License Tax Cases
72 U.S. 462

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U.S. Supreme Court

License Tax Cases, 72 U.S. 5 Wall. 462 462 (1866)

License Tax Cases

72 U.S. (5 Wall.) 462

Syllabus

1. Licenses under the Act of June 30, 1864, "to provide internal revenue to support the government" &c., 13 Stat. at Large 223, and the amendatory acts, conveyed to the licensee no authority to carry on the licensed business within a state.

2. The requirement of payment for such licenses is only a mode of imposing taxes on the licensed business, and the prohibition, under penalties, against carrying on the business without license is only a mode of enforcing the payment of such taxes.

3. The provisions of the act of Congress requiring such licenses and imposing penalties for not taking out and paying for them are not contrary to the Constitution or to public policy.

4. The provisions in the Act of July 13, 1866, "to reduce internal taxation" &c., 14 Stat. at Large 93, for the imposing of special taxes, in lieu of requiring payment for licenses, removes whatever ambiguity existed in the previous laws, and are in harmony with the Constitution and public policy.

5. The recognition by the acts of Congress of the power and right of the

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states to tax, control, or regulate any business carried on within its limits is entirely consistent with an intention on the part of Congress to tax such business for national purposes.

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" [Footnote 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 offense 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. [Footnote 2]

The first came before the Court upon a certificate of division

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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 offense. 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

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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?

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