Sperry & Hutchinson Co. v. State

• Decision Date: 26 March 1919
• Docket Number: No. 23417.,23417.
• Citation: 122 N.E. 584,188 Ind. 173
• Court: Indiana Supreme Court
• Parties: SPERRY & HUTCHINSON CO. v. STATE.

188 Ind. 173

122 N.E. 584

SPERRY & HUTCHINSON CO.

v.STATE.

No. 23417.

Supreme Court of Indiana.

March 26, 1919.

Appeal from Circuit Court, Decatur County; John W. Donaker, Judge.

The Sperry & Hutchinson Company was convicted of violating a statute requiring a license for handling of trading stamps, and it appeals. Reversed, with directions to quash affidavit.Pickens, Cox & Conder, of Indianapolis, and Wickens, Osborn & Hamilton, of Greensburg, for appellant.

Ele Stansbury, of Indianapolis, Charles Wesley Dunn, of New York City, Tremain & Turner, of Greensburg, Elmer E. Hastings, of Washington, Ind., and Dale F. Stansbury, of Indianapolis, for the State.

LAIRY, J.

Appellant was charged and convicted of violating the provisions of an act of the General Assembly entitled “An act regulating and providing a license for the handling of trading stamps, coupons or other similar devices.” Acts 1915, p. 674.

Section 1 of the act provides:

“That every person, firm or corporation, who shall sell or furnish for use in, with or for the sale of any goods, wares or merchandise, any trading stamps, coupons or other similar devices, which are given free with the purchase of any goods or exchanged for any labels or trademarks of manufactured goods and redeemed for money, premiums, or other values by individuals or corporations organized for the purpose of such redemption and who are not manufacturers of products for which they are given or exchanged, which shall entitle the purchaser receiving the same with such sale of goods, wares or merchandise to procure or receive from any person, firm or corporation any money, goods, wares or merchandise free of charge upon the surrender of any number of said trading stamps, coupons or other similar devices, shall before so furnishing, or selling the same, obtain a separate license from the treasurer of the county wherein such furnishing or selling shall take place, for each and every store or place of business in that county in which such trading stamps, coupons or other similar devices are offered to the consumer or dealer.”

Section 2 of the act provides for the issuing of licenses and for a license fee of $1,000 for each license issued. Section 4 provides a penalty for the violation of any of the provisions of the act.

The first count of the affidavit charged that appellant, at the time and place stated therein, did unlawfully sell to Roy C. Kanouse certain trading stamps, at a price not known to affiant, to be given free with goods and merchandise purchased from said Roy C. Kanouse and redeemable for premiums, appellant not having a license at the time as provided by the act, and not being the manufacturer of the products for which such trading stamps are given or exchanged. The second count differs from the first in two particulars. It does not charge that appellant sold trading stamps to Roy C. Kanouse, but it charges that appellant did furnish such trading stamps to him for use in the sale of certain goods and merchandise of the said Roy Kanouse. It does not charge that such trading stamps were to be given free by Kanouse with merchandise sold.

The errors assigned are that the trial court erred in overruling appellant's motion to quash the affidavit and in overruling its motion for a new trial.

The motion to quash the affidavit is based on the ground as asserted by appellant that the act on which it is based is void for the reason that it conflicts with the Fourteenth Amendment to the federal Constitution and also violates certain provisions of the Constitution of this state.

The first attack made on the validity of the act is based on the general proposition advanced by appellant that the furnishing of trading stamps to merchants which are to be given free to the purchaser with merchandise sold, and which are to be redeemed by any individual or any corporation organized for the purpose of such redemption, and which entitle the purchaser receiving the same to procure money, goods, or merchandise free of charge by surrendering a certain number of such trading stamps is a proper and honest business enterprise in which any person or corporation has a natural right to engage within the meaning of section 1, art. 1, of our state Constitution. It is also asserted that the act violates section 1 of the Fourteenth Amendment of the federal Constitution, for the reason that the right of a citizen to engage in a proper and legitimate business is a privilege or an immunity of citizenship which cannot be denied or abridged by a state law.

In support of the proposition that the transactions at which the statute is aimed are of such a nature that they are not subject to be regulated, controlled, or forbidden by legislation enacted in the exercise of the police power, appellant contends that the business has no tendency to affect the public health, the public safety, or the public morals, comfort, or welfare. It is contended that the business which the act seeks to regulate has no tendency to deceive or defraud any one, and that it does not appeal to the gambling instinct by offering prizes to be disposed of by chance or by lottery scheme or gift enterprise. On the other hand, it is asserted that the merchandise or cash, received in exchange for trading stamps given with the sale of goods represents a discount allowed to the purchaser as a cash customer, and that it is beneficial both to the merchant and to his customer, in that it increases the cash sales of the merchant, thus assisting him in taking advantage of trade discounts, and, at the same time, it enables the customer to acquire trading stamps, which represent his discount for cash on small purchases as well as upon those for larger amounts.

[1][2][3] Prior to the decision by the Supreme Court of the United States in the case of Rast v. Van Deman & Lewis Co. (1916) 240 U. S. 342, 36 Sup. Ct. 370, 60 L. Ed. 679, L. R. A. 1917A, 421, Ann. Cas. 1917B, 455, most of the decisions on the subject by the state and federal courts sustained the position of appellant by holding that the practice of furnishing, using, and redeeming trading stamps in the manner described was a legitimate business, not intrinsically so inimical to good morals and public welfare as to subject it to regulation or suppression under the police power of the state. Humes v. City of Little Rock (C. C.) 138 Fed. 929;State v. Sperry & Hutchinson Co., 110 Minn. 378, 126 N. W. 120, 30 L. R. A. (N. S.) 966;People v. Gillson, 109 N. Y. 389, 17 N. E. 343, 4 Am. St. Rep. 465; Ex parte McKenna, 126 Cal. 429, 58 Pac. 916. Other authorities less numerous are found to the contrary. To this class belong the cases of Rast v. Van Deman & Lewis, supra, Tanner v. Little, 240 U. S. 369, 36 Sup. Ct. 379, 60 L. Ed. 691, and Pitney v. Washington, 240 U. S. 387, 36 Sup. Ct. 385, 60 L. Ed. 703.

The federal Constitution provides that no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States, nor shall any state deprive any person of life, liberty, or property without due process of law; nor deny to any person within its jurisdiction the equal protection of the law. Section 1 of Fourteenth Amendment to federal Constitution. In the cases last cited the Supreme Court of the United States considered the effect of these provisions of the federal Constitution and their application to laws of states by which the use, distribution, and redemption of trading stamps or similar devices in the sale of merchandise was regulated or in effect forbidden by the exaction of a prohibitory license. In the first one of these cases, the court refers to the fact that statutes of the character under consideration had been passed in a great number of the states of the union, and that in view of the decisions of courts, which had passed on the question, the weight of authority was in favor of the proposition that such legislation constitutes an unwarranted interference with a lawful calling, and deprives citizens of the United States of their right to pursue a legitimate business of their own selection, thus depriving them of their liberty without due process of law within the meaning of the Fourteenth Amendment to the Constitution. The court says:

“We appreciate the seriousness of the situation. Regarding the number of the cases only, they constitute a body of authority from which there might be hesitation to dissent except upon clear compulsion.”

The court then proceeds to hold that the business which the statute under...