3968. Contempt proceedings for violation of permanent injunction. U. S. v. Tom
G. Sanders.    Government's application for citation of defendant for
criminal contempt denied.  Decision reversed by United States Court of
Appeals.   Defendant's petition for certiorari denied by Supreme Court.
Plea of nolo contendere.  Fine, $500.   (Inj. No. 228.)
APPLICATION FILED :   On May 9, 1951, in the Western District of Oklahoma, the
United States attorney filed an application for an order to show cause why
the defendant should not be punished for criminal contempt.
?See also Nos. 3961-3963.
NATURE OF CHARGE : It was alleged in the application that, notwithstanding the
provisions of the decree of injunction previously entered against the defendant
(see the preceding notice of judgment, No. 3967), the defendant, on January 24
and February 2, 5, and 7,1951, delivered and caused to he delivered, for intro-
duction into interstate commerce, various quantities of the misbranded drug
which was involved in the previous injunction action in that the defendant
had sold and delivered, for introduction into interstate commerce, quantities
of the drug to various purchasers at Wanette, Okla., with the knowledge that
the purchasers intended to and would return to their homes at Garden City,
Kans., Denison, Tex., and Kansas City, Mo.
It was further alleged that, after the entry of the decree of permanent in-
junction, the defendant ostensibly discontinued the practice of using salesmen
or so-called "runners" to solicit and fill orders from customers outside the
State of Oklahoma, and had adopted the practice of gelling and delivering
the misbranded drug at Wanette, Okla., directly to out-of-State customers,
knowing that the misbranded drug would be transported in interstate com-
merce by such purchasers for use in other States; and that the defendant was
thereby disregarding and circumventing the decree of permanent injunction.
DISPOSITION : On July 27, 1951, the defendant having denied that the activities
in which he was then engaged constituted an introduction of the drug into
interstate commerce, or a delivery of the drug for introduction into interstate
commerce, and the court having considered the arguments and briefs of coun-
sel, the following opinion was handed down by the court:
WALLACE, District Judge: "This is a criminal contempt proceeding under
Section 302 (b) of the Federal Food, Drug, and Cosmetic Act of June 25,1938,
52 Stat. 1040, 21 U. S. C. A. 301 et seq. Judgment for defendant and contempt
order denied.
"Defendant, Tom G. Sanders, a resident of the State of Oklahoma, was
perpetually enjoined by this court under authority of Section 302 (a) of the
Act on October 17, 1950, from 'directly or indirectly introducing or causing to
be introduced, and delivering or causing to be delivered, for introduction into
interstate commerce, in violation of 21 U. S. C. A. 331 (a), a drug which is
misbranded within the meaning of 21 U. S. C. A. 352 [502] (b) (1), 352 (b)
(2), 352 (e) (2), or 352 (f) (1).' The injunction was not contested by de-
fendant, and no testimony was heard. This court determined that defendant
was engaged in interstate commerce, inasmuch as he had employed 'runners'
or 'drummers' who would go into other states and take orders for the drug
manufactured by defendant.
"Upon issuance of the injunction order, defendant returned to his home
at Wanette, Oklahoma, and continued to distribute and sell his 'home remedy'
in the same manner as before, with the exception that he no longer employed
?runners,' but merely sold the drug to such persons as personally came to his
home and purchased the product there. Many of these customers were from
out-of-state, and defendant was fully aware of this fact. The Government
thereupon requested this court to cite the defendant for criminal contempt
based upon an alleged violation of the injunction order. Defendant ac-
knowledges and stipulates that the drug is misbranded as provided in the
Act, and as alleged by the Government, but denies that the activities in which
he is presently engaged constitute an introduction of the drug into inter-
state commerce, or a delivery of the drug for introduction into interstate
commerce, as prohibited by this court's injunction order.
"It therefore appears that the determinative issue before this court is
whether or not defendant, by selling his product to persons whom he knew to
be residents of another state, but who personally came to defendant's home to
make their purchases, was engaged in interstate commerce. So far as this
court can determine, this is a matter of first impression, and one upon which
there are no cases directly in point.
"At the time of the adoption of the United States Constitution, the 'Com-
merce power' was relatively unimportant. However, it has so expanded in
significance and application that, today, it is certainly one of the most power-
ful means of Federal regulation. There exists considerable controversy as to
whether this expanded application is desirable for the protection of the
nation's welfare, or whether it is totally unwarranted and creates an invasion
of the regulatory powers of the sovereign states. This difference of opinion
is a political issue which is not before this court for determination. We have
only to determine whether, under this unique factual situation, the defendant
has engaged in interstate commerce.
"An accurate, all-inclusive definition of interstate commerce has never been
formulated by the courts. Nor do we attempt such a definition here, for its
facets are far too numerous and diverse. However, it is the opinion of this
court that certain essential elements must exist before the sales made by the
defendant can be classified as constituting interstate commerce. In the case
of Carter v. Carter Coal Co., 298 U. S. 238, 298, Mr. Justice Sutherland, in
delivering the opinion of the court, stated:
As used in the Constitution, the word "commerce" is the equivalent
of the phrase "intercourse for the purposes of trade," and includes
transportation, purchase, sale, and exchange of commodities between the
citizens of the different states.
Thus we see that three fundamental elements must exist before the transac-
tion becomes affixed with the character of 'interstate commerce.' First, there
must be the element of a sale or exchange. Second, the transaction must be
between citizens of different states, or one which creates commercial traffic
between different states. Third, there must be the element of transporta-
tion. In the case at bar we find that two of these elements have as-
suredly been satisfied; namely, there has been a sale between citizens of
different states. The existence of the element of transportation is not so
readily determined. To begin with, there is some question as to what is
the requisite transportation. It is almost axiomatic that the transporta-
tion intended must be that between states, and not merely that within a
single state. However, actual transportation need not have occurred before
the transaction becomes endowed with the attributes of interstate commerce.
It is enough that a party 'sells and ships, or contracts to sell and ship, the
commodity to customers in another state * * *.' (Carter v. Carter Coal
Co., supra, p. 303.) Defendant has not, since the rendition of the injunc-
tion order, personally shipped or contracted to ship any of his product to
persons in other states. The Government takes the position that the mere
culmination of a sale between citizens of different states constitutes inter-
state commerce, where the purchaser, to the knowledge of the vendor, may
return to his native state with the product. This court cannot believe that
such a broad application of the Commerce power was ever intended, nor that
it is justified under the Constitution. It has previously been determined by
the Supreme Court that a product merely in the stage of production is
not subject to the Commerce power even though it is fully intended that
it shall subsequently be transported to another state. (Carter v. Carter Coal
Co., supra.) Nor does this court believe that the mere sale of goods consti-
tutes interstate commerce, unless there is an actual movement out of the
state, or such is the purpose and intent of both parties in making the sale.
However, the Government cites a number of cases which it contends bear out
its assertion that defendant is engaged in interstate commerce. A few of
the most important of these cases will be considered.
"The Government cites the case of Dahnke-Walker Co. v. Bondurant, 257
U. S. 282. In that case sale was made in Kentucky, the state of the vendor,
to a citizen of the State of Tennessee, the product being delivered to the
purchaser in Kentucky. The Supreme Court ruled that the transaction was
in interstate commerce. From this, the Government has deduced a rule
whereby all such sales between citizens of different states will constitute
interstate commerce. However, counsel overlook the fact that the delivery
of the commodity in question was made on board the cars of a common car-
rier, in continuance of a long established practice whereby the commodity
was to be immediately forwarded to the purchaser's mill.   The contract
required delivery on board the ears of a public carrier for that very purpose.
The Supreme Court considered these facts to be of the utmost importance, for
Mr. Justice Van Devanter stated,in the opinion of the court:
The state court, stressing the fact that the contract was made in Kentucky
and was to be performed there, put aside the further facts that the
delivery was to be on board the cars and that the plaintiff, in continuance
of its prior practice, was purchasing the grain for shipment to its mill
in Tennessee. We think the facts so neglected had a material bearing
and- sTl6iil6riBave~l5eenT~co"nsideTect. ThWy~s1mwefr~ttat^lmt~TJtteriois~e
seemed an intrastate transaction was a part of interstate commerce.
[Emphasis added.]
The latter portion of Mr. Justice Van Devanter's statement leaves with this
court the understanding that had it not been for the established practice of the
purchaser and vendor, taken into consideration with the delivery of the
grain to a common carrier, the court would have determined this transac-
tion to be wholly intrastate. There is no such similarity of conditions under
the facts of the case now before this court. Mere knowledge that the pur-
chaser is a citizen of another state cannot possibly establish such a practice.
Delivery was made at the residence of the defendant, personally, to the
purchaser. For this court to determine that defendant must inquire into the
citizenship of every customer would be to place an intolerable burden upon
all persons who sell to the general public. Instead, this court must look
to the immediate end which the parties to the transaction have in view. Was
it the purpose of the parties to place the commodity within the stream of
commerce and transport it to another state? Here, the immediate end in
view is to sell the product; how the purchaser uses it or where he takes it
is of no concern to the defendant. The fact that defendant was aware that
some of his customers were residents of another state does not alter this
rule.
"Another case relied upon by the Government is United States v. Dr. Charles
Kaadt, 7 Circ, 171 F. 2d 600. In that case the defendant operated a clinie
in Indiana for the treatment of diabetics. When persons who had come to the
clinic for treatment, returned to their homes in other states, Dr. Kaadt shipped
them a special drug, which was misbranded under the provisions of the Fed-
eral Food, Drug, and Cosmetic Act. Dr. Kaadt was charged with such prac-
tices in five counts. There is some confusion as to the exact facts concerned in
the next two counts, but we shall adopt the most charitable interpretation
possible to the Government's case. In these two instances, Dr. Kaadt delivered
the drug to the patients before they left the clinic and they personally carried
it into their home state. All of these counts were upheld as being violative
of the Federal Food, Drug, and Cosmetic Act. However, that case is not
determinative of the issues before the court, for Dr. Kaadt had already placed
the sale within the category of interstate commerce, by reason of the fact that
he had earlier mailed letters to the purchasers in their home states, adver-
tising the drug and directing the manner in which it was to be used. The court
expressly found that these letters constituted part of the misbranding with
which the defendant was charged. In the case before this court, defendant
has not engaged in such a practice.
"The case of Currin v. Wallace is relied on by the Government to support
the rule that where goods are purchased in one state for the purpose of trans-
porting them to another, then the sale is as much a part of interstate com-
merce as is the transportation. This premise is undeniably sound and one
with which this court cannot take issue. However, the basic issue here, is
whether defendant did in fact sell his product for the purpose of transporting
it to another state.   The citation of this case assumes the very point at issue.
"Counsel for defendant refer the court to the case of Eastern Air Transport
v. Tax Commissioner, 285 U. S. 147, opinion by Mr. Chief Justice Hughes. In
that case the State of South Carolina imposed a tax on the sale of aircraft
fuel purchased by an air-transport company for use in its planes, which were
engaged in interstate commerce. The airline company contended that this
tax constituted a burden on interstate commerce. In upholding the tax, the
Supreme Court stated:
* * * The mere purchase of supplies or equipment for use in conducting
a business which constitutes interstate commerce is not so identified with
that commerce as to make the sale immune from a non-discriminatory
tax imposed by the state upon intrastate dealers.    [Emphasis added.]
In another place, the Court states:
Treating the tax as an excise tax upon the sales does not change the result
in the instant case, as the sales are still purely intrastate transactions.
[Emphasis added.]
In both of these statements, the court clearly implies that, even though the
fuel is to be used in interstate commerce, the transaction between the vendor
of the fuel and the operator of the airline company is wholly of an intrastate
character. What the purchaser of the fuel chose to do with the commodity
after its purchase was of no concern to the vendor.
"This court is somewhat astonished to find that an independent gasoline
dealer doing business at Ardmore, Oklahoma, who sells fuel to a motorist
having a Texas license tag on his automobile, becomes engaged in interstate
commerce simply because the purchaser may drive on into Texas and burn
part of the fuel there. Yet this is the substance of the Government's preten-
sion. There is yet a further anomaly to the Government's position. If a
citizen of Oklahoma purchases a piece of wearing apparel in a Kansas City
store, does the vendor thereby become engaged in interstate commerce and
subject to Federal regulation, even though he is fully cognizant of the pur-
chaser's native state? Obviously, not. Such an extension of the Commerce
power would be wholly unwarranted and an invasion of the regulatory rights
of the sovereign states.
"Perhaps the activities of the defendant constitute a recognizable evil which
should be apprehended. However, great care must be taken so that, by crush-
ing one evil, the courts do not create in its stead an even greater one. Congress
possesses no general power to regulate for the promotion of the general wel-
fare. It is limited in its powers to those which are granted it by the Constitu-
tion, and these powers must be either expressly given, or arise by necessary
implication.   (Martin v. Hunter's Lessee, 1 Wheat. 304.)
"It is the opinion of this court that so long as the defendant does not solicit
orders for his product in other states, and does not ship or aid in the ship-
ment of his product to another state, but merely sells his product to persons
who personally come to his residence, purchase and carry away this remedy,
he is not engaged in interstate commerce, even though some of his customers
be residents of another state, and this to the knowledge of the defendant.
Therefore, we cannot find the defendant to be in contempt of court for violation
of the injunction order.
"Counsel are directed to submit a journal entry in conformity with this
opinion within ten days from this date."
In accordance with the above opinion, the court, on or about August 17,
1951, handed down its findings of fact and conclusions of law and entered a
decree denying the Government's application for a citation for contempt of
the injunction. An appeal was taken by the Government to the United States
Court of Appeals for the Tenth Circuit, and on May 7, 1952, the following
opinion was handed down by that court:
HXJXMAN, Circuit Judge: "On October 17,'1951, an injunction was entered
against appellee, Tom G. Sanders, in the United States District Court for the
Western District of Oklahoma, enjoining him from directly or indirectly intro-
ducing or causing to be introduced, and delivering or causing to be delivered,
for introduction into interstate commerce, in violation of 21 U. S. C. 311 (a),
a drug which was misbranded within the meaning of 21 U. S. C. 352. [502] (b)
(1), 352 (b) (2), 352 (e) (2), and 352 (f) (1). Thereafter this action was
filed in the nature of an application for an order to show cause why he should
not be prosecuted for criminal contempt for a violation of the injunction.
"Appellee, defendant below, filed a response to the order to show cause and
moved that appellant's application be quashed and that no citation to show
285401-53?2
cause be issued. A hearing was had on appellee's motion. Judgment was
entered denying appellant's application for a citation to show cause. While
the trial court made findings of fact and conclusions of law, they are based
entirely upon the allegations of the application for the show cause order and ,
the statements of the parties at the time of the hearing thereof and not upon (
evidence introduced bearing upon the issue of appellee's guilt. That issue could
not be before the court for determination until a show cause order had issued.
Neither did the decree of the court attempt to pass upon the guilt or inno-
cence of appellee. It merely denied the application for a show cause order
on the ground that the allegations of the application were insufficient to state
an offense.
"Appellee's challenge to the jurisdiction of this court on the ground that
the judgment of the trial court constituted an adjudication of guilt and is,
therefore, not appealable is not well taken. It is clear that the trial court
did not try the issue of guilt or innocence of the appellee. It merely passed
upon the sufficiency of the allegations of the application to state an offense,
if found true.
"An application to show cause why defendant should not be prosecuted
for criminal contempt is equivalent to an information charging criminal con-
tempt, under Rule 42 (b) of the Federal Rules of Criminal Procedure, and a
criminal contempt proceeding is a criminal case within the meaning of 18
XL S. C. 3731. An order dismissing a criminal contempt proceeding is appeal-
able under the Criminal Appeals Act.1
"It is admitted that the drug in question was misbranded. Appellee's posi-
tion adopted by the court is that his activities do not constitute interstate
commerce as prohibited by the injunction. Prior to the injunction, appellee-
engaged 'runners' or 'drummers' who went into states other than Oklahoma
and solicited orders for the drug. After the injunction, this method of doing
business was discontinued. Appellee sold only to those who came to his place
of business at Wanette, Oklahoma, and delivered the drugs to them there.
Many of these customers came from states other than Oklahoma.
"The application for the order to show cause among others alleged that
since the issuance of the injunction appellee had at various times and with
full knowledge and notice delivered or caused to be delivered for introduc-
tion into interstate commerce various quantities of the misbranded drug;
that on January 24, 1951, he sold and delivered to Loyd Mangan of Garden
City, Kansas, for introduction into interstate commerce two one-quart jars
of said misbranded drug, with the knowledge that Mangan intended to and
would return to Garden City, Kansas, with said article or drug.' The com-
plaint alleged five other specific sales made to out-of-state customers and
alleged that all of said sales were made with the knowledge that the pur-
chaser was from out of the state and intended to and would return to his
place of residence out of the state with said drugs. It alleged that while
appellee ostensibly discontinued the practice of using salesmen or so called
'runners' to solicit and fill orders from customers outside of the State of
Oklahoma he had adopted the practice of selling and delivering his products
at Wanette, Oklahoma, directly to out-of-state customers, soliciting them
to return at later dates for more of the product, knowing that at all times
said misbranded drug would be transported in interstate commerce by said
purchasers for use in other states; that by such conduct he was disregarding
and circumventing the decree and was in truth and in fact continuing to engage
in the interstate business in the misbranded drug and was indirectly intro-
ducing or causing it to be introduced into interstate commerce, in violation
of the injunction. For the purpose of considering the correctness of the trial
court's ruling on the motion for dismissal of the application, these allegations
stand admitted and must be accepted as the facts.
"As stated by the Supreme Court in United States v. Walsh, 331 U. S. 432,
34, 'The Federal Food, Drug, and Cosmetic Act rests upon the constitutional
power resident in Congress to regulate interstate commerce. To the end that
the public health and safety might be advanced, it seeks to keep interstate
channels free from deleterious, adulterated, and misbranded articles of the
specified types. * * * It is in that interstate setting that the various sections
of the Act must be viewed.'   The Act must be given a reasonable construction
1 United States v. Goldman, 277 U. S. 229; United States v. Hoffman, 161 P. 2d 881.
to effectuate its salutary purposes. It prohibits not only the introduction
into interstate commerce of adulterated articles but also the delivery thereof
for introduction into commerce. One is as much a violation of the Act as the
other. There is a long line of cases beginning with Dahnke-Walker Co. v.
Bondurant, 257, U. S. 282, holding that where one purchases goods in one state
-for transportation to another the interstate commerce transaction includes the
purchase as well as the transportation.2 The court sought to distinguish the
Dahnke-Walker case on the ground that the wheat purchased by a resident
of Tennessee in Kentucky for transportation to Tennessee was delivered by the
vendor to the vendee on board the cars of a common carrier, to be immediately
forwarded to the purchaser's mills in Tennessee. The decisions, however,
make it clear that whether delivery for transportation is made to a common
carrier, a private carrier, or even to the purchaser for transportation by him-
self is immaterial.*
"To be guilty of violating the Act, it was not necessary that appellee be
engaged in interstate commerce with respect to a misbranded drug. It was
sufficient if he was engaged in delivering such a drug for introduction into
interstate commerce. If appellee knowingly and regularly sold misbranded
drugs and delivered them, knowing that they were purchased for transporta-
tion in interstate commerce, and solicited customers to return for future pur-
chases and deliveries, he was guilty of a violation of the Act. The allegations
of the complaint for a show cause order alleged that he did all of this and for
the purpose of the motion they stand admitted as true. We accordingly con-
clude that stated an offense and that the trial court erred in dismissing the
application for a show cause order.
"The judgment is reversed and the cause is remanded with directions to
proceed in conformity with the views expressed herein."
Subsequently a petition for a writ of certiorari was filed by the defendant,
and on October 13, 1952, this petition was denied. Thereafter, on February
4, 1953, the case came on for hearing before the United States District Court
for the Western District of Oklahoma, and upon a plea of nolo contendere by
the defendant, the court fined him $500.