Com. v. Strauss
| Decision Date | 17 May 1906 |
| Citation | 78 N.E. 136,191 Mass. 545 |
| Parties | COMMONWEALTH v. STRAUSS. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Asa P. French and Thos. E. Grover, Dist. Atty., for the Commonwealth.
F. M Bixby, for defendant.
This case has once before been considered by this court, upon a question which does not now arise. Commonwealth v Strauss, 188 Mass. 229, 74 N.E. 308. The questions first to be considered at this time relate to the construction of Rev. Laws, c. 56, § 1, under which the defendant was indicted. The section is quoted at length in the case just cited. The prohibitive part is as follows: 'A person firm, corporation or association of persons, doing business in this commonwealth, shall not make it a condition of the sale of goods, wares or merchandise that the purchaser shall not sell or deal in the goods, wares or merchandise of any other person, firm, corporation or association of persons; but the provisions of this section shall not prohibit the appointment of agents or sole agents for the sale of, nor the making of contracts for the exclusive sale of goods, wares or merchandise.'
The defendant contends that a contract that the purchaser shall sell the goods of the seller, and shall not sell the goods of any other person, is a contract for the exclusive sale of the goods, and is therefore permitted by the statute. Such a construction would leave the statute without effect. The term 'exclusive sale' must be given a meaning which is not inconsistent with other provisions of the act. As used here it means selling within a prescribed territory, to the exclusion of all other persons, so that in the designated place the purchaser who makes such a contract with the original seller will have the control of the market for resale. The facts of this case show no arrangement for an exclusive sale of the defendant's goods by either of the purchasers, within the meaning of the statute.
The request for a direction of a verdict of not guilty on the first count, upon grounds which do not pertain to the other counts has not been argued by the defendant, and is treated by both parties as not now important.
The fourth request for a ruling was, in substance, that if the defendant named a price at which he would sell his employer's tobacco, and then stated to the person proposing to purchase 'that if he, the merchant, bought or sold no plug tobaccos except that manufactured by the defendant's employer the defendant would return a rebate of 6 per cent., such statement would not be a sale of goods on condition that the purchaser should not sell or deal in the goods of any other person, firm, corporation or association of persons, and the verdict should be not guilty.' This presents the question which was referred to, but not decided, when the case was formerly considered by this court.
There was evidence from which the jury might find that the price named and the rebate offered were such as were intended by the defendant as a practical refusal to sell any goods, except upon a condition which would entitle the purchaser to the rebate, and were understood by the purchaser to be so intended. Witnesses testified that it would be impossible for the purchaser to carry on business successfully on the offered terms, except upon compliance with this condition which would bring the rebate. Upon the whole evidence the court could not say, as matter of law, that the defendant did not understand his offer, and intend it to be interpreted by his customers as an offer to sell only on condition that they would agree not to sell the goods of others, and that the proposal of the price without a rebate was not intended by the defendant, and understood by his customers, as an evasion and subterfuge which nobody would act upon, except with the understanding on the part of both that there should be no sale of the goods of others. We think the statute was intended to prevent the imposition of the condition in this indirect way, as much as if the seller had said, categorically, 'I will sell you no goods except upon this condition.' This request for a ruling was rightly refused.
We are brought now to a consideration of the objections to the statute on constitutional grounds. The defendant contends, first, that the statute is in conflict with the fourteenth amendment to the Constitution of the United States; secondly, that it is in conflict with articles 1 and 10 of the Declaration of Rights in the Constitution of Massachusetts; and thirdly, that, in its application to the facts of this case, it is in conflict with article 1, § 8, of the Constitution of the United States.
The rights relied upon under the fourteenth amendment to the Constitution of the United States, and under the Declaration of Rights in the Constitution of Massachusetts, are substantially the same, namely, the right of every person to his life, liberty and property, including freedom to use his faculties in all lawful ways, 'to live and work where he will, to earn his livelihood by any lawful calling, to pursue any livelihood or vocation, and for that purpose to enter into all contracts which may be proper, necessary and essential to his carrying out to a successful conclusion the purposes above mentioned.' See Allgeyer v. Louisiana, 165 U.S. 578, 589, 17 S.Ct. 427, 431, 41 L.Ed. 832. These rights, however, are subject to limitations, arising under the proper exercise of the police power, by the Legislatures of the respective states. This power, as recognized under the Constitution of the United States, does not differ materially from that established under the broad language of the Constitution of Massachusetts, found in part 2, c. 1, art. 4, which gives ample legislative authority, and at the same time keeps it within the boundaries of individual constitutional rights.
There is no doubt that the statute before us puts a limitation upon the general right to make contracts. The contention of the commonwealth is that this limitation is valid as an exercise of the police power. The nature of the police power and its extent, as applied to conceivable cases, cannot easily be stated with exactness. It includes the right to legislate in the interest of the public health, the public safety and the public morals. If the power is to be held within the limits of the field thus defined, the words should be interpreted broadly and liberally. If we are to include in the definition, as many judges have done, the right to legislate for the public welfare, this term should be defined with some strictness, so as not to include everything that might be enacted on grounds of mere expediency. In the very late case of Lochner v. New York, 198 U.S. 45, 53, 25 S.Ct. 539, 541, 49 L.Ed. 937, the majority of the court said, 'Those powers, broadly stated, and without at present any attempt at a more specific limitation, relate to the safety, health, morals and general welfare of the public.' In the opinion in Louisville & Nashville Railroad v. Kentucky, 161 U.S. 677, 701, 16 S.Ct. 714, 723, 40 L.Ed. 849, we find this language: 'The general rule holds good, that whatever is contrary to public policy or inimical to the public interests is subject to the police power of the state, and within legislative control, and in the exercise of such power the Legislature is vested with a large discretion, which if exercised bona fide for the protection of the public, is beyond the reach of judicial inquiry.'
It becomes necessary to look somewhat critically at the statute before us, to discover its effect upon the rights of contracting parties, and the purpose of the Legislature in enacting it. In the sale of goods to be resold it forbids one kind of contract which might be made in competition with other sellers of similar goods. It leaves open every other kind of contract. We may infer that the Legislature was providing for cases in which this particular kind of contract would be unfair competition as against weaker dealers, and would be injurious to the public as tending to crush ordinary competitors, and thus create a monopoly, from which the community as consumers would ultimately suffer. If, at the time of the enactment of this statute, there were dangers of this kind confronting the people of the commonwealth, and if this prohibition is a reasonable way of everting such dangers, we find justification for the legislation, unless it involves a serious injury to those who are restrained by it. It permits every kind of contract of sale but one. It does not prohibit the appointment of agents, or sole agents, for the sale of property. It allows contracts for the exclusive sale of goods, wares or merchandise. The contracts that it forbids are only those which, in ordinary competition among equals, no one would have any interest or desire to make. As a rule, it is only a person or corporation that is intrenched in a position of power that can afford to say to a retailer or jobber, 'I will not let you have my goods unless you will agree to sell none furnished by others.' One who controls the sources of supply of goods, which are in such demand that a dealer cannot afford to be without them, can safely say to a purchaser 'You must give me all your trade if you want to sell any of my goods.' In that way he may be able to obtain a complete monoply of the trade in goods such as he supplies.
The evidence in this case illustrates some of the tendencies of the times. The defendant's employer, the Continental Tobacco Company, is incorporated with a capital stock of $75,000,000. At the time of the sales for which the defendant is indicted it had absorbed more than twelve establishments used for the manufacture and sale of plug tobaccos, and owned by as many proprietors. Prior to its...
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