Standard Oil Co v. Graves

Citation63 L.Ed. 662,249 U.S. 389,39 S.Ct. 320
Decision Date14 April 1919
Docket NumberNo. 177,177
PartiesSTANDARD OIL CO. v. GRAVES
CourtUnited States Supreme Court

Messrs. Oscar Sutro, of San Francisco, Cal., Richard A. Ballinger, of Seattle, Wash., E. S. Pillsbury, of San Francisco, Cal., Alfred Battle and Bruce C. Shorts, both of Seattle, Wash., and F. D. Madison and Alfred

Sutro, both of San Francisco, Cal., for plaintiff in error.

Messrs. L. L. Thompson, W. V. Tanner, and Glenn J. Fairbrook, all of Olympia, Wash., for defendant in error.

[Argument of Counsel from page 390-391 intentionally omitted] Mr. Justice DAY delivered the opinion of the Court

Plaintiff in error filed a complaint and an amended complaint in the superior court of Thurston county, Washington, to enjoin the collection of fees prescribed by the Oil Inspection Act of that state upon the ground that the statute was in contravention of the Constitution of the United States. The superior court held the law to be unconstitutional. Upon appeal the Supreme Court of Washington reversed the judgment. 94 Wash. 291, 162 Pac. 558.

The statute is the 'State Oil Inspection Law' (Laws 1907, p. 412) of the state of Washington. Its provisions are thus summarized in the opinion of the Supreme Court of the state:

'The inspection law referred to in the complaint was first passed during the legislative session for the year 1905 (Laws 1905, p. 310). That act was amended in 1907, and will be found in chapter 192 of the Laws of 1907, p. 413 (Rem. Code, § 6051 et seq.). Section 3 (Id., § 6052) of this act provides that all gasoline, benzine, distillate or other volatile product of petroleum intended for use or consumption in this state for illuminating, manufacturing, domestic or power purposes, 'before being sold or offered for sale,' shall be inspected by the state oil inspector or his deputies. When the inspection is made, a certificate is to be issued, and the barrel or receptacle which contains the oil must be labeled or branded. Section 4 (Id., § 6053) of the act contains a schedule of the fees which shall be paid for the inspection. Section 6 (Id., § 6055) provides that if any person or persons, whether manufacturer, vender or dealer, or as agent or representative of any manufacturer, vender or dealer, 'shall sell or attempt to sell' to any person, firm or corporation in this state, any illuminating oil, gasoline, benzine, distillate or any volatile product of petroleum, intended for use or consumption within this state, that has not been inspected and branded according to the provisions of the act, 'shall be guilty of a misdemeanor.' By the Laws of 1913, chapter 60, p. 196 (Rem. Code, § 3000-1 et seq.), it was made the duty of the commissioner of agriculture to exercise all the powers and perform all the duties which, by the law of 1907, were vested in, and required to be performed by, the state oil inspector.'

The case was heard upon demurrer to the amended complaint.

Among other things, the amended complaint set out:

'Plaintiff is engaged in the state of California in the business of producing and buying crude petroleum oil, and of manufacturing and refining the same, and of shipping products of such manufacture, to wit, illuminating oils, gasoline, distillate and other volatile products of petroleum from its refineries in California into the state of Washington, where the same are sold by this plaintiff in large quantities for use and consumption in the state of Washington, for illuminating, manufacturing, domestic and power purposes. None of the products herein-before referred to are manufactured by plaintiff in the state of Washington, but all of said products are shipped into said state from the state of California.

'The plaintiff maintains in the state of Washington wharves and docks, tanks, warehouses. buildings, machinery, horses and wagons, and other equipment for receiving, shipping, handling, selling and otherwise distributing said products shipped as aforesaid from the state of California into the state of Washington.'

The fees collected under the inspection acts are set out in the amended bill of complaint:

The total receipts from the fees collected under said statute, chapter 192 of the Laws of 1907, and chapter 161, Laws of 1905, of the state of Washington, for the inspection therein provided for of said products mentioned in said laws intended for sale or consumption in this state, and the total disbursements in connection with the collection thereof, and in connection with the administration of said laws, and the net revenue from such receipts during the following years have respectively been the following:

                          Date                  Receipts  Disbursements   Revenue 
                 
                   June 30 to Dec. 31, 1905    $ 5,693.19  $ 4,947.70   $   745.49
                   Jan.  1 to Dec. 31, 1906    $ 9,539.86  $ 6,610.80   $ 2,929.06
                   Jan.  1 to Dec. 31, 1907    $19,084.29  $ 7,551.70   $11,532.59
                   Jan.  1 to Dec. 31, 1908    $23,493.93  $ 8,684.87   $14,809.06
                   Jan.  1 to Dec. 31, 1909    $24,799.67  $ 8,802.90   $15,996.77
                   Jan.  1 to Dec. 31, 1910    $35,174.64  $ 8,469.00   $26,705.64
                   Jan.  1 to Dec. 31, 1911    $38,344.42  $ 8,762.85   $29,581.57
                   Jan.  1 to Dec. 31, 1912    $48,489.73  $ 8,860.80   $39,628.93
                   Jan.  1 to Dec. 31, 1913    $51,816.91  $ 8,859.00   $42,957.91
                   Jan.  1 to Dec. 31, 1914    $79,339.66  $ 8,553.75   $70,785.91
                                              ------------ ------------ ------------
                                               335,776.30  $80,103.37  $225,672.93
                 

It thus appears that the expense of administration of the statutes from 1905 to 1914 was $80,103.37. The total receipts for the same time $335,776.30, a difference of $255,672.93.

It is contended by the plaintiff in error that this inspection law violates the commerce clause, article 1, § 8, of the Constitution of the United States, in that it directly burdens such commerce by imposing inspection taxes far in excess of the cost of inspection. The Supreme Court of the state held that the tax was not upon property, but could be sustained as an excise or occupation tax upon the business of selling oil within the state. The reason given by the court for holding that the tax could not be upheld as a property tax rested upon provisions of the state Constitution.

While this court follows the decisions of the highest court of a state, as to the meaning of statutes in cases of this character, the name given to the statute is not conclusive. It must be judged by its necessary effect, and if that is to violate the Constitution of the United States, the law must be declared void. Minnesota v. Barber, 136 U. S. 313, 319, 10 Sup. Ct. 862, 34 L. Ed. 455; Crew Levick v. Pennsylvania, 245 U. S. 292, 294, 38 Sup. Ct. 126, 62 L. Ed. 295, and cases cited.

That the state may pass proper inspection laws for oils brought into its borders in interstate commerce, there can be no question. But, taking the allegations of the complaint to be true, as we must for present purposes, the cost of the inspection was greatly less than the tax imposed. The general...

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