Hamilton v. Kentucky Distilleries Warehouse Co Dryfoos v. Edwards

• Decision Date: 15 December 1919
• Docket Number: 602,Nos. 589,s. 589
• Citation: 251 U.S. 146,40 S.Ct. 106,64 L.Ed. 194
• Parties: HAMILTON, Collector of Internal Revenue, v. KENTUCKY DISTILLERIES & WAREHOUSE CO. DRYFOOS et al. v. EDWARDS, Collector of Internal Revenue
• Court: U.S. Supreme Court

251 U.S. 146

40 S.Ct. 106

64 L.Ed. 194

HAMILTON, Collector of Internal Revenue,

v KENTUCKY DISTILLERIES & WAREHOUSE CO.

DRYFOOS et al.

v. EDWARDS, Collector of Internal Revenue.

Nos. 589, 602.

Argued Nov. 20, 1919.

Decided Dec. 15, 1919.

[No. 589:

Messrs. William L. Frierson, Asst. Atty. Gen., Alex. C. King, Sol. Gen., of Atlanta, Ga., and W. V. Gregory, U. S. Dist. Atty., of Louisville, Ky., for appellant.

Messrs. Levy Mayer, of Chicago, Ill., and William Marshall Bullitt, of Louisville, Ky., for appellee.

No. 602:

Mr. Walter C. Noyes, of New York City, (Messrs. Moses J. Stroock, Arthur L. Strasser, and Walter S. Dryfoos, all of New York

Messrs. J. Smith Hays, of Winchester, Ky.,

Messrs. Levi Cooke and George R. Beneman, both of Washington, D. C., amici curiae and general counsel to the National Association of Distillers and Wholesale Dealers.

Messrs. Alex. C. King, Sol. Gen., of Atlanta, Ga., and William L. Frierson, Asst. Atty. Gen., for the United States.

[Argument of Counsel from pages 148-153 intentionally omitted] Mr. Justice BRANDEIS delivered the opinion of the Court.

The armistice with Germany was signed November 11, 1918. Thereafter Congress passed, and on November 21, 1918, the President approved the War-Time Prohibition Act (40 Stat. 1045, 1046, c. 212), which provides as follows:

'That after June thirtieth, nineteen hundred and nineteen, until the conclusion of the present war and thereafter until the termination of demobilization, the date of which shall be determined and proclaimed by the President of the United States, for the purpose of conserving the man power of the Nation, and to increase efficiency in the production of arms, munitions, ships, food, and clothing for the army and navy, it shall be unlawful to sell for beverage purposes any distilled spirits, and during said time no distilled spirits held in bond shall be removed therefrom for beverage purposes except for export. * * *'

On October 10, 1919, the Kentucky Distilleries & Warehouse Company, owner of distillery warehouses and of whisky therein, brought in the District Court of the United States for the Western District of Kentucky a suit against Hamilton, collector of internal revenue for that district, alleging that the above act was void or had become inoperative, and praying that he be enjoined from interfering, by reason of that act, with the usual process of withdrawal, distribution and sale of the whisky in bond. The case was heard before the District Judge on plaintiff's motion for a preliminary injunction and defendant's motion to dismiss. A decision without opinion was rendered for the plaintiff; and, the defendant declining to plead further, a final decree was entered granting a permanent injunction in accordance with the prayer of the bill. A similar suit seeking like relief was brought on October 29, 1919, by Dryfoos, Blum & Co., in the District Court of the United States for the Southern District of New York, against Edwards, collector for that district. That case was heard on November 5 before the District Judge on like motions for a preliminary injunction and to dismiss. An opinion was filed November 14, 1919, holding the act in force, and on the following day a final decree was entered dismissing the bill.

The essential facts in the two cases differ in this: In the Kentucky case the whisky was stored in a distillery warehouse; the plaintiff was the maker of the whisky, had owned it prior to the passage of the act, and had, since June 30, 1919, paid the revenue tax on part of it. In the New York case the liquors were in general and special bonded warehouses, the plaintiffs were jobbers, and it does not appear when they became the owners of the liquors. Both cases come here by direct appeal under section 238 of the Judicial Code (Act March 3, 1911, c. 231, 36 Stat. 1157 [Comp. St. § 1215]), were argued on the same day, and may be disposed of together. Four contentions are made in support of the relief prayed for: (1) That the act was void when enacted because it violated the Fifth Amendment; (2) that it became void before these suits were brought by reason of the passing of the war emergency; (3) that it was abrogated or repealed by the Eighteenth Amendment; (4) that by its own terms it expired before the commencement of these suits. These contentions will be considered in their order.

First. Is the act void because it takes private property for public purposes without compensation in violation of the Fifth Amendment? The contention is this: The Constitution did not confer police power upon Congress. Its power to regulate the liquor traffic must therefore be sought for in the implied war powers; that is, the power 'to make all laws * * * necessary and proper for carrying into execution' the war powers expressly granted. Article 1, § 8, cl. 18. Congress might under this implied power temporarily regulate the sale of liquor and, if reasonably necessary, forbid its sale in order to guard and promote the efficiency of the men composing the army and the navy and of the workers engaged in supplying them with arms, munitions, transportation and supplies. McKinley v. United States, 249 U. S. 397, 399, 39 Sup. Ct. 324, 63 L. Ed. 668. But the exercise of the war powers is (except in respect to property destroyed by military operations, United States v. Pacific Railroad, 120 U. S. 227, 239, 7 Sup. Ct. 490, and supervision, the council may United States v. Russell, 13 Wall. 623, 627, 20 L. Ed. 474. The severe restriction imposed by the act upon the disposition of liquors amounts to a taking of property, and, being uncompensated, would, at least as applied to liquors acquired before the passage of the act, exceed even the restriction held to be admissible under the broad police powers possessed by the states. Therefore, since it fails to make provision for compensation, which in every other instance Congress made when authorizing the taking or use of property for war purposes,¹ it is void. Such is the argument of the plaintiffs below.

That the United States lacks the police power, and that this was reserved to the states by the Tenth Amendment, is true. But it is none the less true that when the United States exerts any of the powers conferred upon it by the Constitution, no valid objection can be based upon the fact that such exercise may be attended by the same incidents which attend the exercise by a state of its police power, or that it may tend to accomplish a similar purpose. Lottery Case, 188 U. S. 321, 357, 23 Sup. Ct. 321, 47 L. Ed. 492; McCray v. United States, 195 U. S. 27, 24 Sup. Ct. 769, 49 L. Ed. 78, 1 Ann. Cas. 561; Hipolite Egg Co. v. United States, 220 U. S. 45, 58, 31 Sup. Ct. 364, 55 L. Ed. 364; Hoke v. United States, 227 U. S. 308, 323; 33 Sup. Ct. 281, 57 L. Ed. 523, 43 L. R. A. (N. S.) 906, Ann. Cas. 1913E, 905; Seven Cases v. United States, 239 U. S. 510, 515, 36 Sup. Ct. 190, 60 L. Ed. 411, L. R. A. 1916D, 164; United States v. Doremus, 249 U. S. 86, 93, 94, 39 Sup. Ct. 214, 63 L. Ed. 493. The war power of the United States, like its other powers and like the police power of the states, is subject to applicable constitutional limitations. (Ex parte Milligan, 4 Wall. 2, 121-127, 18 L. Ed. 281; Monongahela Navigation Co. v. United States, 148 U. S. 312, 336, 13 Sup. Ct. 622, 37 L. Ed. 463; United States v. Joint Traffic Assoc., 171 U. S. 505, 571, 19 Sup. Ct. 25, 43 L. Ed. 259; McCray v. United States, 195 U. S. 27, 61, 24 Sup. Ct. 769, 49 L. Ed. 18, 1 Ann. Cas. 561; United States v. Cress, 243 U. S. 316, 326, 37 Sup. Ct. 380, 61 L. Ed. 746); but the Fifth Amendment imposes in this respect no greater limitation upon the national power than does the Fourteenth Amendment upon state power (In Re Kemmler, 136 U. S. 436, 448, 10 Sup. Ct. 930, 34 L. Ed. 519; Carroll v. Greenwich Ins. Co., 199 U. S. 401, 410, 26 Sup. Ct. 66, 50 L. Ed. 246). If the nature and conditions of a restriction upon the use or disposition of property is such that a state could, under the police power, impose it consistently with the Fourteenth Amendment without making compensation, then the United States may for a permitted purpose impose a like restriction consistently with the Fifth Amendment without making compensation; for prohibition of the liquor traffic is conceded to be an appropriate means of increasing out war efficiency.

There was no appropriation of the liquor for public purposes. The War-Time Prohibition Act fixed a period of seven months and nine days from its passage during which liquors could be disposed of free from any restriction imposed by the federal government. Thereafter, until the end of the war and the termination of mobilization, it permits an unrestricted sale for export and, within the United States, sales for other than beverage purposes. The uncompensated restriction upon the disposition of liquors imposed by this act is of a nature far less severe than the restrictions upon the use of property acquired before the enactment of the prohibitory law which were held to be permissible in cases arising under the Fourteenth Amendment. Mugler v. Kansas, 123 U. S. 623, 668, 8 Sup. Ct. 273, 31 L. Ed. 205; Kidd v. Pearson, 128 U. S. 1, 23, 9 Sup. Ct. 6, 32 L. Ed. 346. The question whether an absolute prohibition of sale could be applied by a state to liquor acquired before the enactment of the prohibitory law has been raised by this court, but not answered, because unnecessary to a decision. Bartemeyer v. Iowa, 18 Wall. 129, 133, 21 L. Ed. 929; Beer Co. v. Massachusetts, 97 U. S. 25, 32, 33, 24 L. Ed. 989; Eberle v. Michigan, 232 U. S. 700, 706, 34 Sup. Ct. 464, 58 L. Ed. 803; Barbour v. Georgia, 249 U. S. 454, 459, 39 Sup. Ct. 316, 63 L. Ed. 704. See, however, Mugler v. Kansas, supra, 123 U. S. 623, 625, 657, 8 Sup. Ct. 273, 31 L. Ed. 205. But no reason appears why a state statute, which postpones its effective date long enough to enable those engaged in the business to dispose of stocks on...