Lansburgh v. District of Columbia

11 App. D.C. 512, 1897 U.S. App. LEXIS 3144

• Court: Court of Appeals for the D.C. Circuit
• Decided: December 7, 1897
• Docket: No. 749
• Status: Published

Opinion

Mr. Justice Shepard

delivered the opinion of the Court:

1. It is not denied that the power of Congress to legislate in respect of matters affecting the public health, safety, peace and morals within the District of Columbia, is the same as that of the State legislatures within their several jurisdictions. It is neither greater nor less; for “all of the guarantees of the Constitution respecting life, liberty and property are equally for the benefit of all citizens of the United States residing permanently or temporarily in the District of Columbia, as of those residing in the several States of the Union.” Kerr v. Ross, 5 App. D. C. 241, 247, 248; Callan v. Wilson, 127 U. S. 640.

The general nature of the police power of'the State is nowhere more forcefully stated than in the eloquent wTords of Mr. Justice Field. He says: “It is undoubtedly true that it is the right of every citizen of the United States to pursue any lawful trade or business, under such restrictions as are imposed upon all persons of the same age, sex and condition. But the possession and enjoyment of all rights are subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, good order and morals of the community. Even liberty itself, the greatest of all rights, is not unrestricted license to act according to one’s own will. It is only freedom from restraint under conditions essential to the equal enjoyment of the same rights by others. It is then liberty regulated by law. The right to acquire, enjoy, and dispose of property is declared in the constitutions of the several States to be one of the inalienable rights of man. But this declaration is not held to preclude the legislature • of any State from passing laws respecting the acquisition, enjoyment and disposition of property, what contracts respecting its acquisition and disposition shall be valid, and what void or voidable; when they shall be in writing and when they may be made orally; and by what instruments it may be conveyed or mortgaged, are subjects of constant legislation. And as to the enjoyment of property, the rule is general that it must be accompanied with such limitations as will not impair thé equal enjoyment by others of their property. Sic utere tuo ut alienum non laedas is a maxim of universal application. For the pursuit of any lawful trade or business the law imposes similar conditions. Regulations respecting them are almost infinite, varying with the nature of the business.” Crowley v. Christensen, 137 U. S. 89.

Speaking for the same court, sqme years before, Chief Justice Waite said: “Many attempts have been made in this court and elsewhere to definp the police power, but never with entire success. It is always' easier to determine whether a particular case comes within the general scope of the power, than to give an abstract definition of the power itself which will be in all respects accurate. No one denies, however, that it extends to all matters affecting the public health or the public morals.” Stone v. Mississippi, 101 U. S. 818.

In a case involving the regulation of the trade of plumbing in the District of Columbia, we had occasion to say: “It is not an easy matter to draw the line beyond which thiip power of regulation of trades and business may not be extended, in the interést of the public health and safety, without becoming an unwarranted invasion of private right. Each case must depend upon its own peculiar circumstances and conditions. Whilst much is left to the discretion of the legislature and its exercise thereof will not be lightly disturbed, yet the final question whether the trade or calling is of such a nature as to justify police regulation, and when conceded to be such the length to which such legislation may be rightfully extended, is unquestionably to be finally determined ,by the courts.” Kerr v. Ross, 5 App. D. C. 249.

In matters of this nature, the discretion of the legislature is very large, and every fair presumption is to be indulged in favor of power as exercised. Powell v. Pennsylvania, 127 U. S. 678, 684, 685.

It is only, therefore, in a case where the statute purporting to have been enacted for the protection of the public health, safety, peace, and morals “has no real or substantial relation to those objects, or is a palpable invasion of the rights secured by the fundamental law,” that the courts will declare it void. Mugler v. Kansas, 123 U. S. 623, 661; Yick Wo v. Hopkins, 118 U. S. 356, 373; Powell v. Pennsylvania, 127 U. S. 678, 684; City of Baltimore v. Radecke, 49 Md. 217.

2. In the light of the doctrines above enounced, it remains to consider the nature and scope of the statute under which the information in this case was presented, with the objections thereto, in application to the facts hereinabove set forth.

Now, whilst the information charges the defendants with the offence, in general terms, of engaging in a “gift enterprise” we are, nevertheless, spared the consideration and determination of the common or technical meaning of that phrase because the act of Congress under which the prosecution is maintained itself undertakes to define the character of acts comprehended therein.

With a view to raising revenue from this and other sources, the Legislative Assembly of the District of Columbia on August 23,1871, passed an act, the 25th section of which (said to have been copied from a revenue act of Congress then in force) reads as follows:

“The proprietors of gift enterprises shall pay one thousand dollars annually. Every person wdio shall sell or offer for sale any real estate or article of merchandise of any description whatever, or any ticket of admission to any exhibition or performance, or other place of amusement, with a promise, expressed or implied, to give or bestow, or in any manner hold out the promise of gift or bestowal, of any article or thing, for and in consideration of the purchase hy any person of any other article or thing, whether the object shall be for individual gain or for the benefit of any institution of whatever character, or for any purpose whatever, shall be regarded as a gift enterprise: Provided, That no such proprietor, in consequence of being thus taxed, shall be exem'pt from paying any other tax imposed by law, and the license herein required shall be in addition thereto.” (Laws of the District of Columbia, 1871-72, part II, pp. 96, 97.)

After less than twro years’ experience of license there came a complete revolution of public policy as declared by Congress. That which had been permitted and made a source of revenue was then prohibited as an offence. On February 17, 1873, an act was passed entitled “An act prohibiting gift enterprises in the District of Columbia,” 17 Stat. 464. This was embodied in the Revised Statutes for the District of Columbia becoming Sections 1176 and 1777 thereof, as follows:

“Sec. 1176. So much of the act of the Legislative Assembly of the District of Columbia entitled ‘An act imposing a license on trades, business and professions practiced or carried on in the District of Columbia,’ approved August twenty-third, eighteen hundred and seventy-one, as authorizes gift enterprises therein, and licenses to be issued therefor, is disapproved and repealed, and hereafter it shall be unlawful for any person or persons to engage in said business in any manner as defined in said act or otherwise.

“Sue. 1177. Every person who shall in any manner engage in any gift enterprise business in the District shall, on conviction thereof in the Police Court, on information filed for and on behalf of the District, pay a fine not exceeding one thousand dollars or be imprisoned in the District jail not less than one nor more than six months, or both, in the discretion of the court.”

3. The first contention on behalf of the plaintiffs in error, in respect of the operation of the above statute, is that it is so general in its scope as, necessarily, to comprehend, and undertake to punish as offences, acts that are matters of common, private right clearly beyond the power of Congress to prohibit or to interfere with in any manner, under the guarantees of the Constitution; and that this forbidden purpose and operation are inseparable, save by construction only, from the operation upon those acts which, with equal clearness,'are within the power to prohibit and punish.

It is argued, therefore, that the forbidden operation being inseparable from that which is permissible, the whole act must be declared void in accordance with the doctrine of the Supreme Court of the United States in the following cases: United States v. Reese, 92 U. S. 214, 221; Trademark Cases, 100 U. S. 82, 95; United States v. Harris, 106 U. S. 629; Baldwin v. Franks, 120 U S. 678, 685. With the exception of the Trademark Cases, those were all cases of criminal prosecutions under sections of the Revised Statutes relating to conspiracies to deprive citizens of the United States of certain legal rights, etc., and it was plain that Congress had exercised powers not conferred by the Constitution and its amendments, and thereunder had undertaken to punish, as offences against the authority of the United Stales, acts which, in general, were cognizable in the State courts only as crimes against the State. The court declined to limit the sections by construction, so as to make them embrace those acts only that would, when committed under certain conditions, come within the Federal jurisdiction. To do so, it would have had, as was said in Reese v. United States, 92 U. S., p. 221, “ to introduce words of limitation into a penal statute;” and as was said later in Trademark Cases, 100 U. S., p. 98, “it is not within the judicial province to give to the words used by Congress a narrower meaning than they are manifestly intended to bear, in order that crimes may be punished which are not described in language that brings them within the constitutional power of that body.”

In the case at bar; there is no question of conflicting State and Federal jurisdictions, or of constitutional prohibition ofv any interference whatsoever in the subject-matter of legislation ; but merely a question as to the degree or length to which an acknowledged power may be extended.

We think, therefore, that this case must fall within another rule of statutory construction equally well established as the formei'. Sections 102 and 103, Revised Statutes, providing a punishment for witnesses who refuse to answer questions propounded in the course of an investigation instituted by Congress, afford an example.

In a case arising under those sections it was said by the Chief Justice in delivering the opinion of this court:

“It has been strongly urged in argument that the terms of the section, 102, are sufficiently broad and comprehensive to include a class of witnesses protected and exempted by the provisions of Article V of the Constitution, and especially so when read, as urged it should be, in connection with the next succeeding section, 103, of the Revised Statutes; and therefore the section is void in toto. But it is not pretended that the appellant belongs to the class of witnesses contemplated by the article of the Constitution referred to; and if the contention of the appellant were conceded to be correct, as applied to a class of witnesses under different conditions, it would not follow necessarily that the statute should be stricken down in its entirety, because it may be susceptible of an unconstitutional application in certain cases that may possibly arise. This is not reasonable, nor is it in accordance with the rule of interpretation adopted by the Supreme Court of the United States, as applied to a statute good on its face, but where, by reason of its general and comprehensive terms, it may be made, by construction, to apply to objects forbidden by the Constitution. In such case the statute will be allowed its full force and operation, as applicable to all cases, rightfully and constitutionally within its provisions, but such application will be restrained as to those objects simply to which the statute is forbidden to extend. This is the rule, as we understand it, upon which the Supreme Court acted in the State Freight Tax Case, 15 Wall. 232; Supervisors v. Stanley, 105 U. S. 305, 313; Virginia Coupon Cases, 114 U. S. 269, and other cases that could be cited.” Chapman v. United States, 5 App. D. C. 122, 131; see also In re Chapman, 166 U. S. 667.

The comprehensive scope of the police power, as exercised in our day and under our form of constitutional government, has been developed by the process of evolution. Rapid increase in population, wonderful inventions, from time to time, followed by vast material development and advances in the arts of civilization, have introduced novel situations and begotten difficulties for the solution of one generation, that were unanticipated and often undreamed of even by the most advanced minds of the generation next preceding. As a necessary consequence, the boundaries of the police power in its application to the property, business and personal liberty of the individual citizen have never been definitely settled so as to furnish a certain guide for all cases as they may present themselves for legislative or judicial determination. Hence, as we have seen above, in the quotation from the opinion of Chief Justice Waite, the want of success of the many attempts “ to give an abstract definition of the power itself which will be in all respects accurate.” Whilst the existence, or the absence, of power in the legislature to regulate, or to prohibit, is, in many instances, perfectly plain, there is a border line between the two, the accurate delimitation of which presents the difficulty. Special circumstances, under new or different conditions, give rise to new applications that must remain ■uncertain until settled by judicial determination in an actual case. If strict accuracy of definition and certainty of application be required in each exercise of the power by the legislature, so as to prevent the inclusion by possible construction, of something not within that power, there would be few laws creating new offences in response to newly-developed public needs, that would escape condemnation.

It is the duty of the courts to take a liberal view of .the situation presented to the legislature in such oases, and to give its acts providing therefor “a sensible construction such as will effectuate the legislative intention, and, if possible, so as to avoid an unjust or an absurd conclusion.” Law Ow Bew v. United States, 144 U. S. 47, 59; In re Chapman, 166 U. S. 667.

4. We do not feel called upon at this time to undertake a specification of the particular conditions in which the act under consideration might or might not apply to actual merchants in the ordinary course and practice of competitive .business, or to determine -just what character of inducements by way of gift or premium may, and may not, be held out to purchasers at the time, and as a part of their purchases. That it was not intended to apply to ordinary discounts for cash, or in proportion to amounts of purchases when made by the merchant himself to his customers, may be regarded as certain; and the exercise of such power would doubtless be denied if expressly attempted. Nor can it with reason be said to apply to bona fide co-operative associations and the like. It is possible also that it might not be operative in a case where the sale of a lawful article is accompanied by a gift of something specific and certain, not attended with any element of chance, and where the gift is not the real object of the sale, in an attempt to evade acts regulating or prohibiting a particular traffic, as, for example, in the case of Lauer v. The District of Columbia (recently decided), ante, p. 453.

Some cases have been cited by counsel wherein such sales were either held not to be embraced in the statute, or, if comprehended, to render it void. The statutes involved were not, in all respects, like ours, but it is unnecessary to point out the differences, in the view that we take of the application of those cases to the grounds of decision in this case.

(1) Yellowstone Kit v. The State, 88 Ala. 196; S. C. 7 L. K. A. 599. In that case the defendant made a free gift of tickets entitling the holders to chances in a limited distribution of prizes as a means whereby to gather a crowd to wdiom he offered patent medicines for sale. The distribution of the tickets and the prizes had no connection with the sales and prices of the medicines; and the court held that the act did not constitute a lottery within the meaning of the statute, because there was no consideration demanded or received for the tickets.

(2) Long v. State, 74 Md. 565. In that case the Court of Appeals of Maryland reconsidered the conclusion reached on a former appeal (73 Md. 527), and declared the statute void because of its unwarranted interference with the liberty of the citizen. Long was a coffee dealer, and in order to induce customers gave with each package of coffee sold a ticket entitling the purchaser to select a cup and saucer or a plate from a number displayed on a table for examination by intending purchasers.

(3) People v. Gillson, 109 N. Y. 395. The facts of that case were substantially the same as those in the case of Long v. The State, supra, and the statute which made it a crime for a merchant, in selling any article of food, to promise to give the purchaser something else in addition to the article sold, as a prize or reward for making the purchase, was denounced in vigorous terms and declared void.

(4) Commonwealth v. Emerson, 165 Mass. 146. There the statute declared that “no person shall sell, exchange or dispose of any property, or offer or attempt to do so upon any representation, advertisement, notice or inducement that anything other than what is specifically stated to be the subject of the sale or exchange, is, or is to be, delivered or received, or in any way connected with or a part of the transaction.” The defendant was a retail tobacco dealer. He displayed in his window a great number of photographs of distinguished people, and each purchaser of a package of tobacco was permitted to select one of the photographs without further consideration. Nothing was said in respect of the invalidity of such a statute; but the court held that the transaction was not within its prohibition, saying that the terms of the statute “were not intended and do not purport to forbid a sale of two things at once, even if one of them is the principal object of desire and the other an additional inducement which turns the scale.”

Without approving or disapproving the foregoing decisions, and reserving our opinion in respect of the application of our statute to the facts involved therein until such time as a case may be presented demanding it, we can pass them by as having no necessary bearing upon the case of these plaintiffs in error.

In like manner, we think this case may be decided without reference to the numerous decisions cited by counsel for the District, in each of which the element of chance in the distribution of gifts and prizes was the controlling fact.

Without the' necessity of declaring that the acts proved in this case constitute the conduct of a lottery or gift enterprise, as those words are commonly understood, or even of finding that the element of chance operates intentionally and distinctively in the scheme of the Trading Stamp Company, we think, nevertheless, that they come within the prohibition of the statute, which, as before said, furnishes its own definition of “gift enterprise.”

Although one of the most shrewdly planned of the many devices to obtain something for nothing, and one apparently entirely novel, it could hardly have come more clearly within the scope of the statute had it been well known and expressly in the contemplation of Congress at the time of the enactment.

The Washington Trading Stamp Company and its agents are not merchants engaged in business as that term is commonly understood. They are not dealers in ordinary merchandise, engaged in a legitimate attempt to obtain purchasers for their goods by offering fair and lawful inducements to trade. Their business is the exploitation of nothing more or less than a cunning device.

With no stock in trade but that device and the necessary books and stamps and so-called premiums with which to operate it successfully, they have intervened in the legitimate business carried on in the District of Columbia between seller and buyer, not for the advantage of either, but to prey upon both. They sell nothing to the person to whom they furnish the premiums. They pretend simply to act for his benefit and advantage by forcing their stamps upon a perhaps unwilling merchant who pays them in cash at the rate of $5 per thousand. The merchant who yields to their persuasion does so partly in the hope of obtaining the customers of another, and partly through fear of losing his own if he declines. Again, a limited number only (an apparently necessary feature of the scheme) are included in the list for the distribution of the stamps, and other merchants and dealers who can not enter must run the risk of losing their trade or else devise some other scheme to counteract the adverse agency.

The stamps are sold at the rate of fifty cents per hundred to the contracting merchants, and yet purport to be redeemable with premium gifts at the assumed value of one dollar per hundred. Unless, therefore, the so-called premiums to be distributed among the diligent collectors of stamps are grossly overvalued, the scheme can not maintain itself, for in addition to the actual cost of the premiums it has to bear the cost of the books and stamps and the maintenance of its office and exhibition room.

If its premiums should have any fair value, then the Stamp Company must inevitably rely upon the failure of the presentation of tickets for redemption by reason of its requirement that not less than 990 tickets—representing' cash purchases of $99.00—shall be pasted in a book and produced at one time to entitle the holder to his premium. In this event, the company, if it actually contemplates making good its contracts, is relying upon a lottery; that is to say, the chances and advantages of its game for its expectations of profit or gain.

There is not a shadow of rational foundation for the Stamp Company’s claim that it confers a benefit upon buyers by procuring for them an actual discount. If its business.were continued and its contracts faithfully performed, its inevitable result would be, as in all unnecessary interventions of third persons, or “middle men,” between producer and consumer, an increase of cost to the latter.

The prohibition of such a scheme is clearly within the power of Congress, within this District, and the statute under which the prosecution has been maintained makes ample provision for its exercise.

5. The appeal of the defendant Lansburgh must abide the result of his co-defendant’s. Their cases are inseparable. Although a regular merchant of the city of Washington, he does not appear on this record as convicted of the offence of offering a discount, a premium or a gift to his own customers upon sales made to them in the course of his business, and he cannot make that defence. By his contract and its attempted performance he made himself the accomplice of the manager of the Washington Trading Stamp Company—an active party in the promotion of its unlawful scheme; and for that offence alone he has been convicted.

We find no error in the proceedings in the Police Court; and the judgment must be affirmed, with costs.

Affirmed.