An act of the Legislature of Mississippi, approved March 28, 1914 (designated in the record the 'Anti-Gin Act'), prohibits corporations, whether organized under the laws of that state or authorized under the laws thereof to do any local business therein, among other things, from owning or operating any cotton gin, when such corporation is interested in the manufacture of cotton seed oil or cotton seed meal. A penalty is provided for violation of the act, but corporations are permitted to operate their gins for a reasonable time until they may be sold. A proviso permits cotton seed oil companies to operate gins of a prescribed capacity, but only in the city or town where their oil plants are located. Laws Miss. 1914, c. 162, section 4752 et seq., Hemingway's Code 1917.
The plaintiff in error, a corporation organized under Tennessee laws, prior to 1914 owned and operated a cotton seed oil mill at Memphis in that state, and two cotton gins in Mississippi. Disregarding the Anti-Gin Act, it continued to operate its two gins in Mississippi until October, 1915, when, for the purpose of enforcing the law, the state, on the relation of its Attorney General, instituted a suit in equity against the company in a county court of chancery, which, after various vicissitudes, resulted in a decree that the act was constitutional, and that the plaintiff in error was guilty of violating it. A penalty was imposed upon the company, its right to do intrastate or local business in Mississippi was declared forfeited, it was perpetually enjoined from operating cotton gins in the state, and it was ordered that, within 90 days, the company should dispose of the two cotton gins which it owned and operated in Mississippi. The company was also found guilty of violating the anti-trust law of the state and a penalty therefor was imposed.
This is a proceeding in error to review the decree of the Supreme Court of Mississippi affirming that decree of the county court as to the Anti-Gin Act. The holding that the anti-trust laws were violated was reversed by the Supreme Court.
Without proof of it in the record, the case is argued upon the assumption that the statute assailed was enacted in aid of the antitrust laws of the state, under the conviction on the part of the Legislature that it was the practice of corporations operating oil mills and cotton gins to depress the price of ginning, regardless of cost, until local competition was suppressed, or brought to terms, and then to charge excessive prices for ginning and to pay unfairly low prices for seed. There is evidence in the record tending to show resort to such methods by the plaintiff in error.
It clearly appears that in practice it is an advantage to the purchaser of cotton seed to operate gins, not only for the profit that may be made from them directly, but because the grower of cotton often prefers to sell his seed to the company ginning it rather than carry it to another purchaser. It is also in evidence that individuals, as well as corporations owned and operated gins and that other oil companies than the plaintiff in error obtained their supplies of seed from growers, from gin owners, and from brokers.
The plaintiff in error has heretofore relied, and here relies, for its defense, upon the unconstitutionality of the Anti-Gin Act, which it asserts upon two grounds, viz. first, that, as applied to the plaintiff in error, it imposes a direct and substantial, and therefore an unconstitutional, burden upon an instrumentality of interstate commerce; and, second, mildly, that, the act being applicable to corporations, and not to individuals, owning and operating cotton gins, it denies to the plaintiff in error the equal protection of the laws, and therefore offends against the Constitution of the United States.
The basis of the first contention is the claim that it had become impracticable for the oil company to carry on its oil manufacturing business successfully when purchasing its cotton seed supply from other ginners or from brokers, that for this reason the company acquired its two cotton gins in Mississippi, and nine in other states, to obtain the advantage of purchasing seed direct from the growers of cotton, and that all of the cotton seed which it had purchased in connection with its gins was shipped in interstate commerce to its oil mill at Memphis, the gins being, in effect, 'feeders' to its oil mill.
These facts, not disputed in the record, it is argued, constitute the gins an essential means and instrumentality of interstate commerce and that therefore the act imposes a direct and unconstitutional burden on commerce between the states, in violation of section 8 of article 1, of the Constitution of the United States.