Darweger v. Staats , 267 N.Y. 290 ( 1935 )

It is common knowledge that in the summer of 1933 conditions had arisen which almost paralyzed many forms of industry and commerce. That constituted a threat to the economic stability of the Nation and of every State; it affected the welfare of the whole people. It is immaterial whether or not we call this condition an "emergency;" it was certainly a condition from which the country urgently needed relief. Congress and the Legislatures of the several States, each within its own field, were under the duty of enacting legislation reasonably calculated to provide a remedy, so far as possible, for these conditions.

The field within which the Congress of the United States was empowered to act was limited to interstate commerce. Exact definition of the limits of that field is difficult, perhaps impossible. The geographical boundaries of the separate States fix the limits of State sovereignty, they form no barriers, and are completely disregarded in the conduct of commerce and industry by business men. The production and sale of commodities conducted by the same men, in the same plant and at the same time may be a part both of interstate commerce and of intrastate commerce. A business localized within a State competes often with interstate commerce. Economic laws ignore State boundaries artificially created to mark the limits of local sovereignty. The steady increase in the proportion of business conducted on a national or at least interstate scale brings interstate business into constantly increasing competition with local business. The Congress of the United States has, in the National Recovery Act, attempted to provide a method for the formulation of rules and regulations intended to govern such commerce as comes within the field of its power. All Congress can do or has attempted to do is to act within the field of its powers. Only the Supreme Court of the United States can authoritatively define the limits of that field. Outside of that field the statute of Congress can have no effect. There regulation becomes only a matter of State concern and of State powers.

The Legislature of the State of New York, like the Congress of the United States, is impotent to enlarge or restrict the field of its own powers. It knows only that whatever the ultimate definition of the Supreme Court of the United States may be, some field of local intrastate commerce and industry will remain in which the State is the supreme sovereign. The Legislature cannot abdicate within that field, whether it be large or small, the sovereignty of the State. The State of New York, by its Constitution, has intrusted to its Legislature the law-making power. The Legislature cannot delegate to any other person or body the power intrusted to it. It is said that the Legislature has done so in the State Recovery Act. That is the primary question presented upon this appeal.

That question cannot be determined by the application of any set formula. We deal here with no express prohibition or limitation placed by the Constitution upon the powers of the Legislature. The action of the Legislature is challenged upon the ground that it has not exercised the responsibilities and functions intrusted to it, but that it has evaded its responsibilities and confided its own functions to others. That requires an analysis of the problem which confronted the Legislature, and a determination whether the Legislature has in fact devised a remedy reasonably calculated to meet the situation, or has left to others the solution of the problem.

No one can, I think, doubt that conditions existed which were undermining both interstate commerce and local business. Congress took action to remove these conditions in connection with interstate commerce. Within that field Congress is supreme, and a Federal statute becomes the supreme law of the land. That field is, as I have said, not authoritatively defined by the only tribunal that could give an authoritative definition. Assertion was made that Congress could regulate even intrastate, local business upon the theory that under modern conditions intrastate and interstate business are so closely intertwined that regulation of intrastate business is a necessary step in the regulation of commerce between the States. We may reject such assertion; nevertheless a large "twilight zone" must remain in which those who conduct a particular business cannot with certainty determine whether or not they are subject to the provisions of the National Recovery Act. Even if that were not so, it would still be the fact that localized business does come into competition with interstate commerce; that sickness in local business may cause the death of interstate commerce, and, more important, that sound rules regulating either local business or interstate commerce become more effective when applied simultaneously to both.

Thus after Congress had enacted the National Recovery Act, the Legislature was called upon to decide whether the remedy which Congress was seeking to apply to conditions existing in interstate commerce was in its opinion a sound remedy which could be applied also to the same conditions existing in interstate commerce or industry. Then the Legislature was called upon to determine whether it should adopt the same remedy, including the machinery for the formulation of specific rules and regulations in particular lines of business. It could, if it chose, write its own prescription; it could if it chose create its own administrative machinery, but if it chose such course it would introduce chaos into a situation which called for order. Businesses which enter into competition with each other would be subject to different rules, regulations and restrictions; indeed, departments of the same business might be subject to different forms of regulation, and a business man might be called upon to decide at his peril to which rules he was subject.

The Legislature chose instead to cooperate with the National Government effectively; to provide that the same regulations and the same machinery applicable in interstate commerce should be applied also in local business within the State. We are not concerned with the wisdom of the National Recovery Act. Upon that there is, undoubtedly, great difference of opinion. We are not even concerned with the wisdom of the Legislature in recognizing that the orderly application of one system of regulation to business, both interstate and intrastate, has advantages over the introduction of artificial differentiations which would weaken any effective regulations, though here there seems less ground for difference of opinion. We are concerned only with the power of the Legislature to make the choice it did.

If there has been any delegation of legislative authority to the President, to representatives of industry or to code authority, that delegation was made by Congress before the Legislature of this State enacted the statute which is now challenged. The Legislature dealt with a condition already existing. If the Federal statute was valid within the field of interstate commerce, then, so the Legislature decided, it should be applied in all business; and even if eventually the Supreme Court should declare the Federal statute unconstitutional, in the interval, and so long as the executive Federal authorities sought its enforcement, there could be no effective regulation by any other system.

What are the powers and the functions of the Legislature under such circumstances within the field where the State is supreme? Obviously, to appraise the conditions, whether created by economic laws, by action of the Federal authorities, or by greed or unsocial practices of individuals, and then itself to devise the remedy which it deems best calculated to remedy these conditions. That is what the Legislature has done. It has not supinely left to others the determination of such remedy. It has itself determined that the remedy to be tried is the application to business within the State of the same rules and regulations which the Federal authorities apply nationally. It has not delegated to the Federal authorities or to individuals the right to act in its place in the determination of the policy of the State or the remedy to be applied in matters of State concern. It has chosen the policy and formulated the rules by enacting a statute which provides for regulation of intrastate business in the same manner in which interstate business is regulated.

To hold that the Legislature has not the power to choose this course is equivalent to saying that the legislative power of the State is insufficient to make laws best calculated to remedy a particular situation. True, a statute may be subject to successful attack upon the ground that the Legislature violated an express prohibition or express limitation placed upon the exercise of legislative power of the Legislature. Here the attack is on other grounds. The court is holding that the statute is invalid because it is not a complete exercise of the legislative powers of the State, but is merely an authorization conferred upon others to exercise such powers. We are referred to numerous cases as authority for that assertion. They do not support it. They are all cases where the Legislature or Congress deliberately left incomplete even the framework of a regulatory system. Here not only the framework is complete but the system is complete in all its parts. We are told that the statute can be sustained only upon certain assumptions. With the exception, perhaps, of the assumption that price-fixing may, in proper case, be within the legislative power, none of them are, in my opinion, necessary or even relevant. The formulation of regulations in a particular business in accordance with the Federal statute creates the conditions which the Legislature of this State has determined require the application of the same regulations within this State, and thus automatically fixes the rule. The Legislature has not left to others the determination of the policy of the State, or what regulations are wise and are calculated to remedy conditions which might otherwise injuriously affect the public welfare. It has said that, under present conditions and regardless of the wisdom of a particular regulation, the public welfare requires that the same regulations should be applied to interstate and intrastate business.

The rule that the Legislature cannot delegate legislative power is merely an application of the basic rule that the legislative power of the State is vested solely and completely in the Legislature. It is no limitation upon the legislative power of the State. That is plenary in all matters of State concern, except where limited by the Constitution of the State or of the United States. It necessarily includes the power to determine the policy of the State and to make that policy effective. The policy of the State is embodied in the statute which is now attacked. It declares that certain causes affect both intrastate and interstate commerce. It declares that the standards of fair competition should be uniform in intrastate commerce and business and in interstate commerce. That declared policy can be made completely effective only if the State adopts and makes applicable to intrastate industry or commerce the same standards, rules and regulations as are applied in interstate commerce. That is what the Legislature has done. There is no analogy between a statute of that kind and a statute which would authorize the Legislature of a sister State or any other body or person to determine the policy or make the laws for this State. The test in each case must be whether or not the Legislature of this State has itself exercised its constitutional law-making power, or whether it has evaded its responsibility in that respect. Here the Legislature has completely exercised its powers and has adopted as a means of carrying out the policy of the State the method best calculated, in its opinion, to carry out that policy. The attack upon the method is merely an indirect attack upon the policy of uniform standards in intrastate business and in interstate commerce; though that policy is immune from attack otherwise.

The Legislature has said that "a national emergency productive of widespread unemployment and disorganization of industry, which likewise prevails in the state of New York, which burdens intrastate, interstate and foreign commerce, affects the public welfare, and undermines the standards of living of the American people and of the people of the state of New York, is hereby declared to exist." That finding justifies legislation which is calculated to remove these destructive conditions. The Congress of the United States had previously declared the existence of similar destructive conditions in the Nation The Legislature found that the declaration of Congress as to the causes and effect of existing destructive conditions "relate as well to commerce in this State wholly intrastate in character as to interstate and foreign commerce and transactions affecting interstate and foreign commerce carried on in this state." So far certainly there has been no delegation of legislative authority to the Congress of the United States, or to any other body, or person. The Legislature has used its own judgment in reaching its own conclusion.

That conclusion is that the State should make "uniform the standards of fair competition prevailing in intrastate commerce and industry with those of interstate commerce required by the provisions of the said National Industrial Recovery Act which are applicable in interstate commerce in the State of New York." For that purpose and to carry out that policy, the Legislature provides that any violation of any rule or regulation adopted pursuant to the National Recovery Act as a standard of fair competition shall be a misdemeanor in this State. The Legislature has not in that provision left to others the determination of the expediency of rules of conduct hereafter to be imposed in a particular trade or industry, or the determination of whether an emergency exists which requires any compulsory rule of conduct. It has determined for itself that industry in general is suffering from a condition which requires remedy; that a remedy applied to local industry alone is not the most expedient remedy, but that whenever a rule or regulation in regard to fair standards of competition is imposed by competent authority upon transactions affecting interstate and foreign commerce carried on within this State, a contingency arises which should be met by the imposition of the same rule or regulation upon business conducted wholly within the State.

We have sustained legislative action in providing that "foreign insurance companies, as the price of admission to our territory, should pay in taxes, license fees and the like precisely what the States which created them should impose upon our companies in excess of our usual rates as the price of admission to the foreign territory." (People v. Fire Association ofPhiladelphia, 92 N.Y. 311, 317.) The analogy between such a statute and the statute now under consideration is, of course, incomplete. Significant distinctions are obvious; but similar objections were raised to the validity of the statute and much that was said there applies here. "In the statute before us nothing is left to anybody's discretion. That is certain which can be rendered certain, and the act fixes the tax by reference to an extrinsic fact which determines its amount in excess of a fixed and established rate. Because that extrinsic fact is the legislation of another State, it does not follow that the legislative discretion of such other State is in any manner substituted for our own. * * * It seems to us that the whole difficulty arises from a failure to regard the foreign law, relatively to our own legislation, as simply and purely an extrinsic and contingent fact. Such fact, like any other, may justly influence and even occasion legislative action, without at all changing its nature, destroying its discretion or abridging its duties or its judgment. Most laws are made to meet future facts. They are complete when passed, but sleep until the contingency contemplated sets them in operation. * * * Such contingency may sometimes be, instead of a certain and definite fact, one which is variable and changeable. The legislation suited to such a fact and adapted to such a future emergency may properly recognize its movable character, and be itself made flexible to the changing emergency, and this very characteristic is the product of legislative will and discretion rather than a surrender of it" (p. 318, 319). Much more is said in the opinion in that case. It would be difficult to find a single proposition in this dissenting opinion which has not been approved by this court inPeople v. Fire Association of Philadelphia (supra), and there is hardly an argument which could be made to the contrary which was not rejected by this court in the earlier case.

Much of what I have heretofore said applies with at least equal force to the attack upon the statute on the ground that it violates the provision of the Constitution of the State prohibiting incorporation of any existing law or part thereof, by reference, into another act. (Art. III, § 17.) That section of the statute was not intended and cannot reasonably be construed as a limitation upon legislative power but only upon the manner of its exercise. It seems to me too clear to require argument that if the Legislature would otherwise have power to provide that a regulation or rule thereafter to be formulated should become the law of this State, that provision of the Constitution would create no obstacle. By its express terms it is confined to "any existing law" and its purpose as explained in People exrel. Commissioners v. Banks, (67 N.Y. 568), is similarly limited.

I have not overlooked the fact that there may be doubt whether under the Constitution of the United States, the price-fixing provisions in codes are valid and enforceable regulations in interstate commerce. If they are invalid in interstate commerce, then I concede that they are equally invalid in intrastate business. There should, however, be more than doubt as to their validity before this court would be justified in sustaining a suit in equity to set them aside in the absence of any expression of opinion on the question by the Supreme Court of the United States.

The orders should be reversed.

O'BRIEN, HUBBS and LOUGHRAN, JJ., concur with CRANE, Ch. J., for affirmance; LEHMAN, J., dissents in opinion, in which CROUCH and FINCH, JJ., concur.

Orders affirmed, etc.