Real Silk Hosiery Mills v. Portland, 268 U.S. 325 (1925)

U.S. Supreme Court

Real Silk Hosiery Mills v. Portland, 268 U.S. 325 (1925) Real Silk Hosiery Mills v. City of Portland

No. 417

Argued April 27, 1925

Decided May 25, 1925

268 U.S. 325

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

1. A municipal ordinance requiring that every person who goes from place to place taking orders for goods for future delivery and receives payment or any deposit of money in advance shall secure

Page 268 U. S. 326

a license by paying: a fee and filing a bond conditioned to make final delivery of ordered goods held an unconstitutional interference with interstate commerce as applied to the solicitors of a corporation engaged in manufacturing goods in another state and selling them direct to consumers on orders taken by the solicitors and sent to the home office of the corporation, the customers making advance deposits which were retained by the solicitors as their sole competition and were credited to the customers on account of their purchases. P. 268 U. S. 335.

2. An expressed purpose to prevent possible frauds is not enough to justify legislation which really interferes with the free flow of legitimate interstate commerce. P. 268 U. S. 336.

297 F. 897 reversed.

Appeal from a decree of the circuit court of appeals which affirmed a decree of the district court dismissing the bill in a suit brought by the appellant corporation to enjoin the enforcement of a city ordinance requiring its salesmen to take out licenses and file bonds for security of customers.

Page 268 U. S. 334

MR. JUSTICE McREYNOLDS delivered the opinion of the Court.

Appellant is an Illinois corporation engaged in manufacturing silk hosiery at Indianapolis, Indiana, and selling it throughout the United States to consumers only. It employs duly accredited representatives in many states who go from house to house soliciting and accepting orders. When a willing purchaser is found, the solicitor fills out and signs in duplicate a so-called "order blank." This obligates appellant to make delivery of the specified goods and, among other things, states:

"The mills require a deposit of $1.00 [or other specified sum] on each box listed below. Your hosiery will be mailed you by parcel post c.o.d., direct from the post office branch in our mills. Pay the balance to the postman. As the entire business of the Real Silk Hosiery Mills is conducted on the parcel post c.o.d. basis, our representative cannot accept your order unless the deposit is made. We do not accept full payment in advance. Do not pay more than printed deposit."

One of the copies is left with the purchaser; the other is first sent to the local sales manager and then forwarded to the mills at Indianapolis. In response thereto, the goods are packed and shipped by parcel post c.o.d. direct to the purchaser. The solicitor retains the cash deposit, and this constitutes his entire compensation.

The appellant employs 2,000 representatives who solicit in most of the important cities and towns

Page 268 U. S. 335

throughout the Union, and has built up a very large business -- $10,000,000 per annum. Twenty operate in Portland, Oregon.

May 16, 1923, that city passed an ordinance which requires that every person who goes from place to place taking orders for goods for future delivery and receives payment or any deposit of money in advance shall secure a license and file a bond. The license fee is $12.50 quarterly for each person on foot and $25 if he uses a vehicle. The bond must be in the penal sum of $500 and conditioned to make final delivery of ordered goods, etc.

By a bill filed in the United States District Court for Oregon, appellant challenged the ordinance and asked that its enforcement be restrained upon the ground, among others, that it interferes with and burdens interstate commerce and is repugnant to Art. I, § 8, federal Constitution. The trial court upheld the enactment and sustained a motion to dismiss the bill. This was affirmed by the circuit court of appeals. 297 F. 897.

Considering former opinions of this Court, we cannot doubt that the ordinance materially burdens interstate commerce and conflicts with the commerce clause. Robbins v. Shelby Taxing District, 120 U. S. 489, 120 U. S. 497; Brennan v. Titusville, 153 U. S. 289; Rearick v. Pennsylvania, 203 U. S. 507; Crenshaw v. Arkansas, 227 U. S. 389; Texas Transport Co. v. New Orleans, 264 U. S. 150; Alpha Portland Cement Co. v. Massachusetts, 268 U. S. 203.

"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."

Manifestly, no license fee could have been required of appellant's solicitors if they had traveled at its expense and received their compensation by direct remittances from it. And we are unable to see that the burden on interstate

Page 268 U. S. 336

commerce is different or less because they are paid through retention of advance partial payments made under definite contracts negotiated by them. Nor can we accept the theory that an expressed purpose to prevent possible frauds is enough to justify legislation which really interferes with the free flow of legitimate interstate commerce. See Shafer v. Farmers' Grain Co., 268 U. S. 189. The decree of the court below must be reversed. The cause will be remanded to the district court for further proceedings in harmony with this opinion.