Di Santo v. Pennsylvania
273 U.S. 34 (1927)
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Rule of Law:
A state law that imposes a license requirement on agents selling steamship tickets for foreign travel constitutes a direct burden on foreign commerce and is therefore invalid under the Commerce Clause.
Facts:
- A Pennsylvania law enacted in 1921 required any person or corporation, other than a railroad or steamship company, to obtain a license to sell steamship tickets for transportation to or from foreign countries.
- The law required applicants to prove good moral character, list at least three steamship lines they represented, and file a $1,000 bond.
- Di Santo was an agent in Harrisburg, Pennsylvania, representing four steamship companies that operated between the United States and Europe.
- The steamship companies provided Di Santo with certificates authorizing him to sell tickets, along with ticket books, advertising materials, and sailing schedules.
- Di Santo collected money from customers for the tickets and transmitted the funds directly to the steamship companies he represented.
- Di Santo engaged in the business of selling these steamship tickets without having obtained the license required by the Pennsylvania statute.
Procedural Posture:
- Di Santo was indicted and tried in the Court of Quarter Sessions of Dauphin County, Pennsylvania.
- The trial court directed a guilty verdict, which the jury returned.
- The trial court denied Di Santo's motion in arrest of judgment, which argued the state law was unconstitutional, and sentenced him to pay a fine.
- Di Santo, as appellant, appealed to the Pennsylvania Superior Court.
- The Superior Court reversed the trial court, holding the act unconstitutional.
- The Commonwealth of Pennsylvania, as appellant, appealed to the Supreme Court of Pennsylvania.
- The Supreme Court of Pennsylvania reversed the Superior Court's decision and reinstated the trial court's judgment of guilty.
- Di Santo, as plaintiff in error, brought the case to the U.S. Supreme Court for review.
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Issue:
Does a state law requiring persons who sell steamship tickets for foreign travel to obtain a license, pay a fee, and file a bond impose a direct and unconstitutional burden on foreign commerce in violation of the Commerce Clause?
Opinions:
Majority - Mr. Justice Butler
Yes, the state law imposes a direct and unconstitutional burden on foreign commerce. The sale of steamship tickets for passage between the United States and Europe is an integral part of foreign commerce. A state statute that by its necessary operation directly interferes with or burdens foreign commerce is an invalid regulation, regardless of the state's intent, such as preventing fraud. The power to regulate foreign commerce and protect the public from fraud in such transactions rests exclusively with Congress. The license fee and other requirements imposed by the Pennsylvania act on an agent who initiates a foreign commerce transaction for his principals constitute a direct burden on that commerce, making the statute unconstitutional.
Dissenting - Mr. Justice Brandeis
No, the law does not impose a direct and unconstitutional burden on foreign commerce. The statute is a legitimate exercise of the state's police power, designed to prevent fraud against vulnerable individuals, such as immigrants purchasing tickets for their families. The regulated transaction is the local sale of the ticket, which is wholly intrastate, and the statute's effect on foreign commerce is merely indirect. Since Congress has not legislated on this subject, and the state law does not obstruct or discriminate against commerce, it should be upheld as a valid measure to protect citizens from local fraud. The majority's reliance on precedent is misplaced, and the Court should not hesitate to correct a past error in applying a legal rule to a new set of facts.
Dissenting - Mr. Justice Stone
No, the law is a permissible local regulation that does not unconstitutionally burden foreign commerce. The traditional test distinguishing between 'direct' and 'indirect' interference with commerce is too mechanical and uncertain to be useful; it is merely a label used to describe a conclusion rather than a formula for reaching it. The proper analysis involves considering all circumstances, including the local nature of the regulation, its function, and its actual effect on the flow of commerce. The Pennsylvania law concerns interests that are peculiarly local—protecting citizens from dishonest ticket sellers—and it does not erect any barrier to commerce. Until Congress chooses to regulate this area, such local protective measures should not be deemed a prohibited interference with commerce.
Analysis:
This decision represents a high-water mark for the 'direct burden' test under the Commerce Clause, which created a rigid barrier against state regulation of activities deemed to be in the stream of commerce. The Court held that even a well-intentioned state police power regulation aimed at preventing fraud was unconstitutional if it directly regulated foreign commerce. The powerful dissents by Justices Brandeis and Stone, particularly Stone's critique of the 'direct/indirect' test as 'mechanical,' foreshadowed the eventual shift in Commerce Clause jurisprudence toward a more flexible balancing test that weighs state interests against the federal interest in unencumbered commerce. This case was explicitly overruled by California v. Thompson, 313 U.S. 109 (1941), making the dissents here more legally significant in the long run than the majority opinion.
