If a claim is made in the circuit court that a state enactment
is invalid under the Constitution of the United States, and that
claim is sustained or rejected, this Court may review the judgment
at the instance of the unsuccessful party.
If the alleged combination in this case was illegal, it would
not follow that they could, at common law, refuse to pay for pipes
bought for them under special contracts.
The contracts between the plaintiff and the respective
defendants were collateral to the agreement between the plaintiff
and other corporations, etc., whereby an illegal combination was
formed for the sale of sewer pipe.
The first special defense in this case, based alone upon the
principles of the common law, was properly overruled.
The special defense, based upon the Act of Congress of July 2,
1890, 26 Stat. 209, was also properly rejected. That act does not
declare illegal or void any sale made by such combination or its
agents of property acquired for the purpose of being sold, such
property not being at the time in the course of transportation from
one state to another, or to a foreign country, and the buyer could
not refuse to comply with his contract of purchase upon the ground
that the seller was an illegal combination, which might be
restrained or suppressed in the mode prescribed by the act of
Congress.
The case is stated in the opinion of the court.
Page 184 U. S. 541
MR. JUSTICE HARLAN delivered the opinion of the Court.
The Union Sewer Pipe Company -- a corporation organized under
the laws of Ohio and doing business in Illinois -- brought its
action against Thomas Connolly, a citizen of Illinois, in the
Circuit Court of the United States for the Northern District of
Illinois, on two negotiable promissory notes both executed at
Chicago by the defendant; one, dated December 15, 1894, the other
dated January 15, 1895, and each payable to the order of the
plaintiff corporation ninety days after date at the First National
Bank of Chicago.
These notes were given on account of the purchase by the
defendant from the plaintiff of sewer pipe commonly known as
standard Akron pipe at prices agreed upon between the parties.
The pipe company also brought an action in the same court
against William E. Dee, a citizen of Illinois, upon an open account
for $2,389.26, the value at agreed prices of certain pipe purchased
by him from the plaintiff in June, 1896. The plaintiff supplied the
pipe under a written contract executed between it and the defendant
in Illinois under date of August, 1895.
Each of the defendants filed a plea of the general issue, with
notice of special defenses and of set-off.
The special defenses in each case were substantially the same.
The notice in the
Connolly case was that the defendant on
the trial of the action would rely on these special matters:
"First. That the plaintiff is, and at all times since about the
first day of January, 1893, has been, a trust or combination of the
capital, skill, and acts of divers persons and corporations
carrying on a commercial business in the States of Ohio and
Illinois and between said states and elsewhere in the United States
of America, and organized for the express purpose of unlawfully and
contrary to the common law creating and carrying out restrictions
in trade, to-wit, in the trade of buying, selling, and otherwise
dealing in certain articles of merchandise, to-wit, sewer, and
drainage pipes, and also for the express purpose of
Page 184 U. S. 542
unlawfully and contrary to the common law limiting the
production of said articles of merchandise and increasing the
market price thereof, and also for the express purpose of
unlawfully and contrary to the common law preventing competition in
the manufacture, making, transportation, sale, or purchase of said
articles of commerce; also for the express purpose of unlawfully
and contrary to the common law fixing standards or figures whereby
the prices of said articles of merchandise intended for sale, use,
and consumption in this state should be controlled and established,
and also for the express purpose of unlawfully and contrary to the
common law being a pretended agency whereby the sale of said
articles of commerce should and might be covered up and made to
appear to be for the original vendors thereof, and so as to enable
the original vendors or manufacturers thereof to control the
wholesale and retail price of such articles of commerce after the
title thereto had passed from such vendors or manufacturers, and
for the further express purpose of unlawfully and contrary to the
common law making and entering into and carrying out a certain
contract or certain contracts by which the several persons or
corporations forming the plaintiff, or being the pretended
stockholders thereof, to they have agreed to keep the prices of
said of, or transport said articles of commerce below certain
common standard figures or card or list prices in excess of the
true market values thereof, and by which they have agreed to keep
the prices of said articles of commerce at certain fixed or
graduated figures, and by which they have established certain
settled prices of said articles of commerce between themselves and
others, so as to preclude a free and unrestricted competition among
themselves and others in the sale and transportation of said
articles of commerce, and by which they have agreed to pool,
combine, and unite any interests they may have in connection with
the sale and transportation of said articles of commerce so that
the prices thereof may effect advantageously to themselves; that
all of the claims of the plaintiff against the defendant in this
action arise wholly out of, and are in respect of, sales of said
articles of merchandise made between the 1st day of January, A.D.
1893, and the 1st day of March, 1896, to this defendant by
Page 184 U. S. 543
the plaintiff in the ordinary course of its business as such a
trust or combination acting as aforesaid, and that this action is
brought to recover the alleged price thereof and for no other
purpose."
"Secondly. That the plaintiff is, and at all times since the 1st
day of January, 1893, was, a combination in the form of a trust, in
restraint of trade and commerce among the several states, and doing
business as such throughout the United States and between the
States of Ohio and Illinois, contrary to the provisions of an Act
of Congress of date of July 2, 1890, and entitled 'An Act to
Protect Trade and Commerce against Unlawful Restraints and
Monopolies,' and that this action is brought solely to recover the
price of articles of merchandise, to-wit, sewer and drainage pipes,
sold to the defendant by the plaintiff, then and there acting and
doing business as such a combination, as aforesaid, in violation of
the provisions of said act."
"Thirdly. That the plaintiff is, and at all times since the 1st
of January, 1893, was, a trust doing business as such in the State
of Illinois and elsewhere, contrary to the provisions of an act of
the Legislature of the State of Illinois entitled"
"An Act to Define Trusts and Conspiracies against Trade,
Declaring Contracts in Violation of This Provision Void, and Making
Certain Acts and Violations Thereof Misdemeanors, and Prescribing
Punishment Thereof and Matters Connected Therewith, Approved June
20, 1893, in Force July 1, 1893;"
"that this action is brought solely to recover the price of
articles of merchandise, to-wit, sewer and drainage pipes, sold to
the defendant by the plaintiff, then and there acting and doing
business in violation of the provisions of said act, and that the
defendant hereby pleads said act in defense to this action and the
whole thereof."
The set-offs claimed by Connolly were: treble the amount of the
actual damages sustained and allowed by the act of Congress of July
2, 1890, c. 647, known as the Sherman Anti-Trust Act, $56,970.44;
actual damages sustained by reason of the violation by the
plaintiff of the provisions of the Illinois statute of July 1,
1893, $17,323.48, and for money had and received by plaintiff of
defendant contrary to law, $17,323.48.
The set-offs claimed by Dee were of like character, but of
larger amounts.
Page 184 U. S. 544
Both cases were, by agreement, submitted to the same jury, and
were treated as one consolidated case. At the trial, the defendants
respectively asked leave to amend their notices of special
defenses, but leave was denied.
The circuit court disallowed both the first and second of the
above special defenses, and in respect of the third, its decision
was that the Illinois Trust Statute of 1893 was in violation of the
Constitution of the United States. It consequently directed the
jury to find a verdict for the plaintiff in each case, in the
Connolly case for the amount of the two notes sued on, in
the
Dee case for the amount of the plaintiff's open
accounts against him. Verdicts having been returned as directed,
and a motion for new trial in one case, and motions for new trial
and in arrest of judgment in the other, having been overruled,
judgments were entered on the verdicts.
1. The defendant in error insists that these cases should have
gone to the circuit court of appeals, and has moved on that ground
that the writ of error be dismissed. The defense in each case was
based in part on the Illinois statute of 1893. The plaintiff
insisted at the trial that that statute was in violation of the
Constitution of the United States, and its position was sustained
by the circuit court. There have been suits in which the circuit
court, upon the claim of the defendant, has applied the
Constitution of the United States to the case before it, and put
the plaintiff out of court. Here, the plaintiff claimed that the
state enactment upon which defendants relied was unconstitutional,
and its position upon that point was sustained. In
Loeb v.
Columbia Township Trustees, 179 U. S. 47,
this Court said:
"The circuit Court of Appeals Act does not declare that the
final judgment of a circuit court in a case in which there was a
claim of the repugnancy of a state statute to the Constitution of
the United States may be reviewed here only upon writ of error sued
out by the party making the claim. In other words, if a claim is
made in the circuit court, no matter by which party, that a state
enactment is invalid under the Constitution of the United States,
and that claim is sustained or rejected, then it is consistent with
the words of the act, and, we think, in harmony with its object,
that this Court
Page 184 U. S. 545
review the judgment at the instance of the unsuccessful party,
whether plaintiff or defendant. It was the purpose of Congress to
give opportunity to an unsuccessful litigant to come to this Court
directly from the circuit court in every case in which a claim is
made that a state law is in contravention of the Constitution of
the United States."
Upon the authority of that case, the motion to dismiss is
denied.
2. The defendant Connolly purchased Akron sewer pipe from the
plaintiff, and for the agreed price thereof gave the two promissory
notes upon which he was sued. The defendant Dee also purchased
Akron sewer pipe at an agreed price as shown by the account upon
which he was sued. Each defendant disputed his liability to the
plaintiff upon the ground that, prior to the making of the
contracts with the defendants respectively for pipe, the plaintiff
corporation entered into a combination with certain firms,
corporations, and companies engaged in Ohio in the manufacture of
Akron pipe, which combination, it is alleged, was in illegal
restraint of trade, and therefore forbidden by the principles of
the common law as recognized and enforced both in Ohio and
Illinois.
This defense cannot be maintained. Assuming, as defendants
contend, that the alleged combination was illegal if tested by the
principles of the common law, still it would not follow that they
could, at common law, refuse to pay for pipe bought by them under
special contracts with the plaintiff. The illegality of such
combination did not prevent the plaintiff corporation from selling
pipe that it obtained from its constituent companies or either of
them. It could pass a title by a sale to anyone desiring to buy,
and the buyer could not justify a refusal to pay for what he bought
and received by proving that the seller had previously, in the
prosecution of its business, entered into an illegal combination
with others in reference generally to the sale of Akron pipe.
In
Strait v. National Harrow Co., 51 F. 819, a suit in
which the plaintiffs sought a permanent injunction restraining the
defendant from instituting or prosecuting any action against the
plaintiffs for the infringement of letters patent owned by the
defendant covering certain improvements in spring-tooth harrows
Page 184 U. S. 546
or from instituting or prosecuting any such suits against any
person using the spring-tooth harrows manufactured by the
plaintiffs, the court said:
"In substance, the complaint shows that the defendant has
entered into a combination with various other manufacturers of
spring-tooth harrows for the purpose of acquiring a monopoly in
this country in the manufacture and sale of the same, and, as an
incident thereto, has acquired all the rights of the other
manufacturers for the exclusive sale and manufacture of such
harrows under patents, or interests in patents, owned by them
respectively. Such a combination may be an odious and wicked one,
but the proposition that the plaintiffs, while infringing the
rights vested in the defendant under letters patent of the United
States, is entitled to stop the defendant from bringing or
prosecuting any suit therefor because the defendant is an obnoxious
corporation, and is seeking to perpetuate the monopoly which is
conferred upon it by its title to the letters patent, is a novel
one, and entirely unwarranted. The party having such a patent has a
right to bring suit on it not only against a manufacturer who
infringes, but against dealers and users of the patented article,
if he believes the patent is being infringed, and the motive which
prompts him to sue is not open to judicial inquiry, because, having
a legal right to sue, it is immaterial whether his motives are good
or bad, and he is not required to give his reasons for the attempt
to assert his legal rights. 'The exercise of the legal right cannot
be affected by the motive which controls it.'
Kiff v.
Youmans, 86 N.Y. 329."
In
National Distilling Co. v. Cream City Importing Co.,
86 Wis. 352, 355, which was an action to recover the price of goods
sold and delivered, one of the defenses was the plaintiff was a
member of an illegal trust or combination to interfere with the
freedom of trade and commerce. The Supreme Court of Wisconsin
said:
"The first defense does not deny any allegation of the
complaint, but the substance of it is that the sale and delivery of
the goods in question to the defendant was void as against public
policy because the vendor was at the time a member of an unlawful
trust or combination, formed to unlawfully interfere with the
freedom of trade and commerce
Page 184 U. S. 547
and in restraint thereof and to accomplish the ends therein set
forth. . . . Conceding for the purposes of this case that the trust
or combination in question may be illegal, and its members may be
restrained from carrying out the purposes for which it was created
by a court of equity in a suit on behalf of the public, or may be
subject to indictment and punishment, there is nevertheless no
allegation showing or tending to show that the contract of sale
between the plaintiff and defendant was tainted with any illegality
or was contrary to public policy. The argument, if any the case
admits of, is that, as the plaintiff was a member of the so-called
'trust,' or 'combination,' the defendant might voluntarily purchase
the goods in question of it at any agreed price and convert them to
its own use, and be justified in a court of justice in its refusal
to pay the plaintiff for them because of the connection of the
vendor with such trust or combination. The plaintiff's cause of
action is in no legal sense dependent upon or affected by the
alleged illegality of the trust or combination, because the
illegality, if any, is entirely collateral to the transaction in
question, and the court is not called upon in this action to
enforce any contract tainted with illegality, or contrary to public
policy. The mere fact that the plaintiff is a member of a trust or
combination created with the intent and purposes set forth in the
answer will not disable or prevent it in law from selling goods
within or affected by the provisions of such trust or combination
and recovering their price or value. It does not appear that it had
stipulated to refrain from such transactions. A contrary doctrine
would lead to most startling and dangerous consequences."
That case was cited with approval by the Circuit Court of
Appeals for the Seventh Circuit in
Dennehy v. McNulta, 86
F. 825, 827-829. In that case, the court said:
"The mere fact that the corporation, as one of the contracting
parties, may constitute an unjust monopoly, and that its general
business is illegal -- a status apparently held in
Distilling
& Cattle Feeding Co. v. People, 156 Ill. 448, cannot serve
ipso facto to create default or liability on its contracts
generally, nor can such fact be invoked collaterally to affect in
any
Page 184 U. S. 548
manner its independent contract obligations."
Again:
"In the case of an injurious combination of the nature asserted
here, the remedy is by well recognized and direct proceedings; but
one who voluntarily and knowingly deals with the parties so
combined cannot, on the one hand, take the benefit of his bargain,
and, on the other, have a right of action against the seller for
the money paid, or any part of it, either upon the ground that the
combination is illegal or that its prices were unreasonable."
It is undoubtedly the general rule that a contract made in
violation of a statute is void, and no recovery can be had upon it,
as in
Embrey v. Johnson, 131 U. S. 336,
131 U. S. 348.
That was an action upon a promissory note given in execution of a
contract for the purchase of "future delivery" cotton, neither the
purchase nor delivery of actual cotton being contemplated by the
parties, but the settlement in respect to which was to be on the
basis of the "difference" between the contract price and the market
price of cotton futures, according to the fluctuations in the
markets. The contract was held to be a wagering contract, and
therefore illegal and void. As there could be no recovery upon the
original agreement without disclosing the fact that it was illegal,
and one that could not, for that reason, be enforced or made the
basis of a judgment, it was held that attention could not be
withdrawn from the illegality of the contract by the device of
taking notes for the amount claimed under that contract. So in
Miller v. Ammon, 145 U. S. 421,
145 U. S. 427.
That was an action to recover the value of 1,125 gallons of wines
sold in Chicago by one who had not obtained a license to sell
liquors at all -- an ordinance of that city expressly declaring
that no person, firm, or corporation should sell or offer for sale
"any spirituous or vinous liquors in quantities of one gallon or
more at a time, within the city, without having first obtained a
license therefor," under a penalty of not less than $50 or more
than $200 for each offense. It was held that the action could not
be maintained, because "an act done in disobedience to the law
creates no right of action which a court of justice will enforce."
In that case, the sale from which it was attempted to imply the
promise of the buyer to pay for what
Page 184 U. S. 549
he received was itself expressly forbidden by law under a
penalty. The action there was upon the sale, and there was a direct
connection between it and the purchase of the wines. So again, in
McMullen v. Hoffman, 174 U. S. 639,
174 U. S. 654,
after an extended review of the cases, American and English, the
Court said:
"The authorities from the earliest time to the present
unanimously held that no court will lend its assistance in any way
toward carrying out the terms of an illegal contract."
In the present case, other considerations must control. This is
not an action to enforce or which involves the enforcement of the
alleged arrangement or combination between the plaintiff
corporation and other corporations, firms, and companies in
relation to the sale of Akron pipe. As already suggested, the
plaintiff, even if part of a combination illegal at common law, was
not for that reason forbidden to sell property it acquired or held
for sale. The purchases by the defendants had no necessary or
direct connection with the alleged illegal combination, for the
contracts between the defendants and the plaintiff could have been
proved without any reference to the arrangement whereby the latter
became an illegal combination. If, according to the principles of
the common law, the Union Sewer Pipe Company could not have sold or
passed title to any pipe it received and held for sale because of
an illegal arrangement previously made with other corporations,
firms, or companies, a different question would be presented. But
we are aware of no decision to the effect that a sale similar to
that made by the present plaintiff to the defendants respectively
would, in itself, be illegal or void under the principles of the
common law. The contracts between the plaintiff and the respective
defendants were in every sense collateral to the alleged agreement
between the plaintiff and other corporations, firms, or
associations whereby an illegal combination was formed for the sale
of sewer pipe.
We are of opinion that the first special defense, based alone
upon the principles of the common law, was properly overruled.
3. The special defense based upon the act of Congress of July 2,
1890, c. 647, 26 Stat. 209, was also properly rejected.
Page 184 U. S. 550
That act declares illegal
"every contract, combination in form of trust or otherwise, or
conspiracy in restraint of trade or commerce among the several
states, or with foreign nations,"
every person making any such contract or engaging in any such
conspiracy being subject to a fine not exceeding $5,000, or to
imprisonment not exceeding one year, or to both punishments in the
discretion of the court. § 1. So, every person monopolizing or
attempting to monopolize, or combining or conspiring with any other
person or persons to monopolize, any part of the trade or commerce
among the several states or with foreign nations, is liable by that
act to the like penalties in the discretion of the court. § 2. The
several circuit courts of the United States are invested with
jurisdiction to prevent and restrain violations of its provisions.
§ 4. Any property owned under any contract or by any combination or
pursuant to any conspiracy (and being the subject thereof), and
being in the course of transportation from one state to another or
to a foreign country, is subject to be forfeited, seized, and
condemned. § 6. By another section, it is declared:
"Any person who shall be injured in his business or property by
any other person or corporation by reason of anything forbidden or
declared to be unlawful by this act may sue therefor in any circuit
court of the United States in the district in which the defendant
resides or is found, without respect to the amount in controversy,
and shall recover threefold the damages by him sustained, and the
costs of suit, including a reasonable attorney's fee."
§ 7.
Much of what has just been said in reference to the first
special defense, based on the common law, is applicable to this
part of the case. If the contract between the plaintiff corporation
and the other named corporations, persons, and companies, or the
combination thereby formed, was illegal under the act of Congress,
then all those, whether persons, corporations, or associations,
directly connected therewith, became subject to the penalties
prescribed by Congress. But the act does not declare illegal or
void any sale made by such combination, or by its agents, of
property it acquired or which came into its possession for the
purpose of being sold, such property not being at the
Page 184 U. S. 551
time in the course of transportation from one state to another
or to a foreign country. The buyer could not refuse to comply with
his contract of purchase upon the ground that the seller was an
illegal combination which might be restrained or suppressed in the
mode prescribed by the act of Congress, for Congress did not
declare that a combination illegally formed under the act of 1890
should not, in the conduct of its business, become the owner of
property which it might sell to whomsoever wished to buy it. So
that there is no necessary legal connection here between the sale
of pipe to the defendants by the plaintiff corporation and the
alleged arrangement made by it with other corporations, companies,
and firms. The contracts under which the pipe in question was sold
were, as already said, collateral to the arrangement for the
combination referred to, and this is not an action to enforce the
terms of such arrangement. That combination may have been illegal,
and yet the sale to the defendants was valid.
In the case of
The Charles E. Wisewall, 74 F. 802,
which was a libel
in rem by certain tug owners against a
steam dredge to recover the value of certain services rendered by
the tug in towing the dredges, it was sought to avoid payment for
the services thus rendered upon the ground that the tug owners were
members of an association which was illegal and void under the
Sherman Act. The court, assuming that the agreement by which the
tugs acted in unison was prohibited by that act, said:
"He [the claimant] should not be permitted to repudiate his just
debts to the individual tugs because their association was illegal.
Having asked for their services and having accepted the benefit
thereof, he should pay. . . . An agreement by the tug
Mayflower to tow the dredge
Wisewall, for a
reasonable sum, from Albany to Troy, is not void because the
Mayflower is associated with other tugs to regulate the
price of towing at Albany. Should the claimant purchase a pair of
trousers at an Albany clothing shop, he would find it difficult to
avoid paying their actual market value because the vendor and other
tailors of that city had combined to keep up prices."
Nor can the defendants refuse to pay for what they bought upon
the ground that the seventh section of the Sherman Act
Page 184 U. S. 552
gives the right to any person "injured in his business or
property by any other person or corporation by reason of anything
forbidden or declared to be unlawful" by the act, to sue and
recover treble the damages sustained by him. We shall not now
attempt to declare the full scope and meaning of that section of
the act of Congress. It is sufficient to say that the action which
it authorizes must be a direct one, and the damages claimed cannot
be set off in these actions based upon special contracts for the
sale of pipe that have no direct connection with the alleged
arrangement or combination between the plaintiff and other
corporations, firms, or companies. Such damages cannot be said, as
matter of law, to have directly grown out of that arrangement or
combination, and are, besides, unliquidated. Besides, it is well
settled in Illinois that "unliquidated damages arising out of
covenants, contracts, or torts disconnected with plaintiff's claim
cannot be set off under the statute."
Robison v. Hibbs, 48
Ill. 408, 409-410;
Hawks v. Lands, 8 Ill. 227, 232;
Hubbard v. Rogers, 64 Ill. 434, 437;
Evans v.
Hughey, 76 Ill. 115, 120;
Clause v. Bullock Printing Press
Co., 118 Ill. 612, 617;
Dushane v. Benedict,
120 U. S. 630,
120 U. S. 648.
If the act of Congress expressly authorized one who purchased
property from a combination organized in violation of its
provisions to plead, in defense of a suit for the price, the
illegal character of the combination, that would present an
entirely different question. But the act contains no such
provision.
4. We come now to the consideration of the defense based upon
the Trust Statute of Illinois of 1893.
As that statute is alleged to be repugnant to the Constitution
of the United States, and that its full scope may be seen, it is
here given in full:
"§ 1. That a trust is a combination of capital, skill, or acts
by two or more persons, firms, corporations, or associations of
persons, or of two or more of them for either, any, or all of the
following purposes: first, to create or carry out restrictions in
trade; second, to limit or reduce the production, or increase or
reduce the price of merchandise or commodities; third, to prevent
competition in manufacture, making, transportation, sale, or
purchase of merchandise, produce, or commodities;
Page 184 U. S. 553
fourth, to fix at any standard or figure whereby its price to
the public shall be in any manner controlled or established upon
any article or commodity of merchandise, produce, or manufacture
intended for sale, use, or consumption in this state; or to
establish any pretended agency whereby the sale of any such article
or commodity shall be covered up and made to appear to be for the
original vendor, for a like purpose or purposes, and to enable such
original vendor or manufacturer to control the wholesale or retail
price of any such article or commodity after the title to such
article or commodity shall have passed from such vendor or
manufacturer; fifth, to make or enter into, or examine or carry
out, any contract, obligation, or agreement of any kind or
description by which they shall bind or have bound themselves not
to sell, dispose of, or transport any article or commodity, or
article of trade, use, merchandise, commerce, or consumption below
a common standard figure, or card or list price, or by which they
shall agree in any manner to keep the price of such article,
commodity, or transportation at a fixed or graduated figure, or by
which they shall in any manner establish or settle the price of any
article or commodity or transportation between them or themselves
and others to preclude a free and unrestricted competition among
themselves or others in the sale or transportation of any such
article or commodity, or by which they shall agree to pool,
combine, or unite any interest they may have in connection with the
sale or transportation of any such article or commodity that its
price might in any manner be affected."
"§ 2. That any corporation holding a charter under the laws of
this state which shall violate any of the provisions of this act
shall thereby forfeit its charter and franchise, and its corporate
existence shall cease and determine."
"§ 3. For a violation of any of the provisions of this act by
any corporation mentioned herein, it shall be the duty of the
attorney general or prosecuting attorney, upon his own motion, to
institute suit or
quo warranto proceedings at any county
in this state in which such corporation exists, does business, or
may have a domicil, for the forfeiture of its charter rights and
franchise, and the dissolution of its corporate existence. "
Page 184 U. S. 554
"§ 4. Every foreign corporation violating any of the provisions
of this act is hereby denied the right and prohibited from doing
any business within this state, and it shall be the duty of the
attorney general to enforce this provision by injunction or other
proper proceedings, in any county in which such foreign corporation
does business, in the name of the state on his relation."
"§ 5. Any violation of either or all of the provisions of
section 1 of this act shall be and is hereby declared to be a
conspiracy against trade, and a misdemeanor, and any person who may
be or may become engaged in any such conspiracy, or take part
therein, or aid or advise in its commission, or who shall, as
principal, manager, director, agent, servant, or employee, or in
any other capacity, knowingly carry out any of the stipulations,
purposes, prices, rates, orders thereunder, or in pursuance
thereof, shall be punished by fine not less than two thousand
dollars or more than five thousand dollars."
"§ 6. In any indictment or information for any offense named in
this act, it is sufficient to state the purposes and effects of the
trust or combination, and that the accused was a member of, acted
with or in pursuance of it, without giving its name or description,
or how or where it was created."
"§ 7. In prosecutions under this act, it shall be sufficient to
prove that a trust or combination as defined herein exists, and
that the defendant belonged to it or acted for or in connection
with it, without proving all the members belonging to it, or
proving or producing any article of agreement or any written
instrument on which it may have been based, or that it was
evidenced by any written instrument at all."
"§ 8. That any contract or agreement in violation of the
provisions of this act shall be absolutely void and not enforceable
either in law or equity."
"§ 9. The provisions of this act
shall not apply to
agricultural products or livestock while in the hands of the
producer or raiser."
"§ 10. Any purchaser of any article or commodity, from any
person, firm, corporation, or association of persons, or of two or
more of them, transacting business contrary to any provision of the
preceding sections of this act, shall not be liable for the
Page 184 U. S. 555
price or payment of such article or commodity, and may plead
this act as a defense to any suit for such price or payment."
Laws, Ill. 1893, p. 182, Act of June 20, 1893; Hurd's
Rev.Stat.Ill. (1899), 0. 618, title "Criminal Code."
Some reference was made to the Act of the Legislature of
Illinois approved June 10, 1897, amending an Act approved June 11,
1891, in force July first, 1891, relating to the punishment of
persons, partnerships, or corporations forming pools, trusts, and
combines, and prescribing the mode of procedure and rules of
evidence in such cases. The act of 1897 amended section one of the
act of 1891 so as to read:
"If any corporation organized under the laws of this or any
other state or country for transacting or conducting any kind of
business in this state, or any partnership or individual or other
association of persons whosoever, shall create, enter into, become
a member of or a party to any pool, trust, agreement, combination,
confederation, or understanding with any other corporation,
partnership, individual, or any other person or association of
persons, to regulate or fix the price of any article of merchandise
or commodity, or shall enter into, become a member of, or party to
any pool, agreement, contract, combination, or confederation to fix
or limit the amount or quantity of any article, commodity, or
merchandise to be manufactured, mined, produced, or sold in this
state, such corporation, partnership, or individual or other
association of persons shall be deemed and adjudicated guilty of a
conspiracy to defraud, and be subject to indictment and punishment
as provided in this act: provided, however, that in the mining,
manufacture, or production of articles of merchandise the cost of
which is mainly made up of wages, it shall not be unlawful for
persons, firms, or corporations doing business in this state to
enter into joint arrangements of any sort the principal object or
effect of which is to maintain or increase wages."
As this act of 1897 was passed after the date of the
transactions here involved, it has nothing to do with the present
case. Besides, the special defense was based on the act of 1893.
The act of 1897 is referred to only as showing the exemption of
another class from the operation of the general law relating to
pools, trusts, combinations, and confederations organized
Page 184 U. S. 556
to regulate prices of articles, commodities, and merchandise.
Laws, Ill. 1897, c. 38, p. 153; Hurd's Revised Statutes of
Illinois, pp. 615, 639.
That the arrangement or combination made between the Union Sewer
Pipe Company and other companies, corporations, and firms created
such a trust as the Illinois statute forbids is manifest from the
evidence in the record. It is equally clear that, if the plaintiff
was an Illinois corporation, its charter could be forfeited and an
end put to its corporate existence by proceedings instituted by the
attorney general of the state. §§ 1, 2, and 3. It is also clear
that, if the statute is not altogether invalid, the defendants
could plead nonliability for the pipe purchased by them upon the
ground that the plaintiff was, under the statute of Illinois, an
illegal combination, and the contracts which it made with the
defendants were void. §§ 8, 10. The statute expressly authorizes
such a defense. In that particular, the defense based upon the
statute of Illinois differs from the other special defenses.
The vital question, however, is whether the statute of Illinois
of 1893 is not inconsistent with the Constitution of the United
States by reason of the fact that, by the ninth section, it
declares that "the provisions of this act shall not apply to
agricultural products or livestock while in the hands of producer
or raiser." The circuit court held this section to be repugnant to
the Fourteenth Amendment of the Constitution of the United States,
and to be so connected and interwoven with other sections that its
invalidity affected the entire act.
Looking specially at its provisions, it will be seen that, so
far as the statute is concerned, two or more agriculturalists or
two or more livestock raisers may, in respect of their products or
livestock in hand, combine their capital, skill, or acts for the
purpose of creating or carrying out restrictions in the sale of
such products or livestock; or limiting, increasing, or reducing
their price; or preventing competition in their sale or purchase,
or fixing a standard or figure whereby the price thereof to the
public may be controlled, or making contracts whereby they would
become bound not to sell or dispose of such agricultural products
or livestock below a common standard figure
Page 184 U. S. 557
or card or list price, or establishing the price of such
products or stock in hand, so as to preclude free and unrestricted
competition among themselves or others, or, by agreeing to pool,
combine, or unite any interest they may have in connection with the
sale or transportation of their products or livestock that the
price might be affected. All this, so far as the statute is
concerned, may be done by agriculturalists or livestock raisers in
Illinois without subjecting them to the fine imposed by the
statute. But exactly the same things, if done by two or more
persons, firms, corporations, or associations of persons who shall
have combined their capital, skill, or acts, in respect of their
property, merchandise, or commodities held for sale or exchange, is
made by the statute a public offense, and every principal, manager,
director, agent, servant, or employee knowingly carrying out the
purposes, stipulations, and orders of such combination is
punishable by a fine of not less than two thousand dollars nor more
than five thousand dollars. Is not this such discrimination against
those engaged in business (other than the sale of agricultural
products and livestock in the hands of producers and raisers) as is
forbidden by that clause of the Fourteenth Amendment which declares
that "no state shall . . . deny to any person within its
jurisdiction the equal protection of the laws?"
By section 26 of a statute of Illinois, it is provided:
"Foreign corporations, and the officers and agents thereof,
doing business in this state shall be subjected to all the
liabilities, restrictions, and duties that are or may be imposed
upon corporations of like character organized under the general
laws of this state, and shall have no other or greater powers."
1 Starr & Curtis 619. The contracts upon which these suits
are based were made in Illinois. The purpose of the above statute
was
"to produce uniformity in the powers, liabilities, duties, and
restrictions of foreign and domestic corporations of like
character, and bring them all under the influence of the same
law."
Stevens v. Pratt, 101 Ill. 206;
Farmers' Loan and
Trust Co. v. Lake Street Elevated R. Co., 173 Ill. 439. These
matters are called to our attention as showing -- as they
undoubtedly do -- that the Union Sewer Pipe Company, while doing
business in Illinois, was subject to
Page 184 U. S. 558
the statute of Illinois concerning trusts or combinations, and
which, in terms, applies to both domestic and foreign corporations.
But the question remains to be decided whether the statute is
repugnant to the Constitution of the United States. If it be, then
it is not law, and cannot be applied for the purpose of defeating
the plaintiff's claims in these actions.
The question of constitutional law to which we have referred
cannot be disposed of by saying that the statute in question may be
referred to what are called the police powers of the state, which,
as often stated by this Court, were not included in the grants of
power to the general government, and therefore were reserved to the
states when the Constitution was ordained. But as the Constitution
of the United States is the supreme law of the land, anything in
the Constitution or statutes of the states to the contrary
notwithstanding, a statute of a state, even when avowedly enacted
in the exercise of its police powers, must yield to that law. No
right granted or secured by the Constitution of the United States
can be impaired or destroyed by a state enactment, whatever may be
the source from which the power to pass such enactment may have
been derived. "The nullity of any act inconsistent with the
Constitution is produced by the declaration that the Constitution
is the supreme law." The state has undoubtedly the power, by
appropriate legislation, to protect the public morals, the public
health, and the public safety, but if, by their necessary
operation, its regulations looking to either of those ends amount
to a denial to persons within its jurisdiction of the equal
protection of the laws, they must be deemed unconstitutional and
void.
Gibbons v.
Ogden, 9 Wheat. 1,
22 U. S. 210;
Sinnot v.
Davenport, 22 How. 227,
63 U. S. 243;
Missouri, Kansas & Texas Railway v. Haber,
169 U. S. 613,
169 U. S.
626.
What may be regarded as a denial of the equal protection of the
laws is a question not always easily determined, as the decisions
of this Court and of the highest courts of the states will show. It
is sometimes difficult to show that a state enactment, having its
source in a power not controverted, infringes rights protected by
the national Constitution. No rule can be formulated that will
cover every case. But upon this general question
Page 184 U. S. 559
we have said that the guaranty of the equal protection of the
laws means
"that no person or class of persons shall be denied the same
protection of the laws which is enjoyed by other persons or other
classes in the same place and under like circumstances."
Missouri v. Lewis, 101 U. S. 22,
101 U. S. 31. We
have also said:
"The Fourteenth Amendment, in declaring that no state 'shall
deprive any person of life, liberty, or property without due
process of law, nor deny to any person within its jurisdiction the
equal protection of the laws,' undoubtedly intended not only that
there should be no arbitrary deprivation of life or liberty, or
arbitrary spoliation of property, but that equal protection and
security should be given to all under like circumstances in the
enjoyment of their personal and civil rights, that all persons
should be equally entitled to pursue their happiness and acquire
and enjoy property, that they should have like access to the courts
of the country for the protection of their persons and property,
the prevention and redress of wrongs, and the enforcement of
contracts, that no impediment should be interposed to the pursuits
of anyone except as applied to the same pursuits by others under
like circumstances, that no greater burdens should be laid upon one
than are laid upon others in the same calling and condition, and
that, in the administration of criminal justice, no different or
higher punishment should be imposed upon one than such as is
prescribed to all for like offenses."
Barbier v. Connolly, 113 U. S. 27,
113 U. S. 31.
This language was cited with approval in
Yick Wo v.
Hopkins, 118 U. S. 356,
118 U. S. 369,
in which it was also said that "the equal protection of the laws is
a pledge of the protection of equal laws." In
Hayes v.
Missouri, 120 U. S. 68,
120 U. S. 71, we
said that the Fourteenth Amendment required that all persons
subject to legislation limited as to the objects to which it is
directed, or by the territory within which it is to operate, "shall
be treated alike under like circumstances and conditions both in
the privileges conferred and in the liabilities imposed." "Due
process of law and the equal protection of the laws," this Court
has said, "are secured, if the laws operate on all alike, and do
not subject the individual to an arbitrary exercise of the
Page 184 U. S. 560
powers of government."
Duncan v. Missouri, 152 U.
S. 377,
152 U. S. 382.
Many other cases in this Court are to the like effect.
These principles, applied to the case before us, condemn the
statute of Illinois. We have seen that, under that statute, all
except producers of agricultural commodities and raisers of
livestock, who combine their capital, skill, or acts for any of the
purposes named in the act, may be punished as criminals, while
agriculturalists and livestock raisers, in respect of their
products or livestock in hand, are exempted from the operation of
the statute and may combine and do that which, if done by others,
would be a crime against the state. The statute so provides
notwithstanding persons engaged in trade or in the sale of
merchandise and commodities, within the limits of a state, and
agriculturalists and raisers of livestock, are all in the same
general class -- that is, they are all alike engaged in domestic
trade, which is of right open to all, subject to such regulations,
applicable alike to all in like conditions, as the state may
legally prescribe.
The difficulty is not met by saying that, generally speaking,
the state, when enacting laws, may, in its discretion, make a
classification of persons, firms, corporations, and associations in
order to subserve public objects. For this Court has held that
classification
"must always rest upon some difference which bears a reasonable
and just relation to the act in respect to which the classification
is proposed, and can never be made arbitrarily and without any such
basis. . . . But arbitrary selection can never be justified by
calling it classification. The equal protection demanded by the
Fourteenth Amendment forbids this. . . . No duty rests more
imperatively upon the courts than the enforcement of those
constitutional provisions intended to secure that equality of
rights which is the foundation of free government. . . . It is
apparent that the mere fact of classification is not sufficient to
relieve a statute from the reach of the equality clause of the
Fourteenth Amendment, and that, in all cases, it must appear not
only that a classification has been made, but also that it is one
based upon some reasonable ground -- some difference which bears a
just and proper relation to the attempted classification, and is
not a mere arbitrary
Page 184 U. S. 561
selection."
Gulf, Colorado and Santa Fe Railway v. Ellis,
165 U. S. 150,
165 U. S. 155,
165 U. S.
159-160,
165 U. S. 165.
These principles were recognized and applied in
Cotting v.
Kansas City Stock Yards Co., 183 U. S. 79, in
which it was unanimously agreed that a statute of Kansas regulating
the charges of a particular stockyards company in the state, but
which exempted certain stockyards from its operation, was repugnant
to the Fourteenth Amendment in that it denied to that company the
equal protection of the laws.
Attention has been called to the cases of
Magoun v. Illinois
Trust and Savings Bank, 170 U. S. 283, and
American Sugar Refining Co. v. Louisiana, 179 U. S.
89, and it is supposed that the grounds upon which the
decision of the present case is placed are inconsistent with the
principles announced in those cases. We do not think so.
In
Magoun v. Illinois Trust and Savings Bank, we held
that the progressive inheritance tax law of Illinois of June 15,
1895, was not in conflict with the Constitution of the United
States by reason of the fact that the amount of the tax was
determinable by valuation so that every person and corporation
should pay in proportion to the value of his, her, or its property
inherited. The classification made by the statute was held not to
be arbitrary by reason of the fact that inheritances were
classified according to amount, and each class taxed at a different
rate, for it was based upon principles of equality between the
members of each distinct class. Such classification was held not to
be inconsistent with the Fourteenth Amendment.
In
American Sugar Refining Co. v. Louisiana, we held
that a statute of Louisiana exempting from its operation planters
and farmers grinding and refining their own sugar and molasses, but
which imposed a license tax upon persons and corporations carrying
on the business of refining sugar and molasses, did not deny the
equal protection of the laws to such persons and corporations as
were thus taxed. It was as if the statute had imposed a tax upon
the business of refining sugar and molasses, and had declared, as
reasonably it might have done, that those who only refined their
own sugar and molasses should not be regarded as belonging to that
class. We said in that case:
Page 184 U. S. 562
"The power of taxation under this provision was fully considered
in
Bell's Gap Railroad Co. v. Pennsylvania, 134 U. S.
232, in which it was said not to have been intended to
prevent a state from changing its system of taxation in all proper
and reasonable ways. It may, if it chooses, exempt certain classes
of property altogether, may impose different specific taxes upon
different trades or professions, may vary the rates of excise upon
various products, may tax real and personal estate in a different
manner, may tax visible property only, and not securities, may
allow or not allow deductions for indebtedness."
"All such regulations, and those of like character, so long as
they proceed within reasonable limits and general usage, are within
the discretion of the state legislature or the people of the state
in framing their Constitution."
Again:
"The discrimination is obviously intended as an encouragement to
agriculture, and does not deny to persons and corporations engaged
in a general refining business the equal protection of the
laws."
The decision now rendered is not at all in conflict with the
views expressed in the two cases just cited. It is sufficient to
say that those cases had reference to the taxing power of the
state, and involved considerations that could not, in the nature of
things, apply to a state enactment like the one involved in the
present case. The power to tax persons and property is an incident
of sovereignty, and the extent to which it may be exerted has been
indicated in numerous cases. Taxing laws, it has been well said,
furnish the measure of every man's duty in support of the public
burdens and the means of enforcing it. A tax may be imposed only
upon certain callings and trades, for when the state exerts its
power to tax, it is not bound to tax all pursuits or all property
that may be legitimately taxed for governmental purposes. It would
be an intolerable burden if a state could not tax any property or
calling unless, at the same time, it taxed all property or all
callings. Its discretion in such matters is very great, and should
be exercised solely with reference to the general welfare as
involved in the necessity of taxation for the support of the state.
A state may, in its wisdom, classify property for purposes of
taxation, and the exercise of its discretion is not to be
questioned in a court of the
Page 184 U. S. 563
United States, so long as the classification does not invade
rights secured by the Constitution of the United States. But
different considerations control when the state, by legislation,
seeks to regulate the enjoyment of rights and the pursuit of
callings connected with domestic trade. In prescribing regulations
for the conduct of trade, it cannot divide those engaged in trade
into classes and make criminals of one class if they do certain
forbidden things, while allowing another and favored class engaged
in the same domestic trade to do the same things with impunity. It
is one thing to exert the power of taxation so as to meet the
expenses of government, and at the same time indirectly to build up
or protect particular interests or industries. It is quite a
different thing for the state, under its general police power, to
enter the domain of trade or commerce, and discriminate against
some by declaring that particular classes within its jurisdiction
shall be exempt from the operation of a general statute making it
criminal to do certain things connected with domestic trade or
commerce. Such a statute is not a legitimate exertion of the power
of classification, rests upon no reasonable basis, is purely
arbitrary, and plainly denies the equal protection of the laws to
those against whom it discriminates.
We must not be understood by what has been said as conceding
that the question of a denial of the equal protection of the laws
can never arise under the taxing statutes of a state. On the
contrary, the power to tax is so far limited that it cannot be used
to impair or destroy rights that are given or secured by the
supreme law of the land. We only need to say in this connection
that the constitutional validity of the statute of Illinois now
before us is not necessarily to be determined by the same
principles that apply to taxing laws.
Other cases have been cited, but they are equally inapplicable
in the present discussion, and only serve to show the extent to
which the police powers of the states may be exerted without
infringing the federal Constitution.
Returning to the particular case before us, and repeating or
summarizing some thoughts already expressed, it may be observed
that, if combinations of capital, skill, or acts, in respect
Page 184 U. S. 564
of the sale or purchase of goods, merchandise, or commodities
whereby such combinations may, for their benefit exclusively,
control or establish prices are hurtful to the public interests and
should be suppressed, it is impossible to perceive why like
combinations in respect of agricultural products and livestock are
not also hurtful. Two or more engaged in selling dry goods, or
groceries, or meats, or fuel, or clothing, or medicines are, under
the statute, criminals, and subject to a fine if they combine their
capital, skill, or acts for the purpose of establishing,
controlling, increasing, or reducing prices, or of preventing free
and unrestrained competition amongst themselves or others in the
sale of their goods or merchandise; but their neighbors who happen
to be agriculturalists and livestock raisers may make combinations
of that character in reference to their grain or livestock without
incurring the prescribed penalty. Under what rule of permissible
classification can such legislation be sustained as consistent with
the equal protection of the laws? It cannot be said that the
exemption made by the ninth section of the statute was of slight
consequence, as affecting the general public interested in domestic
trade and entitled to be protected against combinations formed to
control prices for their own benefit, for it cannot be disputed
that agricultural products and livestock in Illinois constitute a
very large part of the wealth and property of that state.
We conclude this part of the discussion by saying that to
declare that some of the class engaged in domestic trade or
commerce shall be deemed criminals if they violate the regulations
prescribed by the state for the purpose of protecting the public
against illegal combinations formed to destroy competition and to
control prices, and that others of the same class shall not be
bound to regard those regulations, but may combine their capital,
skill, or acts to destroy competition and to control prices for
their special benefit, is so manifestly a denial of the equal
protection of the laws that further or extended argument to
establish that position would seem to be unnecessary.
We therefore hold that the act of 1893 is repugnant to the
Constitution of the United States unless its ninth section can be
eliminated, leaving the rest of the act in operation.
Page 184 U. S. 565
The principles applicable to such a question are well settled by
the adjudications of this Court. If different sections of a statute
are independent of each other, that which is unconstitutional may
be disregarded and valid sections may stand and be enforced. But if
an obnoxious section is of such import that the other sections
without it would cause results not contemplated or desired by the
legislature, then the entire statute must be held inoperative. The
first section of the act here in question embraces, by its terms,
all persons, firms, corporations, or associations of persons who
combine their capital, skill, or acts for any of the purposes
specified, while the ninth section declares that the statute shall
not apply to agriculturalists or livestock dealers in respect of
their products or stock in hand. If the latter section be
eliminated as unconstitutional, then the act, if it stands, will
apply to agriculturalists and livestock dealers. Those classes
would in that way be reached and fined when evidently the
legislature intended that they should not be regarded as offending
against the law even if they did combine their capital, skill, or
acts in respect of their products or stock in hand. Looking, then,
at all the sections together, we must hold that the legislature
would not have entered upon or continued the policy indicated by
the statute unless agriculturalists and livestock dealers were
excluded from its operation, and thereby protected from
prosecution. The result is that the statute must be regarded as an
entirety, and in that view, it must be adjudged to be
unconstitutional as denying the equal protection of the laws to
those within its jurisdiction who are not embraced by the ninth
section. Whether it is also within the prohibition against the
deprivation of property without due process of law is a question
which it is unnecessary to consider at this time.
Perceiving no error in the record, the judgment in each case
must be
Affirmed, and it is so ordered.
MR. JUSTICE McKENNA dissenting:
The Trust Statute of Illinois of 1893 is directed against
combinations
Page 184 U. S. 566
in trade made to affect prices of commodities. The Court holds
that the statute is repugnant to the Constitution of the United
States because of the ninth section, which excludes from the
operation of the statute "agricultural products or livestock while
in the hands of the producer or raiser." In other words, and to
present the discriminations of the statute in its application to
persons, it punishes as a criminal conspiracy the acts enumerated
in section one except when they are done by producers and raisers
of agricultural products and livestock in respect thereto. The
statute also takes away a right of action for the price of the
commodities sold. One of the defenses of the plaintiffs in error
was based on that provision.
The view of the Court is that the legislation is purely
discriminative, and is not justified by any legal principle of
classification. To sustain the view, the rule expressed in
Gulf, Colorado & Santa Fe Railway v. Ellis,
165 U. S. 150, is
quoted. It was there said:
"It is apparent that the mere fact of classification is not
sufficient to relieve a statute from the reach of the equality
clause of the Fourteenth Amendment, and that in all cases it must
appear not only that a classification has been made, but also that
it is one based upon some reasonable ground -- some difference
which bears a just and proper relation to the attempted
classification, and is not a mere arbitrary selection."
Undoubtedly. Without the observance of that principle, there can
be no classification at all in any proper sense. There will be
arbitrary grouping -- not association of persons or things on
account of common properties or characters or relations. But
differences are recognized in classification as well as
resemblances, and this Court has found it necessary to so state. In
Atchison, Topeka & Santa Fe Railroad v. Matthews,
174 U. S. 96, we
said:
"Indeed, the very idea of classification is that of inequality,
so that it goes without saying that the fact of inequality in no
manner determines the matter of constitutionality."
It seems like a contradiction to say that a law having
inequality of operation may yet give equality of protection. Viewed
rightly, however, the contradiction disappears -- indeed, need not
even be expressed. There are very few exertions of
Page 184 U. S. 567
government which can be made applicable to all persons as such.
Government is not a simple thing. It encounters and must deal with
the problems which come from persons in an infinite variety of
relations. Classification is the recognition of those relations,
and in making it, a legislature must be allowed a wide latitude of
discretion and judgment. This has been decided many times against
contentions based on a variety of facts. I will content myself by
citing the later cases and commenting upon them very briefly. The
cases are
Magoun v. Illinois Trust &c. Bank,
170 U. S. 283;
Clark v. Kansas City, 176 U. S. 114;
Gundling v. Chicago, 177 U. S. 183;
Petit v. Minnesota, 177 U. S. 164;
Williams v. Fears, 179 U. S. 270;
American Sugar Refining Co. v. Louisiana, 179 U. S.
89.
In these cases and the cases cited in them, classifications were
sustained which depended upon differences in the amounts of
legacies, on differences between corporations, on differences
between land dependent on its use for agriculture and other
purposes in regard to the power of a city to annex it, on
differences between fire insurance and other insurance, on the
right of a legislature to declare, as a matter of law, that the
work of a barber was not a work of necessity, while as to all other
kinds of labor the fact was to be determined by a jury, on the
difference between hiring persons to labor in the state and hiring
persons to labor out of the state, on differences between sugar
refiners based entirely and only on the fact of the production or
purchase of the sugar refined.
In
American Sugar Refining Co. v. Louisiana, a license
tax was imposed on those engaged in carrying on the business of
refining sugar and molasses. It was provided, however, that the law
should not apply to "planters and farmers grinding and refining
their own sugar."
Wherein did the Louisiana statute, which was held
constitutional, differ from the Illinois statute, which is held to
be unconstitutional? In the former case, the distinction (in the
opinion in the case it is called "discrimination") was between
manufacturers of sugar and growers of it. In the case at bar, the
distinction is between traders in products and growers of them. Is
not a parallel obvious? Can the cases be distinguished because
Page 184 U. S. 568
in one, a tax was imposed, and in the other, conduct is
regulated or penalized? Indeed, is not the distinction verbal, each
being means to an end? Besides, what justification for the
distinction is there under the Constitution? None, I submit, can be
found in the words of that instrument. Any state legislation which
denies the equal protection of the laws is prohibited. The
prohibition is independent of form or means. It would be strange
indeed if the power of a state is limited and confined by the
Constitution of the United States when the state attempts by law to
regulate conduct, and is unbounded in its discretion when it
imposes taxes; that in one case it may see a difference between
manufacturers and planters, and in the other case may not see a
difference between traders in commodities acquired for the purposes
of sale and such property when held by farmers by whose labor they
were produced.
The reasoning of the cases is as strong and demonstrative as
their instances. We have declared that we could not investigate or
condemn the impolicy of a state law, and that this Court is not a
refuge from the mere injustice and oppression of state legislation.
Many of the exercises of government, it has been pointed out, were
addressed to persons not absolutely or abstractly, but according to
their relations, and that classification based on those relations
need not be constituted by an exact or scientific exclusion or
inclusion of persons or things. Therefore, it has been repeatedly
declared that classification is justified if it is not palpably
arbitrary.
The cases afford not only affirmative examples, but also by a
negative deduction illustrate what is legal classification. Mr.
Justice Bradley said in
Bell's Gap Railroad v.
Pennsylvania, 134 U. S. 232:
"Clear and hostile demonstrations against particular persons and
classes, especially such as are of unusual character, unknown to
the practice of our governments, might be obnoxious to the
constitutional prohibition."
That is, the prohibition upon the states to deny to any citizen
the equal protection of the laws. The thought of Mr. Justice
Bradley was developed and illustrated by MR. JUSTICE BROWN,
speaking for this Court in
American Sugar Refining Co. v.
Louisiana, and tests of the unconstitutionality of the
discriminations of a state law
Page 184 U. S. 569
were expressed which were as ready as they were significant.
Speaking of the Louisiana act, which discriminated between refiners
of sugar, MR. JUSTICE BROWN said:
"The act in question does undoubtedly discriminate in favor of a
certain class of refiners, but this discrimination, if founded upon
a reasonable distinction in principle, is valid. Of course, if such
discrimination were purely
arbitrary, oppressive, or
capricious [the italics are mine], and made to depend upon
differences of color, race, nativity, religious opinions, political
affiliations, or other considerations having no possible connection
with the duties of citizens as taxpayers, such exemption would be
pure favoritism, and a denial of the equal protection of the laws
to the less favored classes."
Of course, the enumeration of some tests does not exclude
others, but why the enumeration of the special kind? Did not the
case require it? What ingenuity can find a difference in the act
and process of sugar refining when done by a purchaser of raw sugar
and a raiser (planter) of it; what difference in the product after
it shall be refined, or in any element, thing, or circumstance,
which can affect its use or sale. The whole and only distinction in
the classes which the statute made was between the grower of sugar
and the buyer of it -- the exact and only distinction of the
Illinois law now held to be void -- and yet the Louisiana law was
sustained as constitutional.
I have already adverted to the distinction which may be claimed
to exist between taxing laws and regulating laws, but a few words
more may be justified. The opinion of the Court makes a great deal
of the penal provisions of the trust law, and its discriminations
are displayed and intensified more by the recitation and effect of
those provisions than by the provision upon which the defense of
plaintiffs in error was based -- that is, the provision (sec. 10)
which precludes recovery of the price of "any article or commodity
sold" by an offender against the statute.
The penal provisions of the statute are not before us for
judgment. It they were and the unconstitutionality of the statute
could be attributed to them, they might be construed as separable
and be discarded. But, not insisting on that, and considering
Page 184 U. S. 570
the comments on those provisions to be more than incidental
illustration of the character of the statute, it is very clear to
me that they do not in any way affect the power of the state. In
other words, the power of the state cannot be impugned or affected
by the sanctions which the state may impose to secure obedience to
its commands or prohibitions. It may be through a tax or it may be
through penalties, and the question will always be is the thing
which is directed or forbidden within the power of the state? And
when a statute is assailed as denying the equal protection of the
laws, its equal operation is only involved.
The principle of classification, therefore, is not different in
tax laws than in other laws. That principle, as I have said,
necessarily implies discrimination between the persons composing
the class and other persons. The equality prescribed by the
Constitution is fulfilled if equality be observed between the
members of the class. It is violated if such equality be not
observed, and the latter was the case in
Cotting v. Kansas City
Stock Yards Co., 183 U. S. 79. That
case therefore does not sustain the ruling now made.
Any further remarks may be only repetition, but the application
of the cases to the statute now before us should be pointed
out.
The equality of operation which the Constitution requires in
state legislation cannot be construed, as we have seen, as
demanding an absolute universality of operation, having no regard
to the different capabilities, conditions, and relations of men.
Classification therefore is necessary, but what are its limits?
They are not easily defined, but the purview of the legislation
should be regarded. A line must not be drawn which includes
arbitrarily some persons who do and some persons who do not stand
in the same relation to the purpose of the legislation. But a wide
latitude of selection must be left to the legislature. It is only a
palpable abuse of the power of selection which can be judicially
reviewed, and the right of review is so delicate that, even in its
best exercises, it may lead to challenge. At times, indeed, it must
be exercised, but should always be exercised in view of the
function and necessarily large powers of a legislature.
Page 184 U. S. 571
What was the purpose of the Illinois statute, and what were the
relations of its classes to that purpose? The statute was the
expression of the purpose of the state to suppress combinations to
control the prices of commodities, not, however, in the hands of
the producers, but in the hands of traders, persons, or
corporations. Shall we say that such suppression must be universal
or not at all? How can we? What knowledge have we of the condition
in Illinois which invoked the legislation, or in what form and
extent the evil of combinations to control prices appeared in that
state? Indeed, whether such combinations are evils or blessings, or
to what extent either, is not a judicial inquiry. If we can assume
them to be evil because the statute does so, can we go beyond the
statute and determine for ourselves the local conditions and
condemn the legislation dependent thereon? But are there not,
between the classes which the statute makes, distinctions which the
legislature had a right to consider? Of whom are the classes
composed? The excluded class is composed of farmers and
stockraisers while holding the products or livestock produced or
raised by them. The included class is composed of merchants,
traders, manufacturers, all engaged in commercial transactions.
That is, one class is composed of persons who are scattered on
farms, the other class is composed of persons congregated in cities
and towns, not only of natural persons, but of corporate
organizations. In the difference of these situations, and in other
differences which will occur to any reflection, might not the
legislature see difference in opportunities and powers between the
classes in regard to the prohibited acts? That differences exist
cannot be denied. To describe and contrast them might be invidious.
To consider their effect would take us from legal problems to
economic ones, and this demonstrates to my mind how essentially any
judgment or action based upon those differences is legislative, and
cannot be reviewed by the judiciary.
I am therefore constrained to dissent from the judgment of the
Court.
MR. JUSTICE GRAY did not participate in the decision of this
case.