Lemke v. Farmers Grain Co. of Embden

Background

A cooperative elevator and warehouse in Embden, North Dakota, brought this suit. The cooperative buys, stores, and ships farmers’ grain and returns any surplus to growers. Most purchases are made to ship and sell the grain at terminal markets in Minnesota (Minneapolis and Duluth). North Dakota enacted a 1919 law requiring licenses for buyers, state inspection, grading, weighing, and allowing a state officer to fix the margin or profit buyers may take.

Reasoning

The core question was whether these buyer‑licensing, inspection, and margin rules were an ordinary local regulation or an unlawful control of trade across state lines. The Court concluded that the cooperative’s buying and shipping practices were part of trade that crosses state lines. Because the state law directly regulated who could buy and how much profit they could take on grain destined for other states, the Court held the law placed a direct burden on interstate trade and exceeded state power. The Court also explained that the appeals court properly handled the case because federal law issues were involved.

Real world impact

The decision prevents North Dakota from using this law to control purchases and fix profits on grain that is bought to be shipped out of the State. Buyers who operate to ship grain to terminal markets cannot be made subject to state price‑fixing in this way. The ruling affirms that sales and purchases effectively part of interstate shipment are governed by national commerce principles rather than state rules.

Dissents or concurrances

Three Justices dissented, arguing the law aimed to protect farmers from local fraud and did not conflict with federal inspection rules as applied; they would have allowed most parts of the statute to stand to protect producers.