Cornell v. Coyne

• Decision Date: 23 February 1904
• Docket Number: No. 118,118
• Citation: 24 S.Ct. 383,192 U.S. 418,48 L.Ed. 504
• Parties: C. W. CORNELL and F. B. Cornell, Copartners, Doing Business under the Name and Style of Cornell Brothers, Plffs. in Err. , v. F. E. COYNE, Late United States Collector of Internal Revenue, First District of Illinois
• Court: U.S. Supreme Court

192 U.S. 418

24 S.Ct. 383

48 L.Ed. 504

C. W. CORNELL and F. B. Cornell, Copartners, Doing Business under the Name and Style of Cornell Brothers, Plffs. in Err.,

v F. E. COYNE, Late United States Collector of Internal Revenue, First District of Illinois.

No. 118.

Argued January 18, 19, 1904.

Decided February 23, 1904.

On June 6, 1896, Congress passed an act (29 Stat. at L. 253, chap. 337, U. S. Comp. Stat. 1901, p. 2236) entitled 'An Act Defining Cheese, and Also Imposing a Tax Upon and Regulating the Manufacture, Sale, Importation and Exportation of 'Filled Cheese." Section 2 defines 'filled cheese.' Section 3 directs that 'manufacturers of filled cheese shall pay $400 for each and every factory, per annum.' Section 6 provides for the stamping and branding of the wooden packages in which manufacturers are required to pack filled cheese, and that 'all sales or consignments made by manufacturers of filled cheese to wholesale dealers in filled cheese or to exporters of filled cheese shall be in original stamped packages.' Sections 9 and 11 are as follows:

'Sec. 9. That upon all filled cheese which shall be manufactured there shall be assessed and collected a tax of one cent per pound, to be paid by the manufacturer thereof; and any fractional part of a pound in a package shall be taxed as a pound. The tax levied by this section shall be represented by coupon stamps; and the provisions of existing laws governing the engraving, issue, sale, accountability, effacement, and destruction of stamps relating to tobacco and snuff, as far as applicable, are hereby made to apply to stamps provided for by this section.'

'Sec. 11. That all filled cheese as herein defined imported from foreign countries shall, in addition to any import duty imposed on the same, pay an internal revenue tax of eight cents per pound, such tax to be represented by coupon stamps; and such imported filled cheese and the packages containing the same shall be stamped, marked, and branded, as in the case of filled cheese manufactured in the United States.'

Plaintiffs in error were manufacturers of filled cheese, entered into contracts for its manufacture and export, and under such contracts manufactured and exported 1,580,479 pounds of filled cheese. They were required by the defendant in error, as collector, to purchase and affix stamps to the exported packages of filled cheese. They protested against such required purchase, and applied to the Commissioner of Internal Revenue, as authorized by § 3226, Rev. Stat. (U. S. Comp. Stat. 1901, p. 2088), for a return of the various sums so paid, but their application was rejected. Thereupon they commenced this action in the circuit court of the United States for the northern district of Illinois. In the declaration they alleged 'that the requirements of the said defendant, whereby the plaintiffs were compelled in the manner aforesaid, to purchase and use the said revenue stamps, were wholly unauthorized and unwarranted by law; and that § 9, of the act of Congress aforesaid, and said act itself in that the same failed to contain provisions whereby filled cheese- manufactured for export trade and exported and sold in foreign markets wholly without the United States might be exported and sold free from the levy of any duty or tax thereon; or provision whereby the same might be freed from the force and effect of said act, are repugnant to said § 9, article 1, of the Constitution of the United States, and that this suit, therefore, involves the construction or application of the Constitution of the United States.'

A demurrer to the declaration was sustained. They elected to stand by the declaration. Judgment was entered in favor of the defendant, and thereupon this writ of error was sued out.

Messrs. Charles W Greenfield, William E. Mason, Charles E. Kremer, and Lewis F. Mason, for plaintiffs in error.

[Argument of Counsel from pages 420-424 intentionally omitted] Assistant Attorney General McReynolds for defendant in error.

Statement by Mr. Justice Brewer:

[Argument of Counsel from pages 424-426 intentionally omitted] Mr. Justice Brewer delivered the opinion of the court:

The contention is that inasmuch as this filled cheese was manufactured under contract for export, and was in fact exported, the tax of 1 cent per pound prescribed by § 9 was prohibited by the 5th paragraph of § 9, article 1, of the Constitution, which reads: 'No tax or duty shall be laid on any articles exported from any state.'

But this means that no burden shall be placed on exportation, and does not require that any bounty be given therefor. Congress has power to encourage exportation by remitting taxes on goods manufactured at home as it has power to encourage manufacturers by duties on imports, yet the Constitution does not compel it to do either the one or the other. This power of encouraging is illustrated by § 11 of this act, which requires all imported filled cheese to pay, in addition to import duties, an internal revenue tax of 8 cents a pound,—eight times as much as that manufactured at home. To remit on articles exported the tax which is cast upon other like articles consumed at home, while perhaps not technically a bounty on exportation, has some of the elements thereof. By this act all filled cheese is subject to a manufacturing tax of 1 cent a pound. To remit that tax in favor of filled cheese exported may encourage the manufacturer to seek a foreign rather than a home market, but if the full tax on all filled cheese manufactured is required for the support of the government, the remission of part necessitates revenue from some other source. Doubtless the remission is given in hope of widening the market and increasing the production, but that is only a possibility of the future, while the loss in the revenue is a fact of the present. Subjecting filled cheese manufactured for the purpose of export to the same tax as all other filled cheese is casting no tax or duty on articles exported, but is only a tax or duty on the manufacturing of articles in order to prepare them for export While that which is asked in this case is the return of a manufacturing tax, there is nothing in the constitutional provision to distinguish between manufacturing and other taxes, and if the plaintiff's contention be sustained as to a manufacturing tax it would follow that the government was bound to refund all prior taxes imposed on articles exported. A farmer may raise cattle with the purpose of exportation, and in fact export them. Can it be that he is entitled to a return of all property taxes which have been cast upon those cattle? The true construction of the constitutional provision is that no burden by way of tax or duty can be cast upon the exportation of articles, and does not mean that articles exported are relieved from the prior ordinary burdens of taxation which rest upon all property similarly situated. The exemption attaches to the export, and not to the article before its exportation. Such has been the ruling of this court. In Turpin v. Burgess, 117 U. S. 504, 506, 29 L. ed. 988, 989, 6 Sup. Ct. Rep. 835, 836, where the question was as to an export stamp tax on tobacco, Mr. Justice Bradley, speaking for the court, said:

'The constitutional prohibition against taxing exports is substantially the same when directed to the United States as when directed to a state. In the one case the words are, 'No tax or duty shall be laid on articles exported from any state.' Art. 1, § 9, par. 5. In the other they are, No state shall, without the consent of Congress, lay any imposts or duties on imports or exports.' Art. 1, § 10, par. 2. The prohibition in both cases has reference to the imposition of duties on goods by reason or because of their exportation or intended exportation, or whilst they are being exported. That would be laying a tax or duty on exports, or on artieles exported, within the meaning of the Constitution. But a general tax, laid on all property alike, and not levied on goods in course of exportation, nor because of their intended exportation, is not within the constitutional prohibition.'

See also Brown v. Houston, 114 U. S. 622, 29 L. ed. 257, 5 Sup. Ct. Rep. 1091; Coe v. Errol, 116 U. S. 517, 29 L. ed. 715, 6 Sup. Ct. Rep. 475.

Justice Miller, in his lectures on the Constitution (p. 592), says:

'The Congress of the United States, during the late Civil war, imposed a tax upon cotton and tobacco, which tax was not limited to those products when in the process of transportation, but was assessed on all the cotton and tobacco in the country. It was argued that because the larger part of these products was exported out of the country and sold to foreign nations, and because their production was limited to a particular part of the country, the tax was forbidden by the corresponding clause of the Constitution prohibiting Congress from levying a tax on exports. Although the question came at that time to the Supreme Court of the United States, it was not then decided, because of a division of opinion in that court. The recent cases, however, of Coe v. Errol, 116 U. S. 517, 29 L. ed. 715, 6 Sup. Ct. Rep. 475, and Turpin v. Burgess, 117 U. S. 504, 29 L. ed. 988, 6 Sup. Ct. Rep. 835, seem to decide that the objection was not valid, and hold that only such property as is in the actual process of exportation, and which has begun its voyage or its preparation for the voyage, can be said to be an export.'

Some light is thrown on this question by the cases of Kidd v. Pearson, 128 U. S. 1, 32 L. ed. 346, 2 Inters. Com. Rep. 232, 9 Sup. Ct. Rep. 6, and United States v. E. C. Knight Co. 156 U. S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249. In the former a manufacturer of intoxicating liquors in Iowa claimed to be beyond the reach of the prohibitory law of the state on the ground that he manufactured only for shipment to other states, and therefore, as Congress had exclusive control over interstate commerce, it had like control...