1. In a suit in the district court which arises under a law of
the United States as well as under the Constitution, in that the
bill attacks a state statute both as violative of the Constitution
directly and as in conflict with an act of Congress, the judgment
may be reviewed by the circuit court of appeals. P. 258 U. S.
2. In the general and usual course of its trade, a North Dakota
association bought grain in that state, placed it in its elevator,
loaded it promptly on cars, and shipped to other states for sale.
The grain, even after loading, was subject to be diverted and sold
locally if the price was offered, but local sales were unusual, the
company's entire market, practically, being outside North
(a) That the business, including the buying of the grain in
North Dakota, was interstate commerce. P. 258 U. S. 54
Dahnke-Walker Milling Co. v. Bondurant, 257 U.
(b) As applied to this business, a North Dakota statute, c. 138,
Laws 1919, requiring purchasers of grain to obtain a license and
pay a license fee, and to act under a defined system of grading,
inspection, and weighing, and subjecting the prices paid and
profits made to regulation, was a direct burden on interstate
commerce. P. 258 U. S.
3. Even when the particular subject remains unregulated by
Congress, a state cannot lay burdens on interstate commerce in the
guise of police regulations to protect the welfare of her people.
P. 258 U. S. 58
Merchants Exchange v. Missouri, 248 U.
Page 258 U. S. 51
4. A state statute unconstitutional in a part essential and
vital to its whole scheme cannot be enforced by this Court in its
other provisions. P. 258 U. S.
273 F. 635 affirmed.
Appeal from a decree of the circuit court of appeals reversing a
decree of the district court and directing a permanent injunction
in a suit against officials of North Dakota, brought to restrain
them from enforcing, against the appellee, the North Dakota Grain
Grading and Inspection Act. See also
the next case,
post 258 U. S. 65
MR. JUSTICE DAY delivered the opinion of the Court.
This suit was brought by the complainant, a cooperative
association incorporated under the laws of North Dakota and engaged
in the business of operating a public elevator and warehouse for
the purchase, sale, distribution, and storage of wheat, oats, rye,
barley, seeds and flax at the Village of Embden in that state. The
association retains no profit. If there is a surplus over operating
expenses at the close of the season, such surplus is distributed
among the grain growers according to the amount sold by each. The
purpose of the suit is to enjoin the enforcement of the North
Dakota Grain Grading and Inspection Act, passed February 11, 1919,
c. 138, North Dakota Laws 1919. The bill, omitting allegations
Page 258 U. S. 52
as to certain federal statutes which have become obsolete, is
based upon two grounds: first, that the state statute is an
unlawful regulation of and burden upon interstate commerce, and
therefore violates the commerce clause of the federal Constitution;
second, that the state statute is in conflict with the Federal
Grain Standards Act of August 11, 1916, c. 313, 39 Stats. 482,
Upon filing its bill, complainant moved for a temporary
injunction, which application was heard before three federal
judges. A motion to dismiss the suit was also filed. The court
denied this motion and granted a temporary injunction, finding that
the North Dakota law imposed a substantial burden upon interstate
commerce, and was in conflict with the Federal Grain Standards Act.
Afterwards, an answer was filed by the Attorney General of North
Dakota on behalf of all the defendants, and later a separate answer
was filed on behalf of Ladd and McGovern, officials charged with
the execution of the state laws. Upon trial, the district court
denied the injunction and held that the state statute did not place
a burden upon interstate commerce and was not in conflict with the
Federal Grain Standards Act, and entered a decree accordingly, from
which appeal was taken to the Circuit Court of Appeals for the
Eighth Circuit. That court reversed the decree of the district
court, held the state statute unconstitutional and invalid as in
conflict with the federal statute, and directed the issuance of a
permanent injunction to prevent the enforcement of the state law.
273 F. 635.
At the threshold, we are met with a question of the jurisdiction
of the circuit court of appeals to review the decree of the
district court. It is well settled that, when the jurisdiction of
the district court rests solely upon an attack upon a state statute
because of its alleged violation of the federal Constitution, a
direct appeal to this Court is the only method of review. Section
238 Judicial Code.
Page 258 U. S. 53
Carolina Glass Co. v. South Carolina, 240 U.
, and cases cited. It is equally well settled
that, where the jurisdiction is invoked upon other federal grounds,
as well as the one attacking the constitutionality of a statute of
a state, an appeal may be taken to the circuit court of appeals,
with ultimate review in this Court if the cause is within a class
within our jurisdiction. In our view, the case falls within the
class permitting appeal to the circuit court of appeals. Section
24, Judicial Code, gives to the district court jurisdiction of
cases arising under the Constitution or laws of the United States.
The attack upon the state statute because of its repugnancy to the
federal statute required a consideration and construction of both
statutes and their application to the facts found. These
considerations presented a ground of jurisdiction arising under a
law of the United States, and was not dependent solely upon the
application and construction of the federal Constitution.
Spreckels Sugar Refining Co. v. McClain, 192 U.
, 192 U. S. 407
City of Pomona v. Sunset Co., 224 U.
. We therefore hold that the circuit court of
appeals had jurisdiction of the cause.
We pass to a consideration of the merits. The record discloses
that North Dakota is a great grain-growing state, producing
annually large crops, particularly wheat, for transportation beyond
its borders. Complainant, and other buyers of like character, are
owners of elevators and purchasers of grain bought in North Dakota
to be shipped to and sold at terminal markets in other states, the
principal markets being at Minneapolis and Duluth. There is
practically no market in North Dakota for the grain purchased by
complainant. The Minneapolis prices are received at the elevator of
the complainant from Minneapolis four times daily, and are posted
for the information of those interested. To these figures the buyer
adds the freight and his "spread," or margin, of profit. The
Page 258 U. S. 54
purchases are generally made with the intention of shipping the
grain to Minneapolis. The grain is placed in the elevator for
shipment and loaded at once upon cars for shipment to Minneapolis
and elsewhere outside the North Dakota. The producers know the
basis upon which the grain is bought, but whoever pays the highest
price gets the grain, Minneapolis, Duluth or elsewhere. This method
of purchasing, shipment, and sale is the general and usual course
of business in the grain trade at the elevator of complainant and
others similarly situated. The market for grain bought at Embden is
outside the State of North Dakota, and it is an unusual thing to
get an offer from a point within the state. After the grain is
loaded upon the cars, it is generally consigned to a commission
merchant at Minneapolis. At the terminal market, the grain is
inspected and graded by inspectors licensed under federal law.
That such course of dealing constitutes interstate commerce,
there can be no question. This Court has so held in many cases, and
we have had occasion to discuss and decide the nature of such
commerce in a case closely analogous in its facts, and altogether
so in principle, Dahnke Walker Milling Co. v. Bondurant,
257 U. S. 282
that case, the facts disclose that a company organized in Tennessee
and carrying on business there went into Kentucky and, through an
agent there, bought wheat for shipment to the company's mill in
Tennessee. The state court held that the transaction was merely a
purchase of wheat in Kentucky, and made the Tennessee company
amenable to the regulatory statutes of the state. This Court
rejected the conclusion of the state court, and held that the
buying, no less than the selling, of grain under such circumstances
was was a part of interstate commerce, committed to national
control by the federal Constitution. Applying the principle of that
decision and the previous decisions
Page 258 U. S. 55
of this Court cited in the opinion, the complainant's course of
dealing in the buying of grain, which it purchased and sold under
the circumstances as herein disclosed, was interstate commerce.
Being such, the state could not regulate the business by a statute
which had the effect to control and burden interstate commerce.
Nor is this conclusion opposed by cases decided in this Court
and relied upon by appellants in which we have had occasion to
define the line between state and federal authority under facts
presented which required a definition of interstate commerce where
the right of state taxation was involved or manufacture or commerce
of an intrastate character was the subject of consideration. In
those cases, we have defined the beginning of interstate commerce
as that time when goods begin their interstate journey by delivery
to a carrier or otherwise, thus passing beyond state authority into
the domain of federal control. Cases of that type are not in
conflict with principles recognized as controlling here. None of
them indicates, much less decides, that interstate commerce does
not include the buying and selling of products for shipment beyond
state lines. It is true, as appellants contend, that, after the
wheat was delivered at complainant's elevator or loaded on the cars
for shipment, it might have been diverted to a local market or sent
to a local mill. But such was not the course of business. The
testimony shows that practically all the wheat purchased by the
complainant was for shipment to and sale in the Minneapolis market.
That was the course of business, and fixed and determined the
interstate character of the transactions. Swift & Co. v.
United States, 196 U. S. 375
Eureka Pipe Line Co. v. Hallanan, 257 U.
, and United Fuel Gas Co. v. Hallanan,
257 U. S. 277
In view of this state of facts, we come to inquire whether the
North Dakota statute is a regulation of interstate
Page 258 U. S. 56
commerce, and therefore beyond the legislative power of the
state. Pertinent parts of the Act are stated in the margin.
This Act shows a comprehensive scheme to regulate the buying of
grain. Such purchases can only be made by those who hold licenses
from the state, pay state charges for the same, and act under a
system of grading, inspecting
Page 258 U. S. 57
and weighing fully defined in the act. Furthermore, the grain
can only be purchased subject to the power of the state Grain
Inspector to determine the margin of profit which the buyer shall
realize upon his purchase. This authority is conferred in § 23, and
the margin of profit is defined to be the difference between the
price paid at the North Dakota elevator and the market price,
Page 258 U. S. 58
with an allowance for freight at the Minnesota points to which
the grain is shipped and sold. That is, the state officer may fix
and determine the price to be paid for grain which is bought,
shipped, and sold in interstate commerce. That this is a regulation
of interstate commerce, is obvious from its mere statement.
Nor will it do to say that the state law acts before the
interstate transaction begins. It seizes upon the grain and
controls its purchase at the beginning of interstate commerce.
Pennsylvania Railroad Co. v. Clark Brothers Coal Mining
Co., 238 U. S. 456
238 U. S.
It is contended that these regulations may stand upon the
principles recognized in decisions of this Court which permit the
state to make local laws under its police power in the interest of
the welfare of its people, which are valid
Page 258 U. S. 59
although affecting interstate commerce, and may stand at least
until Congress takes possession of the field under its superior
authority to regulate commerce among the states. This principle has
no application where the state passes beyond the exercise of its
legitimate authority and undertakes to regulate interstate commerce
by imposing burdens upon it. This Court stated the principle and
its limitations in the discussion of the subject in the
Minnesota Rate Cases, 230 U. S. 352
the course of the opinion in that case, we said (p. 230 U. S.
"The principle, which determines this classification [between
federal and state power], underlies the doctrine that the states
cannot under any guise impose direct burdens upon interstate
commerce. For this is but to hold that the states are not permitted
directly to regulate or restrain that which from its nature should
be under the control of the one authority and be free from
restriction save as it is governed in the manner that the national
legislature constitutionally ordains."
"Thus, the states cannot tax interstate commerce either by
laying the tax upon the business which constitutes such commerce or
the privilege of engaging in it or upon the receipts, as such,
derived from it (State Freight Tax Case,
Wall. 232; Robbins v. Shelby Taxing District, 120 U. S.
; Philadelphia & Mail S.S. Co. v.
Pennsylvania, 122 U. S. 326
; Leloup v.
Mobile, 127 U. S. 640
; McCall v.
California, 136 U. S. 104
; Brennan v.
Titusville, 153 U. S. 289
Harrisburg & San Antonio Railway Co. v. Texas,
210 U. S.
; Western Union Telegraph Co. v. Kansas,
216 U. S.
; Pullman Co. v. Kansas, 216 U. S. 1
U. S. 56
; Meyer v. Wells Fargo & Company,
223 U. S.
; Crenshaw v. Arkansas, 227 U. S.
). . . ."
Applying the principle here, the statute denies the privilege of
engaging in interstate commerce except to dealers licensed by state
authority, and provides a system which enables state officials to
fix the profit which may be made in dealing with a subject of
Page 258 U. S. 60
It is insisted that the price-fixing feature of the statute may
be ignored, and its other regulatory features of inspection and
grading sustained if not contrary to valid federal regulations of
the same subject. But the features of this act, clearly regulatory
of interstate commerce, are essential and vital parts of the
general plan of the statute to control the purchase of grain and to
determine the profit at which it may be sold. It is apparent that,
without these sections, the state legislature would not have passed
the act. Without their enforcement, the plan and scope of the act
fails of accomplishing its manifest purpose. We have no authority
to eliminate an essential feature of the law for the purpose of
saving the constitutionality of parts of it. International
Text-Book Co. v. Pigg, 217 U. S. 91
217 U. S. 113
and cases cited.
Nor is the appellants' contention upheld by the decision of this
Court in Merchants' Exchange v. Missouri, 248 U.
. In that case, this Court sustained the
constitutionality of a statute of Missouri providing that in cities
having more than seventy-five thousand inhabitants buildings used
for the storage of grain shall be deemed public warehouses, and
prohibiting the issue of weight certificates by other than
authorized bonded state weighers. We held that the state statute
did not violate the due process clause or the interstate commerce
clause of the federal Constitution. Furthermore, it was held that
the Act, under the facts of that case, did not violate the United
States Grain Standards Act, as the latter did not regulate
weighing, and, for reasons stated, did not violate the United
States Warehouse Act. The Act there in question did not undertake
to regulate the buying of grain in interstate commerce, nor to levy
a license tax upon the privilege, nor to fix the profit which could
be realized on grain bought, shipped, and sold in interstate
It is alleged that such legislation is in the interest of the
grain growers and essential to protect them from
Page 258 U. S. 61
fraudulent purchases, and to secure payment to them of fair
prices for the grain actually sold. This may be true, but Congress
is amply authorized to pass measures to protect interstate commerce
if legislation of that character is needed. The supposed
inconveniences and wrongs are not to be redressed by sustaining the
constitutionality of laws which clearly encroach upon the field of
interstate commerce placed by the Constitution under federal
We agree with the circuit court of appeals that this legislation
is beyond the power of the state, as it is a regulation of
interstate commerce when applied to complainant's business. This
conclusion renders it unnecessary to consider whether the
provisions of the state act are in contravention of the regulations
provided in the Federal Grain Standards Act, as was held by the
circuit court of appeals.
The decree of the circuit court of appeals is
"Authority is given to a state Inspector appointed by the
"(a) To appoint a Chief Deputy Inspector of Grades, Weights and
Measures; a Chief Elevator Accountant; Deputy Inspector of Grades,
Weights and Measures; state Deputy Inspector of Grades, Weights and
Measures, and Warehouse Inspectors;"
"(b) To issue licenses to warehouses, buyers and solicitors of
grain and other agricultural products;"
"(c) To establish uniform grades for grain, etc., for the North
Dakota; to alter and modify such grades;"
"(d) To establish uniform grade certificates used in marketing
the grain, etc.;"
"(e) To hear and determine appeals from state Deputy Inspectors
and from Deputy Inspectors of Grades, Weights, and Measures;"
"(f) To conduct investigations in regard to marketing, grading,
and weighing of grain, etc.;"
"(i) To establish a reasonable margin to be paid producers of
grain by warehouses, elevators and mills;"
"(j) To fix and determine all charges for grading, inspecting
and weighing grain, etc.;"
"(k) To make rules, etc., to carry out the provisions of the
"Sec. 3. It is made the duty of the Inspector of Grades, Weights
and Measures to define and establish uniform grades and weights for
grain, etc. In establishing such grades, dockage shall be
considered as being of two classes: (1st) that having value, (2nd)
that having no value, the former to be paid for at its market
"Sec. 4. The term 'Deputy Inspector of Grades, Weights and
Measures' under this act means any firm, person, company,
corporation or association that buys, weighs and grades grain,
etc., and holds a license issued therefor by the state Inspector of
Grades, Weights and Measures."
"Sec. 5. The term 'State Deputy Inspector of Grades, Weights and
Measures' within the meaning of this Act is defined as one who is
in the employment of the North Dakota and has received an
appointment from the state Inspector of Grades, Weights and
"Sec. 10. Deputy Inspectors weigh, inspect and grade grain that
shall be offered for sale or shipment at their market place,
according to the provisions of this Act and the rules and
regulations established by the state Inspector. They shall issue a
certificate stating the kind of grain, etc., giving the grade,
test-weight per bushel and the reason for all grades below number
1, and shall deliver to the owner or agent of such grade said
certificate; it is also made their duty to accurately sample grain,
etc., in wagon loads, carloads or other containers and forward
samples thereof to the state Inspector of Grades, Weights and
Measures when instructed by him to do so."
"Sec. 11. The state Inspector may issue a license to any person
engaged in buying, weighing, inspecting and grading grain, etc., or
to the buyer of agent of a privately or publicly owned warehouse,
elevator or flour mill provided they pass an examination as to
their competency as may be prescribed by the state Inspector; the
license requires such Deputy Inspectors to fix grades and dockage
of grain, etc., inspected at their respective places of business --
and to weigh same according to this act, and the regulations
promulgated thereunder. State Inspectors may issue licenses to
persons soliciting or procuring assignments of grain, etc., after
they have passed an examination as to their competency; State
Inspectors may suspend or revoke licenses when he determines
licensee is incompetent, or has knowingly or carelessly graded
grain improperly, or has issued any false certificate of grading;
or violated act or rules made thereunder, etc."
"Sec. 14. Makes it unlawful for any person to buy or grade
grain, etc., without a license, as a Deputy Inspector of Grades,
Weights and Measures, or for any person, corporation, association
operating a public warehouse to purchase, weigh, grade or inspect
grain, etc., without first obtaining a Deputy Inspector's license,
provided that this section shall not prohibit state Deputy
Inspectors from inspecting, weighing and grading grain, etc., under
the direction and supervision of the state Inspector, and shall not
prohibit producers from buying and selling grain, etc., to one
"Sec. 16. The state Inspector after cancellation or suspension
of license may permit the business of the licensee to be completed
and closed out under the inspection and supervision of a state
Deputy Inspector who shall be stationed at the place of business of
such licensee, all expenses to be paid by the licensee."
"Sec. 18. The state Inspector may establish central markets for
the display of samples of grain, etc. at cities or towns within, or
without the North Dakota. Such markets shall be open to any and all
persons desiring to buy and sell on said market, and shall be
operated and conducted under such rules and regulations as the
state Inspector may establish."
"Sec. 20. Makes it the duty of all Deputy Inspectors to keep a
record showing: names and addresses of patrons of their respective
warehouses, elevators, or mills, prices paid for agricultural
products, the grades given, prices received and the grades received
at terminal markets or within the state."
"Sec. 23. The state Inspector is authorized, upon complaint of a
producer of grain, etc., that any warehouse, elevator or mill is
paying an unreasonable margin, to investigate, determine and
establish a reasonable margin to be paid such producer for grain,
MR. JUSTICE BRANDEIS, dissenting, with whom MR. JUSTICE HOLMES
and MR. JUSTICE CLARKE concur.
The United States Grain Standards Act of August 11, 1916, c.
313, Part B, 39 Stat. 482, 483, authorizes the Secretary of
Agriculture to establish standards (or grades) of quality and
condition for different kinds of grain and provides that, when such
standards shall have been established, shipment of any such grain
for sale by grade in interstate commerce is prohibited unless the
grain has either been inspected before shipment or is to be
inspected en route or at destination by an inspector licensed under
the federal act. Shipment without such inspection is permitted
whenever the sale is by sample or by some description other than
the official grade. The act does not purport to deal in any way
with sales in intrastate commerce.
Page 258 U. S. 62
In 1919, the Legislature of North Dakota concluded that its
farmers were being systematically defrauded in purchases of their
grain made within the state. The buyers were largely local mills,
of which there are 160, and local elevators, of which there are
2,200. The fraud was perpetrated, in part, by underweighing and
undergrading in the unofficial inspection of the grain made locally
by or on behalf of the purchasers. In part, the fraud was
perpetrated by means of unconscionable bargains made locally,
through which valuable dockage was obtained from the farmer without
any payment therefor or by which the grain itself was bought at
less than its fair value. Against such frauds the federal act did
not purport to afford any protection. So far as the transactions
were wholly intrastate, Congress was without power to do so. So far
as the sales were part of transactions in interstate commerce, the
power was ample, but Congress did not see fit to exert it. And the
Secretary of Agriculture did not even exercise his authority to
provide for federal inspection and grading within North Dakota of
such grain as was shipped from there in interstate commerce. That
was left by him to be done after the grain reached Minnesota or
To protect the North Dakota farmer against these frauds
practiced by local buyers, its legislature enacted c. 138 of the
Laws of 1919. The statute seeks to effect protection (a) by
establishing a system of state inspection, grading and weighing;
(b) by prohibiting any one from purchasing grain before it is
inspected, graded and weighed (except that one producer may buy
from another); (c) by ascertaining in the course of inspection,
grading and weighing, the amount of dockage, and requiring a
purchaser of the grain either to pay separately for the dockage or
to return the same to the farmer; (d) by requiring payment to the
farmer of the fair value of grain -- the value to be
Page 258 U. S. 63
ascertained by fixing the so-called margin; (e) by insuring
compliance with the above provisions through the further provision
that only persons or concerns licensed to inspect, grade and weigh
may buy grain before it has been officially inspected. The
standards of quality and condition established by the Secretary of
Agriculture were adopted under regulations issued by the state
Inspector of Grades, Weights and Measures, and all state inspectors
(including licensed buyers) were required to observe those
Ordinarily, when a state's police power is exerted in connection
with sales, it is the buyer whom the law seeks to protect, and the
seller is licensed as part of the machinery to enforce the
regulations prescribed. I cannot doubt that the state has power as
broad to protect the seller, and, to that end, to license the
buyer. Compare House v. Mayes, 219 U.
. Ordinarily, the function of inspection, grading,
and measurement is committed to a public official or other
impartial person. But I am not aware of any constitutional
objection to imposing the duty upon the buyer where conditions
demand it. The requirement that the amount of the dockage shall be
ascertained and that it shall be paid for separately or be returned
does not differ in principle from the requirement upheld in
McLean v. Arkansas, 211 U. S. 539
that coal shall be measured before screening, or the requirement
upheld in Knoxville Iron Co. v. Harbison, 183 U. S.
, that store orders shall be redeemed in cash, or that
upheld in House v. Mayes, supra,
which prohibited, in the
purchase of grain, making arbitrary deductions from the actual
weight. The requirement that the buyer shall take only a proper
margin for graded grain is, in effect, requiring that he pay a fair
price. Laws designed to prevent unfair prices are ordinarily
enacted to protect consumers. But there is no constitutional
objection to protecting producers against unconscionable bargains
Page 258 U. S. 64
are such that it is they who require protection. Nor can there
be any constitutional objection to using, as a factor in
determining what is fair the price prevailing in terminal markets
-- even if they happen to be located in another state.
Whether the purchases involved in this case were intrastate or
interstate commerce we need not decide. For the fact that a sale or
purchase is part of a transaction in interstate commerce does not
preclude application of state inspection laws, unless Congress has
occupied the field or the state regulation directly burdens
interstate commerce. That neither of these exceptions applies here
appears from the description of the operation of the federal and
the state laws given below in the opinion of Judge Amidon.
Compare Savage v. Jones, 225 U. S. 501
Merchants Exchange v. Missouri, 248 U.
; Corn Products Refining Co. v. Eddy,
249 U. S. 427
Crescent Cotton Oil Co. v. Mississippi, 257 U.
, and New York Central R. Co. v.
Winfield, 244 U. S. 147
244 U. S. 156
note 1. The requirement of a license and the payment of a $10
license fee, if applied to nonresidents not regularly engaged in
buying grain within the state, might perhaps be obnoxious to the
commerce clause. But the objection, if sound, would not afford this
plaintiff ground for attacking the validity of the statute. Lee
v. New Jersey, 207 U. S. 67
. It is
a North Dakota corporation, owner of an elevator within the state,
and is carrying on business there under the laws of the state as a
public warehouseman. Compare Brass v. Stoeser,
153 U. S. 391
153 U. S.
-396. It is possible also that some provision in the
license or some regulation issued by the state Inspector is
obnoxious to the commerce clause. If so, a licensee may disregard
it. Cargill Co. v. Minnesota, 180 U.
. Even if the margin clause should be held a
burden upon interstate commerce, still that would not invalidate
the whole statute. The margin clause is separable from the other
Page 258 U. S. 65
of the act, and it could be eliminated without affecting the
operation of any other feature of the state system. Compare
Presser v. Illinois, 116 U. S. 252
Bowman v. Continental Oil Co., 256 U.
. And it is clear that the legislature would have
wished to secure the protection afforded by the other provisions,
if this one should be held to be beyond the power of the state.
That it was not the purpose of Congress to supersede state
inspection and grading acts is made manifest by § 29 of the United
States Grain Standards Act (p. 490). Merchants' Exchange v.
p. 248 U. S.
To strike down this inspection law, instead of limiting the
sphere of its operation, seems to me a serious curtailment of the
functions of the state and leaves the farmers of North Dakota
defenseless against what are asserted to be persistent, palpable