1. A law or regulation of a State which prohibits the sale of
milk imported from another State unless the price paid in that
other to the producer was up to the minimum prescribed by the first
State for purchases from local producers is a direct and
unconstitutional burden on interstate commerce, whether applied to
milk sold by the importer in the cans in which it was imported or
to milk sold by him in bottles in which it was put after
importation. Pp.
294 U. S. 521,
294 U. S.
526.
2. Such a regulation cannot be sustained as an exercise of
police power upon the ground that economic security of the dairyman
works for the sanitary security of the community by insuring both
an adequate supply and a wholesome quality of a necessary food. P.
294 U. S.
522.
District Court reversed in part; affirmed in part.
CROSS-APPEAL to review a decree of the District Court, of three
judges, in a suit brought by Seelig, Inc., a milk dealer, to
restrain Baldwin and other state officials from prosecuting it for
selling without a license in New York
Page 294 U. S. 512
milk imported from Vermont. The decree was for the plaintiff in
respect of milk sold in the original packages, but, in respect of
milk sold in bottles filled from those cans, relief was denied.
See 7 F. Supp.
776, opinion on the application for interlocutory
injunction.
Page 294 U. S. 518
MR. JUSTICE CARDOZO delivered the opinion of the Court.
Whether and to what extent the New York Milk Control Act
(N.Y.Laws of 1933, c. 158; Laws of 1934, c. 126) may be applied
against a dealer who has acquired title to the milk as the result
of a transaction in interstate commerce is the question here to be
determined.
G.A.F. Seelig, Inc. (appellee in No. 604 and appellant in No.
605) is engaged in business as a milk dealer in the city of New
York. It buys its milk, including cream, in Fair Haven, Vermont,
from the Seelig Creamery Corporation, which, in turn, buys from the
producers on the neighboring farms. The milk is transported to New
York by rail in forty-quart cans, the daily shipment amounting to
about 200 cans of milk and 20 cans of cream. Upon arrival in New
York, about 90% is sold to customers in the original cans, the
buyers being chiefly hotels, restaurants and stores. About 10% is
bottled in New York and sold to customers in bottles. By
concession, title passes from the Seelig Creamery to G.A.F. Seelig,
Inc., at Fair Haven, Vermont. For convenience, the one company will
be referred to as the Creamery and the other as Seelig.
Page 294 U. S. 519
The New York Milk Control Act, with the aid of regulations made
thereunder, has set up a system of minimum prices to be paid by
dealers to producers. The validity of that system in its
application to producers doing business in New York State has
support in our decisions.
Nebbia v. New York, 291 U.
S. 502;
Hegeman Farms Corp. v. Baldwin,
293 U. S. 163.
Cf. Borden's Farm Products Co. v. Baldwin, 293 U.
S. 194. From the farms of New York, the inhabitants of
the so-called Metropolitan Milk District, comprising the City of
New York and certain neighboring communities, derive about 70% of
the milk requisite for their use. To keep the system unimpaired by
competition from afar, the Act has a provision whereby the
protective prices are extended to that part of the supply (about
30%) which comes from other states. The substance of the provision
is that, so far as such a prohibition is permitted by the
Constitution, there shall be no sale within the state of milk
bought outside unless the price paid to the producers was one that
would be lawful upon a like transaction within the state. The
statute, so far as pertinent, is quoted in the margin, together
with supplementary regulations by the Board of Milk Control.
[
Footnote 1]
Page 294 U. S. 520
Seelig buys its milk from the Creamery in Vermont at prices
lower than the minimum payable to producers in New York. The
Commissioner of Farms and Markets refuses to license the
transaction of its business unless it signs an agreement to conform
to the New York statute and regulations in the sale of the imported
product. [
Footnote 2] This the
applicant declines to do. Because of that refusal, other public
officers, parties to these appeals, announce a purpose to prosecute
for trading without a license and to recover heavy penalties. This
suit has been brought to restrain the enforcement of the Act in its
application to the complainant, repugnancy being charged between
its provisions, when so applied, and limitations imposed by the
Constitution of the United States. United States Constitution,
Page 294 U. S. 521
Art. I, § 8, clause 3; Fourteenth Amendment, § 1. A District
Court of three judges, organized in accordance with § 266 of the
Judicial Code (28 U.S.C. § 380), has granted a final decree
restraining the enforcement of the Act insofar as sales are made by
the complainant while the milk is in the cans or other original
packages in which it was brought into New York, but refusing an
injunction as to milk taken out of the cans for bottling, and
thereafter sold in bottles.
See opinion on application for
interlocutory injunction --
7 F. Supp.
776 and cf. 293 U.S. 522. The case is here on
cross-appeals. 28 U.S.C. § 380.
First. An injunction was properly granted restraining
the enforcement of the Act in its application to sales in the
original packages.
New York has no power to project its legislation into Vermont by
regulating the price to be paid in that state for milk acquired
there. So much is not disputed. New York is equally without power
to prohibit the introduction within her territory of milk of
wholesome quality acquired in Vermont, whether at high prices or at
low ones. This again is not disputed. Accepting those postulates,
New York asserts her power to outlaw milk so introduced by
prohibiting its sale thereafter if the price that has been paid for
it to the farmers of Vermont is less than would be owing in like
circumstances to farmers in New York. The importer, in that view,
may keep his milk or drink it, but sell it, he may not.
Such a power, if exerted, will set a barrier to traffic between
one state and another as effective as if customs duties equal to
the price differential had been laid upon the thing transported.
Imposts or duties upon commerce with other countries are placed, by
an express prohibition of the Constitution, beyond the power of a
state, "except what may be absolutely necessary for executing its
inspection
Page 294 U. S. 522
laws." Constitution, Art. I, § 10, clause 2;
Woodruff
v. Parham, 8 Wall. 123. Imposts and duties upon
interstate commerce are placed beyond the power of a state, without
the mention of an exception, by the provision committing commerce
of that order to the power of the Congress. Constitution, Art. I, §
8, clause 3.
"It is the established doctrine of this court that a state may
not, in any form or under any guise, directly burden the
prosecution of interstate business."
International Textbook Co. v. Pigg, 217 U. S.
91,
217 U. S. 112,
and see Brennan v. Titusville, 153 U.
S. 289;
Brown v. Houston, 114 U.
S. 622;
Weber v. Virginia, 103 U.
S. 344,
103 U. S. 351;
Kansas City Southern Ry. Co. v. Kaw Valley Drainage
District, 233 U. S. 75,
233 U. S. 79.
Nice distinctions have been made at times between direct and
indirect burdens. They are irrelevant when the avowed purpose of
the obstruction, as well as its necessary tendency, is to suppress
or mitigate the consequences of competition between the states.
Such an obstruction is direct by the very terms of the hypothesis.
We are reminded in the opinion below that a chief occasion of the
commerce clauses was "the mutual jealousies and aggressions of the
States, taking form in customs barriers and other economic
retaliation." Farrand, Records of the Federal Convention, vol. II,
p. 308; vol. III, pp. 478, 547, 548; The Federalist, No. XLII;
Curtis, History of the Constitution, vol. 1, p. 502; Story on the
Constitution, § 259. If New York, in order to promote the economic
welfare of her farmers, may guard them against competition with the
cheaper prices of Vermont, the door has been opened to rivalries
and reprisals that were meant to be averted by subjecting commerce
between the states to the power of the nation.
The argument is pressed upon us, however, that the end to be
served by the Milk Control Act is something more than the economic
welfare of the farmers or of any other
Page 294 U. S. 523
class or classes. The end to be served is the maintenance of a
regular and adequate supply of pure and wholesome milk, the supply
being put in jeopardy when the farmers of the state are unable to
earn a living income.
Nebbia v. New York, supra. Price
security, we are told, is only a special form of sanitary security;
the economic motive is secondary and subordinate; the state
intervenes to make its inhabitants healthy, and not to make them
rich. On that assumption we are asked to say that intervention will
be upheld as a valid exercise by the state of its internal police
power, though there is an incidental obstruction to commerce
between one state and another. This would be to eat up the rule
under the guise of an exception. Economic welfare is always related
to health, for there can be no health if men are starving. Let such
an exception be admitted, and all that a state will have to do in
times of stress and strain is to say that its farmers and merchants
and workmen must be protected against competition from without,
lest they go upon the poor relief lists, or perish altogether. To
give entrance to that excuse would be to invite a speedy end of our
national solidarity. The Constitution was framed under the dominion
of a political philosophy less parochial in range. It was framed
upon the theory that the peoples of the several states must sink or
swim together, and that, in the long run, prosperity and salvation
are in union, and not division.
We have dwelt up to this point upon the argument of the state
that economic security for farmers in the milkshed may be a means
of assuring to consumers a steady supply of a food of prime
necessity. There is, however, another argument which seeks to
establish a relation between the wellbeing of the producer and the
quality of the product. We are told that farmers who are underpaid
will be tempted to save the expense of sanitary precautions. This
temptation will affect the farmers outside
Page 294 U. S. 524
New York as well as those within it. For that reason, the
exclusion of milk paid for in Vermont below the New York minimum
will tend, it is said, to impose a higher standard of quality, and
thereby promote health. We think the argument will not avail to
justify impediments to commerce between the states. There is
neither evidence nor presumption that the same minimum prices
established by order of the Board for producers in New York are
necessary also for producers in Vermont. But apart from such
defects of proof, the evils springing from uncared-for cattle must
be remedied by measures of repression more direct and certain than
the creation of a parity of prices between New York and other
states. Appropriate certificates may be exacted from farmers in
Vermont and elsewhere (
Mintz v. Baldwin, 289 U.
S. 346;
Reid v. Colorado, 187 U.
S. 137); milk may be excluded if necessary safeguards
have been omitted; but commerce between the states is burdened
unduly when one state regulates by indirection the prices to be
paid to producers in another in the faith that augmentation of
prices will lift up the level of economic welfare, and that this
will stimulate the observance of sanitary requirements in the
preparation of the product. The next step would be to condition
importation upon proof of a satisfactory wage scale in factory or
shop, or even upon proof of the profits of the business. Whatever
relation there may be between earnings and sanitation is too remote
and indirect to justify obstructions to the normal flow of commerce
in its movement between states.
Cf. Asbell v. Kansas,
209 U. S. 251,
209 U. S. 256;
Railroad Co. v. Husen, 95 U. S. 465,
95 U. S. 472.
One state may not put pressure of that sort upon others to reform
their economic standards. If farmers or manufacturers in Vermont
are abandoning farms or factories, or are failing to maintain them
properly, the legislature of Vermont, and not that of New York,
must supply the fitting remedy.
Page 294 U. S. 525
Many cases from our reports are cited by counsel for the state.
They do not touch the case at hand. The line of division between
direct and indirect restraints of commerce involves in its marking
a reference to considerations of degree. Even so, the borderland is
wide between the restraints upheld as incidental and those
attempted here. Subject to the paramount power of the Congress, a
state may regulate the importation of unhealthy swine or cattle
(
Asbell v. Kansas, supra; Mintz v. Baldwin, supra) or
decayed or noxious foods.
Crossman v. Lurman, 192 U.
S. 189;
Savage v. Jones, 225 U.
S. 501;
Price v. Illinois, 238 U.
S. 446. Things such as these are not proper subjects of
commerce, and there is no unreasonable interference when they are
inspected and excluded. So a state may protect its inhabitants
against the fraudulent substitution, by deceptive coloring or
otherwise, of one article for another.
Plumley v.
Massachusetts, 155 U. S. 461;
Hebe Co. v. Shaw, 248 U. S. 297;
Hygrade Provision Co. v. Sherman, 266 U.
S. 497. It may give protection to travelers against the
dangers of overcrowded highways (
Bradley v. Public Utilities
Comm'n, 289 U. S. 92) and
protection to its residents against unnecessary noises.
Hennington v. Georgia, 163 U. S. 229.
Cf., however, Missouri, K. & T. R. Co. v. Texas,
245 U. S. 484,
245 U. S. 488.
At times, there are border cases, such as
Silz v.
Hesterberg, 211 U. S. 31, where
the decision in all likelihood was influenced, even if it is not
wholly explained, by a recognition of the special and restricted
nature of rights of property in game. Interference was there
permitted with sale and importation, but interference for a close
season and no longer, and in aid of a policy of conservation common
to many states.
Cf. Geer v. Connecticut, 161 U.
S. 519;
Foster Packing Co. v. Haydel,
278 U. S. 1,
278 U. S. 11;
Silz v. Hesterberg, 184 N.Y. 126, 131, 76 N.E. 1032. None
of these statutes -- inspection laws, game laws, laws intended to
curb fraud or exterminate disease -- approaches in drastic quality
the statute here in controversy,
Page 294 U. S. 526
which would neutralize the economic consequences of free trade
among the states.
Second. There was error in refusing an injunction to
restrain the enforcement of the Act in its application to milk in
bottles to be sold by the importer.
The test of the " original package," which came into our law
with
Brown v.
Maryland, 12 Wheat. 419, is not inflexible and
final for the transactions of interstate commerce, whatever may be
its validity for commerce with other countries.
Cf. Woodruff v.
Parham, supra; Anglo-Chilean Nitrate Sales Corp. v. Alabama,
288 U. S. 218,
288 U. S. 226.
There are purposes for which merchandise, transported from another
state, will be treated as a part of the general mass of property at
the state of destination though still in the original containers.
This is so, for illustration, where merchandise so contained is
subjected to a nondiscriminatory property tax which it bears
equally with other merchandise produced within the state.
Sonneborn Bros. v. Cureton, 262 U.
S. 506;
Texas Co. v. Brown, 258 U.
S. 466,
258 U. S. 475;
American Steel & Wire Co. v. Speed, 192 U.
S. 500. There are other purposes for which the same
merchandise will have the benefit of the protection appropriate to
interstate commerce though the original packages have been broken
and the contents subdivided.
"A state tax upon merchandise brought in from another State, or
upon its sales, whether in original packages or not, after it has
reached its destination and is in a state of rest, is lawful only
when the tax is not discriminating in its incidence against the
merchandise because of its origin in another State."
Sonneborn Bros. v. Cureton, supra, at p.
262 U. S. 516.
Cf. McDermott v. Wisconsin, 228 U.
S. 115,
228 U. S. 133;
Bowman v. Chicago & N.W. Ry. Co., 125 U.
S. 465,
125 U. S. 491;
Brimmer v. Rebman, 138 U. S. 78;
Savage v. Jones, supra, at p.
225 U. S. 525;
Western Union v. Foster, 247 U. S. 105,
247 U. S. 114;
Pacific Co. v. Johnson, 285 U. S. 480,
285 U. S. 493.
In brief, the test of the original
Page 294 U. S. 527
package is not an ultimate principle. It is an illustration of a
principle.
Pennsylvania Gas Co. v.Public Service Comm'n,
225 N.Y. 397, 403; 122 N.E. 260. It marks a convenient boundary,
and one sufficiently precise, save in exceptional conditions. What
is ultimate is the principle that one state, in its dealings with
another, may not place itself in a position of economic isolation.
Formulas and catchwords are subordinate to this overmastering
requirement. Neither the power to tax nor the police power may be
used by the state of destination with the aim and effect of
establishing an economic barrier against competition with the
products of another state or the labor of its residents.
Restrictions so contrived are an unreasonable clog upon the
mobility of commerce. They set up what is equivalent to a rampart
of customs duties designed to neutralize advantages belonging to
the place of origin. They are thus hostile in conception, as well
as burdensome in result. The form of the packages in such
circumstances is immaterial, whether they are original or broken.
The importer must be free from imposts framed for the very purpose
of suppressing competition from without, and leading inescapably to
the suppression so intended.
The statute here in controversy will not survive that test. A
dealer in milk buys it in Vermont at prices there prevailing. He
brings it to New York, and is told he may not sell it if he removes
it from the can and pours it into bottles. He may not do this for
the reason that milk in Vermont is cheaper than milk in New York at
the regimented prices, and New York is moved by the desire to
protect her inhabitants from the cut prices and other consequences
of Vermont competition. To overcome that competition, a common
incident of ownership -- the privilege of sale in convenient
receptacles -- is denied to one who has bought in interstate
commerce. He may not sell on any terms to anyone, whether the
orders were given in
Page 294 U. S. 528
advance or came to him thereafter. The decisions of this court
as to the significance of the original package in interstate
transactions were not meant to be a cover for retortion or
suppression.
The distinction is clear between a statute so designed and
statutes of the type considered in
Leisy v. Hardin,
135 U. S. 100, to
take one example out of many available. By the teaching of that
decision, intoxicating liquors are not subject to license or
prohibition by the state of destination without congressional
consent. [
Footnote 3] They
become subject, however, to such laws when the packages are broken.
There is little, if any, analogy between restrictions of that type
and those in controversy here. In licensing or prohibiting the sale
of intoxicating liquors, a state does not attempt to neutralize
economic advantages belonging to the place of origin. What it does
is no more than to apply its domestic policy, rooted in its
conceptions of morality and order, to property which, for such a
purpose, may fairly be deemed to have passed out of commerce and to
be commingled in an absorbing mass. So also the analogy is remote
between restrictions, like the present ones, upon the sale of
imported milk, and restrictions affecting sales in unsanitary
sweatshops. It is one thing for a state to exact adherence by an
importer to fitting standards of sanitation before the products of
the farm or factory may be sold in its markets. It is a very
different thing to establish a wage scale or a scale of prices for
use in other states, and to bar the sale of the products, whether
in the original packages or in others, unless the scale has been
observed.
The decree in No. 604 is affirmed and that in No. 605 reversed,
and the cause remanded for proceedings in accordance with this
opinion.
No. 604. Affirmed. No. 605. Reversed.
* Together with No. 605,
G.A.F. Seelig, Inc. v. Baldwin,
Commissioner of Agriculture & Markets, et al., Appeal from
the District Court of the United States for the Southern District
of New York.
[
Footnote 1]
Section 258(m)(4), Article 21-a, New York Agriculture &
Markets Law, L. 1934, c. 126, formerly § 312(g), Article 25,
L.1933, c. 158
"It is the intent of the legislature that the instant, whenever
that may be, that the handling within the State by a milk dealer of
milk produced outside of the State becomes a subject of regulation
by the State, in the exercise of its police powers, the
restrictions set forth in this article respecting such milk so
produced shall apply and the powers conferred by this article shall
attach. After any such milk so produced shall have come to rest
within the State, any sale, within the State by a licensed milk
dealer or a milk dealer required by this article to be licensed, of
any such milk purchased from the producer at a price lower than
that required to be paid for milk produced within the State
purchased under similar conditions, shall be unlawful."
Order of New York Milk Control Board, July 1, 1933:
"Any continuous and regular purchase or sale or delivery or
receipt of milk passing to a milk dealer at any place and available
for utilization as fluid milk and/or cream within New York State,
followed by such utilization in one or more instances, where the
price involved in such purchase or sale or delivery or receipt is
less than the sum of the minimum price established to be paid to
producers for such milk plus actual costs of transporting and
handling and processing such milk to the place and to the condition
involved in such purchase or sale or delivery or receipt, hereby is
forbidden."
[
Footnote 2]
The application blank contains the following questions which
show the form of the required agreement:
"Do you agree not to sell within New York State, after it has
come to rest within the State, milk or cream purchased from
producers without the State at a price lower than that required to
be paid producers for milk or cream produced within the State
purchased under similar conditions?"
"Do you agree that you will obtain for the Commissioner and
supply to him, at such times and in such manner as he requires,
concerning milk and cream produced without the State and in any way
dealt in by you, data to whatever extent is necessary to ascertain
or compute whether the producers were paid for such milk or cream a
price not lower than that required to be paid producers for milk or
cream produced within New York State and purchased under similar
conditions?"
[
Footnote 3]
The rule is different today under the Twenty-first Amendment.
Art. XXI, § 2.