# Plaintiffs Brief — Schick v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Plaintiffs Brief
- **Published:** January 1, 1904
- **Citation:** 195 U.S. 65

## Text

I ei ak iy: |

T 3 1903
OLEOMARGARINE TAX casEs.} OC 3 |

wm KERNEY,
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—— ee ee

——_—"

SUPREME COURT OF THE UNITED STATES.

Ocroser TERM, 1903.

Aucusr Curr,
Plaintiff in error
US. ow y No. 614, October
Term, 1902.
No. 221, October
Term, 1903.

Tue Unirep Srares.

In error to the District Court of the United States
for the Northern District of Illinois.

{
FREDERICK J. Scuick,
Plaintiffinerror, |

vs. | No. 615, October
ee tear ' erm, 1902.
THE Unitep Starrs. | No. 222. October
In error to the District Court of the United States | Term, 1903.
for the Northern District of Hlinois. |
nee
WiLLiaM Broapwe tt,

Plaintiff in error,
vs.
Tue Unitep Srares. Term, 1902.
No. 223, October

In error to the District Court of the United States Term, 1903.

for the Northern District of ‘ilinvis.

Leo W. McCray,
Plaintiff in error,

VS. f
No. 301, October
Tue Uniten Sratrs. Term, 1993.
In error to the District Court of the United States

for the Southern District of Ohio.

sRIEP FOR PLAINTIFFS IN ERROR.

Wiiutam D. Gurnee,
MILLER Ovu7Tcatt,
CHarces E. Prior.
Francis J. Kearrer,
Drvavan B. Core,
Ciaries C. CARNAHAN,

OF counsel.

pWashington, October Term, 1903.

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Fe age MDS

[ 18,842, 18,843. 18.844, 18,952.)

OLEOMARGARINE TAX CASES,

SUPREME COURT OF THE UNITED STATES.

4
4 +, “ey “ew >
7 OCTOBER TERM, 1903.
yt,
r seine a eR a saa |
‘ AvuGUST CLIFF,
Plaintes En error, No. 614, October
5 ees Term, 1902.
: THE Unirep Srares. No, 221, October
“ a : Term, 1903.
q In error to the District Court of the Unnted States
for the Northern District of Hlinois.
FREDERICK J. SCHICK,
i Mane in error, | wo. 615, October
H nis Term, 1go02.
; THE UNITED SPares. Ne, 222, October
e , oe , : a Term, tyo3.
5 In error to the District Court of the United States
for the Northern District of Mlinois.
’ - _
; WILLIAM BROADWELL,
: No, 616, October
are Seed te ‘ 7 Term, 1902.
PHeE UNITED Srares, No. 223. October
In error to the District Court of the United States Perm, 1903
for the Northern District of Wineis.
Leo W. McCray,
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and raw material found on the premises, and by fine
not exceeding five thousand dollars and imprison-
ment for not more than three years. Section 18 pun-
ishes by a penalty of one thousand dollars, and _for-
feiture of all oleomargarine owned by the offender if he
be a manufacturer, all failures to comply with the act not ;
otherwise punished. Section 19 provides * that all fines,
penalties and forfeitures imposed by this act may be re-
covered in any court of competent jurisdiction.” Section
20 provides * that the Commissioner of Internal Rev-
enue, with the approval of the Secretary of the Treas-
ury, may make all needful regulations for the carrying
into effect of this act.” Section 21 of the original act

provides for its going into effect ninety days after its
passage, and the act, as amended (under the last section
of the act of May 9. 1902), went into effect on July 1,
1902.

On the trial of each case, it was contended by the
defendant that, in so far as this act imposes a tax of

ten cents per pound on olcomargarine containing

= RETR

* artificial coloration that causes it to look like butter of
any shade of yellow,” it was in contravention of the
Constitution of the United States and the amendments
thereto, because it constituted an invasion of the powers
reserved to the several States and deprived him and the
oleomargarine manufacturers and dealers in the United
States of liberty and property without due process of
law. In the CZf/and J/eCray cases it was contended also
that the act was unconstitutional in so far as it authorizes
the Commissioner of Internal RKevcnue “to decide
what substances, extracts, mixtures, or compounds ‘

which may be submitted for his inspection in con-

20458

—
‘

tested cases are to be taxed under this act,” and pro-
vides “ that his decision in matters of taxation under
this act shall be final,” on the ground that it dele-
gates to an inferior administrative officer the power
finally to determine an essentially judicial ques-
tion. Notwithstanding these contentions, judgment
was rendered in favor of the government imposing the
statutory penalty of fifty dollars in each case (Cliff
record, pp. 22-245 Schick record, pp. 19-215 Broadwell
record, pp. 19-21; WMeCray record, pp. 5-7). ‘There-
upon, the cases were brought direct to ihis court
by writ of error under authority of section § of
the judiciary act of March 3, 1891, as involving the
construction or application of the Constitution of
the United States and also as cases in which the
constitutionality of a law of the United States was
drawn in question. 20 Stat. $27, c 5173 Jlotes v.
United States, 178 U.S. 458; 406; Fairbank v. United
States, 181 U.S. 283, 254.

In the Cliff case, the Government showed that the
defendant was a eeneral grocer and retail dealer in
oleomargarine in Chicago; that on December 22, 1902,
he had in his possession a ten pound package of oleo-
margarine of a color resembling June butter and bearing
a tax-paid stamp at the rate of one-fourth of one cent
per pound; that the article was composed of oleo
oil, neutral lard, cotton-seed oil, milk, common sait and
palm oil; that the color of June butter was imparted
to it by the palm oil it contained; that the oleomarga-
rine had been manufactured in the month of Decem-
ber, 1902, by Wm. J. Moxley, Incorporated, factory
No. 5, at the corner of Clinton and Randolph Streets,

SG ERGO EE BT 8

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8

in the City of Chicago, State of Illinois; that the pack-
age was put up, marked, stamped and branded in every
respect in accordance with the acts of Congress relating
to oleomargarine and the regulations of the Secretary
of the Treasury and the Commissioner of Internal
Revenue except that it bore only a tax-paid stamp of
one-fourth of one cent per pound, and that the defend-
ant admitted to the collector at that time that he pur-
chased and received from the Moxley Company the oleo-
margarine in question for the purpose of sale as oleo-
margarine, knowing its character and ingredients and
the amount of tax paid thereon (CZ record, p. 8).

Inthe Schick case substantially the same showing was
made, except that it appeared that the package of oleo-
margarine involved in that case admittedly contained
‘artificial coloration,’ namely, Wells-Richardson’s Im-
proved Butter Color, and that the packave bore only a
tax-paid stamp at the rate of two cents per pound (Schick
record, p. 8).

In the Broadwell case the same showing as in the
Schick case was made, except that the package of oleo-
margarine bore no stamp and no tax had been paid on
it (Broadwell record, p. 8).

The operation and effect of the act were shown by
undisputed evidence offered and adduced on behalf of
the defendant in each case, as follows:

Oleomargarine is designed to be used as a substitute
for butter and to that end is colored as butter is
colored. There is substantially no difference between
yellow olcomaryarine and yellow butter. They are
identice! as to the chemical elements of each, except
only a slight difference in proportion. They each con-

9

tain olein, stearin, palmatin, butyrin and coloring matter.
The first three elements olein, stearin and palmatin,
are the principal components, are exactly the same in
oleomargarine and butter, and constitute more than
go per cent. of the finished product in both cases.
The amount of butyrin varies slightly, being about six
per cent. in good butter, and somewhat less in oleomar-
garine, depending upon the amount of milk, cream or
butter used in its manufacture, as butyrin is found only in
milk, cream or butter. The amount of coloring matter in
butter varies at different periods and according to the con-
dition and food of the cows. It is universally colored
throughout the year to a uniform-shade of yellow, but
requires more color in the winter, when it is white, than
in the spring, when it has some natural color, especially
if the cows have been fed on green grass or clover.
There is nothing, however, in these slight differences
which renders butter more wholesome or digestible
than oleomargarine as an article of food, and
the coloring matter used in both cases is harmless.
Yellow oleomargarine and yellow butter are used tor
the same identical purpose, and compete with each
other in the market. The reason for coloring these
products is the same in both cases: because the
consumers demand it. A necessary element of the
marketability of each is a certain shade of yellow which
must be imparted to the product before it can be sold.
There is no market either for uncolored oleomargarine
or uncolored butter, except, in the case of oleomar-
garine, as a substitute for lard, and, in the case of butter,
a small quantity of sweet unsalted butter is sold to sup-

ply the Jewish settlements. It costs less to produce

1¢

oleomargarine than it does to produce butter, and to this
extent, oleomargarine successfully competes with and
tends to cheapen butter; »dut this difference in cost
is not great enough to enable the colored oleomargarine
to be sold after paying the tax of ten cents per pound
except occasionally when the price of butter is abnor-
mally high (CZ record, pp. 8-21; Schzck record, pp.
8-19; Broadweli record, pp. 8-19).

Prior to July 1, 1902, when the act of May 9, 1902,
went into effect, the business of producing and _ selling
yellow oleomargarine had been able to compete with the
yellow butter industry to a very considerable extent. It
was shown that the Moxley plant, at which the packages
involved in these cases were manufactured, had been
in operation since 1884, supplying the trade in various
parts of the United States with yellow oleomar-
garine designed to be used as a_ substitute for
butter, and had grown to a capacity of between three
and four million pounds per month. Prior to July 1,
1902, the entire output of this factory was all artificially
colored as butter is colored. Thereafter, it could not
be manufactured and sold at a profit after paying the tax
of ten cents per pound, and for the first five months none
of the colored article was produced or sold. In Decem-
ber, 1902, owing to the abnormally high price of butter,
the Moxley Company was enabled to sell 37,594 pounds
of colored oleomargarine, as compared with an output of
about 2,000,000 pounds per month prior to July 1; but
when butter fell again to its normal price, oleomaryarine
bearing the tax of ten cents per pound was practically
unable to compete with it. The uncolorea product,

so far as could be ascertained, was sold for cook-

11

ing purposes, but only in comparatively small and
uncertain quantities, because the relative cost of
production was such that oleomargarine could
not ordinarily compete with lard, although more
desirable than lard for cooking purposes (Cif
record, pp. 18-20). Amundsen, a retail dealer
in Chicago, who obtained his supplies from this factory,
had worked up a business among the laboring classes of
Chicago amounting to sales of 2,600 pounds per week.
‘The customers * knew that it was oleomargarine and not
buiter and they bought it because it was cheaper than
butter’ (26. p.17). But when the ten cent tax was to be
paid it was cheaper to buy butter, and they would not
have the uncolored article. As a consequence, to quote
the witness, ‘every customer I had quit” (7d.). There-
after, he supplied a part of the trade with butter for
table use, selling white oleomargarine only for cooking
purposes (26. pp. 16-17). Izard, a restaurant proprietor
in Chicago, furnished yellow oleomargarine almost ex-
clusively to his patrons, who had no objection to it so
long as it had the proper color. After July 1, 1902, he
could not use it because it was white and the addition of
ten cents per pound to the price of colored oleomar-
garine resulted in the use by him of colored butter
almost exclusively. The uncolored oleomargarine he
could use only for cooking in place of lard (26. pp.
17-18).

In the Cif and MWceCray cases, where the package
was tax-paid at the rate of one-fourth of one cent
per pound, there was an additional question as to
whether the package contained ‘artificial’ coloration
within the meaning of section 8 of the act by reason of

Goer: . ¥

12

the admixture of palm oil or colored butter. Upon this
issue also the facts were undisputed. In the C/f case,
the government showed that the article was of the color
of June butter, and that this color was imparted to
it by the admixture of palm oil in its manufacture
(Cif record, p. 8). The defendant showed by compe-
tent testimony that palm oil is a vegetable oil derived
from the fruit of a certain kind of palm which grows
in East Africa, that it is a digestible and edible
oil, containing all the chemical constituents of butter,
except butyrin, that it is used by the natives of
the country where it is produced as an article of
food, that it is reddish-yellow in appearance and a
very small proportion of it is sufficient to produce
what is considered a desirable color in oleomargarine,
that there is little, if any, difference between the
taste of oleomargarine made in this way and _ the
taste of butter. that it is quite as digestible as
butter and is very cheap, that the oleomargarine
thus produced is substantially the same product as
good butter, and that the nature of palm oil is such
that, by the process of refining, its intense color may be
partially eliminated, thus rendering its use in consider-
able quantities desirable in the manufacture of oleomar-
garine apart from its yellow color (zd. pp. 10-13). These
facts being wholly undisputed, the conviction was
based on the assumption that the question thus pre-
sented had been foreclosed by the final decision of the
Commissioner of Internal Revenue, who had ruled that
palm oil in oleomargarine does constitute ‘ artificial ’
coloration (7. pp. 9, 10), and had instructed the prose-
cuting witness, a Deputy Collector of Internal Revenue,

13

that its use would subject the product to the tax of ten
cents per pound (2d. p. 8).

In the J/Cray case the government alleged in its
complaint that the defendant had purchased for sale
as a retail dealer a package of oleomargarine con-
taining ‘“‘coloring matter that caused it to look like
butter of a certain shade of yellow,” and bearing
a tax-paid stamp at the rate of only one-fourth of one
cent per pound (J/cCray record, p. 2). These allega-
tions were admitted by the defendant, who averred
by way of defense that the coloring matter contained
in the article was that contained in the creamery
butter used by the manufacturer of the oleomargarine
as one of its elementary and necessary ingredients,
according to a formula used in the course of business,
which creamery butter contained Wells-Richardson’s
improved butter color, a harmless substance, universally
used in the United States in the manufacture of butter,
for the purpose of imparting a deep yellow color,
that said creamery butter was purchased in the open
market for said purpose, that no additional or other
coloring matter of any kind whatsoever was used or
introduced into said oleomargarine, that said oleomarga-
rine contained nothing but oleo oil, neutral lard, cream-
ery butter, milk, cream and common salt, and was whole-
some and nutritious and free from any deleterious or in-
jurious ingredient; that said package had been “ packed,
marked, stamped, branded and labeled, in compliance
with all the provisions of said acts and with all the
regulations thereunder prescribed by the Commissioner
of Internal Revenue and the Secretary of the Treasury,”
that “the cost of manufacture of the wholesome and

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14

nutritious oleomargarine like that contained in said
package is such that it cannot be sold in competition
with butter if the tax of ten cents per pound be imposed
and paid,” and that there is little demand in the United
States for either uncolored butter or uncolored oleo-
margarine (2d. pp. 3-5). These facts were admitted by
the demurrer of the government which the court sus-
tained (7d. pp. 6, 7).

The historical facts concerning oleomargarine will
be found in Encye. Brit., vol. 17, p. 760; Century
Dict. & Cyc., vol. 5, p. 4101; Oleomargarine Regula-
tions, U.S. Int. Rev., June, 1902, pp. 11-15; ‘ The
Oleomargarine Bill” (Gov. Print., 1901), resumé pp.
815-885; People v. Marx, 99 N. Y. 377, 382-383:
Feople v. Arensberg. 105 N.Y. 123, 129-132; People ex
rel. Moxley v. Pease, 30 Chicago Leg. News, No. 34;
Ex parte Scott, 66 Fed. Rep. 45. 48; Schollenberger v.
Pennsylvania, 171 U.S. 1, 8-12: ln re Brundage, 96
Fed. Rep. 963, 965.

Shortly after the Franco-Prussian war of 1870-1871,
the French government decided that it was of the
utmost importance that some cheap and wholesome sub-
stitute for butter should be discovered for the relief of
the poor in the great cities and manufacturing centers
who were unable to obtain butter. To that end a prize
was offered to scientists, and the result was the invention
of oleomargarine by M. Mege-Mouries (Encyc. Brit.,
Vol. 17, p.760). This invention was immediately recog-
nized and hailed as a boon to humanity, and soon sprang
into use all over the world. It was at first made by
treating pure beef fat by acertain process. Afterwards,
in order to make the product more wholesome and

SO46E

15

digestible as well as more palatable, various modifications
in the process were from time to time introduced. The
present method is to take selected fat of the steer, re-
duce it to oil, which is called ‘oleo oil,’ and then mix
and work this oleo oil with natural lard, milk, cream and
butter. Oleomargarine furnishes a very valuable by-
product of the slaughter houses and packing establish-

ments, and the effect has been to utilize what had before
gone to waste, to increase the value of beef cattle and to
decrease the price of butter. It has practically no com-
mercial use or value, except as a cheap and wholesome
substitute for butter and as such it necessarily competes
with butter. If it is not allowed to be used as a
substitute for or to compete with butter, the discovery
is of no practical utility to mankind.

The commercial character of oleomargarine is de-
scribed by Mr. Justice Peckham in the case of Schollen-
berger v. Pennsylvania, 171 U.S. 1, 8-12. The growth
and extent of the use of oleomargarine in every
civilized country is part of the common history of the
times. The official records of the United States govern-
ment show that the output during the twelve months

ending June 30, 1900, amounted to 107,045,028 pounds,
an average of 8,920,419 pounds per month, and that

a the revenue collections from oleomargarine in 1900
were $2,543.785.! On the other hand, the same records
show the yearly sales of butter to have been 1,492,699,-
143 pounds;? so that the production of oleomargarine
was only about seven per cent. of the amount of butter
manufactured. As oleomargarine was invented and is

’ Senate Doc. 168, 57th Cong., Ist session.
° Twelfth Census, 1900, vol. 1X, Manufactures, pt. III, p. 517.

pars mm

16

used commercially almost wholly as a_ substitute
for butter and in competition with butter, it is
desirable that its flavor and color should be similar to
the flavor and color of butter, and hence the necessity
for the use of flavoring and coloring matter, being the
same as that used to color and flavor butter. Oleo-
margarine is colored yellow for exactly the same reason
that butter is colored, namely, to meet the taste and
demand of the public.

In 1886 Congress determined to tax oleomargarine
and regulate its manufacture. The act of August 2,
1886, contained a definition of oleomargarine and of
butter which recognized the use of coloring matter as an
element in the manufacture of both articles. It treated
all oleomargarine, no matter how colored, as one article
for the purposes of taxation. The tax then imposed
was at the rate of two cents per pound, and between
November 1, 1886, and the close of the year 1901
more than $21,000,000 had been paid as_ taxes
under this law. The act of Congress of May 9,
1902, does not change these definitions, but oleo-
margarine is classified according to color, and that * free
from artificial coloration that causes it to look like but-
ter of any shade of yellow” is taxed at one-fourth of
one cent per pound, while that containing “ artificial
coloration that causes it to look like butter of any shade
of yellow,” is taxed at ten cents per pound, or forty
times as much.

The discussion in this briet will proceed upon the face
of the act of Congress in question and its undisputed
practical operation and effect, which is to prohibit
the sale of yellow oleomargarine. No quotations will

17

be made from the debates in which the real purpose
of the enactment may have been declared by indi-
vidual members, because counsel are apprehensive that
such debates are not admissible. Avowlton v. Moore, 178
U.S. 41,72. Under the decisions, the question is most
perplexing. The court frequently does refer to these
debates for information, and yet has often declared that
they are not admissible to show purpose or motive or to
determine the intention of particular legislation. The true
rule appears to be that debates may be referred to in
order to show the occasion for the legislation and the
circumstances surrounding its enactment, but not in
order to ascertain the individual motives or purposes of
its promoters or to control the meaning of the language
used. As, in the present cases, reference to the de-
bates would involve a showing of individual motives
and purposes calculated, as it might be charged, to ex-
cite prejudice and sympathy, which counsel are not
satisfied constitute proper elements in the strictly legal
judgment which the court is required to render, they
will not be referred to in argument. It is enough to say
that the supposed * exigencies which led to the passage
of the act” and “the reasons for fixing the duty at this
amount’ may be ascertained by examining the de-
bates.!_— If the court shall reach the conclusion that it will
consult these evidences of leyislative intent and purpose,
the references in the margin may be of convenience.?

"American Net & Twine Co. \. Worthington, 141 U.S. 468, 474; Al-
dridgev. Wrliams, 3 Yow. 9, 24; Jeantso a NV. Avrh, 98 U. S. 453. 459;
Plattv. Union Pacific R. R. Co., 99 U.S. 48, 64. See also //oly Trinity
CRUELE v. Untted States, 143 U.S. 457, 463; Zhe Delaware, 161 U. §.
459. 472; Duilap v. United States, 173 U.S. 65. 75. United States v.
Vretght . Asso dation, 166 U. S. 290, 318, 360.

? Cong ressional Record, 57th Cong., Ist sess., vol. 35, part 2, pp. 1251
ef Seg., 1299, 1310, 1544; part 3, pp. 3192, 3195, 3196, 3246, 327 O- 3274,
3280, 3322, 3452, 3458, 3406, 3467, 3499-3514, 3556, 3595-3597-

12
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18

ASSIGNMENT OF ERRORS.

Error in refusing to hold that the provisions of the
act of Congress of August 2, 1886, as amended by the
act of Congress of May 9, 1902, were in contravention
of the Constitution of the United States and the amend-
ments thereto, in that—

(1) They constitute an encroachment upon and inter-
ference with the powers reserved to the several
States;

(2) They deprive the plaintiffs in error of liberty and
property without due process of law;

(3) They invest an administrative officer with the
power finally to determine essentially judicial ques-
tions.

Error in striking out and refusing to consider proper
evidence offered and received on behalf of the defend-
ants below in the first three cases, tending to prove:

(1) That oleomargarine is a substitute for and com-
petes with butter, that the market demand for and
commercial value of both butter and oleomargarine re-
quire that they shall havea certain shade of yellow during
all seasons of the year, and that there is practically no
market either for uncolored butter or uncolored oleo-
margarine;

(2) That the cost of production of oleomargarine is
such thai, after payment of a tax of ten cents per pound
thereon, it cannot be sold.

The questions presented under these assignments of
error may be classified for the purposes of argument
under the following heads, viz.:

et
es

PS th
E

pa sea arg 8 TI : j > 4a SOAR
Re - we NS oe

19

I. The power of Congress to levy excise taxes on manufac-
tures (pp. 19-28).

Il The internal commerce of the States and the exercise
of the taxing power by Congress (pp. 28-52).

Ill. The restrictions upon the taxing power contained in
the Fifth Amendment (pp. 52-70).

IV. The provision of section 14 of the act conferring
judicial power upon the Commissioner of Internal
Revenue (pp. 70-75).

V. Effect of the invalid amendment upon the original act
(pp. 75-76).

i

THE POWER OF CONGRESS TO LEVY EXCISE TAXES ON MANUFAC-
TURES.

The Constitution of the United States grants to
Congress (Art. I, sec. 8) “the power to lay and collect
taxes, duties, imposts and excises, to pay the debts and
provide for the common defense and general welfare of
the United States,” and directs that capitation and other
direct taxes shall be laid in proportion to the census or
enumeration, and that duties, imposts and excises
shall be uniform throughout the United States. Sub-
ject to these two directions, which are not strictly
limitations of power but rules prescribing the mode in
which the power shall be exercised.! the only express
limitation in the Constitution, as originally adopted, was
that no “tax or duty shall be laid on articles exported
from any State.”’?

An examination of the debates in the various conven-
tions to which the Constitution was submitted for ratifi-
cation and of the writings of that time will show that the
subject of federal taxation and the danger of oppression
from its exercise was discussed as much as any other fea-

* Chief Justice Chase in Veazée Pank v. Fenno, 8 Wall. 533, at p. 541.
? Art. 1, sec. 9; Fazrdank v. United States, 181 U.S. 283, 290.

OCD PR CME

SERRA A ARE EOE

20

ture, and that some of the States apprehended particular
injury from the power to levy excises on manufactures
and commodities. It was particularly objected by the
opponents of the Constitution that Congress was given
power to pass any law which it thought necessary and
proper in aid of the powers granted to it. The answer
of Hamilton in the Federalist was that Conyress could
not by its mere declaration make that necessary and
proper to the execution of its powers which, in its
essence, was not necessary and proper. His language
was (Ford's ed. No. 78, p. 521):
“If it be said that the legislative body are
themselves the constitutional judges of their own
powers, and that the construction they put upon
them is conclusive upon the other departments, it
may be answered that this cannot be the natural
presumption, where it is not to be collected from

any particular provisions in the Constitution.

It is not otherwise to be supposed that the
Constitution could intend to enable the repre-
sentatives of the people to substitute their will to

that of their constituents. It is far more rational to
suppose that the courts were designed to be an
intermediate body between the people and

the legislature, in order, among other things,

to keep the latter within the limits assigned to
their authority. The interpretation of the laws is

a proper and a peculiar province of the courts. The
Constitution is, in fact, and must be regarded by

the judges, as the fundamental law. — It, there-
fore, belongs to them to ascertain its meaning, as
well as the meaning of any particular act proceed-

ing from the legislative body. If there should
happen to be an irreconcilable variance between

the two, that which has the superior obligation and
validity ought, of course, to be preferred; or, in
other words, the constitution ought to be preferred

to the statute; the intention of the people to the
intention of their agents.”

ces SRE ES FE

2s & See SS Nae al :

21

Notwithstanding this assurance, destined as it was
to become an elemental feature of our constitutional
jurisprudence, ! it is well known that the consent of the
people in the necessary number of States was secured
only upon the pledge that amendments recognizing the
reserved powers of the States and protecting the indi-
vidual against the abuse of the powers granted to the
national government would be forthwith submitted.
Barron v. The Mayor and City Council of Baltimore,
- Pet. 243, 250. In pursuance of this pledge. the first
Congress (1 Stat. 97; Rev. Stat. p. 28, note) proposed
the first ten articles of amendment to the Consti-
tution, “in order,” as recited in the preamble of
the resolution, “* to prevent misconstruction or abuse
of its powers” and for the purpose of adding ** declara-
tory and _ restrictive clauses.” Of these restrictive
clauses, the Fifth Article provides that “ no person shall

be deprived of life, hberty or property, with-

out due process of law,” and the Tenth Article provides
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.”
These amendments are clearly to be regarded of equa
force and validity with the provisions of the Constitution
itself. As Mr. Justice Shiras, speaking for the court in the
recent case of Prout v. Starr, 188 U.S. 537. 543) 544 said:
“The Constitution of the United States, with

the several amendments thereof, must be regarded

as one instrument, all of whose provisions are to
be deemed of equal validity. . . .

l Varbury v. Madison, 1 Cranch, 137, 176-1795 McCulloch v. State of
Moryland, 4 Wheaton, 316, 421, 423; Hepburn v. Griswold, 8 Wall. 603,
614,615; Smyth v. Ames, 169 U.S. 466, 5273 Matter of Application
of Facobs, 98 N. Y. 98, 112.

é
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yet

paleo

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to

It is one of the important functions of this
court to so interpret the various provisions and
limitations contained in the organic law of the
Union that each and all of them shall be respected
and observed.”

But whether the Fifth and Tenth Amendments con-
stitute limitations upon the taxing power of Congress
has never yet been expressly adjudged. The wise rule
of our system of jurisprudence which confines adjudi-
cations by the courts to actual cases as they arise from
time to time, has made the growth of American constitu-
tional law extremely slow, and novel exercises of govern-
menta! power are constantly presented which require a
renewed exposition of fundamental principles and a re-
examination of the distribution of governmental powers
contained in the Constitution.! For centuries, the
principics of the common law have been growing by
slow steps to maturity and symmetry, evolving rules of
private justice as between man and man, and it is,
therefore, hardly astonishing that the growth of consti-
tutional jurisprudence also should be by slow and cau-
tious steps in the application to individual cases of
the eternal principles of public justice embodied in the
Consiiiution which protect personal liberty and prop-
erty against the abuse of the powers of government.
Although the Constitution has been in operation for one
hundred and fourteen years, this court has not yet ad-
judged whether there are any qualifications of the power
of Congress to levy taxes other than the rules of ap-
portionment and geographical uniformity, except in
so far as the instrumentalitics of the state govern-
ments are concerned.? Indeed, it was not until

' Leleus vy. Port f Motil. » Ring it. Ss, 4 t0, 638.
© The Collector V. Day, WW Wall. 113, 124; United States v. Railroad
Company, 17 Wall. 322, 327; Van Brocklin v. State of Tennessee, 117

23

May, 1900, in the case of Knowlton v. Moore, 178
U. S. 41, 92, that the true meaning of the provision

“uniform throughout the United States” was def-
initely settled to be geographical uniformity.! In
the later case of Wight v. Davidson, 181 U.S. 371;
377, Mr. Justice Shiras stated in the opinion of the
court, referring to a federal statute, that “ the consti-
tutional right against unjust taxation is given for the
protection of private property,” but did not discuss
what provision of the Constitution secured that right.?
And still later, in the case of Yatton v. Brady, 184 i,m
608, 622, we find Mr. Justice Brewer stating that the
rule of geographical uniformity was the only limitation
imposed upon Congress by the framers of the Constitu-
tion and the people who adopted it in respect of the
power to lay excise taxes. Yet, it cannot be supposed
that this language was intended to recognize the
existence of an unresirained taxing power, in view
of the dissent of the learned Justice in Knowlton v.
Moore, 178 U.S. 41, 110.

From the statement of facts, it appears that the inquiry
‘a each of the cases at bar is confined to the validity
of the act of Congress of May 9, 1902. in so far as
it operates upon the internal commerce of the States of
Illinois and Ohio. ‘The oleomargarine in question was
manufactured and sold in Illinois and Ohio by residents
of those States and the transaction was confined tu
U.S.151, 178; Mercantile Bank v. New York, 121 U.S. 138, 162; /a-
come Tax Cases, 137 U.S. 429, 5845 Plumer v. Coler, 178 U.S. 115,
117; Ambrosini v. United States, 187 U. S. 1,7, Sayder v. Bettman, 190
U. S. 249, 253-

‘See, however, Mr. Justice Field's discussion of the provision in

Income Tax Cases, 157 U.S. 429, at p. 592 ef seg.
2 See also Parsons v. District of Columbia, 170 U.S. 45, 51.

Bo erase cule

oe ee ee

ie

se)

Dee DPR NS ne SMR in Ne SME TR TOY eG SEN

24

the internal commerce of each State. It is, of course,
settled that Congress was not delegated any power
whatever to regulate the internal commerce of the
States, and that the regulation of such commerce
was expressly reserved to the States by the Tenth
Amendment. Gvbéons v. Ogden, 9 Wheat. 1, 194, 203;
License Cases, 5 How. 504. 574, 599; Vassenger Cases, 7
How. 283, 400; License Tar Cases, 5 Wall. 462, 470-471;
United States v. Dewitt, 9 Wall. 41, 44; Trade-Mark
Cases, 100 U. S. 82, 96-97: United States v. E. C.
Knight Co.,156 U.S. 1,12, 13. That the police power
never was surrendered by the States is also a proposition
that need not be argued. It is ‘conceded in all the cases.”
New Orleans Gas Co. v. Louisiana Light Co., 115 U.S.
650, 661; seealso Sn ve Rahrer, 140 U.S. 545,554. 556;
Plumley v. Massachusetts, 155 U.S. 461, 472; United
States v. E. C. Knight Co., 156 U.S.1, 11, 13; Connolly
v. Union Sewer Pipe Co., 184 U. S. 540, 558. Andthe
act now before the court, if grounded upon the attempt
to regulate the manufacture of dairy products and oleo-
margarine and their sale in the internal commerce of the
States, would be clearly beyond the powers of Congress
and unconstitutional. Uzy7tead States vy. Dewitt, 9 Wall. 41,
45; United States v. Fox, 94 U. S. 315, 320: Zrade-
Mark Cases, 100 U. S. 82, 96; Covington, Ce.
Bridge Co. v. Kentucky, 154 U.S. 204, 210; United
States v. E. C. Knight Co., 156 U.S. 1, 12. 13; United
States v. Boyer, 85 Fed. Rep. 424, 432.

The provisions of this act, so far as they affect the
internal commerce of a State, can, therefore, only be
sustained under the power of Congress to tax and to
employ necessary and proper means for carrying that

25

power into execution. It follows that the exact ques-
tion presented in the cases at bar is whether Congress
may prohibit the internal manufactures of the States
by means of a prohibitive tax.

The power of Congress to exclude any commodity
from interstate commerce or to lay a prohibitive ex-
cise tax upon articles transported between States in
order indirectly to accomplish that end, need not now
be discussed. It will be time enough to consider the
subject when a case actually involving that momentous
question shall arise, for it would be difficult to suggest
one of a graver character or the decision of which would
be more far-reaching. Nevertheless, we may remark,
‘nthe language of Mr. Justice Harlan, delivering the
opinion of the court in the recent Lottery Case, 188
U.S. at pp. 362-363:

“ The power of Congress to regulate commerce
among the States, although plenary, cannot be
deemed arbitrary, since it is subject to such limita-
tions or restrictions as are prescribed by the Con-
stitution. This power, therefore, may not be
exercised so as to infringe rights secured or pro-
tected by that instrument. It would not be diffi-
cult to imagine legislation that would be justly liable
to such an objection as that stated, and be hostile
to the objects for the accomplishment of which
Congress was invested with the general power
to regulate commerce among the several States.”

Nor. as to foreign commerce, is there any need to chal-
lenge or doubt the unlimited power of Congress to
exclude or prohibit, and, as a means to that end,
to lay prohibitive duties. Its authority to do so
does not rest upon the taxing power, for even if the

national government had no powcr to tax, its power

Jacana aie REE NG” MeN te SO EO oe eee

26

to regulate foreign commerce and international rela-
tions would be broad enough to support prohibitory
duties on imports. No one has ever doubted that
a governmental power to regulate international trade
included the power to tax it as a means of regulation.
The American colonies did not deny the authority of
the British Parliament to tax them as a regulation of
commerce. The War of the Revolution was precipitated
because Parliament sought to use this power for another
object, namely, the raising of revenue as such.'

It may, therefore, be conceded that Congress, under
the plenary power to regulate our relations with foreign
countries, can exclude commodities of any nature
whatsoever, and levy prohibitive taxes or protective
duties to accomplish that object. The power of Con-
gress—the legislative power of a sovereign nation—
to exclude foreign persons or commodities in_ its
judgment and discretion need not be challenged in the
slightest degree. But no one would seriously suggest
that any class of American citizens could be excluded
or deported under the same power which enables Con-
gress to exclude or deport aliens. United States
v. Wong Kim Ark, 169 U.S. 649, 653. When we say
that Congress may exclude or deport foreigners or their
products or publications from the United States, or
pass a non-intercourse law, or place an embargo upon
foreign ships or manufactures, we are but recognizing
the ancient doctrine of international law that an alien
and an alien's property come into the territory of a
sovereign nation only by its sufferance, and may be

1 Gibbons v. Ogden, 9 Wheat. 1, 199, 202

ee oe

v7

excluded at its will.’ And whether the exclusion be for
the purpose of self-defense, or as an incident to the
regulation of imports or commerce, oF otherwise,
the right to exclude or deport or prohibit is as much
the sovereign’s prerogative as the power to make
treaties giving to foreigners the privilege of abiding or
of bringing or selling their goods or publications within
the sovereign’s domain. That this attribute of sover-
eignty has been surrendered by and does not belong to
the States cannot for a moment be doubted, for the
Siates are expressly forbidden to enter into any form
of treaty.”

in Cooley on Taxation, the distinguished author well
says (at pp. I1, 12, 13):

“In the laying of taxes, one purpose had in view
may be to encourage one branch of industry or
trade, though at the expense of others; as where a
tax is laid upon certain fabrics received from abroad
by the exchanges of commerce for the sake of
encouraging the domestic producer of similar
articles, on whose industry the tax operates as a
bounty. Such a burden, however, may be so
heavy that the market will not warrant its being
paid, and in such case, instead of producing reve-
nue, it merely precludes importation. But a law
which, under the name of taxation, has for its
purpose only to embarrass and, perhaps, to
destroy a certain branch of commerce, if en-
acted by a State, would look to the general
police power for its justification; and, if enacted
by the general government, would seem more
properly to derive its force from the authority con-
ferred upon the government to regulate commerce,

TY Nishimura Ekiu v. United States, 142 U.S. 651, 659; Fong Yue Ting
vy. United States, 149 U. S. 698, 707, 712; United States v. Brigantine
“ William,” 2 Hall’s Am. Law Journal, 255; Gzbbens v. Ogden, 9 Wheaton,

1, 191, 192.
2 Section 10 of Article I of the Constitution of the United States.

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and the intercourse with foreign countries, than to
an authority conferred for revenue purposes, which
such a law would not aim or tend to sub-
serve. . . . As no one will pay the tax
who does not expect to be reimbursed the
expense from the profits of sales, it is ob-
vious that the heavier the tax the fewer can
afford to pay it, and it may be made so heavy that
no one can afford to pay it, and then it becomes
prohibitory. A tax laid for the double purpose of
regulation and revenue must be grounded in both
the police and the taxing power; but the grant of
a power to tax would not authorize the imposition of
a burden in its nature and purpose prohibitory.”

Il.

THE INTERNAL COMMERCE OF THE STATES AND THE EXERCISE OF
THE TAXING POWER BY CONGRESS.

In the cases at bar, the court is called upon to con-
sider what purports on its face to be a tax law, but
which, it is contended, constitutes the imposition of a
burden in its nature and purpose prohibitory of the
internal commerce of the States in a recognized article
of commerce. !

There can be no reasonable doubt that any statute
of Congress which purported on its face to prohibit
internal commerce in oleomargarine would be declared
by this court to be unconstitutional and void on the
ground that it sought to accomplish an object not en-
trusted to Congress and invaded the powers reserved
to the States.2_ It is now to be determined whether
Congress may nevertheless accomplish this forbidden
object and thereby under the form of a tax law, do indi-
rectly what it could not do directly.

" Schollenberger v. Pennsylvania, 171 U.S. 1, 8.

? United States v. Dewitt, 9 Wali. 41, 43 -45; Trade-Mark Cases, 100
U. S, 82, 96; United States v. F.C. Knight Co., 156 U.S. 1, 11-13.

a

See eatiatiateaiainde . . a

7

29

If the object of the act be legitimate taxation, the
excise in question is concededly within the constitu-
tional powers of Congress; but if, under the pretext of
laying an excise on manufactures, the object sought
to be accomplished is to prohibit or destroy the manu-
factures and internal commerce of the States, then it is
submitted that the legislation is not legitimate taxation
at all and is beyond the authority delegated to Con-
gress and conilicts with the powers expressly reserved
to the States.

Chief Justice Marshall in McCulloch v. Maryland,
4 Wheat. 316, 421, 423, among other things said:

“ Let the end be legitimate, let it be within the
scope of the Constitution, and all means which are
appropriate, which are plainly adapted to that end,
and which are not prohibited, but consist with the
letter and spirit of the Constitution, are constitu-
tional. . . +. Should Congress, in the execu-
tion of its powers, adopt measures which are pro-
hibited by the Constitution; or should Congress,
under the pretext of executing its powers, pass
laws for the accomplishment of objects not entrusted
to the government, it would become the painful
duty of this tribunal, should a case requiring such
4 decision come before it, to say that such an act
was not the law of the land.”

The settled doctrine of this court is that whatever may
» be the motive or pretext or guise of a statute, or in
whatever language it may have been framed, its pur-

pose and its validity must be determined by its natural
and reasonable effect to be ascertained from the prac-
tical operation of its provisions.

Thus. in Henderson v. Mayor of New York, 92 U.S.
259, 268, Mr. Justice Miller, delivering the unanimous
opinion of the court, among other things, said:

SpA TARE TELE L ; ee

30

In whatever language a statute may be framed,
its purpose must be determined by its natural and
reasonable effect; and if it is apparent that the
object of this statute, as judged by that criterion, is
to compel the owners of vessels to pay a sum of
money for every passenger brought by them from
a foreign shore, and landed at the port of New
York, it is as much a tax on passengers if collected
from them, or a tax on the vessel or owners for the
exercise of the right of landing their passengers in
that city, as was the statute held void in the /as-
senger cases. To require a heavy and almost im-
possible condition to the exercise of this right,
with the alternative of payment of a small sum of
money, is, in effect, to demand payment of that
sum.

IDR i PDA SAE Sat: ADRENERGIC

de

Mr. Justice Miller in Morgan v. Louisiana, 118 U.S.
j 455. 462, again referred to this point in the following
language:

‘In all cases of this kind it has been repeatedly
held that, when the question is raised whether the
4 State statute is a just exercise of State power or is
i intended by roundabout means to invade the
4 domain of Federal authority, this court will look
: into the operation and effect of the statute to dis-
' cern its purpose. See //enderson v. Mayor of New
4 York, 92 U.S. 259; Chy Lung v. Freeman, 92 U.
‘ S. 275; Cannon v. New Orleans, 20 Wall. 577.”

In construing a state statute applicable to oleomar-
garine, Mr. Justice Peckham in Collins v. New Hamp-
shire, 171 U.S. 30, 33,34, speaking for the court, said:

‘The direct and necessary result of a statute
must be taken into consideration when deciding as
to its validity, even if that result is not in so many
words either enacted or distinctly provided for. In
whatever language a statute may be framed, its
purpose must be determined by its natural and
reasonable effect. Henderson v. Mayor of New
York, 92 U. S. 259; Morgan's Steamship Co. v.

ert "Wt ideale — —
ES bp

:

7

Louisiana, 118 U.S. 455, at 462. Although under
the wording of this statute the importer is per-
mitted to sell oleomargarine freely and to any €x-
tent, provided he colors it pink, yet the permission
to sell, when accompanied by the imposition of a
condition which, if complied with, will effectually
prevent any sale, amounts in law to a prohibition.”

Indeed, as Mr. Justice Harlan said, in Mugler v.
Kansas, 123, U. S. 623, 661:

“The courts are not bound by mere forms, nor
are they to be misled by mere pretences. They
are at liberty-—indeed, are under a solemn duty—
to look at the substance of things, whenever they
enter upon the inquiry whether the legislature has

transcended the limits of its authority.”

And Mr. Justice Brewer in Fairbank v. United States,
181 U. S. 283, 294, 295, 300, speaking of the decision

in Woodruff v. Parham, 8 Wall. 123, used the fol-
lowing language:

“In other words, that decision affirms the great
principle that what cannot be done directly because
of constitutional restrictions cannot be accomplished
indirectly by legislation which accomplishes the
same result. . - . The form m which the
burden is imposed cannot vary the substance. . - -
Constitutional provisions, whether operating by
way of grant or limitation, are to be enforced ac-
cording to their letter and spirit. and cannot be
evaded by any legislation which, though not in
terms trespassing on the letter, yet in substance
and effect destroy the grant or limitation.”

i:
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Agr

, In Postal Telegraph Cable Co. v. Adams, 155 U. S.
f 688, 698, Mr. Chief Justice Fuller said, speaking of
taxation:

F “ The substance and not the shadow determines
j the validity of the exercise of the power.

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32

And again in Pollock v. Farmers’ Loan & Trust Co,
157 U.S. 429, 581:

“If it be true that by varying the form the sub-
stance may be changed, it is not easy to see that
anything would remain of the limitations of the
Constitution. . . . But constitutional —provi-
sions cannot be thus evaded. It is the substance
and not the form which controls, as has indeed
been established by repeated decisions of this
court.”

In Zhomas v. Gay, 169 U. S. 264, 283, Mr. Justice
Shiras, speaking of the acts of a territorial legislature
under authority of Congress, said :

‘‘When, as may sometimes happen, the legisla-
ture transcends its functions and enacts, in the guise
of a tax law, a law whereby the property of the
citizen is confiscated, or taken for private purposes,
the judiciary has the right and duty to interpose.”

Mr. Justice McKenna, in Smith v. St. Louis and

Southwestern Ry. Co., 181 U.S. 248, 257, said:

“Any pretense or masquerade will be disre-
garded, and the true purpose of a statute ascer-
tained.”

It must, therefore, be presumed that the purpose which
Congress had in view in the statute of 1902 was to ac-
complish that which follows as the natural and reason-
able effect of its enactment, and that if the tax now in
question operates as a prohibition of the manufacture
and sale of an article of commerce, the legislation is an
invasion of the powers reserved to the States, and seeks
to accomplish an object beyond the powers granted to
Congress.

It is not, of course, disputed that Congress for
national purposes may tax the manufactures of a
State whether constituting internal or interstate

°

83

commerce, and that both the national and state gov-
ernments can lay excise taxes upon the same
articles. Conflict may thus arise; and as commodities
can only bear a certain amount of taxation, varying ac-
cording to the nature of the article, the exercise of the
taxing power by one government may indirectly affect
the collection of taxes by the other. The mere fact
that Congress taxed a given article, e. g., liquors, would
not, of course, limit or affect the power of the States
either to tax or to prohibit its manufacture so far as
concerned internal commerce; and conversely the
fact that a State taxed its manufactures would
not limit or affect the power of Congress to
tax the same commodities. In the case at bar,
there is, however, no conflict of taxing powers, for
neither the State of Illinois nor the State of Ohio
taxes the manufacture of oleomargarine other than indi-
rectly by means of general property taxes.

In its final analysis, then, the court is asked to deter-
mine the validity of the present law according to its
natural and reasonable effect which ‘* amounts in law toa
prohibition” ; in other words, to determine by its practical
operation whether it is a tax law at all, or merely an at-
tempt to prohibit internal commerce under the guise or
pretext of a tax law. There is no rule of consti-
tutional law and no consideration of public policy
which will prevent this court from deciding ac-
cording to substance and not to form, simply because a
given enactment purports to be an exercise of the tax-
ing power. The indisputable law of the Constitution is

' License Tax Cases, 5 Wall. 462, 470; Pervear v. The Commonwealth,
5 Wall. 475, 479.

MIRE LEONE OER

-.

34

that Congress may not interfere with or regulate the
internal commerce or affairs of a State, and the court will
enforce that rule according to its letter and its spirit.
The Tenth Amendment imperatively forbids any such
interfering regulation as much as if the Constitution
declared in so many words that Congress should not in-
terfere with internal commerce. It surely cannot be
maintained as a rule of our constitutional law that what
Congress may not do directly it may nevertheless do
indirectly under the pretext of an exercise of the taxing
power. As Mr. Chief Justice Fuller said in the Zxcome
Tax cases, supra (157 U. S. 429, 581):

“It is the substance and not the form which
controls, as has indeed been established by re-
peated decisions of this court.”

But, it will be said, the concession of the power to tax
brings the case within the rule that the extent of the
exercise of the taxing power cannot be controlled by the
courts. This argument, however, begs the whole
question. The point to be decided is whether or not
this is a tax law or a regulation of the internal
commerce of the States. If it be a legitimate tax
law, it is constitutional. If the nominal exercise of
the taxing power be a mere pretext * for the accom-
plishment of objects not entrusted to the government,”
then it is not constitutional, and it is the province of this
court to so declare. It may be often difficult to draw
a line between a tax law and an attempt to regulate or
prohibit under the guise or pretext of a tax; but yet it
is not always impracticable, for the validity of many en-
actments, state and national, may depend upon degree.

The amount of a tax or license fee or regulation of rates

RAAT TE

— 2047

35

frequently forms the basis of judicial action and de-
termines the validity of legislation. The court has
found no insuperable difficulty in determining the dif-
ference between a tax and a reasonable fee cover-
ing expenses to protect the government against fraud,'
between a tax on exports and a mere stamp duty on a
document,? between a tax and a penalty,* between a
tax and a covert regulation of interstate commerce,* be-
tween a legitimate regulation of rates and a regulation
which is confiscatory.» The amount of the tax imposed
ina given case has often been considered by this court in
determining whether a particular statute was valid as a
means to accomplish a constitutional object, or invalid as
a pretext to accomplish an object forbidden by the Con-
stitution. The instance of a license tax upon persons
or corporations engaged in foreign or interstate com-
merce is a commonone. In such a case, the only
object which may constitutionally be accomplished by
a State is compensation for reasonable governmental
inspection or supervision. If the amount of the tax
be materially in excess of what is

ee

PEELING LN Eee ee

a NCE DERI ETRE E MES PR Tc ee alk ai

necessary
for that object, there is an indication of a purpose

to regulate foreign or interstate commerce; and it
is therefore necessary for the court to draw the
line in each case according to the amount and adjudge
what amount will constitute taxation for a proper pur-

rR TNL IOS

tie

pose and what amount will constitute a regulation é
of commerce. Atlantic, etc., Tel. Co. v. Philadelphia, ;

' Pace v. Burgess, Collector, 92 U. S. 372, 374, 375+
2 Fairbank v. United States, 181 U.S. 283, 290. 5
° Helwig v. United States, 188 U.S. 605, 611. 4
‘ Atlantic, ete., Tel. Co. v. Philadelphia, 190 U.S. 160, 162. B

a

36

190 U. S. 160, 164. While a State may impose
a license fee upon foreign corporations engaged in
interstate commerce and_ indirectly tax their fran-
chises,! it cannot for a moment be doubted that,
if the State should impose a _ prohibitory tax, it
would be unconstitutional and that the question
of constitutionality in such a case would depend entirely
upon degree. If, for example, a State should impose a
property tax upon an express company,? the effect of
which was practical prohibition, no doubt the court would
hold that it was not a legitimate tax at all, but a round-
about way of prohibiting indirectly what the State could
not prohibit directly, namely, interstate commerce.
So, whenever it is claimed that the amount of
a state inspection charge upon articles of foreign or
interstate commerce is so much in excess of what is
reasonably necessary to accomplish that object as
to evince a purpose to interfere by taxation
with foreign or interstate commerce, the court

must decide when the amount in the par-
ticular case becomes unconstitutional. atapsco Guano
Co. v. North Carolina, 171 U.S. 345, 351 ef zeg., citing
cases. The same principle applies in those cases
where the amount of compensation for the use of prop-
erty affected by a public interest is drawn in question as
being confiscation in the guise of police regulation.
Chesapeake & Potomac Tel. Co. v. Manning, 186 U.S.

'Waine v. Grand Trunk R'y Co., 142 U. S. 217, 228; Fecklen v.
Shelby County, 145 U.S.1,23; Postal Telegraph Cable Co.v. Adams,
155 U. S. 688,697; Atlantic, etc., Tel. Co. v. Philadelphia, 190 U. S.
160, 163, citing cases.

"Adams Express Company v. Ohio, 165 U.S. 194,220; Adams Express
Company v. Kentucky, 166 U.S. 171, 180: Adams Express Company v-

Ohzo, 166 U.S. 185, 221.
_—

PERSE EAIA I, PLN ELIT

87

238, 250, and Cotting v. Kansas City Stock Yards
Co., 183 U.S. 79, 85) citing cases.

At the last term, in Helwig v. United States, 188
U. S. 605, 611, Mr. Justice Peckham said:

“Whether called a ‘further sum’ or an ‘addi-
tional duty,’ or by some other name, the amount
imposed was so large in proportion to the value of
the merchandise imported as to show beyond doubt
that it was a sum imposed not in fact, as a duty
upon an imported article, but as a penalty and
nothing else.”

So, with regard to the tax in question, the amount
of the tax is so large in proportion to the value of
the merchandise as to show beyond doubt that it was
a sum imposed, not in fact as an excise for revenue,
but as a prohibition, and nothing else.

Let us take, for the purpose of concrete illustration,
the case of oleomargarine. It has been held that a
State, under the power to regulate its internal com-
merce, could prohibit the manufacture and sale of oleo-
margarine (Jowell v. Pennsylvania, 127 U.S. 678, 686;
Pluniley v. Massachusetts, 135 U. S.461, 467,and Cafz-
tal City Dairy Co.v. Ohio, 183 U. S. 238, 246), but that
it could not prohibit the sale of oleomargarine manu-
factured in other States and offered for sale in the
course of interstate commerce. Schollenberger v. Penn-
sylvania, 171 tf. S 2,41, %5: & se conceivable that
nevertheless, a State, could indirectly do what this
court has said it could not directly do, that is, prac-
tically prohibit interstate commerce in oleomarga-
rine by taxing it to death? Surely this court
would not entertain an argument attempting to
uphold such legislation upon the ground that on

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its face it was impartial and applied alike to internal
and interstate commerce and that the power to
tax involved the power to destroy.

If a State should impose a tax upon a commercial
commodity as property? and the effect of such a tax, as
to articles brought from other States, was to destroy all
opportunity to sell the commodity, it cannot be doubted
that the law would be declared unconstitutional as
interfering with interstate commerce even though the
same amount of tax should be laid on domestic man-
ufactures as property, and even though such a tax would
only apply after the ‘ original package’ of importation
had been broken and the contents exposed for sale.*
There would be prima facie no discrimination in the
law; on its face it would apply impartially to home
and foreign manufactures alike. Nevertheless, such a
tax law would be held unconstitutional; for, if allowed
to operate, it could as effectually bar the products and
manufactures of other States as if the law directly
enacted that such articles should not be sold. The
products of one or more States could thus, by taxation,
be excluded from any State. Fortunately, ‘such efforts
have been heretofore rendered fruitless by the supervis-

: Woodruff v. Parham, & Wall. 123, 131, 140; Brown v. Houston,
114 U. S. 622, 634. Of course, where the State may prohibit as a police
regulation, different considerations are presented, as discussed by Judge
Cooley in the quotation from his work on Taxation, sufra, pp. 27, 28.

* Woodruff v. Parham, 8 Wall. 123, 131, 140; /Zénson v. Lott, 8 Wall.
148, 152; Brown v. Houston, 114 U.S. 622, 632, 634; Postal Telegraph
Cable Co. v. Adams, 155 U.S. 688, 697; American Refrigerator Tran-
sit Co. v. Hall, 174 U.S. 70, 74; Reymann Brewing Co. v. Brister, 179
U.S. 445, 453.

5 May v. New Orleans, 178 U.S. 496, 508.
* Leloup v. Port of Mobile, 127 U.S. 640, 647; Brennan v. Titusville,

153 U. S. 289, 303.
pic Sas asi

Fe gk eg eh ae Se ae as
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39

ing action of this court.”! In the supposed case, it would
undoubtedly be held that, in whatever language the
statute was framed, its purpose must be determined by
its natural and reasonable effect. The court would brush
aside the form and the pretext, and hold that the
tax in its practical effect was prohibitory, that the pur-
pose of the legislation was legally to be determined by
such prohibitory effect, and that prohibition was beyond
the constitutional power of a State.?

In the case of such a property tax levied by a State,
would it not be relevant to show that the amount of the
tax was such as to prevent sales, and that consequently
‘t was not strictly a tax law at all but a regulation of
interstate commerce? It would undoubtedly be held
that in whatever language the statute was framed, its
purpose must be determined by its natural and reason-
able effect.

On the other hand, if the tax was not prohibitive
but a proportional and reasonable charge for the
maintenance of the state government, levied upon all
similar property, entirely different considerations would
be presented, and it would then be for the courts to
determine whether such a law was in its purpose, opera-
tion or effect a proper and reasonable tax law which did

not unduly interfere with the power of Congress to regu-
late interstate commerce.® In such a case, too, would it
not be relevant to show that the amount of the tax was
such as not to operate as a_ practical prohibition of

\ Caldwell v. North Carolina, 187 U.S, 622, 633.
2 American Fert. Co. v. Board of Agriculture, No. Car., 43 Fed. Rep.
69, 613, cited in Patapsco Guzno Co. v. North Carolina, 171 U.S. 345,

347-
3 Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 697.

EPPA SEE IE OLNI MO ae Be SORTS LN MOREE OT

———— Te

40

sales in competition with the products of the taxing
State? Or, if it were in the guise of an inspection or
license fee, would it not be relevant to show that it was
not large enough to operate as a prohibition or penalty ?}
Are not these all cases of degree and does not the ex-
tent and effect of the tax determine its constitutionality ?
Nor does the fact that the act of Congress applies
also to interstate commerce affect the question,
for it is the settled law of this court that
the power of Congress to regulate interstate com-
merce does not uphold any act which operates
directly upon internal commerce and invades the
domain of the States. The very point was involved in
the Zrade-Mark Cases, 100 U. S.82, 95, 96, where, de-
livering the unanimous opinion of the court, Mr. Justice
Miller said:
* When, therefore, Congress undertakes to enact
a law, which can only be valid as a_ regulation of
commerce, it is reasonable to expect to find on the
face of the law, or from its essential nature, that it
is a regulation of commerce with foreign nations,
or among the several States, or with the Indian
tribes. If not so limited, it is in excess of the
power of Congress. If its main purpose be to
establish a regulation applicable to all trade, to
commerce at all points, especially if it be apparent
that it is designed to govern the commerce wholly
between citizens of the same State, it is obviously
the exercise of a power not confided to Congress.”
The principal argument in support of the law has
heretofore been based upon the famous phrase * that
the power to tax involves the power to destroy,” in

1 Ward v. Maryland, 12 Wall. 418, 425, 429; Welton v. State of Mis-
sourt, 1 U.S. 275, 278; People v. Compagnie Gen. Transatlantigue, 107
U.S. 59, 60; Moran vy. New Orleans, 112 U.S. 69,73; Walling v. Mich-
tgan, 116 U.S. 446, 461; Emert vy. Missourd, 156 U.S. 296, 311.

e Page Kare es PEPE 4 Pate

41

support of which is cited the decision of this court in
Veazie Bank v. Fenno, 8 Wall. 533.

We know of no dictum in any decision that has
been more misconstrued than the statement of Chief
Justice Marshall in A/Culloch v. Maryland, 4 Wheat.
316, 431, that “the power to tax involves the power
to destroy,” nor of one whose misapplication is more
illustrative of the dangers which lurk in a brilliant epi-
gram. Since that decision, there has been no arbi-
trary or unjust exaction under the guise or pretext of
taxation but that it is said to be sanctioned by this
dictum. It has done immeasurable harm, for it has
been held up before legislatures as placing in
their hands unrestrained power to exercise tyranny in
the form of law. ‘ How oft the sight of means to do
ill deeds makes ill deeds done.”! The great Chief
Justice never meant to say that the taxing power
could be arbitrarily exercised to the extent to which
his language has been perverted, or that it could be used
as a pretext to accomplish a forbidden object. He would
have repudiated such a proposition as monstrous and
against all justice and reason. Far from meaning
to say that the power of taxation could be used as
a mere pretext for accomplishing objects not entrusted
to the government, at page 423 of the same opinion,
he distinctly pointed out that Congress could not do so.
He never meant that under the power of taxation, either
of the federal or the state governments, any class of
persons or business could properly be selected for de-
struction. He was speaking of a discriminating state

' King John, IV, 2. See“ The Oleomargarine Bill” (Gov. Print, 1901),
p. 857.

w

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61

state Commerce Comm. v. Brimson, 154 U.S. 447, 479
the learned justice also said: “It is scarcely necessary
to say that the power given to Congress to regulate
interstate commerce does not carry with it any power
to destroy or impair those guaranties.” The very same
reasoning must apply to the exercise of the taxing
power.

Assuming, for the reasons above stated, that the re-
strictive clause of the Fifth Amendment applies to the
exercise of the taxing power, then its prohibition or
limitation should be enforced in its spirit and to its
entirety as fully as if it were part of the very article
conferring the taxing power. rout v. Starr, 188
U. S. 537.543. As Mr. Justice Brewer said in the
case of Fairbank v. United States, 181 U. S. 283,

288:

“ We are not here confronted with a question of
the extent of the powers of Congress but one of
the limitations imposed by the Constitution on its
action, and it seems to us clear that the same rule
and spirit of construction must also be recognized.
If powers granted are to be taken as broadly
granted and as carrying with them authority to
pass those acts which may be reasonably necessary
to carry them into full execution; in other words,
if the Constitution in its grant of powers is to be
so construed that Congress shall be able to carry
into full effect the powers granted, it is equally
imperative that where prohibition or limitation is
placed upon the power of Congress, that prohibition
or limitation should be enforced in its spirit and
to its entirety. It would be a strange rule of con-
struction that language granting powers is to be
liberally construed and that language of restriction
is to be narrowly and technically construed. Es-
pecially is this true when in respect to grants of
powers there is as heretofore noticed the help

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62

found in the last clause of the eighth section, and
no such helping clause in respect to prohibitions
and limitations. The true spirit of constitutional
interpretation in both directions is to give full,
liberal construction to the language, aiming ever
to show fidelity to the spirit and purpose.”

The act of Congress of May 9, 1902, purports to
levy what is strictly and technically an excise upon
the manufacture and sale of an article of food.
Fatton v. Brady, Executrix, 184 U. S. 608, 618.
An excise is generally included in the term ¢ax which,
‘in its most enlarged sense, embraces all the regular
impositions made by government upon the person,
property, privileges, occupations, and enjoyments of
the people for the purpose of raising public revenue.

Taxes are distinguished from arbitrary levies
in that they are laid according to some rule which appor-
tions the burden between the subjects thereof. An
exaction which is made without regard to any rule of
apportionment is therefore not a tax, and is not within
the constitutional authority of the government.”!
Chief Justice Marshall defined ‘taxation’ to be “the
simple operation of taking small proportions from
a perpetually accumulating mass, susceptible of almost
infinite division.” What would he have said of an
alleged tax which took all ?

There is undoubtedly a difference between a land or
property tax and an excise upon a business or upon the
manufacture and sale of a commodity. An excise may
be upon the article, or its value, or its quality, or its
quantity, or its weight; but however the amount be de-
termined, whether by specific or ad valorem taxes or

Cooley's Pr. Const. Law, Third ed., p. 56.
? Grbbons v. Ov den, 9 Wheat. 1, 199.

63

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duties, or both methods, although it need not be inher- ¥
ently equal, it must operate alike on all persons within the

Per th Vedas

class selected or who exercise the same privilege.

The most satisfactory definition of an excise is to be
found in the Massachusetts reports. It is true that the
Massachusetts constitution requires excises to be
‘reasonable,’ but the following definition is not therefore
without general application. A leading case is that of
Oliver v. Washington Mills, 11 Allen, 268, 274, 279)
where Bigelow, C. J., speaking for the Supreme Judicial
Court, said:

« An excise, on the other hand, is of a different
character. It is based on no rule of apportionment
or equality whatever. It is a fixed, absolute and
direct charge laid on merchandise, products or
commodities, without any regard to the amount
of property belonging to those on whom it may
fall, or to any supposed relation between money
expended for a public object and a special benefit
occasioned to those by whom the charge is to be
paid. . . . it only remains for us to consider
whether the assessments laid on the defendants can
be supported as a valid exercise of the power to
impose excises. -» = > In the first place, it is
grossly unequal, and does not operate alike on
all persons whose property is made subject to it.
It was declared by this court in Portland v. Apthorp,
ubi supra,’ that * Taxes of this sort must undoubt-
edly be equal’; that is, must operate alike on all
persons who exercise a particular employment or
enjoy the same privilege or commodity. The same
doctrine was affirmed in the recent case of Com-
monwealth v. People's Savings Bank, ubi supra.*
The reason is obvious. In the language of the
court, an unequal excise would be ‘contrary to
the principles of justice. That the excise in ques-

‘42 Mass. 252, 255.
25 Allen, 431.

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——

64

tion operates unequally in this sense cannot be
doubted.”

This definition of an excise was cited by the Attorney-
General of the United States (Hon. Charles Devens) in
the opinion furnished to Congress for its guidance
(15 Op. Attys.-Gen., p. 219), adding that such an excise
‘may be increased or diminished by the extent to which
the privilege is exercised.”

Assuming that an excise must operate alike on all
persons whose property or business selected for tax-
ation is substantially the same in character, and that an
arbitrary and discriminating excise would be ‘ contrary
to the principles of justice’ and would not constitute
‘due process of Jaw,’ it remains to consider whether
the excise now before the court is arbitrary and dis-
criminating as contended by the plaintiffs in error.

The act of Congress purports to lay an excise tax
upon oleomargarine. Congress, of course, knew, as its
very definition discloses, that oleomargarine was a sub-
stitute for butter and that this quality and essence
alone gave it commercial value or utility. The act im-
poses a tax of ten cents per pound upon yellow oleo-
margarine, which is shown to be prohibitive, and under
the authorities above discussed such prohibitive opera-
tion must be presumed to have been the purpose of
Congress. For all legitimate purposes of taxation, oleo-
margarine, whether colored or uncolored, is practically
the same thing, and there are no inherent differ-
ences between them which would warrant their
separation into two distinct classes. In the nature
of things. reasoning solely according to the rules
which should govern the imposition of taxes, white

st ear icy |
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65

oleomargarine ought not to be taxed one-quarter of a

Fay TSR LOM

cent a pound and yellow oleomargarine forty times as :
much, and, in the absence of some ulterior motive, such :
discrimination would never have been attempted. No
conceivable reason can be suggested for the discrimina-
tion based alone upon the yellow color, other than that
it competes with another and untaxed article of com-
merce, namely, butter. On the very face of the act, it is
declared that this discrimination of ..early four thousand
per cent. in the amount of the tax imposed is made
solely because oleomargarine in its commercial form
looks like butter. Such legislation, it is submitted, is
just as arbitrary and indefensible as if Congress were
to endearor to lay a capitation tax upon men of red
hair, and it were to be argued in support ef such a law
that it was constitutional because apportioned.

It cannot be denied that the tax on yellow oleomar-

garine in the case at bar is an extraordinary piece
of legislation, unusual in our system of government,
and of a kind heretofore happily rare. On its face,
it imposes an enormous and disproportional penalty
upon the mere fact of coloring a wholesome and nutri-
tious article of food, whilst another competing food
product, practically the same substance produced in a
different way, is left untaxed. The proof shows that in
its practical operation the necessary effect of the
discrimination is the destruction of an industry con-
ducted within the jurisdiction of a State, by which
the plaintiffs in error and thousands of others are
deprived of a means of livelihood in a legitimate
trade.

When we say that the federal tax on oleomar-

66

garine is arbitrary, we do not mean to say that
Congress was actuated by no reason in making the
discrimination. We concede that it had a reason and
sought to accomplish a definite object, namely, to pre-
vent the manufacture and sale of yellow oleomargarine
because it looks like and competes with colored butter;
but what we do mean to assert is that it was actuated by
no reason which, under the Constitution of the United
States, it could properly entertain, for in respect of in-
ternal commerce it has no police power whatever. A
commodity cannot be taxed at a prohibitive rate simply
because it necessarily resembles and competes with
another. Such a reason furnishes no legitimate basis
for the object sought to be accomplished. Even under
the police power, a State could not prohibit an article
harmless in itself merely because it looked like another
with which it competes: it could only do so in order to
prevent fraud.

Now, the power to tax undoubtedly involves
the power to classify for purposes of taxation;
but due process of law requires that classifi-
cation shall be something more than mere arbitrary
selection. What test then is to be applied for the
determination of whether there has been legitimate
classification or a mere arbitrary selection? What-
ever else may be done, it must surely be that
discrimination calculated only to deprive one
class of persons of their occupations or property
for no other purpose than to benefit another class
of persons who are their business competitors is, legally
speaking, a mere arbitrary selection. Thus, in the
cases at bar, we find a tax of tem cents per pound upon

- Seem

67

oleomargarine solely because it looks like and competes
with butter, which is exempted from any tax. The
tax depends solely upon the article being a sub-
stitute for an untaxed commodity. What difference
then exists between these two articles to justify this

i
E

discrimination? In their chemical composition there is

substantially no difference and they are used for the

same identical purpose. They compete directly in the

market, but a necessary element of the marketability

of each product is a certain shade of yellow which

must be imparted before it can be sold. The cost of

production is such that yellow oleomargarine cannot

be sold in competition with colored butter if the ten cent

tax be paid. Since uncolored oleomargarine cannot be

| sold or compete with colored butter, the result is the

prohibition of the manufacture and sale of all oleo-

margarine in competition with butter. Therefore, the

. mere fact of necessary resemblance is made to support

the accomplishment of but one object, namely,

the suppression of the oleomargarine industry for the

benefit of the butter industry. No such power was en-

trusted to Congress by the Constitution. It is not

legitimate classification, but mere arbitrary selection

which deprives of liberty and property one body of in-

dividuals for the benefit of another. As Mr. Justice

Harlan said of a state statute in Connolly v. Union
Sewer Pipe Co., 184 U.S. 540, 563:

“ Such a statute is not a legitimate exertion of

the power of classification, rests upon no reason-

able basis, is purely arbitrary, and plainly denies

the equal protection of the laws to those against
whom it discriminates."

68

What Mr. Justice Brewer said in Gulf, Colorado &
Santa Fe Ry v. Ellis, 165 U.S. 150, 154, is equally
applicable to the Fifth Amendment, viz.:

“While good faith and a knowledge of existing
: conditions on the part of a legislature is to be pre-
3 sumed, yet to carry that presumption to the extent
3 of always holding that there must be some undis-
: closed and unknown reason for subjecting certain
4 individuals or corporations to hostile and discrimi-
2 nating legislation is to make the protecting clauses

of the Fourteenth Amendment a mere rope of
sand, in no manner restraining state action.

The State may not say that all white men shall be
subjected to the payment of the attorney's fees of
parties successfully suing them and all black men
not. It may not say that all men beyond a certain
age shall be alone thus subjected, or all men _ pos-
sessed of a certain wealth. These are distinctions
which do not furnish any proper basis for the at-
tempted classification. That must always rest
upon some difference which bears a reasonable
and just relation to the act in respect to which the
classification is proposed, and can never be made
arbitrarily and without any such basis.”

In Zhe State v. Loom?s, 115 Missouri, 307, 314, cited
and quoted with approval in the £7/7s case, Black, J..,
said:

Classification for legislative purposes must have

‘ some reasonable basis upon which to stand. It
x must be evident that differences which would serve
for a classification for some purposes furnish no

reason whatever for a classification for legislative

purposes. The differences which will support

class legislation must be such as in the nature of

things furnish a reasonable basis for separate laws

and regulations. ‘Thus the legislature may fix the

age at which persons shall be deemed competent to

contract for themselves, but no one will claim that
competency to contract can be made to depend

upon stature or color of the hair. Such a classi-

69 :

fication for such a purpose would be arbitrary and
a piece of legislative despotism, and therefore not
the law of the land.”

It is no longer open to question that the right
to earn one’s livelihood by any lawful calling con-
stitutes the liberty and property of the individual and
one of the inalienable privileges and immunities of every
citizen of the United States which are secured by

the Constitution. Butchers’ Union Co. v. Crescent City
Co, 111 U. S. 746, 757+ 7945 Powell v. Pennsyl-
vania, 127 U. S. 678, 684; Allgeyer v. Louisiana,
165 U.S. 578, 589; People v. Marx, 99 N. Y. 377, 386»
and People v. Gillson, 109 N. Y. 389, 399-

The contention of the plaintiffs, if adopted, would not
limit the taxing power of the federal government. It
would leave it free to determine the extent and method
of taxation in all cases where taxation is necessary
and proper to carry into execution the powers delegated
by the Constitution, and to call upon the people to con-
tribute even to the last penny if necessary to defend
or preserve the U nion or promote the common welfare
of the Nation. It would take away no power that a civ-
ilized government ought to exercise. It would declare
that in the exercise of the taxing power Congress may
not impose prohibitory taxes upon internal products
based upon the fact that a manufactured article resem-
bles and competes with another product which is not
taxed: in other words, that it may not destroy the
property of one class of its citizens for the benefit of an-
other class. Such a decision would be but following
the duty which Chief Justice Marshall said would be

imperative if the court were satisfied that a given stat-

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70

ute purporting to lay a tax was in truth a mere pretext
for unauthorized prohibition.

IV.

THE PROVISION OF SECTION 14 OF THE ACT CONFERRING JUDI-
CIAL POWER UPON THE COMMISSIONER OF INTERNAL REVENUE.

The act in question is subject to the additional objec-
tion that the power to decide finally what articles are
to be taxed cannot be conferred upon the Commissioner
of Internal Revenue, who is only an administrative
officer. Sec. 14 of the act provides as follows:

‘And such Commissioner is authorized to decide
‘what substances, extracts, mixtures, or compounds
which may be submitted for his inspection in con-
tested cases are to be taxed under this act ; and

his decision in matters of taxation under this act
shall be final.”

The invalidity of this clause would seem to be estab-
lished by the decision in Unzted States v. Eaton, 144
U. S. 677, 688, where the court, speaking through Mr.
Justice Blatchford, said :

“It would be a very dangerous principle to hold
that a thing prescribed by the Commissioner of
Internal Revenue, as a needful regulation under
the oleomargarine act, for carrying it into effect,
could be considered as a thing * required by law’
in the carrying on or conducting of the business
of a wholesale dealer in oleomargarine, in such
manner as to become a criminal offence punishable
under § 18 of the act.”

See also to the same efiect, United States v. Maid,

116 Fed. Rep. 650, 651; United States v. Blasingame,
116 Fed. Rep. 654.

The case of /x re Kollock, Petitioner, 165 U.S. 526,

533, did not present this point. That decision passed

RT a ae LECLERC LT EE ge” BO RI OT RE Sat

204
71

only upon the power of Congress to authorize the Com-
missioner of Internal Revenue to prescribe regulations
3s to marks, stamps and brands. An entirely different
question is involved in the attempt to invest the Com-
missioner with power to ‘ decide ' fiza/ly how an article
shall be taxed. No such judicial power can be granted
except to the courts.

This objection is peculiar to the Clif and McCray
cases. In the Cliff case, the package bore a tax-paid
stamp of one-fourth of one cent per pound (Cliff record,
p.8). The theory of the prosecution was that the pack-
age had not been “ stamped according to law,” within the
penal intent of section 11 of the act, because it did not
have a tax-paid stamp at the rate of ten cents per pound,
under the requirements of section 8. The theory of the
defense was that the tax required by section 8 on the
package in evidence was only one-fourth of one cent
per pound, because the oleomargarine was “ free from
artificial coloration that causes it to look like butter of
any shade of yellow.” The issue, therefore, was as to
whether or not the package in question contained ‘ ar-
tificial’ coloration within the true meaning of the act of
Congress. Upon this issue the facts were undisputed.
The government showed that the article was of the
color of June butter, and that this color was imparted
to it by the admixture of palm oil in its manufacture
(2b., p. 8). The defendant showed by competent testi-
mony that palm oil is a vegetable oil derived from the
fruit of a certain kind of palm which grows in East Africa,
that it is a wholesome, edible oil, containing all the
chemical constituents of butter, except butyrin, which
gives to butter its flavor, that it is used by the natives of

PMOL ———————

a

72

the country where it is produced to mix with their food,
that it is reddish-yellow in appearance and a very small
proportion of it is sufficient to produce the color of June
butter, that there is little, if any, difference between the
taste of oleomargarine made in this way and the taste
of butter, that it is quite as digestible as butter and is
very cheap, that the oleomargarine thus produced is
substantially the same article as good butter, and that
the nature of palm oil is such that its use és desir
able as an ingredient in the manufacture of olcomar-
garine aside from its yellow color (tb. pp. 1-12).
The government made no objection to this evidence,
and offered none to question or dispute it (/4.. p. 12),
except to show that the Commissioner of Internal
Revenue had finally decided that the use of palm ofl
in the manufacture of oleomargarine does constitute
‘ artificial ° coloration, and had instructed the prosecu-
ting witness, a Deputy Collector of Internal Revenue,
that oleomargarine thus produced is subject to the tax
of ten cents per pound (/., pp. 8-10).

The facts being wholly undisputed. there was pre-
sented a pure question of law. namely. whether the ad-
mixture of palm oil in the manufacture of oleomangarine
constituted * artificial ’ coloration within the meaning of
the act. The conviction necessarily was based upon
the assumption that this question had been foreckoed
by the decision of the Commissioner under authority of
section 14, and that the defendant Clifi was not enti-
tled to a judicial trial upon the question whether the
article he sold was or was not intended by Congress to
be taxed at the ten cent rate.

In the McCray case it was admitted by the govern-

well

qrent that the omby colicmiemg amacter commana’ 4 ee
package of clmcmmargarine Cheweine intecioad’ wae thie
wabversally weed ie the Conve’ Smaties ae vlien teen
ated was Comtaited im cteiatmery ntter wie Mind Seat
practascerd om thee ogecm amaninat axved wsewed ay Shee eeeteatien
tere of the cltecmmatg arietee oo question me ome ofl te ate
mentary and ancestry angtedlenme acomiing wt
formmedia wierd it tlhe cinsatee off aussie — Tie Connerriin
shomer of latevnal Kevemue had denidiad Chet Heit
cally colbert’ bactey ie wind ae & ccormnygeemenn pre ol thee
feamistverd garowthourt oftevonrnantg:wtiete erned Chae! ennai’ gered
wet looks Bke tamer of amy shade of palllow) a Ge

power to tar ollmomargetine commen geliyor
cooled Preetet ad ter cecittis | geet greta) teewecemtiestioane
i cronelied tort axuttlbvortine hee Ccentvottnsnanennnery al Boneceniel:
Reveswe wo to duis ond Gt oF HF HP te
acodiag to bis Geerction Me & aan @ jute
ofhcer, be bas wo pedicle maine We Geer ae
even be @ lawyer the ame) cet ager nel Heette me time
hee gareecermmmteed eo Dien dated after nett Hee stir se
her amg) cfbroroneee tho ariade axtedl vie dieesiteneent a tee naliptnerls
feo prediacinal fewinew —atdhead, Nee amiey dewiidle ane aimee
sqecettinnn ated Iewtaree sucvonedivngg: tee Thee iedidlit appar yetenny ofl
Rae series, Dibeonggth Comioreos amieg arccon the etFinaime of
thee ceaencietinnse che presternecnes of Ghee gremcemnmnecnn ath ah ot

| the powers tenmanety he Che adloyuntte coamitiiny oh te

we te

74

constitutional laws and may confer upon them the power
to determine the existence of facts as the foundation of
such action as may be necessary to give effect to the
declared purpose of Congress, it cannot delegate to any
officer or department of government the power to
‘decide’ finally what articles shall or shall not be
taxed.

According to the ruling of the Commissioner, the
word ‘artificial’ is made to include ‘natural, a
word of opposite meaning, for it is undisputed that the
yellow color of palm oil is a xatural color, and the ex-
ception would be, not of oleomargarine ‘ free from arti-
ficial coloration’ but of oleomargarine ‘free from colora-
tion. The established rule is that the intention to
tax in a particular manner must be expressed in clear
and unambiguous language, else it cannot be enforced,
and that words of exception are to receive a liberal
rather than a restricted construction, to the end that the
burdens imposed upon individuals may be confined
rather than extended. The rule together with its sup-
porting authorities is stated in Lidman v. Martinez,
184 U. S. 578, 583. See also Adams v. Bancroft,
3 Sumner, 384, 387; Schoenemann v. United States,
119 Fed. Rep. 584, 587; /nx re Southern Pac. Co.,
82 Fed. Rep. 311, 313; 87 Fed. Rep. 863; Matheson &
Co. v. United States, 71 Fed. Rep. 394, 395; Rice v.
United States, 53 Fed. Rep. 910, 911; Dean v. Charl-
ton, 27 Wis. 522, 526.

It is not contended that the invalidity of this provi-
sion contained in section 14 affects the other provisions
ofthe act. Omitting the clause or declaring the legal

rg hie? s Fe, Ses . 7 , " permenen
Pe!
~p' \

75

effect to be that the ruling of the Commissioner
is only presumptively correct, will leave the act
complete and harmonious. To the individual, how-
ever, will then be accorded a trial in due form
upon the issue whether palm oil or any other
natural product or colored butter does or does not
constitute ‘ artificial coloration’ within the true meaning
of the statute. Upon that question, we have been de-
nied a day in court; and, acting as an appellate tri-
bunal, this court will not determine that issue but order
it to be tried by the court below in accordance with the
usual practice.

¥.

EFFECT OF THE INVALID AMENDMENT UPON THE ORIGINAL ACT.

The power of Congress to lay a tax of two cents per
pound upon oleomargarine, as was done under section
8 of the original oleomargarine act, is not questioned in
these cases. It is true, in the Broadwell case, no tax
whatever had been paid; but this was upon the
ground that the amendment of May 9, 1902, being
void, no tax provision remained in force. This was
done for the purpose of presenting every phase of the
act, and not because the plaintiffs in error are not
willing to pay a fair tax to the national government.
Although an unconstitutional statute cannot, by mere
implication alone, operate to repeal a prior enact-
ment, still an expression of such an intention may as
well be contained in an unconstitutional statute as any

SARE CERRADO TORY

MELTS he Pee

76

other. Zims v. The State, 26 Ala. 165, 170; County of
Orange v. Harris, 97 Cal. 600, 602; Feople ex rel. v,
Fleming, 7 Colo. 230, 236; Meshmeter v. State, 11 Ind.
482, 489; Childs v. Shower, 18 lowa, 261, 272; Ely v.
Thompson, 3 A. KK. Marsh. 70, 73; Sudlivan v. Adams,
3 Gray, 476, 478; Campau v. The City of Detroit, 14
Mich. 276, 285; Devoy v. Mayor, Cc., of New York, 35
Barb. 264, 270; 36 N. Y. 449, 451; Céty of Portland vy.
Schmidt, 13 Oreg. 17, 20; Shepardson v. Milwaukee and
Beloit R. Co., 6 Wis. 605, 615; State ex rel. Rogers
v. Judge of County Court, 11 Wis. 50, 55. Anda
declaration that a prior statute is amended to read
in the language of the amendatory statute amounts
to an unequivocal expression of an intention to repeal
the original act so far as concerns any vitality distinct
from the amendatory act. /eople v. I ilmerding, 136
N. Y. 363, 369, per Mr. Justice Peckham; J/atter of
Estate of Prime, 136 N. Y. 347, 355; Goodno v. City of
Oshkosh, 31 Wis. 127, 129. Congress cannot be held
to have intended to prohibit oleomargarine provided
the Constitution will permit it to do so and by the same
act to tax it in case the prohibition were unconstitutional.
To so hold would be judicial legislation. Sprazgue v.
Thompson, 118 U. S. 90, 94; James v. Bowman, 190
U.S. 007, t4ts

CONCLUSION,

It results that sections 8 and 14 of the act of Congress
of August 2, 1886, as amended by the act of Congress
of May 9, 1902, should be declared unconstitutional for

77

the reasons above discussed, and that the judgment in
each case should be reversed.

WiiuiaM D. GUTHRIE,
MILLER OUTCALT,
Cuarves E. Prior,
Francis J. KEARFUL,
DeLavan B. COoLe,
Cuarces C. CARNAHAN,
For plaintiffs in error.

Washington, October Term, 1903.

|Ms107]

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386019_0522%3A4. Public record. Not legal advice.