240 U.S. 342 (1916), 41, Rast v. Van Deman & Lewis Company

Docket Nº:No. 41
Citation:240 U.S. 342, 36 S.Ct. 370, 60 L.Ed. 679
Party Name:Rast v. Van Deman & Lewis Company
Case Date:March 06, 1916
Court:United States Supreme Court

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240 U.S. 342 (1916)

36 S.Ct. 370, 60 L.Ed. 679



Van Deman & Lewis Company

No. 41

United States Supreme Court

March 6, 1916

Argued October 29, November 1, 2, 1915




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

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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

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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

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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.

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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...

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