1. State regulation of the business of commission merchants who
solicit consignments of farm produce from within and without the
State and sell them locally on commission affects interstate
commerce only indirectly, and is within the police power, in the
absence of conflicting regulation by Congress. P.
298 U. S.
157.
2. An Illinois statute requiring that commission merchants who
solicit for sale and sell within the State consignments of farm
produce, including fresh fruit and vegetables consigned from
outside the State, shall procure a license, post a bond, keep
records, and account and pay for produce received for sale,
held not inconsistent with the Act of Congress of June 10,
1930, which requires those who are engaged in the business of
receiving in interstate or foreign commerce fresh fruits and
vegetables, for sale on commission, to procure a license from the
Secretary of Agriculture, and
Page 298 U. S. 156
which covers in part the same ground as the Illinois law, but
which does not require a bond and expressly declares that state
statutes dealing with the same subjects as the federal Act shall
remain in effect except insofar as they are inconsistent with it.
P.
298 U. S.
158.
361 Ill. 405, 198 N.E. 356, affirmed.
Appeal from a judgment sustaining a judgment in favor of the
Director of Agriculture of the Illinois, in consolidated actions on
two bonds, given by a commission merchant pursuant to an Illinois
statute for the security of consignors of farm produce. The surety
took the appeal, severing the principal, which had become
bankrupt.
MR. JUSTICE ROBERTS delivered the opinion of the Court.
An Illinois statute [
Footnote
1] forbids persons, associations, and corporations to receive,
sell, offer, or solicit consignments of farm produce for sale on
commission within Illinois unless licensed, requires an applicant
for a license to make a showing as to character, responsibility,
and good faith in the conduct of the proposed business, and directs
that a license must be procured for each location where the
business is to be transacted, a fee paid therefor, and a bond, in
the sum of $5,000, with satisfactory surety, executed, conditioned
on honest accounting and handling of produce received and against
fraudulent conduct. Provision is made for the granting and
revocation of licenses
Page 298 U. S. 157
by the Director of Agriculture. A licensee is required to follow
certain business methods, to keep records, which are to be subject
to inspection, to account and to pay for produce received for sale.
The Director is empowered to bring action upon the licensee's bond
for the recovery of sums due consignors for goods sold, if payment
is not made by the licensee, or for the recovery of damages
suffered by consignors as a result of fraudulent acts or wrongful
handling on the part of the licensee. Should the penalty of the
bond prove insufficient to pay all such liabilities, the consignors
are to receive payment of any amount recovered in proportion to
their several claims.
The Cross Company took licenses, and the appellant became surety
on its bonds, for the years ending July 1, 1932, and July 1, 1933.
In October, 1932, the Cross Company became bankrupt, and failed to
account for numerous consignments of fresh fruits and vegetables.
Some were shipped from Illinois, but most were from other states.
The Director of Agriculture brought actions in a state court on
both bonds. The court consolidated the cases and they were tried
together on stipulated facts.
The appellant, in addition to defenses raising no federal
question, pleaded that the statute was beyond the state's power
because a restriction upon, and a regulation of, interstate
commerce. Judgment was entered against the Cross Company and the
appellant. Both appealed to the Supreme Court of the State, which
affirmed the judgment. [
Footnote
2] The appellant summoned and severed the Cross Company and
prosecuted an appeal to this Court.
The sole question presented is the constitutional validity of
the act as it affects the appellant's liability under its bonds.
The statute is a police regulation. The business regulated is
local, having its situs within the state
Page 298 U. S. 158
and being conducted therein. The fact that the commission
merchant contracts to sell, and sells, farm produce fowarded to him
from points without, as well as points within, the state is not
enough to condemn the regulation of a business carried on within
her borders. [
Footnote 3] Such
effect as the regulation has upon interstate commerce is indirect
and incidental, and does not trespass upon the power conferred on
Congress by article 1, § 8, of the Federal Constitution. In these
circumstances, until Congress, under the commerce power, adopts
inconsistent legislation, that of the state remains effective.
[
Footnote 4]
The appellant urges, however, that Congress has adopted an act
[
Footnote 5] regulating the
same business and the Cross Company was required to take a license
under that act. This alone is not sufficient to nullify the state
law, if the federal act does not cover the same field, or is
consistent with it. [
Footnote
6] But it is said the state and federal laws are similar in
their provisions, and therefore the exercise by Congress of its
paramount power nullifies the state statute. The federal act
requires every person, partnership, association, or corporation who
is engaged in the business of receiving in interstate or foreign
commerce perishable agricultural commodities, defined as "fresh
fruits and vegetables of every kind and character," for sale on
commission, to procure a license from the Secretary of
Agriculture.
Page 298 U. S. 159
The act parallels the state statute in respect of the
requirements of proper accounting, honest dealing, and prompt
remittance. While it provides for awards of reparation by the
Secretary of Agriculture for noncompliance with its prescriptions,
gives a right of action to consignors and shippers for violation of
its provisions, authorizes the revocation of licenses and imposes
penalties, thus covering to some extent the same ground as the
state law, it does not call for the giving of any bond by a
licensee. Moreover, § 15 provides:
"This Act shall not abrogate nor nullify any other statute,
whether Federal, dealing with the same subjects as this act; but it
is intended that all such statutes shall remain in full force and
effect except insofar only as they are inconsistent herewith or
repugnant hereto."
Thus, the act of Congress not only omits the requirement of a
bond, but affirmatively saves the provision of the Illinois act as
to that form of security. As respects the bond and the protection
thereby afforded to consignors, there is no inconsistency between
the two acts, and both may be given effect.
The judgment is
Affirmed.
[
Footnote 1]
Smith-Hurd, c. 5, §§ 17-24, Cahill's Ill.Stat. c. 5, §§
24-32.
[
Footnote 2]
People v. G. H. Cross Co., 361 Ill. 405, 198 N.E.
356.
[
Footnote 3]
W. W. Cargill Co. v. Minnesota, 180 U.
S. 452,
180 U. S. 470;
Ware & Leland v. Mobile County, 209 U.
S. 405;
Minnesota Rate Cases, 230 U.
S. 352,
230 U. S. 410;
South Covington & C. St. Ry. Co. v. Covington,
235 U. S. 537;
Hall v. Geiger-Jones Co., 242 U.
S. 539,
242 U. S. 557;
Federal Compress & Warehouse Co. v. McLean,
291 U. S. 17;
Chassaniol v. Greenwood, 291 U. S. 584.
[
Footnote 4]
Sherlock v. Alling, 93 U. S. 99;
Pennsylvania R. Co. v. Hughes, 191 U.
S. 477.
[
Footnote 5]
Act of June 10, 1930, c. 436, 46 Stat. 531. U.S.C. Tit. 7, §§
499a-499r.
[
Footnote 6]
Sligh v. Kirkwood, 237 U. S. 52;
Mintz v. Baldwin, 289 U. S. 346.