Regulating discriminatory sales made within the state for the
purpose of destroying competition is within the legislative power
of the state unless the statute conflicts with the Constitution of
the United States.
Page 226 U. S. 158
The legislature of a state may direct its police regulations
against what it deems an existing evil without covering the whole
field of possible abuses. It may direct a law for the protection of
trade in accord with its policy against one particular instrument
of trade war.
The Fourteenth Amendment does not prohibit state legislation
special in character. The legislature may deal with a class which
it deems a conspicuous example of what it seeks to prevent,
although logically that class may not be distinguishable from
others not embraced by the law.
A classification that logically affects only those who deal in
more than one place in the state is not necessarily so unreasonable
as to amount to denial of equal protection of the laws.
This Court cannot review the economics or facts on which the
legislature of a state bases its conclusions that an existing evil
should be remedied by an exercise of the police power.
The enactment of police statutes regulating discrimination in
prices for the purpose of destroying competition in several states
demonstrates that there is a widespread conviction in favor of such
regulation.
Chapter 131 of the Laws of South Dakota of 1907, prohibiting
unfair discrimination by anyone engaged in manufacture or
distribution of a commodity in general use for the purpose of
intentionally destroying competition of any regular dealer in such
commodity by making sales thereof at a lower rate in one section of
the state than in other sections, after equalization for distance,
is a constitutional exercise of the police power of the state, and
is not unconstitutional under the Fourteenth Amendment as depriving
persons having more than one place of business in the their
property without due process of law or as denying them the equal
protection of the laws, or as abridging their liberty of
contract.
Where the highest court of a state has construed a statute as
aiming at the prevention of a monopoly in a commodity by means
likely to be employed and prohibited by the statute, this Court
should read the statute as having ultimately in view the benefit of
buyers of the goods.
24 S.D. 136 affirmed.
The facts, which involve the constitutionality under the federal
Constitution of the "one price" statute of the State of South
Dakota, are stated in the opinion.
Page 226 U. S. 159
MR. JUSTICE HOLMES delivered the opinion of the Court.
The plaintiff in error was found guilty of unfair discrimination
under Session Laws of South Dakota for 1907, c. 131, and was
sentenced to a fine of $200 and costs. It objected in due form that
the statute was contrary to the Fourteenth Amendment, but, on
appeal, the judgment of the trial court was sustained. 24 S.D. 136.
By the statute, anyone
"engaged in the production, manufacture, or distribution of any
commodity in general use that intentionally, for the purpose of
destroying the competition of any regular established dealer in
such commodity, or to prevent the competition of any person who in
good faith intends and attempts to become such dealer, shall
discriminate between different sections, communities, or cities of
this state by selling such commodity at a lower rate in one section
. . . than such person . . . charges for such commodity in another
section, . . . after equalizing the distance from the point of
production,"
etc., shall be guilty of the crime and liable to the fine.
The subject matter, like the rest of the criminal law, is under
the control of the Legislature of South Dakota by virtue of its
general powers unless the statute conflicts, as alleged, with the
Constitution of the United States. The grounds on which it is said
to do so are that it denies the equal protection of the laws
because it affects the conduct of only a particular class -- those
selling goods in
Page 226 U. S. 160
two places in the state -- and is intended for the protection of
only a particular class -- regular established dealers -- and also
because it unreasonably limits the liberty of people to make such
bargains as they like.
On the first of these points, it is said that an indefensible
classification may be disguised in the form of a description of the
acts constituting the offense, and it is urged that to punish
selling goods in one place lower than at another in effect is to
select the class of dealers that have two places of business for a
special liability, and in real fact is a blow aimed at those who
have several lumber yards along a line of railroad, in the interest
of independent dealers. All competition, it is added, imports an
attempt to destroy or prevent the competition of rivals, and there
is no difference in principle between the prohibited act and the
ordinary efforts of traders at a single place. The premises may be
conceded without accepting the conclusion that this is an
unconstitutional discrimination. If the legislature shares the now
prevailing belief as to what is public policy, and finds that a
particular instrument of trade war is being used against that
policy in certain cases, it may direct its law against what it
deems the evil as it actually exists without covering the whole
field of possible abuses, and it may do so nonetheless that the
forbidden act does not differ in kind from those that are allowed.
Lindsley v. Natural Carbonic Gas Co., 220 U. S.
61,
220 U. S. 81;
Missouri Pacific Ry. Co. v. Mackey, 127 U.
S. 205.
That is not the arbitrary selection that is condemned in such
cases as
Southern Ry. Co. v. Greene, 216 U.
S. 400. The Fourteenth Amendment does not prohibit
legislation special in character.
Magoun v. Illinois Trust
& Savings Bank, 170 U. S. 283,
170 U. S. 294.
It does not prohibit a state from carrying out a policy that cannot
be pronounced purely arbitrary, by taxation or penal laws.
Orient Insurance Co. v. Daggs, 172 U.
S. 557,
172 U. S. 562;
Quong Wing v. Kirkendall, 223 U. S.
59,
223 U. S. 62. If
a class is deemed to present
Page 226 U. S. 161
a conspicuous example of what the legislature seeks to prevent,
the Fourteenth Amendment allows it to be dealt with, although
otherwise and merely logically not distinguishable from others not
embraced in the law.
Carroll v. Greenwich Ins. Co.,
199 U. S. 401,
199 U. S. 411.
We must assume that the Legislature of South Dakota considered that
people selling in two places made the prohibited use of their
opportunities, and that such use was harmful, although the usual
efforts of competitors were desired. It might have been argued to
the legislature with more force than it can be to us that
recoupment in one place of losses in another is merely an instance
of financial ability to compete. If the legislature thought that
that particular manifestation of ability usually came from great
corporations whose power it deemed excessive and for that reason
did more harm than good in their state, and that there was no other
case of frequent occurrence where the same could be said, we cannot
review their economics or their facts. That the law embodies a
widespread conviction appears from the decisions in other states.
State v. Drayton, 82 Neb. 254;
State v. Standard Oil
Co., 111 Minn. 85;
State v. Fairmont Creamery Co.,
153 Ia. 702;
State v. Bridgeman & Russell Co., 117
Minn. 186.
What we have said makes it unnecessary to add much on the second
point, if open, that the law is made in favor of regular
established dealers, but the short answer is simply to read the
law. It extends on its face also to those who intend to become such
dealers. If it saw fit not to grant the same degree of protection
to parties making a transitory incursion into the business, we see
no objection. But the supreme court says that the statute is aimed
at preventing the creation of a monopoly by means likely to be
employed, and certainly we should read the law as having in view
ultimately the benefit of buyers of the goods.
Page 226 U. S. 162
Finally, as to the statute's depriving the plaintiff in error of
its liberty because it forbids certain class of dealings, we think
it enough to say that, as the law does not otherwise encounter the
Fourteenth Amendment, it is not to be disturbed on this ground. The
matter has been discussed so often in this Court that we simply
refer to
Chicago, Burlington & Quincy R. Co. v.
McGuire, 219 U. S. 549,
219 U. S.
567-568, and the cases there cited to illustrate how
much power is left in the states.
See also Grenada Lumber Co.
v. Mississippi, 217 U. S. 433,
217 U. S. 442;
Lemieux v. Young, 211 U. S. 489,
211 U. S. 496;
Otis v. Parker, 187 U. S. 606,
187 U. S.
609.
Judgment affirmed.
