Purity Extract Tonic Company v. Lynch

• Decision Date: 02 December 1912
• Docket Number: No. 464,464
• Citation: 226 U.S. 192,57 L.Ed. 184,33 S.Ct. 44
• Parties: PURITY EXTRACT & TONIC COMPANY and the United States Fidelity & Guaranty Company, Plffs. in Err., v. C. C. LYNCH
• Court: U.S. Supreme Court

226 U.S. 192

33 S.Ct. 44

57 L.Ed. 184

PURITY EXTRACT & TONIC COMPANY and the United States Fidelity & Guaranty Company, Plffs. in Err.,

v C. C. LYNCH.

No. 464.

Submitted October 28, 1912.

Decided December 2, 1912.

Messrs. Marcellus Green, George D. Lancaster, G. W. Green, and Marcellus Green, Jr., for plaintiffs in error.

[Argument of Counsel from page 193 intentionally omitted] Messrs. Edward Mayes, Robert B. Mayes, and James R. McDowell for appellee.

[Argument of Counsel from pages 194-197 intentionally omitted] Mr. Justice Hughes delivered the opinion of the court:

This is an action for breach of contract. The Purity Extract & Tonic Company (plaintiff below), a Tennessee corporation, is the manufacturer of a bevereage called 'Poinsetta;' and in November, 1910, it made an agreement with the defendant, Lynch, for the purchase of the article by him on stated terms during the period of five years. The agreement contemplated resales by the defendant in Hinds county, Mississippi, to the making of which he was to devote his best efforts. It was provided that he was to sell only in that county, where he was to have the exclusive right of sale, for which he was to pay to the plaintiff the sum of $500 within five days after the making of the contract. It was to recover this amount that the action was brought, the defendant having repudiated the agreement at the outset upon the ground that, on coming to Mississippi, he found it to be unlawful to sell 'Poinsetta' in that state. The trial court sustained the defense of illegality, and its judgment was affirmed by the supreme court of Mississippi. 100 Miss. 650, 56 So. 316.

The statute which the agreement has been held to violate is chapter 115 of the Laws of Mississippi of 1908, § 1, which includes in its prohibition the sale of malt liquors.

The case was tried upon an agreed statement of facts in which the characteristics of 'Poinsetta' are set forth at length. In substance, the statement is that it is composed of pure distilled water to the extent of 90.45 per cent, the remaining 9.55 per cent being solids derived from cereals, 'which are in an unfermented state, and are wholesome and nutritious;' that 'it contains 5.73 per cent of malt, and is sold as a beverage;' that it does not contain either alcohol or saccharine matter, being manufactured in such a manner under a secret formula obtained from German scientists as to bring neither into its composition; that it is not intoxicating; that its taste and odor are distinctive; that its appearance is such that 'it would not probably be mistaken for any intoxicating liquor;' and that it 'cannot be employed as a subterfuge for the sale of beer, because it is bettled in a distinctive way, and its name blown in each bottle which contains the beverage.' It is further agreed that 'the United States government does not treat Poinsetta as within the class of intoxicating liquors, and does not require anything to be done with reference to its sale.'

The state court, following its decision in Fuller v. Jackson, 97 Miss. 237, 30 L.R.A (N.S.) 1078, 52 So. 873, construed the statute as prohibiting the sale of all malt liquors, whether in fact intoxicating or not, and this construction of the state law is binding here. The court said: 'Poinsetta may or may not be an intoxicant, but it is a malt liquor, and as such is prohibited from being sold in this state. The prohibition law cannot be made effective unless it excludes all subterfuges.' (100 Miss. 650, 657, 56 So. 316.)

The agreed statement of facts also contained the following: 'Poinsetta is put up in bottles at Chattanooga, Tennessee, and is shipped in bottles, each separate and apart from the other, placed in a case to which they are in no way attached, and which is done merely to prevent breakage of the bottles in transit. The case is not fastened with nails or other device, but merely closed. The bottles so contained are shipped in interstate commerce from Chattanooga, Tennessee, and are to be received under the contract by the consignee in Mississippi in the same condition as when bottled, and are to be sold as each several package. There is to be no retail sale under such right by said Lynch in the state of Mississippi, but all shipments are to be made direct either to said Lynch, or to other persons who shall desire to purchase said drink, and are to be delivered to said purchasers of said bottles in precisely the same shape as prepared in Tennessee, and said Poinsetta is still contained in the original package at the time it will be offered for sale in Mississippi by the purchaser thereof in the original package, which was sent from Tennessee through Alabama into Mississippi.'

The plaintiff brings this writ of error, assailing the validity of the statute, as construed by the state court, (1) as an unconstitutional interference with interstate commerce and (2) as depriving the plaintiff of its liberty and property without due process of law.

First. We do not find that the decision of the state court involves a denial of any right incident to interstate commerce. The contract, it is true, provided for purchases by the defendant from the plaintiff, the deliveries to be made at Chattanooga, Tennessee, for transportation to the defendant at Jackson, Mississippi. So far as appears, however, there were no purchases and no deliveries. The reason obviously is that the agreement looked to resales by the defendant in Hinds county. Finding that such sales would be against the local law, he refused performance in limine. The state court did not deny to the plaintiff the right to sell to the defendant, or to have its article transported and delivered to the defendant in interstate commerce. (Rhodes v. Iowa, 170 U. S. 412, 42 L. ed. 1088, 18 Sup. Ct. Rep. 664, Louisville & N. R. Co. v. F. W. Cook Brewing Co. 223 U. S. 70, 82, 56 L. ed. 355, 358, 32 Sup. Ct. Rep. 189.) It had no such question before it. This suit was brought to recover the amount which the defendant promised to pay for the exclusive right of making sales in Hinds county. In this aspect, the validity of the contract under the state law was to be judged by its provisions for sales within the state. The contract contained no suggestion that these sales were to be limited to those made in the original packages imported. Its provisions were broad enough to include other sales, and hence encountered the local statute as applied to transactions outside the protection accorded by the Federal Constitution to interstate commerce.

Nor is the contention of the plaintiff aided by the agreed statement of facts. This statement, in one of its clauses, says that there was to be 'no retail sale' by the defendant. Whatever this may mean in the light of the words of the contract, which contained no such limitation, it is clear that the defendant was not debarred from selling the bottles separately. On the contrary, the argument for the plaintiff is that 'each bottle,' brought into the state in cases as described, constitutes 'an original package.' As to this, it is to be noted that by the terms of the contract the agreed prices on the purchases by the defendant from the plaintiff were per cask containing 10 dozen bottles and per case containing 6 dozen bottles, respectively. In short, the plain purpose was that the defendant was to buy in casks and cases, and in the light of the transactions thus contemplated, and, as they would be normally conducted, between the plaintiff as manufacturer and the defendant as local dealer, it cannot be said that each separate bottle which he might sell in Hinds county must be considered as an original package, so as to save the sale from the interdiction of the state law. May v. New Orleans, 178 U. S. 496, 44 L. ed. 1165, 20 Sup. Ct. Rep. 976; Austin v. Tennessee, 179 U. S. 343, 45 L. ed. 224, 21 Sup. Ct. Rep. 132; Cook v. Marshall County, 196 U. S. 261, 49 L. ed. 471, 25 Sup. Ct. Rep. 233. We are therefore not called upon to consider whether or not the Wilson act (August 8, 1890, chap. 728, 26 Stat. at L. 313, U. S. Comp Stat. 1901, p. 3177) governs in the case of such an article as 'Poinsetta,' and, confining ourselves to the issue presented, we express no opinion upon that point.

Second. Treating the matter, then, as one of local sales, the question is whether the prohibitory law of the state, as applied to a beverage of this sort, is in conflict with the 14th Amendment.

That the state, in the exercise of its police power, may prohibit the selling of intoxicating liquors, is undoubted. Bartemeyer v. Iowa, 18 Wall. 129, 21 L. ed. 929; Boston Beer Co. v....