License Tax Cases United States v. Vassar United States v. Schureman United States v. Green United States v. Beatty United States v. Shelly United States v. Bowen United States v. Swain United States v. Craft United States v. Craft
| Decision Date | 01 December 1866 |
| Parties | LICENSE TAX CASES. UNITED STATES v. VASSAR. UNITED STATES v. SCHUREMAN. UNITED STATES v. GREEN. UNITED STATES v. BEATTY. UNITED STATES v. SHELLY. UNITED STATES v. BOWEN. UNITED STATES v. SWAIN. UNITED STATES v. CRAFT. UNITED STATES v. CRAFT |
| Court | U.S. Supreme Court |
CONGRESS, by an internal revenue act of 1864, subsequently amended, enacted that no persons should be engaged in certain trades or businesses, including those of selling lottery tickets and retail dealing in liquors, until they should have obtained a 'license'1 from the United States.
By an amendatory act of 1866, the word 'special tax' was substituted in the place of the word license in the former act.
A party exercising any business for which a 'license' was necessary, or on which the 'special tax' was imposed, without having obtained the former or paid the latter, was made liable, under the acts respectively, both to the tax and to fine or imprisonment, or both. By the two principal acts, respectively, it was provided that no license so granted, or special tax so laid, should be construed to authorize any business within a State prohibited by the laws thereof, or so as to prevent the taxation by the State of the same business.
In New York and New Jersey, selling lottery tickets, as in Massachusetts retailing liquors (except in special cases, not important to be noted), is, by statute, wholly forbidden. Such selling or dealing is treated as an offence against public morals; made subject to indictment, fine, and imprisonment; and in one or more of the States named, high vigilance is enjoined on all magistrates to discover and to bring the offenders to justice; and grand juries are to be specially charged to present them.
In this condition of statute law, National and State, seven cases were brought before this court.
They all arose under the provisions of the internal revenue acts relating to licenses for selling liquors and dealing in lotteries, and to special taxes on the latter business.2
The first came before the court upon a certificate of division from the Circuit Court of the United States for the Northern District of New York.
It was argued at the last term, with the five next cases, which came here upon writs of error to the Circuit Court of the United States for the District of New Jersey.
During the present term another case of the same general character, coming from the Circuit Court for the District of Massachusetts, was argued, with two others, similar, except in one particular, to the New York and New Jersey cases, and coming here upon a certificate of division from the Circuit Court for the Southern District of New York.
In the first case, Vassar, a citizen and resident of the State of New York, was indicted for selling lottery tickets in that State without having first obtained and paid for a license under the internal revenue acts of Congress. He demurred to the indictment, and the division of opinion arose upon the question presented by the demurrer and joinder.
In the five cases from New Jersey, citizens and residents of that State were severally indicted for the same offence. They set up, by way of plea, the statute of New Jersey prohibiting the business, for carrying on which, without obtaining a license and payment of the required duty, they were indicted. The district attorney demurred to each of these pleas, and in each case there was a judgment for the defendants upon demurrer and joinder.
In the case from Massachusetts, the defendant was indicted for carrying on the business of retailing liquors without license, to which indictment there was a demurrer. A statement of facts was agreed on to the effect that the defendant was a retail dealer as charged, and that this business was prohibited by the laws of the commonwealth. And the division of opinion occurred on the question presented by the pleadings and this agreed statement.
The general question in these cases was: Can the defendants be legally convicted upon the several indictments found against them for not having complied with the acts of Congress by taking out and paying for the required licenses to carry on the business in which they were engaged, such business being wholly prohibited by the laws of the several States in which it was carried on?
In one of the two remaining cases the defendant was indicted for being engaged in the business of a lottery dealer, and in the other for being engaged in the business of a lottery ticket dealer, in New York, without having paid the special tax required by law. In each case there was a demurrer and joinder in demurrer. The division of opinion occurred upon the pleadings, and the question certified was the same in each case.
In these two cases, therefore, the general question was: Could the defendants be legally convicted upon an indictment for being engaged in a business on which a special tax is imposed by acts of Congress, without having paid such a special tax, notwithstanding that such business was, and is, wholly prohibited by the laws of New York?
The different cases were argued here for the different defendants by different counsel, Mr. W. M. Evarts representing the defendants in the New York cases, Mr. Senott the defendant in the case from Massachusetts, and Mr. Woodbury (by brief), one of the defendants in the cases, each like the other, from New Jersey.
Argument for the defendants:
The provisions of the acts of Congress under which these indictments are found, if regarded as legislation for the suppression and punishment of crime, which selling lottery tickets is regarded in New York and New Jersey to be, as retailing liquor is also regarded in Massachusetts, would be consistent with morality, but, being beyond the competency of Congress, under the Constitution of the United States, would be void; for no question can be made that the whole jurisdiction over domestic crimes and misdemeanors within its territory rests with each State.
The validity and the construction, therefore, of the acts of Congress, the violation of which, within the States of New York, New Jersey, and Massachusetts, is imputed to the defendants as a crime, must depend upon considerations appropriate to these acts as Revenue Laws.
How, in this aspect, are they to be regarded?
1. Congress cannot, constitutionally, punish for a refusal to pay for a license to commit crime, or constitutionally levy a tax for the privilege of committing it. Such a mode of raising revenue would be palpably against public policy. It matters not whether the crime or offence was malum in se or malum prohibitum. Vending lottery tickets and vending liquors appear to be regarded in some of the States,—perhaps from the consequences to which vending them often lead—as mala in se. But whether or not, with the States,—not with Congress,—rests (confessedly, we suppose) a complete and exclusive right to say whether such acts are criminal or not.
2. The various acts of New York, New Jersey, and Massachusetts, on the subject of dealing in lotteries and retailing liquor, were perfectly known to Congress; and it is apparent that the frame and purpose of the scheme of taxation made by Congress in regard to the two matters now before the court, assume the business of lotteries and vending liquors to be open and lawful pursuits, in the gains of which the Federal government may rightfully participate, and which can endure the regulation in protection of the tax imposed, which these provisions of law establish, and yet yield the revenue sought.
But such a scheme of taxation applied to communities whose exclusive and paramount legislation proscribes the taxed pursuit as common and public nuisances, imputes every step in such pursuit as a crime, and punishes every transaction out of which the tax is raised by fine and imprisonment, and requires every grand jury to be specially charged to inquire into every perpetration of these crimes, is an absurdity.
If the acts of Congress had, in terms, provided 'that no person should, within the different States of New York, New Jersey, and Massachusetts, perpetrate the crime of selling lottery tickets or liquor, without having first paid to the United States $100, and registered his name and the place where he intended to perpetrate these crimes, and given bond that he would account to the United States for a fair share of the lucre which the crimes brought him,' &c.,—of all this were expressed in the acts of Congress, it would have been no more a taxation of crime than it is now asserted to be in reference to these different States by the attempts made in the courts below to punish for the non-impetration of a license or to enforce the collection of the tax.
Suppose that a State, while proscribing and punishing all dealing in liquor or in lottery tickets, should enact as its law the scheme of taxation upon selling liquor and upon lotteries which Congress has adopted. Could a more absurd example of cross-purposes in legislation be imagined?
But the absurdity is in the absolute repugnancy of the two courses of legislation, and is inherent in them. This repugnancy is equally great, though the Federal government is the author of one and the State government of the other of the opposing laws.
In this repugnancy between an act of Congress raising a revenue from crime in a State, and the legislation of the State suppressing the crime, there can be no doubt of the supremacy of the State legislation.
Whatever room for argument there may be as to the competency of State legislation to extinguish material products, as sources of internal revenue to the United States, by proscription of their legal use while their actual use continues, it can never be tolerated that personal vice and guilt constitute a fund for Federal taxation, which ousts the States of police and penal regulation of the personal conduct of their inhabitants.
Hence, upon the natural construction of these acts of Congress, not...
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