A tax imposed by a statute of a state upon an occupation, which
necessarily discriminates against the introduction and sale of the
products of another state or against the citizens of another state,
is repugnant to the Constitution of the United States.
The police power of a state to regulate the sale of intoxicating
liquors and preserve the public health and morals does not warrant
the enactment of laws infringing positive provisions of the
Constitution of the United States.
A state statute which imposes a tax upon persons who, not
residing or having their principal place of business within the
state, engage there in the business of selling or soliciting the
sale of intoxicating liquors to be shipped into the state from
places without it, but does not impose a similar tax upon persons
selling or soliciting the sale of intoxicating liquors manufactured
in the state, is a regulation in restraint of commerce repugnant to
the Constitution of the United States, and the defect is not cured
by a subsequent enactment imposing a greater tax upon all persons
within the state engaged in the business of manufacturing or
selling such liquors therein.
In 1875, the Legislature of the State of Michigan passed an act
relating to the sale of liquors in that state to be shipped into
the state by persons not residing therein, known as Act No. 226 of
the Session Laws of 1875, of which the following is a copy:
"Ax Act to impose a tax on the business of selling spirituous
and intoxicating, malt, brewed, and fermented liquors in the
Michigan to be shipped from without this state."
"SECTION 1.
The People of the State of Michigan enact:
that every person who shall come into, or being in this state,
shall engage in the business of selling spirituous and
intoxicating, malt, brewed, or fermented liquors to citizens or
residents of this state at wholesale, or of soliciting or taking
orders from citizens or residents of this state for any such
liquors, to be shipped into this state, or furnished, or supplied
at wholesale to any person within this state, not having his,
their, or its
Page 116 U. S. 447
principal place of business within this state, shall, on or
before the fourth Friday of June in each year, pay a tax of three
hundred dollars if engaged in selling or soliciting or taking
orders for the sale of such spirituous and intoxicating liquors,
and one hundred dollars for malt, brewed, or fermented liquors.
Such tax shall be paid to the Auditor General, and be by him paid
into the state treasury to the credit of the general fund."
"SEC. 2. Upon the payment of such tax, the Auditor General shall
issue to such person a receipt therefor, and, in case of loss
thereof, a duplicate, when required by the person to whom the
original receipt was issued. Every person making such sales or
soliciting or taking orders as in the first section of this act
provided shall exhibit such receipt to every person to whom he
makes sale or from whom he takes or solicits orders for such
liquors, and shall exhibit such receipt to any supervisor, justice
of the peace, sheriff, under sheriff, or deputy sheriff, city or
village marshal, chief of police, policeman, or constable, when
required so to do, during business hours."
"SEC. 3. Any person liable to pay any tax under this act who
shall sell any liquors or solicit or take orders for liquors to be
shipped from without this state to any person within this state
furnished or supplied by a person, co-partnership, association, or
corporation not resident in, or having his, their, or its principal
place of business within this state without the tax herein provided
for having been paid, and having in his possession and exhibiting
the receipt therefor, or a duplicate thereof, and any person
residing or being in this state who shall purchase liquors from a
person liable to pay a tax under this act, who has not paid such
tax or shall give an order for liquors to such person liable to pay
a tax under this act, which order is to be filled, and such liquors
are to be shipped from without this state to a person within this
state, furnished or supplied by a person, co-partnership,
association, or corporation, not resident in or having his, their,
or its principal place of business within this state shall be
deemed guilty of a misdemeanor, and on conviction thereof shall be
punished by a fine of not less than twenty-five dollars nor more
than one hundred dollars, and, in default of payment thereof, shall
be imprisoned not less than
Page 116 U. S. 448
ten nor more than ninety days, or both such fine and
imprisonment, in the discretion of the court."
"SEC. 4. Selling at wholesale shall be deemed to mean and
include all sales of such spirituous and intoxicating, malt,
brewed, or fermented liquors, in quantities of five gallons or
over, or one dozen quart bottles or more, or soliciting orders
therefor at anyone time of anyone person."
In addition to the foregoing act, there was another independent
law in operation in Michigan in 1883, being an act passed May 31,
1879, entitled "An act to provide for the taxation of the business
of manufacturing and selling spirituous and intoxicating, malt,
brewed, or fermented liquors," and to repeal a previous act for the
same purpose, passed in 1875. Sess.Laws 1879, p. 293. The act of
1879 was amended by an act passed May 19, 1881. Howell's Annotated
Statutes § 1281. As amended, it reads as follows:
"§ 1281. Sec. 1. In all townships, cities, and villages of this
state there shall be paid annually the following tax upon the
business of manufacturing, selling, or keeping for sale, by all
persons whose business, in whole or in part, consists in selling or
keeping for sale or manufacturing distilled or malt liquors or
mixed liquors as follows: upon the business of selling or offering
for sale spirituous or intoxicating liquors, or mixed liquors, by
retail, or any mixture or compound, excepting proprietary patent
medicines which in whole or in part consists of spirituous or
intoxicating liquors the sum of three hundred dollars per annum;
upon the business of selling or offering for sale, by retail, any
malt, brewed, or fermented liquors, two hundred dollars per annum;
upon the business of selling brewed or malt liquors at wholesale,
or at wholesale and retail, two hundred dollars per annum; upon the
business of selling spirituous or intoxicating liquors at
wholesale, or at wholesale and retail, five hundred dollars per
annum; upon the business of manufacturing brewed or malt liquors
for sale, if the quantity manufactured be less than fifteen hundred
barrels, sixty-five dollars per annum, and twenty-five dollars upon
each additional thousand barrels, or part thereof; upon the
business of manufacturing for sale spirituous or intoxicating
Page 116 U. S. 449
liquors, five hundred dollars per annum. No person paying a tax
on spirituous or intoxicating liquors under this act shall be
liable to pay any tax on the sale of malt, brewed, or fermented
liquors. No person paying a manufacturer's tax on brewed or malt
liquors under this act shall be liable to pay a wholesale dealer's
tax on the same."
Howell's Annotated Statutes of Mich. 378.
It is not contended that this act alters or affects the act of
1875, on which the prosecution against Walling is based, except so
far as it may have the effect of removing the discrimination
against the citizens or products of other states which would be
produced by the act of 1875 standing alone. The counsel for the
state contend that the effect of the act of 1881 is not only to
annul any such discrimination, but to create a discrimination
against the citizens and products of Michigan in favor of the
citizens and products of other states. Whether this is so is a
question to be discussed further on.
In June, 1883, Walling, the plaintiff in error, was prosecuted
under the Act of 1875, No. 226, being charged in one count of the
complaint with selling at wholesale without license, and in another
count with soliciting and taking orders for the sale, without
license, and at wholesale, of spirituous and intoxicating liquors,
to be shipped from out of the state, to-wit, from Chicago, in the
State of Illinois, into the State of Michigan, and furnished and
supplied to citizens and residents of said state by Cavanaugh &
Co., a firm doing business in Chicago, not residents of Michigan,
and not having its principal place of business therein. The
prosecution was instituted in the Police Court of Grand Rapids, and
Walling was convicted and sentenced to pay a fine, and to be
imprisoned in default of payment. He appealed to the county circuit
court, in which the case was tried by a jury, who, under the charge
of the court, rendered a verdict of guilty. Exceptions being taken,
the case was carried to the Supreme Court of Michigan, which
adjudged that there was no error in the proceedings and directed
judgment to be entered against the respondent. The decision of the
supreme court is brought here by writ of error, and is now before
us for consideration.
By the bill of exceptions, it appears that one Chapin Pease
was
Page 116 U. S. 450
called as a witness for the prosecution and was asked what
business the respondent (Walling) was engaged in. The respondent
objected to the giving of testimony under the complaint on the
ground that the act of 1875 is repugnant to the Constitution of the
United States, and therefore void; that it is in conflict with
paragraph 3, Section 8, Article I, giving Congress power to
regulate commerce, etc.; paragraph 2, Section 10, Article I,
prohibiting
ex post facto laws and laws impairing the
obligation of contracts, and paragraph 1, Section 2, Article IV,
which declares that "The citizens of each state shall be entitled
to all the privileges and immunities of citizens in the several
states." The defendant also objected to the admission of any
testimony, because the law referred to is in conflict with the
state constitution. All the objections were overruled, and
exceptions were duly taken. The witness then testified that
Walling, on June 1, 1883, and before and since that time, was
engaged as a traveling salesman for the firm of Cavanaugh &
Co., of Chicago, Illinois (shown to be wholesale liquor merchants
residing in Chicago), and that his business was that of selling
liquor at wholesale for that firm; that the place of business of
Cavanaugh & Co. was in Chicago, and that the firm had no place
of business in Michigan; that on the first of June, 1883, Walling
solicited the witness' order for a barrel of whisky to be shipped
to him by Cavanaugh & Co. from the City of Chicago, and from
without the State of Michigan; that witness gave his order for a
barrel of whisky, and the same was shipped to him by said firm from
Chicago, and he paid for the same, and that Walling exhibited to
witness no receipt from the Auditor General of Michigan to show
that he had paid the tax required by the statute. It was also shown
that Walling had never paid any such tax nor received any such
receipt. The evidence being closed, the respondent, on the ground
of the alleged conflict of the law with the Constitution of the
United States, made various distinct applications to the court:
first, to strike out the evidence, and grant him a discharge;
secondly, to charge the jury that the statute of 1875 is in
conflict with the Constitution of the United States, and therefore
void, and therefore that their verdict should be "Not guilty;"
thirdly, to
Page 116 U. S. 451
charge that, under the facts disclosed, the jury should find the
respondent not guilty. These applications were severally refused,
and exceptions taken. The court then charged the jury that the act
in question must be regarded as within the power of the legislature
and as being a valid statute, and that if they should find that the
evidence sustained the allegations of the complaint, they must find
the respondent guilty, to which charge the respondent excepted.
Page 116 U. S. 454
MR. JUSTICE BRADLEY delivered the opinion of the Court. After
stating the facts in the language reported above, he continued:
The single question, therefore, is whether the statute of 1875
is repugnant to the Constitution of the United States. Taken by
itself, and without having reference to the act of 1881, it is very
difficult to find a plausible reason for holding that it is not
repugnant to the Constitution. It certainly does impose a tax or
duty on persons who, not having their principal place of business
within the state, engage in the business of selling or of
soliciting the sale of certain described liquors to be shipped into
the state. If this is not a discriminating tax leveled against
persons for selling goods brought into the state from other states
or countries, it is difficult to conceive of a tax that would be
discriminating. It is clearly within the decision of
Welton v.
Missouri, 91 U. S. 275, where
we held a law of the State of Missouri to be void which laid a
peddler's license tax upon persons going from place to place to
sell patent and other medicines, goods, wares, or merchandise, not
the growth, product, or manufacture of that state, and which did
not lay a like tax upon the sale of similar articles, the growth,
product, or manufacture of Missouri. The same principle is
announced in
Hinson v.
Lott, 8 Wall. 148:
Ward v.
Maryland, 12 Wall. 418;
Guy v. Baltimore,
100 U. S. 438;
County of Mobile v. Kimball, 102 U.
S. 691,
102 U. S. 697;
Webber v. Virginia, 103 U. S. 344.
Page 116 U. S. 455
A discriminating tax imposed by a state, operating to the
disadvantage of the products of other states when introduced into
the first-mentioned state, is, in effect, a regulation in restraint
of commerce among the states, and as such is a usurpation of the
power conferred by the Constitution upon the Congress of the United
States. We have so often held that the power given to Congress to
regulate commerce with foreign nations, among the several states,
and with the Indian tribes is exclusive in all matters which
require or only admit of general and uniform rules, and especially
as regards any impediment or restriction upon such commerce, that
we deem it necessary merely to refer to our previous decisions on
the subject, the most important of which are collected in
Brown
v. Houston, 114 U. S. 631,
and need not be cited here. We have also repeatedly held that so
long as Congress does not pass any law to regulate commerce among
the several states, it thereby indicates its will that such
commerce shall be free and untrammeled, and that any regulation of
the subject by the states, except in matters of local concern only,
is repugnant to such freedom.
Welton v. Missouri,
91 U. S. 282;
County of Mobile v. Kimball, 102
U. S. 697;
Brown v. Houston, 114
U. S. 631. In Mr. Justice Johnson's concurring opinion
in the case of
Gibbons v.
Ogden, 9 Wheat. 1,
22 U. S. 222, his
whole argument (which is a very able one) is based on the idea that
the power to regulate commerce with foreign nations and among the
several states was by the Constitution surrendered by the states to
the United States, and therefore must necessarily be exclusive, and
that where Congress has failed to restrict such commerce, it must
necessarily be free. He says:
"Of all the endless variety of branches of foreign commerce now
carried on to every quarter of the world, I know of no one that is
permitted by act of Congress any otherwise than by not being
forbidden. . . . The grant to Livingston and Fulton interferes with
the freedom of intercourse among the states."
The same sentiment was expressed by Mr. Justice Grier in his
opinion in
The Passenger
Cases, 7 How. 462, where he says:
"And to what weight is that argument entitled which assumes that
because
Page 116 U. S. 456
it is the policy of Congress to leave this intercourse free,
therefore it has not been regulated, and each state may put as many
restrictions upon it as she pleases?"
And one of the four propositions with which the opinion
concludes is as follows, to-wit:
"4th. That Congress has regulated commerce and intercourse with
foreign nations and between the several states by willing that it
shall be free, and it is therefore not left to the discretion of
each state in the union either to refuse a right of passage to
persons or property through her territory, or to exact a duty for
permission to exercise it."
The argument of these eminent judges that where Congress has
exclusive power to regulate commerce, its nonaction is equivalent
to a declaration that commerce shall be free (and we quote their
opinions for no other purpose), seems to be irrefragable. Of
course, the broad conclusions to which they arrive, that the power
is exclusive in all cases, are subject to the modifications
established by subsequent decisions, such as
Cooley v.
Board of Wardens, 12 How. 299, and others.
The law is well summarized in the opinion of this Court
delivered by MR. JUSTICE FIELD in
County of Mobile v.
Kimball, 102 U. S. 691,
102 U. S. 697,
where it is said:
"The subjects, indeed, upon which Congress can act under this
power are of infinite variety, requiring for their successful
management different plans or modes of treatment. Some of them are
national in their character, and admit and require uniformity of
regulation, affecting alike all the states; others are local, or
are mere aids to commerce, and can only be properly regulated by
provisions adapted to their special circumstances and localities.
Of the former class may be mentioned all that portion of commerce
with foreign countries or between the states which consists in the
transportation, purchase, sale, and exchange of commodities. Here
there can of necessity be only one system or plan of regulation,
and that Congress alone can prescribe. Its nonaction in such cases
with respect to any particular commodity or mode of transportation
is a declaration of its purpose that the commerce in that commodity
or by that means of transportation shall be free. There would
otherwise be no security against conflicting regulations of
different states, each discriminating
Page 116 U. S. 457
in favor of its own products and citizens and against the
products and citizens of other states, and it is a matter of public
history that the object of vesting in Congress the power to
regulate commerce with foreign nations and among the states was to
insure uniformity of regulation against conflicting and
discriminating state legislation."
Many state decisions might also be cited in which the same
doctrine is announced. Thus, in the case of
Higgins v. Three
Hundred Casks of Lime, 130 Mass. 1, it is said:
"The result of all these decisions is that the several states
have no authority to prescribe different regulations in relation to
the commerce in certain articles, dependent upon the state from
which they are brought. This rule in no manner controls or limits
the power of a state to enact appropriate health or inspection
laws, for such laws are necessarily uniform, and are not dependent
upon place."
In
State v. Furbush, 72 Me. 495, construing a statute
of Maine, the supreme court of that state says:
"The act is unconstitutional. It allows goods manufactured in
this state to be peddled free, and exacts a license fee from those
who peddle similar goods which are manufactured out of the state.
Such a discrimination in favor of goods manufactured in this state
and against goods manufactured in other states violates the federal
Constitution."
In
State v. North & Scott, 27 Mo. 464, where an act
of Missouri imposed a tax upon merchants for all goods purchased by
them except such as might be the growth, produce, or manufacture of
that state and manufactured articles the growth or produce of other
states, it was held by the supreme court of that state that the law
was unconstitutional and void. The court said:
"From the foregoing statement of the law and facts of this case
it will be seen that it presents the question of the power of the
states, in the exercise of the right of taxation, to discriminate
between products of this state and those manufactured in our sister
states."
And after an examination of the causes which led to the adoption
of the federal Constitution, one of the principal of which was the
necessity of the regulation of commerce and the laying of imposts
and duties by a single government, the
Page 116 U. S. 458
court said:
"But, whatever may be the motive for the tax, whether revenue,
restriction, retaliation, or protection of domestic manufactures,
it is equally a regulation of commerce, and in effect an exercise
of the power of laying duties on imports, and its exercise by the
states is entirely at war with the spirit of the Constitution, and
would render vain and nugatory the power granted to Congress in
relation to these subjects. Can any power more destructive to the
union and harmony of the states be exercised than that of imposing
discriminating taxes or duties on imports from other states?
Whatever may be the motive for such taxes, they cannot fail to
beget irritation and to lead to retaliation, and it is not
difficult to foresee that an indulgence in such a course of
legislation must inflame and produce a state of feeling that would
seek its gratification in any measures, regardless of the
consequences."
See also Norris v. Boston, 4 Met. 282, 293;
S.C. in error among the
Passenger
Cases, 7 How. 283;
Oliver v. Washington
Mills, 11 Allen 268;
Pierce v. State, 13 N.H. 582;
McGuire v. Parker, 32 La.Ann. 832;
Wiley v.
Parmer, 14 Ala. 627;
Scott v. Watkins, 22 Ark. 556,
564;
State v. McGinnis, 37 Ark. 362;
State v.
Browning, 62 Mo. 591;
Daniel v. Richmond, 78 Ky.
542.
In view of these authorities, especially the decisions of this
Court on the subject, we have no hesitation in saying that the act
of 1875, under which the prosecution against Walling was
instituted, if it stood alone, without any concurrent law of
Michigan imposing a like tax to that which it imposes upon those
engaged in selling or soliciting the sale of liquors the produce of
that state, would be repugnant to that clause of the Constitution
of the United States which confers upon Congress the power to
regulate commerce among the several states.
The question then arises whether the act of 1879, as amended by
that of 1881, has removed the objection to the validity of the act
of 1875. We have carefully examined that section and have come to
the conclusion that it has not done so. We will briefly state our
reasons for this conclusion.
The counsel for the state suppose that the act of 1881 imposes a
heavier tax on Michigan dealers in liquors of domestic
Page 116 U. S. 459
origin than that imposed by the act of 1875 on those who deal in
liquors coming from outside of the state, and hence that if there
is any discrimination it is against the domestic and in favor of
the foreign dealer or manufactured article. We do not think that
this position is correct. Let us compare the two acts. Of course,
the act of 1875 does not assume to tax nonresident persons or firms
for doing business in another state. They are subject to taxation
in the states where they are located. It is the business of selling
for such nonresident parties or soliciting orders for them for sale
in Michigan of liquors imported into the state that is the object
of taxation under the law, and any person engaged in those
employments or either of them is subject to the tax of $300 per
annum. Now is such a tax, or any tax imposed upon those who are
engaged in the like employment for persons or firms located in
Michigan, selling or soliciting orders for the sale of liquors
manufactured in that state? Clearly not. The tax imposed by the act
of 1881 is a tax on the manufacturer or dealer. He is taxed in the
city, township, or village in which his distillery or principal
place of business is situated. He is subject to a single tax of
$500 per annum. No tax is imposed on his clerks, his agents, or his
drummers who sell or solicit orders for him. They are merely his
servants, and are not included in the law. It is he, and not they,
whose business is the manufacture or sale of liquors and who is
subject to taxation under the law, whereas the drummers and agents
of the foreign manufacturer or dealer, located in Illinois or
elsewhere, are all and each of them subject to the tax of $300 per
annum. In the one case, it is a single tax on the principal; in the
other, it is a tax not on the principal, for he cannot be taxed in
Michigan, but on each and all of his servants and agents selling or
soliciting orders for him. The tax imposed by the act of 1875 is
not imposed on the same class of persons as is the tax imposed by
the act of 1881. That this must give an immense advantage to the
product manufactured in Michigan, and to the manufacturers and
dealers of that state, is perfectly manifest.
It is suggested by the learned judge who delivered the
Page 116 U. S. 460
opinion of the Supreme Court of Michigan in this case that the
tax imposed by the act of 1875 is an exercise by the legislature of
Michigan of the police power of the state for the discouragement of
the use of intoxicating liquors and the preservation of the health
and morals of the people. This would be a perfect justification of
the act if it did not discriminate against the citizens and
products of other states in a matter of commerce between the
states, and thus usurp one of the prerogatives of the national
legislature. The police power cannot be set up to control the
inhibitions of the federal Constitution or the powers of the United
States government created thereby.
New Orleans Gaslight Co. v.
Louisiana Light Co., 115 U. S. 650.
Another suggestion in the opinion referred to is that although
the tax imposed by the act of 1875 may be a regulation of the
introduction of spirituous liquors from another state into the
State of Michigan, yet that regulation is not prohibition, and that
there is nothing in the act that amounts to prohibition. The
language of the court is:
"The statute does not prohibit the introduction and sale of
liquors made outside of the state. It simply taxes the person who
carries on the business here by making sales in this state. It in
no way interferes with the introduction of the liquors here. It
tolerates and regulates, but seeks not to prohibit. I think in this
case no question can be successfully made under the clause of the
Constitution until the point has been reached where regulation
ceases and prohibition begins."
We are unable to adopt the views of that learned tribunal as
here expressed. It is the power to "regulate" commerce among the
several states which the Constitution in terms confers upon
Congress, and this power, as we have seen, is exclusive in cases
like the present, where the subject of regulation is one that
admits and requires uniformity, and where any regulation affects
the freedom of traffic among the states.
Another argument used by the Supreme Court of Michigan in favor
of the validity of the tax is that it is merely a tax on an
occupation which, it is averred, the state has an undoubted right
to impose, and reference is made to
Brown
v. Maryland, 12 Wheat. 444;
Nathan
v. Louisiana, 8 How. 80;
Page 116 U. S. 461
Peirce v. New
Hampshire, 5 How. 593;
Hinson v.
Lott, 8 Wall. 148;
Machine Co. v. Gage,
100 U. S. 676.
None of these cases, however, sustains the doctrine that an
occupation can be taxed if the tax is so specialized as to operate
as a discriminative burden against the introduction and sale of the
products of another state, or against the citizens of another
state.
We think that the act in question operates as a regulation of
commerce among the states in a matter within the exclusive power of
Congress, and that it is for this reason repugnant to the
Constitution of the United States, and void.
The judgment of the Supreme Court of Michigan is reversed,
and the cause remanded with instructions to take such further
proceedings as may not be inconsistent with this opinion.
THE CHIEF JUSTICE did not sit in this case nor take any part in
the decision.
