Story Case

Abel Woodford, agent for the St. Louis Photographic Company in Alabama, solicited orders for picture enlargement, for which the purchaser agreed to pay a stipulated price. The purchaser did not, at the time of giving his order, agree to buy a frame, but the company always sent the pictures nicely framed to the agent who displayed them to the respective subjects. If the latter was caught by the additional beauty, as was usually the case, he paid an extra price, or else took the picture unframed, in accordance with the order. Woodford objected to the payment of a license tax in Alabama, on the ground that he was engaged in interstate commerce. The state maintained that the sale of the frames was local, and not interstate in character. In an appeal to the Supreme Court what will be decided?

Ruling Court Case No. 1. State Of Iowa Vs. American Express Company, Volume 196 United States, Page 133

The American Express Company received at Rock Island, Illinois, four boxes of merchandise, to be carried to Tama, Iowa, to be delivered to certain persons there. The shipment was "collect on delivery" (C. 0. D.) and the express company was instructed to collect $3.35 for each package from the consignees. When it arrived at Tama, and while still in the possession of the express company's agent, it was seized by the authorities of the law. The American Express Company was indicted for selling liquor in violation of the law of the state.

It was contended by the American Express Company that the law of Iowa, when applied to shipments from other states, is unconstitutional in that it conflicts with the power of Congress to regulate commerce.

It was contended by the state of Iowa that title did not pass until the liquor reached the state, and that since the sale was completed within the state it was subject to the state's control.

Mr. Justice White was of the opinion that, until the liquor reached the consignee, it was still a part of interstate commerce, and not subject to confiscation under the state prohibition laws. The court was of the opinion that it made no difference whether the title to the subject passed at point of shipment or when delivered, so far as its character as the subject matter of interstate commerce was concerned. Judgment was for the American Express Company.

Ruling Court Case No. 2. Pennsylvania Vs. Bearick, Volume 203 United States Reports, Page 507

The city of Sunbury, Pennsylvania, by an ordinance, made it unlawful to solicit orders for, sell, or deliver, at retail, either on the streets or by travelling from house to house, foreign or domestic goods, without a license, for which a large fee was required.

An Ohio corporation employed an agent to solicit, in Sunbury, retail orders for the company for groceries. When the Company received a large number of such orders, it filled them at its place of business in Columbus, Ohio, by wrapping the objects of the several orders in distinct packages, and sending them to Rearick. The packages were then delivered by Rearick to the various customers, who had the right to reject them if the goods were not as ordered, or the same as the sample previously shown. Rearick in conducting the business in this manner, procured no license from Sunbury. He was indicted and convicted for violating this ordinance.

He contends that the ordinance was unconstitutional, in that it conflicted with Congressional control over interstate commerce, to which he claims to have been engaged, in delivering the packages for the Ohio Corporation.

Mr. Justice Holmes said: "The Court was of the opinion that, until these goods were delivered in pursuance of the contracts previously made, they were still subjects of interstate commerce, and free from the control of State or Municipal authorities." Accordingly, it was decided that the conviction of Rearick was illegal.

Ruling Law. Story Case Answer

In determining whether or not a given transaction is interstate in character, it is immaterial where the contract of sale was made. It is of importance only to decide whether transportation, interstate in character, will result in the performance of the contract.

This is true if the completion of the sale and the transportation is in a different state from its inception. The Ruling Court Case shows that the commerce will be interstate when the customer is in another state, although the goods are first sent to an agent of the seller in that state. Also, the courts hold that a shipment is interstate when goods are sent from one state to another, although they are subject to final acceptance or rejection by the consignee.

C. 0. D. shipments; that is, shipments where the carrier acts as agent for the vendor and title does not pass to the commodity until payment has been made, come within the same category. These are interstate in character. When the goods to be sold are outside of the state, and are shipped in for a particular purchaser to fulfill an order from him, the state may place no impediments upon the transfer and shipment.

The Story Case is based on Dozier vs. Alabama, Volume 215 United States Reports, Page 124, in which the court held that the shipment of the picture and frames was interstate, and not subject to a local license. Mr. Justice Holmes said that the question did not depend upon where the contract was made, or the time and place where the title passed, but upon broader considerations, as to the nature of the shipment; that the sale and shipment of the frame could not be separated from the rest of the dealing so as to sustain the license tax. In all of these cases we can deduce the rule that if a shipment is made interstate, and there is reasonable expectation that a sale will be completed, in accordance with the shipment, it is interstate in character, and not subject to local tax.