1. The business of a foreign corporation is property, and the
corporation a "person," within the meaning of the due process and
equal protection clauses of the Fourteenth Amendment. P.
278 U. S.
2. A foreign corporation may not be subjected to statutes that
are in conflict with the federal Constitution by a state in which
it has been permitted to do business. Id.
Page 278 U. S. 106
3. A state statute forbidding any corporation to own a pharmacy
or drugstore in addition to those owned at the time of the
enactment, unless all of its stockholders are licensed pharmacists,
violates the due process clause of the Fourteenth Amendment as
applied to a foreign corporation which owned such store under
license of the state, and sought to extend its business by
acquiring and operating others. P. 278 U. S.
4. Mere stock ownership in a corporation owning and operating a
drugstore can have no real or substantial relation to the public
health. P. 278 U. S.
5. That the stock of corporations owning and operating chain
drugstore is bought and sold on the stock exchanges and must be
largely held by person who are not registered pharmacists are facts
that may be judicially noticed. Id.
22 F.2d 993 reversed.
Appeal from a decree of the district court, composed of three
judges, dismissing the bill whereby appellant drugstore company
sought to enjoin the Attorney General and other officers of
Pennsylvania, from prosecuting it under an act regulating the
ownership of drugstores. The court had previously denied an
application for a preliminary injunction.
Page 278 U. S. 108
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
This appeal brings here for consideration a challenge to the
constitutionality of an act of the Pennsylvania legislature
approved May 13, 1927, Penna.Stats. Supp. 1928, §§ 9377a-1,
9377a-2, a copy of which will be found in the margin. [Footnote 1
] The act provides that every
pharmacy or drugstore shall be owned only by a licensed pharmacist,
and, in the case of corporations, associations and
Page 278 U. S. 109
requires that all the partners or members thereof shall be
licensed pharmacists, with the exception that such corporations as
are already organized and existing and duly authorized and
empowered to do business in the state and own and conduct
drugstores or pharmacies, and associations and partnerships, which
at the time of the passage of the act, still own and conduct
drugstores or pharmacies, may continue to own and conduct the
The appellant is a Massachusetts corporation authorized to do
business in Pennsylvania. At the time of the passage of the act,
appellant was empowered to own and conduct and owned and thereafter
continued to own and operate a number of pharmacies or drugstores
at various places within the latter state. After the passage of the
act, appellant purchased and took possession of two additional
Page 278 U. S. 110
drugstores in that state and carried on and continues and
intends to continue a carry on a retail drug business therein under
the title of "drugstore" or "pharmacy," including the compounding,
dispensing, preparation, and sale at retail of drugs, medicines,
etc. The business was and is carried on through pharmacists
employed by appellant and duly registered in accordance with the
statutes of the state. All of the members (stockholders) of the
appellant corporation are not registered pharmacists, and, in
accordance with the provisions of the act, the Pennsylvania state
Board of Pharmacy has refused to grant appellant a permit to carry
on the business. It further appears that the state Attorney General
and the district attorney of the proper county have threatened and
intend to and will prosecute appellant for its violation of the
act, the penalties for which are severe and cumulative. Suit was
brought to enjoin these officers from putting into effect their
threats, upon the ground that the act in question contravenes the
due process and equal protection clauses of the Fourteenth
Amendment. It is clear from the pleadings and the record, and it is
conceded, that, if the act be unconstitutional as claimed,
appellant is entitled to the relief prayed. Terrace v.
Thompson, 263 U. S. 197
263 U. S. 215
Ex parte Young, 209 U. S. 123
The court below, composed of three judges, heard the case upon
the pleadings, affidavits, and an agreed statement of facts, and
rendered a decree denying a preliminary injunction and, upon the
agreed submission of the case, a final decree dismissing the bill
for want of equity, 22 F.2d 993. The statute was held
constitutional upon the ground that there was a substantial
relation to the public interest in the ownership of a drugstore
where prescriptions were compounded. In support of this conclusion,
the court said that medicines must be in the store before they can
be dispensed; that what is there is dictated
Page 278 U. S. 111
not by the judgment of the pharmacist, but by those who have the
financial control of the business; that the legislature may have
thought that a corporate owner in purchasing drugs might give
greater regard to price than the quality, and that, if such was the
thought of the legislature, the court would not undertake to say
that it was without a valid connection with the public interest,
and so unreasonable as to render the statute invalid.
That appellant's business is a property right, Duplex Co. v.
Deering, 254 U. S. 443
254 U. S. 465
Truax v. Corrigan, 257 U. S. 312
257 U. S. 327
and, as such, entitled to protection against state legislation in
contravention of the federal Constitution is, of course, clear.
That a corporation is a "person" within the meaning of the due
process and equal protection clauses of the Fourteenth Amendment,
and that a foreign corporation permitted to do business in a state
may not be subjected to state statutes in conflict with the federal
Constitution is equally well settled. Kentucky Co. v. Paramount
Exch., 262 U. S. 544
262 U. S. 550
Power Co. v. Saunders, 274 U. S. 490
274 U. S. 493
274 U. S.
-497; Frost Trucking Co. v. R. Comm'n,
271 U. S. 583
271 U. S. 594
And, unless justified as a valid exercise of the
police power, the act assailed must be declared unconstitutional
because the enforcement thereof will deprive appellant of its
property without due process of law.
The act is sought to be sustained specifically upon the ground
that it is reasonably calculated to promote the public health, and
the determination we are called upon to make is whether the act has
a real and substantial relation to that end or is a clear and
arbitrary invasion of appellant's property rights guaranteed by the
Constitution. See Adair v. United States, 208 U.
, 208 U. S.
-174; Mugler v. Kansas, 123 U.
, 123 U. S. 661
The police power may be exerted in the form of state legislation
where otherwise the effect may be to invade rights guaranteed by
the Fourteenth Amendment only when such legislation bears
Page 278 U. S. 112
a real and substantial relation to the public health, safety,
morals, or some other phase of the general welfare. Here, the
pertinent question is: what is the effect of mere ownership of a
drugstore in respect of the public health?
A state undoubtedly may regulate the prescription, compounding
of prescriptions, purchase and sale of medicines, by appropriate
legislation to the extent reasonably necessary to protect the
public health. And this the Pennsylvania Legislature sought to do
by various statutory provisions in force long before the enactment
of the statute under review. Briefly stated, these provisions are:
no one but a licensed physician may practice medicine or prescribe
remedies for sickness; [Footnote
] no one but a registered pharmacist lawfully may have charge
of a drugstore; [Footnote 3
every drugstore must itself be registered, and this can only be
done where the management is in charge of a registered pharmacist;
provision is made to prevent the possession or sale of any impure
drug or any below the standard, strength, quality and purity as
determined by the recognized pharmacopoeia of the United States;
] none but a
registered pharmacist is permitted to compound physician's
prescriptions; [Footnote 6
finally, the supervision of the foregoing matters and the
enforcement of the laws in respect thereof are in the hands of the
State Board of Pharmacy, which is given broad powers for these
It therefore will be seen that, without violating laws the
validity of which is conceded, the owner of a drugstore, whether a
registered pharmacist or not, cannot purchase or dispense impure or
inferior medicines; he cannot,
Page 278 U. S. 113
unless he be a licensed physician, prescribe for the sick; he
cannot unless be he a registered pharmacist, have charge of a
drugstore or compound a prescription. Thus, it would seem, every
point at which the public health is likely to be injuriously
affected by the act of the owner in buying, compounding, or selling
drugs and medicines is amply safeguarded.
The act under review does not deal with any of the things
covered by the prior statutes above enumerated. It deals in terms
only with ownership. It plainly forbids the exercise of an ordinary
property right and, on its face, denies what the Constitution
guarantees. A state cannot, "under the guise of protecting the
public, arbitrarily interfere with private business or prohibit
lawful occupations or impose unreasonable and unnecessary
restrictions upon them." Burns Baking Co. v. Bryan,
264 U. S. 504
264 U. S. 513
See also Meyer v. Nebraska, 262 U.
, 262 U. S.
-400; Norfolk Ry. v. Public Serv. Comm'n,
265 U. S. 70
265 U. S. 74
Pierce v. Society of Sisters, 268 U.
, 268 U. S.
-535; Weaver v. Palmer Bros. Co.,
270 U. S. 402
270 U. S.
-415; Fairmont Co. v. Minnesota,
274 U. S. 1
274 U. S.
In the light of the various requirements of the Pennsylvania
statutes, it is made clear, if it were otherwise doubtful, that
mere stock ownership in a corporation owning and operation a
drugstore can have no real or substantial relation to the public
health, and that the act in question creates an unreasonable and
unnecessary restriction upon private business. No facts are
presented by the record, and, so far as appears, none was presented
to the legislature which enacted the statute, that properly could
give rise to a different conclusion. It is a matter of public
notoriety that chain drugstores in great numbers, owned and
operated by corporations, are to be found throughout the United
States. They have been in operation for many years. We take
judicial notice of the fact
Page 278 U. S. 114
that the stock in these corporations is bought and sold upon the
various stock exchanges of the country and, in the nature of
things, must be held and owned to a large extent by persons who are
not registered pharmacists. If detriment to the public health
thereby has resulted or is threatened, some evidence of it ought to
be forthcoming. None has been produced, and, so far as we are
informed, either by the record or outside of it, none exists. The
claim, that mere ownership of a drugstore by one not a pharmacist
bears a reasonable relation to the public health, finally rests
upon conjecture, unsupported by anything of substance. This is not
enough, and it becomes our duty to declare the act assailed to be
unconstitutional as in contravention of the due process clause of
the Fourteenth Amendment.
"Section 1. Every pharmacy or drugstore shall be owned only by a
licensed pharmacist, and no corporation, association or
copartnership shall own a pharmacy or drugstore, unless all the
partners or members thereof are licensed pharmacists; except that
any corporation organized and existing under the laws of the
commonwealth or of any other state of the United States, and
authorized to do business in the commonwealth, and empowered by its
charter to own and conduct pharmacies or drugstores, and any
association or copartnership which at the time of the passage of
this act, still owns and conducts a registered pharmacy or
pharmacies or a drugstore or drugstores in the commonwealth may
continue to own and conduct the same; but no other or additional
pharmacies or drugstores shall be established, owned, or conducted
by such corporation, association, or copartnership unless all the
members or partners thereof are registered pharmacists; but any
such corporation, association, or copartnership, which shall not
continue to own at least one of the pharmacies or drugstores
theretofore owned by it, or ceases to be actively engaged in the
conduct of a pharmacy, shall not be permitted thereafter to own a
pharmacy or a drugstore unless all of its partners or members are
registered pharmacists, and except that any person, not a licensed
pharmacist, who at the time of the passage of this act, owns a
pharmacy or a drugstore in the commonwealth, may continue to own
and conduct the same, but shall not establish or own any additional
pharmacy or drugstore, or if he or she ceases to operate such
pharmacy or drugstore, shall not thereafter own a pharmacy or
drugstore, unless he or she be a registered pharmacist, and except
that the administrator, executor, or trustee of the estate of any
deceased owner of a registered pharmacy or drugstore, may continue
to own and conduct such pharmacy or drugstore during the period
necessary for the settlement of the estate: Provided, that nothing
in this section shall be construed to prevent or affect the
ownership, by other than a registered pharmacist, of a store or
stores wherein the sale or manufacture of drugs or medicines is
limited to proprietary medicines and commonly used household drugs,
provided such commonly used household drugs are offered for sale or
sold in packages which have been put up ready for sale to consumers
by pharmacists, manufacturing pharmacists, wholesale grocers, or
wholesale druggists. . . ."
"Section 2. Any person, copartnership, or corporation violating
the provisions of this act shall be guilty of a misdemeanor and,
upon conviction thereof, shall be sentenced to pay a fine of not
more than one hundred dollars. Each day any such pharmacy is owned
contrary to the provisions of this act shall be considered a
Pa.St.1920, § 16779.
Pa.St.1920, §§ 9323, 9327.
Pa.St. Supp. 1928, § 9329a-2.
Pa.St.1920, § 9337; Pa.St. Supp. 1928, § 9339.
Pa.St.1920, §§ 9317, 9323.
MR. JUSTICE HOLMES.
A standing criticism of the use of corporations in business is
that it causes such business to be owned by people who do not know
anything about it. Argument has not been supposed to be necessary
in order to show that the divorce between the power of control and
knowledge is an evil. The selling of drugs and poisons calls for
knowledge in a high degree, and Pennsylvania, after enacting a
series of other safeguards, has provided that, in that matter, the
divorce shall not be allowed. Of course, notwithstanding the
requirement that, in corporations hereafter formed, all the
stockholders shall be licensed pharmacists, it still would be
possible for a stockholder to content himself with drawing
dividends and to taken no hand in the company's affairs. But
obviously he would be more likely to observe the business with an
intelligent eye than a casual investor who looked only to the
standing of the
Page 278 U. S. 115
stock in the market. The Constitution does not make it a
condition of preventive legislation that it should work a perfect
cure. It is enough if the questioned act has a manifest tendency to
cure, or act least to make the evil less. It has been recognized by
the professions, by statutes, and by decisions, that a corporation
offering professional services is not placed beyond legislative
control by the fact that all the services in question are rendered
by qualified members of the profession. See People v. Title
Guarantee & Trust Co.,
227 N.Y. 366; Tucker v. New
York State Board of Pharmacy,
217 N.Y.S. 217, 220; Matter
of Cooperative Law Co.,
198 N.Y. 479; People v. Merchants'
189 Cal. 531; New Jersey Photo
Engraving Co. v. Carl Schonert & Sons,
95 N.J.Eq. 12;
Hodgen v. Commonwealth,
142 Ky. 722.
But for decisions to which I bow, I should not think any
conciliatory phrase necessary to justify what seems to me one of
the incidents of legislative power. I think however that the police
power, as that term has been defined and explained, clearly extends
to a law like this, whatever I may think of its wisdom, and that
the decree should be affirmed.
Of course, the appellant cannot complain of the exception in its
favor that allows it to continue to own and conduct the drugstores
that it now owns. The Fourteenth Amendment does not forbid statutes
and statutory changes to have a beginning, and thus to discriminate
between the rights of an earlier and those of a later time.
Sperry & Hutchinson Co. v. Rhodes, 220 U.
, 220 U. S.
MR. JUSTICE BRANDEIS joins in this opinion.