcement of the criminal laws of the
State and was
Page 375
therefore a suit against the State in violation of the Eleventh
Amendment to the Constitution of the United States.
Subsequently motions to dismiss were filed by them and also by
the defendant Evenson, county treasurer of Spokane County. The
grounds of the motions alleged were misjoinder of parties
complainants and of defendants, improper union of causes of suit,
insufficiency of the facts alleged to justify the relief prayed,
the adequacy of a remedy at law, and the absence of jurisdiction
over the persons of the defendants or of the subject-matter of
the action.
The motion for an interlocutory injunction came before three
judges. Rudkin, district judge, delivered the opinion and
judgment ordering an injunction as prayed. 208 F. 605.
This appeal was then taken.
Between 1888 and 1915, statutes prohibiting, restricting, or licensing on the payment of fees, the use of trading stamps, were passed by Alabama, Arkansas, California, Colorado, Florida, Georgia, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, Indiana, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia and Hawaii. In 1873, Congress passed an Act making it a penal offense to engage in any gift enterprise in the District of Columbia,17 Stat. 464, c. 148, which embraced the use of trading stamps,Lansburghv.District of Columbia,11 App.D.C. 512;District of Columbiav.Kraft,35 App.D.C. 253;In re Gregory,219 U.S. 210. By an express Act of Parliament the use of trading stamps is a crime in the Dominion of Canada.Wilderv.Montreal, 26 Rapp.Page 376Jud. Quebec, 504, and note. This unanimity of the legislative mind refutes the argument that the use of trading stamps is only a legitimate and harmless system of advertising, and that the statute of Washington deprives the users of them of liberty and property without due process of law.
In 1913, the State of Washington, declared as the public policy of the State that the use of trading stamps should be restricted and regulated, Sess. Laws, 1913, p. 413, and the Supreme Court of the State sustained it inStatev.Pitney,79 Wn. 608, expressly overrulingLeonardv.Bassindale,46 Wn. 301, holding unconstitutional the previous act of 1905, p. 374.
Coincident with the arguments before this court in this case, the Supreme Court of Louisiana sustained the trading stamp statute of that State,Louisianav.Underwood, La. Sup. C., October 8, 1915. See also on this subject article by Assistant Attorney-General Warren, 13, Col. Law Rev., April, 1913, p. 296; "Premiums in Retail Trade," by I.M. Rubinow, 13, Jour. Pol. Economy, Sept., 1905, No. 4, p. 574; "Cost of Distributing Groceries," by E.M. Patterson, Ph. D., Wharton School of Finance, Univ. Penna., 50, Annals Academy Pol. Science, No. 139, p. 74; "Fallacy of the Trading Stamp," by Arno Dosch, Pearson's Magazine, Aug., 1911; "Premium Giving," by Frank Farrington, in Store Management Complete, Byxbee Pub. Co., Chicago, 1911.
Many authorities sustain the propositions that the State may prohibit the use of trading stamps by virtue of the police power, and that the Washington Trading Stamp Act is not an arbitrary classification.
If the State possesses the power to tax for revenue, the extent of the exercise of the power is immaterial.Mr. W.T. Dovellwith whomMr. Frank T. Wolcottwas on the brief, for appellees:Page 377
The Act is prohibitive.Murphyv.California,225 U.S. 623;Rosenthalv.New York,226 U.S. 260.
To prohibit the conduct of the business is contrary to the law of the land.Cottingv.Stock Yards Co.,183 U.S. 79;Dobbinsv.Los Angeles,195 U.S. 223;Gulf, Colo. c. Ry. v.Ellis,165 U.S. 150;Halterv.Nebraska,205 U.S. 34;Holdenv.Hardy,169 U.S. 366;Lawtonv.Steele,152 U.S. 133;Muglerv.Kansas,123 U.S. 623.
The prohibition does not fall within the police power because it tends to limit extravagance. In regard to sumptuary laws, seeAllnuttv.Inglis, 12 East, 527; Cooley's Blackstone, Book I, p. 125; Cooley's Const. Lim. (7th ed.), p. 549;Ex parteDickey,144 Cal. 234; 2 Farrand's Records of the Fed. Conv. 344;German Alliance Ins. Co. v.Kansas,233 U.S. 389;Humesv.Little Rock, 138 F. 929;Keokee Coke Co. v.Taylor,234 U.S. 224;Noble State Bankv.Haskell,219 U.S. 104;Patsonev.Pennsylvania,232 U.S. 138;Peoplev.Gillson,109 N.Y. 389;17 N.E. 343;Peoplev.Steele,231 Ill. 340;83 N.E. 236;Peoplev.Zimmerman,92 N.Y.S. 497;Pullman Co. v.Knott,35 Sup.Ct. Rep. 2;Exparte Quarg,149 Cal. 79;Seattlev.Dencker,58 Wn. 501;Statev.Fire Creek Coal Co.,33 W. Va. 188; Stickney's State Control, ch. I, and see p. 100; Tiedeman's Pol. Pow., p. 154.
The Act is not brought within the police power because it may foster intermediate concerns.Denverv.Frueauff,39 Colo. 20;Winstonv.Beeson,135 N.C. 271;Commonwealthv.Gibson Co.,125 Ky. 440;Peoplev.Dycker,76 N.Y.S. 111;Peoplev.Zimmerman,92 N.Y.S. 497;Statev.Dalton,22 R.I. 77;Statev.Ramseyer,73 N.H. 31;Statev.Sperry Hutchinson,110 Minn. 378.
The Act denies equal protection of the law because the attempted classification for the purpose of a license tax is purely arbitrary. Casessupraand seeBell's Gap R.R. v.Pennsylvania,134 U.S. 232;Winstonv.Beeson,Page 378135 N.C. 271;Connollyv.Union Sewer Pipe Co.,184 U.S. 540;Ex parte Drexel,147 Cal. 763;Ex parteHutchinson, 137 F. 949;Southern Ry. v.Greene,216 U.S. 400;Sperry Hutchinsonv.Temple, 137 F. 992;Statev.Loomis,115 Mo. 307.
The practice of using premium stamps is legitimate as a method of advertising. The coupon system furnishes a peculiar and legitimate inducement for the return of a customer. Cooperation among merchants in the use of the premium system is lawful and the adjudicated cases have held the classification arbitrary.Montgomeryv.Kelly,142 Ala. 552;Commonwealthv.Gibson Co.,125 Ky. 440;101 S.W. 385;Hewinv.Atlanta,121 Ga. 723;Ex parte McKenna,126 Cal. 429;O'Keeffev.Somerville,190 Mass. 110;VanDeman Lewis Co. v.Rast, 214 F. 827.
If the business or practice is lawful, it may not be prohibited indirectly by a license tax.Connollyv.UnionSewer Pipe Co.,184 U.S. 560; Cooley on Taxation (3d ed.), pp. 260, 1140, 1143;Flintv.Stone Tracy Co.,220 U.S. 107; Harvard Law Review, Vol. XXVI, p. 682;Kehrerv.Stewart,197 U.S. 60;Kirtlandv.Hotchkiss,100 U.S. 491;McCrayv.United States,195 U.S. 27;M'Cullochv.Maryland, 4 Wheat. 316; 3 McQuillin on Mun. Corp., § 1002;Post. Tel. Co. v.Charleston,153 U.S. 692;Spencerv.Merchant,125 U.S. 345;Union Pac. R.R. v.Peniston, 18 Wall. 5;Veazie Bankv.Fenno, 8 Wall. 533;Westonv.Charleston, 2 Pet. 449;Wiggins Ferry Co. v.St. Louis,107 U.S. 365.
Repeated attempts to enact such legislation offer no argument for its constitutionality.Chaddockv.Day,75 Mich. 527;Marburyv.Madison, 1 Cranch, 137.
The "Retail Market Price" provision in the Act renders it unconstitutional. Bishop on Stat. Crimes (2d ed.), § 41;Brownv.State(Wis.),119 N.W. 338;Bucklesv.State,5 Okla. 109;113 P. 244;ChicagoPage 379N.W. Ry. v.Dey, 35 F. 866;Collinsv.Kentucky,234 U.S. 634;Cookv.State(Ind.),59 N.E. 489;Int.Harvester Co. v.Kentucky,234 U.S. 216;Kilbournev.State,84 Ohio St. 247; 2 Lewis' Suth. Stat. Cons. (2d ed.), § 520;Louis. Nash. R.R. v.Commonwealth, 33 L.R.A. 209;Matthewsv.Murphy, 23 Ky. Law Rep. 750;Savagev.Wallace,165 Ala. 572;Tozerv.United States, 52 F. 917.
The Act is invalid because its observance requires the removal of inserts.Asbellv.Kansas,209 U.S. 251;Bettmanv.Warwick, 108 F. 46;Commonwealthv.Sherman Mfg.Co.,75 N.E. 71;Felsenheldv.United States,186 U.S. 126;Halterv.Nebraska,205 U.S. 34;M'Cullochv.Maryland, 4 Wheat. 316;McDermottv.Wisconsin,228 U.S. 115;Mo., Kan. Tex. Ry. v.Haber,169 U.S. 613;Muglerv.Kansas,123 U.S. 623;Nor. Pac. Ry. v.Washington,222 U.S. 370;Peoplev.Van De Carr,178 N.Y. 425;Peoplev.Zimmerman,92 N.Y.S. 497;Savagev.Jones,225 U.S. 501;Second Employers' Liability Cases,223 U.S. 1;Sinnotv.Mobile, 22 How. 227;Smithv.Alabama,124 U.S. 465;Southern Ry. v.Reid,222 U.S. 424;Tex. Pac. Ry. v.Abilene Oil Co.,204 U.S. 426.
Excessive penalty renders Act unconstitutional.Bonnettv.Vallier(Wis.),116 N.W. 885;Cons. Gas Co. v.NewYork, 157 F. 849;Cottingv.Stock Yards,183 U.S. 79;Grenada Co. v.Mississippi,217 U.S. 433;Mo. Pac. Ry. v.Tucker,230 U.S. 340;Portland Ry. v.Portland, 201 F. 119;Reaganv.Farmers' L. T. Co.,154 U.S. 362;Southwestern Oil Co. v.Texas,217 U.S. 114;Statev.Crawford,74 Wn. 248;133 P. 590;UnitedStatesv.Del. Hud. Co.,213 U.S. 366;Waters-Pierce OilCo. v.Texas,212 U.S. 111;Ex parte Young,209 U.S. 123.
The cases ofDist. of Col. v.Kraft,35 App.D.C. 253andLansburghv.Dist. of Col.,11 App.D.C. 512, can be distinguished.Page 380
The charge of discrimination against the statute was decided to be a factor as to its validity. The use of trading stamps and other similar devices was regarded as a legitimate system of advertising and that to distinguish it from other systems of advertising was a violation of the equality clause of the Federal Constitution. And it was said: "As well might the legislature classify separately those who advertise in the columns of the daily papers, by bill boards, or by electrical signs, and impose a tax upon them to the exclusion of others engaged in the same business or calling who do not so advertise."Page 381
In this conclusion we think, for the reasons expressed inRastv.Van Deman Lewis, ante, p. 342, just decided, that the court erred. We have been at pains to summarize the bill in this case to show its similitude to that.
The coupons in this case, in compliance with the law of the State of Washington (Laws of 1907, p. 742), must be redeemed in cash if demanded by the purchaser; otherwise in articles of merchandise selected by him. The redemption of the coupons in some instances is directly by the merchant issuing them; in others, it is alleged, by "a third party, with whom said complainants have a contract for the use of their trading stamps or coupons used in connection therewith and the redemption thereof in merchandise." These differences, however, do not affect the principle announced inRastv.Van Deman Lewis,ante, p. 342. Whether the coupons are prepared by the issuing merchant or prepared by another, whether they be redeemed by him or by another, is but a phase of the system, not affecting its essential character. And we may say here, as we said inRastv.Van Deman Lewis, that we are not concerned with consideration of a business in which coupons, etc., are issued or used and not redeemed in merchandise, that is, where they are used as a rebate upon the price of the article or a discount upon purchases, nor with the legality of a statute which should regulate or prevent such use of the coupons disassociated from other uses of them. Complainants contend for a broad use and assert that there cannot legally be any limitation of their methods of redemption, which they comprehensively denominate the "premium system."
The opinion inRastv.Van Deman Lewis, is, therefore, decisive of the contentions in this case. We said there that there were manifest differences between the "premium system" of advertising and the other methods enumerated and that those differences justified a difference in measures. And this is justified not only by the widePage 382discretion which may be exercised in legislation but by a rigid principle of classification. Classification is not different in law than in other departments of knowledge. "It is the grouping of things in speculation or practice because they `agree with one another in certain particulars and differ from other things in those particulars.'"Billingsv.Illinois,188 U.S. 97,102. Upon what differences or resemblances it may be exercised depends necessarily upon the object in view, may be narrow or wide according to that object. Red things may be associated by reason of their redness, with disregard of all other resemblances or of distinctions. Such classification would be logically appropriate. Apply it further: make a rule of conduct depend upon it and distinguish in legislation between redhaired men and black-haired men and the classification would immediately be seen to be wrong; it would have only arbitrary relation to the purpose and province of legislation. The power of legislation over the subject-matter is hence to be considered. It may not make the distinction adverted to but it may make others the appropriateness of which, considered logically, may be challenged, for instance: between sales of stock upon margin or for immediate or future delivery (Otisv.Parker,187 U.S. 606); between acts directed against a regularly established dealer and one not so established (Central Lumber Co. v.South Dakota,226 U.S. 157); in an inspection law, between coal mines where more than five men are employed and coal mines where that or a lesser number are employed (St. Louis Cons. Coal Co. v.Illinois,185 U.S. 203); and a like distinction in a workmen's compensation law (Jeffrey Mfg. Co. v.Blagg,235 U.S. 571); between a combination of purchasers and a combination of laborers (International Harvester Co. v.Missouri,234 U.S. 199); between residents and non-residents (Travellers' Ins. Co. v.Connecticut,185 U.S. 364); in a law requiring railroads to heat passenger coaches, between roads of 50 miles andPage 383roads of that length or less (N.Y., N.H. H.R.R. v.NewYork,165 U.S. 628; see alsoDowv.Beidleman,125 U.S. 680;Postal Telegraph Co. v.Adams,155 U.S. 688); between theatres according to the price of admission (Metropolis TheatreCo. v.Chicago,228 U.S. 61); between land owners as to liability for permitting certain noxious grasses to go to seed on the lands (Missouri, Kansas Texas Ry. v.May,194 U.S. 267); between businesses, in the solicitation of patronage on railroad trains and at depots (Williamsv.Arkansas,217 U.S. 79); and a distinction based on the evidence of the qualifications of physicians (Watsonv.Maryland,218 U.S. 173,179).
Those were instances (and others might be cited) of the regulation of conduct and the restriction of its freedom, it being the conception of the legislature that the regulation and restriction was in the interest of the public welfare. Those classifications were sustained as legal, being within the power of the legislature over the subject-matter, and having proper bases of community.
But the classification which was sustained inSt. Louis CoalCo. v.Illinois,185 U.S. 203, was condemned inTruaxv.Raich,239 U.S. 33. The statute in the latter case required employers of more than five workers at any one time to employ not less than 80% qualified electors or native born citizens of the United States or of some subdivision of such. The statute was held void because there was no authority to deal with that at which the legislation was aimed. And this is important to be kept in mind. If there is no such authority, a classification, however logical, appropriate or scientific, will not be sustained; if such authority exist, a classification may be deficient in those attributes, may be harsh and oppressive, and yet be within the power of the legislature. This has been declared many times. Let us apply the test to the case at bar. Let it be granted that the "premium system" is a method of advertising, can there not be differences in advertisingPage 384which may be subject to differences in legislation? Can there not be advertising at places or at times or in kind or effect subversive of public order or convenience?Fifth Ave. Coach Co. v.New York,221 U.S. 467;Commonwealthv.McCafferty,145 Mass. 384. However, a decisive answer to the questions, need not be given, for we have said, inRastv.Van DemanLewis, ante, p. 342, that the "premium system" is not one of advertising merely. It has other, and, it may be, deleterious, consequences. It does not terminate with the bringing together of seller and buyer, the profit of one and the desire of the other satisfied, the article bought and its price being equivalents. It is not so limited in purpose or effect. It has ulterior purpose, and how it has developed complainants vividly represent by their averments. It appears that companies are formed, called trading stamp companies,1which extend and facilitate the schemes, making a seller of merchandise their agent for the distribution of stamps to be redeemed by them or other merchants, the profit of all being secured through the retail purchaser who has been brought under the attraction of the system. There must, therefore, be something more in it than the giving of discounts, something more than the mere laudation of wares. If companies — evolved from the system, as counsel say in justification of them — are able to reap a profit from it, it may well be thought there is something in it which is masked from the common eye and that the purchaser at retail is made to believe that he can get more out of the fund than he has put into it, something of value which is not offset in the prices or quality of the articles which he buys. It is certain that the prices he pays make thePage 385efficiency of the system and the fund, if we may individualize it, out of which the cost of the instruments and agents of the system must be defrayed and the profit to all concerned paid. The system, therefore, has features different from the ordinary transactions of trade which have their impulse, as we have said, in immediate and definite desires having definite and measurable results. There may be in them at times reckless buying, but it is not provoked or systematized by the seller.
Complainants charge that the tax of the statute is not upon the business but upon its incidents. The separation is artificial. It is the incidents which give character to the business, affecting it with evil, it was thought, provoking therefore against it the power of the State and taking away from it the immunity it else might have.
It is unimportant what the incidents may be called, whether a method of advertising, discount giving or profit sharing. Their significance is not in their designations but in their influence upon the public welfare. And of this the judgment of the legislature must prevail, though it be controverted and opposed by arguments of strength. Nor is there support of the system or obstruction to the statute in declamation against sumptuary laws, nor in the assertion that there is evil lesson in the statute, nor in the prophecies which are ventured of more serious inter-meddling with the conduct of business. Neither the declamation, the assertion nor the prophecies can influence a present judgment. As to what extent legislation should interfere in affairs political philosophers have disputed and always will dispute. It is not in our province to engage on either side, nor to pronounce anticipatory judgments. We must wait for the instance. Our present duty is to pass upon the statute before us, and if it has been enacted upon a belief of evils that is not arbitrary we cannot measure their extent against the estimate of the legislature.McLeanv.Arkansas,211 U.S. 539. Such beliefPage 386has many examples in state legislation and, we have seen, it has persisted against adverse judicial opinion. If it may be said to be a judgment from experience as against a judgment from speculation, certainly, from its generality, it cannot be declared to be made in mere wantonness.Central Lumber Co. v.South Dakota,226 U.S. 157,160;Purity Extract Co. v.Lynch,226 U.S. 192,204-205.
Discrimination aside, the power to enact the legislation we need not discuss, but may refer to the opinion inRastv.VanDeman Lewis. Of course, it is in the exercise of the police power of the State. We will not here define it or its limitations. As was said by Mr. Justice Brown, inCamfieldv.United States,167 U.S. 518,524, citingRideoutv.Knox,148 Mass. 368, "The police power is not subject to any definite limitations, but is coextensive with the necessities of the case and the safeguard of the public interests."
In the view that the license is prohibitive we may concur, and concede that such is the effect given it by the Supreme Court of the State inPitneyv.Washington, post, p. 387, one of the cases submitted with this one. And we think it was competent for the State to give it that effect. The cases cited by Judge Rudkin and those cited in the opinion inRastv.Van Deman Lewis,ante, p. 342, so established.
For answer to the other contentions which we consider material to notice we refer to that case.Decree reversed and case remanded with directions to dismissthe bill.Page 387
- Page 384Lansburghv.District of Columbia,11 App.D.C. 512;Attorney Generalv.Sperry Hutchinson Co.,110 Minn. 378;Louisianav.C.A. Underwood or Southern MerchandiseExchange, decided October 18, 1915, by the Supreme Court of Louisiana;Hewinv.Atlanta,121 Ga. 723. ↩