Opinion
Rehearing Denied Sept. 3, 1930
Hearing Granted by Supreme Court Sept. 17, 1930.
Appeal from Superior Court, Tulare County; J.A. Allen, Judge.
Criminal prosecution by the People of the State of California against Irwin L. Perry for a violation of the Dealers’ Act. From an order sustaining a demurrer to the amended information and dismissing prosecution, the People appeal.
Affirmed. COUNSEL
U.S. Webb, Atty. Gen., John L. Flynn, Deputy Atty. Gen., and Leroy McCormick, Dist. Atty., and W.G. Machetanz, Deputy Dist. Atty., both of Visalia, for the People.
W.W. Bedford, of San Francisco, and Theodore M. Stuart, of Fresno, amici curiae.
H.A. Savage, of Fresno, for respondent.
OPINION
AMES, Justice pro tem.
The defendant in this case was prosecuted for the alleged violation of an act of the Legislature of the State of California, approved May 20, 1929, entitled, "An act to provide for the licensing and bonding of dealers engaged in handling any deciduous fruit, including grapes and dates, produced by another in the State of California, making an appropriation therefor and declaring the same an urgency measure." For the purpose of brevity we will hereafter refer to this act as the Dealers’ Act. The act is found in St.1929, p. 665.
From an order sustaining a demurrer to the amended information and judgment of dismissal the people appealed.
The respondent attacks the validity of the act, under which he was prosecuted, as violating the several provisions of the Constitution of the United States which will hereinafter be discussed. The Dealers’ Act divides persons purchasing and dealing in deciduous fruit into three classes, which are designated as "Cash Buyer," "Consignment Shipper," and "Dealer." The provisions of the act with respect to consignment shippers are not here involved and will require no further attention. A cash buyer is defined by subdivision (c) of section 1 of the act as follows:
" ‘Cash buyer’ means every person (1) who has a regular business address in California and who has registered the same in the office of the director, and (2) who, if his permanent business address is located outside of California, has also registered such business address in the office of the director, and (3) who furnishes in writing to each grower with whom he does business his said regular California business address, and (4) who represents himself as a ‘cash buyer,’ and (5) who purchases any deciduous fruits in California from the grower or producer thereof for the purposes of resale, and (6) who agrees by his contract of purchase to pay the purchase price upon demand following delivery, and (7) who within forty-eight hours (Sundays and legal holidays excepted) after demand has been made by said grower upon him pays or remits to said grower the full purchase price of all or any delivered portion of said deciduous fruits either in lawful money of the United States or by bank check of said buyer certified by the bank upon which it is drawn, or by a cashier’s check of a bank in California, payment of which cannot be stopped. Demand for the purchase price must be made upon the cash buyer in writing and the mailing of a registered letter making such demand, addressed to said buyer at his said California business address, shall be conclusive evidence that demand was made upon the mailing of said letter."
A dealer is defined by subdivision (e) of section 1 as follows:
" ‘Dealer’ includes every person other than a cash buyer or consignment shipper who attempts to make money on any deciduous fruit by dealing with the grower thereof."
Section 2 of the act limits its application in the following language: "This act shall have no application to any ‘cash buyer’ except to such a person who fails to make payment as required by paragraph (c) of section 1; *** nor shall this act apply to any deciduous fruit consumed fresh in this state, or dried, canned, preserved or concentrated in this state, and the purchase of any deciduous fruit from the grower for the purpose of any such use is hereby declared to be beyond the application of this act provided said deciduous fruit is actually so used."
Section 3: "Whenever any person although claiming to be a cash buyer either (1) causes a grower to part with the control of all or any portion of his deciduous fruits by any means of proposed payment other than that specified in paragraph (c) of section 1, or (2) causes a grower to part with the control of all or any portion of his deciduous fruits by means of any contract under which the grower has waived the right to demand the purchase price as and when he parts with said control, then in either of said events said person is not a cash buyer but is a dealer within the meaning of this act *** and in all cases where any person represents to the grower either verbally or in writing that he holds or will get a cash deposit to support an order for deciduous fruit and by means of such representation causes a grower to part with control of a portion or all of his deciduous fruit, then such person shall upon the removal of said deciduous fruits from the grower’s control be liable to said grower for the amount of said deposit less said person’s legal charges."
Section 4 of the act is as follows: "It shall be unlawful for any person to engage in the business of a dealer in the state of California unless and until he has fully complied with all the provisions of this act."
Section 5 of the act provides that any person desiring to engage in the business of a dealer in the state of California must file in the office of the director of agriculture an application for a license, which application must be verified by the applicant and must set forth certain information, including the name and business address of the applicant, the legal status of the applicant, whether an individual, exchange, corporation, partnership, or other group or association, the length of time of which applicant has been in business as a dealer in California, and whether applicant has made settlement in full with growers of deciduous fruit handled by applicant in either of the two immediately preceding calendar years, the volume of business handled by the applicant, and such additional and different information concerning his or its business as the director of agriculture deems advisable in order to determine whether he is qualified to engage in said business. For the filing of such application a fee of $25 is required.
Section 7 of the act requires the director of agriculture to examine such application, cause an investigation to be made of the applicant and his business rating, character, and reputation, and vests said director with power to refuse to grant a license and to deny the application if he finds from such investigation that the applicant is "not properly qualified to engage in business as a dealer."
Section 8 requires the delivery, by the applicant to the director of agriculture, of "a good and sufficient surety bond executed by the applicant as principal and by a surety company qualified and authorized to do business in this state as surety." The amount of the bond is determined by, and in proportion to, the quantity of deciduous fruits with which the applicant intends to deal during the twelve months next ensuing. But the minimum amount of such bond shall not in any event be less than $5,000 and shall be conditioned upon the compliance by the applicant with the provisions of the act, and upon faithful compliance with the condition of all contracts, verbal or written, made by the dealer with growers of deciduous fruits relative thereto, and upon applicant’s accounting for the proceeds of any fruit contracted for in accordance with the terms of the contracts with growers. Under the provisions of the last-named section, any person, claiming to be injured or damaged by any act of the dealer, or the director of agriculture on behalf of all growers contracting with such dealer, may institute and maintain an action against the dealer and the surety named in his bond; and any judgment rendered in said action may include a reasonable attorney fee. It is further provided that in the event the contract does not specify a date for settlement for fruits purchased by him, then the dealer shall settle therefor within thirty days from the delivery of the fruit into the dealer’s control. The dealer shall then account and pay to the grower the full amounts called for in such contract.
Section 10 authorizes the director of agriculture to issue and deliver to the applicant his license, but only after the applicant has complied with all the requirements in the statute, and imposes upon the dealer the duty of notifying the director whenever he intends to handle a greater or lesser number of tons of fruit than that specified in his original application, and thereupon the director of agriculture is authorized to increase or diminish the amount of his bond as the case may be.
Section 11 of the act authorizes the director of agriculture, either upon his own motion, or upon verified complaint against any dealer, to make any and all investigations which he deems necessary, and shall have at all times free and unimpeded access to all buildings, yards, warehouses, storage and transportation, or any other facilities or places in which such fruits are stored, handled or transported; and he shall have authority to administer oaths, take testimony and issue subpoenas requiring the attendance of witnesses before him, together with all books, documents, articles, or instruments, and to compel the disclosure by such witnesses of all facts known to them relative to the matters under investigation. Disobedience of such orders or subpoenas are punishable by the superior court as a contempt.
By section 12 it is made the duty of the director of agriculture, either upon his own motion or upon the receipt of a verified complaint, to investigate, among other things, "any alleged failure to account and settle for deciduous fruit as in this act required." And after a hearing in the matter under investigation, after due notice to the dealer, the director of agriculture may suspend the license of the dealer for a specified period or revoke the same or make such other appropriate order as may be deemed just and proper.
Section 14 requires every dealer to keep a correct record showing certain data with reference to his transactions with the grower; among other things, such record must show the price for which such fruit was sold, if a minimum price is guaranteed to the growers, an itemized statement of the charges to be paid by the grower in connection with any sale involving a minimum price guarantee to the grower, and a detailed statement of all claims made by growers against the dealer. This section also contained the following provision:
"A copy of the record and account of sales of fruit, the possession of which is obtained by dealer on a contract involving a minimum price guarantee, shall be delivered to the grower upon the consummation of the sale, together with all moneys received by dealer in payment for such transaction made upon account of the grower, less the agreed commission and other charges, and said payment and accounting must be made by said dealer to the grower within ten days after said dealer receives the money in payment of said fruit."
Section 16 provides that any person who acts as a dealer without a license, or having a license, willfully violates any provision of the act, or any cash buyer who willfully refuses to make payment for deciduous fruits as and when required by this act, is guilty of a felony.
The amended information to which the defendant’s demurrer was sustained consisted of two counts, the first one of which alleged that the defendant "who was then and there a cash buyer, as defined by chapter 344 of Statutes of 1929, at page 665, did willfully, unlawfully and feloniously refuse to make payment to August F. Spomer for certain deciduous fruit, to-wit, grapes, as and when required by the provisions of said statute above referred to." The second count in the information is identical with the first, except that it appears to have been based upon a different transaction on a different date with a different grower.
In initiating its argument, appellant contends that by the terms of the act a cash buyer, to which class it is alleged in the information the defendant belongs, is eliminated from its operation since the defendant is not charged with acting in any way as a dealer, and thus (so argues appellant) substantially all of the statute goes out of the case, and for the purpose of the demurrer nothing remains except those provisions of the statute which deal with a cash buyer. But an examination of the several provisions of the statute above referred to convinces us that this argument is unsound. Subdivision (e) of section 1 includes within the definition of the word "dealer," "every person other than a cash buyer *** who attempts to make money on any deciduous fruit by dealing with the grower thereof." But by willfully and unlawfully refusing to make payment for the fruit purchased by him in violation of section 16 of the statute, the defendant automatically placed himself beyond the scope of the definition of a cash buyer as contained in subdivision (c) of section 1 of the statute, in that he did not within forty-eight hours after demand had been made by said grower upon him, pay or remit to said grower the price of the fruit delivered to him. In other words, the willful refusal to make payment for fruits as and when required by the act has reference to and must be read with subdivision 6 of section 1(c), and after failure to make payment within the time, after demand was made as prescribed in the definition of a cash buyer, he, by virtue of the provisions of subdivision (e) of section 1, automatically assumes the status of a dealer and is subjected to all of the onerous burdens which devolve upon persons in that class both as conditions precedent and conditions subsequent to the transaction of business as such dealer within this state.
Appellant’s argument that the respondent as a cash buyer is exempt from the operation of the statute is answered by another provision in the statute itself. Section 2, after providing that this act shall have no application to any cash buyer, except as "to such a person who fails to make payment as required by paragraph (c) of section 1."
If the defendant by a failure to pay for the fruit purchased by him in the manner prescribed by subdivision 6, paragraph (c) of section 1, ceases to be a cash buyer and automatically becomes a dealer, and cannot transact business as such without procuring a license, furnishing a bond, paying the fee, and complying with other requirements incident to that classification, we think that he has placed himself under all of the provisions of the statute governing the transaction of business as a dealer, and is in a position to attack the validity of those provisions of the statute on constitutional grounds.
The supreme power to regulate interstate commerce is vested in the Congress by section 8 of article 1 of the Constitution of the United States, which provides that Congress shall have power to regulate commerce with foreign nations and among the several states. The first attack made upon the act is upon the ground that the statute imposes a direct burden upon and interference with interstate commerce, in violation of the above provision of the federal Constitution.
But appellant contends that the act does not attempt to regulate interstate commerce. He argues that the sale was made and completed in the state of California; that the title to the property conveyed passed to the buyer upon delivery within that state; and that after having acquired title to such property the cash buyer is at liberty to dispose of the same as he may see fit, and that the operation of the statute ends before any disposition of the fruit has been made by the buyer. In other words, appellant treats a purchase of fruit by a cash buyer as a purely local transaction, subject to the operation and regulation of local laws, and not a subject of congressional regulation under constitutional authority.
It is true that the act does not refer directly to interstate commerce, nor is that term, nor any equivalent expression, to be found therein. But included in the definition of a cash buyer it will be seen that he is a person "who purchases any deciduous fruits in California from the grower or producer thereof for the purposes of resale," and in section 2 it is further provided that the act shall not apply to any deciduous fruit consumed fresh in this state, or dried, canned, preserved, or concentrated in this state, and that the purchase of any deciduous fruit from the grower for the purpose of any such use is expressly declared to be beyond the application of the act, provided such deciduous fruit is actually so used. If the fruit purchased by a cash buyer for the purpose of resale is not consumed fresh in this state, or dried, canned, preserved, or concentrated in this state, what disposition of such fruit was contemplated by the Legislature in framing this statute other than that such fruit should enter the channels of interstate commerce? We think the answer to this question is obvious. It is a matter of common knowledge, of which this court will take judicial notice, that the cultivation and production of deciduous fruit in this state is one of its largest and most important industries and one in which millions of dollars have been invested, and from which thousands of its citizens derive the means of their subsistence. The statute under consideration does not purport to operate upon persons dealing in fruit purchased for consumption or processing within this state. It must therefore operate upon those dealing in that surplus of this product beyond that required for local consumption and processing and which would necessarily enter the channels of interstate commerce, and upon that class, and that class alone, would this statute operate.
Assuming then, in construing the amended information before us, that the fruit purchased by the defendant was designed for shipment into another state or a foreign country, we are confronted with the question as to the precise point in this transaction it would cease to be an intrastate transaction and assume an interstate character and become subjected to regulations prescribed by Congress. Appellant contends that the purchase having been consummated, and the title and possession having been transferred to the defendant as a cash buyer, the transaction was closed, and that the same did not partake of the character of an interstate transaction. But we cannot accede to this view. The rule is well settled that when, in the due course of business, the products of a state are purchased therein for the purpose and with the design of transferring and utilizing the same in another state, that the initial act of a consummated purchase, and resulting change of title and possession, together with all subsequent transactions including transportation and delivery at its destination, is an interstate transaction. In the case of Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 108, 66 L.Ed. 239, the Supreme Court of the United States said:
"Where goods in one state are transported into another for purposes of sale, the commerce does not end with the transportation, but embraces as well the sale of the goods after they reach their destination and while they are in the original packages. Brown v. Maryland, 12 Wheat. 419, 446-447, 6 L.Ed. 678; American Steel & Wire Co. v. Speed, 192 U.S. 500, 519, 24 S.Ct. 365, 48 L.Ed. 538. On the same principle, where goods are purchased in one state for transportation to another, the commerce includes the purchase quite as much as it does the transportation. American Express Co. v. Iowa, 196 U.S. 133, 143, 25 S.Ct. 182, 49 L.Ed. 417. This has been recognized in many decisions construing the commerce clause. Thus it was said in Welton v. Missouri, 91 U.S. 275, 280, 23 L.Ed. 347: ‘ "Commerce" is a term of the largest import. It comprehends intercourse for the purposes of trade in any and all of its forms, including the transportation, purchase, sale, and exchange of commodities.’
"In Kidd v. Pearson, 128 U.S. 1, 20, 9 S.Ct. 6, 10, 32 L.Ed. 346, it was tersely said: ‘Buying and selling and the transportation incidental thereto constitute commerce.’
"In United States v. E.C. Knight Co., 156 U.S. 1, 13, 15 S.Ct. 249, 254, 39 L.Ed. 325, ‘contracts to buy, sell, or exchange goods to be transported among the several states’ were declared ‘part of interstate trade or commerce.’ "
In the case of Farmers’ Grain Co. v. Langer (C.C.A.) 273 F. 635, 636, 19 A.L.R. 148, after reviewing many decisions of the United States Supreme Court in which this question was involved, the court concludes that the purchases of grain by dealers in North Dakota for shipment to terminal markets in another state are a part of the unit of interstate commerce involved in the shipments. And the Supreme Court of the United States, in Lemke v. Farmers’ Grain Co., 258 U.S. 50, 42 S.Ct. 244, 247, 66 L.Ed. 458, in reviewing the decision of Farmers’ Grain Co. v. Langer, supra, said: "Nor will it do to say that the state law acts before the interstate transaction begins. It seizes upon the grain and controls its purchase at the beginning of interstate commerce. Pennsylvania Railroad Co. v. Clark Brothers Coal Mining Co., 238 U.S. 456, 468, 35 S.Ct. 896, 59 L.Ed. 1406."
We conclude, therefore, that the purchase of fruit involved in this case was an interstate transaction and one subject to the control of Congress.
Appellant next contends that, in the exercise of its sovereign police power, a state has the right to regulate its commerce even though a statute enacted in the exercise of such power may incidentally affect interstate commerce, and that the act involved in this proceeding was a legitimate exercise of such power. The decisions of the Supreme Court of the United States with respect to the power of the states over the general subject of commerce recognize a division of such power into three classes. First, those in which the power of the state is exclusive; second, those in which the states may act in the absence of legislation by Congress; third, those in which the action by Congress is exclusive and the states cannot interfere at all. Covington & C. Bridge Co. v. Kentucky, 154 U.S. 204, 14 S.Ct. 1087, 1090, 38 L.Ed. 962.
Under the first classification is included the authority of the states to construct and maintain highways, turnpikes, railways, and canals between points in the same state (Baltimore & Ohio Railroad Co. v. Maryland, 21 Wall. 456, 22 L.Ed. 678); the construction of bridges over nonnavigable streams; the regulation of navigation of the internal waters of the state. And the states may exercise such powers notwithstanding the fact that such avenues of commerce may be utilized in the transportation of persons or of property in interstate transactions, and may exact a bonus for such use. Covington & C. Bridge Co. v. Kentucky, supra, and cases there cited. Congress has no power to interfere with police regulations relating exclusively to the internal trade of the states.
Under the second classification are included those cases which may be termed concurrent jurisdiction, embracing laws for the regulation of pilots, quarantine inspection, improvement of navigable channels, regulation of wharves, piers, and docks, and statutes of a similar character affecting interstate commerce but indirectly. In speaking of the third classification of such powers, the Supreme Court of the United States in Covington, etc., v. Kentucky, supra, said:
"But wherever such laws, instead of being of a local nature and affecting interstate commerce but incidentally, are national in their character, the nonaction of congress indicates its will that such commerce shall be free and untrammeled, and the case falls within the third class,— of those laws wherein the jurisdiction of congress is exclusive. Brown v. Houston, 114 U.S. 622, 5 S.Ct. 1091, 29 L.Ed. 257; Bowman v. Railway Co., 125 U.S. 465, 8 S.Ct. 689, 1062, 31 L.Ed. 700."
We are next confronted by the question as to the classification in which the Dealers’ Act of 1929 could fall. The question is answered by numerous decisions of the Supreme Court of the United States. The rule is well established that a state cannot impose a burden, either under the guise of taxation, or regulation, upon the citizen of another state transacting business therein. The case of Crutcher v. Kentucky, 141 U.S. 47, 11 S.Ct. 851, 35 L.Ed. 649, involved the validity of a Kentucky statute which forbade an express company from carrying on business within that state without first procuring a license therefrom. The court said, at page 854 of 11 S.Ct.:
"We have repeatedly decided that a state law is unconstitutional and void which requires a party to take out a license for carrying on interstate commerce, no matter how specious the pretext may be for imposing it. (Citing cases.) As a summation of the whole matter it was aptly said by the present chief justice in Lyng v. Michigan, 135 U.S. 161, 166, 10 S.Ct. 725 [34 L.Ed. 150]: ‘We have repeatedly held that no state has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, for the reason that taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to congress.’ "
The case of Caldwell v. North Carolina, 187 U.S. 622, 23 S.Ct. 229, 47 L.Ed. 337, involved the validity of a municipal ordinance imposing a license fee upon a nonresident corporation delivering orders previously received within the municipality. In holding the imposition of such license fee invalid, the court said in quoting with approval from Crutcher v. Kentucky, supra, at page 231 of 23 S.Ct.:
"In Crutcher v. Kentucky, 141 U.S. 47, 35 L.Ed. 649, 11 S.Ct. 851, an act of the state of Kentucky which forbade the agent of an express company, not incorporated by the laws of that state, from carrying on business without first obtaining a license from the state, was held to be a regulation of commerce and invalid. Mr. Justice Bradley, speaking for the court, said: ‘The character of police regulation, claimed for the requirements of the statute in question, is certainly not such as to give them a controlling force over the regulations of interstate commerce which may have been expressly or impliedly adopted by Congress, or such as to exempt them from nullity when repugnant to the exclusive power given to Congress in relation to that commerce. This is abundantly shown by the decisions to which we have already referred, which are clear to the effect that neither licenses nor indirect taxation of any kind, nor any system of state regulation, can be imposed upon interstate, any more than upon foreign, commerce; and that all acts of legislation producing any such result are, to that extent, unconstitutional and void.’ "
The case of Farmers’ Grain Co. v. Langer, supra, involved the validity of a statute of North Dakota which provided for the appointment of a state inspector of grades, weights, and measures, with power to establish grades for grain, seeds, and other agricultural products, to issue licenses to persons engaged in buying grain, to fix charges for grading, inspecting, and weighing the same, and requiring all buyers of grain to procure licenses from the state and pay an annual fee therefor. Having first determined that the purchase of wheat to be shipped to another state constituted a part of an interstate transaction, the Circuit Court of Appeals said, at page 647:
"If the purchase of grain as detailed in the evidence is a part of the unit of interstate commerce in that grain, it necessarily follows that said chapter 138 does impose a burden on that commerce. In Stuart v. Palmer, 74 N.Y. 183, 188, 30 Am.Rep. 289, Earl, J., said: ‘The constitutional validity of law is to be tested, not by what has been done under it, but by what may, by its authority, be done.’ In Montana Co. v. St. Louis Mining, etc., Co., 152 U.S. 170, 14 S.Ct. 506, 38 L.Ed. 398, the Supreme Court, in quoting this language, declared that the test was accurate, provided, of course, it is limited to what may be rightfully done, and does not extend to that which is wrongfully, though under pretense of the statute, done."
The court further said:
"The state law further provides that, before any one can purchase a bushel of grain in North Dakota, he must first obtain a license to do so and pay an annual license fee of $10, and he must promise in his application for the license that he will obey and enforce all the provisions of the state law. Can interstate commerce carried on under such conditions be called free? Supposing every state in the Union should pass a similar law, what would become of the United States Grain Standards Act, if in addition to the inspection and grading required thereby each state had an inspection and grading law of its own, to which interstate commerce must be subjected."
The case last referred to was taken to the Supreme Court of the United States and is reported under the title of Lemke v. Farmers’ Grain Co., supra. In the opinion rendered in this case the Supreme Court said, at page 247 of 42 S.Ct.:
"It is contended that these regulations may stand upon the principles recognized in decisions of this court which permit the State to make local laws under its police power in the interest of the welfare of its people, which are valid although affecting interstate commerce, and may stand, at least until Congress takes possession of the field under its superior authority to regulate commerce among the States. This principle has no application where the State passes beyond the exercise of its legitimate authority, and undertakes to regulate interstate commerce by imposing burdens upon it. This court stated the principle and its limitations in the discussion of the subject in the Minnesota Rate Cases, 230 U.S. 352, 33 S.Ct. 729, 57 L.Ed. 1511, 48 L.R.A. (N.S.) 1151, Ann.Cas.1916A, 18. In the course of the opinion in that case, we said (230 U.S. p. 400, 33 S.Ct. 740, 57 L.Ed. 1511, 48 L.R.A.[N.S.] 1151, Ann.Cas.1916A, 18): ‘The principle, which determines this classification (between federal and state power), underlies the doctrine that the States cannot under any guise impose direct burdens upon interstate commerce. For this is but to hold that the States are not permitted directly to regulate or restrain that which from its nature should be under the control of the one authority and be free from restriction save as it is governed in the manner that the national legislature constitutionally ordains. Thus, the States cannot tax interstate commerce, either by laying the tax upon the business which constitutes such commerce or the privilege of engaging in it, or upon the receipts, as such, derived from it (citing cases).’ Applying the principle here, the statute denies the privilege of engaging in interstate commerce except to dealers licensed by state authority, and provides a system which enables state officials to fix the profit which may be made in dealing with a subject of interstate commerce."
After the decision of the Supreme Court in the case of Lemke v. Farmers’ Grain Co., the state of North Dakota enacted another statute, and, while eliminating some of the objectionable features of the former act, there were included in the new act provisions for the grading of wheat and supervising the marketing of the same, and for the issue by state supervisors of licenses to grade. Persons engaged in buying, weighing, and grading wheat were required to pass a satisfactory examination, and the supervisors were authorized to revoke or suspend licenses after investigation, if he found the licensee to be incompetent or knowingly or carelessly had graded grain improperly or had otherwise been guilty of misconduct. Every buyer was required by the act to obtain an annual license and pay a prescribed fee therefor, and every elevator operator, or individual, buying or shipping for profit, who did not pay cash in advance, was required to furnish a bond to secure payment for all wheat bought on credit. Such buyer was required to keep a record of his transactions and furnish the information therein contained to the supervisor when requested. The act contained a penal provision, and a violation thereof was declared to be a misdemeanor.
The similarity of the provisions of this statute to those of the Dealers’ Act in the case at bar is at once apparent. The constitutionality of the North Dakota act was attacked in the case of Shafer v. Farmers’ Grain Co., 268 U.S. 189, 45 S.Ct. 481, 69 L.Ed. 909, and after reiterating the principle that the purchase of grain for shipment into another state was an interstate commerce transaction, the court said, at pages 485, 486 of 45 S.Ct.:
"The decisions of this court respecting the validity of state laws challenged under the commerce clause have established many rules covering various situations. Two of these rules are specially invoked here— one that a state statute enacted for admissible state purposes and which affects interstate commerce only incidentally and remotely is not a prohibited state regulation in the sense of that clause; and the other that a state statute which by its necessary operation directly interferes with or burdens such commerce is a prohibited regulation and invalid, regardless of the purpose with which it was enacted. *** In our opinion the North Dakota act falls certainly within the second of the two rules just stated. By it that state attempts to exercise a large measure of control over all wheat buying within her limits. ***
"Only by disregarding the nature of this business and neglecting important features of the act can it be said to affect interstate commerce only incidentally and remotely. That it is designed to reach and cover buying for interstate shipment is not only plain but conceded. *** The act requires every such buyer to give to the state, if he buys on credit, a bond securing payment for all wheat so purchased; to keep a record of all wheat bought, showing the grade given and price paid at his elevator and the grade fixed and the price received at the terminal market; and to furnish such data to the state supervisor when requested. The act also intends and declares that the state supervisor ‘shall in a general way investigate and supervise the marketing’ of the grain with a view of ‘preventing’ various things deemed unjust or fraudulent, including ‘unreasonable margins of profit’ and ‘confiscation of valuable dockage,’ and, to the end that this and other provisions may be made effective, the act invests him with authority to make and enforce such orders, rules and regulations as may be necessary to carry out all of its provisions.
"We think it plain that, in subjecting the buying for interstate shipment to the conditions and measure of control just shown, the act directly interferes with and burdens interstate commerce, and is an attempt by the state to prescribe rules under which an important part of such commerce shall be conducted. This no state can do consistently with the commerce clause."
The case of Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 402, 66 L.Ed. 735, 23 A.L.R. 229, presented the question as to whether sales and purchases of cattle made by dealers and traders in the stockyards at Chicago, under the rules of the stockyards corporation, could be brought by Congress under the supervision of the Secretary of Agriculture in order to prevent abuses by commission men and dealers in charging exorbitant commissions, and in other ways, in their relations with packers, monopolizing trade and increasing or decreasing the market demand. In holding that such regulations were properly within federal control, Chief Justice Taft said:
"Such transactions cannot be separated from the movement to which they contribute and necessarily take on its character. The commission men are essential in making the sales, without which the flow of the current would be obstructed, and this, whether they are made to packers or dealers. The dealers are essential to the sales to the stock farmers and feeders. The sales are not in this aspect merely local transactions. They create a local change of title, it is true, but they do not stop the flow; they merely change the private interests in the subject of the current, not interfering with, but, on the contrary, being indispensable to, its continuity."
We have examined the cases cited by appellant and they can readily be differentiated from the case at bar. We will briefly notice and distinguish some of these authorities.
The case of Munn v. Illinois, 94 U.S. 113, 24 L.Ed. 77, is distinguishable from the case of Shafer v. Farmers’ Grain Co., supra, and we think the same reasoning applies here. In this latter case the court said:
"In Munn v. Illinois, supra, the question was whether, as respects an elevator devoted to storing grain for hire, the state could regulate the storage charge where part of the grain reached the elevator, or was destined to leave it, through the channels of interstate commerce. The court held such a regulation admissible because of the public character of the elevator and because interstate commerce was affected only incidentally and remotely. No restriction on buying or shipping was involved. In Cargill Co. v. Minnesota, 180 U.S. 452, 21 S.Ct. 423, 45 L.Ed. 619, the court had before it a state statute, much of which had been pronounced unconstitutional by the state court."
Appellant quotes from Smith v. Alabama, 124 U.S. 465, 8 S.Ct. 564, 567, 31 L.Ed. 508, as follows:
"In conferring upon congress the regulation of commerce, it was never intended to cut the states off from legislating upon all subjects relating to the health, life, and safety of their citizens, though the legislation might indirectly affect the commerce of the country."
This statement is but a declaration of the recognized police powers reserved by the several states which they can exercise, provided a direct burden is not thereby imposed upon interstate commerce, but it is not contended that the Dealers’ Act in any way affects the health, life, or safety of the citizens of this state.
In the case of Atlantic Coast Railway Co. v. Standard Oil Co. of Kentucky, 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270, the Standard Oil Company sought to enjoin the railroad company from charging Florida rates for transportation of oil within the state of Florida, the said oil having been purchased from other companies and delivered to it from without the state and stored in tanks maintained by the company upon the seaboard, and thence delivered to various distributing points and service stations throughout the state. But this case is not in point, because the delivery of the oil to the seaboard, where it was placed in storage, its subsequent destination not having been determined, the title thus passed to the Standard Oil Company, and the oil then entered the channels of intrastate commerce and was no longer a subject for federal regulation.
In Hill v. Wallace, 259 U.S. 44, 42 S.Ct. 453, 66 L.Ed. 822, Chief Justice Taft held the Future Trading Act of 1921 (42 Stat. 187) void as in no way limited to interstate commerce, but the validity of the Grain Futures Act of 1922 (7 USCA § § 1-17) was upheld in an opinion by him in Board of Trade v. Olsen, 262 U.S. 1, 43 S.Ct. 470, 67 L.Ed. 839, holding grain transactions on the Chicago Board of Trade to be a part of interstate commerce and properly subject to federal regulation.
Morris v. Duby, 274 U.S. 135, 47 S.Ct. 548, 71 L.Ed. 966, holding that a state may by statute limit the weight of motor trucks operating over its highways, was upheld. But the statute under consideration in that case applied to all trucks exceeding the prescribed minimum weight and clearly was a police regulation operating but indirectly upon interstate commerce.
The case of Ware & Leland v. Mobile County, 209 U.S. 405, 28 S.Ct. 526, 529, 52 L.Ed. 855, 14 Ann.Cas. 1031, involved the validity of a statute of Alabama imposing a license tax upon brokers engaged in the buying and selling of cotton for future delivery, for speculation. The distinction between that case and the case at bar is readily apparent from the following excerpt from the opinion:
"But how stands the present case upon the facts stipulated? The plaintiffs in error are brokers who take orders and transmit them to other states for the purchase and sale of grain or cotton upon speculation. They are, in no just sense, common carriers of messages, as are the telegraph companies. For that part of the transactions, merely speculative and followed by no actual delivery, it cannot be fairly contended that such contracts are the subject of interstate commerce; and concerning such of the contracts for purchases for future delivery as result in actual delivery of the grain or cotton, the stipulated facts show that, when the orders transmitted are received in the foreign state, the property is bought in that state and there held for the purchaser. The transaction was thus closed by a contract completed and executed in the foreign state, although the orders were received from another state. When the delivery was upon a contract of sale made by the broker, the seller was at liberty to acquire the cotton in the market where the delivery was required or elsewhere. He did not contract to ship it from one state to the place of delivery in another state. And though it is stipulated that shipments were made from Alabama to the foreign state in some instances, that was not because of any contractual obligation so to do. In neither class of contracts, for sale or purchase, was there necessarily any movement of commodities in interstate traffic because of the contracts made by the brokers."
The case of Stewart v. Rivara, 274 U.S. 614, 47 S.Ct. 718, 71 L.Ed. 1234, cited by appellant, involved the validity of a statute of New York regulating contracts of conditional sales of personal property, and provided that when articles are repossessed by a vendor under such contracts, they should be retained for thirty days during which time the vendee may comply with the terms of his contract. The question before the court was whether this statute applied to a tugboat operated in both interstate and intrastate commerce, and the court said, at page 720 of 47 S.Ct.:
"Clearly there is nothing in the state law to interfere with the use of such vessels as instrumentalities of interstate commerce. Its enforcement does not require that the tugboat be withdrawn from service after retaking by the conditional vendor; and the change of possession would not necessarily interfere with its use in interstate commerce. And, if interpreted to require the vessel to be withdrawn from service for a time, the law would not for that reason be invalid."
The case of American Transit Co. v. City of Philadelphia (D.C.) 18 F.2d 991, upheld the validity of an ordinance of the city of Philadelphia requiring licenses from motor vehicles and requiring the owners and drivers thereof to furnish the municipal authorities with certain information for the purpose of identification. It requires no citation of authorities to show that this ordinance was a legitimate exercise of the police power.
Appellant cites and relies upon the case of Clark Distilling Co. v. Western Maryland Ry. Co., 242 U.S. 311, 37 S.Ct. 180, 185, 61 L.Ed. 326, L.R.A.1917B, 1218, Ann.Cas.1917B, 845, to uphold his contention that, even though a state statute may burden interstate commerce, the enactment of a federal statute in harmony therewith renders the state statute valid and effective. But the state statute involved in that case was one prohibiting the manufacture, sale, keeping, or storing for sale, or offering or exposing for sale, intoxicating liquors within the state of West Virginia, a statute obviously within the police powers of the state.
Recurring again to the statute under consideration, we think its design to regulate the marketing of deciduous fruits which have entered the channels of interstate commerce is too palpable to escape our notice, and having for its exclusive object the regulation of an important branch of such commerce, it imposes thereon a burden which is direct and immediate and therefore in direct conflict with section 8 of article 1 of the Constitution of the United States.
At the oral argument, appellant called the court’s attention to an act of Congress known as the "Perishable Agricultural Commodities Act, 1930," approved June 10, 1930 (7 USCA § § 551-568), which he contends contains a saving clause which would avert the invalidation of the Dealers’ Act by judicial decision. The purpose of that act, as expressed in its title, is as follows: "An act to suppress unfair and fraudulent practices in the marketing of perishable agricultural commodities in interstate and foreign commerce." While certain provisions of this act of Congress bear a similarity to the California Dealers’ Act, it does not purport to invade the same field embraced by the latter, the onerous provisions of which are not included in the act of Congress. And while the act of Congress requires certain classes of dealers to secure a license, which, after proper proceedings, may be invoked, it prohibits such dealer from engaging in certain practices which are therein defined as unfair conduct, and among the acts condemned are the making of any fraudulent charge in respect to the commodity purchased, failure of the dealer to deliver the product handled in accordance with the terms of the contract without reasonable cause, or, without reasonable cause to discard or destroy the same. And while the dealer is required to keep records of his transactions which shall be subject to the inspection of the secretary of agriculture or his representatives, it also contains a requirement that if such dealer fail or refuse truly and correctly to account promptly in respect to any transaction regulated by the statute, he subjects himself to the penalties prescribed by the act; that penalty being a revocation of his license and the payment of damages in any civil action brought by the injured party. A dealer is not otherwise penalized for failure to pay for commodities purchased within a limited time, or at all. It contains no penal provisions. This act is but the exercise, by Congress, of the constitutional grant of regulation of interstate commerce, in which field its authority is supreme, and we do not believe that the saving clause contained in section 15 (7 USCA § 565) can save the California Dealers’ Act from judicial condemnation. That section contains the following provision:
"This act shall not abrogate nor nullify any other statute, whether State or Federal, dealing with the same subjects as this act; but it is intended that all such statutes shall remain in full force and effect except in so far only as they are inconsistent herewith or repugnant hereto."
But the California Dealers’ Act does not deal with the same subjects intended by the saving clause, and being itself in conflict with the federal Constitution, the federal statute cannot impart validity. Stafford v. Wallace, supra.
Respondent next attacks the Dealers’ Act as being a violation of section 1 of article 1 of the Constitution of California. Those sections of article 1 of the Constitution involved in this case are as follows:
Section 1. "All men are by nature free and independent, and have certain inalienable rights, among which are those of enjoying and defending life and liberty; acquiring, possessing, and protecting property; and pursuing and obtaining safety and happiness."
Section 11. "All laws of a general nature shall have a uniform operation."
Section 21. "No special privileges or immunities shall ever be granted which may not be altered, revoked, or repealed by the legislature, nor shall any citizen, or class of citizens, be granted privileges or immunities which, upon the same terms, shall not be granted to all citizens."
Respondent contends also that the Dealers’ Act is violative of the Fourteenth Amendment of the Constitution of the United States. All laws of a general nature shall have a uniform operation. It may be conceded that certain occupations, which are otherwise lawful, are such that the public health, public morals, and public safety require regulation by means of legislative enactment, and the state, or its political subdivisions, possess the undoubted authority to enact and enforce such regulations in the exercise of the police power. Among such occupations which are so classified are included the operation of common carriers, the conducting of certain places of amusement, regulating the practice of certain professions, and other occupations which, in the absence of salutary regulations, would be or might be detrimental to the health and general well-being of the people of the state. Obviously the business of buying deciduous fruits from the grower thereof cannot be so classified. The statute under consideration imposes upon a person, engaged in business as a cash buyer, certain requirements set forth in section 1 of the act hereinbefore quoted, and should he fail to conform to such requirements he is, or may become, automatically classified as a dealer and subject to other onerous provisions imposed by the act upon persons so classified.
Do these requirements, which by the terms of the statute are made applicable to a person purchasing deciduous fruit for the purpose of resale, but do not apply to a purchase of deciduous fruit subsequently consumed fresh in California, or otherwise processed here, render the statute void as class legislation?
We think the question is answered by the decisions of the courts of this state and of the Supreme Court of the United States. The case of Pasadena v. Stimson, 91 Cal. 238, 27 P. 604, 607, is the leading authority in California in this particular field. In that case Chief Justice Beatty said:
"The conclusion is that, although a law is general and constitutional when it applies equally to all persons embraced in a class founded upon some natural or intrinsic or constitutional distinction, it is not general or constitutional if it confers particular privileges, or imposes peculiar disabilities or burdensome conditions in the exercise of a common right, upon a class of persons arbitrarily selected from the general body of those who stand in precisely the same relation to the subject of the law."
And in Darcy v. Mayor, etc., of San Jose, 104 Cal. 642, 38 P. 500, 501, the court said:
"The classification, however, must be founded upon differences which are either defined by the constitution or are natural, and which will suggest a reason which might rationally be held to justify the diversity in the legislation."
In Ex parte Dickey, 144 Cal. 234, 77 P. 924, 925, 66 L.R.A. 928, 103 Am.St.Rep. 82, 1 Ann.Cas. 428, the Supreme Court had before it a statute limiting the compensation of employment agents and making it a misdemeanor to receive money in excess of the percentage therein allowed. The court, speaking through Justice Henshaw, said:
"It appears, therefore, that the due exercise of the police power is limited to the preservation of the public health, safety, and morals, and that legislation which transcends these objects, whatever other justification it may claim for its existence, cannot be upheld as a legitimate police regulation. The business in which this defendant is engaged is not only innocent and innocuous, but is highly beneficial, as tending the more quickly to secure labor for the unemployed. There is nothing in the nature of the business, therefore, that in any way threatens or endangers the public health, safety, or morals. Nor, indeed, is the purpose of this statute to regulate in these regards, or in any of them. The declared purpose and the plain effect of the above-quoted section is to limit the right of an employment agent in making contracts— a right free to those who follow other vocations— and arbitrarily to fix the compensation which he may receive for the services which he renders. *** By the act in question he is arbitrarily stripped of this right of contract, and deprived of his property, and left, in following his vocation and in pursuit of his livelihood, circumscribed and hampered by a law not applicable to his fellow men in other occupations. Such legislation is of the class discussed by Judge Cooley *** ‘entirely arbitrary in its character, and restricting the rights, privileges, or legal capacities’ of one class of citizens ‘in a manner before unknown to the law.’ For such legislation, as he very justly adds, those who claim its validity should be able to show a specific authority therefor, ‘instead of calling upon others to show how and where the authority is negative.’ "
In Re Foley, 172 Cal. 744, 158 P. 1034, Ann.Cas.1918A, 180, it was held that, a statute regulating the sale of eggs shipped or imported into California from any place outside of the United States, requiring that each egg be marked with the word "imported," was special legislation.
Mattei v. Hecke, 99 Cal.App. 747, 279 P. 470, 471, involved the constitutionality of a portion of section 22 of "The California Fruit, Nut and Vegetable Standardization Act of 1927" (St.1927, p. 1845), providing that containers in which grapes were packed should conform to certain requirements. It provided also that any containers not conforming to the specifications of the statute should be conspicuously marked "irregular container" in letters of a certain size. The court held that:
"Unquestionably an act such as we have here, restricting the personal liberty of a citizen, is invalid unless such restriction is necessary for the protection of the public safety, public health, or public morals. (Citing Ex parte Dickey, supra.) *** The liberty of the citizen and his manner of conducting his business or marketing his products may not be curtailed or interfered with, except where it is necessary under the police power for the protection or preservation of the public health, safety, or morals. ‘A statute prohibiting, regulating, or interfering with private business can be upheld only under the police power, and that the police power can be rightfully exercised only when the statute in question is for the protection of the public safety, the public health, or the public morals.’ Ex parte Drexel, 147 Cal. 763, 3 Ann.Cas. 878, 2 L.R.A.(N.S.) 588, 82 P. 429, 430. ‘It is, of course, elementary, that the enjoyment of one’s property cannot be interfered with or limited arbitrarily.’ "
In Ex parte Jentzsch, 112 Cal. 468, 44 P. 803, 804, 32 L.R.A. 664, the petitioner was prosecuted for the violation of an act prohibiting one engaged in work as a barber, and other allied occupations, from keeping open and conducting a barber shop on Sundays and other holidays after the hour of 12 o’clock noon. In holding the act unconstitutional, and in violation of the same provisions of the Constitution as are involved in the instant case, the court said:
"Whether or not a general law to promote rest from labor in all business vocations may be upheld as within the due exercise of the police power as imposing for its welfare a needed period of repose upon the whole community, a law such as this certainly cannot. A law is not always general because it operates upon all within a class. There must be back of that a substantial reason why it is made to operate only upon a class, and not generally upon all."
In Re Dees, 46 Cal.App. 656, 189 P. 1050, 1052, the court said:
"If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety has no real or substantial relation to those objects, or is a palpable invasion of rights secured by fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution."
In Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679, the Supreme Court of the United States had before it the Anti-Trust Law of Illinois. That statute, by its terms, condemned the formation of trusts and combinations created for the purpose of regulating supply and demand of agricultural commodities, but excepted from its operation those engaged in the production of live stock and agricultural products. In holding the act unconstitutional, the court said, at pages 439, 440 of 22 S.Ct.:
"But upon this general question we have said that the guaranty of the equal protection of the laws means ‘that no person or class of persons shall be denied the same protection of the laws which is enjoyed by other persons or other classes in the same place and under like circumstances.’ *** The difficulty is not met by saying that, generally speaking, the state when enacting laws may, in its discretion, make a classification of persons, firms, corporations, and associations, in order to subserve public objects. *** ‘It is apparent that the mere fact of classification is not sufficient to relieve a statute from the reach of the equality clause of the 14th Amendment, and that in all cases it must appear, not only that a classification has been made, but also that it is one based upon some reasonable ground,— some difference which bears a just and proper relation to the attempted classification,— and is not a mere arbitrary selection.’ "
In the case of In re Raleigh, 177 Cal. 746, 171 P. 950, the petitioner was prosecuted for a violation of the real estate brokers’ license law as it then existed. That act required real estate brokers to furnish, to a commissioner’s department created by the act, evidence of good character, the filing of a bond, and prescribed other steps to be taken as a prerequisite to obtaining a license, authorizing him to engage in business as a broker, but exempted from its operation, corporations, associations, copartnerships, companies, firms, and individuals who had secured from the insurance commissioner, or the bureau of building and loan supervision, a certificate of authority or license to engage in business within this state. The requirements exacted by the insurance commissioner and the bureau of building and loan supervision were less onerous than those imposed by the real estate brokers’ license law. The language used by the court in holding the law unconstitutional is in part as follows, at page 751 of 177 Cal., 171 P. 950, 952:
"The law is well settled that a statute which contains exemptions amounting to substantial discriminations between those attempted to be classified, where no reasonable basis for the classification exists, is violative of the provisions of the Constitution requiring the passage of general laws and forbidding special legislation in all cases where general laws can be made applicable."
The citation of authorities in which statutes or ordinances have been held unconstitutional as class legislation might be indefinitely continued, but we will content ourselves with references to but few more cases, Ex parte Bohen, 115 Cal. 372, 47 P. 55, 36 L.R.A. 618; Rauer v. Williams, 118 Cal. 401, 50 P. 691; Ex parte Sohncke, 148 Cal. 262, 82 P. 956, 2 L.R.A. (N.S.) 813, 113 Am.St.Rep. 236, 7 Ann.Cas. 475; Vail v. San Diego County, 126 Cal. 35, 58 P. 392.
The cases cited by appellant, on the question at issue, are not persuasive. The case of People v. Eiseman, 78 Cal.App. 223, 248 P. 716, involved the constitutionality of the Corporate Securities Act, but in that case the law operated alike upon all securities of the same general class; there being no segregation of securities of the same general character.
In Ex parte King, 157 Cal. 161, 106 P. 578, 579, the court upheld the validity of an act prohibiting the sale of intoxicating liquors within a certain distance of a camp or body of men engaged in the construction of any public work, improvement, or utility, but excepted from its operation sales of liquor made by licensed saloons established more than six months, or any winery, licensed brewery, or distillery where liquor was manufactured. The act was designed to prevent irresponsible and itinerant saloon keepers from maintaining temporary establishments in localities where large groups of laboring men were employed. And the court properly upheld that this class of liquor dealers could be readily segregated from other dealers operating permanently in the locality under licenses issued by constituted authorities and amenable to the courts for any violation of laws or ordinances. It said further:
"While arbitrary discriminations by the Legislature between persons standing in the same relation to the subject of legislation will not be sustained by the courts, it is firmly settled that ‘a law is general and constitutional when it applies equally to all persons embraced in a class founded upon some natural or intrinsic or constitutional distinction.’ City of Pasadena v. Stimson, 91 Cal. 251, 27 P. 604, 607. ‘If the individuals to whom the legislation is applicable constitute a class characterized by some substantial qualities or attributes of such a character as to indicate the necessity or propriety of certain legislation restricted to that class, such legislation, if applicable to all members of that class, is not violative of our constitutional provisions against special legislation’ (Deyoe v. Superior Court, 140 Cal. 476, 481, 98 Am.St.Rep. 73, 74 P. 28, 29), and cases there cited."
In Heron v. Riley (Cal.Sup.) 284 P. 209, 211, cited by appellant in its brief, the court said:
"Consequently, a law, to be general in its scope, need not include all classes of individuals in the state. It answers the constitutional requirements if it relates to and acts uniformly upon the whole of any single class of individuals or objects, and the classification is founded upon some natural, intrinsic, or constitutional distinction. Abeel v. Clark, 84 Cal. 226, 230, 24 P. 383; People v. Jordan, 172 Cal. 391, 397, 156 P. 451. If good ground for the classification exists, such classification is not void because it does not embrace within it every other class which might be included."
But we do not believe that the Dealers’ Act conforms to these requirements. It does not act "uniformly upon the whole of any single class of individuals or objects," and we are unable to distinguish any natural, intrinsic, or constitutional distinction between a purchase of deciduous fruits to be consumed fresh, or processed or concentrated in this state, and a purchase of such fruit to be disposed of by sale or transportation outside the state. No valid reason for such classification is apparent upon the face of the statute and none is pointed out in appellant’s brief. We think that this classification is artificial and capricious, and, tested by the principle announced in the decisions above cited, it is a direct violation of section 1 of article 1 of the Constitution of California, and of the Fourteenth Amendment of the Constitution of the United States.
Respondent’s next attack upon the constitutionality of the Dealers’ Act is based upon its purported violation of section 15 of article 1 of the Constitution of California, which is as follows:
"No person shall be imprisoned for debt in any civil action, on mesne or final process, unless in cases of fraud, nor in civil actions for torts, except in cases of wilful injury to person or property; and no person shall be imprisoned for a militia fine in time of peace."
It is apparent from an examination of the foregoing section that the existence of fraud is a prerequisite to a successful prosecution for failure to pay a debt for which a debtor would be liable in a civil action. In defining the offense with which the respondent is charged, the words "fraud" or "fraudulent" do not appear in the statute. While it is true that, in the statutory definition of a cash buyer appearing in section 1 of the Dealers’ Act is included, together with six other and different qualifications, the requirement that a cash buyer is a person "who agrees by his contract of purchase to pay the purchase price upon demand following delivery"; each one of the requirements contained in said definition is separated by the conjunctive "and" from the other elements contained in the definition and each one of these elements must be considered as an essential part of the definition. In the amended information it is alleged that the defendant was a cash buyer as defined by the statute, and did willfully, unlawfully, and feloniously refuse to make payment for certain deciduous fruit. Reading this allegation in the light of the definition above quoted, it means that the defendant agreed, by his contract of purchase, to pay the purchase price upon demand following delivery. Defendant is charged with a violation of a portion of section 16 of the Dealers’ Act in that he, as a cash buyer, willfully refused to make payment for deciduous fruits as and when required by the statute. The time required by the statute when or within which such payment must be made is forty-eight hours after demand had been made by the grower. Obviously, whatever intent may have actuated the cash buyer in agreeing, by his contract of purchase, to pay the purchase price upon demand following delivery, no violation of the statute in the particular involved in this case has been committed until his willful refusal to make such payment within forty-eight hours following demand. By the express terms of section 16, the crime (if a crime) is committed "as and when" a willful refusal to pay occurs. We do not believe that the willful refusal to make such payment under the conditions required by the act is of itself a fraud. Appellant contends that the offense with which the respondent is charged is equivalent to a charge of obtaining property under false pretenses. In order to so construe the statute, it would be necessary, not only to read clause 6 of subdivision (c) of section 1 in conjunction with section 16, but also to read into the statute a fraudulent intent, an element of the offense which was not incorporated in its definition by the Legislature. By the terms of the statute we are not permitted to construe the two portions above referred to together because the phrase "as and when" limits the offense to the time of the willful refusal to make payment, and such refusal constitutes the offense. The obligation of the cash buyer to pay for the fruit purchased by him is a civil obligation for which his property would be subject to levy and seizure upon an execution issued on a judgment rendered against him in favor of the grower in a civil action. The obligation is primarily one arising out of contract. Can the Legislature define as a felony a willful refusal to pay a civil obligation and in the absence of fraud provide for imprisonment for the commission thereof in a criminal action prosecuted by the people?
In People v. Holder, 53 Cal.App. 45, 199 P. 832, 834, the defendant was prosecuted under section 506 of the Penal Code for embezzlement. This section provides, among other things, "that any contractor who appropriates money paid to him for any use or purpose, other than for that which he received it, is guilty of embezzlement, and the payment of laborers and material-men for work performed or material furnished in the performance of any contract," was by the terms of that section "declared to be the use and purpose to which the contract price *** received by the contractor shall be applied." In construing this statute the court pointed out that to hold the defendant guilty of embezzlement it must be held, either that by reason of the statute under consideration, a contractor who breaches his agreement to pay certain of his debts with the moneys paid him under his contract, is guilty of embezzlement, notwithstanding the title to the moneys is vested in him; or that the statute is constitutional, and that its provisions so enter into, and become a part of, every building contract. And in holding the statute unconstitutional, the court said:
"In our opinion the Legislature is without the power to do either of these things. That is, the Legislature has not the power to provide that a contractor who breaches his agreement to pay a certain class of debts with money that is his own shall, for that reason alone, be deemed guilty of a crime punishable with imprisonment. Nor has it the power to so interfere with the right of contract as to provide, in effect, that money paid to a contractor under his contract shall not be absolutely his own property to do with as he pleases, but shall be received by him in trust to pay a certain favored class of creditors. Any legislation that makes it a crime for one to use his own money for any purpose other than the payment of his debts is violative of section 15 of article 1 of the Constitution of this state, which expressly inhibits imprisonment for debt except in cases of fraud (citing cases). The provision in the California Constitution inhibiting imprisonment for debt ‘in civil actions’ cannot be evaded by making the nonpayment of a debt a crime."
A petition to have this case heard by the Supreme Court was denied. Cited with approval in this case is the case of State v. Paint Rock Coal & Coke Co., 92 Tenn. 81, 20 S.W. 499, 500, 36 Am.St.Rep. 68, in which the court said:
"Section 18 of article 1 of the Constitution of this state provides: ‘The legislature shall pass no law authorizing imprisonment for debt in civil cases.’ The act of the legislature in question, while not directly authorizing imprisonment for debt, does attempt to create a crime for the nonpayment of debts evidenced by check, scrip, or order, and for such crime provides a penalty, which may or may not be followed by imprisonment. In that way and for that reason the act is violative of the spirit, if not the letter, of the constitutional provision above cited. It is an indirect imposition of imprisonment for the nonpayment of debt, and is therefore clearly within the constitutional inhibition."
In Re Crane, 26 Cal.App. 22, 145 P. 733, the petitioner was prosecuted for the violation of an act of the Legislature containing, among other things, a provision that, whenever an employer discharges an employee, the wages earned and unpaid at the time of such discharge shall become due and payable immediately; that when any such employee, having a contract for a definite period, quits or resigns his employment, the wages earned and unpaid at the time of such quitting or resignation shall become due and payable five days thereafter; that all wages, with the exceptions provided in the statute, earned by any person during any one month shall become due and payable at least once in each month. Conviction for violation of the statute was punishable by a fine. Petitioner contended that the act was unconstitutional in that it permitted an imprisonment on mesne process for debt. In holding this statute unconstitutional the court said, at page 25 of 26 Cal.App., 145 P. 733:
"In our opinion, this contention is sound, and must be sustained. Section 15 of article 1 of our state Constitution provides in part that: ‘No person shall be imprisoned for debt in any civil action, on mesne or final process, unless in cases of fraud. ***’ By this constitutional provision the right of a creditor to control and confine the person of his debtor by the process of arrest, which the law at one time gave the creditor for the enforcement of his debt, has been abolished, and, happily, is prohibited in this state, save and except that the body of a debtor may be seized and confined in cases where it is made to appear that the indebtedness was fraudulently contracted, or that there has been an attempted fraudulent disposition of the property of the debtor with the intent to delay or defeat the payment of the debt."
In Ex parte Hollman, 79 S.C. 9, 60 S.E. 19, 22, 21 L.R.A.(N.S.) 242, 14 Ann.Cas. 1105, cited with approval in People v. Holder, supra, the defendant was prosecuted for the violation of a statute of South Carolina providing that any laborer working on shares of crop, or for wages in money, or other valuable consideration under a contract to labor on farm lands, who shall receive advances, either in money or supplies, and thereafter willfully and without just cause fail to perform the reasonable labor required of him by the terms of his contract, shall be liable to prosecution for a misdemeanor and upon conviction shall be punished by imprisonment. The Constitution of South Carolina, like that of California, prohibits imprisonment for debt, except in cases of fraud. In holding the act unconstitutional, the court said:
"Willful and unjust failure to perform a contract does not necessarily connote fraud. Bad faith is the test. One may willfully or intentionally abandon a contract under a bona fide claim of right without being subject to the charge of fraud, though in fact the other party had not impaired his right to require performance. In addition to the abandonment being willful, it may also be unjust without being fraudulent. Justice is rendering to every man his due. An act may be willful and unjust, ethically and legally, and yet not fraudulent, because it may be done with such right intention as to completely negative the suggestion of actual fraud, and the grounds upon which the doer thought it to be right may be too rational for the law to impute fraud."
Appellant cites and relies upon the case In re Nowak, 184 Cal. 701, 195 P. 402, in which the petitioner was imprisoned for failure to pay a municipal occupational license tax. The ordinance imposing such tax provided, in addition to punishment for its violation by imprisonment, that such tax could be recovered in a civil action as a debt. It is true that the Supreme Court held that an imprisonment for the violation of this ordinance did not violate his constitutional right not to be imprisoned for debt, and further that such imprisonment is necessarily imprisonment in a civil action for debt. But it will be noted that the offense with which the petitioner had been charged was, not his refusal to pay a debt, but for the act of doing business without the payment of the tax. We think for that reason that case is readily distinguishable from the one at bar.
Appellant also relies on In re Oswald, 76 Cal.App. 347, 244 P. 940. The petitioner in that case had been convicted of a violation of the provisions of section 6 of an act to regulate the payment of wages, approved May 6, 1919 (St.1919, p. 294), which penalizes the willful refusal of an employer to pay the wages earned by an employee, having the ability to do so. Following the decision of In re Crane, supra, the Legislature passed the act of 1919 in which it attempted to, and apparently did, restrict its provisions to the constitutional limitation contained in section 15 of article 1 of the Constitution by adding the following provision to the definition of the crime with which defendant was charged:
"With intent to secure for himself, his employer or other person, any discount upon such indebtedness, or with intent to annoy, harass, or oppress, or hinder, or delay, or defraud, the person to whom such indebtedness is due."
The validity of the statute of 1919 was upheld in that case upon the ground that section 15 of article 1 of the Constitution does not in terms apply to criminal actions, but only provides against imprisonment for debt in civil actions. But in view of the above-quoted provision of the act of 1919 which added to the crime defined therein an element of fraud and of oppression which would be tantamount to fraud, we think the distinction drawn by the court between civil and criminal actions was unnecessary to the decision in that case and is contrary to the rule announced in the case of In re Crane, supra, which was approved by the Supreme Court in denying a petition for a hearing there.
If a defendant, prosecuted under the Dealers’ Act, can be lawfully imprisoned for the willful (that is to say intentional) failure to meet his obligations as and when they are due, then there is no constitutional power to restrain the legislature from penalizing the failure of any person to pay a debt when the same falls due.
We think it was such legislation that the Constitution was designed to prohibit and for that reason the Dealers’ Act is unconstitutional.
Order and judgment affirmed.
We concur: CARY, P.J.; BARNARD, J.