Foote & Co., Inc. v. Stanley - 232 U.S. 494 (1914)
U.S. Supreme Court
Foote & Co., Inc. v. Stanley, 232 U.S. 494 (1914)
D. E. Foote & Company Incorporated v. Stanley
Argued January 16, 1914
Decided February 24, 1914
232 U.S. 494
The federal Constitution prohibits a state from regulating interstate commerce, but at the same time authorizes it to burden that commerce by the collection of the expenses if absolutely necessary for enforcing its inspection laws.
There is an essential difference between policing and inspection, and a state cannot include the expense of the former as part of the expense of the latter in determining the amount which it can raise as an inspection tax which affects interstate commerce.
As inspection necessarily involves expense, it is primarily for the legislature to determine the amount, and even though the revenue be slightly in excess of the expense, the courts should not interfere.
There is a presumption that the legislature will reduce inspection fees to a proper sum if the amount originally fixed proves to be unreasonably in excess of the amount required. Red "C" Oil Co. v. North Carolina, 222 U. S. 393.
Effect must be given by the courts to the provisions of the Constitution, and where it does appear that the amount of inspection fees are disproportionate to the inspection service rendered or include something beyond inspection, the tax must be declared void as obstructing the freedom of interstate commerce.
A state statute imposing an inspection tax, the proceeds of which are to be and actually are used partly for inspection and partly for other purposes such as policing state territory, is necessarily void as imposing a burden on interstate commerce in excess of the expense absolutely necessary for inspection, and so held as to the Maryland Oyster Inspection Tax of 1910.
The question of constitutionality of an inspection law depends not only upon whether the excess proceeds of the tax may be used for other purposes, but whether they actually are so used, and it is the duty of the courts to determine whether the tax is excessive and the excess is
While the excess of a state inspection tax may be valid as a tax on property within the state, if it does not appear that the legislature would have separately imposed such a property tax, the whole tax must be declared void if it is unconstitutional as to interstate commerce.
117 Md. 335 reversed.
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 one 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."
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 reenactment of sections of a prior statute (Code of Maryland, c. 72) which was substantially like the present law, with the same charge of one 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 reenacted oyster law. In the report of the Comptroller for 1909, he says:
"The tax as to one 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 excess
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 one cent per bushel on oysters sold amounted to $28,680.94, making the fund self-sustaining for the year ."
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), and the case was brought here by writ of error.