State of South Carolina v. United States

Decision Date04 December 1905
Docket NumberNo. 10,10
PartiesSTATE OF SOUTH CAROLINA, Appt. , v. UNITED STATES
CourtU.S. Supreme Court

By several statutes, the state of South Carolina established dispensaries for the wholesale and retail sale of liquor, and prohibited sale by other than the dispensers. The United States demanded the license taxes prescribed by the internal revenue act for dealers in intoxicating liquors, and the dispensers filed the statutory applications for such licenses. The state, sometimes in cash and sometimes by warrant on its treasury, paid the taxes. No protest was made in reference to these payments prior to April 14, 1901. On that day a formal protest by the state dispensary commissioner was filed with the United States collector of internal revenue at Columbia, South Carolina. No appeal or application for the repayment of the sums paid by the various dispensers was made by them or by the state of South Carolina to the Commissioner of Internal Revenue, as authorized by §§ 3226, 3227, and 3228, Rev. Stat., U. S. Comp. Stat. 1901, pp. 2088, 2089.

The dispensers had no interest in the sales, and received no profit therefrom. The entire profits were appropriated by the state, one half being divided equally between the municipality and the county in which the dispensaries were located, and the other half paid into the state treasury. In the year 1901 the profits arising from these sales amounted to $545,248.12. While the laws of South Carolina prohibited the sale of liquor by individuals other than the dispensers, of 373 special license stamps issued in that state by the United States internal revenue collector, only 112 were to dispensers, while 260 were to private individuals. Three separate actions were commenced in the court of claims by the state of South Carolina to recover the amounts paid for these license taxes. These actions were consolidated. Upon a hearing, findings of fact were made and a judgment entered for the United States. 39 Ct. Cl. 257. Whereupon the state appealed to this court.

Messrs. Jackson H. Ralston, Frederick L. Siddons, and Franklin H. Mackey for appellant.

[Argument of Counsel from pages 440-443 intentionally omitted] Solicitor General Hoyt for appellee.

Statement by Mr. Justice Brewer:

[Argument of Counsel from pages 443-447 intentionally omitted] Mr. Justice Brewer delivered the opinion of the court:

The important question in this case is whether persons who are selling liquor are relieved from liability for the internal revenue tax by the fact that they have no interest in the profits of the business, and are simply the agents of a state which, in the exercise of its sovereign power, has taken charge of the business of selling intoxicating liquors. It is true a further question is made whether the act of Congress is broad enough to include such persons. But upon this we have little doubt. Section 3232, Rev. Stat., U. S. Comp. Stat. 1901, p. 2091, provides:

'No person shall be engaged in or carry on any trade or business hereinafter mentioned until he has paid a special tax therefor in the manner hereinafter provided.'

Section 3244 (U. S. Comp. Stat. 1901, p. 2097) contains these words of description:

'Every person who sells or offers for sale foreign or domestic distilled spirits or wines, in less quantities than five wine gallons at the same time, shall be regarded as a retail dealer in liquors.'

'Person' is also defined:

'Sec. 3140 (U. S. Comp. Stat. 1901, p. 2040). . . . Where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, the word 'person,' as used in this title, shall be construed to mean and include a partnership, association, company, or corporation, as well as a natural person.'

Now, the dispensers were persons who sold liquors. They applied for and received the licenses. True, they were acting simply as agents of the state; but if the fact that the state was the principal creates no exemption from Federal taxation, then the statute reaches them because they were the actual sellers.

We pass, therefore, to the vital question in the case, and it is one of far-reaching significance. We have in this republic a dual system of government,—national and state,—each operating within the same territory and upon the same persons, and yet working without collision, because their functions are different. There are certain matters over which the national government has absolute control, and no action of the state can interfere therewith, and there are others in which the state is supreme, and in respect to them the national government is powerless. To preserve the even balance between these two governments, and hold each in its separate sphere, is the peculiar duty of all courts; pre-eminently of this,—a duty oftentimes of great delicacy and difficulty.

Two propositions in our constitutional jurisprudence are no longer debatable. One is that the national government is one of enumerated powers; and the other, that a power enumerated and delegated by the Constitution to Congress is comprehensive and complete, without other limitations than those found in the Constitution itself.

The Constitution is a written instrument. As such its meaning does not alter. That which it meant when adopted, it means now. Being a grant of powers to a government, its language is general; and, as changes come in social and political life, it embraces in its grasp all new conditions which are within the scope of the powers in terms conferred. In other words while the powers granted do not change, they apply from generation to generation to all things to which they are in their nature applicable. This in no manner abridges the fact of its changeless nature and meaning. Those things which are within its grants of power, as those grants were understood when made, are still within them; and those things not within them remain still excluded. As said by Mr. Chief Justice Taney in Scott v. Sandford, 19 How. 393, 426, 15 L. ed. 691, 709:

'It is not only the same in words, but the same in meaning, and delegates the same powers to the government, and reserves and secures the same rights and privileges to the citizen; and as long as it continues to exist in its present form, it speaks not only in the same words, but with the same meaning and intent with which it spoke when it came from the hands of its framers, and was voted on and adopted by the people of the United States. Any other rule of construction would abrogate the judicial character of this court, and make it the mere reflex of the popular opinion or passion of the day.'

It must also be remembered that the framers of the Constitution were not mere visionaries, toying with speculations or theories, but practical men, dealing with the facts of political life as they understood them; putting into form the government they were creating, and prescribing, in language clear and intelligible, the powers that government was to take. Mr. Chief Justice Marshall, in Gobbons v. Ogden, 9 Wheat. 1, 188, 6 L. ed. 23, 68, well declared:

'As men whose intentions require no concealment generally employ the words which most directly and aptly express the ideas they intend to convey, the enlightened patriots who framed our Constitution, and the people who adopted it, must be understood to have employed words in their natural sense, and to have intended what they have said.'

One other fact must be borne in mind, and that is that in interpreting the Constitution we must have recourse to the common law. As said by Mr. Justice Matthews in Smith v. Alabama, 124 U. S. 465, 478, 31 L. ed. 508, 512, 1 Inters. Com. Rep. 804, 809, 8 Sup. Ct. Rep. 564, 569:

'The interpretation of the Constitution of the United States in necessarily influenced by the fact that its provisions are framed in the language of the English common law, and are to be read in the light of its history.'

And by Mr. Justice Gray in United States v. Wong Kim Ark, 169 U. S. 649, 654, 42 L. ed. 890, 892, 18 Sup. Ct. Rep. 456, 459:

'In this, as in other respects, it must be interpreted in the light of the common law, the principles and history of which were familiarly known to the framers of the Constitution. Minor v. Happersett, 21 Wall. 162, 22 L. ed. 627; Ex parte Wilson, 114 U. S. 417, 422, 29 L. ed. 89, 91, 5 Sup. Ct. Rep. 935; Boyd v. United States, 116 U. S. 616, 624, 625, 29 L. ed. 746, 748, 749, 6 Sup. Ct. Rep. 524; Smith v. Alabama, 124 U. S. 465, 31 L. ed. 508, 1 Inters. Com. Rep. 804, 8 Sup. Ct. Rep. 564. The language of the Constitution, as has been well said, could not be understood without reference to the common law. 1 Kent, Com. 336; Bradley, J., in Moore v. United States, 91 U. S. 270, 274, 23 L. ed. 346, 347.'

To determine the extent of the grants of power, we must, therefore, place ourselves in the position of the men who framed and adopted the Constitution, and inquire what they must have understood to be the meaning and scope of those grants.

By the 1st clause of § 8 of article 1 of the Constitution, congress is given 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; but all duties, imposts, and excises shall be uniform throughout the United States.'

By this clause the grant is limited in two ways: The revenue must be collected for public purposes, and all duties, imposts, and excises must be uniform throughout the United States.

The 4th, 5th, and 6th clauses of § 9 of article 1 are:

'4. No capitation or other direct tax shall be laid, unless in proportion to the census or enumeration hereinbefore directed to be taken.

'5. No tax or duty shall be laid on articles exported from any state.

'6. No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another; nor shall vessels bound to, or from, one state, be obliged to enter,...

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