Dugan v. Bridges

• Decision Date: 06 October 1936
• Docket Number: No. 290.,290.
• Citation: 16 F. Supp. 694
• Parties: DUGAN et al. v. BRIDGES, Governor, et al.
• Court: U.S. District Court — District of New Hampshire

16 F. Supp. 694

DUGAN et al. v. BRIDGES, Governor, et al.

No. 290.

District Court, D. New Hampshire.

October 6, 1936.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Dudley Orr, Asst. Atty. Gen., for the State of New Hampshire.

Demond, Woodworth, Sulloway, Piper & Jones and Jonathan Piper, all of Concord, N. H., for Creeden Tobacco Co.

Before BINGHAM, Circuit Judge, and MORRIS, and PETERS, District Judges.

Jurisdiction.

Amount in Controversy.

MORRIS, District Judge (after stating the facts as above).

The first issue raised by the pleadings is that of jurisdiction. It is claimed by the respondents that the amount in controversy does not exceed the sum of $3,000, exclusive of interest and costs, as provided in Judicial Code, § 24, subdivision (1), (Title 28 U.S.C.A. § 41 (1).

Nine other firms claiming to be affected by the statute have been allowed to intervene. We agree with the contention of the respondents that the injury to the business of such interveners cannot be added to that of the complainants in order to make up the jurisdictional amount. Scott v. Frazier, 253 U.S. 243, 40 S.Ct. 503, 64 L. Ed. 883; Wheless v. St. Louis, 180 U.S. 379, 21 S.Ct. 402, 45 L.Ed. 583; Rogers v. Hennepin County, 239 U.S. 621, 36 S.Ct. 217, 60 L.Ed. 469.

Respondents cite the case of Healy v. Ratta, 292 U.S. 263, 54 S.Ct. 700, 703, 78 L. Ed. 1248, as sustaining their contention. In the above-entitled case it was held that in suits to enjoin the collection of a tax payable annually or the imposition of penalties in case it is not paid, the sum due or demanded is the matter in controversy and the amount of the tax, not the capitalized value, is the measure of the jurisdictional amount.

The respondents argue that although the complainants allege that the value in controversy exceeds $3,000, upon examination of the bill of complaint it appears the real controversy is whether Anheuser-Busch, Inc., shall pay $500 for a certificate of approval as required by the act, and that the principles enunciated in the Healy Case require this court to refuse to take jurisdiction of the present suit. It is further argued that if Anheuser-Busch, Inc., refuses to pay the tax and as a result complainants' business in "Budweiser" beer is lost, the result flows as much from the act of Anheuser-Busch, Inc., as from the operation of the statute. Respondents say that complainants' argument that no tax is involved is not only illogical, but overlooks the most salient subject of their bill, namely, that the whole point of this case is the propriety of New Hampshire requiring foreign brewers to pay a $500 fee for a certificate of approval.

The facts of the instant case are clearly distinguishable from the Healy Case. In the opinion in that case the court carefully distinguishes between mere payment of a tax and threats to impose penalties for nonpayment and cases wherein nonpayment may result in a serious or permanent destruction of the complainants' business, and attention is called to the following language of Mr. Justice Stone wherein he says: "Where a challenged statute commands the suppression or restriction of a business without reference to the payment of any tax, the right to do the business or the injury to it is the matter in controversy. Scott v. Donald, 165 U.S. 107, 17 S.Ct. 262, 41 L.Ed. 648; see Bitterman v. Louisville & Nashville Ry. Co., 207 U.S. 205, 28 S.Ct. 91, 52 L.Ed. 171, 12 Ann.Cas. 693; Hunt v. New York Cotton Exchange, 205 U.S. 322, 27 S.Ct. 529, 51 L.Ed. 821; Gallardo v. Questell (C.C.A.) 29 F.(2d) 897." It appears to us that the complainants come within the above-mentioned rule. The state is not demanding that the complainants pay a tax. There is no tax they can pay which would stop the operation of the statute against them. The state threatens to suppress their business and forfeit their property because a third party over whom they have no control has refused to pay an alleged illegal exaction. Their right to retain their property and continue their business is at stake and the value thereof is the measure of the amount in controversy. In the case of Packard v. Banton, 264 U.S. 140, 44 S.Ct. 257, 68 L.Ed. 596, it is held that the amount in controversy, in a suit to enjoin enforcement of a statute alleged to be unconstitutional in relation to the plaintiffs' business, is the value of the right to carry on the business free from the restraint of the statute. Scott v. Donald, supra, and cases cited. On both reason and authority we hold that the respondents' motion to dismiss for want of jurisdictional amount should be overruled.

Adequate Remedy at Law.

The second issue raised by the respondents is that the complainants have a plain and adequate remedy at law. This point calls for no extended discussion. Injunctive relief is sought on the ground of the unconstitutionality of a state law. Decisions are numerous that hold that, if a state through its administrative officers attempts to enforce the provisions of an act passed by the State Legislature that contravenes the Federal Constitution, a court of equity may intervene for the purpose of preventing irreparable injury because there is no adequate remedy at law. Scott v. Donald, supra; Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714, 13 L.R.A. (N.S.) 932, 14 Ann.Cas. 764.

Does bill allege grounds cognizable in a court of equity?

The next point on which the jurisdiction of the court is challenged is that the bill is without equity; that state statutes have no extraterritorial effect. The New Hampshire State Liquor Commission cannot compel Anheuser-Busch, Inc., to pay $500 for a certificate of approval. It does no business within the state of New Hampshire; its sales are made f. o. b. cars at St. Louis, Mo.; if it declines to take out a certificate of approval, the results of its noncompliance with the statute including all penalties are visited upon the complainants in this case. But the threatened cancelation of complainants' permit, the threatened seizure of complainants' property, the interference of complainants' business with its retail permittees and consequent destruction of such business, the inability of the complainants to obtain a permit to resume business for a period of three years, and the threatened visitation of penalties under the statute, are allegations sufficient, if established, to show irreparable injury and bring the case within recognized rules of equity jurisdiction. If the statute complained of is, in fact, unconstitutional, the complainants have no adequate remedy at law and equity will take jurisdiction. Respondents' third ground of objection to the court's jurisdiction is therefore overruled.

Are alleged rights of a kind protected by title 28 U.S.C.A. § 41 (14)?

It is argued by the respondents that the rights that the complainants seek to protect do not come within civil rights statute, U.S.C.A. tit. 28, § 41 (14); that it is too well settled for argument that the right to traffic in intoxicating liquor is not a right, privilege, or immunity secured by the Constitution of the United States or any law of the United States; and in support of their contention they cite the cases of Mugler v. Kansas, 123 U.S. 623, 625, 8 S.Ct. 273, 297, 31 L.Ed. 205, and Crowley v. Christensen, 137 U.S. 86, 11 S.Ct. 13, 34 L.Ed. 620.

It must be conceded that the traffic in intoxicating liquor is not a matter of right such as the dealing in the ordinary necessities of life; that intoxicating liquor falls within a class of merchandise the sale of which may be regulated by state legislation, but in so far as it is an article of commerce its regulation in interstate commerce is subject to the regulation of Congress. In all such matters of regulation that come within the police power of the state, the legislation must have some legitimate connection with the protection of the public welfare or public health. This principle is well stated in the case of Lemke v. Farmers' Grain Company, 258 U.S. 50, 59, 42 S. Ct. 244, 247, 66 L.Ed. 458, in the following language; speaking of the right of State Legislatures to pass laws for protection of public health, morals, and safety and that the same must bear some legitimate relation to the public interest, it is said: "This principle has no application where the State passes beyond the exercise of its legitimate authority, and undertakes to regulate interstate commerce by imposing burdens upon it. This Court stated the principle and its limitations in the discussion of the subject in the Minnesota Rate Case, 230 U.S. 352, 33 S.Ct. 729, 57 L.Ed. 1511, 48 L.R.A.(N.S.) 1151, Ann.Cas.1916A, 18." See, also, Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 560, 22 S.Ct. 431, 46 L. Ed. 679; Chicago B. & Q. Ry. Co. v. People of State of Illinois ex rel. Drainage Commissioners, 200 U.S. 561, 593, 26 S.Ct. 341, 50 L.Ed. 596, 4 Ann.Cas. 1175.

It is stated in the case of Mugler v. Kansas supra, that: "If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety, has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the constitution."

Upon the facts and circumstances alleged in complainants' bill, jurisdiction of this court may be found in the provisions of title 28 U.S.C.A. § 41 (14).

Discrimination.

It is contended by the respondents that the provision of the Constitution giving Congress the power to "regulate commerce with foreign nations and among the several states and the Indian tribes" was not intended to take away and does not take away from the states their inherent police power to regulate interstate commerce in the course of protecting the health and welfare of the citizens of the several states; that the power of the states to tax interstate...