Wrigley Pharmaceutical Co. v. Cameron, 481.

• Court: United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. Western District of Pennsylvania
• Citation: 16 F.2d 290
• Docket Number: No. 481.,481.
• Parties: WRIGLEY PHARMACEUTICAL CO. et al. v. CAMERON, Commissioner of Banking, et al.
• Decision Date: 27 December 1926

16 F.2d 290 (1926)

WRIGLEY PHARMACEUTICAL CO. et al. v. CAMERON, Commissioner of Banking, et al.

No. 481.

District Court, M. D. Pennsylvania.

December 27, 1926.

Joseph S. Clark, Paul C. Wagner, and Jay W. Sechler, all of Philadelphia, Pa., and William M. Curry, of Scranton, Pa., for plaintiffs.

George W. Woodruff, Atty. Gen., of Pennsylvania, and J. W. Brown, T. Ewing Montgomery, Warren C. Graham, Asst. Dist. Atty., and Samuel P. Rotan, Dist. Atty., all of Philadelphia, Pa., for defendants.

Before DAVIS, Circuit Judge, and CLARK and JOHNSON, District Judges.

JOHNSON, District Judge.

On October 1, 1925, the plaintiffs filed their amended bill in equity to restrain the defendants, officers of the state of Pennsylvania, from instituting and prosecuting any civil or criminal actions against plaintiffs under the provisions of the Securities Act of Pennsylvania (Pa. St. Supp. 1924, §§ 19867a1-19867a36), on the ground that this act, as construed, applied, and attempted to be applied against the plaintiffs, is contrary to and in violation of the commerce clause of the Constitution of the United States, and in violation of the plaintiffs' right to engage in interstate commerce. From the statements of the amended bill of complaint the following facts appear:

The plaintiffs in the bill consist of the Wrigley Pharmaceutical Company, a Delaware corporation with an office and place of business in Atlantic City, N. J., William W. Wrigley, president of said corporation, a citizen of the state of Pennsylvania and an inhabitant of the city of Philadelphia, and Patrick Gallagher, vice president of said corporation, a citizen of the state of Pennsylvania, and an inhabitant and resident of the city of Philadelphia. The defendants consist of Peter G. Cameron, commissioner of banking of the commonwealth of Pennsylvania, George W. Woodruff, Attorney General of the commonwealth of Pennsylvania, and Samuel P. Rotan, district attorney of the county of Philadelphia in the commonwealth of Pennsylvania.

The Wrigley Company has been engaged since January 1, 1925, in the sale of tooth paste and its treasury stock to the citizens and inhabitants residing in the commonwealth of Pennsylvania, by use of circulars sent through the mails from the Atlantic City office of the company to the residents of the commonwealth of Pennsylvania. On October 3, 1925, Peter G. Cameron, commissioner of banking of Pennsylvania, through his deputies, as provided for in the Securities Act of June 14, 1923, issued a subpœna to William W. Wrigley and Patrick Gallagher, two of the plaintiffs in this bill, requiring their presence before the commissioner of banking or his deputies in their office in Philadelphia, October 9, 1925, to be examined as provided under section 20 of the said Securities Act (Pa. St. Supp. 1924, § 19867a20).

On October 9th counsel for William W. Wrigley and Patrick Gallagher appeared and stated the individuals who had been served with subpœnas would not be present, for the reason that they had committed no acts in violation of the said Securities Act, claiming that all of the acts done by the said Wrigley Company were interstate commerce, and not subject to investigation by the commissioner of banking of Pennsylvania. Counsel for William W. Wrigley and Patrick Gallagher were informed by the deputy commissioner of banking that, unless the said individuals appeared in response to the subpœna, the commissioner of banking would resort to the court of common pleas of Philadelphia county, as provided for in section 20 of the said Securities Act, to compel the said individuals to appear and testify, or show cause why the provisions of the subpœna should not be obeyed.

The bill also alleges that the plaintiffs, under the interpretation placed on the said Securities act by the commissioner of banking, would be subjected to a multiplicity of suits, both civil and criminal, in enforcement of the provisions of the act against them, and in the prosecuting of them for alleged violation thereof, and that such actions would irreparably damage the plaintiffs' business, reputation, and good will.

On November 1, 1925, the defendants, by their solicitors, filed an amended motion to dismiss plaintiffs' bill of complaint, assigning a number of reasons therefor, and on November 7, 1925, Samuel P. Rotan, district attorney of the county of Philadelphia, Pa., moved the court to dissolve the temporary restraining order.

From the allegations in the bill of complaint, and the motions to dismiss, three questions arise: The jurisdiction of this court; the adequacy of a remedy at law; and whether the said Securities Act of Pennsylvania is a violation of the Constitution of the United States, and its application to the plaintiffs an illegal interference with interstate commerce. These questions will be considered in their order.

We are satisfied the court has jurisdiction in this case. The defendants contend that the plaintiffs' procedure in this case is in violation of the Eleventh Amendment to the Constitution of the United States, which prohibits citizens of any foreign state from prosecuting a suit in law or equity against one of the United States, and that no federal question is raised. But this is not a suit against one of the states, but an attempt to prevent the officers of Pennsylvania from enforcing an unconstitutional enactment of the state of Pennsylvania, or an illegal application of such enactment. While no action can be prosecuted against one of the United States by citizens of another state, suits may be prosecuted against the officers of such state for the enforcement of an unconstitutional enactment of such state, or an illegal application of such enactment by the officers of the state.

This question was decided against the defendants' contention in Reagan v. Farmers' Loan & Trust Co., 154 U. S. 362, where, on page 388, 14 S. Ct. 1047, 1050 (38 L. Ed. 1014), Mr. Justice Brewer, delivering the opinion of the court, said:

"We are met at the threshold with an objection that this is in effect a suit against the state of Texas, brought by a citizen of another state, and therefore, under the Eleventh Amendment to the Constitution, beyond the jurisdiction of the federal court. The question as to when an action against officers of a state is to be treated as an action against the state has been of late several times carefully considered by this court, especially in the cases of In re Ayers, 123 U. S. 443, 8 S. Ct. 164 31 L. Ed. 216 by Mr. Justice Matthews, and Pennoyer v. McConnaughy, 140 U. S. 1, 11 S. Ct. 699 35 L. Ed. 363 by Mr. Justice Lamar. In the former of these cases it was said (page 505 8 S. Ct. 183):

"`To secure the manifest purposes of the constitutional exemption guaranteed by the Eleventh Amendment requires that it should be interpreted, not literally and too narrowly, but fairly, and with such breadth and largeness as effectually to accomplish the substance of its purpose. In this spirit it must be held to cover, not only suits brought against a state by name, but those also against its officers, agents, and representatives, where the state, though not named as such, is nevertheless the only real party against which alone in fact the relief is asked, and against which the judgment or decree effectively operates.'

"And in the latter (page 9 11 S. Ct. 701):

"`It is well settled that no action can be maintained in any federal court by the citizens of one of the states against a state, without its consent, even though the sole object of such suit be to bring the state within the operation of the constitutional provision, which provides that "no state shall pass any law impairing the obligation of contracts." This immunity of a state from suit is absolute and unqualified, and the constitutional provisions securing it is not to be so construed as to place the state within the reach of the process of the court. Accordingly it is equally well settled that a suit against the officers of a state, to compel them to do the acts which constitute a performance by it of its contracts, is, in effect, a suit against the state itself. In the application of this latter principle, two classes of cases have appeared in the decisions of this court, and it is in determining to which class a particular case belongs that differing views have been presented.

"`The first class is where the suit is brought against the officers of the state, as representing the state's action and liability, and thus making it, though not a party to the record, the real party against which the judgment will so operate as to compel it to specifically perform its contracts. In re Ayers, 123 U. S. 443 8 S. Ct. 164, 31 L. Ed. 216; Louisiana v. Jumel, 107 U. S. 711 2 S. Ct. 128, 27 L. Ed. 448; Antoni v. Greenhow, 107 U. S. 769 2 S. Ct. 91, 27 L. Ed. 468; Cunningham v. Macon & Brunswick Railroad, 109 U. S. 446 3 S. Ct. 292, 609, 27 L. Ed. 992; Hagood v. Southern, 117 U. S. 52 6 S. Ct. 608, 29 L. Ed. 805.

"`The other class is where a suit is brought against defendants who, claiming to act as officers of the state, and under the color of an unconstitutional statute, commit acts of wrong and injury to the rights and property of the plaintiff acquired under a contract with the state. Such suit, whether brought to recover money or property in the hands of such defendants, unlawfully taken by them in behalf of the state, or for compensation in damages, or, in a proper case, where the remedy at law is inadequate, for an injunction to prevent such wrong and injury, or for a mandamus, in a like case, to enforce upon the defendant the performance of a plain, legal duty, purely ministerial, is not, within the meaning of the Eleventh Amendment, an action against the state. Osborn v. Bank of the United States, 9 Wheat. 738 6 L. Ed. 204; Davis v. Gray, 16 Wall. 203 21 L. Ed. 447; Tomlinson v. Branch, 15 Wall. 460 21 L. Ed. 189; Litchfield v. Webster County, 101 U. S. 773 25 L. Ed. 925; Allen...