Winslow v. Federal Trade Com'n
| Decision Date | 01 November 1921 |
| Docket Number | 1887,1892. |
| Citation | 277 F. 206 |
| Parties | WINSLOW et al. v. FEDERAL TRADE COMMISSION. [1] NORDEN SHIP SUPPLY CO., Inc., v. SAME. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Herbert G. Cochran and Henry Bowden, both of Norfolk, Va., for petitioners.
John W Davis, of New York City (Adrien F. Busick, of Washington D.C., Acting Chief Counsel of Federal Trade Commission, and Charles S. Moore, of Washington, D.C., on the brief), for respondent.
Before KNAPP and WOODS, Circuit Judges, and WATKINS, District Judge.
Each of these suits is brought, by petition filed originally in this court, to set aside and annul an order of the Federal Trade Commission requiring the parties named therein to cease and desist from certain practices, presently to be described which are declared to be 'unfair methods of competition in interstate and foreign commerce. ' The same questions arise in both cases. They were argued together and may properly be disposed of in one opinion.
In the case of D. A. Winslow & Co. the findings of the commission are reproduced in the margin, [1] but a shorter statement will disclose the practices held to be unlawful. The petitioners are ship-chandlers, having their principal place of business in Norfolk, Va., with a branch in Newport News. In those places they keep in stock and sell to ships coming to that port supplies of various kinds. Ninety per cent. of their business is with English ships, and they appear to cater to that trade. Deliveries are made by launches from their warehouses to ships lying at anchor in Hampton Roads, which is in the state of Virginia.
When the transaction with a given ship has been completed by delivery of the supplies on board and receipt of payment therefor, the petitioners usually give the captain a gratuity, or commission on the purchase price, which is sometimes as much as 5 per cent., and amounts in instances to a considerable sum. They say that the making of such gifts, the purpose of which is obvious, is a custom of long standing, generally observed in the ship-chandlery trade, and well known to all ship owners. It is this payment of gratuities or commissions to captains purchasing supplies for their ships which the Federal Trade Commission holds to be unfair competition, and the order under review directs discontinuance of the practice. Other facts will be referred to in the brief discussion which follows:
In carrying on the business thus outlined, were the petitioners engaged in interstate or foreign commerce? This is the fundamental question to be determined, since if they were not, the commission was without jurisdiction. The claim that they were engaged in interstate commerce rests wholly on the fact that the commodities in which they deal are in large part transported into Virginia from other states in which they are procured. But this transportation ends when the goods reach their destination and are placed in petitioners' warehouses in Norfolk and Newport News. They are then incorporated in the general stock of merchandise there held for sale, and become subject, so far as now concerns us, to the exclusive jurisdiction of the state of Virginia. Their subsequent sale and delivery within that state, with which alone the condemned practices are connected, is in no sense interstate commerce. In short, it is quite beyond doubt that the jurisdiction of the commission over the matter in hand cannot be supported by the prior, but independent and completed transportation of the goods, or some part of them, from another state. Brown v. Houston, 114 U.S. 622, 5 Sup.Ct. 1091, 29 L.Ed. 257; Robbins v. Taxing District, 120 U.S. 489, 497, 7 Sup.Ct. 592, 30 L.Ed. 694; Wagner v. Covington, 251 U.S. 95, 40 Sup.Ct. 93, 64 L.Ed. 157; American Harrow Co. v. Shaffer (C.C.) 68 F. 750; Ward Baking Co. v. Federal Trade Commission (C.C.A.) 264 F. 330, directly in point; Roselle v. Commonwealth, 110 Va. 235, 65 S.E. 526.
Were the petitioners engaged in foreign commerce? Their business is simply this: From stocks held in their storehouses in Virginia they sell and deliver supplies to ships lying in Hampton Roads, within the territorial limits of Virginia; that is, in waters under the jurisdiction of that state. The Abby Dodge, 223 U.S. 166, 32 Sup.Ct. 310, 56 L.Ed. 390. Their dealings in all cases are carried on and concluded in the state of Virginia. True, the supplies may be used by the ships-- doubtless are used for the most part-- in navigating the high seas, but with that use or other use the petitioners have nothing to do. Their relations with the ships cease entirely when the supplies are put on board and payment therefor is received. What becomes of them afterwards is beyond their control and in no wise their concern. This being so, how can it be said that the petitioners are engaged in foreign commerce? Surely not because, and solely because, the ships to which they sell supplies in a Virginia port go from that port to foreign countries. The mere statement of the facts refutes the contention. Nor are we referred to any case in which such transactions as here appear are held to be foreign commerce, or in which similar transactions are held to be interstate commerce. It is indeed a novel proposition, to take a concrete example, that one who sells coal to an interstate railroad, which coal is necessary for and actually used on locomotives hauling interstate trains, is for that reason himself engaged in interstate commerce. To state the proposition is to reject it. Decisions under the Employers' Liability Act are not in point, or at most but beg the question. Could an action be maintained under that act by an employee of the coal dealer, in the case supposed, who was injured in delivering coal to the railroad, or by an employee of petitioners injured in delivering supplies to a ship? Only a negative answer can be given to either question, because it is manifest, as we think, that neither would the coal dealer be engaged in interstate commerce nor are the petitioners engaged in foreign commerce. The underlying principle as regards interstate commerce, equally applicable to foreign commerce, and in our judgment decisive of the instant case, is stated in Hooper v. California, 155 U.S. 648, 655, 15 Sup.Ct. 207, 210, 39 L.Ed. 297, as follows:
'If the power to regulate interstate commerce applied to all the incidents to which said commerce might give rise, and to all contracts which might be made in the course of its transaction, that power would embrace the entire sphere of mercantile activity in any way connected with trade...
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