Baldwin v. G.A.F. Seelig, Inc.

Supreme Court of United States
294 U.S. 511 (1935)

ELI5:

Rule of Law:

Under the Commerce Clause, a state cannot regulate the price of goods purchased in another state or prohibit the sale of those goods in-state on the basis that they were purchased at a price lower than the minimum price set by the state, as this constitutes an unconstitutional economic barrier against interstate commerce.

Facts:

G. A. F. Seelig, Inc. is a milk dealer located in New York City.
Seelig purchased milk and cream from the Seelig Creamery Corporation in Fair Haven, Vermont, with title transferring in Vermont.
The Creamery purchased its milk from Vermont farmers at prices lower than the minimum price mandated by New York law for New York producers.
Seelig transported the milk to New York in forty-quart cans.
Upon arrival in New York, approximately 90% of the milk was sold in these original cans to hotels, restaurants, and stores.
The remaining 10% was bottled by Seelig in New York and then sold to customers.
New York's Milk Control Act prohibited the sale of imported milk if the out-of-state producer was paid a price lower than the New York minimum.
The New York Commissioner of Farms and Markets refused to grant Seelig a license unless it agreed to pay Vermont producers the New York minimum price for all milk it sold in New York.

Procedural Posture:

G. A. F. Seelig, Inc. filed suit in the U.S. District Court for the Southern District of New York against Baldwin, the Commissioner of Farms and Markets, seeking to enjoin the enforcement of the New York Milk Control Act.
A three-judge District Court heard the case.
The District Court granted a final decree enjoining the Act's enforcement as to milk sold by Seelig in its original packages (cans).
The District Court denied an injunction as to milk that Seelig removed from the original cans and bottled in New York before sale.
Both parties filed cross-appeals to the Supreme Court of the United States.

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Issue:

Does the New York Milk Control Act, which prohibits the in-state sale of milk purchased from out-of-state producers at a price lower than the prescribed minimum for in-state producers, violate the Commerce Clause of the U.S. Constitution?

Opinions:

Majority - Justice Cardozo

Yes, the New York Milk Control Act violates the Commerce Clause. A state may not use its police power to establish an economic barrier against competition with the products of another state. By regulating the price to be paid to producers in Vermont as a condition of sale in New York, the law projects its legislation into another state and creates a barrier to interstate commerce as effective as a customs duty. New York's justification that the law promotes public health by ensuring farmers a living income to maintain sanitary conditions is too remote and indirect to justify such a direct burden on commerce. The Constitution was designed to create a national market and prevent the economic rivalries and reprisals between states that this law would engender. This principle applies regardless of whether the milk is sold in its original packages or bottled in-state, as the ultimate test is whether a state is placing itself in a position of economic isolation, not the form of the packaging.

Analysis:

This decision establishes a foundational principle of the dormant Commerce Clause: states cannot enact protectionist legislation that discriminates against out-of-state economic interests to benefit local producers. The Court rejected the use of public health and welfare as a pretext for what was, in effect, economic protectionism. This ruling powerfully reinforces the concept of the United States as a single economic union, limiting a state's power to regulate out-of-state conduct even when it has in-state economic consequences. Future cases involving state laws that impact interstate commerce would be scrutinized for their purpose and effect, with laws aimed at neutralizing out-of-state economic advantages being presumptively unconstitutional.

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