Sheedy v. District of Columbia

19 App. D.C. 280, 1902 U.S. App. LEXIS 5387

• Court: Court of Appeals for the D.C. Circuit
• Decided: January 7, 1902
• Docket: No. 1137
• Status: Published

Opinion

Mr. Justice Shepard

delivered the opinion of the Court:

The business of the gift enterprise is defined, in an act of the former District assembly (A. D. 1871) providing an annual license therefor, in the following terms: “Every person who 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 express 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 by 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.” These general words form a part of a section of a comprehensive system for raising revenue through licensing trades and occupations; but the amount of the annual license for this particular business, would seem to indicate rather an intention to prohibit all small enterprises of the kind at least.

In 1873 an act of Congress specially disapproved and repealed the aforesaid section of the act of assembly and declared it unlawful to “ engage in said business in any manner as defined in said act or otherwise;” and provided a penalty therefor. (R. S. D. C., Secs. 1176, 1177.)

This prohibitory enactment has heretofore been carefully considered by this court and upheld as applied to a scheme for distributing premiums or gifts to the customers of retail merchants by means of a system of “ trading stamps ” managed by third parties. Lansburgh v. District of Columbia, 11 App. D. C. 512.

One of the contentions of the plaintiff in error in that case has been substantially repeated in this, namely; that the act is so broad as to comprehend and punish acts that are matters of common right and clearly beyond the power of the Congress to prohibit, and that the statute is invalidated thereby because such acts are inseparable from those clearly within the prohibitory power. The point was fully considered in that case and denied upon a review of the' authorities bearing upon it. ~We are entirely satisfied with the conclusion then reached, and see no occasion to add anything to the reasons given therefor.

It is quite true, as contended, that the business engaged in by the plaintiff in error, as set out in the agreed statement, differs, in important particulars, from that carried on by the party in the former case, and embraces also two separate plans for the distribution of premiums, prizes or gifts, that are submitted to the selection of purchasing customers.

A coupon with a letter in red is enclosed in each package offered for sale. A purchaser who retains these until he shall have collected enough of them to include the letters necessary to spell the word Mothers, may forward them to the manufacturer in Akron, Ohio, who agrees, in such event, to deliver to him, at Akron, a set of china valued at eight dollars. If he prefers, however, he may send the red letters, as obtained, in certain quantities, not less than twenty-five in any case, with four cents in postage stamps and receive in return certain specified articles of slight value. This double plan of distribution of the gifts, though not found in Lansburgh’s case, does not operate to take the case out of the rule of construction therein enounced; for to concede that either the principal or the alternative plan might not be within the scope of the act, or within the power of the Congress to prohibit, cannot change, or raise an exception to, the principle of its application.

The information with which the prosecution began has been omitted from the record because of the agreed case, but it appears from the statement in the briefs that the charge was the general one of engaging in the business of a gift enterprise contrary to the statute. The agreed case admits the sale of many packages containing the coupons which, at the option of the purchasers, could be, and had been, used according to both of the plans.

For the reasons sufficiently stated in the opinion in Lansburgh’s case (11 App. D. C. p. 526) and in cases there cited, we think it clear that the statute cannot be declared void or inoperative, because the main feature of the scheme includes another which, by itself, might be lawful, or not within the power of the Congress to render unlawful.

As regards this main feature of the business scheme, we are of the opinion that it falls clearly within the scope of the statute prohibiting engagement in the business of a gift enterprise “ in the manner defined in the act, or otherwise.” (R. S. D. C., Sec. 1176.) To the indirect gift or premium feature of the “ trading stamp ” scheme, it plainly super-adds the element of chance, the gambling feature generally involved in all of the many forms of what is ordinarily known as a gift enterprise.

Holding, as we do, that this leading feature of the scheme of distribution is clearly within the police power of regulation and prohibition, that it is within the terms of the statute, and that the conviction of engaging in the business of a gift enterprise may stand upon that ground alone, even if it should be held that the second method, if alone pursued, would not support a conviction, it becomes unnecessary to pass upon the contention, that the latter method is a legitimate incident of a' lawful business with which it is beyond the constitutional power of Congress to interfere.

In view of the numerous schemes to attract purchasers and secure trade that have been in practice, and the probable inventions of new ones from time to time hereafter, we think it unwise to go any farther beyond the particular method upon which the case turns, in the expression of an opinion in respect of what might or might not be within the power of Congress to declare unlawful, than was done in Lansburgh’s case.

In that case, after indicating certain benefits conferred upon customers by retail merchants against which the statute either would or could not be made to operate, it was said: “ 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. District of Columbia, 11 App. D. C. 453.

It is sufficient to say that the case at bar does not furnish an instance of a gift, specific and certain, by a retail dealer to each customer who purchases a specific article.

The plaintiff in error gives nothing to the purchaser and, so far as the premium scheme is concerned, acts as the representative or agent, merely, of a third person who gives nothing specific and certain to induce the purchase, but undertakes to make a gift' to any one who shall send him not less than twenty-five coupons at a time and four cents in postage stamps. The following language used in Lansburgh’s case is, therefore, applicable to that of the plaintiff in error.

“ Although a regular merchant of the city of Washington, he does not appear on this record as convicted of the offense 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 defense.” 11 App. D. C., p. 532.

“We think it will be time enough to determine, when the exact question shall have been presented, whether the statute prohibiting the business of a gift enterprise applies to, or can be enforced against a regular merchant who, at the time of sale, gives to his customer some additional article as an inducement that has been offered to obtain the purchase.

For the reasons' given, the judgment of the police court will be affirmed with costs; and it is so ordered. Affirmed.