Joseph S. Finch & Co. v. McKittrick

• Decision Date: 25 February 1938
• Docket Number: No. 668-672.,668-672.
• Citation: 23 F. Supp. 244
• Parties: JOSEPH S. FINCH & CO. et al. v. McKITTRICK, Atty. Gen. of Missouri, et al., and four other cases.
• Court: U.S. District Court — Western District of Missouri

23 F. Supp. 244

JOSEPH S. FINCH & CO. et al.

v.

McKITTRICK, Atty. Gen. of Missouri, et al., and four other cases.

Nos. 668-672.

District Court, W. D. Missouri, Central Division.

February 25, 1938.

James P. Aylward, George V. Aylward, Terrence M. O'Brien, and Ralph M. Russell, all of Kansas City, Mo., for plaintiffs.

Roy McKittrick, Atty. Gen. of Missouri, and Edward H. Miller and Aubrey R. Hammett, Jr., Asst. Attys. Gen., for defendants.

Before WOODROUGH, Circuit Judge, OTIS and COLLET, District Judges.

OTIS, District Judge.

Following the adoption of the Twenty-First Amendment to the Constitution, may Missouri prohibit the sale within the state of intoxicating liquors manufactured in such other states as have laws discriminating against intoxicating liquors manufactured in other states (including Missouri)? More specifically, if Michigan has a law imposing a tax upon the importation of intoxicating liquors from Missouri and other states, which tax (or a tax similar in amount) Michigan manufacturers of intoxicating liquors are not required to pay, may Missouri lawfully prohibit the sale in Missouri of intoxicating liquors manufactured in Michigan? Such are the questions presented by these cases. Missouri has such a statute. Laws of Missouri 1937, p. 536, Mo.St.Ann. § 4525h — 1 et seq., p. 4689. Section 4 of that statute, Mo.St.Ann. § 4525h — 4, p. 4689, provides: "The transportation or importation into this state, or the purchase, sale, receipt, or possession herein, by any licensee, of any alcoholic liquor manufactured in a `state in which discrimination exists' is hereby prohibited, and it shall be unlawful for any licensee to transport or import into this state, or to purchase, receive, possess, or sell in this state, any alcoholic liquor manufactured in any `state in which discrimination exists' as herein defined."

The phrase, "state in which discrimination exists," is defined in the statute as we indicated in the first two sentences of this paragraph. The plaintiff (or plaintiffs) in each of the five cases is (or are) incorporated and manufacturing intoxicating liquors in a "state in which discrimination exists." The plaintiffs contend that the Missouri statute is invalid in that it violates (a) the "commerce clause" of the Constitution, article 1, § 8, cl. 3, and (b) the "equal protection clause" of the Fourteenth Amendment. They ask that enforcement of the statute be enjoined.

The "Commerce Clause" and the Twenty-First Amendment.

1. We would have thought that the first of the two contentions had in it much of merit were it not for the opinion and judgment of the Supreme Court in State Board v. Young's Market Co., 299 U.S. 59, 57 S.Ct. 77, 81 L.Ed. 38, decided November 9, 1936. That case involved the validity of a California statute imposing a license fee for importing beer. It was the opinion of the court that while before the adoption of the Twenty-First Amendment such a statute clearly would have been invalid ("because the fee would be a direct burden on interstate commerce" and because "the commerce clause confers the right to import merchandise free into any state, except as Congress may otherwise provide"), the effect of section 2¹ of the Amendment was to abrogate "the right to import free, so far as concerns intoxicating liquors" and to confer upon each state "the power to forbid all importations of intoxicating liquors which do not comply with the conditions which it prescribes." Page 78. By reason of this opinion it must now be said that the implied prohibition upon state legislation arising from the "commerce clause" no longer exists, in so far as intoxicating liquors are concerned. So far as that one commodity is concerned, the nation again is in that same situation in which it was as to all commerce before the adoption of the Constitution.

The "Equal Protection" Clause of the Fourteenth Amendment.

2. The opinion and judgment in State Board v. Young's Market Co. do not, however, dispose of the second contention made by plaintiffs. It was indeed contended in that case that the challenged California statute violated the "equal protection" clause. The classification of that statute was: Importers of beer and manufacturers of beer within the state. The statute discriminated against the first class in favor of the second class (although that discrimination perhaps was counterbalanced). The court said (page 79): "A classification recognized by the Twenty-First Amendment cannot be deemed forbidden by the Fourteenth." But the classification which is "recognized by the Twenty-First Amendment" is one based on a distinction between intoxicating liquors manufactured within and without a state. It does not authorize a distinction between intoxicating liquors all of which are manufactured in other states. The classification made by the Missouri statute must stand or fall as may be required by the general principles developed for the enforcement of the Fourteenth Amendment.

That provision of the Fourteenth Amendment reading, "No State shall * * * deny to any person within its jurisdiction the equal protection of the laws," was most illumined by the Supreme Court when long ago (1886) it said that the provision guaranteed to all persons "the protection of equal laws." Yick Wo v. Hopkins, 118 U. S. 356, 369, 6 S.Ct. 1064, 1070, 30 L.Ed. 220. The laws of a state must apply equally to all persons in the same or a similar situation. These principles are elementary. Equally elementary is it that a state "when enacting laws may, in its discretion, make a classification of persons, firms, corporations, and associations, in order to subserve public objects." Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 560, 22 S.Ct. 431, 439, 46 L.Ed. 679. What are the principles by which the propriety of a classification is to be determined?

These principles again and again have been stated by the Supreme Court. "* * * (legislation) which, in carrying out a public purpose, is limited in its application, if within the sphere of its operation it affects alike all persons similarly situated, is not within the amendment." Barbier v. Connolly, 113 U.S. 27, 32, 5 S.Ct. 357, 360, 28 L.Ed. 923. "The fourteenth amendment * * * does not prohibit legislation which is limited * * * in the objects to which it is directed. * * * It merely requires that all persons subjected to such legislation shall be treated alike, under like circumstances and conditions * * *." Hayes v. Missouri, 120 U.S. 68, 71, 7 S.Ct. 350, 352, 30 L.Ed. 578. "Classification must always rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis. * * * it must be one based upon some reasonable ground — some difference which bears a just and proper relation to the attempted classification. * * *" Gulf, Colorado & Santa Fe Railway Co. v. Ellis, 165 U.S. 150, 155, 17 S.Ct. 255, 41 L.Ed. 666, quoted in Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 560, 22 S. Ct. 431, 439, 46 L.Ed. 679. "* * * (It) is obvious that the legislature is the only judge of the policy of a proposed discrimination. * * * When a state legislature has declared that * * * policy requires a certain measure, its action should not be disturbed by the courts * * * unless they can see clearly that there is no fair reason for the law that would not require with equal force its extension to others whom it leaves untouched." Missouri, Kansas & Texas Railway Co. v. May, 194 U.S. 267, 269, 24 S.Ct. 638, 639, 48 L.Ed. 971.

"* * * (A) state may classify with reference to the cost to be prevented, and * * * if the class discriminated against is or reasonably might be considered to define those from whom the evil mainly is to be feared, it properly may be picked out. * * *" Patsone v. Pennsylvania, 232 U.S. 138, 144, 34 S.Ct. 281, 282, 58 L.Ed. 539. (The case upheld a statute forbidding unnaturalized foreign born persons owning shotguns). "It must * * * be said that reasonable classification implies action consistent with the legitimate interests of the state * * * these cannot be so broadly conceived as to bring them into hostility to exclusive Federal power." Truax v. Raich, 239 U.S. 33, 42, 36 S.Ct. 7, 11, 60 L.Ed. 131, L.R.A.1916D, 545, Ann. Cas.1917B, 283. (The case involved an Arizona statute limiting employment of aliens lawfully within the United States.) "Classification * * * must regard real resemblances and real differences between things and persons, and class them in accordance with their pertinence to the purpose in hand." Id. "* * * (Classification) must be based upon some real and substantial distinction, bearing a reasonable and just relation to the things in respect to which such classification is imposed; * * * classification cannot be arbitrarily made without any substantial basis." Truax v. Corrigan, 257 U.S. 312, 337, 42 S.Ct. 124, 131, 66 L.Ed. 254, 27 A.L.R. 375. "* * * The mere fact of classification is not enough to put a statute beyond the reach of the equality provision of the Fourteenth Amendment. Such classification must not be `purely arbitrary, oppressive or capricious.' * * * But the mere production of inequality is not enough. * * * The inequality produced, in order to encounter the challenge of the Constitution, must be `actually and palpably unreasonable and arbitrary.'" Radice v. New York, 264 U.S. 292, 296, 44 S.Ct. 325, 327, 68 L.Ed. 690. "The Amendment does require that the classification be not arbitrary, but based on a real and substantial difference, having a reasonable relation to the subject of the particular legislation." Power Mfg. Co. v....