OZAN LUMBER COMPANY, Petitioner, v.

UNION COUNTY NATIONAL BANK OP LIBERTY, INDIANA.

(See S. C. Reporter’s ed. 251-257.)

Constitutional law— equal protection of the laws — state regulation of sale of patented articles.

The exemption of merchants and dealers who sell patented things in the usual course of business from the operation of Kirby’s- (Ark.) Dig. §§ 513-516, requiring a nego¬ tiable instrument taken in payment for a patented article to show on its face for what it was given or be void, does not ren¬ der such statute repugnant to U. S. Const., 14th Amend., as denying the equal protec¬ tion of the laws.

[No. 37.]

Submitted November 5, 1907. Decided De¬ cember 2, 1907.

ON WRIT of Certiorari to the United States Circuit Court of Appeals for the Eighth Circuit to review a judgment which affirmed a judgment of the Circuit Court for the Western District of Arkansas, sus¬ taining a demurrer to the defense in an ac¬ tion upon certain promissory notes, that they did not show on their face that they were taken in payment for a patented ar¬ ticle. Judgments of both courts reversed and the cause remanded to the Circuit Court for further proceedings.

See same case below, 76 C. C. A. 218, 145 Fed. 344.

Statement by Mr. Justice Pecltham:

This case comes here upon certiorari di¬ rected to the circuit court of appeals for the eighth circuit. The action was com¬ menced in the United States circuit court for the western district of Arkansas, upon certain promissory notes, which the defend¬ ant, the Ozan Lumber Company, in its an¬ swer alleged had been given by it in pay¬ ment for a patented article, such notes not being executed upon a printed form, show¬ ing they were given in consideration of a patented machine, as required by the stat-

195

252, 254, 255

Supreme Court of the United States.

Oct. Term,

ute of Arkansas. Kirby’s Digest Laws of Arkansas, §§ 513 to 516, inclusive.

A demurrer to the defense was interposed on the ground that it did not state facts con¬ stituting a defense. The circuit court sus¬ tained the demurrer, because, as it held, the act was in violation of the 14th Amendment, as denying to the plaintiff the equal protec¬ tion of the laws. 127 Fed. 200. The case was taken by writ of error to the circuit court of appeals, where the judgment was affirmed for the reason that the act was an illegal discrimination against patented articles. 76 C. C. A. 218, 145 Fed. 344. The application by defendant for a certiorari to review that judgment was granted.

Messrs. U. M. Rose and Thomas C. Mc¬ Rae submitted the cause for petitioner.

Mr. Morris M. Cohn submitted the cause for respondent:

The statute was void, because of the im¬ proper classification made.

Gulf, C. & S. F. R. Co. v. Ellis, 105 U. S. 150, 41 L. ed. 660, 17 Sup. Ct. Rep. 255; Connolly v. Union Sewer Pipe Co. 184 LT. S. 540, 46 L. ed. 679, 22 Sup. Ct. Rep. 431; Cotting v. Kansas City Stock Yards Co. (Cotting v. Godard) 183 U. S. 79, 46 L. ed. 92, 22 Sup. Ct. Rep. 30; Dobbins v. Los An¬ geles, 195 U. S. 223, 236, 49 L. ed. 109, 175, 25 Sup. Ct. Rep. 18; Lake Shore & M. S. R. Co. v. Smith, 173 U. S. 684, 43 L. ed. 858, 19 Sup. Ct. Rep. 565; Magoun v. Illinois Trust & Sav. Bank, 170 U. S. 283, 42 L. ed. 1037, 18 Sup. Ct. Rep. 594; Minnesota v. Barber, 136 U. S. 313, 34 L. ed. 455, 3 Inters. Com. Rep. 185, 10 Sup. Ct. Rep. 862; Soon Iling v. Crowley, 113 U. S. 709, 28 L. ed. 1147, 5 Sup. Ct. Rep. 730; Ward v. Maryland, 12 Wall. 418, 20 L. ed. 449; Ex parte Deeds, 75 Ark. 542, 87 S. W. 1030; Woods v. Carl, 75 Ark. 335, 87 S. W. 621; Ex parte Ft. Smith & V. B. Bridge Co. 62 Ark. 461, 36 S. W. 1060; State ex rel. Mc- Cue v. Ramsey County, 48 Minn. 236, 31 Am. St. Rep. 650, 51 N. W. 112; People v. Marx, 99 N. Y. 377, 52 Am. Rep. 34, 2 N. E. 29 ; Dixon v. Poe, 159 Ind. 492, 60 L.R.A. 308, 95 Am. St. Rep. 309, 65 N. E. 518; Harmon v. State, 66 Ohio St. 249, 58 L.R.A. 618, 64 N. E. 117; Brown v. Jacobs’ Pharmacy Co. 115 Ga. 429, 57 L.R.A. 547, 90 Am. St. Rep. 126, 41 S. E. 553; Re Flukes, 157 Mo. 125, 51 L.R.A. 176, 80 Am. St. Rep. 619, 57 S. W. 545; Stimson v. Muskegon Booming Co. 100 Mich. 347, 59 N. W. 142; Gillespie v. People, 188 Ill. 176, 52 L.R.A. 283, 80 Am. St. Rep. 176, 58 N. E. 1007; Templar v. State Exam¬ iners, 131 Mich. 254, 100 Am. St. Rep. 610, 90 N. W. 1058; Low v. Rees Printing Co. 41 Neb. 127, 24 L.R.A. 702, 43 Am. St. Rep. 670, 59 N. W. 362.

196

Mr. Justice Peckham, after making the foregoing statement, delivered the opinion of the court :

The validity of this very statute of Ar¬ kansas (at least, until Congress legislates upon the subject) has already been affirmed by this court (Woods v. Carl, 203 U. S.

358, 51 L. ed. 219, 27 Sup. Ct. Rep. 99), and the validity of statutes of a somewhat similar nature has also been affirmed in the case of Allen v. Riley, 203 U. S. 347,

51 L. ed. 216, 27 Sup. Ct.' Rep. 95, immedi¬ ately preceding the case above cited.

It is sought to avoid the authority of our decision upon this Arkansas statute by as¬ serting that nothing was therein decided ex¬ cept the validity of the 1st section of the act, and that the validity of the act when considered in connection with the 4th section was not argued or decided. The 4tli sec¬ tion reads as follows: "This act shall not apply to merchants and dealers who sell pat¬ ented things in the usual course of busi¬ ness.” Other reasons for an affirmance are set up in the brief of respondent.

The grounds given for the decision by the circuit court and the circuit court of ap¬ peals differ somewhat. The circuit court says that the effect of the 4th section of the statute is to violate that portion of the 14th Amendment to the Federal Constitution which provides that no state shall *deny to

any person within its jurisdiction the equal protection of the laws; while the circuit court of appeals bases its judgment upon the unlawful discrimination evidenced by the act against those who are protected by a patent granted by the United States.

In 203 U. S. 358 (supra) this court held the statute valid as against an objection of the same nature as that taken herein by the circuit court of appeals. Our decision in that case had not been made at the time of the decision of this case in the courts below.

The ground taken by the circuit court was not discussed in our opinion in 203 U. S., and although it might be urged that all ob¬ jections to its validity arising upon the face of the statute, even if not specially dis¬ cussed, were overruled by the decision, yet, assuming that the particular question now presented is still open in this court, we are of opinion that the exception contained in § 4 does not render the statute invalid. The plain purpose of the whole statute is to create and enforce a proper police regula¬ tion. Its passage showed that the legis¬ lature was of opinion that fraud and impo¬ sition were frequent in the sale of property of this nature, except in the cases mentioned in § 4, and that temptations to false repre¬ sentations in regard to the virtues and val¬ ue of the article sold were also frequently yielded to. When the sale of the article wa3

207 U. S.

255 -258

Bank of Kentucky v. Kentucky.

effected by such representations, and a note given for the amount of the sale, a transfer of the note to a bona fide purchaser for val¬ ue before its maturity prevented the vendee from showing the fraud by which the sale had been accomplished. In order to reach such a transaction and to permit the vendee to show the fraud, the statute wTas passed. It was doubtless thought that merchants and dealers, as mentioned in the statute, while dealing with the patented things in the manner stated, would not be so likely to make representations or to engage in a fraud to effect a sale, as those covered by tne statute. The various itinerant venders of patented articles, whose fluency of speech and carelessness regarding the truth of their representations might almost be said to have [25 6]*become proverbial, were, of course, in the mind of the legislature, and were included in this legislation. Indeed, they are the principal people to be affected by it.

The manufacturer of a patented article, who also sells it in the usual course of busi¬ ness in his store or factory, would probably come within the exception of § 4. He may be none the less a dealer, selling in the usual course of his business, because he is also a manufacturer of the article dealt in. Ex¬ ceptional and rare cases, not arising out of the sale of patented things in the ordinary way, may be imagined where this general classification separating the merchants and dealers from the rest of the people might be regarded as not sufficiently comprehensive, because in such unforeseen, unusual, and ex¬ ceptional cases the people affected by the statute ought, in strictness, to have been in¬ cluded in the exception. See opinion of circuit court herein, 127 Fed., supra. But we do not think the statute should be con¬ demned on that account. It is because such imaginary and unforeseen cases are so rare and exceptional as to have been overlooked that the general classification ought not to be rendered invalid. In such case there is really no substantial denial of the equal pro¬ tection of the laws within the meaning of the Amendment.

It is almost impossible, in some matters, to foresee and provide for every imagina¬ ble and exceptional case, and a legislature ought not to be required to do so at the risk of having its legislation declared void, al¬ though appropriate and proper upon the general subject upon which such legislation is to act, so long as there is no substantial and fair ground to say that the statute makes an unreasonable and unfounded gen¬ eral classification, and thereby denies to any person the equal protection of the laws. In a classification for governmental purposes there cannot be an exact exclusion or in¬ clusion of persons and things. See Gulf, C. & S. F. R. Co. v. Ellis, 1G5 U. S. 150, 41 52 L. ed.

L. ed. 066, 17 Sup. Ct. Rep. 255, and cases cited; Missouri, K. & T. R. Co. v. May, 194 U. S. 207, 48 L. ed. 971, 24 Sup. Ct. Rep.

chants and dealers who sell patented things, in the usual course of business, from the provisions of the statute, *and we think the

failure to exempt some few others, as above suggested, ought not to render the whole statute void as resulting in an unjust and unreasonable discrimination.

The case of Connolly v. Union Sewer Pipe Co. 184 U. S. 540, 46 L. ed. 079, 22 Sup.

Ct. Rep. 431, one of the cases cited by the circuit court, is not, in our opinion, ap¬ plicable. The statute did not apply to ag¬ ricultural products or live stock while in the hands of the producer or raiser. It was held that this exemption rendered the stat¬ ute void, as denying to persons within the jurisdiction of the state the equal protection of the laws. The statute was held to create a classification of an arbitrary nature, appli¬ cable to large numbers of people, and yet not based upon any reasonable ground.

Those who were exempted from its provi¬ sions were numerous and stood practically in the same relation to the subject-matter of the statute as did the other class upon whom the statute acted, and no valid rea¬ son could be given why, if one were included, the other should be exempted. The same reasons applied to all the classes, and should have led to the same results with regard to all. There was no room for a proper or fair discrimination.

We think there is a distinction, founded upon fair reasoning, which upholds the prin¬ ciple of exemption as contained in the 4th section, and that, consequently, the statute does not violate the 14th Amendment on the ground stated.

The case was decided by the courts below solely upon constitutional grounds, and up¬ on those grounds the decision cannot rest.

It must, therefore, be remanded, and if there be any other facts to be urged they can be presented on another trial.

The judgments of the Circuit Court and the Circuit Court of Appeals must be re- f versed and the case remanded to the Circuit Court for further proceedings not inconsist¬ ent with this opinion.

Reversed.