(278 U. S. 105) LOUIS K. LIGGETT CO. v. BALDRIDGE, Atty. Gen. of Pennsylvania, et al.

Argued Oct. 8, 1928. Decided Nov. 19, 1928.

No. 34.

1. Injunction 85 (2)-Enforcement of state statute violating foreign corporation's rights under due process and equal protection clauses may be enjoined (Const. Amend. 14.)

Foreign corporation, whose rights under the equal protection and due process clauses of Const. Amend. 14, are violated by state statute, is entitled to enjoin state officers from enforcing

such act.

2. Druggists -Business of chain drug store corporation is property right, protected against state legislation violating federal Constitution.

Business of foreign corporation engaged in conducting chain drug stores is a property right, and as such entitled to protection against state legislation in contravention of the federal Constitution.

3. Constitutional law 210, 252-Corporation is "person," within due process and equal protection clauses (Const. Amend. 14).

A corporation is a "person," within the meaning of the due process and equal protection clauses of Const. Amend. 14.

[Ed. Note.-For other definitions, see Words and Phrases, First and Second Series, Person.] 4. Corporations 639-Foreign corporation, doing business in state, may not be subjected to state statutes conflicting with federal Constitution.

A foreign corporation, permitted to do business in a state, may not be subjected to state statutes in conflict with the federal Constitution.

5. Constitutional law 212, 253-State legislation under police power may violate constitutional rights only when it substantially relates to public health, safety, morals, or general welfare (Const. Amend. 14).

The police power may be exerted in form of state legislation, where otherwise effect thereof may be to invade rights guaranteed by Const. Amend. 14, only when such legislation bears a real and substantial relation to the public health, safety, morals, or some other phase of the general welfare.

6. Constitutional law 240(1), 296(1)—State cannot, under guise of protecting public, arbitrarily interfere with private business, or impose unreasonable or unnecessary restrictions thereon (Const. Amend 14).

Under due process and equal protection clauses of Const. Amend. 14, a state cannot, under the guise of protecting the public, arbitrarily interfere with private business, or prohibit lawful occupations, or impose unreasonable and unnecessary restrictions on them.

2-State statute prohibiting ownership of drug stores, or interest in corporations, partnerships, or associations owning such stores, by other than licensed pharmacists, held invalid, as denying due process (Pa. St. Supp. 1928, §§ 9377a-1, 9377a-2; Const. U. S. Amend. 14).

Pa. St. Supp. 1928, §§ 9377a-1, 9377a-2, approved May 13, 1927, requiring every pharmacy to be owned by licensed pharmacists, and in case of corporations, associations, and copartnerships requiring all partners or members to be licensed pharmacists, except as to those already engaged in such business, held violative of due process clause of Const. U. S. Amend. 14, as creating an unreasonable and unnecessary restriction on private business, since mere stock ownership in corporation owning and operating a drug store can have no real or substantial relation to public health.

8. Evidence 22(1)-Court judicially notices that stock of corporation operating chain drug stores is bought and sold on stock exchanges, and that stock is largely owned by persons not registered pharmacists.

It is a matter of public notoriety that chain drug stores in great numbers owned and operated by corporations are to be found throughout United States, and court will take judicial notice of fact that stock in such corporations is bought and sold on the various stock exchanges of country, and in nature of things must be held and owned to large extent by persons not registered pharmacists.

Mr. Justice Holmes and Mr. Justice Brandeis dissenting.

Appeal from the District Court of the United States for the Eastern District of Pennsylvania.

Suit by the Louis K. Liggett Company against Thomas J. Baldridge, Attorney General of the Commonwealth of Pennsylvania, and others. Decree for defendants [22 F.(2d) 993], and plaintiff appeals. Reversed.

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*Messrs. Owen J. Roberts, of Philadelphia, for appellant. Pa., and Roy M. Sterne, of New York City,

Messrs. Paul C. Wagner, of Philadelphia, Pa., and Thos. J. Baldrige, of Harrisburg, Pa., for appellees.

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*Mr. Justice SUTHERLAND delivered the opinion of the Court.

This appeal brings here for consideration a challenge to the constitutionality of an act of the Pennsylvania Legislature approved May 13, 1927, Pa. St. Supp. 1928, §§ 9377a-1, 9377a-2, a copy of which will be found in the margin.1 The act provides that every phar

1 Section 1. Every pharmacy or drug store shall be owned only by a licensed pharmacist, and no corporation, association or copartnership shall own a pharmacy or drug store, unless all the partners or members thereof are licensed pharmacists; except that any corporation organized and existing under the laws of the commonwealth or of any

macy or drug store shall be owned only by a licensed pharmacist, and, in the case of cor109 porations, associations and co*partnerships, requires that all the partners or members thereof shall be licensed pharmacists, with the exception that such corporations as are already organized and existing and duly authorized and empowered to do business in the state and own and conduct drug stores or pharmacies, and associations and partnerships, which, at the time of the passage of the act, still own and conduct drug stores or pharmacies, may continue to own and conduct the same.

[1] The appellant is a Massachusetts corporation authorized to do business in Pennsylvania. At the time of the passage of the act, appellant was empowered to own and conduct and owned and thereafter continued to own and operate a number of pharmacies or drug stores at various places within the latter state. After the passage of the act, appellant purchased and took possession of two

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additional drug stores in that state and carried on and continues and intends to continue

other state of the United States, and authorized to do business in the commonwealth, and empowered by its charter to own and conduct pharmacies or drug stores, and any association or copartnership which, at the time of the passage of this act, still owns and conducts a registered pharmacy or pharmacies or a drug store or drug stores in the commonwealth, may continue to own and conduct the same; but no other or additional pharmacies or drug stores shall be established, owned, or conducted by such corporation, association, or copartnership, unless all the members or partners thereof are registered pharmacists; but any such corporation, association, or copartnership, which shall not continue to own at least one of the pharmacies or drug stores theretofore owned by it, or ceases to be actively engaged in the conduct of a pharmacy, shall not be permitted thereafter to own a pharmacy or a drug store, unless all of its partners or members are registered pharmacists; and except that any person, not a licensed pharmacist, who,

at the time of the passage of this act, owns a pharmacy or a drug store in the commonwealth, may continue to own and conduct the same, but shall not establish or own any additional pharmacy or drug store, or if he or she ceases to operate such pharmacy or drug store, shall not thereafter own a pharmacy or drug store, unless he or she be a registered pharmacist; and except that the administrator, executor, or trustee of the estate of any de

to carry on a retail drug business therein under the title of "drug store" or "pharmacy," including the compounding, dispensing, preparation and sale at retail of drugs, medicines, etc. The business was and is carried on through pharmacists employed by appellant and duly registered in accordance with the statutes of the state. All of the members [stockholders] of the appellant corporation are not registered pharmacists, and, in accordance with the provisions of the act, the Pennsylvania State Board of Pharmacy has refused to grant appellant a permit to carry on the business. It further appears that the state Attorney General and the district attorney of the proper county have threatened and intend to and will prosecute appellant for its violation of the act, the pen

alties for which are severe and cumulative.

Suit was brought to enjoin these officers from putting into effect their threats, upon the ground that the act in question contravenes the due process and equal protection clauses of the Fourteenth Amendment. It is clear from the pleadings and the record, and it is conceded, that if the act be unconstitutional as claimed, appellant is entitled to the relief prayed. Terrace v. Thompson, 263 U. S. 197, 215, 44 S. Ct. 15, 68 L. Ed. 255; Ex parte Young, 209 U. S. 123, 28 S. Ct. 441, 52 L. Ed. 714, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764.

The court below, composed of three judges, heard the case upon the pleadings, affidavits and an agreed statement of facts, and rendered a decree denying a preliminary injunction and, upon the agreed submission of the case, a final decree dismissing the bill for want of equity. (D. C.) 22 F.(2d) 993. The statute was held constitutional upon the ground that there was a substantial relation to the public interest in the ownership of a drug store where prescriptions were compounded. In support of this conclusion, the

court said that medicines must be in the store before they can be dispensed; that what is

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there is dictated not by the judgment of the pharmacist but by those who have the financial control of the business; that the Legislature may have thought that a corporate owner in purchasing drugs might give greater

store, may continue to own and conduct such pharmacy or drug store during the period necessary for the settlement of the estate: Provided, that nothing in this section shall be construed to prevent or affect the ownership, by other than a registered pharmacist, of a store or stores wherein the sale or manufacture of drugs or medicines is limited to proprietary medicines and commonly used household drugs, provided such commonly used household drugs are offered for sale or sold in packages which have been put up ready for sale to consumers by pharmacists, manufacturing pharmacists, wholesale grocers, or wholesale druggists.

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Section 2. Any person, copartnership, or corporation, violating the provisions of this act, shall be guilty of a misdemeanor and, upon conviction thereof, shall be sentenced to pay a fine of not more than one hundred dollars. Each day any such pharmacy is owned contrary to the provisions of this act shall be considered a separate offense.

such was the thought of the Legislature the court would not undertake to say that it was without a valid connection with the public interest and so unreasonable as to render the statute invalid.

[2-4] That appellant's business is a property right (Duplex Co. v. Deering, 254 U. S. 443, 465, 41 S. Ct. 172, 65 L. Ed. 349, 16 A. L. R. 196; Truax v. Corrigan, 257 U. S. 312, 327, 42 S. Ct. 124, 66 L. Ed. 254, 27 A. L. R. 375), and as such entitled to protection against state legislation in contravention of the federal Constitution, is, of course, clear. That a corporation is a "person" within the meaning of the due process and equal protection

clauses of the Fourteenth Amendment, and that a foreign corporation permitted to do business in a state may not be subjected to state statutes in conflict with the federal Constitution, is equally well settled. Kentucky Co. v. Paramount Exch., 262 U. S. 544, 550, 43 S. Ct. 636, 67 L. Ed. 1112; Power Co. v. Saunders, 274 U. S. 490, 493, 496, 497, 47 S. Ct. 678, 71 L. Ed. 1165; Frost Trucking Co. v. R. R. Com., 271 U. S. 583, 594 et seq., 46 S. Ct. 605, 70 L. Ed. 1101, 47 A. L. R. 457. And, unless justified as a valid exercise of the police power, the act assailed must be declared unconstitutional because the enforce

ment thereof will deprive appellant of its property without due process of law.

[5] The act is sought to be sustained specifically upon the ground that it is reasonably calculated to promote the public health; and the determination we are called upon to make is whether the act has a real and substantial relation to that end or is a clear and arbitrary invasion of appellant's property rights guaranteed by the Constitution. See Adair v. United States, 208 U. S. 161, 173, 174, 28 S. Ct. 277, 52 L. Ed. 436, 13 Ann. Cas. 764; Mugler v. Kansas, 123 U. S. 623, 661, 8 S. Ct. 273, 31 L. Ed. 205. The police power may be exerted in the form of state legislation where otherwise the effect may be to in-. vade rights guaranteed by the Fourteenth Amendment only when such legislation bears

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*a real and substantial relation to the public health, safety, morals, or some other phase of the general welfare. Here the pertinent question is: What is the effect of mere ownership of a drug store in respect of the public health?

A state undoubtedly may regulate the prescription, compounding of prescriptions, purchase and sale of medicines, by appropriate legislation to the extent reasonably necessary to protect the public health. And this the Pennsylvania Legislature sought to do by various statutory provisions in force long before the enactment of the statute under review. Briefly stated, these provisions are: No one but a licensed physician may practice medicine or prescribe remedies for sickness;2 no one but a registered pharmacist lawfully may have charge of a drug store;3 every drug store must itself be registered, and this can only be done where the management is in charge of a registered pharmacist; stringent provision is made to prevent the possession or sale of any impure drug or any below the standard, strength, quality and purity as determined by the recognized pharmacopoeia of the United States; none but a registered pharmacist is permitted to compound physician's prescriptions; and finally, the super

2 Pa. St. 1920, § 16779.

Pa. St. 1920, §§ 9323, 9327.

'Pa. St. Supp. 1928, § 9329a-2.

Pa. St. 1920, § 9337; Pa. St. Supp. 1928, § 9329. Pa. St. 1920, §§ 9317, 9323.

vision of the foregoing matters and the enforcement of the laws in respect thereof are in the hands of the State Board of Pharmacy, which is given broad powers for these purposes.

It therefore, will be seen that without violating laws, the validity of which is conceded, the owner of a drug store, whether a registered pharmacist or not, cannot purchase or dispense impure or inferior medicines; he cannot, unless he be a licensed physician, pre*113

scribe for the sick; he cannot *unless he be a registered pharmacist, have charge of a drug store or compound a prescription. Thus, it would seem, every point at which the public health is likely to be injuriously affected by the act of the owner in buying, compounding, or selling drugs and medicines is amply safeguarded.

[6] The act under review does not deal with any of the things covered by the prior statutes above enumerated. It deals in terms only with ownership. It plainly forbids the exercise of an ordinary property right and, on its face, denies what the Constitution guarantees. A state cannot, "under the guise of protecting the public, arbitrarily interfere with private business or prohibit lawful occupations or impose unreasonable and unnecessary restrictions upon them. Burns Baking Co. v. Bryan, 264 U. S. 504, 513, 44 S. Ct. 412, 413 (68 L. Ed. 813, 32 A. L. R. 661). See, also, Meyer v. Nebraska, 262 U. S. 390, 399, 400, 43 S. Ct. 625, 67 L. Ed. 1042, 29 A. L. R. 1446; Norfolk Ry. v. Public Serv. Comm., 265 U. S. 70, 74, 44 S. Ct. 439, 68 L. Ed. 904; Pierce v. Society of Sisters, 268 U. S. 510, 534, 535, 45 S. Ct. 571, 69 L. Ed. 1070, 39 A. L. R. 468; Weaver v. Palmer Bros. Co., 270 U. S. 402, 412-415, 46 S. Ct. 320, 70 L. Ed. 654; Fairmont Co. v. Minnesota, 274 U. S. 1, 9-11, 47 S. Ct. 506, 71 L. Ed. 893, 52 A. L. R. 163.

[7, 8] In the light of the various requirements of the Pennsylvania statutes, it is made clear, if it were otherwise doubtful, that mere stock ownership in a corporation, owning and operating a drug store, can have no real or substantial relation to the public health; and that the act in question creates an unreasonable and unnecessary restriction upon private business. No facts are presented by the record, and, so far as appears, none were presented to the Legislature which enacted the statute, that properly could give rise to a different conclusion. It is a matter of public notoriety that chain drug stores in great numbers, owned and operated by corporations, are to be found throughout the United States. They have been in operation for many years. We take judicial notice of the fact *that the stock in these corporations is bought and sold upon the various stock exchanges of the country and, in the nature of things must be held and owned to a large extent by persons who are not registered pharmacists.

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If detriment to the public health thereby has resulted or is threatened, some evidence of it ought to be forthcoming. None has been produced, and, so far as we are informed, either by the record or outside of it, none exists. The claim, that mere ownership of a drug store by one not a pharmacist bears a reasonable relation to the public health, finally rests upon conjecture, unsupported by anything of substance. This is not enough; and it becomes our duty to declare the act assailed to be unconstitutional as in contravention of the due process clause of the Fourteenth Amendment.

Decree reversed.

Mr. Justice HOLMES. A standing criticism of the use of corporations in business is that it causes such business to be owned by people who do not know anything about it. Argument has not been supposed to be necessary in order to show that the divorce between the power of control and knowledge is an evil. The selling of drugs and poisons calls for knowledge in a high degree, and Pennsylvania after enacting a series of other safeguards has provided that in that matter the divorce shall not be allowed. Of course, notwithstanding the requirement that in corporations hereafter formed all the stockholders shall be licensed pharmacists, it still would be possible for a stockholder to content himself with drawing dividends and to take no hand in the company's affairs. But obviously he would be more likely to observe the business with an intelligent eye than a casual investor who looked only to the stand

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ing of the stock in the market. The Constitution does not make it a condition of preventive legislation that it should work a perfect cure. It is enough if the questioned act has

a manifest tendency to cure or at least to make the evil less. It has been recognized by the professions, by statutes and by decisions that a corporation offering professional services is not placed beyond legislative control by the fact that all the services in question are rendered by qualified members of the profession. See People v. Title Guarantee & Trust Co., 227 N. Y. 366, 125 N. E. 666; Tucker v. New York State Board of Pharmacy, 127 Misc. Rep. 538, 217 N. Y. S. 217, 220; Matter of Co-operative Law Co., 198 N. Y. 479, 92 N. E. 15, 32 L. R. A. (N. S.) 55, 139 Am. St. Rep. 839, 19 Ann. Cas. 879; People v. Merchants' Protective Corporation, 189 Cal. 531, 209 P. 363; New Jersey Photo Engraving Co. v. Carl Schonert & Sons, 95 N. J. Eq. 12, 122 A. 307; Hodgen v. Commonwealth, 142 Ky. 722, 135 S. W. 311.

But for decisions to which I bow I should

not think any conciliatory phrase necessary to justify what seems to me one of the inciI think however dents of legislative power.

that the police power as that term has been defined and explained clearly extends to a law like this, whatever I may think of its wisdom, and that the decree should be affirmed.

Of course the appellant cannot complain of the exception in its favor that allows it to continue to own and conduct the drug stores The Fourteenth Amendthat it now owns. ment does not forbid statutes and statutory changes to have a beginning and thus to discriminate between the rights of an earlier and those of a later time. Sperry & Hutchinson Co. v. Rhodes, 220 U. S. 502, 505, 31 S. Ct. 490, 55 L. Ed. 561.

Mr. Justice BRANDEIS joins in this opinion.

(278 U. S. 63)

No. 2.

1. Courts 23—Appellate jurisdiction of Supreme Court may not be established by consent.

Consent or acquiescence of parties is alone insufficient to establish appellate jurisdiction of Supreme Court.

2. Courts 391 (2)—Supreme Court has jurisdiction on error from state court, if record shows claim of invalidity of state statute under Federal Constitution was fairly and timely presented with fair precision (Jud. Code, § 237 (a); 28 USCA § 344 (a).

To give Supreme Court jurisdiction on writ of error from state court decree drawing in question validity of statute under United States Constitution or laws, under Judicial Code, 8 237(a); 28 USCA § 344(a), no particular form of words is necessary, but claim is regarded as having been adequately presented, if record shows expressly, or by fair intendment that it was brought to the attention of the state court with fair precision and in due time.

3. Courts 391 (3)—Supreme Court has jurisdiction on error from state court, if necessary effect of judgment is to reject claim of invalidity of state statute under Federal Constitution (Jud. Code, § 237(a); 28 USCA § 344 (a).

To give Supreme Court jurisdiction on writ of error from state court, under Judicial Code, § 237(a), 28 USCA § 344 (a), it is not necessary that the ruling of the state court, sustaining state statute against claim of invalidity under the Federal Constitution and laws, should have been put in direct terms, but it is sufficient if necessary effect of judgment was to deny claim of invalidity.

4. Courts 391 (3)—Supreme Court had jurisdiction, on error from New York Court of Appeals, affirming Appellate Division, which upheld state statute under Federal Constitution, not referred to (Jud. Code, § 237 (a); 28 USCA § 344 (a).

Supreme Court held to have jurisdiction of writ of error from New York Court of Appeals, under Judicial Code, § 237(a), 28 USCA § 344 (a), on ground claim of invalidity of state statute under Federal Constitution was involved, where decision of Appellate Division, upholding statute under equal protection clause of Const. U. S. Amend. 14, was affirmed by Court of Appeals, though without mentioning Federal Constitution.

5. Courts ~394(3)—Supreme Court had jurisdiction, on error from state court, of habeas corpus proceeding to obtain discharge from custody for violating alleged unconstitutional state statute (Jud. Code, § 237(a); 28 USCA § 344(a); Civil Practice Act N. Y. §§ 1230-1235, 1251).

Supreme Court held to have jurisdiction of habeas corpus proceeding, commenced in state

error of final judgment in any suit in state court involving validity of state statute as repugnant to Federal Constitution; habeas corpus proceeding being consistent with local practice under Civil Practice Act N. Y. §§ 1230-1235, 1251.

6. Associations 2-Constitutional law

206(1)-Corporations 391-Statute requiring certain associations to file list of members, with constitution and membership oath, held not to abridge privileges and immunities of citizens of United States (Civil Rights Law N. Y. §§ 53, 56; Const. U. S. Amend. 14).

Civil Rights Law N. Y. (Laws 1923, c. 664)

88 53, 56, requiring membership corporations or associations, which prescribe oath as condistitution, oath, by-laws, and list of members tion of membership, to file sworn copy of conand officers with secretary of state, and penalizing members knowingly attending meetings of Const. U. S. Amend. 14, as abridging privileges noncomplying associations, held not violative of and immunities of citizens of United States.

7. Associations 2-State may prescribe reasonable regulations for secret associations having oath-bound membership.

State has power to prescribe reasonable regulations for secret associations having oathbound membership, in order to confine their with public welfare. purposes and activities within limits consistent

8. Constitutional law 253-Statute requiring certain associations to file constitution and membership oath with list of members, and penalizing members of noncomplying associations, held not to deny due process (Civil Rights Law N. Y. §§ 53, 56; Const. U. s. Amend. 14).

Civil Rights Law N. Y. (Laws 1923, c. 664) 88 53, 56, requiring membership corporations or associations which prescribe oath as prerequisite to membership to file copy of constitution, bylaws, oath, and rules, with list of members and officers with secretary of state, and penalizing members knowingly attending meetings of noncomplying associations, held within lawful exercise of state's police power, and not in violation of due process clause of Const. U. S. Amend. 14.

9. Constitutional law 211-State Legislature may discriminate against particular class from which evil sought to be remedied is mainly to be feared (Const. U. S. Amend. 14).

Under equal protection clause of Const. U. S. Amend. 14, state enacting statute to remedy particular evil may classify subjects of legislation with reference to the evil to be prevented, and may properly discriminate against particular class from whom evil is mainly to be feared; but classification must be based on real and substantial difference, and may not be arbitrary.