United Drug Co. v. Graves

• Decision Date: 25 September 1929
• Docket Number: No. 417.,417.
• Citation: 34 F.2d 808
• Parties: UNITED DRUG CO. v. GRAVES, Governor of Alabama, et al.
• Court: U.S. District Court — Middle District of Alabama

34 F.2d 808 (1929)

UNITED DRUG CO. v. GRAVES, Governor of Alabama, et al.

No. 417.

District Court, M. D. Alabama, N. D. at Montgomery.

September 25, 1929.

Joseph P. Mudd, of Birmingham, Ala., for plaintiff.

Charlie C. McCall, Atty. Gen., and A. A. Evans, Asst. Atty. Gen., for defendants.

CLAYTON, District Judge.

The plaintiff is engaged in the manufacture and sale of medicines, drugs, and drug sundries, and its business in interstate and foreign commerce amounts annually to more than $27,000,000, a portion of which consists of the manufacture and sale of certain insecticides and fungicides put up in packages bearing plaintiff's trade-mark, alleged to be of great value. The manufacturing is done in part in the city of Boston, Mass., and in part in the city of St. Louis, Mo. A large part of the plaintiff's business consists in selling and shipping its products to customers in Alabama. The products are labeled and shipped in interstate and foreign commerce subject to the provisions of the statute known as the Insecticide Act, 36 U. S. Stat. at L. pp. 331, 335 (title 7, c. 6, USCA sections 121-134).

The Legislature of the state on August 24, 1927, adopted the Agricultural Code of Alabama (Gen. Acts 1927, p. 324), article 18 of which embraces sections 159 to 169, both inclusive. Section 168 is in these words:

"Statement of Chemical Analysis. — Any manufacturer of an insecticide or fungicide, before the same is offered for sale in Alabama, shall file or cause to be filed with the Commissioner, for each and every brand of insecticide and fungicide, a certified statement of the brand name and of the chemical analysis, showing the active or inert constituents as required by Section 166 of this Article (provided that whenever any inert constituent is claimed to exert especial attractions it shall be considered as active and its nature and percentage shall be filed with the said Commissioner and shall be stated on the label of the product), in the form of an application for registration of the brand. Said application shall be accompanied by a copy of the label proposed for use in connection with the sale of said brand, and when said Commissioner shall so request, with a sealed package containing not less than one pound of the insecticide or fungicide. The manufacturer filing or causing to be filed such certificate, shall accompany the application with and shall pay annually to the Commissioner a fee of Ten ($10.00) Dollars on each and every brand prepared and offered for interstate shipment, and a fee of Five ($5.00) Dollars per brand for such brands as are not offered for interstate shipment (except that said fee shall not be assessed for registration of an insecticide or fungicide consisting of a single unmixed organic matter and not containing any added inorganic matter or mineral chemical, provided that a complete chemical analysis, showing the active or inert constituents and the proportions of same, of said insecticide or fungicide is given in, and as part of the certificate required under this Section). Whenever any person shall have filed said certificate and paid said registration fee, no other person shall be required to file such statement or pay such fee. If after a brand of insecticide or fungicide has been registered, it is later discovered that the brand was registered in violation of the provisions of this Article, the Commissioner shall have authority to cancel the registration."

The plaintiff complains that the $10 fee provided in the section quoted applies to its business in interstate commerce, and "accordingly charges the fact to be, that said statutory provision of the State of Alabama casts an unnecessary and discriminatory burden upon interstate commerce and that, by compelling plaintiff to pay said fees in order to protect the good will and value of its business, would deny to plaintiff the just and equal protection of the laws and would deprive plaintiff of its property without due process of law, all of which is in violation of the Constitution of the United States and of the Fourteenth Amendment thereof."

The Commissioner of Agriculture and Industries, on or about September 6, 1928, sent to the plaintiff forms for making report under said statutory provision, together with a copy of the sections of the statute, accompanied by a threat, as plaintiff alleges, of prosecution. On receipt of the forms and literature, the plaintiff telegraphed the Attorney General of the State for assurance that such annual charges and penalties would not be enforced against it; and also made personal application for such assurance. The Attorney General declined to give assurance or to express an opinion that the statutes or any part thereof are void.

The prayer is for restraining order to prohibit the defendants from endeavoring because of the nonregistration of the plaintiff's insecticides or fungicides, or because of the nonpayment of any fee in respect thereto, from interfering with the plaintiff or any person selling or offering for sale any insecticide or fungicide manufactured or sold by the plaintiff. And, further, the prayer is for the convening of a three-judge court and for injunction making good the restraining order prayed for.

In conformity with the stipulation of the parties, the cause is now submitted to the court for decretal order.

The plaintiff is a foreign corporation and has not qualified under the Alabama statutes to do business in the state. It does not manufacture any insecticides or fungicides in Alabama, and does not keep any of such articles in Alabama for sale. It does no intrastate business in Alabama. All of its sales to residents in the state of Alabama are made in interstate commerce; that is, insecticides and fungicides manufactured outside of the state of Alabama and shipped into the state by the plaintiff to the purchaser in the state under and subject to the provisions of the Insecticide Act, supra.

The complaint is that under the provisions of article 18 of the Agricultural Code it is made a misdemeanor to offer for sale in the state any brand of insecticide or fungicide obtained through interstate commerce unless an annual fee of $10 shall have been paid to the state; and the contention is that this burdens the plaintiff's interstate business, and would force the plaintiff, in order to protect its good will, to submit to unlawful exactions.

The plaintiff, not having complied with the Alabama statute, is not qualified to carry on business in this state; and of course the court takes judicial notice of the state statute and of its construction by the state court of last resort. Section 7209, Code of Ala. 1923, vol. 3, p. 566; Hurst v. F. W. Wheel Co., 197 Ala. 10, 72 So. 314; American Amus. Co. v. East L. C. Co., 174 Ala. 526, 56 So. 961.

The plaintiff's conclusions of law, if not correct, cannot be held to be admitted as correct on the motion to dismiss the bill. Such motion fills the office of a general demurrer, admitting the allegations of fact; but the motion does not admit the incorrect conclusions of law. Hopkins, New Fed. Eq. Rules (6th Ed.) rule 29, and authorities cited in footnotes, dealing with various aspects of the rule.

It seems plain to me that the plaintiff is not engaged in manufacturing or selling in Alabama for which the payment of the fee of $10 is required, for examination of section 159, art. 18, of the Alabama Agricultural Code shows the proper interpretation of that article. There it is said that: "The provisions of this Article shall govern the manufacture, sale, offering for sale, or other disposition of insecticides, fungicides or ingredients thereof, and other remedies or materials used in the control or eradication of insect pests and plant diseases within the State of Alabama."

My conclusion is that the provisions of article 18 apply only...