Cook v. Pennsylvania

• Decision Date: 01 October 1878
• Citation: 97 U.S. 566,24 L.Ed. 1015
• Parties: COOK v. PENNSYLVANIA
• Court: U.S. Supreme Court

97 U.S. 566

24 L.Ed. 1015

COOK v. PENNSYLVANIA.

October Term, 1878

ERROR to the Supreme Court of the State of Pennsylvania.

This action, which was brought in the Court of Common Pleas of Dauphin County, Pennsylvania, was tried by the court upon the following case, stated in the nature of a special verdict.

The Commonwealth of Pennsylvania claims from the defendant, Samuel C. Cook, who, by the governor, was duly appointed and commissioned an auctioneer in and for the city of Philadelphia, the sum of $757.83, for taxes due at one-half of one per cent and three-fourths of one per cent, as per his report furnished to the auditor-general, and settlement made by the auditor-general and State treasurer, dated Jan. 3, 1871, upon sales made by him of foreign goods placed in his hands by the importer, in bulk or original packages, to be sold at auction as an auctioneer in the original packages as imported, and which were so sold by him at auction as an auctioneer. The Commonwealth claims the said taxes under the act of assembly entitled 'An Act to incorporate the Commercial Mutual Insurance Company of Philadelphia, relative to the State duty on domestic and foreign articles in the counties of Philadelphia and Allegheny,' & c., approved the twentieth day of May, 1853, P. L. 1853, 679; and under the act of assembly entitled 'An Act to modify the existing laws of the Commonwealth, and to provide more effectually for the collection of the State tax or duty on auction sales in the city of Philadelphia and county of Allegheny,' approved April 9, 1859, P. L. 1859, 435.

The defendant claims that said sales of foreign goods are exempt from taxation, because said acts of assembly, so far as they relate to such taxation, are in direct conflict with sects 8 and 10 of art. 1 of the Constitution of the United States, and for that and other reasons void; and inasmuch as the foreign goods so taxed as aforesaid were sold in bulk, as they were imported by the importer, said defendant, Cook, acted simply as his salesman.

That as the said goods had never been sold for consumption or resale by the importer, and had never been divided by him into smaller quantities by breaking up the casks or packages in which they were originally imported, the said goods had not lost their character as imports, and therefore that any such tax is unconstitutional and ought not to be levied.

That if the court should be of the opinion that the acts of assembly are constitutional, then judgment should be entered for the Commonwealth, but if not, then for the defendant, Cook; costs to follow the judgment, and either party reserving the right to sue out a writ of error.

The court being of the opinion that the defendant was properly charged with the tax, and that the laws under which it was assessed were constitutional, gave judgment in favor of the Commonwealth. That judgment having been affirmed by the Supreme Court of Pennsylvania, Cook sued out this writ of error.

The statutes of Pennsylvania referred to in the case stated are set out in the opinion of the court.

Mr. Benjamin Harris Brewster for the plaintiff in error.

As the goods sold by Cook had not lost their character as imports, the tax imposed was upon them, and is therefore in direct repugnance to the provisions of the Constitution of the United States, which declare that 'no State shall, without the consent of Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws;' and that Congress shall have power 'to regulate commerce with foreign nations, and among the several States, and with the Indian tribes.' Brown v. State of Maryland, 12 Wheat. 419; The License Cases, 5 How, 504; Pervear v. The Commonwealth, 5 Wall. 475; Same v. Austin, 13 id. 29; Case of the State Freight Tax, 15 id. 232; Waring v. The Mayor, 8 id. 110; People v. Waring, 3 Keyes (N. Y.), 374; Pennsylvania Railroad v. Commonwealth, 3 Grant (Pa.), 130; Welton v. The State of Missouri, 91 U. S. 275; Henderson v. The Mayor, &c., 92 id. 268; Inman Steamship Co. v. Tinker, 94 id. 238.

Mr. Lyman D. Gilbert, Deputy Attorney-General of Pennsylvania, contra.

The contention is between the Commonwealth and an auctioneer, as to a graduated tax upon his sales; a liability to pay which she annexed as a condition to the grant of authority to pursue his calling.

If it be asserted that the tax is laid upon the importer, and is paid by him, the auctioneer being merely the collector, the Commonwealth has the right to collect it from the latter, for he succeeds to no defence which the former might have made. Waring v. The Mayor, 8 Wall. 110.

The demand is made upon Cook not as an importer, but as an auctioneer, who, as an agent of the Commonwealth, received the tax in dispute, and holds it as her trustee. If he has not collected it, his failure to perform his agreement renders him liable.

Although the tax was not laid directly upon the importer, it is submitted that, if the contrary were true, the right of the Commonwealth to collect it is undoubted; because, first, no one can require the services of her officer, except upon her terms; second, she appointed Cook an auctioneer, investing him with certain privileges and subjecting him to certain responsibilities; and importers who for their own advantage avail themselves of his services, and of the security which she demands of him for his fidelity, cannot decline to pay the prescribed price fixed for his services, and for the benefit which such security affords. As was said by Mr. Chief Justice Marshall, in Brown v. The State of Maryland (12 Wheat. 437), 'Auctioneers are persons licensed by the State, and if the importer chooses to employ them, he can as little object to paying for the service, as for any other for which he may apply to an officer of the State. The right of sale may very well be annexed to importation, without annexing to it also the privilege of using the officers licensed by the State to make sales in a particular way.'

Whatever privileges, therefore, importers obtain not from the United States, but exclusively from the Commonwealth,—among them being that of employing a licensed auctioneer,—are subject to her regulation, and to such taxtion as she imposes. An increased price of foreign merchandise may result from the tax in question; but such a consequence follows many modes of taxation, and furnishes no reason against their validity. Nathan v. Louisiana, 8 How. 73; State Tax on Railway Gross Receipts, 15 Wall. 284.

The Commonwealth having the right to impose the tax in question, can determine the amount thereof and the manner in which it shall be laid. State Tax on Railway Gross Receipts, supra; Society for Savings v. Coite, 6 Wall. 594; Provident Institution v. Massachusetts, id. 611; The Delaware Railroad Tax, 18 id. 206.

MR. JUSTICE MILLER delivered the opinion of the court.

The act of the legislature of Pennsylvania, of May 20, 1853 (Pamphlet Laws, 683), declares that——

'The State duty to be paid on sales by auction in the counties of Philadelphia and Allegheny shall be on all domestic articles and groceries, one-half of one per cent; on foreign drugs, glass, earthenware, hides, marble-work, and dye-woods, three-quarters of one per cent.'

By the sixth section of the act of April 9, 1859, the law was modified, as follows:——

'Said auctioneers shall pay into the treasury of the Commonwealth a tax or duty of one-fourth of one per cent on all sales of loans or stocks, and shall also pay into the treasury aforesaid a tax or duty, as required by existing laws, on all other sales to be made as aforesaid, except on groceries, goods, wares, and merchandise of American growth or manufacture, real estate, shipping, or livestock; and it shall be the duty of the auctioneer having charge of such sales to collect and pay over to the State treasurer the said duty or tax, and give a true and correct account of the same quarterly, under oath or affirmation, in the form now required by law.' Pamphlet Laws, 436.

The effect of this legislation is, that by the first statute a discrimination of one-fourth of one per cent is made against foreign goods sold at auction; and by the last statute, while all sales of foreign or imported goods are taxed, those arising from groceries, goods, wares, and merchandise of American growth or manufacture are exempt from such tax.

It appears that the law also required these auctioneers to take out a license, to make report of such sales, and to pay into the treasury the taxes on these sales.

The defendant refused to pay the tax for which he was liable under this law, for the sale of goods which had been imported and which he had sold for the importers in the original packages. In the suit, in which judgment was rendered against him in the Supreme Court of Pennsylvania, he defended himself on the ground that these statutes were void, because forbidden by sects. 8 and 10 of art. 1 of the Constitution of the United States.

The clauses referred to are those which give to Congress power to regulate commerce with foreign nations, and forbid a State, without the consent of Congress, to levy any imposts or duties on imports. The case stated shows that the goods sold by defendant were imported goods, and that they were sold by him in the packages in which they were originally imported. It is conceded by the Attorney-General of the State, that if the statute we have recited is a tax on these imports, it is justly obnoxious to the objection taken to it.

But it is argued that the authority of the auctioneer to make any sales is derived from the State, and that the State can, therefore, impose upon him a tax for the privilege conferred, and that the mode...