Plaintiff in error, a Tennessee corporation, engaged in the
manufacture of cotton seed oil in that state, finding it
impracticable to carry on the business successfully when purchasing
its supply of cotton seed from ginners or from brokers, acquired
and operated cotton gins in Mississippi and other states where it
ginned cotton for cotton growers, purchased from them the seed thus
separated from the fiber, and then shipped it to its Tennessee
factory. Mississippi passed a law forbidding corporations
interested in the manufacture of cotton seed oil from owning or
operating cotton gins, except of a prescribed capacity and in the
city or town where their oil plants were located.
(1) That, since the ginning was merely manufacture, and the
seeds were not in interstate commerce until purchased and
Page 257 U. S. 130
to a carrier, the gins were not instrumentalities of interstate
commerce and the prohibition of their operation did not infringe
the company's rights under the commerce clause. P. 257 U. S.
(2) That the prohibition did not deny to the company the equal
protection of the laws in applying to corporations and not to
individuals, because the inherent difference between corporations
and natural persons sustained the classification and because it
might be assumed, in the absence of any contrary showing, that only
corporations were engaged in operating both oil mills and cotton
gins when the act was passed. P. 257 U. S.
121 Miss. 615 affirmed.
Error to a decree of the Supreme Court of Mississippi in a suit
by the state imposing a penalty on the plaintiff in error,
forfeiting its right to do local business, enjoining it from
operating its cotton gins, and requiring it to dispose of them
within a prescribed time.
Page 257 U. S. 132
MR. JUSTICE CLARKE delivered the opinion of the Court.
An act of the Legislature of Mississippi, approved March 28,
1914 (designated in the record the "Anti-Gin Act"), prohibits
corporations, whether organized under the laws of that state or
authorized under the laws thereof, to do any local business
therein, among other things, from owning or operating any cotton
gin, when such corporation is interested in the manufacture of
cotton seed oil or cotton seed meal. A penalty is provided for
violation of the act, but corporations are permitted to operate
their gins for a reasonable time until they may be sold. A
Page 257 U. S. 133
permits cotton seed oil companies to operate gins of a
prescribed capacity, but only in the city or town where their oil
plants are located. Laws Miss.1914, c. 162, § 4752 et
Hemingway's Code 1917.
The plaintiff in error, a corporation organized under Tennessee
laws, prior to 1914 owned and operated a cotton seed oil mill at
Memphis in that state, and two cotton gins in Mississippi.
Disregarding the Anti-Gin Act, it continued to operate its two gins
in Mississippi until October, 1915, when, for the purpose of
enforcing the law, the state, on the relation of its Attorney
General, instituted a suit in equity against the company in a
county court of chancery, which, after various vicissitudes,
resulted in a decree that the act was constitutional, and that the
plaintiff in error was guilty of violating it. A penalty was
imposed upon the company, its right to do intrastate or local
business in Mississippi was declared forfeited, it was perpetually
enjoined from operating cotton gins in the state, and it was
ordered that, within 90 days, the company should dispose of the two
cotton gins which it owned and operated in Mississippi. The company
was also found guilty of violating the antitrust law of the state,
and a penalty therefor was imposed.
This is a proceeding in error to review the decree of the
Supreme Court of Mississippi affirming that decree of the county
court as to the Anti-Gin Act. The holding that the antitrust laws
were violated was reversed by the Supreme Court.
Without proof of it in the record, the case is argued upon the
assumption that the statute assailed was enacted in aid of the
antitrust laws of the state, under the conviction on the part of
the legislature that it was the practice of corporations operating
oil mills and cotton gins to depress the price of ginning,
regardless of cost, until local competition was suppressed, or
brought to terms, and then to charge excessive prices for ginning
and to pay
Page 257 U. S. 134
unfairly low prices for seed. There is evidence in the record
tending to show resort to such methods by the plaintiff in
It clearly appears that, in practice, it is an advantage to the
purchaser of cotton seed to operate gins not only for the profit
that may be made from them directly, but because the grower of
cotton often prefers to sell his seed to the company ginning it,
rather than carry it to another purchaser. It is also in evidence
that individuals, as well as corporations owned and operated gins,
and that other oil companies than the plaintiff in error obtained
their supplies of seed from growers, from gin owners, and from
The plaintiff in error has heretofore relied, and here relies,
for its defense upon the unconstitutionality of the Anti-Gin Act,
which it asserts upon two grounds, viz.,
first, that, as
applied to the plaintiff in error, it imposes a direct and
substantial, and therefore an unconstitutional, burden upon an
instrumentality of interstate commerce; and, second, mildly, that,
the act being applicable to corporations, and not to individuals,
owning and operating cotton gins, it denies to the plaintiff in
error the equal protection of the laws, and therefore offends
against the Constitution of the United States.
The basis of the first contention is the claim that it had
become impracticable for the oil company to carry on its oil
manufacturing business successfully when purchasing its cotton seed
supply from other ginners or from brokers, that for this reason the
company acquired its two cotton gins in Mississippi, and nine in
other states, to obtain the advantage of purchasing seed direct
from the growers of cotton, and that all of the cotton seed which
it had purchased in connection with its gins was shipped in
interstate commerce to its oil mill at Memphis, the gins being, in
effect, "feeders" to its oil mill.
These facts, not disputed in the record, it is argued,
constitute the gins an essential means and instrumentality of
Page 257 U. S. 135
interstate commerce, and that therefore the act imposes a direct
and unconstitutional burden on commerce between the states, in
violation of § 8 of Article I of the Constitution of the United
Western Union Telegraph Co. v. Kansas, 216 U. S.
, Pullman Co. v. Kansas, 216 U. S.
, Ludwig v. Western Union Telegraph Co.,
216 U. S. 1
Harrison v. St. Louis & San Francisco Railroad Co.,
232 U. S. 318
relied upon to sustain this contention of the plaintiff in error.
In the first two of the cases cited, an attempt was made by the
State of Kansas to tax interstate carriers on the basis of all of
their property, wherever situated, as measured by the capital stock
of the companies. In the third case, a similar attempt was made by
the State of Arkansas.
There was no question in any of these cases but that the
principal business of the companies challenging the taxing law was
interstate in character, and that their chief investment was in
property used in and necessary to the conduct of their interstate
commerce. The controversy in the cases was as to the incidence of
the tax -- whether it was so imposed upon the property of the
companies or the stock representing it as to constitute a direct
and substantial burden upon the interstate commerce in which they
It is clear that these decisions cannot be of aid in determining
the question we are now considering, which is whether a cotton gin
operated by an oil company in Mississippi is rendered an
instrumentality of interstate commerce by the fact that the owner
of it ships out of the state, for its use in another state, all of
the cotton seed which may be purchased in connection with its
The fourth case relied upon, Harrison v. St. Louis & San
Francisco Railroad Co., 232 U. S. 318
an attempt on the part of a state to prevent removal of causes from
state to United States courts, and is, if possible, yet more
Page 257 U. S. 136
The separation of the seed from the fiber of the cotton, which
is accomplished by the use of the cotton gin, is a short but
important step in the manufacture of both the seed and the fiber
into useful articles of commerce, but that manufacture is not
commerce was held in Kidd v. Pearson, 128 U. S.
, 128 U. S. 20
United States v. E. C. Knight Co., 156 U. S.
, 156 U. S. 12
Capital City Dairy Co. v. Ohio, 183 U.
, 183 U. S. 245
McCluskey v. Marysville & Northern Railway Co.,
243 U. S. 36
243 U. S. 38
and in Hammer v. Dagenhart, 247 U.
, 247 U. S. 252
Arkadelphia Milling Co. v. St. Louis & South Western
Railway Co., 249 U. S. 134
249 U. S.
-152. And the fact, of itself, that an article, when
in the process of manufacture, is intended for export to another
state does not render it an article of interstate commerce. Coe
v. Errol, 116 U. S. 517
New York Central R. Co. v. Mohney, 252 U.
, 252 U. S. 155
When the ginning is completed, the operator of the gin is free to
purchase the seed or not, and, if it is purchased, to store it in
Mississippi indefinitely, or to sell or use it in that state, or to
ship it out of the state for use in another, and, under the cases
cited, it is only in this last case, and after the seed has been
committed to a carrier for interstate transport, that it passes
from the regulatory power of the state into interstate commerce and
under the national power.
The application of these conclusions of law to the manufacturing
operations of the cotton gins, which we have seen precede, but are
not a part of, interstate commerce, renders it quite impossible to
consider them an instrumentality of such commerce, which is
burdened by the Anti-Gin Act, and the first contention of the
plaintiff in error must be denied.
There remains the second contention, that the Anti-Gin Act
denies to plaintiff in error the equal protection of the laws
because it applies to corporations, and not to individuals.
Page 257 U. S. 137
Where, as we have found in this case, a foreign corporation has
no federal right to continue to do business in a state, and where,
as here, no contract right is involved, and there is no employment
by the federal government, it is the settled law that a state may
impose conditions, in its discretion, upon the right of such a
corporation to do business within the state, even to the extent of
excluding it altogether. Horn Silver Mining Co. v. New
York, 143 U. S. 305
Baltic Mining Co. v. Massachusetts, 231 U. S.
, 231 U. S. 83
and cases cited. And, in such case, the inherent difference between
corporations and natural persons is sufficient to sustain a
classification making restrictions applicable to corporations only.
Hammond Packing Co. v. Arkansas, 212 U.
, 212 U. S.
-344; Baltic Mining Co. v. Massachusetts,
231 U. S. 68
231 U. S. 83
And see Ft. Smith Lumber Co. v. Arkansas, 251 U.
, 251 U. S. 533
American Sugar Refining Co. v. Louisiana, 179 U. S.
; Williams v. Fears, 179 U.
, 179 U. S. 276
W. W. Cargill Co. v. Minnesota, 180 U.
This would be sufficient to dispose of this second contention,
but we may add that the law assailed was enacted by the state in
the exercise of its police power, to prevent a practice conceived
to be promotive of monopoly with its attendant evils. It is clearly
settled that any classification adopted by a state in the exercise
of this power which has a reasonable basis, and is therefore not
arbitrary, will be sustained against an attack based upon the equal
protection of the laws clause of the Fourteenth Amendment, and also
that every state of facts sufficient to sustain such classification
which can be reasonably conceived of as having existed when the law
was enacted will be assumed. Lindsley v. Natural Carbonic Gas
Co., 220 U. S. 61
cases cited; Rast v. Van Deman & Lewis Co.,
240 U. S. 342
Page 257 U. S. 138
The record before us shows that, before the law assailed was
enacted, cotton gins had been operated in Mississippi by
individuals as well as by corporations, but there is no showing
that oil mills and cotton gins were both operated by an individual
or by groups of individuals, and we think it may well be assumed,
under the rule stated, that, because of the larger capital
required, and perhaps for other reasons, oil mills and cotton gins
may have been operated in that state only by corporations, and
that, for this reason, the restraint of the evil aimed at by the
act of the legislature could be accomplished by controlling
corporations only. Assuming this to be the fact when the law was
enacted, obviously the classification objected to cannot be
pronounced so without reasonable basis as to be arbitrary.
A number of minor contentions are discussed in the briefs. These
have all been considered, but are found to be not of sufficient
substance to deserve special discussion.
It results that the judgment of the Supreme Court of Mississippi