1. A State may require a railroad company engaged in interstate
commerce to pay a fee, in addition to general taxation of its
property in the State, to cover the expense of local inspection and
supervision within the State's police power, but the exaction
violates both the commerce clause and the Fourteenth Amendment if,
beyond those legitimate purposes, it is made and used to defray the
cost of other activities of the State, such as local reparation
proceedings and litigation before the Interstate Commerce
Commission in behalf of shippers. P.
300 U. S.
159.
2. A statute (c. 107, L. Wash., 1929) requires public utilities
generally, including railroads, to pay into a common fund each
year
Page 300 U. S. 155
a fee of 1/10th of one percent of gross operating revenue of the
year preceding, for use in administering the state public service
commission law.
Held:
(1) That the statute is not void on its face, as applied to an
interstate railroad, merely because it exacts fees at the same rate
from the railroad and other public utilities as well, or because
the proceeds compose a common fund which may be used not only for
expense of inspection and supervision, but for other purposes. P.
300 U. S.
161.
(2) But, to sustain the exaction in the case of an interstate
railroad, the burden rests upon the State to show that the sums
collected from the railroad do not exceed what is reasonably needed
in its case for inspection and supervision service.
Foote &
Co. v. Stanley, 232 U. S. 494. P.
300 U. S.
162.
(3) This burden was not sustained by the evidence in this case.
P.
300 U. S.
165.
3. When a claim of federal right has been denied by a state
court upon the basis of a finding of fact or of mixed fact and law,
this Court must examine the evidence and determine whether it
supports the decision against the federal claim.
Norris v.
Alabama, 294 U. S. 587. P.
300 U. S.
165.
184 Wash. 648, 52 P.2d 1274, reversed.
Appeal from a judgment which reversed a judgment for the Railway
Company in its action to recover fees claimed to have been
unconstitutionally exacted by the State.
MR. JUSTICE ROBERTS delivered the opinion of the Court.
This is an appeal from a judgment of the Supreme Court of
Washington [
Footnote 1] in an
action brought by the appellant
Page 300 U. S. 156
to recover fees for the years 1929-1933 paid under protest to
the State Department of Public Works. The relevant statutory
provisions are: [
Footnote
2]
"Section 1. That hereafter every person, firm or corporation
engaged in business as a public utility and subject to regulation
as to rates and charges by the department of public works, except
auto transportation companies and steamboat companies holding
certificates under chapter 248 of the Laws of 1927, shall, on or
before the first day of April of each year, file with the
department of public works a statement on oath showing its gross
operating revenue for the preceding calendar year or portion
thereof and pay to the department of public works a fee of 1/10 of
one percent of such gross operating revenue:
Provided,
That the fee so paid shall in no case be less than ten
dollars."
"Sec. 2. All sums collected by the director of public works
under the provisions of this act shall, within thirty days after
their receipt, be paid to the state treasurer, and by him deposited
in a fund to be known as the public service revolving fund."
The Supreme Court of the State has defined the exaction as a
regulatory or inspection fee, and has declared that the fund
created by the sums collected must be used solely for administering
the State public service commission law. [
Footnote 3]
The complaint [
Footnote 4]
alleges that the Department of Public Works exercises jurisdiction
and supervision over sundry
Page 300 U. S. 157
public utilities, including common carriers by rail, electric,
and street railways, gas, electrical, and water companies,
telegraph and telephone companies, wharfingers, warehousemen, and
carriers by water, engages in many activities disconnected from and
unrelated to the inspection and supervision of rail carriers, and
has a variety of duties in the enforcement of the State's police
power. The complaint affirms that the fee is not based upon or
restricted to the cost of legitimate regulation or supervision, but
is used to defray the costs of other activities in connection with
railroads, and also of supervising and inspecting unrelated public
utilities and of performing other duties the expense of which
cannot legitimately be imposed upon carriers by rail; that the fee
is grossly in excess of the reasonable cost of inspection and
regulation of railroads; that, to January 1, 1933, there had
accumulated from the fees collected more than $250,000 in excess of
the amount expended by the department in the discharge of all its
duties; that the statute is in truth a revenue measure; that the
State taxes plaintiff's property and other like property on an
ad valorem basis. The complaint charges that the fee is a
burden on, and a regulation of, interstate commerce in violation of
Article I, § 8 of the Constitution; is so arbitrary, excessive,
discriminatory, and unequal as to deny the plaintiff equal
protection of the laws and to deprive it of property without due
process of law, in violation of the Fourteenth Amendment.
The answer admits plaintiff's payment under protest; admits that
the Department of Public Works exercises jurisdiction and
supervision over many classes of public utilities, including common
carriers, and that the plaintiff's property within the State is
assessed on an
ad valorem basis for taxes like other
property; admits plaintiff's capacity to sue; but denies
substantially all other allegations of the complaint.
Page 300 U. S. 158
The case was tried without a jury. The evidence largely
consisted of the annual reports of the department. By the
uncontradicted evidence and by the relevant statutes, the following
facts were established. The department has jurisdiction of various
classes of public utilities, including railroads, electric and
street railways, gas, electric and water companies, telegraph and
telephone companies, wharfingers, warehousemen, and carriers by
water, in respect of which it exercises many regulatory and
supervisory duties. As respects railroads, the department
constantly exercises functions unrelated to inspection and
supervision, including the statutory duties of taking part in
litigation before the Interstate Commerce Commission affecting the
citizens of the State, and of acting judicially in decreeing
refunds of overcharges. These functions, unrelated to the
inspection and regulation of railroads, entail large expense.
Between 1929 and 1933, the legislature made no appropriation from
the State's general fund for the expenses of the department's
activities, all being paid indiscriminately out of the department's
fund derived from the fees collected from businesses subject to its
jurisdiction. During this period, the surplus accumulated from such
receipts was $224,193.95, which was expended in 1934 in carrying on
investigations of, and litigation with, public utility corporations
other than railroads. No separate accounts are kept, or required by
law to be kept, with respect to the expense of these various
activities, and it is impossible to determine from the records and
accounts of the department the expense of inspecting and regulating
railroads separate and apart from the expense of regulating other
utilities or other functions of the department.
The plaintiff called the department's auditor, who testified
that the charge of one-tenth of one percent of gross income
collected from utilities goes to build up a fund
Page 300 U. S. 159
from which all the department's expenses are paid; that he had
figures classifying the expenditures according to the various kinds
of utilities with which the department is concerned. These
calculations he had made for himself, there being no duty under the
law to keep accounts on this basis. He testified that, in computing
the expenditures in connection with railroads, he lumped them as
railroad charges and made no separation of the costs of inspection
and regulation, the costs of rate hearings, and the costs of
reparation proceedings, although the evidence establishes that many
of the railroad charges had to do with reparation cases and
litigation before the Interstate Commerce Commission. At the close
of plaintiff's case, the defendant recalled the auditor as its own
witness. He testified that the disbursements chargeable to the
railroads for the period 1929 to 1933, inclusive, exceeded the
receipts from railroads in the same period by $37,833. He did not,
however, qualify what he had previously stated -- that, in making
up these figures, he had lumped all railroad charges, whether for
inspection and regulation or interstate commerce cases or
reparation cases. Upon cross-examination, it developed that the
figures he submitted were not official, and, so far as they covered
salary items, had been made up from slips which the various
employees, at his request, had turned in monthly allocating the
time each employee spent in the various branches of the work, and
the witness had no personal knowledge of the accuracy of these
slips. Plaintiff objected to the testimony and moved to strike it
on the ground that it was hearsay, but the court let it stand,
subject to the objection. A judgment awarded the plaintiff by the
trial court was reversed by the Supreme Court.
The principles governing decision have repeatedly been
announced, and were not questioned below. In the exercise of its
police power, the state may provide for the supervision and
regulation of public utilities, such as railroads;
Page 300 U. S. 160
may delegate the duty to an officer or commission, and may exact
the reasonable cost of such supervision and regulation from the
utilities concerned and allocate the exaction amongst the members
of the affected class without violating the rule of equality
imposed by the Fourteenth Amendment. [
Footnote 5] The supervision and regulation of the local
structures and activities of a corporation engaged in interstate
commerce, and the imposition of the reasonable expense thereof upon
such corporation, is not a burden upon, or regulation of,
interstate commerce in violation of the commerce clause of the
Constitution. [
Footnote 6] A
law exhibiting the intent to impose a compensatory fee for such a
legitimate purpose is
prima facie reasonable. [
Footnote 7] If the exaction be so
unreasonable and disproportionate to the service as to impugn the
good faith of the law, [
Footnote
8] it cannot stand either under the commerce clause or the
Fourteenth Amendment. [
Footnote
9] The State is not bound to adjust the charge after the fact,
but may, in anticipation, fix what the legislature deems to be a
fair fee for the expected service, the presumption being that if,
in practice, the sum charged appears inordinate, the legislative
body will reduce it in the light of experience. [
Footnote 10] Such a statute may, in spite
of the presumption of validity, show on its
Page 300 U. S. 161
face that some part of the exaction is to be used for a purpose
other than the legitimate one of supervision and regulation and
may, for that reason, be void. [
Footnote 11] And a statute fair upon its face may be
shown to be void and unenforceable on account of its actual
operation. [
Footnote 12] If
the exaction be clearly excessive, it is bad
in toto, and
the state cannot collect any part of it. [
Footnote 13]
The contention is that the challenged statute is void on its
face, since it discloses that the fee charged the appellant is not
imposed for, or limited by, the reasonable cost of supervision or
regulation of its business, and, if this is not so, the case made
in respect of the act's operation cast on the appellee the burden
of proof, which it failed to carry.
The Supreme Court of the state based its decision in favor of
the validity of the statute on two grounds: first, that the act is
not unconstitutional on its face; secondly, that, as the answer
denied the material allegations of the complaint concerning the
operative effect of the act, the plaintiff had the burden of proof,
which it failed to sustain, and, if the burden was shifted by the
case made by the plaintiff, the evidence preponderated in favor of
the defendant.
First. The statute does not exhibit a failure
reasonably to adjust the fee to the expense of the supervision and
regulation of railroads. The legislation is to be accorded the
presumption of fairness and regularity. It cannot be deduced from
the provisions of the act that the amounts collected from the
railroads grossly exceed those legitimately expended for inspection
and regulation. The appellant
Page 300 U. S. 162
insists that such is the necessary inference from the
circumstance that the same fee is exacted from public utilities
generally, and the collections go into a single fund and are
indiscriminately disbursed for the many branches of the
department's work. But these facts, without more, do not prove that
the amounts derived from the railroads are in excess of the
legitimate expenses of inspection and regulation. It may be that,
in spite of this lumping of receipts and expenditures, the fees
paid by the railroads are no more than enough to defray such
expenses. The court below was therefore justified in refusing to
hold the statute void on its face.
Second. The court thought the plaintiff had the burden
of showing that the sums exacted from rail carriers substantially
exceeded the amounts expended for regulation and supervision, and
the proofs offered were insufficient to shift the burden to the
defendant. This view was erroneous.
Foote & Co., Inc. v.
Stanley, 232 U. S. 494.
In that case, it appeared that the plaintiffs were packers of
oysters taken from the waters of Maryland, Virginia, and New
Jersey, and shipped to Baltimore. A statute of Maryland required
that the oysters be inspected at Baltimore. It imposed a charge of
one cent a bushel
"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 plaintiffs refused to pay the exaction, and, upon threat of
enforcement, filed a bill in a state court for injunction alleging
the fee was excessive, a burden on interstate commerce, and a
violation of the constitutional provision 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 Maryland Court of Appeals [117 Md. 335, 82 A. 380] affirmed
a decree dismissing the bill, and this
Page 300 U. S. 163
Court reversed its decision. The plaintiff asserted that, as the
act laid the fee for the expense of inspection "and other
expenses," it was obvious that the state had provided for the
collection of more than was necessary for inspection. To this the
state answered that the section levying the fee was but a part of
an elaborate system of inspection imposed upon the state fishery
force. It appeared from the evidence, as it does here, that the
fishery force had duties other than those of inspection which were
to be paid for out of the fund produced by the fees. This Court
said (p.
232 U. S.
503):
"But, while the two duties may sometimes overlap, there is a
difference between policing and inspection, and if the state
imposes upon one set of officers the performance of the two duties,
and pays the whole or a part of the joint expenses out of
inspection fees,
it must be made to appear that such tax does
not materially exceed the cost of inspection, the burden in such
cases being on those seeking to collect the combined
charge."
And said further (p.
232 U. S.
506):
"But the commingling of these various duties, paid for out of a
fund raised for inspection, does not necessarily show that the fee
is excessive. For the presumption of invalidity arising from such
intermingling might be met by carrying the burden of showing that,
while the statute required payment out of which joint fund, the
collections were not sufficient, but only helped, to pay the
definitely ascertained expenses of inspection. The question of
reasonableness therefore may be considered in the light of the
practical operation of the law with a view of determining, with
reasonable certainty, the permanent relation between the amount
collected and the cost of inspecting."
The court examined the evidence as to the operation of a prior
law which levied the same charge per bushel and which the
challenged act superseded, consisting of the
Page 300 U. S. 164
annual reports of the comptroller, and found therefrom that
one-third of the amount collected was sufficient to pay the cost of
inspection, and the other two-thirds had been appropriated to
"other expenses of the Fishery Force." In the light of the
operation of the previous act and the failure of the state to show
that the amount collected under the new law would not be more than
was necessary for the expenses of inspection proper, the challenged
statute was held void.
There are factual distinctions between the cited case and the
instant one, but they do not affect the binding authority of the
former. The law under consideration in the
Foote case was
purely an inspection measure. That here under review is
characterized by the state court as one for regulation and
inspection. The specific mandate of the Federal Constitution
limiting state inspection fees to an amount absolutely necessary
for executing a state's inspection laws was treated in the
Foote case as raising the same issue as was presented in
earlier decisions with respect to the bearing of the commerce
clause upon the imposition of regulatory and inspection fees
imposed upon local property of interstate enterprises. And the
cases decided under the commerce clause dealing with the
reasonableness of regulation and inspection fees have been treated
by this Court as apposite to the guarantees of the Fourteenth
Amendment. In the
Foote case, reference to the accounts
and records kept by state authority disclosed the extent of the
excess of receipts over expenditures, whereas here it is
demonstrated that, while expenses other than those of inspection
and regulation of railroads are paid out of the fees, the amount of
the excess over what is necessary for regulation and inspection
cannot be ascertained from the department's accounts. The
Foote case is authority that, in such circumstances, the
burden is on those seeking to collect the charge.
Page 300 U. S. 165
The State Supreme Court, after holding that the plaintiff failed
to carry its burden and that no duty of showing the amount
necessary for inspection and regulation of railroads lay upon the
defendant, proceeded to discuss the evidence and reached the
conclusion that the proof preponderated in favor of the defendant.
This conclusion was based upon the testimony of the department
auditor that he had found from memoranda furnished him, and data
collected by him, what had been expended in connection with
railroads exceeded what they had paid. As already noted, the
appellant insists that this evidence was inadmissible and lacked
value because hearsay.
The state court said:
"While the account kept by the auditor was not official, in the
sense that of itself it was admissible in evidence, yet what the
auditor did in that respect qualified him to testify as to the
ultimate fact. Without further detailing the evidence, we will say
that, in our opinion and insofar as there was any evidence on the
subject, it preponderated against the findings made by the court as
to the cost of supervising and regulating railroads."
184 Wash. 648, 52 P.2d 1274, 1277.
Passing the appellant's contention that a federal right may not
be denied under the guise of the application of a state rule of
evidence, [
Footnote 14] we
come to the question whether, when the asserted right has been
denied, this Court is concluded by a finding of fact or a mixed
finding of law and fact made by the state court. We have repeatedly
held that, in such case, we must examine the evidence to ascertain
whether it supports the decision against the claim of federal
right. A recent exposition
Page 300 U. S. 166
of the doctrine is found in
Norris v. Alabama,
294 U. S. 587, a
case coming here from a state court, in which the appellant claimed
that he had been denied due process by the systematic and
intentional exclusion of negroes from the jury lists. The state
court held that the evidence did not establish such exclusion. This
Court reviewed the evidence, reached a conclusion contrary to that
of the state court, and reversed the judgment. At pp.
294 U. S.
589-590, it was said:
"The question is of the application of this established
principle to the facts disclosed by the record. That the question
is one of fact does not relieve us of the duty to determine
whether, in truth, a federal right has been denied. When a federal
right has been specially set up and claimed in a state court, it is
our province to inquire not merely whether it was denied in express
terms, but also whether it was denied in substance and effect. If
this requires an examination of evidence, that examination must be
made. Otherwise, review by this Court would fail of its purpose in
safeguarding constitutional rights. Thus, whenever a conclusion of
law of a state court as to a federal right and findings of fact are
so intermingled that the latter control the former, it is incumbent
upon us to analyze the facts in order that the appropriate
enforcement of the federal right may be assured."
In
Beidler v. South Carolina Tax Comm'n, 282 U. S.
1, the validity of a state inheritance tax act was
challenged in a state court, the claim being that the act operated
to take property without due process if held to apply to property
having no situs in the state. The state court held that intangible
property, the transfer of which was sought to be taxed, had
acquired a business situs in South Carolina. This Court reexamined
the question, in the light of the evidence, and overruled the state
court's decision, saying (p.
282 U. S. 8):
Page 300 U. S. 167
"But a conclusion that debts have thus acquired a business situs
must have evidence to support it, and it is our province to inquire
whether there is such evidence when the inquiry is essential to the
enforcement of a right suitably asserted under the federal
Constitution."
In
Johnson Oil Co. v. Oklahoma, 290 U.
S. 158, there was drawn in question the validity of
ad valorem taxes laid under a state statute upon the
entire fleet of the appellant's tank cars. It was charged that the
cars did not have a situs within the state, and there was therefore
no jurisdiction to tax them. The Supreme Court of the State held
that all the cars had their taxable situs within the state. This
Court examined the evidence, reached a contrary conclusion, and
reversed the judgment, saying (pp.
290 U. S.
159-160):
"As the asserted federal right turns upon the determination of
the question of situs, it is our province to analyze the facts in
order to apply the law, and thus to ascertain whether the
conclusion of the state court has adequate support in the
evidence."
Citation of authority for the same principle might be multiplied
indefinitely. [
Footnote
15]
While holding the testimony of the department auditor competent,
the state court omits to refer to the fact that the figures he
presented were not allocated so as to show the amounts spent for
inspection and regulation and those expended for other so-called
railroad charges which could not be imposed upon the railroads.
Page 300 U. S. 168
As has been pointed out, the evidence is uncontradicted and
conclusive that the sums he mentioned as having been expended for
railroad account did include substantial, and apparently large,
amounts for activities in the interest of interstate shippers and
for the trial of reparation cases. It is impossible to sustain the
state court's conclusion that such testimony had any probative
value upon the sole issue in the cause, which was whether the
statute subjects the railroads to an unreasonably excessive charge
for inspection and regulation. As was said in the
Foote
case, the state is at liberty to intermingle duties involving costs
properly chargeable to the railroads with others involving costs
not so chargeable, but if it does so, and the exaction is
challenged, it must assume the burden of showing that the sums
exacted from the appellant do not exceed what is reasonably needed
for the service rendered. The State failed to carry this
burden.
It results that the judgment must be reversed, and the cause
remanded for further proceedings not inconsistent with thus
opinion.
Reversed.
[
Footnote 1]
184 Wash. 648, 52 P.2d 1274.
[
Footnote 2]
Chapter 107, p. 209, Washington Session Laws of 1929.
(Remington's Revised Statutes §§ 10417, 10418.) This act amended §
1 of c. 113, p. 354, of the Laws of 1921, as amended by § 1, c.
107, p. 290 of the Laws of 1923. It left § 2 of c. 113, p. 354 Laws
of 1921, in effect.
[
Footnote 3]
Pacific T. & T. Co. v. Seattle, 172 Wash. 649, 21
P.2d 721,
aff'd on other questions, 291 U. S. 291 U.S.
300.
See also the opinion below, 184 Wash. 648 at 650,
651, 52 P.2d 1274 at 1275.
[
Footnote 4]
The complaint as filed sought recovery also of sums paid
pursuant to other statutory provisions. The appellant, however,
abandoned these items of claim.
[
Footnote 5]
Charlotte, C. & A. R. Co. v. Gibbes, 142 U.
S. 386;
New York v. Squire, 145 U.
S. 175,
145 U. S.
191.
[
Footnote 6]
Atlantic & Pacific Tel. Co. v. Philadelphia,
190 U. S. 160;
Mackay Tel. Co. v. Little Rock, 250 U. S.
94,
250 U. S.
99.
[
Footnote 7]
Western Union Tel. Co. v. New Hope, 187 U.
S. 419,
187 U. S. 425;
Pure Oil Co. v. Minnesota, 248 U.
S. 158,
248 U. S.
162.
[
Footnote 8]
McLean & Co. v. Denver & R.G. R. Co.,
203 U. S. 38,
203 U. S. 55;
compare Red "C" Oil Co. v. North Carolina, 222 U.
S. 380,
222 U. S. 393;
Western Union Tel. Co. v. New Hope, supra.
[
Footnote 9]
Brimmer v. Rebman, 138 U. S. 78,
138 U. S. 83;
Postal Telegraph-Cable Co. v. Taylor, 192 U. S.
64;
Pure Oil Co. v. Minnesota, supra, p.
248 U. S.
162.
[
Footnote 10]
Atlantic & Pacific Tel. Co. v. Philadelphia, supra,
p.
190 U. S. 164;
Postal Telegraph-Cable Co. v. Taylor, supra, p.
192 U. S. 69;
Foote & Co., Inc. v. Stanley, 232 U.
S. 494,
232 U. S.
503-504.
[
Footnote 11]
Foote & Co., Inc. v. Stanley, supra, p.
232 U. S. 505;
Lugo v. Suazo, 59 F.2d 386.
[
Footnote 12]
Western Union Tel. Co. v. New Hope, supra, p.
187 U. S. 425;
Foote & Co., Inc. v. Stanley, supra, p.,
232 U. S.
507.
[
Footnote 13]
Postal Telegraph-Cable Co. v. New Hope, 192 U. S.
55;
Foote & Co., Inc. v. Stanley, supra, p.
232 U. S. 508.
[
Footnote 14]
Compare 45 U. S.
Dillon, 4 How. 421,
45 U. S. 447;
Dower v. Richards, 151 U. S. 658,
151 U. S. 667;
Cleveland, C., C. & St.L. Ry. Co. v. Backus,
154 U. S. 439,
154 U. S. 443;
Cedar Rapids Gas Co. v. Cedar Rapids, 223 U.
S. 655,
223 U. S. 668;
Bailey v. Alabama, 219 U. S. 219,
219 U. S. 239;
Central Vermont R. Co. v. White, 238 U.
S. 507,
238 U. S. 512;
Hill v. Smith, 260 U. S. 592,
260 U. S.
594.
[
Footnote 15]
Kansas City Southern Ry. Co. v. Albers Commission Co.,
223 U. S. 573,
223 U. S. 591;
Creswill v. Grand Lodge, 225 U. S. 246,
225 U. S. 261;
Northern Pacific Ry. v. North Dakota, 236 U.
S. 585,
236 U. S. 593;
Interstate Amusement Co. v. Albert, 239 U.
S. 560,
239 U. S. 566;
Truax v. Corrigan, 257 U. S. 312,
257 U. S. 324;
Ward & Gow v. Krinsky, 259 U.
S. 503,
259 U. S. 511;
Aetna Life Insurance Co. v. Dunken, 266 U.
S. 389,
266 U. S. 394;
Fiske v. Kansas, 274 U. S. 380,
274 U. S. 385;
Ancient Order v. Michaux, 279 U.
S. 737,
279 U. S. 745;
Consolidated Textile Corp. v. Gregory, 289 U. S.
85,
289 U. S.
86.
MR. JUSTICE CARDOZO, dissenting.
To show that the revolving fund was used as a common pot for the
regulation of public utilities generally, irrespective of their
special function, does not make out a case of wrong to railroads,
considered as a separate class, or to appellant in particular. For
the purposes of this case, there is no need to inquire whether
anything in the Fourteenth Amendment forbids the recognition of a
single and all-inclusive class of public service corporations
without further subdivision. If the prohibition be assumed, still
the burden is on the railroads to satisfy the court that what was
contributed by them was more than what was expended for their
account, since otherwise the common pot may have been a help, and
not a hurt.
Page 300 U. S. 169
That burden was not discharged. Far from being discharged, there
was a disclaimer of any attempt or purpose to discharge it. And so
the case must fail.
Norfolk & Western Ry. Co. v. North
Carolina, 297 U. S. 682,
297 U. S.
688-690.
The decision in
Foote & Co., Inc. v. Stanley,
232 U. S. 494,
much relied on by appellant, is inapplicable here. That was a case
under Article I, § 10, of the Constitution, which provides 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."
Maryland passed an act for the payment of charges, characterized
as inspection fees, upon imports of oysters from neighboring
states. The "inspectors" did more than inspect that oysters; they
policed the waters of Chesapeake Bay, being thus policemen as well
as inspectors. On its face, the act provided that a fee of one cent
per bushel should be "levied to help pay the salary of the
inspectors and the other expenses of the State Fishery Force." 232
U.S.
232 U. S. 505.
In these circumstances, the ruling was that, in a suit for an
injunction brought by the importers, the state had the burden of
showing that the fee was not an unreasonable one for the service of
inspection, as distinguished from the other services covered
thereby. Imposts upon interstate commerce being generally
prohibited, and being lawful only when "absolutely necessary" for
the purpose of inspection, a charge covering the service of
inspection and also something else must collapse in its entirety
unless the state is in a position to break it up into its elements.
A power has been granted to be used in exceptional conditions. The
state must bring itself within the exception if it seeks to act
within the grant.
A very different situation confronts us in the case at hand.
Here, the statute of the state does not trespass upon a field of
legislation where entry is forbidden without
Page 300 U. S. 170
the license of the nation. What has been done is well within the
field of general legislative power, with every presumption of
validity back of it. In such circumstances, the burden of making
good a claim of invalidity, and thus establishing an exception, is
on the assailants of the rule, and not on its proponents. The
conclusion becomes clearer when the statute is analyzed more
closely. All that it does is to exact of public utilities generally
(with particular exceptions) a fee of 1/10th of one percent of
their gross revenues, confined, however, to operations in
intrastate commerce, the fee, when collected, to be paid into a
revolving fund. Laws of Washington, 1929, p. 209, c. 107; Laws of
1923, p. 290, c. 107; Laws of 1921, p. 354, c. 113. Another statute
(Laws of Washington, 1929, p. 210, c. 108) lays a heavier tax (one
percent), to be paid into the same fund, upon the receipts of auto
transportation companies. Steamship companies of a stated class are
subject to a special rule, the fee in their case being one-fifth of
one percent. Laws of Washington, 1927, pp. 382, 384, c. 248 .
Plainly there is no presumption that these varying contributions
are out of proportion to the expenses incurred in supervising and
regulating the several classes of contributors. Illegality, if
there is any, is to be found in the administration of the statute,
and not in anything inherent in its essential scheme and framework.
That being so, the taxpayer may not rest upon a showing of possible
overpayment. There must be a showing of an overpayment not merely
possible, but actual, and one substantial in amount.
Norfolk
& Western Ry. Co. v. North Carolina, supra; Foote & Co.,
Inc. v. Stanley, supra. To hold otherwise would be to go
counter to the settled rule that
"one who would strike down a state statute as obnoxious to the
Federal Constitution must show that the alleged unconstitutional
feature injures him."
Premier-Pabst Sales Co. v. Grosscup, 298 U.
S. 226,
298 U. S. 227.
Analogies drawn from the law of trusts are inapposite and
misleading.
Page 300 U. S. 171
The state does not collect the taxes or place them in the fund
as trustee for the contributor or for any one else. It receives the
moneys and expends them as an owner, charged with no other duty to
a particular group of taxpayers than to members of the public
generally.
The burden resting on the railroads to show that the use of the
common pot has resulted to their damage, the record must be
scrutinized to see whether the burden has been borne. In that
scrutiny, there is no denial of a duty to inquire whether the
decision of the state court, irrespective of its surface
protestations, amounts in substance and reality to the denial of a
federal right.
Norris v. Alabama, 294 U.
S. 587,
294 U. S. 589;
Beidler v. South Carolina Tax Comm'n, 282 U. S.
1,
282 U. S. 8. There
is a recognition of the duty, and an endeavor to fulfill it.
1. The trial court suggested to counsel for appellant that it
would be interesting to know whether the amount that had been
collected through the tax upon the railroads was in excess of the
amount expended for their benefit. Counsel responded that he would
not embark on that inquiry. His position was stated to be that the
act was invalid on its face, in which event it would be vain to
pursue the subject further. This Court, by its opinion, has
rejected that contention. The act is not invalid on its face,
whether valid or invalid otherwise.
2. Explaining, or at least supplementing, the refusal to compare
disbursements and receipts, counsel stated on the trial that there
were no records available. But the contrary was clearly proved. The
auditor of the Department of Public Works caused the employees of
the department to submit vouchers or slips descriptive of their
services with an appropriate segregation and apportionment among
the several classes of utilities. He testified on the basis of
these reports, which were on file in his office, that disbursements
for account of the railroads
Page 300 U. S. 172
were in excess by $37,833.14 of the railroads' contributions.
Counsel for appellant expresses his belief that inspection and
discovery of the contents of the vouchers would have yielded
inadequate information. His business was to look and see.
3. The objection will not hold that the documents might be
ignored for the reason that, if produced, they would be incompetent
as evidence. Apart from the possibility of examining the men who
made them, it is the law of the State of Washington, declared in
this very case, that the slips and vouchers so filed in the course
of the business of the bureau were sufficient to support the
testimony of the auditor as to the conclusions to be drawn from
them. Referring to that subject, the court said:
"While the account kept by the auditor was not official in the
sense that, of itself, it was admissible in evidence, yet what the
auditor did in that respect qualified him to testify as to the
ultimate fact. Without further detailing the evidence, we will say
that, in our opinion, and insofar as there was any evidence on the
subject, it preponderated against the findings made by the [trial]
court as to the cost of supervising and regulating railroads."
184 Wash. 648, 52 P.2d 1274, 1277.
Whether the evidence thus accepted and relied upon would be
rejected by other courts either as hearsay or on other grounds is
quite beside the point. The Fourteenth Amendment does not confine
the states to the common law rules of evidence, however well
established.
West v. Louisiana, 194 U.
S. 258,
194 U. S.
262-263;
Brown v. New Jersey, 175 U.
S. 172,
175 U. S.
174-175;
Twining v. New Jersey, 211 U. S.
78,
211 U. S. 101;
Luria v. United States, 231 U. S. 9,
231 U. S. 25.
"The state is not tied down by any provision of the Federal
Constitution to the practice and procedure which existed at the
common law."
Brown v. New Jersey, supra. The acceptance of
the testimony of the auditor does not touch the privilege of
confrontation in a prosecution
Page 300 U. S. 173
for a crime.
Snyder v. Massachusetts, 291 U. S.
97,
291 U. S. 106.
It does not substitute hearsay for direct testimony generally or as
to every possible issue arising in a case. At most, it is an
enlargement of the common law rule as to entries in books of
account or in public or official documents.
Cf. Wigmore,
Evidence vol. 3, § 1517
et seq; § 1630
et
seq.
Hearsay is competent evidence by the law of many enlightened
countries. Stumberg, Guide to the Law and Legal Literature of
France, pp. 148, 149; Encyclopedia of the Social Sciences, title
Evidence, vol. v. pp. 646, 647. Even at common law it is competent
at certain times and for certain purposes, though narrowly
restricted. Wigmore, Evidence, vol. 3, § 1420
et seq.;
Thayer, A Preliminary Treatise on Evidence at the Common Law, p.
518. The range of its competence has been greatly enlarged by
statutes in many of the states, as,
e.g., in the
administration of Workmen's Compensation Laws, and by the
relaxation of ancient rules as to entries in accounts. Dodd,
Administration of Workmen's Compensation, pp. 227-236; Wigmore,
Evidence, Supplement, 1934, §§ 1519, 1520; Morgan v. others, The
Law of Evidence, p. 51; New York Civil Practice Act, § 374a;
cf. Massachusetts Bonding & Insurance Co. v. Norwich
Pharmacal Co., 18 F.2d 934;
Cub Fork Coal Co. v. Fairmont
Glass Co., 19 F.2d 273;
United States v. Cotter, 60
F.2d 689. The question may be laid aside whether a change in the
law of evidence might be so radical and unjust as to work a
destruction of fundamental rights, and thus a denial of due
process.
Brown v. New Jersey, supra, p.
175 U. S. 175.
Assuming such a possibility, there is nothing in this ruling to
make it a reality. If the legislature of Washington had passed a
statute to the effect that vouchers in a public office, filed by
the employees at the bidding of a superior, should be
prima
facie evidence of the truth of their contents, it is not
open
Page 300 U. S. 174
to doubt that such a statute would be valid. It would not even
involve an extreme departure from common law analogies rooted in
the presumption of official regularity. What a state may do in
changing the rules of evidence through the action of its
legislature it may do with equal competence through the action of
its judges, for anything to the contrary in the Constitution of the
United States.
4. Appellant did not discharge its burden by proving in a vague
way that some of the disbursements classified by the auditor as a
charge against the railroads were incidental to proceedings
conducted before the Interstate Commerce Commission or elsewhere
for the benefit of private shippers, and were not properly a part
of the expense of local regulation.
The Attorney General takes the ground that disbursements from
the revolving fund, if made for that purpose, were without
authority of law. If that be so, they cannot avail to invalidate
the statute, though they may lay the basis for a remedy in behalf
of the state or others against the officers or agents guilty of
unintentional misfeasance. Aside, however, from that objection,
there was no attempt by appellant to prove the amount of these or
like withdrawals in even the roughest fashion. There was no
suggestion, much less evidence, that they would wipe out the excess
of $37,833.14 stated by the auditor. An inquiry directed to the
point would have yielded, in all likelihood, an estimate at least
approximately correct. If such inquiry was inadequate, the slips
and vouchers were available for scrutiny and dissection.
Examination of the auditor in connection with the documents would
have shown forth the truth.
The presumption of validity which sustains an act of legislation
is unbroken by the evidence.
THE CHIEF JUSTICE, MR. JUSTICE BRANDEIS, and MR. JUSTICE STONE
join in this opinion.