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one account, with reference to the act of 1891 and also to that of 1899, and we think that under the circumstances the defendants should be held liable to account therefor as indicated.

The account should be restated by allowing credit to the defendant of $6,500, the amount paid the attorneys as already stated. As to all other matters, the decree is right. The proper disposition of the case is to dismiss the appeal in No. 12, because the decree appealed from is not a final one, and to reverse the decree in No. 388, for the purpose of making the proper credit to defendants in the account.

Reversed.

OZAN LUMBER COMPANY v. UNION COUNTY NATIONAL BANK OF LIBERTY.

ON WRIT OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT.

No. 37. Submitted November 5, 1907.-Decided December 2, 1907.

Woods & Sons v. Carl, 203 U. S. 358, and Allen v. Riley, 203 U. S. 347, followed as to the power of a State, until Congress legislates, to make such reasonable regulations in regard to the transfer of patent rights as will protect its citizens from fraud.

There cannot be an exact exclusion or inclusion of persons and things in a classification for governmental purposes, and a general classification, otherwise proper, will not be rendered invalid because certain imaginary and unforeseen cases have been overlooked. In such a case there is no substantial denial of the equal protection of the laws within the meaning of the Fourteenth Amendment.

State legislation which regulates business may well make distinctions depend upon the degrees of evil without being arbitrary and unreasonable. See Heath & Milligan Mfg. Co. v. Worst, post.

The purpose of the statute of Arkansas providing that all notes given for payment of patented articles must show that they were so given, and permitting defenses to be made to such notes in the hands of third parties, is to create and enforce a police regulation, aimed principally at itinerant vendors of patented articles, and the distinction in § 4 that it shall not apply to merchants and dealers who sell patented articles in the usual course of business is founded upon fair reasoning and is not such a discrimination as violates the equal protection provisions of the Fourteenth Amendment.

Argument for Petitioner.

207 U. S.

Where the case was decided below solely upon constitutional grounds upon which the decision cannot rest, it must be remanded and if there are any other facts they can be presented upon another trial.

145 Fed. Rep. 344, reversed.

THIS case comes here upon certiorari directed to the Circuit Court of Appeals for the Eighth Circuit. The action was commenced in the United States Circuit Court for the Western District of Arkansas, upon certain promissory notes, which the defendant, the Ozan Lumber Company, in its answer alleged had been given by it in payment for a patented article, such notes not being executed upon a printed form, showing they were given in consideration of a patented machine, as required by the statute of Arkansas. Sections 513 to 516, inclusive, Kirby's Digest Laws of Arkansas.

A demurrer to the defense was interposed on the ground that it did not state facts constituting a defense. The Circuit Court sustained the demurrer, because, as it held, the act was in violation of the Fourteenth Amendment, as denying to the plaintiff the equal protection of the laws. 127 Fed. Rep. 206. The case was taken by writ of error to the Circuit Court of Appeals, where the judgment was affirmed for the reason that the act was an illegal discrimination against patented articles. 145 Fed. Rep. 344. The application by defendant for a certiorari to review that judgment was granted.

Mr. T. C. McRae and Mr. U. M. Rose, for petitioner, submitted:

There is a manifest difference between the patent right and patented articles made under that right. The latter have entered into the common mass of merchandise of the State, and are necessarily within the police power of the State. Stephens v. Cady, 14 How. 528.

As to the domestic trade of the States, Congress has no power of regulation, nor any direct control. This power belongs exclusively to the States. License Tax Cases, 5 Wall. 470.

Whether Congress could legislate on this subject is a question that does not arise here. New York v. Miln, 11 Pet. 146:

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207 U.S.

Argument for Respondent.

Blalock v. Alling, 93 U. S. 99; Mobile v. Kimball, 102 U. S. 691, 697; Cooley v. Board, &c., 12 How. 299.

The power to make police regulations for the protection of its citizens against fraud and imposition has not been taken from the States. Brechbill v. Randall, 102 Indiana, 528; S. C., 52 Am. Rep. 695; United States v. Dewitt, 9 Wall. 41; Mann v. Illinois, 94 U. S. 135; Civil Rights Cases, 109 U. S. 14.

In the execution of its police powers the State has a right "to enact such legislation as it may deem proper, even in regard to interstate commerce for the purpose of preventing fraud or deception." Schollenberger v. Pennsylvania, 171 U. S. 14.

In New v. Walker, 108 Indiana, 365; S. C., 58 Am. Rep. 40, one of these statutes relating to patent rights was held to be valid. To the same effect see Shires v. Commonwealth, 120 Pa. St. 368; Reeves v. Baker, 51 Fed. Rep. 785; Mason v. McLeod, 57 Kansas, 105; Sandage v. Studebaker Co., 142 Indiana, 148; Robertson v. Cooper, 1 Ind. App. 78; Pinney v. First Nat. Bk., 75 Paç. Rep. 119; S. C., 78 Pac. Rep. 161; Hankey v. Downey, 116 Indiana, 119; Pegram v. Am. Alkali Co. (Pa.), 122 Fed. Rep. 1004; Haskell v. Jones, 86 Pa. St. 173.

The fact that the statute may indirectly affect patents furnishes no objection to its validity. Slaughter-House Cases, 16 Wall. 62.

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Since the preparation of the brief on the petition for certiorari in this case, this court has determined the validity of the Arkansas statute in question, at least for the purposes of the present case. Woods & Sons v. Carl, 203 U. S. 358.

Mr. Morris M. Cohn, for respondent, submitted:

The statute in question is void because of the improper classification made by the exception from the provisions of the act of "merchants and dealers who sell patented things in the usual course of business." Gulf, Colorado & Santa Fe Ry. Co. v. Ellis, 165 U. S. 150; Connelly v. Union Sewer Pipe Company, 184 U. S. 540; Cotting v. Kansas City Stock Yards Co., 183 U. S. 179; Dobbins v. Los Angeles, 195 U. S. 223, 236;

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Lake Shore Ry. Co. v. Smith, 173 U. S. 684; Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283; Minnesota v. Barber, 136 U. S. 313; Soon Hing v. Crowley, 113 U. S. 709; Ward v. Maryland, 12 Wall. 418; Ex parte Deeds, 75 Arkansas, 542; Woods v. Carl, 75 Arkansas, 328, 335; Ex parte Ft. Smith Bridge Co., 62 Arkansas, 461; State v. Sheriff, &c., 48 Minnesota, 236; People v. Max, 99 N. Y. 377; Dickson v. Poe, 159 Indiana, 492; Hannon v. State, 66 Ohio St. 249; Brown v. Jacobs P. Co., 115 Georgia, 429; In re Flucks, 157 Missouri, 125; Stinson v. Muskegon Brewing Co., 100 Michigan, 347; Gillespie v. People, 188. Illinois, 176; Templar v. Michigan St. Board, 90 N. W. Rep. 1058.

MR. JUSTICE PECKHAM, after making the foregoing statement, delivered the opinion of the court.

The validity of this very statute of Arkansas (at least until Congress legislates upon the subject) has already been affirmed by this court, Woods & Sons v. Carl, 203 U. S. 358, and the validity of statutes of a somewhat similar nature has also been affirmed in the case of Allen v. Riley, 203 U. S. 347, immediately preceding the case above cited.

It is sought to avoid the authority of our decision upon this Arkansas statute by asserting that nothing was therein decided, except the validity of the first section of the act, and that the validity of the act when considered in connection with the fourth section was not argued or decided. The fourth section reads as follows: "This act shall not apply to merchants and dealers who sell patented things in the usual course of business." Other reasons for an affirmance are set up in the brief of respondent.

The grounds given for the decision by the Circuit Court and the Circuit Court of Appeals differ somewhat. The Circuit Court says that the effect of the fourth section of the statute is to violate that portion of the Fourteenth Amendment to the Federal Constitution, which provides that no State shall

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deny to any person within its jurisdiction the equal protection of the laws; while the Circuit Court of Appeals bases its judgment upon the unlawful discrimination evidenced by the act against those who are protected by a patent granted by the United States.

In 203 U. S. 358, supra, this court held the statute valid as against an objection of the same nature as that taken herein by the Circuit Court of Appeals. Our decision in that case had not been made at the time of the decision of this case in the courts below. The ground taken by the Circuit Court was not discussed in our opinion in 203 U. S. and although it might be urged that all objections to its validity arising upon the face of the statute, even if not specially discussed, were overruled by the decision; yet assuming that the particular question now presented is still open in this court, we are of opinion that the exception contained in section four does not render the statute invalid. The plain purpose of the whole statute is to create and enforce a proper police regulation. Its passage showed that the legislature was of opinion that fraud and imposition were frequent in the sale of property of this nature, except in the cases mentioned in § 4, and that temptations to false representations in regard to the virtues and value of the article sold were also frequently yielded to. When the sale of the article was effected by such representations, and a note given for the amount of the sale, a transfer of the note to a bona fide purchaser for value before its maturity prevented the vendee from showing the fraud by which the sale had been accomplished. In order to reach such a transaction and to permit the vendee to show the fraud, the statute was passed. It was doubtless thought that merchants and dealers, as mentioned in the statute, while dealing with the patented things in the manner stated, would not be so likely to make representations or to engage in a fraud to effect a sale, as those covered by the statute. The various itinerant vendors of patented articles, whose fluency of speech and carelessness regarding the truth of their representations, might almost be said to have

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