November 2, 1939.
Before BELLINGER, J., Richland, July, 1939. Affirmed.
J. Yetter was convicted of violating statute requiring license for temporary display of samples, goods, wares, or merchandise for purpose of securing retail sales by the magistrate's Court, and he appeals to the Circuit Court. From an order reversing judgment of magistrate's Court the State appeals.
Order of Judge Bellinger, requested to be reported, follows:
This case comes before me on appeal from the Court of Magistrate Wm. A. Gunter of Richland County, from a conviction and sentence of the defendant charged with violation of Act No. 705, page 1569, Acts of the General Assembly of 1938. The pertinent part of the Act that the defendant is charged with violating is as follows: "Section 1. License for temporary display of samples, goods, wares or merchandise secure sales at retail. — Be it enacted by the General Assembly of the State of South Carolina: That every person, firm or corporation not being a regular retail merchant in the state of South Carolina who shall display samples, goods, wares or merchandise in any hotel room or in any room or house rented or occupied temporarily for the purpose of securing orders for the retail sale of such goods, wares or merchandise so displayed, shall apply for in advance and procure a state license from the South Carolina Tax Commission for the privilege of displaying such samples, goods, wares or merchandise, and shall pay an annual privilege tax of two hundred and fifty ($250.00) dollars, which license shall entitle such person, firm or corporation to display such samples, goods, wares or merchandise in any county of this State: Provided, That this Act shall not apply to displays of samples, goods, wares or merchandise at conventions, expositions or fairs."
The Act provides that one convicted of violating its terms shall be punishable by a fine not exceeding one hundred ($100.00) dollars, in addition to the payment of the license or by imprisonment not exceeding thirty (30) days.
The agreed facts are: That the defendant is not a regular retail merchant in the State of South Carolina; that at the times alleged in the warrant he was displaying samples, goods, wares or merchandise in a room in the Columbia Hotel, Columbia, South Carolina, which had been rented or occupied for the purpose of securing orders for the retail sale of such goods, wares or merchandise. It was testified to by the defendant, and not denied or contradicted by the State, that he was a resident of the State of New York; that his salary and expenses were paid direct from the New York office; that he only took orders for goods, which orders were forwarded to New York, to be filled and the goods were shipped by mail to the customer; that the defendant received no money or payment from the customer, and made no deliveries, but only solicited orders for goods desired from the samples displayed; that the persons invited to see the samples were those selected by the New York office and notified of the display of the goods by that office; that collection for the orders filled was left to the New York office.
Upon the trial of the defendant the magistrate found him guilty of violating the Act in question, and imposed sentence upon the defendant in accordance with the Act. It is from this judgment and sentence that the defendant appeals to this Court, on the following grounds: "That the Magistrate erred in finding the defendant guilty because the Statute in question, Act 705 of 1938, is unconstitutional, null and void, in that it interferes with interstate commerce and is in violation of Article 1, Section 8, of the Constitution of the United States, and that it abridges the privileges and immunities of citizens of the United States and deprives the defendant of his liberty and property without due process of law and denies to the defendant equal protection of the laws in violation of Article XIV, Section 1, of the Constitution of the United States, and Article 1, Section 5, of the Constitution of South Carolina."
The defendant has not argued the contention of the unconstitutionality of the Act under the due process clauses of the State and Federal Constitution, U.S.C.A. ; therefore, this Court will not consider the appeal upon those grounds.
Both appellant and respondent have relied upon the effect of "the interstate commerce clause" of the Federal Constitution as controlling the determination of this case. The only question to be decided is, whether or not Act No. 705, Acts of the General Assembly of 1938, imposes a burden or restriction upon interstate commerce as prohibited by Article I. Section 8, of the Constitution of the United States?
Section 8, Clause 3, of Article I of the Federal Constitution, U.S.C.A., delegates to the Congress of the United States the power "to regulate Commerce with foreign Nations, and among the several States and with the Indian Tribes." This commerce among the several States has been defined in the case of State v. Holleyman, 55 S.C. 207, 31 S.E., 362, 33 S.E., 366, 367, 45 L.R.A., 567, 11 L.R.A. (N.S.), 552, 24 L.R.A. (N.S.), 175, 2 A.L.R., 1094, thus: "Interstate commerce, ordinarily, consists of three elements, to wit: (1) The purchasing of merchandise by a resident of one state from a resident of another state; (2) the delivery of the articles of commerce; and (3) the transportation thereof. The purchase may be made by the buyer in person, or through a traveling salesman of the nonresident, or by an order sent by the purchaser to the nonresident. The delivery may be made directly to the purchaser when the goods are sold, or when they reach their destination, in cases when they have been consigned to him." (Italics added.)
The facts in the case at bar squarely fit the foregoing definition. The defendant in the instant case was a traveling salesman for the nonresident seller; he took the order for the merchandise, forwarded it to the non-resident seller who in turn shipped it from the foreign state to the resident purchaser in this State and delivery was made by the carrier. Each element of the definition of interstate commerce is present in this transaction and as I view it, each step is a necessary link in the chain. It is argued that the tax as imposed is not for soliciting business or for taking orders but for the privilege of displaying the goods in a temporary show room and therefore does not impose a burden or restriction on interstate commerce. I cannot agree with this theory. Each act done by this defendant was a related and necessary step in the consummation of a transaction in interstate commerce. It is true that the defendant's principal does not have to come into this State to transact business and the clear intent of this Act is to discourage, to say the least, his doing so; however, it is his right to do so and the Article of the Constitution here invoked was specifically included so that such business or commerce could be freely transacted between residents of the several states without hindrance and burden.
In the conclusion I have reached, I am amply supported by the decisions of our Supreme Court and the United States Supreme Court. In the Holleyman case, supra, the defendant and others were transporting liquor from North Carolina to their homes in this State after dark, in their own vehicles; they were arrested in this State for violation of a statute which prohibited transporting liquor in the State after dark. Upon appeal from the conviction, our Supreme Court by divided opinion upheld the conviction, but upon rehearing before an en banc Court, this decision was reversed and likewise the judgment of the lower Court. The sole point in issue in that case, as here, was whether or not such a statute was prohibited by the interstate commerce clause of the Federal Constitution and the final decision resolved that question in the defendant's favor. In the case just referred to, the defendant, a resident of South Carolina, purchased and received in North Carolina a package of liquor and was transporting same from that state to this State in his own vehicle. Our Supreme Court held that while the liquor was being transported and until the defendant arrived at his home, he was engaged in interstate commerce and to arrest Holleyman and confiscate the liquor was such a burden upon that commerce as is prohibited by the commerce clause of the Federal Constitution.
Under very similar facts as in the case at bar, the United States Supreme Court, in the case of Robbins v. Taxing District of Shelby County (Tennessee), 120 U.S. 489, 7 S.Ct., 592, 596, 30 L.Ed., 694, held that a statute, similar to the one here involved, was unconstitutional as repugnant to the "commerce clause." In that case the Court fixes the point at which a transaction becomes interstate commerce, using this language: "But to tax the sale of such goods, or the offer to sell them, before they are brought into the state, is a very different thing, and seems to us clearly a tax on interstate commerce itself. * * * The negotiation of sales of goods which are in another state, for the purpose of introducing them into the state in which the negotiation is made, is interstate commerce." (Italics added.)
In the case at bar, the displaying of samples of goods to be purchased in another state is an element in the negotiation for the sale, and, therefore, constitutes interstate commerce. With facts and statutes very similar to the case at bar, the United States Supreme Court has consistently held those statutes to be restrictions upon interstate commerce and therefore invalid. Standard v. Morgan, 185 U.S. 27, 22 S.Ct., 576, 46 L.Ed., 785; Crenshaw v. Arkansas, 227 U.S. 389, 33 S.Ct., 294, 57 L.Ed., 565; Brennan v. City of Titusville (Pa.), 153 U.S. 289, 14 S. Ct., 829, 38 L.Ed., 719; State v. Emert, 103 Mo., 241, 15 S.W. 81, 11 L.R.A., 219, 23 Am. St. Rep., 874; Emert v. State of Missouri, 156 U.S. 296, 15 S.Ct., 367, 39 L.Ed., 430; Real Silk Hosiery Mills v. City of Portland (Oregon), 268 U.S. 325, 45 S.Ct., 525, 69 L.Ed., 982.
In the case of State v. Emert, supra, the Missouri Supreme Court held: "The sale of goods which are in another state at the time of sale, for the purpose of introducing them into the state in which a regulation concerning their sale is made, is interstate commerce, and a tax upon them before they are brought into the state is a tax on interstate commerce. The imposition of a license tax on the person so making the sale of them is also, in effect, a tax upon the goods, and illegal, because a state cannot tax goods beyond its jurisdiction; but as soon as the goods are brought into the state, and have become a part of its general mass of property, they become taxable the same as other similar property within the state." This holding of the Missouri Court was affirmed by the United States Supreme Court.
In Brennan v. City of Titusville, supra, the very question here presented was passed upon, and it was there held that a regulation as to the manner of sale of subjects of commerce, whether by sample or not, and by exhibiting samples is a regulation of commerce and that an ordinance requiring a license of a manufacturer of goods in carrying on his business in another state by sending his agent there to solicit orders, conflicts directly upon the provisions of the Federal Constitution regulating interstate commerce which is within the exclusive jurisdiction of the Federal Government. Mr. Justice Brewer, delivering the opinion of the Court, said ( 153 U.S. 289, 14 S.Ct., 832, 38 L.Ed., 719): "It is undoubtedly true that there are many police regulations which do affect interstate commerce, but which have been and will be sustained as clearly within the power of the state; but we think it must be considered, in view of a long line of decisions, that it is settled that nothing which is a direct burden upon interstate commerce can be imposed by the state without the assent of congress, and that the silence of congress in respect to any matter of interstate commerce is equivalent to a declaration on its part that it should be absolutely free." Again quoting from the same authority: "It is clear, therefore, that this license tax is not a mere police regulation, simply inconveniencing one engaged in interstate commerce, and so only indirectly affecting the business, but is a direct charge and burden upon that business; and, if a state may lawfully exact it, it may increase the amount of the exaction until all interstate commerce in this mode ceases to be possible. And, notwithstanding the fact that the regulation of interstate commerce is committed by the constitution to the United States, the state is enabled to say that it shall not be carried on in this way, and to that extent to regulate it." The Court reviewed numerous decisions in which it had passed upon similar questions and held that the license tax imposed in that case upon the defendant was a direct burden on interstate commerce and was, therefore, beyond the power of the State.
The respondent relies strongly upon the case of Best Company, Inc., v. A.J. Maxwell, Commissioner of Revenue, 216 N.C. 114, 3 S.E.2d 292, decided by the Supreme Court of North Carolina and filed June 16, 1939, to sustain the validity of our Act on the same subject. The main provisions of the North Carolina Act are identical with ours, and the North Carolina Court held their Act to be constitutional. Notwithstanding in that case, like in the case before this Court, the facts were similar. The North Carolina decision was not concurred in by the entire Court, but I have not before me the dissenting opinion.
The writer holds the decisions of our sister state in the highest regard, but he finds himself unable to concur in the opinion of that Court upon the question here presented. In view of the numerous decisions of the United States Court, holding that the statute of this kind under the facts in the instant case places a burden upon interstate commerce in contravention of the Federal Constitution, he finds himself in disagreement with the North Carolina decision.
There being a Federal question here involved, it is to the decisions of the United States Supreme Court that we must look for the proper interpretation of the commerce clause of the Federal Constitution upon the subject that is here being dealt with. And, reluctant as this Court is to declare an Act of our Legislature unconstitutional, it has no alternative, in view of the decisions heretofore cited, as well as others, than to hold that the Act in question, in so far as it is attempted to be applied to the defendant in the instant case under the facts here presented, clearly contravenes the Federal Constitution by placing a burden upon and attempting to regulate interstate commerce. It, therefore, follows that the defendant has, under the facts in this case, been convicted under a statute which as to him is void.
The following cases from our own Court bear very strongly upon the question involved in the instant case: Jewel Tea Co., Inc., v. City of Camden, 171 S.C. 353, 172 S.E., 307; Zeigler v. Puritan Mills, 188 S.C. 367, 199 S.E., 420.
It is, therefore, ordered, adjudged and decreed, that Act No. 705, Acts of the General Assembly 1938, page 1569, in so far as it is attempted to be applied in this particular case, is unconstitutional and of no force or effect.
It is further ordered that the judgment of the magistrate's Court in the instant case be, and the same is, reversed and that the defendant be discharged.
Messrs. John M. Daniel, Attorney General, J. Ivey Humphrey and M.J. Hough, Assistant Attorneys General and C.T. Graydon, for appellant cite: Power to tax for use of property: 300 U.S. 577; 57 Sup. Ct., 524; 280 U.S. 124; 74 L.Ed., 226; 289 U.S. 670; 77 L.Ed., 1439; 49 P.2d 14; 285 U.S. 147; 76 L.Ed., 673; 303 U.S. 250; 134 U.S. 232; 281 U.S. 146; 220 U.S. 107. As to tax being burden on interstate commerce: 303 U.S. 604; 58 Sup. Ct., 736; 300 U.S. 577; 81 L.Ed., 814; 303 U.S. 250; 82 L.Ed., 823; 18 N.E.2d 25; 298 U.S. 238; 291 U.S. 584; 116 U.S. 517; 128 U.S. 1; 260 U.S. 245; 286 U.S. 210; 14 How., 568; 249 U.S. 252; 63 L.Ed., 590. As to contract between persons in different states being within protection of commerce clause: 19 L.Ed., 357; 155 U.S. 648; 39 L.Ed., 297; 231 U.S. 495; 58 L.Ed., 332; 209 U.S. 405; 52 L.Ed., 855; 14 Ann. Cas., 1031; 219 U.S. 128; 55 L.Ed., 128; 179 U.S. 270; 45 L.Ed., 186; 233 U.S. 16; 58 L.Ed., 828; 246 U.S. 500; 62 L.Ed., 854; 286 U.S. 165; 76 L.Ed., 1038; 145 U.S. 1; 36 L.Ed., 601; 125 U.S. 530; 31 L.Ed., 790; 141 U.S. 18; 35 L.Ed., 613; 246 U.S. 450; 62 L.Ed., 827; 247 U.S. 321; 62 L.Ed., 1135; 254 U.S. 113; 65 L.Ed., 165; 266 U.S. 271; 69 L.Ed., 282; 121 U.S. 230; 30 L.Ed., 888; 122 U.S. 326; 30 L.Ed., 1200; 122 U.S. 326. As to tax on a distinct class: 300 U.S. 577; 276 U.S. 245; 270 U.S. 367; 283 U.S. 527; 180 U.S. 452; 45 L.Ed., 619; 200 U.S. 226; 50 L.Ed., 451; 233 U.S. 304; 58 L.Ed., 974; 55 F.2d 931; 55 F.2d 789.
Messrs. Benet, Shand McGowan, for respondent, cite: Unconstitutionality of Act as violating commerce law: 279 U.S. 245; 73 L.Ed., 687; 185 U.S. 27; 46 L.Ed., 785; 120 U.S. 489; 30 L.Ed., 694; 185 U.S. 27; 46 L.Ed., 785; 227 U.S. 389; 57 L.Ed., 565; 153 U.S. 288; 38 L.Ed., 719; 268 U.S. 325; 69 L.Ed., 982.
November 2, 1939. The opinion of the Court was delivered by
In February, 1938, the Legislature passed an Act (40 Stat. at Large, page 1569), requiring the payment of a license for the temporary display of samples, goods, wares or merchandise for the purpose of securing sales at retail. The defendant, a traveling salesman in the employ of Best Company, a corporation, with its principal office and place of business in New York City, came to South Carolina in September, 1938, to secure for his employer orders for merchandise. With this object in view, he displayed his samples or goods in a room in the Columbia Hotel, in the City of Columbia, the room being rented or occupied for that purpose. The defendant took or accepted orders only, Best Company shipping the goods direct to the customer, who paid for them by remittance direct to New York upon receipt of the merchandise and of a bill therefor. Payment of the license tax was refused by the defendant, and he was thereupon arrested and tried in the magistrate's Court for violation of the Act. His defense was that the statute in question was a burden upon interstate commerce as prohibited by Section 8 of Article I of the Federal Constitution. Being convicted as charged, he appealed to the Court of General Sessions for Richland County, where the matter was later heard by his Honor, Judge Bellinger, who filed an order on July 12, 1939, holding the Act to be unconstitutional, "in so far as it is attempted to be applied in this particular case." He accordingly reversed the judgment of the magistrate and ordered the defendant released.
Counsel for the appellant, the State, have filed with this Court a persuasive argument, and while we approve some of the things said, we are unable to agree with the contention that the Circuit Judge, for the reasons urged, should be reversed. An examination of the decisions of the United States Supreme Court pertinent to the questions involved, those cited in the order and others not cited, as well as of the decisions of our own Court which may have a bearing thereon, satisfies us of the correctness of the conclusion reached by Judge Bellinger; and while we deem it unnecessary to add anything to what is said in his order, we will briefly refer to Best Co. v. Maxwell, 216 N.C. 114, 3 S.E., 2d 292, which is strongly relied upon by counsel for the appellant. The North Carolina Supreme Court held, the facts and the questions there involved being practically the same as those in the case at bar, that the tax was not invalid as violative of the commerce clause of the Federal Constitution. While we have the greatest respect for the decisions of that Court, we are not in accord with its conclusions in the Maxwell case, in view of the applicable decisions of the United States Supreme Court, which necessarily control in questions of this kind. Furthermore, we have been advised that a rehearing has been granted in that case, thus leaving the Court's final action in doubt.
The order appealed from, which will be reported, is affirmed.
MESSRS. JUSTICES CARTER, BONHAM, BAKER and FISHBURNE concur.