U.S. v. Carolene Products Co.

US Constitutional Law

US v Carolene Products Co
Image: ‘Oreo Cookies and Milk’ by Mick McGinty

Amendment rights and the need to protect against fraud, are central to a case involving a distributor of food products and the intervention by Congress in the interests of public safety when in 1938, a corporate entity was indicted under §§ 61 and 62 of the Filled Milk Act 1923.

After having shipped a number of containers of ‘Milnut’, a product that fell within the scope of the Act, and which resulted in a sentence of either imprisonment or a $1000 fine as per § 63, the now appellee was charged with illegal distribution and misrepresentation, within which § 62 clearly expressed how:

“It is declared that filled milk, as herein defined, is an adulterated article of food, injurious to the public health, and its sale constitutes a fraud upon the public. It shall be unlawful for any person to ship or deliver for shipment in interstate or foreign commerce, any filled milk.”

Whereupon the matter was taken to appeal before the U.S. Supreme Court under the Criminal Appeals Act 1907. Here, the appellee demurred that application of the 1923 Act was subject to the limitations prescribed by the tenth amendment to the U.S. Constitution, which states that:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

And that seizure of the prohibited goods was a breach of the Fifth Amendment to the Constitution, which expresses how:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury…nor be deprived of life, liberty, or property, without due process of law…”

Therefore the decision by Congress to create and apply prohibitive legislation which conflicts with the aims of the Constitution, was both ultra vires and an affront to the privacy rights and freedoms of the individual citizens of the United States of America.

Contrastingly, the Court drew reference to Hebe Co. v. Shaw, in which the Supreme Court ruled that any state law forbidding the manufacture and sale of filled milk under § 6(c) of the 1923 Act, which clarified how:

“The term ‘filled milk’ means any milk, cream, or skimmed milk, whether or not condensed, evaporated, concentrated, Powdered, dried, or desiccated, to which has been added, or which has been blended or compounded with, any fat or oil other than milk fat, so that the resulting product is in imitation or semblance of milk, cream, or skimmed milk, whether or not condensed, evaporated, concentrated, powdered, dried, or desiccated.”

Was not an infringement of the Fourteenth Amendment of the Constitution, which again stipulates that:

“No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

This translated that while the rights afforded under the Constitution were exempt from the wishes of Congress, the importance of public interest and compelling evidence submitted by the House Committee on Agriculture and the Senate Committee on Agriculture and Forestry in relation to ‘doctored’ milk, justified the prevention of misrepresentation through sensitive regulation, as opposed to wanton deprivation of liberty or distortion of justice. Thus it was for this fundamental reason that the Court dismissed the demurrer and reversed the judgment accordingly.

R v Lambie

English Criminal Law

 

R v Lambie
Image: ‘Red Purse’ by Vladimir Kush

Fraudulent misrepresentation and the need for proof of inducement, may at first seem like prudent adjudication, however when the facts are properly assembled, there is little doubt as to whether the act itself was one of corroboration through personal gain, or a simple exploitation of the contractual arrangements between credit and debtor.

In the winter of 1980, the now respondent was convicted for obtaining pecuniary advantage by deception under s.16(1) of the Theft Act 1968 after an indictment on two counts, one of which was quashed, while the second occurred during a period after the lending bank had recalled the credit card used.

Having been granted use of the card in spring 1977, the bank had, after a period of time, requested its return after the respondent had incurred a debt far in excess of the prescribed limit of £200. On 6 December 1977, the respondent agreed to return the card, after which she entered into a transaction in a Mothercare store on 15 December 1977, before returning the card on 19 December, at which point the debt had increased to a princely £1005.

At the trial, the jury returned a verdict against the respondent, after which she appealed on grounds that the store clerk had, by her application of store policy regards their relationship with the bank, allowed the transaction to proceed, not because she had been falsely induced, but rather because the credit card was (i) within the expiration date, (ii) not on the store’s ‘stop list’ and (iii) the respondent’s signature matched that on the card. It was also argued that the mere presentation of the card did not indicate anything more than that of a right to use it, as opposed to any representation on behalf of the bank, therefore liability for deception could not stand.

With doubts as to the exactness of related precedent, the Court of Appeal reluctantly overturned the conviction, during which Cumming-Bruce LJ remarked:

“By their contract with the bank, Mothercare had bought from the bank the right to sell goods to Barclaycard holders without regard to the question whether the customer was complying with the terms of the contract between the customer and the bank.”

At which point the County Chief Constable appealed under s.33(2) of the Criminal Appeal Act 1968, and the matter was again presented before the House of Lords. Here, the facts of R v Charles were given deliberate consideration, in particular the commentary by Diplock LJ who had explained:

“By exhibiting to the payee a cheque card containing the undertaking by the bank to honour cheques drawn in compliance with the conditions endorsed on the back, and drawing the cheque accordingly, the drawer represents to the payee that he has actual authority from the bank to make a contract with the payee on the bank’s behalf that it will honour the cheque on presentment for payment.

What creates ostensible authority in a person who purports to enter into a contract as agent for a principal is a representation made to the other party that he has the actual authority of the principal for whom he claims to be acting to enter into the contract on that person’s behalf.

[T]hen, is he bound by the contract purportedly made on his behalf. The whole foundation of liability under the doctrine of ostensible authority is a representation, believed by the person to whom it is made, that the person claiming to contract as agent for a principal has the actual authority of the principal to enter into the contract on his behalf.”

Which meant that despite the protestations of exemption from the transaction, the respondent was inevitably liable for deception when using the card in the knowledge that it was the property of the issuing bank, and that the period for its used had since expired. It was also noted by the House that when introducing the concept of inducement into any act of fraud, the words of Humphrey J in R v Sullivan reminded the judiciary that:

“[I]t is patent that there was only one reason which anybody could suggest for the person alleged to have been defrauded parting with his money, and that is the false pretence, if it was a false pretence.”

At which point the House unanimously reversed the decision of the Court of Appeal and awarded due judgment for the Crown.

 

Hasham v Zenab

English Contract Law

Hasham v Zenab
Image: ‘Palace Gate, Udaiper’ by Colin Campbell Cooper

Specific performance and cessation of contract on grounds of mistake, are both viable arguments for either continuation of contractual obligations, or the cessation of a transaction for reasons non-detrimental to both contractees. However, both approaches rely upon the honesty and accountability of at least one party should the courts take a view to upholding either of them.

In this instance, a Gujarati widower entered into an agreement to convey a determinate plot of land for an agreed sum, yet immediately after signing the disposition, she tore up the document and refused to continue with the transaction on grounds that she had been misled as to (i) the size of the plot and (ii) the identity of the individual to whom the purchaser was planning to sell it to.

During initial litigation, her argument for the fraudulent misrepresentation was based upon her limited grasp the English language, and so she had elected a representative to be present with her at the time of signing. However, it was also argued that no mention had been given of the size of the plot, which in the first instance was alleged to be half an acre, and not the two acres contained within the conveyance, a fact discovered only after the signing.

When cross-examined, the respondent was proven to have falsified the statement, and thus her witness was accused of perjury, whereas contrastingly, the appellant contested that during preliminary talks, the proposed plot was described as two acres, and not the half-acre suggested. The contract itself was signed in the presence of a third party, however the respondent also relied upon the contention that at no point during an earlier meeting did anybody translate the contents of the contract, despite the appellant claiming that not only did he explain it, but the respondent’s cousin had also clarified its contents to her. It was likewise argued by the appellant that the respondent tore up contract, not because of the plot variation, but upon the knowledge that the land was to be resold to an individual she had a dislike of; however this was also proven to be untrue after lengthy cross-examination and questioning of oral evidence.

Upon summation, the trial judge awarded in favour of the appellant, despite reservations around the integrity of both parties, and so when presented to the Court of Appeal, the Court took issue with the reliability of the appellant’s statements and proceeded to reexamine the facts before reaching the exact same conclusion as the lower court.

Take finally to the House of Lords, it was noted that vol.2 of ‘Williams on Vendor and Purchaser’ clearly illustrated that:

“[A]s a rule, either party to a contract to sell land is entitled to sue in equity for specific performance of the agreement. This right is, in general, founded on a breach of the contract, but not in the same manner as the right to sue at law. The court has no jurisdiction to award damages at law except in case of a breach of the contract; while the equitable jurisdiction to order an agreement to be specifically performed is not limited to the cases in which at law damages could be recoverable.”

Which translated that when contracting parties hold a good account of themselves throughout their dealings, equity would provide sufficient weight as to instigate specific performance; yet on this occasion, neither party had been anywhere near as truthful as a court would rightfully expect, and so on this principle it was impossible to uphold the appeal, nor enforce the equitable rights of the appellant or those forwarded by the respondent.