CHAPTER XVIII LEGISLATION § 178. Respective power of Congress and of the States. 179. Constitutional limitations, i. e., inhibition against depriving of life, liberty or property. 180. Necessity for legislation. 181. Class legislation. § 178. Respective power of Congress and of the States.—Any power that a State may possess to legislate as to restrictions upon competition is limited as to its effect, generally speaking, to the territory of such State.1 It is further subject to important limitations arising under the provision of the Federal constitution conferring upon Congress power "to regulate commerce with foreign nations, and among the several States, and with the Indian tribes." 2 Such power seems, so far at least 1 See State ex rel. Star Publishing Co. v. Associated Press, 159 Mo. 410, 466; 60 S. W. 91, 108; 51 L. R. A. 151, 170; 81 Am. St. Rep. 368 (1901). See under Ark. (§ 205); Ill. (§ 209); Mo. (§ 220); Tex. (§ 232). That a statute is to be construed as excluding from its operation subjects or classes upon which the legislature has no power to legislate, though comprehended within its general terms, see People ex rel. Akin v. Butler Street Foundry Co., 201 Ill. 236, 249; 66 N. E. 349, 353 (1903). In several instances the operation of an anti-trust act is by its express terms confined to the territory of the State, thus as to sales within the State. 2 Thus a statute of a State was held inapplicable in determining the validity of a contract involving transportation within the scope of commerce clause, in Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 Fea. 242; 74 C. C. A. 462 (8th C., 1906). See also Frank A. Menne Factory v. Harback, 85 Ark. 278; 107 S. W. 991 (1908); U. S. v. American Tobacco Co., 164 Fed. 700, 706 (C. C. N. Y., 1908). In State v. Virginia-Carolina Chemical Co., 71 S. C. 544, 560; 51 S. E. 455, 461 (1905), it was thought, though the point was unnecessary to the decision, that there was invalid, as in contravention of the commerce clause, the prohibition of the State anti-trust act against contracts "made with a view to lessen, or which tends to lessen, as we are here concerned, exclusive of any exercise of power to regulate such commerce under authority of a State. In our view, at least, commerce, within the scope of the commerce clause, essentially consists in transportation, there being excluded, however, as a rule, transportation between points both within a State, as well as other transactions carried on wholly within the State, in particular, sale or manufacture.5 § 179. Constitutional limitations, i. e., inhibition against depriving of life, liberty or property.-The legislative power, both full and free competition in the importation or sale of articles imported into this State." In Commonwealth v. Strauss, 191 Mass. 545; 78 N. E. 136; 11 L. R. A. N. S. 968 (1906), the prohibition of Mass. R. L. (1902), c. 56, § 1 (see § 94), against making it a condition of a sale, that the purchaser shall not sell or deal in goods of any other person, was sustained as not in contravention of the commerce clause, though said to "indirectly affect it in those cases where contracts are made for the sale and transportation of property in another State to a purchaser in this State." See under Federal act, c. XIX; also under S. C. (§ 229); Tenn. (§ 231); 1ex. (§ 232). For provision as to foreign commerce, see under N. Y. (§ 224). See articles in 34 Am. Law Rev. 186 (1900) by E. W. Huffcut; 37 Id. 237 (1903) by W. S. Logan; Id. 703, by J. B. Sanborn; 17 Harv. Law Rev. 83 (1903-4) by A. L. Humes; 11 Yale Law Jour. 273 (1901-2) by J. B. Dill; 12 Id. 117 (1902-3) by W. S. Logan; 2 Mich. Law Rev. 358 (1903-4) by H. L. Wilgus; 18 Pol. Sci. Quart. 11, 462 (1903) by A. D. Adams; 9 Va. Law Reg. 463 (1902-3) by John Goode; 51 Cent. L. J. 45 (1900) by D. H. Pingrey; 5 Chicago Weekly L. J. 128, 135 (1900) by W. A. Conover. 8 See Cooke on the Commerce Clause, § 55. 4 See Cooke on the Commerce Clause, § 4. That insurance is not commerce within the meaning of such provision, see Id., § 7; Niagara Fire Ins. Co. v. Cornell, 110 Fed. 816, 821 (C. C. Neb., 1901). Addyston Pipe & Steel Co. v. U. S., 175 U. S. 211, 247; 20 Supm. 96, 109; 44 L. Ed. 136 (1899); Gibbs v. McNeeley, 102 Fed. 594 (C. C. Wash., 1900); The Charles E. Wiswall, 86 Fed. 671; 30 C. C. A. 339; 42 L. R. A. 85 (2d C., 1898); U. S. v. American Tobacco Co., 164 Fed. 700, 712 (C. C. N. Y., 1908); but as to a Territory, see Moore v. U. S., 85 Fed. 465; 29 C. C. A. 269 (8th C., 1898). See under Federal act, § 189. So, even in case of a combination that also relates to commerce within the scope of the commerce clause. People ex rel. Akin v. Butler Street Foundry Co., 201 Ill. 236, 250; 66 N. E. 349, 353 (1903); State v. Jack, 69 Kan. 387, 401; 76 Pac. 911, 915; 1 L. R. A. N. S. 167, 174 (1904). of Congress and of the States, is subject to various constitutional limitations, notably, so far as we are here concerned, that imposed (as to Congress by the Fifth, and as to the States by the Fourteenth Amendment), by the inhibition against "depriving of life, liberty, or property, without due process of law." But, notwithstanding such inhibition, it is established that legislation by a State against restrictions upon competition is justifiable.7 Nor does it seem necessary to determine whether or not it is to be referred to what has commonly been termed the "police power." 8 This is so, at any rate, as to such restrictions upon competition as are illegal at common law, though we submit 6 As to effect of contract clause of Federal constitution, with reference to application of State antitrust act to combination formed before, but carried out after act took effect, see State v. Missouri, K. & T. Ry. Co., 99 Tex. 516; 91 S. W. 214; 5 L. R. A. N. S. 783 (1906); Waters-Pierce Oil Co. v. Texas, infra (212 U. S. 107; 29 Supm. 225). See under Tex. (§ 232). As to objection of impairment of obligation of contract by revocation of permit to foreign corporation to do business, see Hammond Packing Co. v. Arkansas, 212 U. S. 322, 344; 29 Supm. 370, 376 (1909). As to objection to statute as vague, indefinite and uncertain, and as imposing excessive fine, see also under § 232. 7 Such legislation was sustained in Smiley v. Kansas, 196 U. S. 447; 25 Supm. 276; 49 L. Ed. 546 (1905; see § 212); affirming State v. Smiley, 65 Kan. 240, 261; 69 Pac. 199, 206; 67 L. R. A. 903, 912 (1902); National Cotton Oil Co. v. State, 197 U. S. 115; 25 Supm. 379; 49 L. Ed. 689 (1905; see § 232); Carroll v. Greenwich Ins. Co., 199 U. S. 401; 26 Supm. 66; 50 L. Ed. 246 (1905; see § 211); reversing Greenwich Ins. Co. v. Carroll, 125 Fed. 121 (C. C. Iowa, 1903); Waters-Pierce Oil Co. v. Texas, 212 U. S. 86; 29 Supm. 220 (1909; see § 232). See also Hammond Packing Co. v. Arkansas, supra (see under § 205). See in State v. Smiley (65 Kan. 244; 69 Pac. 200; 67 L. R. A. 906) discussion of effect of Re Grice, 79 Fed. 627 (C. C. Tex., 1897; see § 232); Niagara Fire Ins. Co. v. Cornell, 110 Fed. 816 (C. C. Neb., 1901; see § 222). See articles in 16 Harv. Law Rev. 329 (1902-3) by H. W. Chaplin; 17 Id. 156, 217 (1903-4) by Bruce Wyman; 3 Va. Law Reg. 163, 241, 261 (1897-8) by W. L. Royall. In 2 Eddy on Combinations, §§ 902, 903, is suggested a distinction between corporations and individuals, etc., as to the constitutional application of anti-trust legislation. As to provision for establishment of character of trust or combination "by proof of its general reputation as such," see under Ohio (§ 227). 8 See State ex rel. Durner v. Huegin, 110 Wis. 189, 253; 85 N. W. 1046, 1063; 62 L. R. A. 700, 742 (1901). that on principle this is not so clear as to those that are legal at common law. What has just been said seems substantially applicable to legislation by Congress. That is to say, in the exercise of the power to regulate commerce or transportation, it may, like the States, and notwithstanding the Fifth Amendment, legislate against restrictions upon competition in such commerce or transportation, in other words, prescribe therefor "the rule of free competition." 10 And, according to the authorities, such power of legislation seems not limited to such restrictions as are illegal at common law, but extends to such as are legal at common law, thus what may be termed a reasonable restriction 11 (here assuming that the test of reasonableness is properly applied in determining the validity of such a restriction). And notwithstanding that the liberty guaranteed by the Fifth and Fourteenth Amendments includes, generally speaking, liberty to contract, it is clear enough that the power of legislation includes the power to prohibit contracts that operate by way of restriction upon competition.12 "Having the power to 9 See Walter A. Wood Mowing, etc., Co. v. Greenwood Hardware Co., 75 S. C. 378; 55 S. E. 973; 9 L. R. A. N. S. 501 (1905); State v. Virginia-Carolina Chemical Co., 71 S. C. 544, 568; 51 S. E. 455, 463 (1905). See note 11, infra. See under Mo. (§ 220); Neb. (§ 222); Ohio (§ 227); Tex. (§ 232). In Bingham v. Brands, 119 Mich. 255; 77 N. W. 940 (1899), however, the prohibition of the Michigan act (see § 217) was held to apply to a contract in restraint of trade regarded by the court as legal at common law. See also § 217 as to L. 1905, c. 329. 10 Northern Securities Co. v. U. S., 193 U. S. 197, 337; 24 Supm. 436, 457; 48 L. Ed. 679 (1904; see § 197). As to the distinction, if any, between the power of Congress under the commerce clause, as lim ited by the Fifth Amendment, and the power of the States as limited by the Fourteenth, see Carroll v. Greenwich Ins. Co., supra, where, in sustaining a State anti-trust act, it was said: "While we need not affirm that in no instance could a distinction be taken, ordinarily if an act of Congress is valid under the Fifth Amendment, it would be hard to say that a State law in like terms was void under the Fourteenth." See decision below here reversed, in Greenwich Ins. Co. v. Carroll, supra, and criticism in State v. Smiley, supra, of view expressed in Niagara Fire Ins. Co. v. Cornell, supra. See under Neb. (§ 222). 11 See under Federal act (§ 194). 12 Addyston Pipe & Steel Co. v. U. S., 175 U. S. 211, 227, 235; 2J Supm. 96, 102, 105; 44 L. Ed. 136 pass laws of this character, of course the State may provide for proceedings to enforce the same. The State, keeping within constitutional limitations, may provide its own method of procedure and determine the methods and means by which such laws may be made effectual." 13 § 180. Necessity for legislation.-As will hereafter be seen in detail,14 there is a considerable mass of legislation by the States, as well as by Congress, by way of prohibition of restrictions upon competition. Such legislation, besides being subject to the constitutional limitations elsewhere considered,15 is governed by the rules of construction applicable to statutes generally. 16 Leaving out of consideration whether such legislation is desirable on purely economic grounds, it remains to determine the extent of the necessity therefor from a strictly legal standpoint. Such extent would seem to be very limited. The illegality of such restrictions as are complete, or approximately complete, is, in this country at least, generally recognized as (1899). See Northern Securities Co. v. U. S., supra (193 U. S. 332; 24 Supm. 454). 18 Waters-Pierce Oil Co. v. Texas, supra (212 U. S. 107; 29 Supm. 225). This was said with reference to the contention that the rulings of the State court "as to the admission of testimony, and upon questions of general law deprived the defendant of its property and rights without due process of law." 14 See cc. XIX, XX. See such legislation epitomized and criticised by S. C. T. Dodd, in 7 Harv. Law Rev. 157, 164 (1893). As to early legislation in England, see article in 3 Mich. Law Rev. 119 (1904) by D. M. Frederiksen. As to edict of the Emperor Zeno in A. D. 483, see 1 Eddy on Combinations, §§ 4, 5; of the French minister Turgot in 1776, note to Slaughter-House Cases, 16 Wall. 36, 110; 21 L. Ed. 394 (Dec. T., 1872). 16 Thus the rule of strict construction of a penal statute. U. S. v. Trans-Missouri Freight Assoc., 58 Fed. 58, 77; 7 C. C. A. 15, 81; 24 L. R. A. 73, 87 (8th C., 1893); Greer v. Stoller, 77 Fed. 1 (C. C. Mo., 1896). As indicating a tendency to restrict such legislation to combinations "detrimental to the interests of the public," see under § 219, Yazoo & M. V. R. Co. v. Searles, 85 Miss. 520, 529; 37 So. 939, 942; 68 L. R. A. 715, 721 (1905). |