Packer Corp. v. Utah, 285 U.S. 105 (1932)
Case details
Citation
285 U.S. 105
Full caption
PACKER CORPORATION v. UTAH.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Decided
Feb. 23, 1932
Majority
Brandeis (Justice)
PACKER CORPORATION v. UTAH.
APPEAL FROM THE SUPREME COURT OF UTAH.
No. 357. Argued January 20, 1932.—Decided February 23, 1932.
A statute of Utah forbids the advertising of cigarettes and other tobacco products on billboards, street car signs, and placards, but does not apply to advertising in newspapers and periodicals, this exemption having been introduced to avoid conflict with the commerce clause of the Federal Constitution as construed by the State’s highest court. A billboard company was convicted for displaying a poster advertising a brand of cigarettes. Both poster and cigarettes were manufactured outside of the State and shipped into it by a foreign corporation; and the advertising was done under contract with an agency in another State. It was conceded that the regulation of the local sale and advertising of tobacco products was within the police power of the State. Held:
1
The amendment exempting advertising in newspapers and periodicals to avoid conflict with the commerce clause, did not produce a discrimination violative of the equal protection clause of the Fourteenth Amendment. P. 108.
2
It is a reasonable ground of classification that the State has power to legislate with respect to persons in certain situations and not with respect to those in a different one. P. 110.
3
The discrimination between billboard and newspaper advertising was not an arbitrary classification. The legislature may recognize degrees of evil and adapt its legislation accordingly. Id.
*
See also Cherokee Nation v. Southern Kansas Ry. Co., 135 U. S. 641, 659; Sweet v. Rechel, 159 U. S. 380, 400, 407; Adirondack Ry. Co. v. New York, 176 U. S. 335, 349; Williams v. Parker, 188 U. S. 491, 502, 503; Manigault v. Springs, 199 U. S. 473, 485, 486; Hays v. Port oj Seattle, 251 U. S. 233, 238.
Argument for Appellant. 285U.S.
4. In making it illegal to carry out the contract under which the advertising was being done, the statute does not violate the due process clause of the Fourteenth Amendment, since the subject of the legislation was within the police power of the State. P. 111.
5. In preventing the display, for intrastate advertising, of posters shipped in from another State, the statute does not impose an unreasonable restraint upon interstate commerce. Id. 78 Utah 177; 2 P. (2d) 114, affirmed.
Appeal from a judgment affirming a conviction for displaying a billboard poster advertising cigarettes.
Messrs. Gardner Abbott and William H. Reeder, Jr., with whom Messrs. Dan B. Shields and W. T. Kinder were on the brief, for appellant.
Upon the question of discrimination they cited: Louisville Gas Co. v. Coleman, 277 U. S. 32, 37; Connolly v. Union Sewer Pipe Co-, 184 U. S. 540, 558; Power Mjg. Co. v. Saunders, 274 U. S. 490, 493; Smith v. Cahoon, 283 U. S. 553, 566.
Also Truax v. Corrigan, 257 U. S. 312, 332; Hayes v. Missouri, 120 U. S. 68, 71; Gulj, C. & S. P. Ry. Co. v. Ellis, 165 U. S. 150, 155; Cotting v. Kansas City Stock Yards Co., 183 U. S. 79, 111; State v. Packer Corp., 297 Pac. 1013, 1022.
To make it illegal for the appellant to carry out its contract by a statute so unreasonable and arbitrary as this, is to deprive the appellant of property without due process of law. Prudential Ins. Co. v. Cheek, 259 U. S. 530, 536; Wolff Co. v. Industrial Court, 262 U. S. 522, 534; Liberty Warehouse Co. v. Burley Tobacco Assn., 276 U. S. 71, 97; Fairmont Creamery Co. v. Minnesota, 274 U. S. 1.
The advertisements which were sent into the State from a foreign State for the purpose of being posted were articles in interstate commerce, and prohibiting their display was an undue restraint of interstate commerce. Ramsey Co. v. Bill Posters Assn., 260 U. S. 501; Binderup v. Pathe Exchange, 263 U. S. 291, 309; Illinois Cent. R.
Co. v. Railroad Commission, 236 U. S. 157, 163; Western Union v. Foster, 247 U. S. 105, 113; Western Oil Rfg. Co. v. Lipscomb, 244 U. S. 346, 349.
Messrs. George P. Parker, xAttorney General of Utah, and Byron D. Anderson, Assistant Attorney General, for appellee.
Mr . Justice Brandeis delivered the opinion of the Court.
Section 2, of c. 145, Laws of Utah, 1921, as amended by c. 52, § 2, Laws of 1923, and c. 92, Laws of 1929, provides:
“ It shall be a misdemeanor for any person, company, or corporation, to display on any bill board, street car sign, street car, placard, or on any other object or place of display, any advertisement of cigarettes, cigarette papers, cigars, chewing tobacco, or smoking tobacco, or any disguise or substitute of either, except that a dealer in cigarettes, cigarette papers, tobacco or cigars or their substitutes, may have a sign on the front of his place of business stating that he is a dealer in such articles, provided that nothing herein shall be construed to prohibit the advertising of cigarettes, cigarette papers, chewing tobacco, smoking tobacco, or any disguise or substitute of either in any newspaper, magazine, or periodical printed or circulating in the State of Utah.”
The Packer Corporation, a Delaware corporation engaged in billboard advertising and authorized to do business in Utah, was prosecuted under this statute for displaying a large poster advertising Chesterfield cigarettes on a billboard owned by it and located in Salt Lake City. The poster was displayed pursuant to a general contract for advertising Chesterfield cigarettes, made by the defendant with an advertising agency in the State of Ohio. Both the poster and the cigarettes advertised were manufactured without the State of Utah and were shipped into p. 108it by Liggett & Myers Tobacco Company, a foreign corporation. The defendant claimed that the statute violates several provisions of the Federal Constitution; the objections were overruled; and the defendant was convicted and sentenced. On the authority of its recent decision in State v. Packer Corp., 297 Pac. 1013, the highest court of the State affirmed the judgment of the trial court. 2 P. (2d) 114. The case is here on appeal under § 237 (a) of the Judicial Code, as amended by the Act of February 13, 1925, c. 229, 43 Stat. 937.
It is not denied that the State may, under the police power, regulate the business of selling tobacco products, compare Gundling v. Chicago, 177 U. S. 183, 188; Austin v. Tennessee, 179 U. S. 343, 348; and the advertising connected therewith, compare Rast v. Van Deman & Lewis Co., 240 U. S. 342, 364, 365; Tanner v. Little, 240 U. S. 369, 384, 385. The claim is that because of its peculiar provisions the statute violates the Federal Constitution.
First. The contention mainly urged is that the statute violates the equal protection clause of the Fourteenth Amendment; that in discriminating between the display by appellant of tobacco advertisements upon billboards and the display by others of such advertisements in newspapers, magazines or periodicals, it makes an arbitrary classification. The history of the legislation shows that the charge is unfounded. In Utah no one may sell cigarettes or cigarette papers without a license.1 Since 1890, it has been the persistent policy, first of the Territory and then of the State, to prevent the use of tobacco by minors, and to discourage its use by adults. Giving tobacco to a minor, as well as selling it, is a misdemeanor.12
1
Laws of Utah, 1921, c. 145, § 1, as amended, Laws of 1923, c. 52, § 1; Laws of 1925, c. 68; Laws of 1930, c. 5, § 1.
2
Laws of Utah, 1890, c. 65, § 1, as amended, Laws of 1911, c. 51; Laws of 1930, c. 5, § 1 (k).
So is permitting a minor to frequent any place of business while in the act of using tobacco in any form.3 Mere possession of tobacco by the minor is made a crime.4 And smoking by anyone in any enclosed public place (except a public smoking room designated as such by a conspicuous sign at or near the entrance) is a misdemeanor.5 In 1921, the legislature enacted a general prohibition of the sale or giving away of cigarettes or cigarette papers to any person, and of their advertisement in any form. Laws of Utah, 1921, c. 145, §§ 1, 2. After two years, however, the plan of absolute prohibition of sale was abandoned in favor of a license system. Laws of Utah, 1923, c. 52, § 1. But the provision against advertisements was retained, broadened to include tobacco in most other forms. In 1926, this statute was held void under the commerce clause, as applied to an advertisement of cigarettes manufactured in another State, inserted in a Utah newspaper which circulated in other States. State v. Salt Lake Tribune Publishing Co., 68 Utah 187; 249 Pac. 474. Thereupon the legislature, unwilling to abandon altogether its declared policy, amended the law by striking out the provision which prohibited advertising in newspapers and periodicals. The classification alleged to be arbitrary was made in order to comply with the requirement of the Federal Constitution as interpreted and applied by the highest court of the State. Action by a State taken to observe one prohibition of the Constitution does not entail the violation of another. J. E. Raley de Bros. v. Richardson, 264 U. S. 157, 160; Des Moines Nat. Bank v. Fairweather, 263 U. S. 103, 116, 117. Compare Dolley p. 110v. Abilene Nat. Bank, 179 Fed. 461, 463, 464. It is a reasonable ground of classification that the State has power to legislate with respect to persons in certain situations and not with respect to those in a different one.6 Compare Williams v. Walsh, 222 U. S. 415, 420.
3
Laws of Utah, 1921, c. 145, § 3. See Laws of 1923, c. 52, § 1.
4
Laws of Utah, 1903, c. 135, as amended, Laws of 1911, c. 51; Laws of 1913, c. 59.
5
Laws of Utah, 1921, c. 145, § 4, as amended, Laws of 1923, 0. 52, § 4.
Moreover, as the state court has shown, there is a difference which justifies the classification between display advertising and that in periodicals or newspapers: “ Billboards, street car signs, and placards and such are in a class by themselves. They are wholly intrastate, and the restrictions apply without discrimination to all in the same class. Advertisements of this sort are constantly before the eyes of observers on the streets and in street cars to be seen without the exercise of choice or volition on their part. Other forms of advertising are ordinarily seen as a matter of choice on the part of the observer. The young people as well as the adults have the message of the billboard thrust upon them by all the arts and devices that skill can produce. In the case of newspapers and magazines, there must be some seeking by the one who is to see and read the advertisement. The radio can be turned off, but not so the billboard or street car placard. These distinctions clearly place this kind of advertisement in a position to be classified so that regulations or prohibitions may be imposed upon all within the class. This is impossible with respect to newspapers and magazines.” 297 Pac. 1013, 1019. The legislature may recognize degrees of evil and adapt its legislation accordingly.
6
A contention was made in argument that the State had not in fact acted upon this basis of classification since the statute makes no distinction as to newspapers and magazines circulating solely in intrastate commerce. But the record does not indicate the existence of any such publications. Moreover, the administrative difficulties of any effort to make the applicability of the statute depend upon the character of the circulation of a particular newspaper or magazine would be such as to justify the exclusion of the entire class, CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FOURTH CIRCUIT. No. 311. Argued January 12, 1932.—Decided February 23, 1932. A fire insurance policy contained a warranty exempting the insurer from liability for loss occurring while the hazard was increased by any means “ within the control or knowledge of the insured,” and another warranty exempting the insurer if loss occurred while there were kept on the premises certain prohibited articles, including gasoline. A rider altered this prohibition to the extent of permitting gasoline to be kept and used for the purpose of bottling automobile oils “ or for other mercantile purposes not more hazardous.” Fire occurred during occupancy by a tenant engaged in the illegal manufacture of intoxicating liquor who kept on the premises a large quantity of gasoline for use in that connection. Held: 1. A determination of the hazard involved was essential to maintaining the defense under either warranty. P, 116.
PACKER CORPORATION v. UTAH. Ill
Second. The defendant contends that to make it illegal to carry out the contract under which the advertisement was displayed takes its property without due process of law because it arbitrarily curtails liberty of contract. The contention is without merit. The law deals confessedly with a subject within the scope of the police power. No facts are brought to our attention which establish either that the evil aimed at does not exist or that the statutory remedy is inappropriate. O’Gorman & Young v. Hartford Fire Insurance Co., 282 U. S. 251, 257; Hardware Dealers Mutual Fire Insurance Co. v. Glidden Co., 284 U. S. 151.
Third. The defendant contends also that the statute imposes an unreasonable restraint upon interstate commerce because it prevents the display on billboards of posters shipped from another State. It does not appear from the record that the defendant is the owner of the posters. Its interest is merely in its billboards located in the State, upon which it displays advertisements for which it is paid. So far as the posters are concerned, assuming them to be articles of commerce, compare Charles A. Ramsay Co. v. Associated Bill Posters, 260 U. S. 501, 511, the statute is aimed, not at their importation, but at their use when affixed to billboards permanently located in the State. Compare Browning v. Waycross, 233 U. S. 16, 22, 23; General Railway Signal Co. v. Virginia, 246 U. S. 500, 510. The prohibition is non-discriminatory, applying regardless of the origin of the poster. Its operation is wholly intrastate, beginning after the interstate movement of the poster has ceased. Compare Hygrade Provision Co. v. Sherman, 266 U. S. 497, 503; Hebe Co. n . Shaw, 248 U. S. 297, 304. See also Corn Products Refining Co. v. Eddy, 249 U, S. 427, 433, To sustain the
Syllabus. 285 U.S.
defendant’s contention would be to hold that the posters, because of their origin, were entitled to permanent immunity from the exercise of state regulatory power. The Federal Constitution does not so require. Compare Mutual Film Corp. n . Industrial Commission, 236 U. S. 230, 240, 241. So far as the articles advertised are concerned, the solicitation of the advertisements, it may be assumed, is directed toward intrastate sales. Compare Di Santo v. Pennsylvania, 273 U. S. 34. Whatever may be the limitations upon the power of the State to regulate solicitation and advertisement incident to an exclusively interstate business, the commerce clause interposes no barrier to its effective control of advertising essentially local. Compare Jell-0 Co. v. Landes, 20 F. (2d) 120, 121; International Text-Book Co. v. District of Columbia, 35 App. D. C. 307, 311, 312.
Affirmed.
ST. PAUL FIRE & MARINE INSURANCE CO. v. BACHMANN.
2. The increase-of-hazard warranty is not violated unless there is increase of hazard within the knowledge and control of the insured; the prohibited articles warranty may be violated irrespective of the knowledge and control of the insured. P. 116.
3. Whether the business of operating moonshine stills was or was not more hazardous than that of bottling automobile oils was a question of fact for the jury. P. 117.
4. If the illicit business was more hazardous, the. prohibited articles warranty was violated. Id.
5. An allegation in a specification of defense under the prohibited articles warranty, charging the insured with knowledge and control, is to be regarded as surplusage. Id.
6. The burden of proof was upon the insurer to show that the occupancy was not one to which the gasoline permit extended. Id.
7. The court could not take judicial notice that the operation of the stills was more hazardous than bottling automobile oils or say that it was not a mercantile purpose. P. 118.
8. The defendant’s failure to ask proper instructions does not cure the error in instructions which were given, and to which exceptions were taken. Id.
49 F. (2d) 158, reversed.
Certior ari , 284 U. S. 605, to review a judgment affirming a judgment against the insurance company in an action upon a policy of fire insurance.
Mr. James M. Guiher, with whom Messrs. Russell L. Furbee, Philip P. Steptoe, and Louis A. Johnson were on the brief, for petitioner.
Messrs. Charles J. Schuck and Carl G. Bachmann, with whom Mr. J. Bernard Handlan was on the brief, for respondent.
Mr . Justice Brandeis delivered the opinion of the Court.
This action to recover on a policy of fire insurance was brought in the federal court for northern West Virginia by Sophia C. Bachmann, a citizen of that State, against
137818°—32-------8
the St. Paul Fire & Marine Insurance Company, a Minnesota corporation. The parties stipulated that the plaintiff was entitled to recover “ unless the policy had been forfeited and nullified by the alleged violations as set forth in defendant’s Specifications of Defense Nos. 1 and 2 filed in this case.” The first specification recited the Increase of Hazard Warranty: “Unless otherwise provided by agreement in writing added hereto, this company shall not be liable for loss or damage occurring (b) while the hazard is increased by any means within the control or knowledge of the insured ”; and alleged that by means “ within the knowledge and control of the plaintiff and her agent or agents ” the fire hazard had been increased. The second specification of defense recited the Prohibited Articles Warranty: “Unless otherwise provided by agreement in writing added hereto, this Company shall not be liable for loss or damage occurring (d) while . . . there is kept, used or allowed on the described premises . . . gasoline . . .”; and alleged that “ at the time of the fire complained of, and prior thereto, large quantities of gasoline were being kept . . . upon and about the insured premises, all of which was well known to the plaintiff and her agent or agents, and was in violation of the foregoing condition and warranty.”
To each defense the plaintiff replied that the warranty recited had been modified by a rider added to the policy; and also that prior to the fire she had no knowledge or control, as alleged, of the circumstances relied upon as showing breach of the warranty. The rider set forth in the reply altered the occupancy clause of the policy, which had originally described the insured building as “ occupied as Produce Store,” so that it read, “ occupied for bottling automobile oils, offices, and other mercantile purposes not more hazardous.” Another clause of the policy permitted the insured “ for present and other occupancies not more hazardous ” “ to do such work and p. 115to keep and use such materials as are usual in such occupancies;” and a rule of the West Virginia Fire Underwriters’ Association (concededly a part of the insurance contract) provides that “ the word ‘ materials ’ as used above, includes gasoline and such other materials as are prohibited by the printed conditions of the policy, when kept and used for such purposes as are usual to the occupancies permitted.” Gasoline is used in the business of bottling automobile oils.
The case was tried before a jury. The defendant introduced evidence tending to show that the premises were occupied at the time of the fire by a tenant engaged in the illegal manufacture of intoxicating liquors; and that a large quantity of gasoline was kept on the premises for use in that connection. But it failed in its effort to prove that the plaintiff had knowledge of these facts. The verdict was for the plaintiff; and the judgment entered thereon was affirmed by the Circuit Court of Appeals, 49 F. (2d) 158. The writ of certiorari was granted because of alleged conflict with decisions of this Court and of the Eighth Circuit Court of Appeals.
The only error assigned here by the Insurance Company relates to the construction of the Prohibited Articles Warranty, and to the Circuit Court of Appeals’ approval of the trial court’s instructions with reference thereto. It is contended that under that warranty, even as modified by the rider, the presence of gasoline in connection with the use of the premises for the illegal manufacture of intoxicating liquors was an absolute bar to liability, regardless of the plaintiff’s knowledge or control of the conditions; and that the trial court, in instructing the jury that the defendant must establish the fact of such knowledge and control, confused the requirements of the Prohibited Articles Warranty with those of the Increase of Hazard Warranty, and in effect read the condition against the use of gasoline out of the policy.
In passing upon this contention, the Circuit Court of Appeals said [p. 160]:
“At the time of the inspection by the agent of the insurance company, and the attachment of the rider to the policy, the building was being used for the handling and bottling of automobile oil, and it was shown that gasoline was stored in the building, and that the agent of the insurance company saw that gasoline was being used and stored in the building. It was contended at the trial below that this rider constituted a permit for the handling of gasoline within the building, and that its effect was to remove gasoline from the prohibited articles warranty, and that the quantity of gasoline, if greater than usedat* the time of the issuance of the permit, brought this question into the increased hazard class. The trial court took this view of the case, and we think properly so. The agent of the insurance company knew that the rider permitted the use of gasoline, at least to some extent, and in order to show that the hazard was increased by a greater use of gasoline, as a defense to the recovery by the insured, the insurance company must under the terms of the policy, as above discussed, bring such fact 1within the knowledge and control ’ of the insured or her agent.”
In so holding the court was in error. Because of the terms of the rider, a determination of the hazard involved was essential to maintaining the defense under the Prohibited Articles Warranty as well as that under the Increase of Hazard Warranty. But the two warranties are distinct. The latter is not violated unless there is increase of hazard within the knowledge and control of the insured. The former may be violated if a tenant keeps the prohibited article on the premises, even if this was done without the knowledge and control of the insured. Liverpool & London Ins. Co. v. Gunther,
Globe Ins. Co., 134 U. S. 110,116. Compare Imperial Fire p. 117Ins. Co. v. Coos County, 151 U. S. 452, 463, 464. The rider attached to the policy altered the prohibition against gasoline only to the extent of permitting it to be kept and used for the purpose of bottling automobile oils, or for “ other mercantile purposes not more hazardous.” The court could not say as a matter of law whether the business of operating moonshine stills was or was not more hazardous than that of bottling automobile oils. Compare Royal Exch. Assur. of London v. Thrower, 246 Fed. 768, 772; Phoenix Assur. Co. v. Franklin Brass Co., 58 Fed. 166, 171; Schaffer v. Hampton Ins. Co., 235 N. W. 618. If it was more hazardous, the presence of the gasoline constituted a violation of the warranty. The question should have been submitted to the jury.
It is urged on behalf of the respondent that the Insurance Company is not in a position to complain of this error. Stress is laid on the circumstance that in its specifications of defense the Company alleged knowledge and control by the insured of the presence of the gasoline and the operation of the stills; and it is argued that the parties are bound by the issue as thus joined. But the pleading set forth the Prohibited Articles Warranty and asserted a defense under it. Any additional matter, which might by implication be read as an attempted construction of the warranty, is to be regarded as surplusage. Compare Lawrence v. Hyde, 77 W. Va. 639, 643; 88 S. E. 45; Lohr v. Wolfe, 71 W. Va. 627, 628; 77 S. E. 71; Jones v. Sanitary District, 265 Ill. 98, 100, 101; 106 N. E. 473; Hall v. Spaulding, 42 N. H. 259, 262. When the defendant later sought instructions that proof of knowledge and control by the insured was not essential to establishment of the defense, the plaintiff made no effort to show that it had been prejudiced.
A more serious difficulty is that the defendant did not itself seek proper instructions. The burden was upon p. 118it to prove that the occupancy was not one to which the gasoline permit extended. Compare Logan v. Provident Savings Life Assurance Society, 57 W. Va. 384, 390; 50 S. E. 529. Yet it presented no request that the jury be instructed as to the meaning of the rider. Nor did it request an instruction that the jury find whether the occupancy at or before the time of the fire was more hazardous than that of bottling automobile oils. Its request was merely that the jury be charged that the plaintiff could not recover if at and prior to the time of the fire substantial quantities of gasoline were being kept on the premises “ either for the purpose of operating moonshine stills or for any other purpose not permitted by the policy.” Thus, it requested the court to hold as a matter of law that operating moonshine stills was outside the scope of the permitted occupancies. The court could not take judicial notice that the operation of the stills was more hazardous than bottling automobile oils or say that it was not a mercantile purpose.
But the defendant’s failure to ask proper instructions does not cure the error in the instructions which were given, and excepted to. Compare Texas & Pacific Ry. Co. v. Volk, 151 U. S. 73, 78. At the plaintiff’s request the trial judge charged that “ unless the plaintiff . . . had control or knowledge of the keeping and using of such gasoline or the operation of such stills, such keeping, using and operation . . . constitute no defense”; that “the defendant by the issuance of the rider ... is estopped to avoid the policy because of the fact that quantities of gasoline were kept and used upon the premises since the said rider permitted the bottling of automobile oils which according to the uncontradicted evidence contained gasoline.” These instructions, while correct insofar as they bore upon the defense under the Increase of Hazard Warranty, were erroneous in respect to that under the Prohibited Articles War- p. 119112 Syllabus.
ranty. The fact that the defendant had incorporated errors of law in the instructions which it sought upon the second defense did not justify putting the case to the jury solely upon the first. Compare Westchester Fire Ins. Co. v. Fitzpatrick, 2 F. (2d) 651, 654; Sutherland v. Payne, 274 Fed. 360, 361; Rothe v. Pennsylvania Co., 195 Fed. 21, 25; Audubon Bldg. Co. v. F. M. Andrews & Co., 187 Fed. 254, 260. We are constrained to reverse the judgment of the Circuit Court of Appeals, with directions that the case be remanded to the District Court for further proceedings in accordance with this opinion.
Reversed.
Mr . Just ice Mc Reynolds thinks the judgment should be affirmed.
1
Where a corporation selling natural gas locally procures its supply by agreement in interstate commerce from a pipe-line company with which it is so affiliated that the two are not at arm’s length in their dealings, the reasonableness of the interstate price is subject to be inquired into by state authority when applied to by the local company for permission to increase its local rate. Smith v. Illinois Bell Telephone Co., 282 U. S. 133. P. 123.
2
A local distributor of natural gas, in a common corporate control with an interstate pipe-line company from which it bought its supply in interstate commerce, sought to enjoin the enforcement of a local rate in a particular city which the state commission had declined to increase without proof that the interstate price was reasonable. Held: (1) Adjudications upholding the same wholesale rate in relation to other cities of the State, in suits to which the city now in question was not a party, do not make a prima facie case here. P. 125.