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MCFARLAND v. AMERICAN SUGAR REFINING COMPANY

April 24, 1916

MCFARLAND, SUPERVISOR OF PUBLIC ACCOUNTS OF LOUISIANA
v.
AMERICAN SUGAR REFINING COMPANY



APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF LOUISIANA

White, McKenna, Holmes, Hughes, Van Devanter, Pitney, McReynolds

Author: Holmes

[ 241 U.S. Page 80]

 MR. JUSTICE HOLMES delivered the opinion of the court.

This is a bill in equity brought by a New Jersey corporation, the appellee, against the Inspector of Sugar Refining, the Governor and the Attorney General of Louisiana, to prevent the enforcement of Act No. 10 of the Extra Session of the General Assembly of that State for 1915. The grounds of relief are the commerce clause and the Fourteenth Amendment of the Constitution of the United States.

The plaintiff was granted a preliminary injunction by three judges in the District Court and the defendants appealed. 229 Fed. Rep. 284.

A summary of the statute is as follows: The business of refining sugar is declared to be impressed with a public interest 'by reason of the nature and by reason of the monopolization thereof,' and on that footing the regulations are made. After providing for elaborate reports and inspection of books by the Inspector the act imposes for the benefit of the Inspection Fund a tax of one-half cent for every three hundred and fifty pounds of granulated

[ 241 U.S. Page 81]

     sugar made. It then makes it unlawful to buy sugar on an ex parte test of quality, &c., and proceeds to authorize the Inspector to make such reasonable regulations not only concerning that, but affecting any branch of the business of sugar refining, as he may deem proper and as may be conducive to the public interest, and to the prevention of monopoly in the business or to the protection of the public from its consequences. Then come the provisions chiefly in issue here. By § 7 "any person engaged in the business of refining sugar within this State who shall systematically pay in Louisiana a less price for sugar than he pays in any other State shall be prima facie presumed to be a party to a monopoly or combination or conspiracy in restraint of trade and commerce, and upon conviction thereof shall be subject to a fine of five hundred dollars a day for the period during which he is adjudged to have done so"; his license to do business in the State is to be revoked, and any foreign corporation (such as the plaintiff is) is to be ousted from the State and its property sold. If irreparable injury to the public interest is shown in such a case the court may appoint a receiver at any stage of the proceedings, &c. By § 8 if shown by affidavit or otherwise either in limine or after trial that any refinery has been closed or kept idle for more than one year it shall be presumed to have been done for the purpose of violating this act or the laws against monopoly, &c., and if the counter evidence does not rebut the presumption the court shall order the owner to sell the refinery within six months and if that is not done shall appoint a receiver to do it within twelve months. In computing the year of idleness any plant shall be treated as idle that has not been operating bona fide. By § 9 in suits for ouster, &c., upon showing by the State that the monopoly, &c. are detrimental to the public welfare, an injunction may be issued or a receiver appointed, after a hearing, subject to an appeal returnable

[ 241 U.S. Page 82]

     within five days to be determined within forty days, &c. By § 10 a fine of from fifty to twenty-five hundred dollars a day is imposed for violations of the act not otherwise provided for or of any of the regulations promulgated by the Inspector. By § 11, in suits under the act, books, letters and other documents, 'or apparent copies thereof,' of the defendant shall be given effect as being what they purport to be and 'as establishing the facts carried on their face' unless sufficiently rebutted, upon proof of their having been in the possession or control of the defendant; and any report of any legislative committee of the State, or of the Senate or House of Representatives of the United States, or of any bureau, department, or commission acting under the authority either of the State or of the Senate or the House of Representatives of the United States, and the records of any court of any State, or of the United States are made prima facie evidence of the facts set forth therein, subject to rebuttal. In conclusion, by § 15 the business of refining sugar is defined to be "that of any concern that buys and refines raw or other sugar exclusively, or that refines raw or other sugar from sugar taken on toll, or that buys or refines more raw or other sugar than the aggregate of the sugar produced by it from cane grown and purchased by it."

Besides the allegations that bring the plaintiff within the purview of the act, the claims of the protection of the Constitution, and the invocation of the principle of Ex parte Young, 209 U.S. 123, for equitable relief, the bill sets forth some facts that throw special light upon the case. First for the bearing of § 8, it shows that formerly the plaintiff purchased a consolidated refinery called the Louisiana Refinery, increased its capacity to 2,500,000 pounds daily and worked it until 1909. It then built at a cost of about six million dollars a new refinery at Chalmette with a daily melting capacity of 3,000,000 pounds since increased to 3,500,000. It then closed the Louisiana

[ 241 U.S. Page 83]

     Refinery as it could not distribute from New Orleans more refined sugar than could be made at Chalmette. The machinery of the Louisiana Refinery is comparatively antiquated and could not be operated economically, although in case of the destruction of the Chalmette plant it ...


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