People v. Beakes Diary Co.

This is an action to recover judgment against defendant for two hundred and ninety-eight penal, ties of one hundred dollars each for buying milk or cream within the state from certain producers for the purpose of shipping the same to New York city for consumption or manufacture without having been duly licensed as provided by sections fifty-five and following of the Agricultural Law (Cons. Laws, ch. 1), added thereto by chapter 408 of the Laws of 1913, as amended by chapter 651 of the Laws of 1915. The principal provisions of the statute are as follows:

“ § 55. Incensing of milk gathering stations where milk is bought. On and after September first, nineteen hundred and thirteen, no person, firm, association or corporation, shall buy milk or cream, within the state from producers for the purpose of' shipping the same to any city for consumption or for manufacture, unless such business be regularly transacted at an office or station within the state and unless such person, firm, association or corporation be duly licensed as provided in this and the ensuing sections of this article. Every such person, firm, association or corporation before engaging or continuing in the business of buying milk or cream for the purposes aforesaid, shall, annually, on or before August first, file an application with the commissioner of agriculture for a license to transact such business. The application shall state the nature of the business, as hereinabove set forth, the full name of the person or corporation applying for the license, and, if the applicant be a firm or association, the full name of each member of such firm, or association,

“ A license shall not be issued as provided in this section, on and after the taking effect of this section, unless the applicant for such license shall file with the application a good and sufficient surety bond, executed by a surety company, duly authorized to transact business in this state, in a sum not less than five thousand dollars, or shall be relieved from such requirement as provided herein. Such bond shall be approved as to its form and sufficiency by the commissioner of agriculture.

“ Such applicant may in lieu of such bond deposit with the commissioner of agriculture money or securities in which the trustees of a savings bank may invest the moneys deposited therein, as provided in the banking law, in an amount equal to the sum seemed by the bond required to be filed as herein provided.

“ The bond required to be filed hereunder shall be given to the commissioner of agriculture in his official capacity and shall be conditioned for the faithful compliance by the licensee with the provisions of this chapter, as hereby amended, and for the payment of all amounts due to persons who have sold milk or cream to such licensee, during the period that the license is in force. * * *

“ Upon default by the licensee in the payment of any money due for the pmchase of milk or cream, which

" After the expiration of ninety days from the termination of any license period the commissioner of agriculture shall, by proper action wherein all such creditors and any surety upon any bond given as hereinbefore provided for and the licensee shall be parties, proceed to determine the amount due each such creditor, and the judgment rendered in such action shall be enforced ratably for such creditors against the surety on the bond, if one there be, or against the moneys or securities deposited as hereinbefore provided for. * * *

“ A person or corporation licensed hereunder shall make a verified statement of his or its disbursements during a period to be prescribed by the commissioner of agriculture, containing the names of the persons from whom such products were purchased, and the amount due to the vendors thereof. Such statement shall be submitted to the commissioner of agriculture when requested by him and shall be in the form prescribed by such commissioner. If it appears from such statement or other facts ascertained by the commissioner of agriculture, upon inspection or investigation of the books and papers of such licensee as authorized by section fifty-six of this chapter, that the security afforded to persons selling milk and cream to such licensee by the bond executed or deposit made by such licensee as herein provided does not adequately protect such vendors, the commissioner of agriculture may

“ If the applicant for a license under this section be a person or domestic corporation, the commissioner of agriculture may, notwithstanding the provisions of this section, if satisfied from an. investigation of the financial condition of such person or domestic corporation that such person or corporation is solvent and possessed of sufficient assets to reasonably assure compensation to probable creditors, by an order filed in the department of agriculture, relieve such person or corporation from the provisions of this section requiring the filing of a bond.

“ The term ‘ station ’ or ‘ milk gathering station,’ as used in this and the ensuing sections of this article, shall include an established office where the business of buying milk or cream as herein provided is carried on, with or without a place or premises in connection therewith for the physical handling of milk or cream.”

To summarize the principal features of the enactment:

1. No person, firm, association or corporation shall as a business, buy milk or cream within the state from producers for the purpose of shipping the same to any city for consumption or manufacture without having (a) an established office within the state, and (b) a license.

2. No such person, firm, association or corporation

3. On default of payment by a licensee of money due for the purchase of milk and cream the commissioner shall apply the security to the extinguishment of the claims of creditors filed with him.

Defendant is a domestic corporation. It demurred to each of the two hundred and ninety-eight causes of action set forth in the complaint on the ground that the facts stated do not constitute a cause of action, and moved for judgment on the pleadings. At the Special Term the motion was denied, but the Appellate Division reversed the order denying the motion and dismissed the complaint, one justice dissenting and one not voting, on the ground “ that the purpose of the statute is to secure payment for the purchase price of merchandise and is class legislation and not a valid exercise of the police power.”

Does an action lie to recover a penalty for violation of section 55 of the Agricultural Law? Section 61 provides that “ any person who * * * not being licensed, shall conduct the business of buying milk for shipment as provided in section 55, * * * shall be guilty of a misdemeanor.” But the Agricultural Law (Section 52) also provides for penalties to be collected in a civil action. “ Every person violating any of the provisions of this chapter, shall forfeit to the People of the State of New York the sum of not less than fifty dollars nor more than one hundred dollars for the first violation.”

Is a violation of the provisions of section 55 charged in the complaint? The grievance to be complained of is not each act of purchasing, but the act of conducting the business of purchasing. The complaint charges in two hundred and ninety-eight separate counts that on or about a certain date, each count setting forth a different date, defendant bought milk or cream from certain producers without having been duly licensed. .Each count must be read separately as if it were the only count. The complaint does not allege that at any time defendant carried on the business of purchasing milk or cream. Carrying on the business within the terms of the statute implies continuity of conduct in that respect, a continuous course of dealing, not an isolated transaction. (Penn Collieries Co. v. McKeever, 183 N. Y. 98 ; People ex rel. Allen v. Whiting, 68 Misc. Rep. 306 .) Section 52 of the Agricultural Law provides for separate penalties for separate acts of selling, exposing for sale, using and the like, but no provision is made for cumulative penalties in case the purchasing is carried on or continued from day to day. The offense of carrying on the business in violation of the statute should alone be pleaded and one penalty sued for. (People v. Spencer, 201 N. Y. 105 .) The complaint does not state facts constituting two hundred and ninety-eight causes of action, neither does it state facts constituting one cause of action. Defendant’s demurrer should accordingly be sustained and this opinion might end at this point.

To hold a statute unconstitutional is a grave thing to do. To refuse, by so doing, to recognize a demonstrated evil and to characterize the unusual in legislation as impossible is unwise. Constitutional law is “ to a certain extent, a progressive science ” (Holden v. Hardy, 169

So many decisions of the courts of this state and of the United States have dealt with the question of legislative power that only a few of the most recent will be considered. We may begin with the proposition that the state may not prohibit the lawful, common and ordinary business of purchasing milk or cream (People ex rel. Tyroler v. Warden, etc., 157 N. Y. 116 ; Fisher Co. v. Woods, 187 N. Y. 90 ; Adams v. Tanner, 244 U. S. 590 ), but it may regulate a business, however honest in itself, if it may become a medium of fraud. It is not enough to say that the business may be honestly conducted. The state may, to some extent, compel honesty by imposing a license fee if widespread frauds upon and losses by its people are thereby prevented. Any trade, calling or occupation may be reasonably regulated if “ the general nature of the business is such that unless regulated many persons may be exposed to misfortunes against which the legislature can properly protect them.” (Allen v. Riley, 203 U. S. 347 ; Brazee v. Michigan, 241 U. S. 340 , 343.) Passing from the general to the particular, the constitutionality of the “ Blue Sky Laws ” of Ohio and other states which require dealers in corporate, stocks and other securities to be licensed has been upheld. (Hall v. Geiger-Jones Co., 242 U. S. 539 ; Caldwell v. Sioux Falls Stock Yards Co., 242 U. S. 559 ; Merrick v. Halsey & Co., 242 U. S. 568 .) The evils of “ get-rich-quick ” schemes called for protection against the frauds of unscrupulous dealers. Licenses may be required for employment agencies. (Brazee v. Michigan, supra; People ex rel. Armstrong v. Warden, etc., 183 N. Y. 223 .) The business of banking by individuals and partnerships has been held subject to license (Musco v. United Surety

But all these statutes and many others have for their legitimate object the prevention of frauds, rather than the collection of debts through the agency of the state. This statute points to protection from the probability of financial loss rather than fraud and goes far beyond any mere licensing statute by requiring the licensee to give security for payment of his debts to purchasers. The business regulated is not done with ignorant people, the chosen and easy prey of the cunning and unscrupulous impostor. It is done with men of ordinary intelligence, fully conscious of what they are about. “ The state must adapt its legislation to evils as they appear.” (McKenna, J., in Merrick v. Halsey & Co., supra.) If the legislature can check impending ills before they become notorious, the courts should not say that it has acted too soon. As suggested by Klein v. Maravelas ( 219 N. Y. 383 ) that which seems vain and capricious to one generation may become the wisdom of the next. But it is urged that so much of this statute as aims to compel certain purchasers of milk to pay their debts, measured by the standards of the obligations of the state to its citizens as we now understand them, is a hateful interference with the freedom of men to transact ordinary business, not affected with a public interest, with other men as they see fit; that its implication is that bad debts may be secured or prevented by the exercise on the part of the state of its power to regulate

The question is not presented whether the statute is valid as an exercise of the police power of the state over individuals; nor is the determination of that question essential to the decision of this case. The question here is whether the defendant, a domestic corporation, is affected by the alleged unconstitutionality of the statute in the features complained of. If it is not, it cannot complain. (Jeffrey Manfg. Co. v. Blagg, 235 U. S. 571 , 576; Cusack Co. v. City of Chicago, 242 U. S. 526 , 530.)

Whatever might be said of the statute as “ class legislation ” (State v. Latham, 98 Atl. Rep. 578 , Supreme Judicial Court of Maine, September 8, 1916) is answered by People v. Hamor ( 149 N. Y. 195 , 205). The statute there under consideration placed barbers in a class by themselves and then subdivided the class between barbers in New York and Saratoga and barbers elsewhere for the purpose of regulating their right to work on Sunday; but Vann, J., said, “ the statute treats all barbers, alike within the same localities * * * under like circumstances and conditions * * There is no constitutional prohibition against class legislation as such if the classification is based on some reasonable ground, and is not essentially arbitrary. The statutes are replete with instances where the legislature has selected a class of persons for regulation. (People v. Klinck Packing Co., 214 N. Y. 121 , 137.) It is only where there is no real distinction on a substantial basis that it can be said that the equal protection of the laws is denied. (Gulf, Col. & S.

Nor can it be said that the power vested in the commissioner of agriculture to waive the requirement of a bond or other security in certain cases is a delegation of legislative power. He is not left “ without check or guidance.” The legislature has furnished the rule; the commissioner merely applies it. His determination is subject to judicial review. (Section .58.) In People v. Klinck Packing Co. (supra) the provisions of the statute exempted from the application of the hours of rest law certain employees, “ if the commissioner of labor in his discretion approves.” Those words were held to have the vice of vesting the commissioner with the power wholly at his volition to suspend the operation of the statute. The legislature here prescribes the regulations which are to be enforced according to the legal discretion of the commissioner. (Brazee v. Michigan, supra.) Nor does it appear that defendant has applied for and failed to obtain a license without giving a bond. (Lehon v. City of Atlanta, 242 U. S. 53 .)

Is the statute good as the exercise of the lawful power of the state over a domestic corporation? As a corporation created by this state, defendant has no natural right to purchase milk without obtaining a license on such terms as the state directs. Corporate charters may be altered or repealed. (Const, of N. Y. art. 8, sec. 1.) Under the guise of an amendment to corporate charters the legislature may not defeat or substantially impair the object of the grant, the right of the corporation to transact business, but it may qualify it by reasonable restrictions. (Sutton v. New Jersey, 244 U. S. 258 ; Noble State Bank v. Haskell, 219 U. S. 104 , 110.) In Berea College v. Kentucky ( 211 U. S. 45 ) a statute provided that “ it shall be unlawful for any person, corpora

In New York C. & H. R. R. R. Co. v. Williams ( 199 N. Y. 108 , 116) this court, in dealing with the provisions of the

When the companion case of Erie R. R. Co. v. Williams ( 199 N. Y. 525 ; affd., 233 U. S. 685 ), involving the constitutionality of the same provisions of the Labor Law, reached the Supreme Court of the United States, it was said that “ cost and inconvenience would have to be very great before they could become an element in the consideration of the right of a state to exert its reserved power.” (p. 700.)

The Ives Case ( 201 N. Y. 271 , 290) decided nothing contrary when it held that the Workmen’s Compensation Act of 1910 could not be upheld in part under the reserved power of the legislature to alter and amend corporate charters. Corporations were not specifically mentioned in the statute. The plaintiff waived the point. As in the Employer’s Liability Cases ( 207 U. S. 463 ) the court declined to modify the statute in order to save part of it by writing into it words not found in it which would, if so written, be indicative of the legislative intent.

The judgment of the Appellate Division should be affirmed, with costs.

Hiscock, Ch. J., Chase, Hogan, McLaughlin and Andrews, JJ., concur; Cardozo, J., concurs in result.

Judgment affirmed.