In a suit brought to restrain the enforcement of the statute of
Florida of 1913 imposing special license taxes on merchants using
profit sharing coupons and trading stamps on the ground that it
violates the contract and the commerce clauses of, and the due
process and equal protection provisions of the Fourteenth Amendment
to, the federal Constitution, and in which the district court,
under Judicial Code § 226, granted a preliminary injunction holding
that the statute violated the Fourteenth Amendment without stating
on which provision it rested its decision or determining whether
the statute violated other provisions of the Constitution, this
Court, on appeal from the order of injunction reversed, and
remanded with instructions to dismiss the bill, as the statute does
not offend any constitutional provisions under consideration, and
held that:
As the bill shows that the conditions of complainant's business
and property engaged therein are such that enforcement of the
statute would produce irreparable injury, it furnishes ground for
equitable relief.
On this appeal, this Court can pass on the constitutionality of
the statute on all of the grounds submitted for consideration.
A classification based on differences between a business using,
and one not using, such coupons and stamps is not so arbitrary as
to deny equal protection of the law.
A distinction in legislation does not deny equal protection of
the laws if any state of facts can be conceived that will sustain
it, and, even though such facts or their effect may be disputed,
courts cannot arbitrate such differences of opinion.
It is for the legislature to discern and correct evils not only
of definite injury, but also such as are obstacles to greater
public welfare, if within legislative authority, as is the use of
such coupons and stamps.
Quaere whether a statute relating to coupons and stamps
redeemable
Page 240 U. S. 343
exclusively in cash and credit on purchase is objectionable, the
statute and all the schemes under consideration in this case
involving other methods of redemption.
The use of such coupons and stamps in connection with retail
sales to individual purchasers and consumers and not designed to be
used by the manufacturer from another state to the state of
distribution are not transactions of interstate commerce, and
regulations of the use of such coupons and sales otherwise legal do
not interfere with, nor are they a burden, on interstate
commerce.
Regulation by a state of the use of such coupons and stamps in
connection with sales of tobacco is not prohibited by Rev.Stats. §
3394, as amended in 1897 and 1902; that section does not attempt to
protect and enforce permission as to retail sales within the
states.
Regulation of retail sales within the state does not in this
case amount to an attempt to control transportation of the packages
into the state from other states.
The statute is not unconstitutional as impairing obligation of
contracts, as it must be construed as having prospective operation,
and as not affecting sales completed before its enactment.
If a business is subject to regulation by the state and the
imposition of privilege taxes for carrying it on, contracts made in
its conduct are also subject to such regulation.
There are many restrictions upon liberty of contract and
business that do not amount to deprivation of liberty and property
without due process of law.
In conducting retail business, the use of such coupons and
stamps is not advertising, pure and simple. The latter is merely
identification and description of the article sold, apprising of
quality and space, while the former relies upon something other
than the article itself.
Whether the use of such coupons and stamps can or cannot be
called a lottery, it is still within the power of the legislature
to consider it as having similar evils, and the regulation thereof
by the legislature is not to be impeached and overruled by the
courts on account of difference of opinion in regard to the
conclusion reached.
The recognized rule that legislative opinion may not impose
judicial opinion as to what are fundamental rights does not
determine supremacy in any given instance, but the power of the
legislature to regulate conduct and contracts upon its conception
of the public welfare is only subject to review by the courts when
the legislation is unreasonable or purely arbitrary.
Even if the taxes imposed by the statute are prohibitory,
the
Page 240 U. S. 344
right to carry on business by using such coupons and stamps is
not so protected by the federal Constitution as to render such a
tax a violation of the due process provision of the Fourteenth
Amendment. The statute is not open to objection as depriving of
liberty and property without due process of law on account of
severity of its penalties intimidating against testing its
legality.
Ex parte Young, 209 U.
S. 123, distinguished.
214 F. 847 reversed.
A statute of Florida passed in 1913, imposing licenses and other
taxes, provides that merchants, druggists, and storekeepers shall
pay a license tax upon the cash value of the "stock of merchandise"
of $3 for the first $1,000 or fraction thereof, and $1.50 for each
additional $1,000 or fraction thereof. The tax upon wholesale
dealers is $1.50 upon each $1,000. The statute has this
proviso:
"Provided, further, That each and every person, firm or
corporation, who shall offer with merchandise bargained or sold in
the course of trade any coupon, profit-sharing certificate, or
other evidence of indebtedness or liability, redeemable in
premiums, shall pay annually a state license tax of five hundred
($500) dollars and a county license tax of two hundred and fifty
($250) dollars in each and every county in which said business is
conducted or carried on, and if more than one place of such
business shall be operated by any person, firm or corporation, a
separate state and county license shall be taken out for each such
place, and no person, firm or corporation shall offer with
merchandise, bargained or sold as aforesaid, any coupon,
profit-sharing certificate or other evidence of indebtedness or
liability, redeemable by any other person, firm or corporation than
the one offering the same without paying the above license for each
other person, firm or corporation who may redeem the same. The
license prescribed in this section shall be in addition to other
licenses prescribed by this Act. Any
Page 240 U. S. 345
person violating any of the provisions of this section, whether
acting for himself or as the agent of another, shall, on conviction
thereof, be punished by fine not exceeding one thousand ($1,000)
dollars or by imprisonment in the county jail not exceeding six
months."
"Mercantile agencies shall pay a license tax of one hundred
($100) dollars in each county in which an office is
established."
"Merchants using trading stamps shall pay a license tax of two
hundred and fifty ($250) dollars for each place of business where
they use such stamps."
"Merchant tailors shall pay a license tax of ten ($10) dollars
for each place of business."
This suit was instituted by appellees (Florida merchants)
against appellant Rast as tax collector of Duval County, Florida,
and the tax collectors of each county in the state, the different
state's attorneys, county solicitors, and prosecuting attorneys of
the circuits and counties of Florida. The purpose of the suit was
to restrain those officers from proceeding under the statute or
enforcing it. A preliminary and perpetual injunction was prayed,
and that the act be declared unconstitutional, illegal, and
void.
The bill is very elaborate, and we select from its repetitions
and condense the following: it alleges the various businesses in
which the complainants are engaged. The Van Deman & Lewis
Company is a Florida corporation and a wholesale grocer, doing
business as such and selling groceries in certain counties in the
state; Harkisheimer Company is also a Florida corporation and is a
retail grocer; J. S. Pinkussohn Cigar Company is a corporation
organized under the laws of South Carolina, and is a wholesale and
retail merchant, buying and selling cigars and other tobacco
products in the Cities of Jacksonville and Pensacola, Florida. With
these complainants were joined others, corporations and
individuals, doing business in Florida.
Page 240 U. S. 346
It is alleged that complainants and each of them, in the conduct
of their business, offer for sale and deal in various and numerous
articles of merchandise manufactured and produced in other states
than Florida by persons and corporations in those states and
shipped into Florida to be sold therein, and who, for the purpose
of advertising their businesses and increasing their sales, enclose
in the packages in which the merchandise is put up for market and
sale coupons, slips, certificates, and other profit-sharing
discount or premium tokens. The articles and the persons and
companies producing them are enumerated.
The manner or method of disposing of and redeeming and taking up
such coupons, etc., is alleged to be that the same are enclosed in
packages or the wrappers thereof, or are a part of the wrappers,
the packages are put into boxes, cases, or other receptacles or
enclosures and shipped by the manufacturer or producer from his
place of business outside of Florida to the merchants in Florida,
generally to a wholesale merchant or jobber, and are received by
such in Florida and sold to the retail merchants in that state. The
retail merchant sells them to his customers. When the latter have
accumulated a sufficient number of the coupons, etc., to entitle
them to receive a premium or article or payment therefor according
to some list, catalogue, or rule promulgated by the manufacturer,
producer, or original shipper, they send such coupons, etc., to
such manufacturer, producer, or original shipper, or, in some
instances, to a company or agency in some state other than Florida,
where they are redeemed or paid, or the articles which the
purchasers have selected are sent to them in consideration of such
coupons, etc., or for the same and a postage stamp or stamps, or a
small sum of money in addition thereto. And this in accordance with
the contract, agreement, or sale made to the purchasers by the
manufacturer, shipper, or producer outside of the
Page 240 U. S. 347
state. And it is alleged that the transactions so detailed, the
manufacture without the state and shipment to wholesale merchants
within the state, the sale by the latter to retail merchants, and
by the latter again to customers, constitute interstate
commerce.
That the form of the coupons, etc., varies, and when its
identity is secured as prescribed, it is evidence that each
purchaser of a package has bought a definite part of some article,
to be selected by him or her from a certain list, the list showing
a number of valuable articles which can be paid for by a certain
number of the tokens and a two-cent stamp.
In another case, there is an accumulation of the tokens which
are to be sent to the redemption or coupon agency or corporation
and exchanged for a valuable article of merchandise to be selected
by the purchaser from a list or catalogue furnished him.
Another form of coupons, etc., is where each of them is good for
a certain value -- for instance, one-half cent in presents or
premiums, the coupons being sent from the State of Florida to
another state. There are also other forms in which the coupons or
tokens are to be redeemed, paid for, or used in the purchase of
other articles of merchandise or in the accumulation of premiums or
the like. All of the articles are known and largely used as
legitimate articles of commerce, and the transactions detailed are
interstate commerce.
That divers forms of coupons, etc., in connection with the sale
of merchandise, are used by the merchants of the state
substantially in similar form mentioned above, and the payment or
redemption is made by the Florida merchant in Florida, sometimes by
the delivery of some valuable article of merchandise, sometimes by
the payment of cash or the allowance of credit on account of
purchases in the nature of a discount, or for or on account of a
certain amount having been purchased of the merchant by the
Page 240 U. S. 348
customer. The tokens are sometimes in the form of a cash
register slip or memorandum.
That the methods detailed are a form of advertising and the use
of such coupons, etc., induces purchasers to trade more largely
with and to make more of their purchases from complainants on
account of the additional inducement of such coupons, etc.; that
they increase the businesses of complainants and their profits, and
enable them to carry and sell stocks of goods covering the various
articles of merchandise, and are of great importance and value to
complainants in their several businesses, and, if they are
prevented from using them, their businesses will be decreased to
the amount of many thousands of dollars.
That, at the time of the passage of the statute, complainants
had on hand large amounts and quantities of goods, and if they are
prevented from selling them in the manner detailed, they will be
subjected to great loss and damage, will be embarrassed and injured
in their businesses, and the value of their property destroyed or
greatly lessened.
That the transactions and methods give an additional value to
purchasers, and they are substantially benefited thereby. That
there is no element of gambling or chance in the transactions, and
nothing in them or their methods prejudicial to the public health,
safety, morals, or welfare.
That, if there is a cessation of the transactions, purchasers
and customers who have received tokens, but have not accumulated a
sufficient number of them, will be unable to have the same redeemed
or paid, or secure articles therewith. That about 500 merchants are
similarly affected with complainants.
That certificates or tokens commonly called trading stamps, and
so designated in the statute, are substantially like some of the
tokens hereinbefore mentioned and
Page 240 U. S. 349
described, and, when delivered by retail merchants with the
various articles sold to purchasers, such purchasers are entitled
to purchase or receive various valuable articles of merchandise,
according to a list or catalogue, upon the presentation of the
stamps to some person or company that has issued the trading
stamps, and that redeems them according to the provisions of such
list or catalogue.
That, under the statute, every person, firm, or corporation
offering with merchandise any coupon, profit-sharing certificate,
or other evidence of indebtedness or liability redeemable in
premiums is not only liable to pay the license tax for himself or
itself, but to pay such tax for every other person, firm, or
corporation who may redeem any such coupon, etc.
That such taxes are unreasonable, enormous, and prohibitive on
account of the number of articles sold, and by reason of the
provision requiring complainants and each and every other person in
like situation to pay the license tax to the state, and it is
alleged with much circumstance that, from their number and the
number of the articles that each sells, each and every person would
be required to pay for license tax to the state and for one county
or one place of business alone $15,000 per year, or one half that
amount for six months or less time.
That, as a result of the statute, if the tax be paid for only
100 persons, or persons, firms, or corporations, it would amount to
$75,000 per annum; if for 1,000 persons, or persons, firms, or
corporations in Florida for one place of business, it would amount
to $750,000, and so on as to any number to be paid by and for each
and every manufacturer, producer, or shipper.
That such coupons, etc., enclosed in packages of tobacco and so
delivered are authorized and rendered lawful by § 3394 of the
Revised Statutes of the United
Page 240 U. S. 350
states, as amended by § 10 of the Act of July 24, 1897, 30 Stat.
206, c. 11, and by § 2 of the act of July 1, 1902, 32 Stat. 715, c.
1371.
That the provision of § 35 (the provision quoted above) of the
Florida statute and all provisions and enactments for its
enforcement are in violation of the Constitution of the United
States in that they violate (1) the commerce clause, (2) the due
process clause of the Fourteenth Amendment, and (3) the equal
protection clause of that Amendment. There are many specifications
of the particulars, and it is alleged: (1) the statute
discriminates between merchants in similar lines of business; (2)
between merchants who advertise in a certain manner and those who
advertise in another manner; (3) the taxes are not upon the
business or occupation of complainants, but upon the mere incidents
of the business, and are an unreasonable and illegal interference
with the method and manner of conducting the business; (4) the
taxes are unreasonable, arbitrary, oppressive, discriminatory, and
prohibitory for the reasons already detailed, and are far in excess
of the amounts of taxes or licenses fixed or imposed when other
methods of advertising or inducing custom are used, and will
prevent complainants from carrying on their legitimate business;
(5) they are not productive of revenue, are in excess of the
profits of the businesses, and are in fact prohibitory; (6) that
the methods employed by complainants in no wise affect the public
health, morals, or welfare, and the imposition of the taxes is in
no way a legitimate or lawful exercise of the police power of the
state; (7) that the fines are so onerous, drastic, excessive, and
enormous as to deter complainants in going on and doing business as
they have heretofore done, and testing the validity of the statute
in a court of law.
That, by the statute and in § 59 thereof, a violation of its
provisions is made a misdemeanor, and it is provided
Page 240 U. S. 351
in § 35 that, for failure to pay any of the license taxes, any
person, whether acting for himself or as agent of another, may be
imprisoned in the county jail, not exceeding six months.
It is further alleged that the statute impairs the obligations
of the contracts entered into between complainants and their
customers, in violation of clause 1, § 10, Article I, of the
Constitution of the United States.
That the officers of the state threaten to enforce the statute,
and that the state's attorneys, county solicitors, and prosecuting
attorneys of the several circuits and counties of the state are
respectively empowered and authorized to prosecute in the several
courts of the state, and such officers are threatening to prosecute
divers of the complainants, and it is alleged that a multitude of
prosecutions will be instituted, with seizures, sales, and injury
to property, if a temporary restraining order be not granted. There
is a prayer for such order and for a perpetual injunction.
A restraining order was issued. The defendants appeared
specially and filed motions to dismiss the suit, and as grounds
thereof denied the allegations and implications of the bill as to
the various grounds of infringement of the Constitution of the
United States charged against the statute, and set up that
complainants had a complete and adequate remedy at law. That the
bill sought a restraint of the enforcement of a criminal statute of
the state, and to enjoin an alleged threatened seizure of property
in the enforcement of the alleged illegal tax, and the enforcement
of the collection of a tax imposed by a statute of the state of a
general and public nature.
A motion was made for an interlocutory injunction, hearing upon
which was referred to three judges. Upon the hearing, the
injunction was ordered (214 F. 827), to review which this appeal
has been prosecuted.
Page 240 U. S. 355
MR. JUSTICE McKENNA, after stating the case as above, delivered
the opinion of the Court.
It was determined that the bill set forth grounds of equitable
relief; that the condition of complainants' businesses and of the
property engaged in them was such that the statute, if exerted
against complainants and their property, would produce irreparable
injury, citing
Ex Parte Young, 209 U.
S. 123;
Dobbins v. Los Angeles, 195 U.
S. 223;
Davis & Farnum Mfg. Co. v. Los
Angeles, 189 U. S. 207. We
concur in this view.
Passing on the constitutional questions involved, the
Page 240 U. S. 356
court was of opinion that the statute violated the Fourteenth
Amendment, and considered it unnecessary to decide whether there
was an interference with interstate commerce.
It is not entirely clear upon what clause of the Fourteenth
Amendment the court rested its judgment. The equality clause was
selected for special comment. After stating the limitation upon
legislation and the power of classification, the court proceeds to
say:
"Is there a just basis for the classification attempted in this
section [§ 35] of the act? Merchants, etc., all pay a tax according
to the value of the stock carried by each, but if they sell goods
for which coupons, etc., are given by themselves or others, then
they must pay this additional tax for each place of business in
each and every county in which said business is conducted or
carried on. And if goods are offered for sale with which coupons
are given, redeemable by persons other than the seller, then this
tax must be paid by him for each of said lines of goods."
"We can see no just basis for such classification. It is an
arbitrary selection of one merchant for the imposition of a
'greater burden' than that imposed on others in the same calling
and condition."
But the court went farther, and declared that "the use of
coupons, etc., was an entirely legitimate method of advertising,"
and that such had been the ruling in state cases which were cited.
And, excluding the application of cases adduced by defendants to
sustain the statute as an exercise of the police power of the
state, the court said: "As before pointed out, this coupon business
is legitimate, in no way affecting the health or morals of the
community."
Though it is not clear, as we have said, certainly not explicit
in the opinion of the court, whether it decided the due process
clause as well as the equal protection clause of the Fourteenth
Amendment was violated by the statute,
Page 240 U. S. 357
we may assume that the violation of both was decided. It may be
that the court thought that, even though the use of coupons was a
legitimate method of advertising, and not affecting the health or
morals of the community, it was nevertheless within the power of
the state to license if the statute were free from discrimination,
or it may be that the court considered that the two grounds
interlocked, and were dependent upon the same reasoning. However,
the two grounds may be -- indeed, must be -- taken into
consideration, as they are submitted for decision.
The ground of discrimination, simply and separated from the
other attacks upon the statute, does not present much difficulty.
The difference between a business where coupons are used, even
regarding their use as a means of advertising, and a business where
they are not used is pronounced. Complainants are at pains to
display it. The legislation which regards the difference is not
arbitrary within the rulings of the cases. It is established that a
distinction in legislation is not arbitrary if any state of facts
reasonably can be conceived that would sustain it, and the
existence of that state of facts at the time the law was enacted
must be assumed.
Lindsley v. Natural Carbonic Gas Co.,
220 U. S. 61,
220 U. S. 78. It
makes no difference that the facts may be disputed or their effect
opposed by argument and opinion of serious strength. It is not
within the competency of the courts to arbitrate in such
contrariety.
Chi., Burl. & Quincy R. Co. v. McGuire,
219 U. S. 549;
German Alliance Ins. Co. v. Lewis, 233 U.
S. 389,
233 U. S.
413-414;
Price v. Illinois, 238 U.
S. 446,
238 U. S.
452.
It is the duty and function of the legislature to discern and
correct evils, and by evils we do not mean some definite injury,
but obstacles to a greater public welfare.
Eubank v.
Richmond, 226 U. S. 137,
226 U. S. 142;
Sligh v. Kirkwood, 237 U. S. 52,
237 U. S. 59.
And, we repeat, "it may make discriminations if founded on
distinctions that we cannot pronounce unreasonable and purely
arbitrary."
Quong
Page 240 U. S. 358
Wing v. Kirkendall, 223 U. S. 59,
223 U. S. 62,
and the cases cited above.
Of course, an element to be considered is the authority of the
legislature over the subject matter, and this will best be examined
in considering the contentions of complainants under the due
process clause. Preceding that, however, are the contentions based
on the commerce clause and the sanction which the Constitution
gives to the integrity of contracts.
First, as pertinent to our discussion, are the specific schemes
at which, it is said, the statute is directed, and we adopt
complainants' description of them. The first is
"where the Florida merchant issues his own coupon, certificate,
or cash register receipt, and himself makes payment or redemption
of the same, sometimes by the delivery of some valuable article of
merchandise, sometimes by the payment of cash or allowance of
credit on account of purchases, being in the nature of a discount,
or for or on account of a certain amount having been purchased of
the merchant by the customer."
In a word, it is a case where the Florida merchant issues his
own coupons and redeems them.
The second is
"where the manufacturer or shipper outside of the State of
Florida, in some other state of the Union, inserts such coupons or
certificates in packages of his goods which he ships to Florida,
and the ultimate purchaser or consumer takes such coupons or
certificates from such packages and returns them to such
manufacturer or shipper in such state outside of Florida, who gives
a premium for them and sends such premium or proceeds of redemption
to such ultimate purchaser or consumer in Florida who has forwarded
to him such coupons or certificates."
The merchandise so shipped into Florida is kept in stock by the
merchants of the state, and the coupons, etc., are delivered upon
the sale of the merchandise to their customers, who have them
redeemed in the
Page 240 U. S. 359
manner described. That is, the coupons are redeemed by the
person who originally issues them, the coupons, however, to repeat,
being delivered by the Florida merchant as a part of the
transaction between him and the purchaser from him at retail.
The third is
"where the manufacturer or shipper in a state other than Florida
inserts in the packages of his goods which he ships to Florida such
coupons or certificates which are taken from the packages by the
ultimate purchaser or consumer in Florida and sent to some company
or agency in some state of the United States outside of the State
of Florida other than the manufacturer or shipper of the goods, to
be redeemed or paid, and the premium or proceeds thereof is
returned by such company or agency to the person in Florida who has
sent such coupons or certificates."
This differs from the other two cases in that a premium company
or agency other than the manufacturer or shipper himself is used
for the redemption or payment of the coupons or certificates. But
here again, the Florida merchant is a factor because it is in
completion of the sale by him at retail that the coupons are
delivered to the purchasers.
We are careful, by much repetition, to show the difference
between the cases, to distinguish between the premium systems, and
to show, as urged by counsel, that this case is not concerned with
a license tax upon a trading stamp business pure and simple, a
license upon companies engaged in such business being provided by
another section of the statute. [
Footnote 1]
It is well here to observe, to avoid misunderstanding, that the
redemption in the first scheme is
"
sometimes by the payment of cash or allowance of credit on
account of
Page 240 U. S. 360
purchases or for or on account of a certain amount having
been purchased of the merchant by the customer."
We are not concerned with a statute directed solely at such
method of redemption, or a business so confined. The Florida
statute imposes its license tax on coupons, etc., "redeemable in
premiums." And therefore, whether any other method of redemption --
be it by giving a discount or an allowance of credit simply --
would be amenable to objection, we express no opinion. In all of
the schemes, other methods of redemption are used and are attempted
to be justified.
With this comment we may say that all of the schemes have a
common character -- something is given besides that which is or is
supposed to be the immediate incentive to the transaction of sale
and purchase -- something of value given other than it, and even as
to the second and third schemes, the transactions are only executed
through the purchase at retail. In other words, they are not
designed for or executed through a sale of the original package of
importation, but in the packages of retail and sale to the
individual purchaser and consumer. This fixes their character as
transactions within the state, and not as transactions in
interstate commerce, and this is conceded as to the first scheme;
it is true as to the second and third schemes. All of the schemes
have their influence and effect within the state. Nor is such
influence and effect changed or lessened by the redemption of the
tokens outside of the state.
The transactions, therefore, are not in interstate commerce. The
sales, as we have said, are not in the packages of that commerce;
they are essentially local sales, schemes consummated by such
sales, and it is upon them and on account of their effect that the
statute has imposed its license tax, and not upon the shipment into
the state, nor their disposition in the packages of importation. Of
course, there is shipment to Florida merchants, but
Page 240 U. S. 361
for the disposition of the merchandise in retail trade. The
schemes contemplate such disposition, and are executed by it.
Detach the importations from the retail sale, consider only the
transportation to the state of merchandise in its original package,
being sold therein in such package, and there may indeed be
interstate commerce, but, so detached and so considered, the
importations are left without purpose, the schemes without
execution. Indeed, complainants contend for the right not only of
importations in the original package containing the coupons, but
the disposition of the goods and coupons through the retail
merchant. This, we repeat, has no protection in the commerce
clause.
Nor is the regulation of the statute prohibited by § 3394 of the
Revised Statutes of the United States as amended in 1897 (July 24,
c. 11, § 10, 30 Stat. 206) and 1902 (July 1, c. 1371, § 2, 32 Stat.
715). Section 3394 provides for a tax on cigars and cigarettes. By
the amendment of 1897, it was forbidden to pack in, attach to, or
connect with any package of tobacco or cigarettes anything but the
wrappers, and it was further provided that there should not be
affixed to, or branded, stamped, marked, written, or printed upon
the packages or their contents any promise or offer of, or any
order or certificate for, any gift, prize, premium, payment, or
reward. This provision upset the practice of manufacturers, and was
attacked on the ground that it was beyond the power of Congress
under the Constitution to enact, the prohibited practice being a
method of advertising. The provision was sustained.
Felsenhead
v. United States, 186 U. S. 126,
aff'g 103 F. 453. In 1902, the paragraph containing the
provision was amended so as to forbid the enclosure or attachment
to the packages of
"any paper, certificate, or instrument purporting to be or
represent a ticket, chance, share or interest in, or dependent upon
the event of a lottery,
Page 240 U. S. 362
nor any indecent or immoral picture, representation, print or
words."
Let it be granted that this provision permitted the enclosure in
the package of tobacco of tokens of the character with which this
case is concerned. It goes not farther, nor does it purport to go
farther. It does not attempt to protect and enforce the permission
to the retail sales of packages in the state. It might not legally
have such effect if attempted, and such attempt will not lightly be
inferred.
Savage v. Jones, 225 U.
S. 501;
Standard Food Co. v. Wright,
225 U. S. 540. The
statute of Florida does not seek to control the interstate
transportation of the packages; it controls only their sale in the
state through the retail merchant, or, it may be, directly to the
individual consumer for the purpose described, and in both cases
for the ultimate redemption of the tokens delivered with the
sale.
McDermott v. Wisconsin, 228 U.
S. 115, is not applicable. There, Congress, for the
effective execution of the food and drugs act, defined what the
"package" of commerce should be, and necessarily any law which
conflicted with it was void. In the case at bar, there is no such
definition. There is only permission to insert in the package
whatever the manufacturer of tobacco may choose, with a single
exception. There is no compulsion of use, and omission to avail of
the permission has no effect upon the purpose of Congress in the
enactment of the revenue laws which provide for the packing of
tobacco products.
The contract clause of the Constitution is also unavailable to
complainants. The statute must be held to have prospective
operation. Sales completed before its enactment are unaffected by
it. We say "sales completed," and by this we mean those in which
the right of redemption according to some of the schemes has
accrued, as distinguished from what is alleged in the bill as
"the
Page 240 U. S. 363
understanding and expectation" arising from one or more sales
that complainants would continue to sell to such purchasers other
articles so that they might be able to accumulate tokens and use
them. It cannot be said that there is an obligation to continue
sales or an obligation to continue purchases. Besides, as the
business is subject to regulation, the contracts made in its
conduct are subject to such regulation.
Louis. & Nash. R.
Co. v. Mottley, 219 U. S. 467, and
N.Y. Central R. Co. v. Gray, 239 U.
S. 583.
Having disposed of the other contentions of complainants, we are
brought to a consideration of the question whether the statute of
Florida offends the due process clause of the Fourteenth Amendment
of the Constitution. In other words, does the statute interfere
with the business liberty of complainants? Is it an illegal
meddling with a lawful calling and a deprivation of freedom of
contract? This is the contention, and it is attempted to be
supported by the assertion that the schemes detailed in the bill
are but a method of advertising, and, as such, mere allurements to
customers, not detrimental in any way to the public health and
morals, nor obstructive of the public welfare, but are a means of
enterprise, mere incidents of the businesses of complainants, and
as beneficial to their customers as to them. And besides, that they
are but a method of giving discount, practically in some instances
a rebate upon the price, and in others an equivalent gift of some
article that may attract the choice of the purchaser, the choice
being free and the article of definite utility and value.
These contentions have the support of a number of cases. They
are opposed by others, not nearly so numerous as the supporting
cases, but marking a change of opinion. Both sets of cases indicate
by the statutes passed upon a persistent legislative effort against
the schemes under review or some form of them, beginning in 1880
and
Page 240 U. S. 364
repeated from time to time until the statute in controversy was
passed in 1913. [
Footnote 2] In
such differences between judicial and legislative opinion, where
should the choice be? That necessarily depends upon what reasoning
judicial opinion was based. We appreciate the seriousness of the
situation. Regarding the number of the cases only, they constitute
a body of authority from which there might well be hesitation to
dissent except upon clear compulsion.
The foundation of all of them is that the schemes detailed are
based on an inviolable right, that they are but the exercise of a
personal liberty secured by the Constitution of the United States
and distinguished from other lawful exercise of business contracts
and activity by a method of advertising and lawful inducements to
an increased custom, and that in them there is no element of chance
or anything detrimental to the public welfare. But there may be
partial or total dispute of the propositions. And it can be urged
that the reasoning upon which they are based regards the mere
mechanism of the schemes alone, and does not give enough force to
their influence upon conduct and habit, not enough to their
insidious potentialities. As to all of which not courts, but
legislatures, may be the best judges, and, it may be, the
conclusive judges.
This may be illustrated. A lottery, of itself, is not wrong, may
be fairer, having less of overreaching in it, than many of the
commercial transactions that the Constitution protects. All
participants in it have an equal chance; there is no admonishing
caveat of one against the other. And at one time it was lawful. It
came to be condemned by experience of its evil influence and
effects. It is trite to say that practices harmless of themselves
may, from
Page 240 U. S. 365
circumstances, become the source of evil or may have evil
tendency.
Murphy v. California, 225 U.
S. 623.
But no refinement of reason is necessary to demonstrate the
broad power of the legislature over the transactions of men. There
are many lawful restrictions upon liberty of contract and business.
It would be an endless task to cite cases in demonstration, and
that the supplementing of the sale of one article by a token given
and to be redeemed in some other article has accompaniments and
effects beyond mere advertising the allegations of the bill and the
argument of counsel establish. Advertising is merely identification
and description, apprising of quality and place. It has no other
object than to draw attention to the article to be sold, and the
acquisition of the article to be sold constitutes the only
inducement to its purchase. The matter is simple, single in purpose
and motive; its consequences are well defined, there being nothing
ulterior; it is the practice of old and familiar transactions, and
has sufficed for their success.
The schemes of complainants have no such directness and effect.
They rely upon something else than the article sold. They tempt by
a promise of a value greater than that article and apparently not
represented in its price, and it hence may be thought that thus, by
an appeal to cupidity, lure to improvidence. This may not be called
in an exact sense a "lottery," may not be called "gaming;" it may,
however, be considered as having the seduction and evil of such,
and whether it has may be a matter of inquiry -- a matter of
inquiry and of judgment that it is finally within the power of the
legislature to make. Certainly in the first instance, and, as we
have seen, its judgment is not impeached by urging against it a
difference of opinion.
Chic., Burl. & Quincy R. Co. v.
McGuire, 219 U. S. 549, and
German Alliance Ins. Co. v. Lewis, supra. And it is not
required that we should be sure as to the precise reasons for such
judgment, or that we should certainly know them
Page 240 U. S. 366
or be convinced of the wisdom of the legislation.
Southwestern Oil Co. v. Texas, 217 U.
S. 114,
217 U. S.
126-127.
See also Munn v. Illinois,
94 U. S. 113,
94 U. S.
132.
But it may be said that judicial opinion cannot be controlled by
legislative opinion of what are fundamental rights. This is freely
conceded; it is the very essence of constitutional law, but its
recognition does not determine supremacy in any given instance.
"While the courts must exercise a judgment of their own, it by
no means is true that every law is void which may seem to the
judges who pass upon it excessive, unsuited to its ostensible end,
or based upon conceptions of morality with which they disagree.
Considerable latitude must be allowed for differences of view as
well as for possible peculiar conditions which this Court can know
but imperfectly, if at all. Otherwise a constitution, instead of
embodying only relatively fundamental rules of right, as generally
understood by all English-speaking communities, would become the
partisan of a particular set of ethical or economical opinions,
which by no means are held
semper ubique et ab
omnibus."
Otis v. Parker, 187 U. S. 606,
187 U. S.
608-609.
That case illustrated the reach of the power of government to
protect or promote the general welfare. It sustained a provision of
the Constitution of the State of California which made void all
contracts for the sale of the stock of corporations on margin or to
be delivered at a future day. The practice had been common, its
evil was disputed. It was attempted to be justified by argument
very much like those advanced in the case at bar, but this Court
decided that the legislative judgment was controlling.
Even more pertinent in illustration of the power of the states
as unaffected by the Fourteenth Amendment is
Central Lumber Co.
v. South Dakota, 226 U. S. 157. A
statute of the state was sustained which provided that anyone
engaged in the manufacture, production, or distribution
Page 240 U. S. 367
of any commodity in general use, who should intentionally, for
the purpose of destroying the competition of any regular,
established dealer, discriminate between different places by
selling such commodity at a lower rate in one place than such
person charged in another, after equalizing the distance from the
point of production, should be guilty of a crime. Freedom of
conduct was restricted by the statute, which had its incentive in
trade advantages. It was the judgment of the legislature that such
practice was an impediment to the public welfare. The legislative
judgment was sustained against the attack, among others, that the
law was an infringement of freedom of conduct and contract.
In
Keokee Coke Co. v. Taylor, 234 U.
S. 224, the company issued scrip payable in merchandise
only from its store as an advance of monthly wages in payment of
labor performed. A statute of the state (West Virginia) prohibited
the issue of any order for the payment of labor unless it was
redeemable in money. The statute was assailed on the ground that it
interfered with the freedom of contract. It will be observed that
there was a consideration for the order payable in merchandise; it
was a payment in advance, and hence it was asserted that the
statute was an injury to the employees and employers. There were
elements in the transactions of apparent advantage to both, and it
would seem to have been within the liberty of both to contract upon
an estimate of the value of that advantage. It was deemed an evil
by the legislature, and this Court sustained its judgment.
In
Erie R. Co. v. Williams, 233 U.
S. 685, a law of the State of New York required railroad
companies to pay their employees semimonthly, and prohibited them
from making contracts which should vary the time of payment. The
law was sustained mainly upon the ground that it was an amendment
of the charter of the corporation, but the extent of the police
power was adverted to and the competency
Page 240 U. S. 368
of the legislature exercising that power to enact the
legislation. The incentive of the legislation was the benefit which
accrued to the employees by the period of payment. The public
welfare was deemed to be promoted by it.
Other cases might be cited, and, it may be, of more pertinent
application, which, from their number and instances, would seem to
have uttered the last necessary word upon the power of the
legislature to regulate conduct and contracts, and, in the exercise
of the power, to classify objects, upon its conception of the
public welfare, the right of review to be exerted by the courts
only when the legislation is unreasonable or purely arbitrary.
Complainants allege that the license tax which the statute
imposes is of prohibitory character, and assert that they are
exercising inviolable rights and privileges which the excess of the
tax prevents in violation of the Fourteenth Amendment; they contend
that hence the statute is invalid.
It is not certain from the allegations of the bill that the tax
is of the asserted character, but, granting it to be so, we have
shown that the business schemes described in the bill are not
protected from regulation or prohibition by the Constitution of the
United States.
Lawton v. Steele, 152 U.
S. 133;
Booth v. Illinois, 184 U.
S. 425;
Otis v. Parker, 187 U.
S. 606;
see also Dobbins v. Los Angeles,
195 U. S. 238;
Murphy v. California, 225 U. S. 623;
Postal Telegraph Co. v. Charleston, 153
U. S. 699;
McCray v. United States,
195 U. S. 27;
Kehrer v. Stewart, 197 U. S. 60;
Hammond Packing Co. v. Montana, 233 U.
S. 331.
The contention that the statute intimidates against a contest of
its legality by the severity of its penalties, and is therefore
unconstitutional on that ground, within the ruling in
Ex Parte
Young, 209 U. S. 123, is
not justified.
Order reversed and case remanded with directions to dismiss
the bill.
[
Footnote 1]
"SEC. 55. Trading stamp firms: Persons or firms or corporations
known as trading stamp companies shall pay a state license tax of
one thousand ($1,000) dollars in each county where they transact
any business."
[
Footnote 2]
It is said that twenty-three states have attempted either to
prohibit or to license the selling or use of trading stamps and
coupons. And there has been like legislation for the District of
Columbia and the Territory of Hawaii.