Foote Company v. Charles Stanley

• Decision Date: 24 February 1914
• Docket Number: No. 159,159
• Parties: D. E. FOOTE & COMPANY, Incorporated, et al., Plffs. in Err., v. CHARLES H. STANLEY, Comptroller of the State of Maryland
• Court: U.S. Supreme Court

232 U.S. 494

34 S.Ct. 377

58 L.Ed. 698

D. E. FOOTE & COMPANY, Incorporated, et al., Plffs. in Err.,

v CHARLES H. STANLEY, Comptroller of the State of Maryland.

No. 159.

Argued January 16, 1914.

Decided February 24, 1914.

The plaintiffs are engaged in packing oysters taken from the waters of Maryland, Virginia, and New Jersey, and shipped to Baltimore, where they are inspected under the provisions of the Maryland oyster law. This comprehensive statute contains 82 sections, one of which (§ 69) provides for the appointment of 20 special inspectors, to be paid $45 per month each, during the season. They are required to inspect all oysters in the district to which they are assigned, and to give a certificate to buyer and seller in substantially the following form:

'I hereby certify that I have this day inspected for Captain ________ of the schooner ________, a cargo of oysters, sold to ________, and found the same to contain _____ bushels of merchantable oysters, and _____ bushels of unmerchantable oysters. . . .'

The section further provides that 'a charge of 1 cent per bushel is hereby levied to help defray the expenses of such inspection and the other expenses of the State Fishery Force, upon all oysters unloaded from vessels at the place where said oysters are to be no further shipped in bulk in vessels.'

The fee was to be charged equally to the buyer and seller, and in case it was not paid at the end of the week, the property of the party indebted was to be levied on and sold by the comptroller 'as in cases of taxes in default, without further process of law.'

The four plaintiffs refused to pay the inspection fees charged against them between October, 1910, and April, 1911. The comptroller threatened to enforce collection by levy and sale, and they filed a bill in the circuit court of Baltimore city, seeking an injunction on the ground that the inspection fees were excessive and constituted a burden on interstate commerce and a violation of the provision of the Constitution that 'no state shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws.' [Art. 1, § 10.]

The case was heard on an agreed statement of facts which, in addition to those above recited, showed that the act of April, 1910, was a re-enactment of sections of a prior statute (Code of Maryland, art. 72) which was substantially like the present law, with the same charge of 1 cent a bushel for measuring oysters.

Extracts from various annual reports of the comptroller were stipulated into the record. They show that the salaries of the inspectors amounted to about $14,000 per annum. After the deduction of salaries of these inspectors there was for 1909 and 1910 respectively, an excess of $22,010 and $28,680. This annual excess was carried to the credit of the oyster fund, provided for both in the repealed and re-enacted oyster law. In the report of the comptroller for 1909, he says: 'The tax as to 1 cent per bushel on all oysters inspected in this state, as enacted by chapter 488 of the Acts of 1908, has been sufficient not only to pay the cost of such inspections, but also to carry to this [oyster] fund the balance or excess of $22,010.95.'

In the report for 1910, he says: 'During the fiscal year ending September 30, 1910, the receipts of taxes on oysters amounted to $43,671.94. The disbursements for account of salaries of the measurers and inspectors of oysters were $14,991, leaving a balance or ex- cess of $28,680.94, which was carried to the credit of the Maryland state oyster fund.'

'The receipts from dredging and tonging licenses show a heavy shrinkage by reason of fewer boats being engaged in the industry; nevertheless the excess tax of 1 cent per bushel on oysters sold amounted to $28,680.94, making the fund self-sustaining for the year' (1911).

Section 30 of the oyster law referred to provides that the oyster fund shall only be drawn upon for 'the purpose of maintaining sufficient and proper police regulations for the protection of fish and oysters in Maryland waters, and in the payment of the officers and men, and keeping in repair and supplying the necessary means of sailing the boats and vessels of the state fishery force.'

After a hearing and consideration of the facts submitted, the circuit court held that the inspection tax was valid, refused to enjoin its collection, and dismissed the bill. That judgment was affirmed by the court of appeals (117 Md. 335, 82 Atl. 380), and the case was brought here by writ of error.

Messrs. W. Thomas Hemp and George Whitelock for plaintiff in error.

[Argument of Counsel from pages 497-499 intentionally omitted] Mr. Edgar Allan Poe, Attorney General of Maryland for defendant in error.

Statement by Mr. Justice Lamar:

[Argument of Counsel from pages 499-502 intentionally omitted] Mr. Justice Lamar, after making the foregoing statement of facts, delivered the opinion of the court:

The plaintiffs are engaged in the business of packing oysters in the city of Baltimore, and, during the season of 1910-11 purchased 736,000 bushels, of which 494,000 bushels were taken from the waters of the state of Maryland, 228,000 from the waters of the state of Virginia, and 14,118 from the state of New Jersey. These oysters were inspected in Baltimore by officers appointed under the provisions of the Maryland statute, which fixed an inspection fee of 1 cent per bushel to be paid, one half by the seller and one half by the buyer. The plaintiffs having refused to pay the inspection charge assessed against them, litigation followed. The decision was against their claim of immunity under art. I, §§ 8 and 10, of the Constitution. The case was then brought here on the ground that the inspection fee of 1 cent per bushel charge was excessive, that it interfered with interstate commerce, and levied an unlawful impost duty upon goods shipped into Maryland from other states.

1. The Constitution prohibits a state from regulating interstate commerce, but at the same time authorizes the collection of the necessary expenses of its inspection laws, with the result that interstate commerce is to that extent lawfully burdened. Inspection is intended to determine the weight, condition, quantity, and quality of merchandise to be sold within or beyond the state's borders. It is usually 'accomplished by looking at or weighing or measuring the thing to be inspected.' (New York v. Compagnie G en erale Transatlantique, 107 U. S. 62, 27 L. ed. 384, 2 Sup. Ct. Rep. 87), though there may be cases in which some degree of supervision or policing is required in order to secure the proper certification of the property intended for sale or shipment. But while the two duties may sometimes overlap, there is a difference between policing and inspection, and if the state imposes upon one set of officers the performance of the two duties, and pays the whole or a part of the joint expenses out of inspection fees, it must be made to appear that such tax does not materially exceed the cost of inspection,—the burden in such cases being on those seeking to collect the combined charge. For if the cost of inspection is so intermingled with other expenses as to make it impossible to separate the two, interstate commerce might be burdened by fees collected both for inspection and revenue,—for a lawful and for an unlawful purpose. Such is the contention here, the plaintiffs insisting that the fees are collected partly for inspecting oysters and partly for the cost of policing the waters of Chesapeake bay; while the defendant insists that the charge is collected and spent solely for inspection.

2. Inspection necessarily involves expense, and the power to fix the fee, to cover that...