Hartford Accident & Indemnity Co. v. Illinois Ex Rel. McLaughlin, 298 U.S. 155 (1936)

298 U.S.
155
56 S.Ct. 685
80 L.Ed. 1099
HARTFORD ACCIDENT & INDEMNITY CO.

v.
PEOPLE of STATE of ILLINOIS ex rel. McLAUGHLIN,
Director of Agriculture.
No. 692.
Argued March 31, 1936.
Decided April 27, 1936.
mS.CT685mMr. J. F. Dammann, of Chicago, Ill., for appellant.

Mr. Justice ROBERTS delivered the opinion of the Court.
An Illinois statute 1 forbids persons, associations, and corporations to receive,

sell, offer, or solicit consignments of farm produce for sale, on commission,
within Illinois, unless licensed; requires an applicant for a license to make a
showing as to character, responsibility, and good faith in the conduct of the
proposed business; and directs that a license must be procured for each location
where the business is to be transacted, a fee paid therefor, and a bond, in the
sum of $5,000, with satisfactory surety, executed, conditioned on honest
accounting and handling of produce received and against fraudulent conduct.
Provision is made for the granting and revocation of licenses by the Director of
Agriculture. A licensee is required to follow certain business methods, to keep
records, which are to be subject to inspection, to account and to pay for produce
received for sale. The Director is empowered to bring action upon the licensee's
bond for the recovery of sums due consignors for goods sold, if payment is not
made by the licensee, or for the recovery of damages suffered by consignors as
a result of fraudulent acts or wrongful handling on the part of the licensee.
Should the penalty of the bond prove insufficient to pay all such liabilities, the
consignors are to receive payment of any amount recovered in proportion to
their serveral claims.
The Cross Company took licenses, and the appellant became surety on its
bonds, for the years ending July 1, 1932, and July 1, 1933. In October, 1932,
the Cross Company became bankrupt and failed to account for numerous
consignments of fresh fruits and vegetables. Some were shipped from Illinois,
but most were from other states. The Director of Agriculture brought actions in
a state court on both bonds. The court consolidated the cases and they were
tried together on stipulated facts.
3
The appellant, in addition to defenses raising no federal question, pleaded that

the statute was beyond the state's power because a restriction upon, and a
regulation of, interstate commerce. Judgment was entered against the Cross
Company and the appellant. Both appealed to the Supreme Court of the State,
which affirmed the judgment.2 The appellant summoned and severed the Cross
Company and prosecuted an appeal to this court.
The sole question presented is the constitutional validity of the act as it affects
the appellant's liability under its bonds. The statute is a police regulation. The
business regulated is local, having its situs within the state and being conducted
therein. The fact that the commission merchant contracts to sell, and sells, farm
produce forwarded to him from points without, as well as points within, the
state is not enough to condemn the regulation of a business carried on within
her borders.3 Such effect as the regulation has upon interstate commerce is
indirect and incidental and does not trespass upon the power conferred on
Congress by article 1, 8, of the Federal Constitution. In these circumstances,
until Congress, under the commerce power, adopts inconsistent legislation, that
of the state remains effective.4
The appellant urges, however, that Congress has adopted an act 5 regulating the
same business and the Cross Company was required to take a license under that
act. This alone is not sufficient to nullify the state law, if the federal act does
not cover the same field, or is consistent with it.6 But it is said the state and
federal laws are similar in their provisions and, therefore, the exercise by
Congress of its paramount power nullifies the state statute. The federal act
requires every person, partnership, association, or corporation, who is engaged
in the business of receiving in interstate or foreign commerce perishable
agricultural commodities, defined as 'fresh fruits and vegetables of every kind
and character,' for sale on commission, to procure a license from the Secretary
of Agriculture. The act parallels the state statute in respect of the requirements
of proper accounting, honest dealing, and prompt remittance. While it provides
for awards of reparation by the Secretary of Agriculture for noncompliance
with its prescriptions, gives a right of action to consignors and shippers for
violation of its provisions, authorizes the revocation of licenses and imposes
penalties, thus covering to some extent the same ground as the state law, it does
not call for the giving of any bond by a licensee. Moreover, section 15(7
U.S.C.A. 499o) r1936123248;;;ST;15(7USCAS499o;;r provides: 'This Act

(chapter) shall not abrogate nor nullify any other statute, whether State of
Federal, dealing with the same subjects as this act (chapter); 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.'
6
Thus the act of Congress not only omits the requirement of a bond, but
affirmatively saves the provision of the Illinois act as to that form of security.
As respects the bond and the protection thereby afforded to consignors, there is
no inconsistency between the two acts, and both may be given effect.
The judgment is affirmed.
Smith-Hurd Ann.St.Ill. c. 5, 1724, Cahill's Ill.Rev.Stat. c. 5, 2432.
People v. G. H. Cross Co., 361 Ill. 405, 198 N.E. 356.
W. W. Cargill Co. v. Minnesota, 180 U.S. 452, 470, 21 S.Ct. 423, 45 L.Ed.
619; Ware & Leland v. Mobile County, 209 U.S. 405, 28 S.Ct. 526, 52 L.Ed.
855, 14 Ann.Cas. 1031; Minnesota Rate Cases, 230 U.S. 352, 410, 33 S.Ct.
729, 57 L.Ed. 1511, 48 L.R.A.(N.S.) 1151, Ann.Cas.1916A, 18; South
Covington & C. St. Ry. Co. v. Covington, 235 U.S. 537, 35 S.Ct. 158, 59 L.Ed.
350, L.R.A.1915F, 792; Hall v. Geiger-Jones Co., 242 U.S. 539, 557, 37 S.Ct.
217, 61 L.Ed. 480, L.R.A.1917F 514, Ann.Cas.1917C, 643; Federal Compress
& Warehouse Co. v. McLean, 291 U.S. 17, 54 S.Ct. 267, 78 L.Ed. 622;
Chassaniol v. Greenwood, 291 U.S. 584, 54 S.Ct. 541, 78 L.Ed. 1004.
Sherlock v. Alling, 93 U.S. 99, 23 L.Ed. 819; Pennsylvania R. Co. v. Hughes,

191 U.S. 477, 24 S.Ct. 132, 48 L.Ed. 268.
Act of June 10, 1930, c. 436, 46 Stat. 531, see U.S.C. tit. 7, 499a-499r (see 7
U.S.C.A. 499a499r).
Sligh v. Kirkwood, 237 U.S. 52, 35 S.Ct. 501, 59 L.Ed. 835; Mintz v. Baldwin,
289 U.S. 346, 53 S.Ct. 611, 77 L.Ed. 1245.

Hartford Accident & Indemnity Co. v. Illinois Ex Rel. McLaughlin, 298 U.S. 155 (1936)

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298 U.S.

HARTFORD ACCIDENT & INDEMNITY CO.

mS.CT685mMr. J. F. Dammann, of Chicago, Ill., for appellant.

An Illinois statute 1 forbids persons, associations, and corporations to receive,

The appellant, in addition to defenses raising no federal question, pleaded that

U.S.C.A. 499o) r1936123248;;;ST;15(7USCAS499o;;r provides: 'This Act

The judgment is affirmed.

Smith-Hurd Ann.St.Ill. c. 5, 1724, Cahill's Ill.Rev.Stat. c. 5, 2432.

People v. G. H. Cross Co., 361 Ill. 405, 198 N.E. 356.

Sherlock v. Alling, 93 U.S. 99, 23 L.Ed. 819; Pennsylvania R. Co. v. Hughes,

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