last time I was here, and I say now that every case and every instance which has been cited by every person before this committee as indicating practical operations of dealers in prohibition sections have been cases with which existing laws are amply able to cope, if properly enforced. And, if it is true that the supreme court of Iowa has decided the flat question, as was stated by Judge Smith, that a C. O. D. shipment constitutes a sale at the point of delivery, then Iowa, at least, is in even a stronger position than any of the other States to cope with the evils of which they complain than if that court had not attempted to overrule a principle of law merchant which is supposed to have been established so long "whereof the memory of man runneth not to the contrary."

Mr. ALEXANDER. May I interrupt you with a question?
Mr. HOUGH. Certainly.

I

Mr. ALEXANDER. It is a much-disputed question among many members of the committee, and I want to get your idea about this. asked you a moment ago whether, if this bill became a law, it would prevent any bona fide shipment not intended for sale, but which is transported solely for the purpose of actual delivery to the original consignee for his personal use and consumption, and your answer was that it would?

Mr. HOUGH. That is my answer.

Mr. ALEXANDER. Now, I want to ask you, further, whether if the bill contained that proviso it would be constitutional?

Mr. HOUGH. A proviso, you mean, that they could stop it if intended for sale and could not stop it if it was intended for use? Mr. ALEXANDER. Yes.

Mr. HOUGH. It would not be constitutional, even then, for a reason. which I will give you later on, because you can not interject into the case the question of fact as to what is the purpose, and until Congress prohibits absolutely the shipment from every State there exists the right of every shipper in the United States to have his shipments reach the consignee, no matter where he is or what it may be his purpose to do with the shipment after it reaches him.

Mr. GILLETTE, of California. And no matter what the use is to be? Mr. HOUGH. No matter what the use is to be.

Mr. HENRY, of Texas. You take the broad ground that Congress can not permit a State to interfere with interstate commerce? Mr. HOUGH. Exactly; that is what it resolves itself into.

Mr. HENRY, of Texas. Can not delegate its power?

Mr. HOUGH. Can not delegate its power.

Mr. BRANTLEY. Referring to this question asked you by Mr. Alexander, your position is that under the law of the State of Iowa as it now exists, if we pass this bill, the purpose and effect of this bill now pending would be that the State of Iowa would prohibit or could prohibit, under the present law, a man from importing liquor for his own personal use?

Mr. HOUGH. Yes, sir; and more

Mr. BRANTLEY. One minute. But you contend that, even although we passed it, it would be an unconstitutional provision?

Mr. HOUGH. Clearly. This bill would be unconstitutional for these

reasons

Mr. BRANTLEY. And even although we amend this bill by elimi

nating the man who imports for his own personal use, so as not to make him subject to the State law, that even then it would be unconstitutional?

Mr. HOUGH. Clearly so.

The CHAIRMAN. Why?

Mr. HOUGH. Because you can not interfere with any shipment before it reaches the consignee without trenching upon the rights of every other citizen in every other State than the destination of that shipment.

The CHAIRMAN. Now, your answer shows that we do not understand each other

Mr. HOUGH. Of course, you understand that a great many of these questions raise questions which I have covered in this address. I am prepared to cover all these in the remarks I have laid out, and, to a certain extent, it flushes me to be asked these questions before I get to them in the line of argument I had laid out. I mean you get at these points before they are brought out in their strongest connection; but I do not object to that.

Mr. ALEXANDER. This is a good time to bring them out.
Mr. HOUGH. I do not object.

The CHAIRMAN. This raises this question: If I am in Iowa, under the conditions heretofore stated, and I give an order to any person outside of Iowa to ship me liquor, no one can question the purpose I have, under these decisions of the Supreme Court of the United States?

Mr. HOUGH. That is correct, and no one can question as to whether I have ordered that liquor to sell it or to use it.

The CHAIRMAN. But under the decision of the Supreme Court of the United States, to-day no man in any State outside of Iowa can anticipate a sale and make a shipment, and if he does it

Mr. HOUGH. If he does it, that constitutes a sale at the place of delivery, and if there is a law at the place of delivery which forbids or punishes sales of intoxicating liquors, it would apply to that case.

Mr. GILLETT of California. Then your position is this: That the laws of Iowa that would prevent a contract being carried out, if entered into in Kentucky, would have extraterritorial force?

Mr. HOUGH. The court said so in the Bowman case.

Mr. GILLETT of California. And it would be unconstitutional? Mr. HOUGH. Yes, sir. The Supreme Court said it in the Bowman case particularly. Therefore, I say that, if you should even try to amend this bill so as to discriminate or enable the State to discriminate between a shipment which it may be alleged is intended for sale, and a shipment which they may think is for private consumption, it would still be unconstitutional if it interfered in any way with that shipment prior to the time when it reaches the consignee, for reasons and authorities that I cite later.

Mr. ALEXANDER. Then you think this bill is unconstitutional, anyhow?

Mr. HOUGH. Clearly.

The CHAIRMAN. If you have no objection, I will ask you to suspend now, because, under our rules, we take a recess at this hour. Thereupon, at 12.30, the committee took a recess until 2 o'clock p. m.

AFTERNOON SESSION.

The committee met at 2 o'clock p. m., Hon. John J. Jenkins in the chair.

STATEMENT OF MR. W. M. HOUGH-Continued.

Just before recess I had reached that point of my statement where I referred to a remark of Judge Smith, of Iowa, in reference to a decision in that State on the C. O. D. question, and I stated that if it were true that the supreme court of Iowa had decided the flat question that a C. O. D. shipment constituted a sale at the point of delivery, they were in a better condition to cope with the evils complained of than any other State. I am inclined, however, to doubt that the supreme court of Iowa has decided the flat question in any such way, and I am inclined to believe that there was some other element in the case than the mere C. O. D. proposition which conduced to the conclusion reached, if, as I say, any such conclusion was reached. I was not able to find any decision of the supreme court of Iowa which covered that proposition, but in the latest volume of reported cases the latest volume of the Iowa reports, the 117th Iowa I find the following case, State v. Hanaphy, wherein the court decides that where a traveling salesman, whose principal was engaged in the sale of intoxicating liquors in the State of Illinois, solicited and accepted an order for liquor in Iowa, which order was sent to the house in Illinois, and there accepted, and the goods sent C. O. D. from the principal to the buyer, the transaction constituted interstate commerce, and the salesman was not liable to prosecution under an act prohibiting the soliciting and filling of orders.

That is inconsistent with the proposition that a C. O. D. shipment constituted a sale at the point of delivery. It may be that the case Judge Smith had in mind was a case where a shipment was sent C. O. D., and the party to whom it was consigned did not call for it, and the bill of lading was transferred to somebody else, and the other person called and took it. I say it may have been that kind of a case, and if it was that kind of a case, then such facts constituted a sale at the point of delivery, irrespective of the fact that it may have been shipped C. O. D. The supreme court of Iowa, in the Hanaphy case, says some further things to which I will refer later on; another proposition which is even more important than this.

It is earnestly and seriously contended that it is not the purpose of this bill to interfere in any way with the rights of an individual, and yet those who assert this willfully or negligently ignore the fact that the distinction drawn by the Supreme Court in the Rhodes case as to the time when State laws could first apply to interstate shipments for the protection of health and morals, and the enforcement of their police regulations, without amounting to a regulation of interstate commerce by the States, is absolutely necessary to protect that right of the individual to receive for his own use. If you attempt to give the State the right to make a State law apply before delivery, then, instead of having that right of the individual guaranteed by the Constitution, as was said by the Supreme Court in the case of Vance v. Vandercook, you tell him that that right shall be made subject to State law, which may prevent its ever reaching him. This would be

the necessary consequence of saying that an interstate shipment should be subject to State laws before delivery, and that at any time. after it reaches the boundary of the State.

In so far as Iowa is concerned, this would be already accomplished by existing laws, because, as I have stated, the requirement of the law of Iowa that a certificate that the consignee has the right to sell must accompany the shipment, absolutely excludes the idea of a shipment for private consumption.

From this statement alone it is apparent that an interstate shipment must continue until actual or constructive delivery to the consignee, and so long as no State proposes to prohibit the right of the individual to drink, no legislation is needed which would apply to a shipment before actual or constructive delivery. When it reaches the consignee, however, he has only the right to consume it, but no right to sell it in violation of the State laws.

The distinction which was drawn by the Supreme Court in the Rhodes case between the time when a State law would apply to an interstate shipment without amounting to a regulation by the State of interstate commerce and the time when its application would amount to a regulation of interstate commerce is necessary, for

another reason.

I stated in my former argument that, without appreciating the fact, the complaint of the proponents of this bill was really against the "law of sales," and I cited authorities to show that when a man in the State of Iowa wrote to a firm in New York or Philadelphia, Illinois or Missouri, where the business of manufacturing or selling intoxicating liquors is permitted, and ordered the same sent to him, that that was a sale at the place where the order was received and accepted, and the fact that it was a sale at such place was not affected in any way by the manner of delivery.

There is a right, however, which grows out of such a transaction which belongs to the seller or shipper, and which continues until actual or constructive delivery to the consignee. This is the right of stoppage in transitu, a right which is recognized and in force under both the common and civil law.

Mr. Parsons, in his work on contracts (6th ed.), says:

If a vendor who has consigned goods to a purchaser at a distance finds that the purchaser is insolvent, he may stop the goods at any time before they reach the purchaser. This right is called the right of stoppage in transitu.

The second edition of the American and English Encyclopedia of Law says:

The right of stoppage in transitu is the right of an unpaid seller of merchandise to resume possession thereof after shipment and before actual or constructive delivery to the buyer, or some one claiming under him or for him in some capacity other than that of carrier or middleman for the purpose of securing himself to the extent of the purchase price remaining unpaid against the insolvency of the buyer existing unknown to the seller at the time of the sale or arising thereafter.

This principle clearly indicates that in contemplation of law the transit continues until delivery, and the fact that the transit was an interstate transit can not limit that fact. In every instance the transit must continue until actual or constructive delivery. This is a right which is enforced, not by virtue of the law of the forum, but by virtue of the law of the place of contract.

If, therefore, you attempt to give the State the right to destroy any shipment before delivery to the consignee, actual or constructive, you are attempting to give the State authority to cut out a right which belongs to the citizens of all the other States under the laws of such other States.

Again, the liability of a common carrier continues until delivery to the consignee, though after reasonable notice to the consignee the liability of carrier is transferred into the liability of warehouseman. But this is a legal recognition of the proposition that the transit of goods continues until actual or constructive delivery to the consignee, and that includes storage for a reasonable length of time in the warehouse of the carrier at the point of destination, to give notice to the consignee.

In the case of the Daniel Ball (10 Wall., 565) the court said:

In this case it is admitted that the steamer was engaged in shipping and transporting down Grand River goods destined and marked for other States than Michigan and in receiving and transporting by the river goods brought from without its limits; but inasmuch as her agency in the transportation was entirely within the limits of the State, and she did not run in connection with or in continuation of any line of vessels or railway leading to other States, it is contended that she was engaged entirely in domestic commerce. But this conclusion does not follow. So far as she was employed in transporting goods destined for other States, or brought from without the limits of Michigan and destined to places within that State, she was engaged in commerce between the States, and however limited that commerce may have been, she was, so far as it went, subject to legislation of Congress. She was employed as an instrument of that commerce; for whenever a commodity has begun to move as an article of trade from one State to another commerce in that commodity between the States has commenced.

And the same rule applies to the shipment until it reaches delivery; even the express wagon that would deliver the goods from the railway station to the consignee is in that respect engaged in inter

state commerce.

Mr. BRANTLEY. Will you read that last clause again?

Mr. HOUGH (reading):

She was employed as an instrument of that commerce; for whenever a commodity has begun to move as an article of trade from one State to another commerce in that commodity between the States has commenced.

The point was made in this case that, inasmuch as the part played in that commerce by that boat was wholly within the State, therefore it was no part of interstate commerce. The rule laid down by the court, as I say, applies at the other end of the shipment as well as at the beginning of the shipment. To continue my quotation:

The fact that several different and independent agencies are employed to transport a commodity, some acting entirely in one State and some acting through two or more States, does in no respect affect the character of the transaction. To the extent to which each agency acts in that transportation, it is subject to the regulation of Congress.

And the doctrine in this case was approved by the Supreme Court in the case of Norfolk Railroad v. Pennsylvania (136 U. S., 119). In the case of Rhodes v. Iowa the Supreme Court said:

The fundamenal right which the decision in the Bowman case held to be protected from the operation of State laws by the Constitution of the United States was the continuity of shipment of goods coming from one State into another from the point of transmission to the point of consignment, and the accomplishment there of the delivery covered by the contract.