Ex parte Brown

• Decision Date: 07 August 1891
• Citation: 48 F. 435
• Parties: Ex parte BROWN.
• Court: U.S. Court of Appeals — Fourth Circuit

48 F. 435

Ex parte BROWN.

United States District Court, E.D. North Carolina.

August 7, 1891

George Rountree, for petitioner.

Thomas Strange, for the State.

SEYMOUR J.

This petition for a writ of habeas corpus has been presented with the purpose of testing the merchants' license tax of the state of North Carolina. Mr. Strange was, by consent, heard in opposition to the petition in behalf of the state, and the facts set forth therein were admitted, for the purposes of this application, to be true. The material parts of the revenue act are found in section 22 of the act, and are in these words:

'Every merchant, jeweler, grocer, druggist, or other dealer who shall buy and sell goods, wares, and merchandise, of whatsoever description, not specially taxed elsewhere in this act, shall, in addition to his ad valorem tax on his stock, pay as a license tax one-tenth of one per centum on the total amount of purchases in or out of the state (except purchases of farm products from the producer,) for cash or on credit, whether such persons herein mentioned shall purchase as principal or through an agent or commission merchant. Every person mentioned in this section shall, within ten days after the first days of January and July in each year, deliver to the clerk of the board of county commissioners a sworn statement of the amount of his purchases for the preceding six months. * * * Every merchant or dealer failing to render such list * * * shall be guilty of a misdemeanor. * * *

Petitioner is a merchant in Wilmington, who is engaged in the business of buying in other states, and bringing into North Carolina and there selling, large quantities of merchandise, including farm products not purchased from the producer, as well as in the business of buying and selling such articles in North Carolina. Having been so advised by counsel, he has refused to deliver a sworn statement of purchases out of the state, but has delivered to the clerk of the board of county commissioners such a statement of purchases within the state, and paid tax accordingly. Thereupon he has been arrested, and held in custody by the sheriff of his county, on a warrant charging him with a violation of the statute above cited. He claims that his arrest is illegal, and that he is restrained of his liberty in violation of the constitution of the United States. So the question is whether the tax imposed upon merchants of one-tenth of 1 per centum on purchases out of the state is unconstitutional, and, if so, whether petitioner's imprisonment for failing to deliver a sworn statement of such purchases, with a view to the listing of such tax, is in violation of the constitution of the United States. Section 3 of the revenue act imposes an ad valorem tax of 25 cents on $100 value of all real and personal property within the state. The tax under discussion is in addition to the ad valorem tax, and, in view of the provision of the constitution of North Carolina requiring equal taxation on all real and personal property, would be illegal, but that it is a license tax, and therefore within the authority given to the legislature by article 5, Sec. 3, of that instrument. Besides being a license tax, it is, however, an ad valorem tax on property. Brown v. Maryland, 12 Wheat. 419. As a license tax, it is imposed on a person residing and engaged in business in North Carolina. Considered as a tax on property, it is imposed, or, for the purposes of this proceeding, and under petitioner's application for a writ of habeas corpus, must be considered as imposed, on merchandise being, at the time when, under the law, it should have been listed, within the state of North Carolina. The requirement of the statute is that within 10 days after the 30th of last June petitioner should have delivered a sworn statement of his purchases for the 6 months ending on such 30th of June. I do not at all pass upon the question of the possible construction of this provision with respect to whether the statement required does or does not include any merchandise purchased before the last of June, but on that day not yet within the state. If it could be in any way material, no such question is raised by the petitioner. On the contrary, petitioner refuses to deliver any statement of purchases out of the state.

As some stress seems to have been laid upon the phrase used in the description of the tax, it may be well to say, although the proposition seems to be an obvious one, that the words 'purchases in or out of the state' do not refer to the act of purchasing, but to the goods purchased. It seems not at all material to the characterization of the tax whether it be laid upon the amount of sales, upon the average amount kept on hand, or, as is the case here, upon the amount of purchases; in either case, the tax is upon the goods, and it is of no moment whether they be valued by their purchase or sale price, or by some other standard. Either as a license tax imposed upon a resident, or as a property tax laid upon property, within the state, the imposition in section 22 is legal, unless it is in conflict with some one of the provisions of the constitution of the United States. Petitioner claims that it does so conflict with article 1, Sec. 8, cl. 3, which provided that 'congress shall have power to regulate commerce with foreign nations, and among the several states;' and with article 1, Sec. 10, cl. 2, which provided that 'no state shall * * * lay any imposts or duties on imports or exports.'

Before proceeding to the graver questions at issue, which involves an important part of the state's powers to raise revenue, I will dispose of a position taken in the outset of his argument by counsel for petitioner, which only attacks the form of the tax, but not the taxing power itself, but which, if decided in his favor, would be fatal to the state's right to ultimately collect the tax sub lite, if not decisive of the present application. Section 22 excepts from taxation purchases of farm products from the producer. This, it is claimed, is in reality, although not ostensibly, a discrimination in favor of inhabitants of the state as against non-residents. The argument made is that, by reason of locality, a merchant naturally will buy a much greater quantity of farm products in his own state than out of it. Therefore, it is said the law, being in this respect in its effect more to the advantage of farmers in North Carolina than out of it, discriminates in favor of the former and against the latter. It may be said with equal truth that it discriminates also in favor of farmers within 10 miles of the merchant as against those 100 miles from him, and in the case of petitioner in favor or farmers in Marion county, in South Carolina, as against those in Craven county, North Carolina. But, indeed, I can see no force in the position in any point of view, and no applicability in the authorities cited to sustain it. It is conceded that a law that professes to be non-discriminating, and is so, as far as its words upon its face go, may, when the circumstances are applied to it, be shown to discriminate, and may for that reason be unconstitutional. Such was the fact in the Virginia case of Brimmer v. Rebman, 138 U.S. 78; 11 S.Ct. 213, and of Minnesota v. Barber, 136 U.S. 313, 10 S.Ct. 862. Laws professing to be enacted for the purpose of preventing the sale of unwholesome meat, and in one case taxing all dressed meat slaughtered more than 100 miles from the place of sale, and in the other prohibiting the sale of fresh meat from animals not inspected by a Minnesota inspector before being slaughtered, were found to be really laws prohibiting the sale of all such commodities imported from other states, and were held to be violations of the right of interstate commerce. But these were cases of taxation or prohibition. The revenue act of North Carolina contains, on the contrary, only an exemption from taxation. I know of no provision of the constitution violated by the exemption. It does not deprive any farmer in any other state of the privilege of selling his products in North Carolina, or tax him for the right to do so. If he is at a disadvantage in so selling by reason of his distance from a market like the one of Wilmington, in that state, it is a disadvantage not caused by any statute, and is doubtless compensated by nearness to some market more accessible to him than to his rival in the market of Wilmington, the farmer residing in that locality. Nor does it in any way interfere with commerce. Only a tax or a prohibition could have that effect.

I come to the main point in the case. The law in question imposes a non-discriminating tax upon all merchandise in North Carolina, with the exception above mentioned, whether the product of that or some other state, whether in the hands of a second purchases or of the importer, and whether it be or not in the condition in which it was imported; that is, as it is usually termed, in the original package. It is contended that, as far as it affects goods brought from another state in the possession of the first purchaser, in an unchanged form, it is unconstitutional. This is not the case of a tax upon a citizen of another state, imposed upon him for the privilege of bringing his merchandise into North Carolina and there offering it for sale, but a tax upon goods in the state, imposed upon them in common with all other goods. A moment's consideration will be enough to show that, if it is unconstitutional, no tax upon the business of a merchant can be imposed and collected in any state. The great mass of merchants' sales consists either of commodities exclusively brought from outside of the state, and which are not produced within its limits, or of commodities in regard to which the...