
    The People of the State of New York ex rel. Louis Phillips, Respondent, v. Edward Raynes, a Peace Officer of the County of New York, Defendant. The People of the State of New York, Appellant.
    First Department,
    January 21, 1910.
    Constitutional law—statute requiring vendors of goods produced by convict labor to pay license — unreasonable classification of property— interstate commerce.
    Section 190 of the Labor Law (Consol. Laws, chap. 31) forbidding the sale of convict-made goods without a license, to be issued only'on tiie filing of a bond and an annual payment of $500 to the State, is void as a revenue or tax law, being contrary to the 14th amendment of the Federal Constitution, forbidding a State to deny to any person within its jurisdiction the equal protection of the laws.
    While persons and property may be classified for taxation, the classification may not be arbitrary, unreasonable or capricious. The statute aforesaid is unconstitutional in that a classification of the goods by reason of their origin through convict labor is unreasonable.
    
      
      It seems, tljat said statute is not' an unconstitutional interference with interstate ■ commerce when applied to the retail sale of goods originally produced by convict labor in other States, for when goods brought.into this State have entered into the body of merchandise here situate, they lose their character as articles of interstate commerce and become subject to local taxation.
    Appeal by-The People of the State of Hew York from an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 5tli day of Hovember, 1909, discharging the relator from custody upon a writ of habeas corpus.'
    
      Edward H. Letehworth, Deputy Attorney-General, of counsel \Ed%oard B. O'Malley, Attorney-General],, for the appellant.
    
      Mortimer Eishel, for the respondent.
   Clarke, J.:

The relator, a resident of. the State, who owned and conducted a store in the city of Hew York, was arrested upon a warrant issued by a city magistrate for an alleged violation, of the .provisions of section 190 of the Labor Law, being chapter 31 of thei Consolidated Laws, chapter 36 of the Laws of 1909, the charge being, that not having a license to sell convict-made goods, wares and merchandise, he had sold in the store eleven boys’ shirts for two dollars and fifty cents, which said shirts were convict-made in the Illinois penitentiary, Joliet, 111.

The said section'is as follow's: “Ho person or corporation shall, sell or expose for sale any convict-made goods, wares of merchandise, either by', sample or otherwise, .without a license therefor. Such license may be obtained upon application in writing to the Comp-' troller. ■ * * * Such application shall be accompanied with a bond, executed by two or more responsible citizens, or some legally incorporated surety company authorized to do business in this State, to be approved by the Comptroller., in the sum of five thousand dollars, and conditioned that such applicant will comply with all « the provisions of law relative to the sale of convict-máde goods, wares and merchandise. Such license shall be for a term of one year unless sooner revoked. Such person or corporation shall pay annually, on or before the fifteenth day of January, the sum of five hundred dollars as a license fee into the treasury of the State, which amount shall be credited to the maintenance account of the State prisons. Such license shall be kept conspicuously posted in the place of business of such licensee.”

Section 192 ¡provides for a verified statement by the licensee to the Secretary of State each year setting forth the names of the persons, agents, wardens or keepers of the prisons using convict labor with whom he has done business, and the name and address of the person or corporation to whom he has sold goods, wares and merchandise, and in general terms the amount paid to each of such agents, wardens or keepers for goods, wares or merchandise, and the character thereof.

Section 193 provides for branding or labeling convict-made goods, and that no convict-made goods, wares or merchandise shall be sold without such brand or label. Section 194 makes it the duty of the Commissioner of Labor to enforce the provisions of article 13 of the statute, in which these sections are contained, to advise the distinct attorney of violations, who shall at once institute proper proceedings to compel compliance with this article and secure convictions for violations. Upon the conviction of a person or corporation for a violation of this article, one-half of the fine recovered shall be paid and certified by the district attorney to the Commissioner of Labor, who shall use such money in investigating and securing information in regard to violations of this chapter and in paying the expenses of such convictions..

. Section 620 of the Penal Law providés that “ A person who: 1. Sells or exposes for sale convict-made goods, wares or merchandise, without a license therefor, or having such license does not transmit to the Secretary of State the statement required by article thirteen of the Labor Law; or, 2. Sells, offers for sale, or has in his possession for sale any such convict-made goods, wares or merchandise without the brand, mark or label required by article thirteen of the Labor Law; or, 3. Bemoves or defaces or in any way alters such brand, mark or label, is guilty of a misdemeanor, and upon conviction therefor shall be punished, by a fine of not more than one thousand nor less than one hundred dollars, or by imprisonment for not less than ten days or by both such fine and imprisonment.”

Chapter 698 of the Laws of 1894 provided that any person having in his possession, for the purpose of sale or offering for sale, any convict-made, goods manufactured in any State other than the State of New York, without being branded or labelled as specified in the act, should be guilty of a misdemeanor. This act was declared to be unconstitutional in People v. Hawkins (85 Hun, 43) because it discriminated between convict-made goods of other States and those made in the State of New York, the court saying: Commerce among the States cannot be said to be free when a commodity is, by reason of its foreign manufacture, subjected by a State Legislature to discriminating regulations or burdens.”

The said statute was repealed by chapter 931 of the Laws of 1896, which provided that all goods made by convict labor (which included those made in the State of New York), before being exposed for sale or sold, shall be labeled, marked or branded as in the act mentioned. This act was declared to be unconstitutional. (People v. Hawkins, 20 App. Div. 494; affd., 157 N. Y. 1.) In .the Court of Appeals, Judge O’Bbiee condemned the law Upon the ground that it was in conflict with the Constitution of this State, since it interfered with the right to acquire, possess and dispose ,of property, and with the liberty of the individual to earn a living by dealing in the articles embraced within, the scope of the law; that it was-an unauthorized limitation upon the freedom of the individual to buy and sell all such articles, subject only to the law of; supply and demand,' and the legislation was not within the scope of the police power; and also upon the. ground that it was in violation of the commerce clause of the Federal Constitution: “ A State law which interferes with the freedom of commerce is not saved by the fact that it applies to all States alike, including the State enacting it. Interstate commerce cannot be taxed, burdened' or restricted at all by State laws, even though operating wholly within its own jurisdiction. If it is a regulation of commerce, the law relates to a subject within the exclusive jurisdiction ■ of .Congress, upon which the State has no power to legislate. It matters not whether the regulation be under the guisé of a law requiring a municipal license to sell certain goods, or a health law requiring inspection of the article, or a label law, as in this case, requiring the article to be branded or labeled. When they operate as burdens or restrictions upon the freedom of tradé or commercial intercourse they are invalid; * * * This statute manifestly discriminates against the sale of goods made in a prison in the State of Ohio' by a certain class. of workmen, and in favor of the same articles when made outside a penal institution and by ¡free labor. * * * Trade and commerce between the States must be left free. The Constitution intended that it should be affected only by natural laws and the ordinary burdens of government imposed through the exercise of the taxing power equally on all property. The police power of a State cannot be used to depress the price or restrict the sale of articles of commerce merely because they happen to be made in a prison or by a certain class of workmen while the same articles made in some other place and by free labor are left untouched by the regulation. A citizen of this State who happens to buy goods made in a prison in Ohio has the right to put them upon the market here on their own merits, and if this right is restricted by a penal law, while the same goods made in factories are untouched, such a law is a restriction upon the freedom of commerce, and the objection to it is not removed by the fact that it may have been enacted in the guise of a police regulation. The validity of such a law is to be tested by its purpose and practical operation without regard to the name or classification that may have been given to it.” It was upon the latter ground that the three other judges of the court who made up the majority concurred.

In 1897 the Labor Law (Chap. 415) was passed, and section 50 thereof provided for the licensing of dealers in convict-made goods and is the source of the statute now under consideration. The two former acts, which had been declared to be unconstitutional, provided for the branding of the goods. The obvious purpose was.to prevent the buying and selling of such goods. The act now under consideration for the same purpose brands the dealer. It requires him to take out a license which he must display conspicuously in his place of business, give a bond in the sum of $5,000, pay an annual license fee of $500, and make a verified annual statement to the Secretary of State, which shall disclose his every transaction in such goods.

It is clear that absolute prohibition alone could be more efficacious in preventing dealing in such articles. It is claimed that these provisions are not repugnant to the commerce clause of the Federal Constitution, and if so, that that point cannot be raised in this case because the relator is a resident of the State of Few-York, and the goods winch it is alleged he sold were part of the general merchandise of the State, and, therefore, do not constitute interstate commerce. He was, not a drummer or an agent from another State undertaking to buy or sell within this State; the sale wa;s not of goods located in another State, to arrive and be delivered-in this State; nor were.-they in the' original package'. It is the laiw that a tax upon a business or occupation of a resident of á State conducted within that State is valid, and that when goods have been, brought within the State and have entered into the body of the merchandise therein situate they lose their character as articles of interstate commerce and become subject to. taxation witllin the State. And it is further true that the Supreme Court of the United States has held that a law. taxing' drummers and commercial travelers, so far as it affects only the residents of a State, cannot be questioned by such resident. Unless the party setting up the unconstitutionality of the State law belongs to the class for whose sake the constitutional protection is given, or the class, primarily protected, this coiirt does' not listen to his objections and will not go into imaginary cases, notwithstanding the seeming logic of the position that it must do so, because if for any reason, or as. against any class embraced, the law is unconstitutional it is void as to all.” (New York ex rel. Hatch v. Reardon, 204 U. S. 152, and cases there collated.)

So that, looking at this statute as a licensing act upon an' occupation under the taxing power of the State,.it would be. difficult--to maintain that it violated, the commerce clause of the¡ Federal Constitution.

The appellant claims that it is valid as a .tax law; that its purpose is to raise'revenue, and that the revenué'so raised is by- the statute to be applied to the maintenance of 'the State prisons, and that as the taxing power of the State is not restricted by the Constitution the Legislature is to determine the objects of taxation, the remedy for unwise- tax laws being lodged in the People at the polls and not in the' courts.

It is not now true that the power of taxation is Without constitu- ' tional restraint for section 1 of the Í4th amendment of the Constitution of the United.States provides “ nor shall any State deprive any person of life,-liberty or property, without, due process of law ; nor deny to any person within its jurisdiction the equal protection of the laws,” . .;

While the taxing power may be extended to all kinds of persons and property within the State or may be restricted to certain kinds or limited area (People ex rel. Griffin v. Mayor, etc., of Brooklyn, 4 N. Y. 419 ; People ex rel. Crowell v. Lawrence, 41 id. 137; Gordon v. Cornes, 47 id. 608 ; Genet v. City of Brooklyn, 99 id. 296 ; Cayuga County v. State, 153 id. 279 ; Gubner v. McClellan, 130 App. Div. 716), it is subject to the one great rule that all persons, under like circumstances, shall be treated in the same way. Persons and property may be classified for taxation, but such classification may not be arbitrary, unreasonable or capricious. (Matter of Pell, 171 N. Y. 48.) So that if we ignore in this statute its obvious purpose, writ so plain that all may read, namely, to prohibit by onerous and exasperating restrictions, under the guise of regulation, the buying and selling within this State of convict-made goods, and treat it purely as a revenue or tax law, the inquiry is, is its classification unreasonable and capricious?

The appellants say that it does not conflict with the rule of eqiiality; that it puts into one class all who deal in convict-made goods, and treats them all alike, and. that is a reasonable classification. Let us see. That classification is based upon the origin of the goods dealt in, without regard to the quality or character or nature of the goods themselves. Clothing, household furniture, shoes, scrubbing brushes,, brooms, harness, anything that can be made by hand or machinery, falls within one classification, provided the origin is the same.

Substitute a State for a prison, and no one would be willing to say that a law which required all persons who might deal in goods, wares and merchandise made in Pew Jersey to take out a license would be valid; or, if it be objected that that would be a direct violation of the Federal Constitution, made in Troy, or in Schenectady, or in Buffalo. Take another classification; that a license fee should be required for dealers in all goods made by machinery, or all goods made by hand. If such classification be valid, and if the purpose of the act, as is claimed, is to protect free labor from prison labor, why, in these days of contest between organized and unorganized labor, should not an act be passed which provided for such a license for selling all goods made in a shop which did not employ union labor, and then, if the advocates of a free shop were in power, repeal it, and provide for such license for all goods made in shops which employed union labor, or single out for license dealers in goods made in shops employing members of certain races, religions or political parties ? All these classifications would be based on - origin, as is that under consideration. -

In People ex rel. Hatch v. Reardon (184 N. Y. 431; affd., sub nom. New York ex rel. Hatch v. Reardon, 204 U. S. 152) the Court of Appeals had under consideration the Stock Transfer Tax Act, chapter 241 of the. Laws of 1905, and held -that-a tax of two cents on each $100 of face value or fraction thereof of stock certificates wes valid. Many cases in the courts of this State and of the Supreme Court of the United States were there considered.

. In People ex rel. Farrington v. Mensching (187 N. Y. 8) the court held chapter 414 .of the Laws of 1906, amending the Stock Transfer Tax Act so as to make the.two-cent tax applicable to each share no matter what its face value might be; unconstitutional. The court said : “ We. adhere without qualification to the decision made when the act of 1905 was before us, and broadly indorse the reasons given to support the judgment then .'rendered. (People ex rel. Hatch v. Reardon, 184 N. Y. 431.) We held that ‘ The Legislature has power to classify as it sees fit by imposing a heavy burden on one class of property and no burden at all upon others,’ provided ‘ all persons and property in the same class are treated alike,’ and ‘the tax is imposed equally upon all property of the class to which it belongs.’ In discussing the subject we' said that: ‘While a tax upon a particular house or horse, or the houses or horses- of a particular man, or on the sale thereof, would obviously invade a constitutional right, still a tax upon, all houses, leaving barns and business buildings untaxed, or upon all horses or the sale thereof, leaving sheep and cows untaxed, however unwise, would be within the power of the Legislature. * * * The equal protection of.the laws ‘only requires the same means and methods to be applied impartially to all the constituents of each- class so that the laws shall operate equally and uniformly upon all persons in similar circumstances.’ (Kentucky Railroad Tax Cases, 115 U. S. 321, 337.) Or, in other words, all persons must ‘ be treated alike under like circumstances and conditions, both in the privilege conferred' and the liabilities imposed.’. (Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283, 293; Hayes v. Missouri, 120 U. S. 68; Barbier v. Connolly, 113 U. S. 27, 32.) ’ * * * The act now before us does not classify by arranging according to quality, but by arranging according to accident. While it places all corporate shares in a class, still it does not treat all members of the class alike, but without method or order bears heavily upon some and lightly upon others, which, in effect, is a further classification. * * * While the Legislature has wide latitude in classification, its power in that regard is not without limitation, for the classification must have some basis, reasonable or unreasonable, other than mere accident, whim or caprice. There must be some support of taste, policy, difference of situation or the like, some reason for it even if it is a poor one. While the State can tax some occupations and omit others, can it tax only such members of a calling as have blue eyes or black hair? We have said that it could tax horses and leave sheep untaxed, but it does not follow that it could tax white horses and omit all others, or tax the sale of certificates printed on white paper-and not those on yellow or brown. While one class may be made of horses and another of sheep, or even a class made of race-horses, owing to the use made of them, without a shock to common sense, a classification limited to white horses would -be so arbitrary as to amount to tyranny, because there would be no semblance of reason for it.”

It does not seem necessary to add anything to these felicitous illustrations of improper classification. A classification by origin, applied'to a-vast variety of goods, seems to be more unreasonable than any enumerated by the Court of Appeals. So that, if we should hold that this statute does not violate the interstate commerce clause of the Federal Constitution, and does not, under the guise of a licensing act, practically prohibit the buying and selling within this State' of goods, wares and merchandise-produced in another State and look at it solely as a revenue-act, we are forced to the conclusion that it is an unconstitutional exercise of legislative power and hence invalid.

It follows that the order appealed from should be affirmed.

.Ingraham, P. J., Laughlin, Scott and Miller, JJ., concurred.

Order affirmed.  