Document: 366 U.S. 276 81 S.Ct. 1316 6 L.Ed.2d 288 ELI LILLY AND COMPANY, Appellant,v.SAV-ON-DRUGS, INC,, et al. No. 203. Argued March 20, 21, 1961. Decided May 22, Rehearing Denied June 19, See 978, 1913. Mr. Everett I. Willis, New York City, for appellant. Samuel M. Lane, appellee, Sav-On-Drugs, Inc. David Satz, Jr., Trenton, N.J., State of Jersey. Justice BLACK delivered the opinion Court. 1 The appellant Eli Lilly and Company, an Indiana corporation dealing in pharmaceutical products, brought this action a Jersey state court to enjoin appellee Inc., corporation, from selling Lilly's products at prices lower than those fixed minimum retail price contracts into wi ch had entered with number drug retailers. Sav-On itself signed no such contract but, under Fair Trade Act, so established become obligatory upon nonsigning retailers who have notice that manufacturer has made these other retailers.1 moved dismiss complaint statute denies foreign transacting business right bring any there unless until it files Secretary copy its charter together limited amount information about operations2 obtains him certificate authorizing do State.3 2 opposed motion dismiss, urging was entirely interstate commerce arguing, ground, attempt require file necessary obtain forbidden by Commerce Clause Federal Constitution. Both parties offered evidence Court nature affidavits as extent kind done companies people. On evidence, trial findings fact granted Sav-On's stating ground 'the conclusion is inescapable plaintiff (Lilly) doing time acts complained required to, but did not, comply provisions Corporation Act.'4 appeal Supreme Jersey, constitutional attack renewed Attorney General permitted intervene party-defendant defend validity statute. then affirmed judgment upholding statute, relying court.5 We noted probable jurisdiction consider contention question improperly decided courts.6 3 record shows trade carried on through both intrastate channels. manufactures sells them certain selected wholesalers. These wholesalers sell hospitals, physicians stores, stores turn them, again commerce, general public. It well cannot get authority if participation wholly sales wholesalers.7 Under so-called 'drummer' cases, Robbins v. Shelby County Taxing District8 free send salesmen promote without interference regulations imposed State. hand, equally settled engaged aspects business, can requr e business.9 In situation, could not escape regulation merely because also commerce. must look determine whether 4 court, based they are uncontroverted presented it, show clearly conducting Jersey: 5 'The facts these: Plaintiff maintains office 60 Park Place, Newark, Its name door tenant registry lobby building. (The September 1959 issue Newark Telephone Directory lists plaintiff, regular section classified 'Pharmaceutical Products,' having Newark.) lessor space plaintiff's employee, Leonard L. Audino, district manager charge marketing division known Newark. party lease, reimburses Audino 'for all expenses incidental maintenance operation said office.' There secretary office, paid directly salary basis. 18 'detailmen' supervision Audino. detailmen basis receive commissions. Many, reside Whether pays unemployment or taxes stated. function visit pharmacists, hospitals order acquaint view encouraging use products. contends their work 'promotional informational only.' occasion, detailmen, 'as service retailer,' may transmittal wholesaler. They examine stocks inventory make recommendations relating supplying merchandising available druggists, charge, advertising promotional material. When defendant opened store Carteret, provide, announcements mailing medical profession, cost defendant. same thing occurred when Plainfield store.'10 agree '(t)o hold above recited completely ignore reality.'11 Eighteen 'detailmen,' working out big building, been regularly which relates sale eighteen traveling throughout promoting wholesalers, customers, physicians, buy To end, provided up-to-date knowledge material designed encourage public more purchases And sometimes even participate themselves transmitting orders drugstores 7 This somewhat similar problem before Cheney Brothers Co. Com. Massachusetts.12 case, Northwestern Consolidated Milling Company Minnesota Massachusetts manner quite being used Jersey—a were buying Northwestern's flour Massachusetts, addition force drummers group traveled solicited dealers turned over nearest Despite substantial connection contended commerce—a disposed summarily following words: 'Of course domestic business—inducing one local merchant particular class goods another.'13 8 attempts distinguish holding case here systematic solicitation true does here. But difference enough cases. For here, less there, engages 'domestic business—inducing,' Northwestern, 'one another.' 'inducing' sales, Lilly, primarily include goes only carrying on, business. 9 virtue be license State, properly deny access courts suit arising regard, relies cases International Textbook Pigg,14 condition sue goods. think applicable however, present kind. Here, suing separable power consequently involving contracts. 10 What we would dispose us. upn interpretation decision resting assumption only. accept because, first place, rests erroneous court's opinion. That called decide 'transacting business' within meaning requires registration corporations. deciding question, relied set regard various activities summarized quoted above. reasonable inference interpreted phrase mean concluded found reinforced subsequent distinguishes precisely ground.15 11 below should, urged, mistaken belief register, though transacted whatever except still affirm presently was, matter fact, employees kept induce retailers, So rested conclusions improper undisputed establishing declare solemn act unconstitutional. supports therefore affirmed. 12 Affirmed. 13 HARLAN, concurring. 14 premise impede out-of-state seller's market,1 difficult how much shipping subjecting requirements sanctions Jersey's licensing laws. joining Court's opinion, I some further observations appropriate. 15 clear sending 'drummers' seeking customers whom sold shipped, District, 120 489, 592, 30 L.Ed. 694, enforce goods, Pigg, 217 91, 481, 54 678, intimately connected market, controls, separated off 'local conducted However, promt ion among consumers who, conducts affairs, purchase wholesaler bears close relationship necessities keeping channels state-unburdened. believe treat activities, pointed result initially direct own goods.2 Three factors, particularly, persuade me view. 16 First: A requirement, applied significant opportunity reach customers. Appellant remains free, constitutionally entitled remain solicit or, alternatively, rely develop market. Thus, position whose protection Bradley concerned when, County, supra, page 494, 595 he asked: 'How manufacturer, merchant, his another state, without, way, obtaining therefor? Must compelled venture, knowing demand them?' 17 Second: Were distinct consideration, enter arrangement account, suppose scarcely doubtful endeavor constitute incident subject State's power, ultimate purpose effect enhance see why differently redound wholesalers' benefit, lessening need effort expense part, profit, form increased 246 147, 38 295, 62 632;3 cf. Norton Department Revenue, 340 534, 536, 537—539, 71 377, 379, 380—381, 95 517. different indicatd circumstance bought, benefit comes resulting increase sales. essential point 'wholly separate involved delivery property shipped complete transaction, after terminated.' Browning City Waycross, 233 16, 22—23, 34 578, 580, 58 828.4 Third: 'is repudiate whole line cases.' referred seller immunity state-license requirement where promoted participated transactions between vendor purchaser already Cf. Wagner Covington, 251 95, 40 93, 64 157. aspect resembles promotion ultimately serves factor bringing situation drummer would, my view, substantially extend am prepared subscribe extension regulate owned located countervailing federal considerations thin seem enjoy immunities simply restricting 19 Finally, while rest majority finding business,' doubt score forecloses us now sustaining leadin dispute. Nashville, C. & St. L.R. Browning, 310 362, 968, 84 1254.5 20 DOUGLAS, FRANKFURTER, WHITTAKER STEWART concur, dissenting. 21 Court, deference, blends three lines decisions today considered separate. indeed problems other. refer our concerning (1) tax enterprise, (2) suits, (3) it. 22 If sought collect apportioned activity carries objection Cement Minnesota, 358 450, 79 357, 421. Such relation 'to opportunities given, afforded, benefits conferred.' Wisconsin J. Penney Co., 311 435, 444, 61 246, 250, 85 267. 23 sued connections sufficient (International Shoe Washington, 326 310, 66 154, 90 95), least suits reveal 'substantial connection' McGee Life Ins. 355 220, 78 199, 223. Hanson Denckla, 357 235, 250—255, 1228, 1237—1240, 1283. 24 falls neither two categories. demands absent she her courts. thus presents strikingly issue—whether subjected system. 25 put side Union Brokerage Jensen, 322 202, 967, 88 1227, Rice Santa Fe Elevator Corp., 331 218, 67 1146, 91 1447, company exempt Congress Railway Express Agency Virginia, 282 440, 51 201, 75 company, intrastate* express conduct exercise right, like control suppress enjoyment.' Murdock Pennsylvania, 319 105, 112, 63 870, 874, 87 1292. Soliciting up day far concerned. usually argued soliciting activity' licensed lay privilege tax. argument Nippert Richmond, 327 416, 420, 586, 588, 760; Memphis Steam Laundry Stone, 342 389, 392, 72 424, 426, 96 436. rejected pointing long beginning 'this held itself.' pages 392—393, 426. 26 appellant's certainly what house does. petitioner's engage 27 'It 28 store.' 29 491, 593, failed take following: 'Sabine * citizen resident Cincinnati, Ohio, drumming taxing county, Tenn.; i.e., trade, samples, firm worked (a) drummer; 'Rose, Co.,' members citizens residents Ohio.' 31 solely 'drumming up' trade. this, buyers, contacts buyers. 'exclusively furtherance commerce' years ago States Portland 452, 455, 359. Yet finds business; 'soliciting' them. distinction accept. 32 deal regulatory measure. precedents, barred 'a coming (the State) contribute conclude unitary transaction.' 211, 973. claims do. struck down recover contract, breach sale, Dahnke-Walker Bondurant, 257 282, 42 106, 239, fraudulent transfer assets debtor, Buck Stove Range Vickers, 226 205, 33 41, 57 189. Surely, cause asserted involve interest compelling debtors stability title lands. places special reliance Bros. 155, 297, 632, Massachusetts' imposition xcise tax' upheld. entire Here dominant nothing relations. every concern engages. 35 little injury. provides formula whereby stand way promises great harm national market heretofore protected. N.J.Rev.Stat. 56:4—6, N.J.S.A. legality arrangements insofar antitrust laws McGuire Stat. U.S.C. § 45(a), U.S.C.A. 45(a). is: corporation's authorized capital stock; stock actually issued corporation; character intends transact Jersey; (4) principal (5) place abode agent process against served. 14:15—3, 14:15—4, N.J.Super. 291, 302, 154 A.2d 650, 656. N.J. 591, 158 528. 364 860, 102, 84. See, e.g., Crutcher Kentucky, 141 47, 851, 649; 678; Sioux Remedy Cope, 235 197, 57, 59 193. 694. followed partial list Cleaner note 7, 450. especially 211—212, 973, 1227. 298—299, 654. Id., 300, 655. 632. 297. 678. Furst Brewster, 493, 478; United Time Corp. Grand 39, 45—46, 165 313—314. Because enjoys degree purely Compare California Thompson, 313 109, 930, 1219, 760, Spector Motor Service, O'Connor, 602, 508, 573; Powell, Vagaries Varieties Constitutional Interpretation, 172—176, 186—187. informational' specifically aimed securing consumer One submitted opposition states: primary (stationed Jersey) will wholesale distributors.' affidavit detail men (Lilly stationed institutions professional men. circumstances Products distributors. may, retailer, Orders received transmitted acceptance rejection wholesaler.' forth 279, 1319. recognize field income taxation, impaired Act 14, 1959, Pub.L. 86—272, 73 555, §§ 381—384, passed response 359, Even so, should observed immunizes taxation concern's prospective (interstate) customer,' situations solicitation. 101(c) 105 Cong.Rec. 16469—16477. activities. Reliance opinion's characterization seems stretching too casual reference unnecessary case. lightning rods, installing purchased seller, occupation erecting despite rods obligated install expense. 'it convert exclusively control, protected clause.' 23, 580. Sprout South Bend, 277 163, 48 502, 833, Leloup Port Mobile, 127 640, 1380, 311, controlling contrary light Superior suggests apply licensable later 310. picked articles Virginia

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