Macfarlane & Co. v. Wright

Tbis is an application for an injunction prayed for by the plaintiffs against William H. Wright, Treasurer of the Territory of Hawaii, to restrain 'him from the further issuance of certain beer licenses, so called which it is claimed were, issued under the provisions of Chapter 46 of thei Session Laws of 1888, said Chapter 46 being part Y. of Chapter 41 of the “Penal Laws of tbie Hawaiian Islands 1897” entitled “Stile of Malt Liquors”, also, that this Court declare said Statute unconstitutional amid void. Tho facts appear1 to. be these: — 208 — The plaintiffs, Macfaxlane & Go., Limited, Peacock & Go., Limited, Ed. Hoffschlaeger & 0:o., Limited, and St. 0. Sayers, are all engaged in tire sale of liquors under what are known as “Dealers’ Licenses”. These licenses are issued under the provisions of Sections 11, 12, 13 of Chapter 44 of the Session Laws of 1882, now known as Sections 431, 432 and'433 of the “Penal Laws of the Hawaiian Islands, 1897.” Ear the issuance to them of said1 “Dealers’ Licenses”, each of the plaintiffs last named pays a yearly tax or1 fee of $500, and under said license each of them is entitled to sell “ardent spirits in quantities not less than one gallon, wines, alee and other1 liquors containing alcohol in bottles and in quantities of mot lesa than one dozen bottles; provided that the same and no part thereof shall be drank or used on thei premises where they are sold or in any other house or premises contiguous thereto procured or rented for that purpose by the party holding such license..........under the penalty of forfeiting his license and incurring the penalty of the law prescribed on his bond.” The plaintiff, II. Hackfeld & Co., Limited, is a corporation doing business under what is known as a “Wholesalers Licensed, which license was issued under the provisions of Sections 8, 9 and 10 of Chapter 44 of the Session Laws of 1882, mow known as Sections 428, 429 and 430 of the aforesaid Penal Laws, and for which said license said plaintiff pays $500 annually for the privilege of the “wholesale vending of spirituous liquors in quantities mot less tiran the packages imported and in no other manner; provided that no part thereof shall be drank on the premises where they are sold.” While the remaining plaintiff, Lawrence H. Dee, is doing a retail liquor business under a so-called “Retailers’ License” issued under the provisions of Sections 14, 15 and 16 of Chapter 44 of tire said Session Laws of 1882, mow known as Sections 434, 435 and 436 of the aforesaid Penal Laws, and for which license the said Dee pays a tax of one thousand dollars pier* annum; thereby securing the privilege of “selling and disposing of any spirituous liquors by the glass or bottle on tire premises therein specified between tire hours of half past five O’’clock in — 209 — the morning and half past eleven o’clock at night except Sunday.” Under! the license aforesaid, each of the plaintiffs have “been and are now importing and selling, in addition to other spirituous liquors, certain beer and malt liquors which ar'e nrnnfaetured in various states of the Union; that said plaintiffs are and each of them, is an agent in this territory for certain persons and corporations engaged in the manufacture and brewing of said beier and other malt liquors outside of the Territory of Hawaii, and in various states of the United State® to wit: The plaintiff, Macfarlame & Oo., Limited, is the agent for the Val Blatz Brewing Oo. of Milwaukee in the state of Wisconsin and the John Wieland Brewing Oo. of San Francisco in the state of California; the plaintiff, H. Ilackfeld & Co., Limited, is the agent, for the Anhenser Buseli Brewing- Oo. of St.. Louis in tliei state of Missouri; the plaintiff, W. O. Peacock & Co., Limited, is tire agent for the Pabst Brewing Co,. of Milwaukee in the state of Wisconsin, American Brewing Oo. in the city of St. Louis, state of Missouri and Buffalo Brewing Co’. of Sacramento in- tire state of California; the plaintiff, Ed. Hoffschlaeger & Oo-., Limited, is tire agent for the Fred. Mill-ear Brewing Co. of Milwaukee in tire state of Wisconsin; tire plaintiff, St. 0. Sayers, is the agent for the Seattle- Brewing & Malt Co. of tire city of Seattle in the State of Washington, while the plaintiff, Lawrence II. Dee;- is -the agent for the Capital Brewing Co. of Olympia, in the state of Washington. It further appears, that long after the passage of these Sections of Chapter 44 o-f the Session Laws of 1882, (now embodied in Sections 428-9, 430, 431, 432, 433, 434, 435 and 436 of the Penal Laws of the; Hawaiian Islands, 1897) and under which Sections the licenses were issued to complainants as aforesaid, an. Act was passed by the Legislature of the kingdom of Hawaii (Session Laws' of 1886) mow known as Part IV.. of the aforesaid Penal Laws, wherein it is provided by Section 472 thereof, that— “The Minister of thei Interior (n.ow the Treasurer) is hereby — 210 — authorized to- issue a license for the brewing of malt liquors in the District of Honolulu on the Island of Oahu, for a term of fifteen years..........” . That thereafter am; Act was passed by the Legislature of the Kingdom of Hawaii (Session Laws of 1888) now embodied -in .Pant Y. (Sections 4-79 to 483 inclusive of Chapter 41 of -the Penal Laws), entitled “An Act to specially license the retailing •of malt liquors manufactured under the Act entitled an ‘Act to license the brewing of malt liquors iu the District of Honolulu.’ ” And Section 479 of said Part Y. provided as fallows: '“The Minister of the Interior (now the Treasurer) is ¡hereby authorized to grant licenses for one year in this Republic to any person or persons making written application for the same, to sell by the glass or in any other quantity less than five gallons, malt liquors manufactured in Honolulu under Section 472 to 483 inclusive, upon receiving for e-ach license, the sum of two hundred and fifty dollars.” While Section 481 prescribes that— “Before receiving any license to sell malt liquors as above, the applicant shall file an approved bond with the Minister of the Interior (now the Treasurer) iu the penalty of one thousand •dollars conditioned: “..........Second: That he will not sell or otherwise dispose of on the premises for which he is licensed any wines, malt liquors, or spirits of any description whatever; and «also that he will not store or allow to be stored on the premises for which lie is licensed, any wines, malt liquors or any spirits of any 'description whatsoever, except such beer mamifactnred in Honolulu and under the said above mentioned Sections.” (Sections 472 to 478 inclusive), which latter Sections all provide íegulations for the person who is to be given a license to' brew the malted liquor in Honolulu. While Section 482 gives to the Minister of the Interior (now the Treasurer) discretionary power to place such provisions in the license or the bond referred to in Section 481 as shall be necessary to the correct regulation of the business and premises licensed. — 211 — It was shown upon the hearing that no license, was issued to any person to brew malted liquor in Honolulu, in accordance ■with the provisions of Section 412 hereinbefore referred to, until the 4th day of May, 1899, when such a license was issued to one A. Hocking “-bo brew malted liquors at Queen street in the District of Honolulu, Island of Oahu, Hawaiian Islands” for the term of two years and nine months from that data That the Honolulu Brewery and Malting'1 Company, Limited, organized pursuant to said license, began brewing some time in February or March, 1901, and the first output of its beer- was on July 1, 1901. Simultaneously with the output of the brewery, to-wit, on said July 1, 1901 the: defendant herein began the issuing of licenses under the Act referred to, to various parties, who upon paying the license fee of two hundred and fifty dollars for one year were given the privilege to “sell by the glass or in any other quantity less tiran five gallons, malt liquors manufactured in Honolulu.” Said licenses containing a proviso that said malt liquor should be disposed of only “beitween -the hour's of six o’clock in the morning and eleven o’clock at night on every day except Sunday............(plaintiffs’ Exhibit 1). But as a condition precedent to the issuance of said license, each applicant was required to execute a bond in the penal sum of one thousand dollars conditioned among other things as follows: “......Second: That he will not sell or otherwise dispose of on the premises for which he is licensed, any wines, malt liquors or spirits of any description whatever, and also that he will not store: or allowed to be stored on the premises for which hie is license!, any wines, malt liquors or spirits of any description whatsoever except such beer manufactured in Honolulu and under said above mentioned Act (the Act to license the brewing of malt liquors in Honolulu) Plaintiff’s Exhibit 2. In other words, said licensees are given the privilege of selling at retail, Honolulu manufactured beer under licenses, which are to be paid for at tire rate of two hundred 'and fifty dollars per annum, upon condition that they do not either store or sell — 212 — upon the premises:, any foreign manufactured beier or other spirits. From the testimony of the defendant, W. H. Wright, it appears that twenty-five of these licenses were issued between July 1, 1901, and November 25th, 1901, and the testimony further shows that certain of the licensees are now doing business thereunder. It further appears from the testimony of Mr. Wright, that before the commencement of these proceedings, the plaintiffs through Mr. Robertson, one of their attorneys, made a demand upon him for a license to: sell foreign brewed beers for the same fee required under the law for a license to sell Honolulu brewed beer, tic-wit: .$250 per annum, and the said defendant testified tbat he refused to. issue said license. Thereafter, on November 19, 1901, application was made in writing' by the complainants, through their attorneys, upon, the said defendant, requesting thei issuance to them of licenses to “sell beier by the glass and in any other quantity less tiran five gallons, under the provisions of Chapter 46 of the Session1 Laws of 1888 (Sections 479-483, Penal Laws), excepting therefrom that provision which prevents the sale and storing' on the premises of malt liquors other than heer manufactured in Honolulu.” Thereafter, on the 21st day of November, 1901, the- said plaintiffs, through their attorneys1, addressed another communication tc the defendant, in which they complained of the fact that Chapter 46 of tine Session Laws of 1888, was in conflict with the Constitution of the United States and void as discriminating in favor* of local beer and against beer made on tlia mainland in regard to the amount of tine license fee, and requested tbat he cease to issue any further licenses under the conditions imposed by said statute;, to-wit: those; conditions which prohibit the licensees from selling oilier beer than Honolulu beer; which said communication was1 acknowledged by the defendant in a letter dated November 26th, 1901, in which lie states that “mo; more licenses will he issued for the time being.” No' licenses, as demanded, were ever issued to; the complainants or any onei of them, as in the language of the defendant — 213 — in his answer on file herein, “in the exercise of the discretion vested in him, he refused to issue the licenses hereinabove requested and still refuses to issue the same.” While the real issue in this ease is whether Chapter 46 of the Session Laws of 1888 (now part Y., Chapter 41 of “The Penal Laws of the Hawaiian. Islands, 1897”), is unconstitutional and void by reason of its discrimination against the beer products’ of the other states and territories of the United States, yet the jurisdiction of tire Court on 'Other grounds has been assailed upon the hearing, although no plea thereto Avas raised by defendant’s answer. In the matter of jurisdiction two questions are toi be considered by the Court: First: Is there a constitutional question involved in the case? and Second: Do 'the facts in the case show an amount of injury sufficient to enable the Court to assume and retain jurisdiction in accordance with the provisions' of the Irav giving jurisdicition to Circuit Courts in certain cases? Section 1 of the Act of 1888 (Yol. 25, Statutes of U. S., P. 434), ‘amendatory of thei Act of 1875, provides as follows: “The Circuit Courts of the United States shall have original cognizance. . . .of all suits of a civil nature at common law;or in equity where the matter in dispute exceeds, exclusive 'of interest and costs, the sum or value 'of $2000, and arising under the Constitution or laws of the United States.” There is no doubt as to the bill of complainants showing upon its face a sufficient case for the Court to take jimsdiction originally, alleging as it does both the statutory amount of injury and the fact that the territorial statute complained of is in violation of the Constitution of the United States; and no plea having heeni filed on the- part of the defendant to the jurisdiction. As Avas said by the Supreme Court of the United Statesm the case of Hartog v. Memory, 116 U. S. 588, parties cannot call upon the Court to go behind the record “except by a plea to the jurisdiction or some other appropriate form of proceeding:. The case is not to he tried by the parties as if there Avas a plea to the jurisdiction when no such plea has been filed.” — 214 — Tihlip is not an action at law. It is an application for an injunction and therefore within the 'equity jurisdiction of the 'Court. The injury complained of, if any be shown, is a continuing one, and it has been frequently held that in a suit in equity, where an injunction is asked for, the amount in dispute is not the amount in controversy, but rather the value of the object to be gained by the bill. In tire case of Humes v. City of Ft. Smith, 93 Fed. 857, 862, where an objection was made to the jurisdiction of the Court because the amount did not exceed the sum of two thousand dollars, the Court held that: “Tire jurisdiction is not determined in that way. Jurisdiction is determined by the value of the right to be protected or the extent of the injury to be prevented by the injunction.” Delaware L. & W. R. Co. v. Frank et al., 110 Fed. 689; Interstate Bldg. & Loan Assn. v. Edgefield Hotel Co., 109 Fed. 692; Nashville St. L. Ry. Co. v. McConnell, 82 Fed. 65. See also the case of Haverhill Gaslight Co. v. Barker et al., 109 Fed. 694, where it Avas held that a Federal Court of equity lias jurisdiction of a suit by a gas company against officers of a state to enjoin fbe threatened enforcement of an order made by defendants, under a statute requiring complainants to supply gas to customers at a rate which is alleged to he so unreasonably Ioav that the enforcement of the order will result in depriving complainant of its rights under the Fourteenth Amendment, both on the ground of a preVenltion of a multiplicity of suits between complainant and its customers and because such suit is tlia most approved method of determining the constitutional questions involved. “The dignity and value of the right, assailed, and the power and authority of the source from which the assault proceeds ara elements to be considered in the 'Computation of damages if they ara to bia not only compensation for the direct loss inflicted, but a remedy and prevention for tbe greater Awong and injury involved in the apprehension of its repetition.” Barry v. Edmunds, 116 U. S. 550. — 215 — And while it is true that the complainants did not all establish a clear pecuniary loss, yet it is apparent that each of them was injured in Ms individual right to free commerce in the infringement thereof, by this discriminating statute, and in addition to- this common injury -sustained by all, there was in the estimation of the Court, sufficient specific pecuniary loss shown, by at least two- of the complainants, tor-wit: Peacock & On. and L. II. Dee, in damage to each of them by reason of the falling-off of sale® since the issuance, of the licenses to- sell Honolulu brewed beier to-, meet the reqidreane-nts of the statute in relation to tihei -amount of damage involved in a suit to- give- this Court jurisdiction, -and especially as it appears that this injury will be a continuing one, the amount of which cannot no.w be clearly estimated in dollars' and cents. It would steem apparent, therefore, that the jurisdiction is shown by at least two of the complainants. “Th© general principle * * is that if several persons be joined in -a suit in equity or admiralty, and have a, common and individual interest, though separable a® between themslelves, the amount of their joint claims or liability will be the test of jurisdiction, bu-t where their interests are distinct and they are joined for the sake of convenience only and because they form a class of parties whose rights or liabilities arose out of the same transactions or have relation to. a common fund or mass of property sought to. be administered, such distinct demands: or liabilities canno-t be aggregated together for the purpose of giving-this Court jurisdiction by appeal, but each must stand or fall by itself alone.” Clay v. Field, 138 U. S. 464; the same Court saying in .the ease of Schwed v. Smith, 106 U. S., P. 188: “The theory is that, although the- proceeding is in form but one suit, its legal effect is 'tire same as though separate suits had. been begun, on each of the separate causes of action.” Holt et al. v. Bergevin et al., 60 Fed. 1; Putney v. Whitmire et al., 66 Fed. 385; Nashville C. and St. L. Ry. Co. v. McConnell 82 Fed. 65, 72-5. To this question of jurisdiction there is another aspect besides that of thei pecuniary nature already discussed, and that — 216 — is in relation to the infringement of the constitutional right of the plaintiffs “to all privilegies and immunities” enjoyed by citizens of the territory, tin the sale of foreign products within the territory, and their right to be free from all discriminating legislation. Subdivision 1 of Section 8 of Article One of the Constitution of the United States prescribes that: “All duties, imposts and excises shall be uniform throughout the United States;” Subdivision 3 of said Section 8 also providing, that Congress shall have power “to regulate commerce with foreign nations, and among the Several states and with the Indian tribes.” While the so-called “Equal Rights Clause,” Subdivision 1 of Section 2 of Article IV., of the Constitution provides that: “The citizens of each state shall be entitled to all the privileges and immunities of tire citizens in the several states.” Under the state of facts disclosed in this case, are the complainants, while selling the beers of the different persons and corporations, citizens of other states, for whom they respectively act as agents in Honolulu, on an equal footing in a free market with the manufacturers of home brewed beer? Sections 479 to 483 of Part V., Chapter 41 of the Penal laws, and under which lav's sonreí twenty-five licenses were issued by the Treasurer of the Territory, as appears in evidence, together authorize the Treasurer to issue licenses for one year for a fee •or tax of two hundred and fifty dollars to any person who desires to sell “malt liquors manufactured in Honolulu,” by the glass or in any other quantity less than five gallons, upon the •execution of a bond that ha will not “sell or otherwise dispose of on the premises for which he is licensed any wines, malt liquors or spirits of any description whatever; and also that he will not store or 'allow to be: stoned on the premises for Which he is licensed, any wines, malt liquors or any spirits of any description whatsoever except such beer manufactured in Honolulu.......” The “wholesale vending of spirituous liquors,” under Section 429 of the Penal Laws, in which one of the plaintiffs is en — 217 — gaged, and for which an annual license fee of $500 is required, simply entitles tire licensee to sell liquors in the -original packages imported, .-and in no -other manner. Four of the plaintiffs, who have been licensed under Section 432 of the Penal Laws, having what are known as “Dealers’ Licenses,” -and for which they pay five hundred' dollars a yiear, are privileged to sell “ardent spirits In quantities not less than one gallon, wines, ales and other liquors containing alcohol, in quantities not less than one dozen bottles.” But with the proviso that such liquors shall not be drunk or used on the premises where they are sold. While Lawrence H. Dee, the remaining plaintiff, has What is known as a “Retailer’s License” under Sections 434, 435 and 436 of the Penial Laws, for which he pays an annual fee of o-ne thousand dollars, and which entitles him to sell and dispose of any spirituous liquors “by the glass or bottle on the premises therein specified between the hours of half past five o’clock in the. morning and 'half past eleven o-’clock at -night, except Sundays.” It seems to- be clear, that upon the face of Sections 479 to 481 inclusive, they are grossly discriminating against a foreign, manufactured commodity, in this instance foreign manufactnred beer. And this is made absolutely plain from the testimony of Mr. Wright, the defendant herein, who, referring to a conversation with Mr. Robertson, onie of the attorneys for the complainants an relation to the issuance of a license to- them, said: “Yo-u informed me what you wanted and I told you that I would not issue a license under that lawT (Act of 1888) to- sell foreign beer, and you then told me that perhaps there- would be u suit brought against me. . . .1 refused to issue- a license under that law for the sale of beer manufactured -outside of II oniolulu.” “The; Court: Lelt us get at it. For a manufacturer of the mainland beer to sell beier in this territory, he must pay to the territory a thousand dollars a year; is that so? A. They must obtain a retail liquor license. Q. For a thousand dollars a year? Yes, sir; Which peannits them to- sell also, permits them to sell everything. — 218 — Q. But they cannot sell that imported beer unless they have one of these thousand dollar licenses? A. That is correct. Q. And they can Sell home-made beer for $250 a license, is that correct? A. Yes, sir.” In other words, any man to whom a license is issued to sell and who will give bond to sell none but Honolulu brewed beer, can do so for a license fee of $250 a year; but any man who desires tó sell imported beers ait retail, must -take out a retailer's license and pay $1000 a year, or exactly four times the amount he would have to pay to sell home-brewed beer alone, and while paying this $1000 a year, he is not even then permitted to sell tbe Honolulu commodity thereunder. Olear discrimina,'tion is shown as against the manufacturers of the foreign commodity, for which, they have a right, thro,ugh their agents, to complain, and tire fact that the $1000 license also covers the sale of spirituous liquors other than beer, is a, mere incident; the fact remains that the imported beers cannot be sold except upon a license costing four times the amount of tiie license to, sell tbe home-brewed beer. Such a discrimination is repugnant to. the Constitution -of the United States and clearly in violation, of its provisions hereinbefore set forth. It is true that, under the police powers of a state or territory, it can regulate tlhei sale of all intoxicating liquors within its' bounds, or prohibit such sale entirely, but in doing so, it cannot discriminate against the stranger Avitbin its gates. The local laws of this territory, far from prohibiting the sale of spirituous liquors herein, directly contemplate the continuance of the liquor traffic, and derive a revenue theriefrom by licensing it. Nothing is better settled, however, tiran that a state or a territory cannot constitutionally enact laws discriminating in favor of its own citizens and against the citizens of any other state or territory of tire United States. On this rests one of the most sacred rights of citizenship-. If the laws of one state or territory can discriminate against the property rights of the citizens of another state — 219 — or territory in one. tiling, they can do. so in all tilings. It would hardly seean necessary to. refer to -autliorities sustaining tikis proposition. But it was held by the Supreme. Oou-rt of the United States in' the caste of Walling v. Michigan, 116 U. S. 446, which ■is a case in relation to the constitutionality of a statute imposing a tax on persons engaged ini the sale of liquors to be brought into and sold within the state: “A discriminating tax imposed by a. state operating to the disadvantage of the products of other states when, introduced into the first mentioned state is in effect, a. regulation in restraint of commerce among the- states and as such is a usurpation of the power conferred by the Constitution noon the- Congress of the United States.” So, too, in the case of Webber v. Virginia,, 103 U. S. 344, referring to the statute of the state of Virginia, which provided for the payment of a license fee for the. right to sell sewing machines in other states, the Court says (page 351): “Commerce among the states in any commodity can only he free when the commodity is exempted from all discriminating regulations and burdens imposed by local authority by reason of its foreign growth or manufacture.” Leloup v. Port of Mobile, 127 U. S. 640; Welton v. State of Missouri, 91 U. S. 275, and also, the very recent case of Lansing v. Davies & Co., 13 Haw. 286, which is to the same effect. I am, therefore., of opinion that Chapter 46 of the Session Laws of 1888, now known as Part Y. of Chapter 41 of the “Penal Laws of the Hawaiian-Islands of 1897,” entitled “Sale of Malt Liquors,” is unconstitutional and void. Let the injunction issue -as prayed for. Note: Appeal dismissed. See Wright, Treasurer, etc. v Macfarlane & Co., Limited, et al., 122 Fed. 770.