242 U.S. 559 (1917), 386, Caldwell v. Sioux Falls Stock Yards Company

Docket Nº:No. 386
Citation:242 U.S. 559, 37 S.Ct. 224, 61 L.Ed. 493
Party Name:Caldwell v. Sioux Falls Stock Yards Company
Case Date:January 22, 1917
Court:United States Supreme Court
 
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Page 559

242 U.S. 559 (1917)

37 S.Ct. 224, 61 L.Ed. 493

Caldwell

v.

Sioux Falls Stock Yards Company

No. 386

United States Supreme Court

January 22, 1917

Argued October 16, 17, 1916

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE DISTRICT OF SOUTH DAKOTA

Syllabus

The South Dakota "Blue Sky Law," Laws of 1915, c. 27a, is the same in principle as the laws of Ohio and Michigan involved in Hall v. Geiger-Jones Co., ante, 539, and Merrick v. Halsey & Co., post, 568, and is sustained over constitutional objections for the reasons assigned in those cases, as applied to a Colorado corporation seeking to raise capital by sales of its own shares, and to individuals dealing in such shares.

When a statute regulating complainant's business is alleged to be unconstitutional

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and its effect, if the business be continued in disregard of it, will be to visit him with repeated criminal prosecutions involving heavy fines and imprisonment, the remedy at law is not adequate.

A suit to enjoin state officials from instituting criminal proceedings in enforcement of such a statute is not a suit against the state.

Reversed.

For decree below, see 230 F. 236, note.

The case is stated in the opinion.

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MCKENNA, J., lead opinion

MR. JUSTICE McKENNA delivered the opinion of the Court.

This case was argued and submitted with Nos. 438-440, just decided, ante, 539, and with No. 413, post, 568, which concerns a statute of Michigan of like kind, the opinion in which is to follow. It involves the same general questions as those cases, and is presented to review a decree of the district court enjoining appellants from enforcing a statute of the State of South Dakota relating to the sale of securities. The act, § 23, makes violations of its provisions a misdemeanor, and criminal prosecutions under the act were the particular actions of the officers of the state that the appellees prayed to be enjoined.

After a consideration of the pleadings and argument the court, consisting of three judges, expressed the view that the statute violated the Constitution of the United States, and cited in confirmation Alabama & N. O. Transportation Co. v. Doyle, 210 F. 173; William R. Compton Co. v.

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Allen, 216 F. 537, and Bracey v. Darst, 218 F. 482.

The court decreed that the appellants be enjoined from instituting and prosecuting any actions, civil or criminal, against complainants (appellees) under the statute for alleged violations thereof, and from taking any proceedings for its enforcement except such as might be deemed proper by them in the criminal actions already pending.

The Sioux Falls Stock Yards Company is a Colorado corporation having its principal place of business at the City of Denver, and the Morleys are residents and citizens of Iowa.

The Stock Yards Company was, at the times mentioned in the bill, engaged in building and constructing a stockyard in Sioux Falls, South Dakota, and in selling a certain amount of its capital stock for raising sufficient capital for that purpose. The Morleys at such time were engaged in the buying and selling of stock, and especially in selling the stock of the Stock Yards Company to various farmers and other purchasers, such sales being necessary to complete the construction of the stockyard, and also necessary to enable the Morleys to earn a livelihood.

Six informations were filed against appellees at the instigation of appellants for violations of the statute, and it is alleged that appellees will be prosecuted immediately under such informations, and will be further prosecuted.

The statute, it is alleged, is an infraction of the Fourteenth Amendment of the Constitution of the United States, and imposes a burden upon and practically amounts to a prohibition of interstate commerce, and hence offends the commerce clause of the Constitution of the United States, and "that it attempts to vest in and delegate to the state Securities Commission judicial powers unauthorized by law."

Against the bill, appellants urge, besides asserting the validity of the statute, three defenses: (1) that complainants

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have a plain, speedy, and adequate remedy at law; (2) the suit is one against the state; (3) that the plea of the unconstitutionality of the statute was made in the criminal actions.

The three defenses are without merit. Six informations have already been filed against appellees and as many more may be brought as there may be violations of the statute, and a conviction of each may bear a fine of $1,000 or imprisonment, or both.

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