586 F.2d 1230 (8th Cir. 1978), 78-1578, Reeves, Inc. v. Kelley

Docket Nº78-1578, 78-1720 and 78-1721.
Citation586 F.2d 1230
Party NameREEVES, INC., Appellee, v. Tom KELLEY, Stan Frank, John E. Phelps, Al Sandvig and Dave Johnson, Members of the South Dakota Cement Commission, Appellants. MULLINAX CONCRETE SERVICE COMPANY, a corporation, Appellee, v. Tom KELLEY, Stan Frank, John E. Phelps, Al Sandvig and Dave Johnson, Members of the South Dakota Cement Commission, Appellants. RUSS
Case DateNovember 07, 1978
CourtUnited States Courts of Appeals, Court of Appeals for the Eighth Circuit

Page 1230

586 F.2d 1230 (8th Cir. 1978)

REEVES, INC., Appellee,

v.

Tom KELLEY, Stan Frank, John E. Phelps, Al Sandvig and Dave

Johnson, Members of the South Dakota Cement

Commission, Appellants.

MULLINAX CONCRETE SERVICE COMPANY, a corporation, Appellee,

v.

Tom KELLEY, Stan Frank, John E. Phelps, Al Sandvig and Dave

Johnson, Members of the South Dakota Cement

Commission, Appellants.

RUSSELL'S READY MIX, INC., a corporation, Appellee,

v.

Tom KELLEY, Stan Frank, John E. Phelps, Al Sandvig, and Dave

Johnson, Members of the South Dakota Cement

Commission, Appellants.

Nos. 78-1578, 78-1720 and 78-1721.

United States Court of Appeals, Eighth Circuit

November 7, 1978

Submitted Oct. 19, 1978.

Page 1231

Donald R. Shultz of Lynn, Jackson, Shultz, Ireland & Lebrun, Rapid City, S. D., for appellants.

George A. Bangs of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, S. D., argued, and Dennis M. Kirven of Kirven & Kirven, Buffalo, Wyo., on brief, for appellees.

Before LAY, ROSS and McMILLIAN, Circuit Judges.

LAY, Circuit Judge.

In 1919 the State of South Dakota, as authorized by its constitution, created a cement commission by legislative charter to carry out the manufacture, distribution and sale of cement as "works of public necessity and importance." S.D.Const. art. XIII, § 10; S.D. Compiled Laws Ann. § 5-17-1, -2, -9. See generally, Eakin v. South Dakota State Cement Comm'n, 44 S.D. 268, 183 N.W. 651 (1921). In the past the Commission has operated a cement plant and has sold its products to out of state customers as well as to South Dakota residents. In recent months the demand for cement has risen sharply. Therefore, on June 1, 1978, the Commission reaffirmed a policy of supplying all South Dakota customers first and honoring all contract commitments, with the remaining volume being allocated on a first come, first served basis. As a result of this policy and the continuing cement shortage, the Commission refused to sell to out of state customers. Reeves, Inc., a Wyoming corporation, challenged this policy in federal district court. The district court, the Honorable Andrew Bogue presiding, found that such policy violated the Commerce Clause of the United States Constitution, U.S. Const. art. I, § 8, cl. 3, and enjoined its application to Reeves, Inc. Subsequently, Mullinax Concrete Service Co., a Wyoming corporation, and Russell's Ready Mix, Inc., an Iowa corporation, brought suit seeking a permanent injunction of the policy. 1 The court granted the requested relief in each case and permanently enjoined the Commission from taking any action to prohibit the sale of cement to prospective out of state purchasers because of their nonresidency. The State Cement Commission has filed this appeal.

Page 1232

We reverse and remand to the district court with directions to vacate the injunctions.

The federal district court in issuing injunctive relief held:

The South Dakota Cement Commission's policy of refusing to serve the Plaintiff simply because the corporation is not an entity within the boundaries of the State of South Dakota is declared to be a violation of the Commerce Clause and the Privilege (sic) and Immunities Clause of the United States Constitution.

Reeves, Inc. v. Kelley, No. 78-5060, slip op. at 3 (D.S.D. July 21, 1978).

Judge Bogue concluded:

A state may not compel the confinement of their resources to their own people, whenever such hoarding and confinement impedes interstate commerce.

This Court is aware of the fact that the South Dakota Cement Plant is publicly owned by the citizens of this state, for public use. It should be noted, however, that the Commission has made an election to become part of the interstate commerce system. Such an election was made when the Commission began selling to out-of-state entities, in competition with private industry. As a result of that election, the South Dakota Cement Plant is required to comply with the mandates of the United States Constitution, including the Commerce Clause and the Privilege (sic) and Immunities Clause.

Id. at 1-2.

The commerce clause 2 has been interpreted as primarily intended to inhibit the power of the states to interfere with the natural functioning of the interstate market through burdensome regulation or prohibition. See City of Philadelphia v. New Jersey, --- U.S. ----, 98 S.Ct. 2531, 2535-37, 57 L.Ed.2d 475 (1978) 3; Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 806, 96 S.Ct. 2488, 49 L.Ed.2d 220 (1976). In the instant case South Dakota has not attempted to pass any regulation or prohibition on any private industry functioning in commerce. It has simply acted in a proprietary capacity as a seller of cement within the interstate cement market. Such activity is not the type of state action the commerce clause was intended to restrict.

In Hughes v. Alexandria Scrap Corp., the State of Maryland in an attempt to rid the landscape of junk cars paid a "bounty" to scrap processors for the destruction of inoperable automobiles over eight years old. An out of state processor was required to show title...

To continue reading

Request your trial
4 practice notes
  • 778 F.Supp. 1515 (D.S.D. 1991), Civ. 91-3027, South Dakota State Cement Plant Com'n for Use and Benefit of State of S.D. v. Wausau Underwriters Ins. Co.
    • United States
    • Federal Cases United States District Courts 8th Circuit District of South Dakota
    • November 27, 1991
    ...today be deemed indispensable.' Id. at 442 n. 16, 100 S.Ct. 2280 n. 16 (citation omitted). And as Judge Lay, in Reeves, Inc. v. Kelley, 586 F.2d 1230 (8th Cir.1978), 9 had earlier While a state is similar to private business when it participates in the market in a purely proprietary capacit......
  • 447 U.S. 429 (1980), 79-677, Reeves, Inc. v. Stake
    • United States
    • Federal Cases United States Supreme Court
    • June 19, 1980
    ...by the Commerce Clause. Id. at 27-30. The United States Court of Appeals for the Eighth Circuit reversed. Reeves, Inc. v. Kelley, 586 F.2d 1230, 1232 (1978). It concluded that the State had "simply acted in a proprietary capacity," as permitted by Hughes v. Alexandria Scrap Corp.,......
  • 781 F.Supp. 621 (D.S.D. 1991), Civ. 91-3023, Gulch Gaming, Inc. v. State of S.D.
    • United States
    • Federal Cases United States District Courts 8th Circuit District of South Dakota
    • December 20, 1991
    ...See Western & S.L.I. Co. v. Bd. of Equalization, 451 U.S. 648, 656, 101 S.Ct. 2070, 2076-77, 68 L.Ed.2d 514 (1981); Reeves v. Kelley, 586 F.2d 1230, 1232 n. 2 (8th Cir.1978) (citing Asbury Hosp. v. Cass County, 326 U.S. 207, 210-11, 66 S.Ct. 61, 63, 90 L.Ed. 6 (1945); Paul v. Virginia, ......
  • 603 F.2d 736 (8th Cir. 1979), 78-1578, Reeves, Inc. v. Kelley
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • August 7, 1979
    ...on brief, for appellee. Before LAY, ROSS and McMILLIAN, Circuit Judges. LAY, Circuit Judge. The Supreme Court has remanded our decision, 586 F.2d 1230 (8th Cir. 1978), for us to reconsider in light of its recent opinion in Hughes v. Oklahoma, --- U.S. ----, 99 S.Ct. 1727, 60 L.Ed.2d 250 (19......
4 cases
  • 778 F.Supp. 1515 (D.S.D. 1991), Civ. 91-3027, South Dakota State Cement Plant Com'n for Use and Benefit of State of S.D. v. Wausau Underwriters Ins. Co.
    • United States
    • Federal Cases United States District Courts 8th Circuit District of South Dakota
    • November 27, 1991
    ...today be deemed indispensable.' Id. at 442 n. 16, 100 S.Ct. 2280 n. 16 (citation omitted). And as Judge Lay, in Reeves, Inc. v. Kelley, 586 F.2d 1230 (8th Cir.1978), 9 had earlier While a state is similar to private business when it participates in the market in a purely proprietary capacit......
  • 447 U.S. 429 (1980), 79-677, Reeves, Inc. v. Stake
    • United States
    • Federal Cases United States Supreme Court
    • June 19, 1980
    ...by the Commerce Clause. Id. at 27-30. The United States Court of Appeals for the Eighth Circuit reversed. Reeves, Inc. v. Kelley, 586 F.2d 1230, 1232 (1978). It concluded that the State had "simply acted in a proprietary capacity," as permitted by Hughes v. Alexandria Scrap Corp.,......
  • 781 F.Supp. 621 (D.S.D. 1991), Civ. 91-3023, Gulch Gaming, Inc. v. State of S.D.
    • United States
    • Federal Cases United States District Courts 8th Circuit District of South Dakota
    • December 20, 1991
    ...See Western & S.L.I. Co. v. Bd. of Equalization, 451 U.S. 648, 656, 101 S.Ct. 2070, 2076-77, 68 L.Ed.2d 514 (1981); Reeves v. Kelley, 586 F.2d 1230, 1232 n. 2 (8th Cir.1978) (citing Asbury Hosp. v. Cass County, 326 U.S. 207, 210-11, 66 S.Ct. 61, 63, 90 L.Ed. 6 (1945); Paul v. Virginia, ......
  • 603 F.2d 736 (8th Cir. 1979), 78-1578, Reeves, Inc. v. Kelley
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Eighth Circuit
    • August 7, 1979
    ...on brief, for appellee. Before LAY, ROSS and McMILLIAN, Circuit Judges. LAY, Circuit Judge. The Supreme Court has remanded our decision, 586 F.2d 1230 (8th Cir. 1978), for us to reconsider in light of its recent opinion in Hughes v. Oklahoma, --- U.S. ----, 99 S.Ct. 1727, 60 L.Ed.2d 250 (19......