199 U.S. 437 (1905), 10, South Carolina v. United States
|Docket Nº:||No. 10|
|Citation:||199 U.S. 437, 26 S.Ct. 110, 50 L.Ed. 261|
|Party Name:||South Carolina v. United States|
|Case Date:||December 04, 1905|
|Court:||United States Supreme Court|
Argued April 11, 1905
APPEAL FROM THE COURT OF CLAIMS
Persons who sell liquor are not relieved from liability for the internal revenue tax imposed by the federal government 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 liquor. They are persons within the meaning of §§ 3140, 3232 and 3214 Rev.Stat.
The national government is one of enumerated powers, and a power enumerated and delegated by the Constitution to Congress is comprehensive and complete, without other limitations than those found in the Constitution itself.
To preserve the even balance between the national and state governments and hold each in its separate sphere is the duty of all courts, and preeminently of this Court.
The Constitution is a written instrument, and, as such, its meaning does not alter. Its language, as a grant of power to the national government, is general and, as changes come in social and political life, it embraces all new conditions within the scope of the powers conferred.
In interpreting the Constitution, recourse must be had to the common law and also to the position of the framers of the instrument and what they
must have understood to be the meaning and scope of the grants of power contained therein must be considered.
That which is implied is as much a part of the Constitution as that which is expressed, and amongst the implied matters is that the nation may not prevent a state from discharging the ordinary functions of government, and no state can interfere with the national government in the free exercise of the powers conferred upon it.
The framers of the Constitution, in granting to the national government full power over license taxes, intended that the power should be complete, and not to be destroyed by the states' extending their functions in a manner not then contemplated.
A state may control the sale of liquor by the dispensary system adopted in South Carolina, but, when it does so, it engages in ordinary private business which is not, by the mere fact that it is being conducted by a state, exempted from the operation of the taxing power of the national government.
The internal revenue tax on the sale of liquor is not a tax on property or profits of a business, but a charge on the business, irrespective of the property used therein or the profits realized therefrom.
The exemption of state agencies and instrumentalities from national taxation is limited to those which are of a strictly governmental character, and does not extend to those used by the state in carrying on an ordinary private business.
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 sections 3226, 3227, and 3228, Rev.Stat.
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.
BREWER, J., lead opinion
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 [26 S.Ct. 111] 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., 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 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. . . . 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 -- preeminently 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 Dred Scott v. Sandford, 19 How. 393, 426:
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 Gibbons v. Ogden, 9 Wheat. 1, 188, 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...
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