statute would be unconstitutional as "there is nothing in the conduct proposed to be prohibited that necessarily appeals to the gambling instinct or involves the element of chance."1 Statutes in Alabama and Kansas prohibiting gift enterprises, without any definition of the term, have also been held not to apply to the trading-stamp business as usually conducted. A Michigan act so defining a gift enterprise as to cover the trading-stamp company has not apparently been construed.*

Statutes intended to prohibit the operation of trading-stamp companies are much more numerous. Laws have been passed in a number of States prohibiting the issuance or redemption of stamps by any person other than a merchant or manufacturer. In all these States except Rhode Island and Vermont it is expressly provided that the retail merchant may give coupons issued by manufacturers with their products. These statutes have been held unconstitutional in New Hampshire, New York, Rhode Island, Vermont," and Virginia, as an unwarranted interference with individual liberty and a violation of the fourteenth amendment to the Federal Constitution, as a violation of similar clauses in State constitutions, or as an unlawful exercise of the police power. A Massachusetts statute of this character was held not to prohibt the use of trading stamps to be redeemed by a stamp company unless there was an element of chance involved in the transaction." The Louisiana statute was declared void on the ground that its title was inadequate and misleading.12 In construing a Maryland statute of another type the court said that if the stamps were otherwise free from objection it was immaterial whether they were to be redeemed by the merchant selling the goods or by a third party. 13 A Michigan statute of this character has not been construed in any reported case.

1 Opinion of the Justices, 208 Mass., 607 (1911).

* Alabama Laws (1891), No. 352; Kansas Laws (1895), ch. 152.

* State v. Shugart, 138 Ala., 86 (1903); United Jewelers Mfg. Co. v. Keckley, 77 Kans., 797 (1907).

Michigan Laws (1911), No. 244.

Louisiana Laws (1900), Act No. 35; Maryland, Laws 1898, ch. 207, Laws 1904, chs. 233, 577, Laws 1910, ch. 381, p. 95; Massachusetts Laws (1898), ch. 576; Michigan Laws (1911), No. 244; New Hampshire Laws (1899), ch. 60; New York Cons. Laws, Pena! Law, secs. 2360, 2361; Rhode Island Laws (1899), ch. 652; Vermont Laws (1898), No. 123; Virginia Laws (1897-98), ch. 406, p. 442.

State v. Ramseyer, 73 N. H., 31 (1904).

7 People v. Dycker, 72 N. Y. App. Div., 308 (1902); People v. Zimmerman, 102 N. Y. App. Div., 103 (1905).

State v. Dalton, 22 R. I., 77 (1900).

State v. Dodge, 76 Vt., 197 (1904).

10 Young v. Commonwealth, 101 Va., 853 (1903).

11 Commonwealth v. Sisson, 178 Mass., 578 (1901).

12 State v. Walker, 105 La., 492 (1901).

13 State v. Hawkins, 95 Md., 133 (1902).

Taxes or license fees on the use of trading stamps have been imposed in a dozen or more States.1 These are sometimes limited to trading-stamp companies, but some of the statutes and ordinances are so worded as to include both trading-stamp companies and merchants using stamps put out by such companies, and others are apparently intended to cover even the merchant who issues and redeems his own stamps.

3

In their application to trading-stamp companies such taxes, whether laid directly by the State or by the city under charter authority, and whether for revenue or regulation, have generally not been successfully attacked in State courts. Intimations and holdings that the tax must be reasonable, however, are found in decisions by State courts and some ordinances have been declared void by them as in excess of delegated authority. And tax provisions in Arkansas, Oregon, and Washington have been held by Federal courts to be oppressive or to be an invasion of the trading-stamp company's constitutional rights." In the Arkansas case the court declared the ordinance in question to be in excess of charter authority. Later, after the legislature had specifically authorized cities to tax the use of trading stamps, a city ordinance levying a still heavier tax was upheld by a different Federal court as a valid regulation under the police power.?

When applied to merchants using stamps put out by trading-stamp companies or to merchants issuing and redeeming their own stamps, tax provisions have been held void wherever called in question, ex

8

1 Alabama Laws (1909), p. 229; Arkansas Laws (1899), No. 21; Florida Laws (1913), ch. 6421, secs. 35, 55; Kentucky Stats., sec. 4224; Louisiana Laws (1904), No. 47; Massachusetts Laws (1904), ch. 403; New Hampshire Laws (1905), ch. 83; North Carolina Laws (1913), ch. 201, secs. 51, 75; Oregon Laws (1915), ch. 228; Tennessee Laws (1899), chs. 27, 207; Utah Laws (1915), chs. 116, 117; Washington Laws (1913), ch. 134; West Virginia, Laws 1904, ch. 3; Laws 1905, ch. 36; Code 1913, secs. 1114j, 1155, 1232.

Authority to tax gift enterprises is held not to be authority to tax the use of trading stamps. Winston v. Beeson, 135 N. C., 271 (1904); Humes v. Little Rock, 138 Fed., 929 (1898).

Gambler. Montgomery, 147 Ala., 682; State v. Merchants Trading Stamp Co., 114 La., 529 (1905); Fleetwood v. Read, 21 Wash., 547 (1899); Oilure Mfg. Co. r. PidduckRoss Co., 38 Wash., 137 (1905); Sperry & Hutchinson Co. v. Tacoma, 68 Wash., 254 (1912); State v. Pitney, 79 Wash., 608 (1914).

Gamble v. Montgomery, 147 Ala., 682; Columbia v. Lusk, (Ct. Com. Pleas, Richland Co., S. C., September, 1909); Sperry & Hutchinson Co. v. Danville (Corp. Ct., Danville, Va., October, 1910).

Winston v. Beeson, 135 N. C., 271 (1904); Merchants Trading Stamp Co. v. Memphis, 101 Tenn.. 181 (1898); Sperry & Hutchinson Co. v. Owensboro, 151 Ky., 389 (1912).

• Humes v. Little Rock, 138 Fed., 929 (1898); Ex parte Hutchinson (Wash.), 137 Fed., 949 (1904); Ex parte Hutchinson (Oreg.), 137 Fed., 950 (1905).

Humes v. Fort Smith, 93 Fed., 857 (1899).

8 Montgomery r. Kelly, 142 Ala., 552 (1905); Humes v. Little Rock, 138 Fed., 929 (1898); Ex parte McKenna, 126 Cal. 429 (1899); Van Deman & Lewis Co. r. Rast, 208 Fed.. 827 (Fla., 1913); Hewin v. Atlanta, 121 Ga., 723 (1905); Com. v. Gibson, 125 Ky., 401 (1907); O'Keefe v. Somerville, 190 Mass., 110 (1906); Columbia r. Lusk, (Ct. Com. Pleas, Richland Co., S. C., Sept., 1909); Merchants Trading Stamp Co. v. Memphis, 101 Tenn., 181 (1898); Ex parte Hutchinson, 137 Fed., 949 (1904); Ex parte Hutchinson, 137 Fed., 950 (1905); S. & H. Co. v. Tacoma, 190 Fed., 682 (1911); Little v. Tanner, 208 Fed., 605 (Wash., 1914).

1

cept in Washington and in the Federal court in Arkansas mentioned above. As thus applied these statutes are usually said to infringe the liberty guaranteed by the Federal and State Constitutions or to amount to class legislation. In Massachusetts the giving of stamps in connection with sales of goods was said not to be a commodity within the special taxing power, and in Georgia it was said not to be "a business," and hence was not to be reached under the city's taxing power. The provisions that have been upheld were declared to be proper exercises of the police power.

3

The conflict on tax statutes in Washington between State and Federal courts was partly responsible for the Washington court in 1907 declaring a statute void that prohibited offering unidentified or chance premiums in exchange for trading stamps. In a recent decision on trading-stamp legislation, however, the Washington court expressly overrules this decision, and upholds, as a valid exercise of the police power, a taxing statute conceded to be prohibitive of the use of trading stamps.*

STATUTES REGULATING THE USE OF TRADING STAMPS.-A number of statutes have been passed which regulate more or less strictly the trading-stamp business. The restrictions in some of these laws are so onerous that they have been regarded by the courts as prohibitory and declared to be unconstitutional. The most common provision is that which prohibits the issuance of stamps under such circumstances that the purchaser of goods does not know at the time what articles he is entitled to receive for the stamps. A number of States prohibit the issuance of stamps redeemable in articles variously described in the laws as "indefinite," "undescribed," "undetermined," " unidentified," "unknown," or " unselected," or where the selection is dependent upon chance, hazard, or contingency. A number of these laws have been declared void as in violation of constitutional provisions that no person shall be deprived of life, liberty, or property without due process of law or as not a valid exercise of the police power. The Washington decision was, however, expres-ly

1 Fleetwood r. Read, 21 Wash., 547 (1899); Oilure Mfg. Co. v. Pidduck-Ross Co., 38 Wash., 137 (1905); State v. Pitney, 79 Wash., 608 (1914).

2 Humes r. Fort Smith, 93 Fed., 857 (1899).

$ Leonard v. Bassindale, 46 Wash., 301 (1907).

State v. Pitney, 79 Wash., 608 (1914). This case is pending in the United States Supreme Court.

California Laws (1905), ch. 69 (Henning's Gen. Laws of Cal., 1914, act No. 5216, p. 2092); Colorado Laws (1905), ch. 110 (Mills' Ann. Stats., 1912, sees, 4685, 4686, 4687. 4688); Georgia Penal Code (1914), sec. 404 (Laws 1909, p. 153); Iowa Laws (1909), ch. 226; Maryland Laws (1898), ch. 207 (Laws 1904, chs. 233, 577; Laws 1910, chs, 381, p. 95); Massachusetts Laws (1903), ch. 386 (Supp. Rev. Laws Mass., 1902-1908, p. 1446); Minnesota Laws (1909), ch. 142 (Gen. Stats., 1913, sees. 8995-8998); New Hamp shire Laws (1905), ch. 83; Rhode Island Laws (1901), ch. 842 (Gen. Laws 1909, p. 1284); Washington Laws (1905), ch. 179; and Laws of Hawaii (1905), act 85.

Ex parte Drexel, 147 Cal., 763 (1905); Leonard v. Bassindale, 40 Wash., 301 (1907); Hawaii v. Gunst & Co., 18 Hawaii, 196 (1907).

overruled in 1914 in a case holding a tax on trading stamps valid even though it was regarded as prohibitive.1 A Maryland statute was held valid in one case, so far as it prohibited uncertain, undetermined, or unknown premiums,2 but in a subsequent case it was held valid only so far as it prohibited an element of chance, partaking of the nature of a lottery and appealing to the gambling instinct, in the determination of the premium.3 The Georgia act was also held not to apply to the trading-stamp business as ordinarily conducted.* Statutes requiring articles in which stamps are to be redeemed to be described on the stamp, and the character and value thereof made known to the purchaser, or requiring that the purchaser be furnished with a list of all articles given in redemption of stamps, have likewise been held to be practically prohibitive of the business and unconstitutional as not being a proper exercise of the police power. Other statutes of the same general character as those described above appear not to have been passed upon by the courts. A number of statutes require that trading stamps shall have a redeemable value in money, which shall be legibly shown on the face of the stamp, that they shall be redeemed at their face value in goods or money at the option of the holder, and that the vendor of goods shall be liable for the redemption of the stamps upon the default of the third party and may be primarily liable. A statute of this character has been held invalid, and another of the same general nature, but with the added requirement that each stamp should have the value of not less than 1 cent and should be redeemed even though presented singly, has likewise been held unconstitutional."

Section 9. False, deceptive, or misleading advertising.

Twenty-eight States,10 one municipality," and the Philippine Islands prohibit the publication or circulation of false or mislead

1 State v. Pitney, 79 Wash., 608 (1914). Appeal pending.

2 State v. Hawkins, 95 Md., 133 (1902).

State v. Caspare et al., 115 Md., 7 (1911)

Tumlin v. State, 141 Ga., 613 (1914).

State . Friedman, District Court, Wapello County, Iowa (Oct., 1910); State v. Caspare et al., 115 Md., 7 (1911); State v. Sperry & Hutchinson Co., 110 Minn., 378 (1910). Colorado Laws (1905), ch. 110 (Mills' Ann. Stats. 1912, secs. 4685-4688); Massachusetts Laws (1903), ch. 386 (Supp. Rev. Laws, Mass., 1902-1908, p. 1446); New Hampshire Laws (1905), ch. 83; Rhode Island Pub. Laws (1901), ch. 842 (Gen. Laws, 1909, p. 1284).

Indiana Laws (1913), ch. 299 (Burns' Ann. Stats., 1914, sec. 10463a to 10463f); Maryland Laws (1904), chs. 233, 577 (Laws 1910, ch. 381, p. 95); New Hampshire Laws (1905), ch. 83; New Jersey Laws (1905), ch. 265 (Comp. St., p. 5648); New York Cons. Laws, Penal Law, sec. 2361; Ohio Laws (1904), p. 277 (General Code, secs. 6386 to 6389); Washington Laws (1907), ch. 253.

8 People v. Zimmerman, 102 N. Y. App. Div., 103 (1905). State v. Caspare et al., 115 Md., 7 (1911).

10 California, Connecticut, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Utah, Washington, West Virginia, Wisconsin.

11 Chicago.

ing advertisements concerning property which is offered for sale. These laws are, as a rule, of very recent date, practically all of them having been passed in 1913 or 1914. They fall into two general classes, first, those which prohibit any representation or statement of fact respecting the property offered for sale which is untrue, deceptive, or misleading, and, second, those which prohibit untrue or misleading statements of the kinds specified in the acts. These latter statutes apply only to specific kinds of property or services. Statutes of the first class are so nearly alike in scope and verbiage that a fair idea of them all may be conveyed by quoting a part of the New Jersey act, which is as follows:

Any person, firm, corporation or association who, with intent to sell or in any wise dispose of merchandise, securities, service, or anything offered by such person, firm, corporation or association, directly or indirectly, to the public for sale or distribution, or with intent to increase the consumption thereof, or to induce the public in any manner to enter into any obligation relating thereto, or to acquire title thereto, or an interest therein, makes, publishes, disseminates, circulates, or places before the public or causes, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in this State, in a newspaper or other publication, or in the form of a book, notice, hand-bill, poster, bill, circular, pamphlet or letter or in any other way, an advertisement of any sort regarding merchandise, securities, service, or anything so offered to the public, which advertisement contains any assertion, representation or statement of fact which is untrue, deceptive or misleading, shall be guilty of a misdemeanor.

A number of States have substantially similar laws. It may be noted that the Iowa, Kansas, Michigan, Washington, and Wisconsin acts expressly exempt publishers of newspapers from liability for the publication of such advertisements if made in good faith.

A Chicago municipal ordinance is similar to the New Jersey law, except that its application is limited to advertisements in newspapers or other publications, or to signs, banners, handbills, or placards, offered for sale or exposed on streets, sidewalks, or public grounds over which the city has control.

In California, Connecticut, Indiana, Maryland, Massachusetts, Montana, Oregon, Pennsylvania, and South Dakota the statutes'

1 New Jersey Laws (1913), ch. 318.

2 Idaho Laws (1915), ch. 23; Iowa Laws (1913), ch. 309; Kansas Laws (1915), ch. 2; Louisiana Acts (1914), ch. 162; Michigan Laws (1913), Act No. 276; Minnesota Laws (1913), ch. 51; Missouri Laws (1915), p. 267; Nebraska Laws (1913), ch. 104: New York Laws (1915), ch. 569; North Carolina Pub. Laws (1915), ch. 218; North Dakota Laws (1913), ch. 3; Ohio Laws (1913), p. 43; Acts of Third Philippine Legislature, special session (1914), No. 2333; Rhode Island Laws (1914), ch. 1073; Utah Laws (1913), ch. 22; Washington Laws (1913), ch. 34; West Virginia Laws (1915), ch. 43; Wisconsin Laws (1913), ch. 510.

City of Chicago ordinance passed by city council, December, 1913.

California, Henning's Gen. Laws (1914), ch, 453, Act 4040; Connecticut Pub. Acts (1913), ch. 65; Indiana, Burns' Ann. Stats. (1914), sec. 2590d; Maryland Laws (1914), ch. 410; Massachusetts Laws (1914), ch. 288; Montana Laws (1915), ch. 117; Oregon Laws (1909), ch. 104; Pennsylvania Laws (1913), Act. No. 8; South Dakota LawS (1913), ch. 15.