Red "C" Oil Manufacturing Co. v. North Carolina
222 U.S. 380 (1912)

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U.S. Supreme Court

Red "C" Oil Manufacturing Co. v. North Carolina, 222 U.S. 380 (1912)

Red "C" Oil Manufacturing Company v.

Board of Agriculture of North Carolina

No. 141

Argued December 21, 22, 1911

Decided January 9, 1912

222 U.S. 380

Syllabus

This Court will not lightly attribute improper motives to the lawmaking power, and will not, on a mere charge, regard a statute imposing inspection fees as an act to raise revenue. Ellis v. United States,206 U. S. 246. Prima facie, the charge for inspection in an act otherwise constitutional is reasonable. Western Union Tel. Co. v. New Hope,187 U. S. 417. The fact that oil inspection laws have been passed in a majority of the states shows that oil is a proper subject for police regulation.

In this case, this Court cannot conclude that the charge for inspecting oil, provided by the North Carolina oil inspection law of 1909, is

Page 222 U. S. 381

so seriously in excess of what is necessary for the object designed to be effected as to justify the imputation of bad faith and the conclusion that the law is one for revenue and not merely for inspection. Patpsco Guano Co. v. South Carolina,171 U. S. 354.

This Court cannot determine what the actual operation of a statute will be after its enactment by going outside the record and taking judicial knowledge of what has happened since the filing of the transcript here.

If the inspection fees exacted under a state statute average largely more than enough to pay expenses, the presumption is that the state will reduce them to conform to the constitutional authority to impose fees solely to reimburse for expense of inspection.

What relief shall be accorded to one who may sustain injury by the failure of a state to protect his rights under the Constitution cannot be determined before there has been such failure.

A requirement by the legislature that illuminating oils must be safe, pure, and afford a satisfactory light establishes a sufficient primary standard, and remitting to the proper state board the establishment of rules and regulations to determine what oils measure up to those standards does not amount to a delegation of legislative power.

Where one complains that regulations promulgated under legislative authority by a state board are unreasonable and oppressive, he should seek relief by applying to that board to modify them.

A state police statute cannot be declared invalid because in the opinion of this Court it does not accord with sound policy. The appeal for redress must be to the lawmaking power.

In the year 1909, North Carolina passed an act for the inspection, under the control of the Board of Agriculture, of all kerosene or other illuminating oils sold or offered for sale in the state. The object of such inspection was declared to be in order to determine the safety and value of such oils for illuminating purposes. A charge of one-half cent per gallon was fixed, which law declared should be paid to the Commissioner of Agriculture for the purpose of defraying expenses connected with the inspection, testing, and analyzing of oils in this state. It was provided that the act should go into effect on July 1, 1909.

Page 222 U. S. 382

Two days after, viz., on July 3, 1909, this suit was commenced by the appellant, the Red "C" Oil Manufacturing Company, a corporation of the State of Maryland. The defendants named were the Board of Agriculture of North Carolina and the members of the Board, and the object of the bill was to restrain the enforcement of the act referred to because it was charged to be not a proper exertion of the police power of the state, and besides was asserted to be repugnant to the Constitution of the United States.

The bill averred that the complainant was a large shipper of illuminating oils from the State of Maryland into the State of North Carolina, and that it did an extensive business in North Carolina in dealing in such oil. The provisions of the assailed act were set out in extenso, as also the terms of an act of the general assembly approved on March 9, 1909, which forbade the collection of a tax upon dealers in oils, authorized by § 58 of the Revenue Act, passed at the same session,

"from any persons, dealers, or corporations paying the taxes imposed under the inspection law enacted at the present session of the General Assembly, entitled, 'An Act to Provide for the Inspection of Illuminating Oils and Fluids;' Provided, however, if the said oil inspection act should be held invalid, § 58, Revenue Act, shall remain in full effect."

In the preamble of this latter act, it was recited that the "inspection tax" was much greater than the "tax" imposed under § 58 of the Revenue Act, and that "it is not the purpose of the General Assembly that the said tax shall be cumulative." In addition to averring the appointment of inspectors by the Board of Agriculture, and the purpose of the Board to enforce the collection of the inspection taxes, there were set forth the regulations adopted by the Board under the authority of the statute.

Page 222 U. S. 383

The particulars by which it was asserted the statutory charge was shown to be unlawful may be thus summarized: the charge or "tax" was not for the purpose of defraying the cost of the inspection of oil, but was imposed for revenue upon the goods of complainant shipped into the State of North Carolina from the State of Maryland, and was hence in conflict with the commerce clause and the Fourteenth Amendment. The law, it was charged, was not a police regulation, since an inspection of oil "for value and luminosity" was not within the competency of legislative action, and the public safety was not concerned, since illuminating oils, as the result of modern methods of manufacture, were no longer explosive. The charge or tax, it was averred, was more than double the amount necessary for the inspection proposed, and would realize annually a surplus for the state treasury of more than $20,000. It was further charged that the act fixed no standard for the guidance of the Board of Agriculture, but in effect arbitrary powers were conferred upon the Board, and, indeed, legislative authority had been delegated to it. The power thus conferred, it was also alleged, had been exerted in an arbitrary manner, and tests prescribed which were not necessary "in order to procure the safety of oil, to protect the people from the sale of oils which are dangerous." Certain of the regulations promulgated by the Board were also assailed as being uncertain, unreasonable, illegal, and oppressive.

On the filing of the bill, an order was entered temporarily restraining the defendants from enforcing, as against the complainant, the statute and the rules and regulations of the Board thereunder. The restraining order was subsequently amended by requiring the complainant, "pending the final determination of this cause," to "pay the one-half cent per gallon upon all illuminating oils sold by it in the state, as prescribed in said act." The defendants jointly and severally answered the bill, and took

Page 222 U. S. 384

issue upon all the matters alleged in the complaint. As regards the allegation that the inspection fee was unnecessarily high and would yield a large surplus over the expenses, the defendants said:

"Defendants say that they have made no estimate that any excess may be left after paying all the proper and necessary expenses of inspection, and these defendants say that they have no means of actually approximating the amount that the tax of one-half cent per gallon will yield, or the expenses of equipping and maintaining a competent inspection force and department. That the legislature thought that one-half cent a gallon would be necessary to pay the expenses of inspection, and these defendants are informed and believe, and therefore aver, that this is as low an inspection tax as there is to be found in any state having oil inspection laws, and lower than the taxes in a great many of the states. In some states, there is a graduated scale of taxation of more than one-half cent for small quantities and less than one-half cent for large quantities. The said act expressly provides, in § 6, that the Commissioner of Agriculture shall include in his report to the General Assembly an account of the expenses under this act. The said act also provides that all money paid for inspection taxes shall be kept by the State Treasurer as a distinct fund, to be styled, 'The Oil Inspection Fund.' At the end of one year, it can be seen exactly what the inspection costs and how much is paid for it by dealers in oil, and until it shall appear that said tax is excessive, a charge to that effect by complaint is premature and ill considered."

Both parties filed affidavits in support of their respective claims. The matter was heard upon a motion for an injunction upon the bill, answer, and affidavits just referred to. Elaborately examining all the contentions, the court (172 F. 695) concluded that the complainant was not entitled to relief by injunction, and that,

Page 222 U. S. 385

as respects the other relief asked, the bill should be dismissed. A final decree was thereupon entered, and this appeal was then taken.

Page 222 U. S. 389

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