Allenberg Cotton Co., Inc. v. Pittman
In Allenberg Cotton Co., Inc. v. Pittman, 419 U.S. 20, 95 S.Ct. 260, 42 L.Ed.2d 195 (1974), the Court reviewed a decision by the Mississippi Supreme Court holding that a Tennessee-based cotton buyer's transactions with a Mississippi cotton farmer were wholly intrastate in nature and thus that the Commerce Clause was not violated by its decision that the buyer could not recover damages for breach of a contract to deliver cotton as a consequence of its failure to qualify to do business in Mississippi.
The nature of the transaction involved in Allenberg was described by the Supreme Court:
Appellant is a cotton merchant with its principal office in Memphis, Tenn. It had arranged with one Covington, a local cotton buyer in Marks, Mississippi, "to contract cotton" to be produced the following season by farmers in Quitman County, Mississippi. The farmer, Pittman, in the present case, made the initial approach to Covington, seeking a contract for his cotton; in other instances Covington might contact the local farmers. In either event, Covington would obtain all the information necessary for a purchase contract and telephone the information to appellant in Memphis, where a contract would be prepared, signed by an officer of appellant, and forwarded to Covington. The latter would then have the farmer sign the contract. For these services Covington received a commission on each bale of cotton delivered to appellant's account at the local warehouse. When the farmers delivered the cotton, Covington would draw on appellant and pay them the agreed price. (419 U.S. at 22-25, 95 S.Ct. at 262-63, 42 L.Ed.2d at 199-200.)
The Court noted that standard forward cotton contracts, like the one in the case before it, play a highly functional commercial role by helping to guarantee some measure of stability in the intricate interstate marketing mechanism for cotton.
After reviewing some of its earlier cases construing the permissible reach of state regulation of interstate commerce, the Court concluded "that Mississippi's refusal to honor and enforce contracts made for interstate or foreign commerce is repugnant to the Commerce Clause." (419 U.S. at 32, 95 S.Ct. at 267, 42 L.Ed.2d at 205.)