1. Under § 301(h) of the Federal Food, Drug, and Cosmetic Act of
1938, which prohibits the giving of a false guaranty that any food,
drug, device, or cosmetic is not adulterated or misbranded within
the meaning of the Act, it is an offense to give a false guaranty
to one engaged wholly or partly in an interstate business,
irrespective of whether the guaranty leads in any particular
instance to an illegal shipment in interstate commerce. P.
331 U. S.
437.
2. As thus construed, § 301(h) is a valid exercise of the power
of Congress under the Commerce Clause of the Federal Constitution.
Pp.
331 U. S.
437-438.
Reversed.
In a prosecution for violation of the Federal Food, Drug, and
Cosmetic Act, the District Court sustained the defendant's motion
to dismiss the information. The Government appealed directly to
this Court under the Criminal Appeals Act.
Reversed, p.
331 U. S.
438.
MR. JUSTICE MURPHY, delivered the opinion of the Court.
This appeal brings before us § 301(h) of the Federal Food, Drug
and Cosmetic Act of 1938, 52 Stat. 1040, 1042,
Page 331 U. S. 433
21 U.S.C. § 331(h), which prohibits the giving of a false
guaranty that any food, drug, device or cosmetic is not adulterated
or misbranded within the meaning of the Act.
Appellee does business in San Diego, California, under the name
of Kelp Laboratories. An information has been filed charging
appellee with having given a false guaranty in violation of §
301(h). The following facts have been alleged: in February, 1943,
appellee gave a continuing guaranty to Richard Harrison Products,
of Hollywood, California, stating that no products thereafter
shipped to the latter would be adulterated or misbranded within the
meaning of the Act. On February 24, 1945, while the guaranty was in
full force and effect, appellee consigned to Richard Harrison
Products at Hollywood, a shipment of vitamin products which were
allegedly adulterated and misbranded, thereby making the guaranty
false in respect of that shipment. Prior and subsequent to the date
of the shipment, Richard Harrison Products was engaged in the
business of introducing and delivering for introduction into
interstate commerce quantities of the vitamin product supplied by
appellee.
Appellee moved to dismiss the information on the ground that it
did not state an offense. The argument was that § 301(h) applies
only to a guaranty that is false relative to an interstate
shipment, whereas the alleged shipment here was to a consignee
within California, the state of origin, and there was no allegation
that the consignee purchased the order for someone outside
California or that it intended to sell the products in its
interstate, rather than its intrastate, business. The District
Court gave an oral opinion sustaining appellee's contention and
granting the motion to dismiss. The case is here on direct appeal
by the United States.
Page 331 U. S. 434
The Federal Food, Drug, and Cosmetic Act rests upon the
constitutional power resident in Congress to regulate interstate
commerce. Article 1, § 8, cl. 3. To the end that the public health
and safety might be advanced, it seeks to keep interstate channels
free from deleterious, adulterated, and misbranded articles of the
specified types.
United States v. Dotterweich,
320 U. S. 277,
320 U. S. 280.
It is in that interstate setting that the various sections of the
Act must be viewed.
But § 301(h), with which we are concerned, does not speak
specifically in interstate terms. It prohibits the "giving of a
guaranty or undertaking referred to in section 303(c)(2), which
guaranty or undertaking is false," the only exception being as to a
false guaranty given by a person who, in turn, relied upon a
similar guaranty given by the person from whom he received in good
faith the adulterated or misbranded article. [
Footnote 1] Nothing on the face of the section
limits its application to guaranties relating to articles
introduced or delivered for introduction into interstate commerce.
From all that appears, its proscription plainly extends to the
giving of any false statutory guaranty, without regard to the
interstate or intrastate character of the shipment in question, to
those who are engaged in the business of making interstate
shipments.
Nor do we find any interstate limitation of the type which
appellee proposes in the reference made in § 301(h)
Page 331 U. S. 435
to § 303(c)(2). [
Footnote 2]
That reference is made simply to define the type of guaranty or
undertaking the falsification of which is prohibited by § 301(h).
Instead of spelling out the matter, § 301(h) adopts the reference
in § 303(c)(2) to
"a guaranty or undertaking signed by, and containing the name
and address of, the person residing in the United States from whom
he received in good faith the article, to the effect . . . that
such article is not adulterated or misbranded, within the meaning
of this Act, designating this Act."
The fact that § 303(c)(2) relieves a holder of such a guaranty
from the criminal penalties provided by § 303(a) for violating §
301(a) does not carry over the interstate limitation of § 301(a) to
§ 301(h). Section 301(a) prohibits the introduction or delivery for
introduction into interstate commerce of illicit articles,
[
Footnote 3] and § 303(c)(2)
relieves one from the liabilities of such introduction if one has a
guaranty or undertaking as therein described. Section 301(h)has
adopted that description for the entirely different purpose of
informing persons what kind of a guaranty or undertaking may not be
given falsely. In other words,
Page 331 U. S. 436
§ 301(a) is directed to illegal interstate shipments, while §
301(h) is directed to the giving of false guaranties. Guaranties as
described in § 303(c)(2) may be used by interstate dealers in
connection with either interstate or intrastate shipments, and
those guaranties that are false are outlawed by § 301(h).
It is true, of course, that the guaranty referred to in §
303(c)(2) is one given for the purpose of protecting the dealer "in
case of an alleged violation of section 301(a)," thereby relieving
him of liability if he reships adulterated or misbranded goods in
interstate commerce. But, where such a guaranty, as in this case,
is given to a dealer regularly engaged in making interstate
shipments, and who may therefore have need of the guaranty, §
301(h) imposes liability on the guarantor if that guaranty turns
out to be false. And that liability attaches even where the
particular shipment which renders the guaranty false is not alleged
to have been an interstate one.
It is significant that § 301(h) had no counterpart in the
predecessor statute, the Food and Drugs Act of 1906, 34 Stat. 768.
Under § 9 of that Act, a dealer could not be prosecuted for
shipping adulterated or misbranded articles in interstate commerce
if he had a guaranty of a type similar to that referred to in the
present statute. If there were such a guaranty, the guarantor was
subject to the penalties which would otherwise attach to the
dealer. The result was that the guarantor was not liable on account
of a false guaranty unless the dealer had shipped the prohibited
article in interstate commerce.
Steinhardt Bros. & Co. v.
United States, 191 F. 798, 800;
United States v. Charles
L. Heinle Specialty Co., 175 F. 299, 300, 301. There was no
liability for issuing a false guaranty as such to one engaged in an
interstate business. But, in the 1938 Act, Congress added a new
liability in the form
Page 331 U. S. 437
of § 301(h), making the guarantor liable for giving a false
guaranty of the type referred to in § 303(c)(2). We find it
impossible to say that the framers of the 1938 Act added § 301(h)
for the useless purpose of achieving the same result as had been
reached under the 1906 Act without such a provision.
We thus conclude that § 301(h) definitely proscribes the giving
of a false guaranty to one engaged wholly or partly in an
interstate business irrespective of whether that guaranty leads in
any particular instance to an illegal shipment in interstate
commerce. Such a construction is entirely consistent with the
interstate setting of the Act. A manufacturer or processor
ordinarily has no way of knowing whether a dealer, whose business
includes making interstate sales, will redistribute a particular
shipment in interstate or intrastate commerce. But if he guarantees
that his product is not adulterated or misbranded within the
meaning of the Act, he clearly intends to assure the dealer that
the latter may redistribute the product in interstate commerce
without incurring any of the liabilities of the Act. And the dealer
is thereby more likely to engage in interstate distribution without
making an independent check of the product. The possibility that a
false guaranty may give rise to an illegal interstate shipment by
such a dealer is strong enough to make reasonable the prohibition
of all false guaranties to him, even though some of them may
actually result only in intrastate distribution. By this means,
some of the evils which Congress sought to eliminate are cut down
at their source, and the effectiveness of the Act's enforcement is
greatly enhanced.
So construed, § 301(h) raises no constitutional difficulties.
The commerce clause of the Constitution is not to be interpreted so
as to deny to Congress the power to make effective its regulation
of interstate commerce.
Page 331 U. S. 438
Where that effectiveness depends upon a regulation or
prohibition attaching regardless of whether the particular
transaction in issue is interstate or intrastate in character, a
transaction that concerns a business generally engaged in
interstate commerce, Congress may act. Such is this case.
The judgment of the District Court is accordingly
Reversed.
[
Footnote 1]
Section 301(h) prohibits
"The giving of a guaranty or undertaking referred to in section
303(c)(2), which guaranty or undertaking is false, except by a
person who relied upon a guaranty or undertaking to the same effect
signed by, and containing the name and address of, the person
residing in the United States from whom he received in good faith
the food, drug, device, or cosmetic; or the giving of a guaranty or
undertaking referred to in section 303(c)(3), which guaranty or
undertaking is false."
[
Footnote 2]
Section 303(c)(2) provides that no person shall be subject to
the penalties of § 303(a)
"for having violated section 301(a) or (d) if he establishes a
guaranty or undertaking signed by, and containing the name and
address of, the person residing in the United States from whom he
received in good faith the article to the effect, in case of an
alleged violation of section 301(a), that such article is not
adulterated or misbranded within the meaning of this Act,
designating this Act, or to the effect, in case of an alleged
violation of section 301(d), that such article is not an article
which may not, under the provisions of section 404 or 505, be
introduced into interstate commerce."
[
Footnote 3]
Section 301(a) prohibits "[t]he introduction or delivery for
introduction into interstate commerce of any food, drug, device, or
cosmetic that is adulterated or misbranded."
MR. JUSTICE JACKSON, dissenting.
Stretch the Food and Drugs Act as we will, I cannot make it
cover this charge as a crime. The statutory scheme is to make a
crime of "The introduction or delivery for introduction into
interstate commerce" of adulterated or misbranded goods. 52 Stat.
1042, 21 U.S.C. § 331(a) and (d).
But since many shippers buy goods of others and do not know
their precise ingredients, Congress allowed an escape for the
violator, provided he acted in good faith and could trace the
responsibility to another. This he must do by producing a signed
guaranty or undertaking, and the statute requires that it shall be
conditioned
"to the effect,
in case of an alleged violation of §
331(a), that such article is not adulterated or misbranded . . . or
to the effect,
in case of an alleged violation of §
331(d), that such article is not an article"
forbidden shipment by stated paragraphs of the Act. (Emphasis
added.) 52 Stat. 1043, 21 U.S.C. § 333(c).
It will be noticed that Congress not only provided, but
repeated, that the statutory bond required is "in case of an
alleged violation" by introducing or delivering for introduction of
goods in interstate commerce. No such violation has been alleged
here; these goods were never introduced or delivered for
introduction into interstate
Page 331 U. S. 439
commerce. But the Court seems to think it is enough that there
are some grounds for expecting that this crime possibly, or
probably, or perhaps pretty certainly, would eventually be
committed.
Of course, if the assured had committed this offense and had
fallen back on the guarantor, the statute which reached the assured
would not be sufficient. To punish the responsible person, it was
made a crime to give a false guaranty "referred to in" the statute.
52 Stat. 1042, 21 U.S.C. § 331(h).
The Government now seeks to exact criminal responsibility on a
guarantee, expressly conditioned only "in case of violation," in a
case of no violation. Until a violation is alleged, the guaranty
plays no statutory role at all. It might afford a cause of action
if false, but that is quite different from making it a crime. For
it is no guaranty at all for criminal prosecution purposes if
violation of neither § 331(a) nor § 331(d) is alleged. The statute
requires such violation to be alleged only, not proved, in order to
put the guarantor, rather than the assured to the proof. This is
the only instance I recall where the guarantor is liable when there
is no breach of the condition of the bond. The whole plan was to
have a substituted liability in case the violator of the Act became
such in good faith. This decision makes a new, independent, and
original liability where there has been no alleged violation by
moving the goods in interstate commerce.
I do not think we should take such liberties in expanding
criminal statutes in which the sovereign once was considered under
a duty to be explicit and the subject entitled to the doubt.