Citation. 300 N.Y. 480, 88 N.E.2d 661 (1949)
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Brief Fact Summary.
The Supreme Court of the United States found that denial of a distribution license to Plaintiff, H. P. Hood & Sons, a Boston milk distributor, on the basis of a state law requiring issuance of licenses only where the Commissioner of Agriculture and Markets finds that such issuance will not encourage destructive competition and such issuance is in the public interest is a violation of the commerce clause.
Synopsis of Rule of Law.
A state may not use its powers to protect the health and safety of its people as a basis for suppressing competition.
Plaintiff, H. P. Hood & Sons, a Boston milk distributor, applied for a New York license with the Commissioner of Agriculture and Markets (“Commissioner”) to distribute milk in New York. The Commissioner denied Plaintiff a license on the grounds that issuance of a license to Plaintiff would create a “destructive competition” with other suppliers. Plaintiff contends that the law violates the commerce clause. The state courts rejected such a contention and held the law to be valid.
Whether New York’s licensing law which prohibits licensure to suppliers who will create “destructive competition” or where the Commissioner finds that such licensing is not in the public interest violates the commerce clause?
Yes. Judgment of the highest state court reversed. The statute, as applied, violates the commerce clause because a state may not protect its own inhabitants from competition by forbidding licensure where granting a license to an out-of-state supplier will create “destructive competition.” The purpose of the licensing scheme is to protect instate suppliers and the direct effect of the licensing law is an obstruction on interstate commerce. Therefore, this law violates the commerce clause.
The language of the state law is not discriminatory. The legislative history shows no discriminatory intent and the Commissioner has not acted with discrimination. Further, it is not the function of the Court to revise the state’s economic decisions.
The degree to which interstate commerce is burdened is highly questionable.
The majority holds that a state may not prevent destructive competition by denying an applicant access to a market within the state if that applicant happens to intend the out-of-state shipment of the product that he buys.