Document: 419 U.S. 20 95 S.Ct. 260 42 L.Ed.2d 195 ALLENBERG COTTON COMPANY, INC., Appellant,v.Ben E. PITTMAN. No. 73—628. Argued Oct. 17, 1974. Decided Nov. 19, Syllabus Appellant, a cotton merchant with its principal office in Memphis, Tenn., January 1971 negotiated 'forward' contract appellee, Mississippi farmer, for appellee's forthcoming crop. The agreement was made through broker who arranged contracts appellant to be resold interstate and foreign markets. Appellant had contracted mills outside sale of most the purchased Mississippi, including that grown by appellee under this contract. Alleging refusal farmer deliver cotton, brought suit injunctive relief damages. Supreme Court reversing court below, dismissed complaint, holding appellant's were wholly intrastate, being completed upon delivery at warehouse, upholding contention courts could not used enforce as doing business without requisite certificate. Appellee moved dismiss on ground State did pass federal question. Held: 1. A certificate executed Chief Justice makes it clear question raised decided validity state statute applied facts case Commerce Clause Federal Constitution, has jurisdiction over appeal. Pp. 22—23. 2. Court's contravened Clause, since instant transaction, though delivered local there only temporarily sorting classification out-of-state shipment thus already stream commerce. Dahnke-Walker Milling Co. v. Bondurant, 257 282, 106, 66 L.Ed. 239, 25—34. 276 So.2d 678, reversed remanded. John McQuiston, II, appellant. George C. Cochran, University, Miss., appellee. Mr. DOUGLAS opinion Court. 1 This is an appeal from judgment 678 (1973), which held applicable statute1 might recover damages breach because failure qualify do State. claims repugnant Constitution. motion such fact raised. We accordingly postponed probable hearing merits, 415 988, 94 1585, 39 885 (1974). 2 * On application (appellee below), dated August 1973, stating part: 3 '(T)his . hereby certifies arguments both oral brief behalf original petition rehearing filed support thereof, insisted case, sued 'interstate commerce' transacting commerce, entitled protection statutes Constitution; deliberation considered these questions commerce; said nor showed commerce within meaning laws Code 1942 Ann. Section 5309—239 (Supp.1972) Allenberg Cotton Company, Inc., Tennessee corporation, bar maintaining United States necessary determine determined adversely position appellee.' Justice, speaking court, That adequate our decisions.2 So we proceed merits. II 4 Tenn. It one Covington, buyer Marks, Miss. cotton' produced following season farmers Quitman County, Pittman, present initial approach seeking his cotton; other instances Covington contact farmers.3 In either event, would obtain all information purchase telephone where prepared, signed officer appellant, forwarded Covington. latter then have sign For services received commission each bale account warehouse.4 When draw pay them agreed price. 5 transactions intrastate nature, subsequently sell irrelevant 'as transaction been belonged exclusively Allenberg, disposed saw fit, sole election discretion,' So.2d, 681. Under plant, cultivate, harvest crop land, named company ginning, turn ginned warehouse. alleged Pittman asked One defense tendered use contracts, sustained plea, favor complaint. 6 Appellant's arrangements broker, are representative course dealing many whose once sold enters long pipeline. pipeline ultimately terminates across country or indeed around world, after complex matching process designed provide mill particular grade equipped process. 7 Due differences soil, time planting, harvesting, weather, like, even same farm, may different quality.5 Traders merchants like assistance Department Agriculture, must sample classify according grade, staple length, color.6 Similar bales, whether farms collection points, grouped multiples 100 into 'even-running lots' uniform measurable characteristics. grouping typically takes place card files merchant's office; when enough bales pooled make even-running lot, entire lot can targeted handle quality, individual will shipped their respective points.7 true title often formally passes rest warehouse pending completion processes; but, description above indicates, fleeting events integral first step vast system distribution 8 entered between standard contract, covering year. Such become common American cotton-marketing system; they ready way protect himself against price decline ensuring he able sufficient cover expenses.8 but market fluctuations. customers Mississippi,9 quantities approximating expected yield contracts. resale sort ensures own expenses recoup small profit; alternatively, 'hedging,' i.e., offsetting purchases futures exchange.10 stability constructed himself, however, clearly depends integrity enforceability resale.11 9 recent House report functioning commodity exchanges connection marketing agricultural products said: 10 'The markets very important part system. Producers, processors, merchandisers commodities hedge prices buy day. elevator buys grain sells quantity deliverable about anticipates cash purchased. actual made, 'lifts' buying month previously in. If fluctuates up down, gain loss should approximately offset hedged position. 11 '. (I)n situation if drops 15 cents per bushel operator resells months later, incur $1,500 10,000 bushels. If, amount matured also decrease similar profit bushels market. net effect, course, thse sales guard loss, thereby permitting him continue regard fluctuation, providing operates normal historical manner. 12 'Such producer, buyer, seller gamble fluctuation out operation enables lock relatively margin profit. worked well time, whenever supplies short number speculators becomes excessive, exist opportunities manipulations distortions great extent no longer reflects supply demand, during season, artificially lowered. 13 'In past year, fluctuations so wide erratic indicate possibility manipulation squeezing. Businessmen some occasions unable back day found Chicago Board Trade Mercantile Exchange always dependable deals. With compromsing kind insurance, businessmen felt compelled substantially increase charge lost sums money. Some now feel triple quadruple new risks act basis. 14 'Consumers greatly affected any breakdown manipulated undependable, wider margins required level add final product. Historically, swings result retail going more than ever come down. consumers stake preventing excessive speculation causing prices.' H.R.Rep. 93—963, pp. 2—4 While discussion covers grain, essential difference, relevant here, comes cotton. 16 deal here species control intricate mechanism. exchange, livestock-marketing regime involved Swift & States, 196 375, 25 276, 49 518 (1905), Stafford Wallace, 258 495, 397, 735 (1922), Clause. 239 (1921), wheat Kentucky purchsed miller Tennessee, payment carrier Kentucky. There, Kenturcky defended grounds qualified that, therefore, unenforceable. defeat which, having aspects, 'a commerce,' id., 292, 109. observation pertinent here. Delivery taken isolation, transaction. But before precise destination abroad, determined. determination cannot until made. sale, Olsen, 262 1, 33, 43 470, 476, 67 839 (1923), still As stated Olsen case: 17 west cars stored warehouses mixed owner receives presenting receipt continuing shipment, does take away character mixture oil gas pipe lines companies West Virginia, right owners withdraw shares crossing lines, prevented bulk thereafter cross current commerce.' Id., 33—34, 476. 18 Shafer Farmers Grain Co., 268 189, 45 481, 69 909 (1925), pervasive regulatory scheme governing permissible, '(b) uying shipment' much (interstate commerce) shipping.' 198, 485. And added: 19 'Wheat—both dockage—is legitimate article subject dealings nation-wide. ship it, privilege derived laws, fetter conditions, right, regulation committed Congress denied states clause Constitution.' 198—199, 485 (footnote omitted). Hood Sons Du Mond, 336 525, 657, 93 865 (1949), deny license milk distributor serving facilities reduce expressing philosophy federalize 21 prolific sources national power equally source conflict legislation state. Constitution vests regulate among states, say what absence congressional action, how line states. Perhaps interpretation written word, advanced solicarity prosperity Nation given silences 534—535, 663. 22 'Our system, fostered every craftsman shall encouraged produce certainty free access Nation, home embargoes withhold exports, customs duties regulations exclude them. Likewise, consumer look competition producing area explitation any. vision Founders; doctrine reality.' 539, 665. 23 Much reliance placed Eli Lilly Sav-On-Drugs, 366 81 1316, 288 (1961), sustaining Mississippi's action. point. There corporation salesmen New Jersey selling drugs intrastate. Since engaged business. 24 Reliance Union Brokerage Jensen, 322 202, 64 967, 88 1227 (1944), likewise customhouse goods transit. Nevertheless, expressly noted '(the broker's) activities confined port entry. localized business, function effectively variety people community.' 210, 972. Lilly, element localization distinguishable cases 'to contribute conclude unitary transaction.' 211, 973. respect transactions, viewed background customary trade practices market, indistinguishable significant regard. Court, noted, ruled Mississippi. operate there. employees soliciting otherwise operating regular basis;12 independent paid authority enter appellant.13 These sharp contrast operated salaried job promote Lilly's products. U.S., 279 281, 1318—1320. indication 'perpetual inventory' anything claimed be, namely, awaiting prerequisite 26 short, contacts exhibit situations seeks require Whether tax incidents those reached express opinion. couse suits view. hold honor 27 cause remanded proceedings inconsistent 28 ordered. 29 Reversed 30 REHNQUIST, dissenting. 31 quality law sue summarized 'without substantial dispute,' follows: 32 'It apparent took producer All interest terminated finally Marks. afterward issue ..' 681 (1973). 33 added exclusive agent, resident, County alone, production 9,000 acres county. Allenberg's total identical exceeded 25,000 bales. arrived designated compressed sorted warehousemen acting direction. perpetual revolving inventory maintained concentration points throughout await future shipping orders.1 34 reasons entirely me, holds condition using Pittman.2 35 says: determined.' Ante, 30. Yet Parker Brown, 317 341, 361, 63 307, 318, 87 315 (1943), 'no gone far articles processing packing them, will, putting aside uncertainties engendered language, seems me quite previous applying factual situation. 36 37 '(I)f aspects drug get situation, escape merely 279, 1318, 38 supporting 'corporate presence' probably stronger conclusion 'doing business' case. imporatnce note sought bring Sav-On-Drugs; generall Jersey, rather Sav-On Here concededly courts. I agree purely 'interstate,' believe cases, properly understood, prevent exacting qualification condiction 40 settled Taney's Bank Augusta Earle, Pet. 519, 274 (1839), organized another An exception general rule established Crutcher Kentucky, 141 47, 851, 649 (1891), 56 57, 853, 649. International Text-Book Pigg, 217 91, 54 (1910), expanded Farmers' (1925). 41 today excerpts paragraph wheat, cites proposition trading commodities, form regulated States. invalidated, requiring courts, instead comprehensive statutory regulating method sold. careful distinguish went upheld. 201—202, 486, 909. supra, corporations qualify, consistently reasoning reaching supports reaches today. 'This continuance practice plaintiff intending forward soon keeping purpose board public carrier. Applying principles stated, think stressing performed there, put further plaintiff, prior practice, purchasing Tennessee. neglected material bearing considered. They show seemed 109, (Emphasis added.) 44 Here, unlike regarded critical chose store owned warenhouses varying lengths order available orders. too, farmers, grow seed. Cases Shafer, Dahnke-Walker, period hitory approved judicial technique 'was decide was, alone not, could.'3 mutual exclusivity largely dispelled later beginning South Carolina Highway Dept. Barnwell Bros., 303 177, 58 510, 82 734 (1938), followed succeeding cases.4 Pike Bruce Church, 397 137, 142, 90 844, 847, 174 (1970), Dahnke-Walker: 46 'Where regulates evenhandedly effectuate interest, effects incidental, upheld unless burden imposed relation putative benefits.' 47 (1944),5 Minnesota's denial North Dakota Minnesota failed corporations: 48 '(T)he cut off legislative Hwy. .. incidence enactment transgressed left special interests although related phase extensive commercial process.' 209—210, See 318 (1942). discriminatory. Domestic her submit themselves taxing jurisdiction, service State, corporate existence impose. recognized taxes identifying State6 citizens insuring susceptibility process.7 serves informational making details financing control.8 Although comply drastic one,9 decisions judged reference measures legislation, sanctions violation it. 282—283, S.Ct., 1320; Railway Express Agency 282 440, 444, 51 201, 75 450 (1931). steps unreasonably burdensome.10 50 expand holdings face body subsequent leaves reasoning, holdings, suspect. affirm § 79—3—247 (1972), formerly Miss.Code (1942), provides 'No permitted maintain proceeding Nor successor assignee claim demand arising state.' Steel Iron National Surety 297 661—662, 619, 621—622, 80 961 (1936). Herb Pitcairn, 324 117, 127, 65 459, 464, 89 789 (1945): York Appeals, counsel Judge presented necessarily passed See, e.g., cited Robertson Kirkham, Jurisdiction 75.' Whitney California, 357, 360—362, 641, 643, 71 1095 (1927), while record party 'any whatever,' supplemental setting forth effect done statement delivered.' (Honeyman Hanan, 300 14, 57 350, 476 (1937)) member (Charleston Savings Loan Assn. Alderson, 182, 624, 857 (1945)) insufficient, lingering doubts decided. remaining doubts. usual one. (App. 54, 102—105.) farmer. (Id., 53, 68.) A. B. Cox, Cotton—Demand, Supply, Merchandising 4—5 (1953); Garside, Goes Market 66—67 (1935). detailed process, see n. 5, 131—147; 46—85. 4—5, 233—236. Virtually state, milling activity U.S.Dept. Agriculture (USDA), Statistical Bulletin 417—Statistics Related Data, 1930—1967, 58, 77 (Supp.1972). Cone Mills Corp. Hurdle, 369 F.Supp. 426, 430 (ND Miss.1974); 10. Government figures 32% 1972 least 45% 1973 contracted. USDA, Crop Production A—6; Situation (CS—265) p. (Apr. 1974). Of decrease; 1971. circumstances, unprofitable, obligated lower spot generate strong economic incentive elsewhere. App. 79, 96. Cf. 7, supra. Commodity Act, Stat. 998, 1491, U.S.C. et seq. hedging mechanism, 303—315; 206—226, 377-382; Volkart Inc. Freeman, 311 F.2d 52, 54—56 (CA5 1962); quoted text, page 28—29. ability secure depend banks credit perceive reliable. situations, 90% cost raw financed borrowing receipts collateral, viable drastically reduces risk lenders. 181. Memphis employees, Jerry Hill, came two three appears mailed. 56—57, 66—67, 72 76.) 60—61, 65—66, 106—107. 4, App., 92; Brief 11. disclose turnover light acmission maintains inventories concluding states: 'We Clause.' offers definition analysis why 'made language traceable none Stern, Economy, 1933-1946, 59 Harv.L.Rev. 645, 648 (1946). P. Benson, 1937—1970 (1970). addition relies Swife (1905); (1922); (1923). justified power. Unless giant backwards, constitutionality statute. Di Santo Pennsylvania, 273 34, 37, 267, 524 (1927) (Brandeis, J., joined Homes, dissenting), overruled California Thompson, 313 116, 61 930, 933, 85 1219 (1941). distinguishes 'localized' comparison suggests bit Minnesota. Most commentators studying concluded major facilitation assessment ad valorem franchise taxes. Comment, Foreign Corporations-State Boundaries Business, Yale L.J. 737, 746 (1950). Chassaniol Greenwood, 291 584, 541, 78 1004 (1934); Compress McLean, 622 (1934), Kosydar Cash Register 417 62, 2108, 660 (1974), taxation. 27—13—7 (1972) imposes measured capital located portion Secretary estimate identification tax. standing illogically deprives means enforcement possible assert unqualified long-arm minimum normally exist, registered agent creates problems potential prove subpoena corporation. Note, 1960 Term, 40, 138, 140 (1961). rough reciprocity (a guarantee exchange suit) security performance corporation's obligations owed Paul Wall. 168, 181, 357 (1869). 6, L.J., 742—745. Case: Dictum, Holding, Finding, Nw.U.L.Rev. 306, 321 (1962). securities occasion parallel disclosures, not. example, immediate disclosure requirements provided requires update certificates annual reports. 79—3—249 (1972). nominal fee State's office. 79—3—257. Information financial structure obviously highly citizen considering large discussed length Sanctions Failure Comply Corporate Qualifications Statutes: Evaluation, Col.L.Rev. 122—123 (1963). 'Because difficulties discovery officials, encourage compliance requirements.' 129—130 denial-of-a-forum sanction utilized five Ala.Code, Tit. 10, 21(89) (1973 Cum.Supp.; Ariz.Rev.Stat.Ann. 10—482 (1956); Ark.Stat.Ann. 64—1202 (1966); Vt.Stat.Ann., 11, 2120 Montana law. Right Corporation Sue Contracts Courts—Doing Business-Failure Qualify-Subsequent Qualification, Mont.L.Rev. 218 (1965). certainly dispute wisdom choice substantive due clothed garb elevates arbiter wisdom, consideration disposition filing certain ranging $20 $500 depending §§ 79—3—219 79—3—255(q)(1972). paid, issues requested 79—3—221. qualifying small, particularly compared 972, (1944).

Category: 9