Not many cases are to be found which have considered the element of purchase in reference to interstate commerce, where a violation of the Constitution was involved.

In the early history of the interpretation of the commerce clause of the Constitution, it was first contended that commerce did not include transportation or navigation, but was confined solely to traffic, buying and selling. This contention, however, was decided to be unsound in Gibbons v. Ogden, 9 Wheat. 229, 6 L. ed. 78. At this day it seems strange that such a contention was ever made, as now the great and important element in commerce is transportation or navigation. It was next contended that a sale of goods within a state after their transportation into that state was not a part of interstate commerce, but this contention was also decided to be unsound in Brown v. Maryland, 12 Wheat. 419, 6 L. ed. 678. In principle it is difficult to conceive any valid distinction between a sale following transportation and a purchase preceding it. It is noteworthy that Mr. Justice Thompson, in his dissenting opinion in Brown v. Maryland, supra, made the same objection in reference to a sale after transportation that is now made in this case to a sale before transportation. In Mobile County v. Kimball, 102 U. S. 691, 702, 26 L. ed. 238, 241, it was said: "Commerce with foreign countries and among the states, strictly considered, consists in intercourse and traffic, including in these terms navigation and transportation and transit of persons and property, as well as the purchase, sale, and exchange of commodities."

In Kidd v. Pearson, 128 U. S. 1, 32 L. ed. 346, 2 Inters. Com. Rep. 232, 9 Sup. Ct. Rep. 6, it was said: "Buying and selling, and the trans

The Supreme Court has, however, in discussing the application of the Sherman Act (Comp. Stat. §§ 88208823, 8827-8830, 9 Fed. Stat. Anno. 2d ed. p. 644) and Federal pure food legislation (Comp. Stat. §§ 87178728, 3 Fed. Stat. Anno. 2d ed. p. 358), announced principles which we believe to be applicable to the question now under discussion. In United States v. E. C. Knight Co. 156 U. S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249, the court said: "Contracts to buy, sell, or exchange goods to be transported among the several states, the transportation and its instrumentalities, and articles bought, sold, or exchanged for the purposes of such transit among the states, or put in the way of transit, may be regulated, but this is because they form part of interstate trade or commerce."

Justice Harlan, dissenting from the majority in the above case, concurred in the above statement of law, and further contended that manufacture before shipment was a part of interstate commerce.

In the case of Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96, the Supreme Court said: "As has frequently been said, interstate commerce consists of intercourse and traffic between the citizens or inhabitants of different states, and includes not only the transportation of persons and property and the navigation of public waters for that purpose, but also the purchase, sale, and exchange of commodities. Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196-203, 29 L. ed. 158-161, 1 Inters. Com. Rep. 382, 5 Sup. Ct. Rep. 826; Kidd v. Pearson, 128 U. S. 1, 20, 32 L. ed. 346, 350, 2 Inters. Com. Rep. 232, 9 Sup. Ct. Rep. 6."

In Swift & Co. v. United States,

196 U. S. 375, 49 L. ed. 518, 25 Sup. Ct. Rep. 276, it was said: "Taking up the latter objection first, commerce among the states is not a technical legal conception, but a practical one, drawn from the course of business. When cattle are sent for sale from a place in one state, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stockyards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the states, and the purchase of the cattle is a part and incident of such commerce.'

In West v. Kansas Natural Gas Co. 221 U. S. 229, 55 L. ed. 716, 35 L.R.A. (N.S.) 1193, 31 Sup. Ct. Rep. 564, the Supreme Court held a statute of Oklahoma to be unconstitutional which prohibited the shipment of natural gas in interstate commerce. The court, in discussing the question there involved, remarked: "And why may not the products of the field be brought within the principle? Thus enlarged, or without that enlargement, its influence on interstate commerce need not be pointed out. To what consequences does such power tend? If one state has it, all states have it; embargo may be retaliated by embargo, and commerce will be halted at state lines. And yet we have said that 'in matters of foreign and interstate commerce there are no state lines.' In such commerce, instead of the states, a new power appears, and a new welfare, a welfare which transcends that of any state. But rather let us say it is constituted of the welfare of all of the states, and that of each state is made the greater by a division of its resources, natural and created, with every other state, and those of every other state with it. This was the purpose, as it is the result, of the interstate commerce clause of the Constitution of the United States. If there is to be a turning backward, it must be done

by the authority of another instrumentality than a court."

In United States v. Reading Co. 226 U. S. 324, the court said on page 367, 57 L. ed. 243, 257, 33 Sup. Ct. Rep. 90, 102: "The coal contracts acquired when this proceeding was begun aggregated nearly one half the tonnage of the independent operators. Much of the coal so bought was sold in Pennsylvania, and all of . the contracts were made in that state, and the coal was also there delivered to the buying defendants. That the defendants were free to sell again within Pennsylvania, or transport and sell beyond the state, is true. That some of the coal was intended for local consumption may also be true. But the general market contemplated was the market at tidewater, and the sales were made upon the basis of the average price at tidewater. The mere fact that the sales and deliveries took place in Pennsylvania is not controlling, when, as here, the expectation was that the coal would, for the most part, fall into and become a part of the well-known current of commerce between the mines and the general consuming markets of other states."

In Pennsylvania R. Co. v. Clark Bros. Coal Min. Co. 238 U. S. 456, 59 L. ed. 1406, 35 Sup. Ct. Rep. 896, it was said: "In the present case, to repeat, it appears that, for the purpose of filing contracts with purchasers in other states, coal is delivered f. o. b. at the mines for transportation to such purchasers. The movement thus initiated is an interstate movement, and the facilities required are facilities of interstate commerce. A very large part of what in fact is the interstate commerce of the country is conducted upon this basis, and the arrangements that are made between seller and purchaser with respect to the place of taking title to the commodity, or as to the payment of freight, where the actual movement is interstate, does not affect either the power of Congress or the jurisdiction of the commission which Congress has established."

Section 25, C. J. vol. 12, p. 26, reads as follows: "That intercourse between citizens and inhabitants of different states which constitutes interstate commerce, and which is subject to Federal, but not to state, regulation, includes not only the transportation of persons and property, but also the purchase, sale, and exchange of commodities, the very purpose and motive of that branch of commerce which consists in transportation being that other and consequent act of commerce which consists in the sale or exchange of the commodities transported."

This declaration of law is supported by numerous cases cited in the work referred to. In view of the language of the cases cited under the Sherman Act, it is entirely proper to suppose a combination among all the purchasers of grain in the state of North Dakota for shipment beyond the state to control the price on which the surplus grain of North Dakota should be bought, and under the rules in the cases referred to, there scarcely could be a doubt but that the combination would come within the Federal Anti-trust Act. As opposed to the proposition that the purchase of grain in North Dakota, under the facts as they appear in the record, is not interstate commerce or a part of the transportation, cases involving the right of a state where taxes are regularly levied are cited. Such a case is Coe v. Errol, 116 U. S. 517, 29 L. ed. 715, 6 Sup. Ct. Rep. 475, where it was held that logs cut in New Hampshire were still subject to taxation by that state, although they were being assembled at a station for shipment to Maine, and this because such logs were still a part of the general mass of property within the state, and were therefore subject to taxation in the usual manner in common with other property in the state. In Woodruff v. Parham, 8 Wall. 123, 19 L. ed. 382, and Brown v. Houston, 114 U. S. 622, 29 L. ed. 257, 5 Sup. Ct. Rep. 1091, it was decided that goods brought in

to a state, after arriving at their destination, may be taxed by the state in the same manner as other goods in the state, although, under the rule of Brown v. Maryland, a state regulation of the sale of such goods would be void. In Bacon v. Illinois, 227 U. S. 504, 57 L. ed. 615, 33 Sup. Ct. Rep. 299, it was held that grain passing through the city of Chicago and there loaded into an elevator for the purpose of weighing, grading, mixing, etc., became subject to taxation by the state of Illinois. Other cases are cited to the same effect, but in view of what seems to be the established rule that interstate commerce in a case like the one under consideration includes the purchase of goods, we do not think the Supreme Court intended, by its decisions in the tax cases, to in any way modify the rule which it had established in the cases heretofore cited. Other cases are cited to the effect that the manufacture of goods is not a part of interstate commerce in such goods. There is no occasion in this case to controvert that proposition. Manufacture is a very different element than the purchase of goods for shipment in interstate commerce. The proposition is clearly established by Kidd v. Pearson, United States v. E. C. Knight Co., and Addyston Pipe & Steel Co. v. United States, supra.

One of the cases cited by counsel for appellees is Hammer v. Dagenhart, 247 U. S. 251, 62 L. ed. 1101, 3 A.L.R. 649, 38 Sup. Ct. Rep. 529, Ann. Cas. 1918E, 724. This case arose under the Federal Child Labor Statute. It followed the decisions in the Kidd, Knight, and Addyston Pipe & Steel Co. Cases, to the effect that manufacture is not commerce. Applying the rule that each case must be decided according to its own facts, we cannot avoid the conclusion that a purchase of grain in North Dakota for shipment and sale purchase for at the terminal

Commerce

sale out of state.

markets of Minneapolis and Duluth, Minnesota, taken in connection with the fact that the seller knows that the grain is sold for shipment out of

the state, makes the purchase and sale in the state of North Dakota for shipment and sale at the above terminal markets a unit in interstate commerce. There is evidence in the record given by one of the managers of appellant that he would sell the grain purchased wherever he could get the highest price; but the undisputed course of commerce in grain, continued over a period of years, shows beyond a doubt that the above markets are the markets where the highest price can be obtained, and that grain is bought with reference to those markets alone.

Having answered the first proposition in the affirmative, we come to the question as to whether chapter 138, supra, imposes a direct burden upon such interstate commerce. If the purchase of grain as detailed in the evidence is a part of the unit of interstate commerce in that grain, it necessarily follows that said chapter 138 does impose a burden on that commerce. In Stuart v. Palmer, 74 N. Y. 183, 188, 30 Am. Rep. 289, Earl, J., said: "The constitutional validity of law is to be tested, not by what has been done under it, but by what may, by its authority, be done."

Re

In Montana Co. v. St. Louis Min. & Mill. Co. 152 U. S. 170, 38 L. ed. 398, 14 Sup. Ct. Rep. 506, the Supreme Court, in quoting this language, declared that the test was accurate, provided, of course, it is limited to what may be rightfully done, and does not extend to that which is wrongfully, though under pretense of the statute, done. Re Lambert, 134 Cal. 626, 55 L.R.A. 856, 86 Am. St. Rep. 296, 66 Pac. 851; Colon v. Lisk, 153 N. Y. 188, 60 Am. St. Rep. 609, 47 N. E. 302; Hathorn v. National Carbonic Gas Co. 194 N. Y. 326, 23 L.R.A. (N.S.) 436, 128 Am. St. Rep. 555, 87 N. E. 504, 16 Ann. Cas. 989; State v. Williams, 146 N. C. 618, 17 L.R.A. (N.S.) 299, 61 S. E. 61, 14 Ann. Cas. 562; Stout v. State, 36 Okla. 744, 45 L.R.A. (N.S.) 884, 130 Pac. 553, Ann. Cas. 1916E, 858; Sterritt v.

Young, 14 Wyo. 146, 4 L.R.A. (N.S.) 169, 116 Am. St. Rep. 994, 82 Pac. 946.

The law of North Dakota gives to the state inspector of grades, weights, and measures the power to establish uniform grades for grain, seeds, or other agricultural products for the state of North Dakota, with power to alter and modify such grades. In the order establishing official grades for grain in North Dakota, effective June 16, 1919, the inspector said that in order to avoid the confusion of a double standard and a dual inspection he deemed it advisable to adopt the grades established by the Federal government for corn and all classes of wheat and oats. The inspector under the law Iwas not obliged to establish these grades. He had the power under the law to establish other grades, and his successor in office may not be of the same opinion as to this duty to establish the Federal grades as the grades for North Dakota. So it clearly appears that, although the Federal law does not acquire any inspection and grading of grain .in North Dakota, still by virtue of the state law there must be an inspection and grading within the state, and the law gives the power to the inspector to bring about dual inspection and grading. The fact that the present inspector established the Federal grade is a mere incident, and does not relieve the law from the charge of creating an additional burden to interstate commerce from those required by the Federal law. We think this fact viding for alone is a direct grading of grain and unreasonable burden upon interstate commerce in grain. The state law further provides that, before anyone can purchase a bushel of grain in North Dakota, he must first obtain a license to do so and pay an annual license fee of $10, and he must promise in his application for the license that he will obey and enforce all the provisions of the state law. Can interstate commerce carried on

-state law pro

-validity.

under such conditions be called free? Supposing every state in the Union should pass a similar law, what would become of the United States Grain Standards Act, if, in addition to the inspection and grading required thereby, each state had an inspection and grading law of its own, to which interstate commerce must be subjected?

The inspection and grading of grain in interstate commerce requires a uniform system throughout the United States, and no state has the authority to interfere with such system established by the United States. The state law empowered the state inspector of grades, weights, and measures to establish a reasonable margin to be paid by producers of grain, by warehouses, elevators, and mills. The margin as used in the statute means the difference between the Minneapolis or Duluth price for grain and the price paid the producer at the country elevator, with freight from the country elevator to Minneapolis or Duluth added. The power, then, to establish this margin, places the wheat buyer or elevator in the hands of the inspector. He may establish such a margin as will allow the wheat buyer to make a profit, or he may establish it so that he will make nothing. The inspector for practical purposes controls the price the wheat buyers shall pay for the wheat. It is said the law only empowers the inspector to establish a reasonable margin. This would raise in each particular case, if the wheat buyer was not satisfied with the margin, the question as to what would be reasonable. After a year or two of litigation, the courts might decide what was a reasonable margin; but what would this decision be worth to the wheat buyer with a market continually changing? This is another direct and unreasonable burden upon interstate commerce. The state statute gives the state grain inspector authority to regulate and control the marketing of all grain in North Dakota, including authority to determine the

19 A.L.R.-11.

price which must be paid for grain bought in the state. A law which has this effect clearly interferes with interstate commerce. Cooley v. Port Wardens, 12 How. 299, 319, 13 L. ed. 996, 1004; State Freight Tax, 15 Wall. 232, 21 L. ed. 146; Hall v. De Cuir, 95 U. S. 485, 24 L. ed. 547; Mobile County v. Kimball, 102 U. S. 691, 26 L. ed. 238; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 29 L. ed. 158, 1 Inters. Com. Rep. 382, 5 Sup. Ct. Rep. 826; Re Schechter (C. C.) 4 Inters. Com. Rep. 849, 63 Fed. 695; 12 C. J. p. 12; Haskell v. Cowham, 109 C. C. A. 235, 187 Fed. (8th C.) 403; Globe Elevator Co. v. Andrew (C. C.) 144 Fed. 871. In the last case cited a law of Wisconsin requiring all grain sold at Superior, in that state, to be in accordance with Wisconsin weights and grades, was held invalid.

The state law also specifically requires the wheat buyer to pay for the dockage contained in grain at a price to be fixed by the seller, or the return of the dockage itself to the seller, and this the buyer must do or forfeit his license. If the license is canceled, the inspector takes possession of the elevator and operates the same without compensation. The existence of a state power to regulate public warehouses does not establish a state power to directly regulate and control the marketing of grain in interstate commerce, and authorities in support of the power to regulate warehouses are not in point. The two leading cases upon the power to regulate warehouses and the distinction between this power and the power to regulate commerce are Munn v. Illinois, 94 U. S. 113, 24 L. ed. 77, and Wabash, St. L. & P. R. Co. v. Illinois, 118 U. S. 557, 30 L. ed. 244, 1 Inters. Com. Rep. 31, 7 Sup. Ct. Rep. 4. The principles established by these cases were followed in Budd v. New York, 143 U. S. 517, 4 Inters. Com. Rep. 45, 36 L. ed. 247, 12 Sup. Ct. Rep. 468; Brass v. North Dakota, 153 U. S. 391, 38 L. ed. 757, 4 Inters. Com. Rep. 670, 14 Sup. Ct. Rep. 857; W.