A state statute imposing a license tax upon persons and
corporations carrying on the business of refining sugar and
molasses does not, by exempting from such tax "planters and farmers
grinding and refining their own sugar and molasses," deny sugar
refiners the equal protection of the laws within the Fourteenth
Amendment.
This was a petition filed in the Civil District Court for the
Parish of Orleans by John Brewster, tax collector, against the
American Sugar Refining Company, a corporation engaged in the
business of refining sugar and molasses, to recover the sum of
$3,500 per year as a state license tax for the years 1892 to 1897,
inclusive, alleged to be due under a statute of Louisiana enacted
in 1890, entitled
"An Act to Levy, Collect, and Enforce Payment of an Annual
License Tax upon all Persons, Associations of Persons, or Business
Firms and Corporations Pursuing any Trade, Profession, Vocation,
Calling, or Business, Except Those Who are Expressly Excepted from
Such License Tax by Articles 206 and 207 of the Constitution."
By the ninth section, it is enacted
"that for carrying on each business of . . . refining sugar and
molasses . . . the license shall be based on the gross annual
receipts of each person, association of persons, business firm or
corporation engaged in said business as follows: Provided, that
this section shall not apply to
planters and farmers grinding
and refining their own
Page 179 U. S. 90
sugar and molasses; . . . and provided, further, that
it shall not apply to those planters who granulate syrup for other
planters during the rolling season."
"First class. When the said gross actual receipts are $2,500,000
and over, the license shall be $3,500."
This act was passed in pursuance of Article 206 of the state
constitution of 1879, which reads as follows:
"ART. 206. The general assembly may levy a license tax, and in
such case shall graduate the amount of such tax to be collected
from the persons pursuing the several trades, professions,
vocations, and callings. All persons, associations of persons, and
corporations pursuing any trade, profession, business, or calling
may be rendered liable to such tax, except clerks, laborers,
clergymen, school teachers, those engaged in mechanical,
agricultural, horticultural, and mining pursuits and manufacturers,
other than those of distilled, alcoholic, or malt liquors, tobacco
and cigars, and cotton-seed oil. No political corporation shall
impose a greater license tax than is imposed by the general
assembly for state purposes."
Defense: first, that the business of refining sugar and molasses
is exempt from the payment of any license tax, because it is one of
those
manufactures enumerated in article 206 as entitled
to exemption. Second, that the act of 1890
"violates the Constitution of the United States, and is void
insofar as it attempts to impose a license tax on this defendant,
because said act denies to this defendant the equal protection of
the laws of the state inasmuch as said act does not impose equally
a license tax on all persons engaged in the business of refining
sugar and molasses, but discriminates in favor of planters who
refine their own sugar and molasses, and in favor of planters who
granulate syrups for other planters during the rolling season."
The court, being of opinion that the business carried on by the
defendant company was that of a manufacturer, dismissed the
petition. On appeal to the supreme court, that court was of opinion
that the defendant was not entitled to exemption under Article 207
of the Constitution (not now in question), which exempted certain
manufacturers, and ordered a judgment
Page 179 U. S. 91
for $3,500, with interest and costs, for the license tax for the
year 1897. But, upon the attention of the court being called by a
petition for rehearing to Article 206 of the Constitution, above
quoted, that court delivered a new opinion to the effect that the
defendant was not a manufacturer, and therefore not entitled to an
exemption by article 206, and that the exemption of planters who
refine their own sugar did not deprive the defendant of the equal
protection of the laws. It further revised its judgment, and held
the state entitled to recover for each of the years from 1892 to
1897, and rendered judgment for the sum of $3,500, for each of said
years. Whereupon defendant sued out a writ of error from this
Court.
MR. JUSTICE BROWN delivered the opinion of the Court.
Motion was made to dismiss this writ of error upon the ground
that the case did not present a federal question, inasmuch as the
question of illegal discrimination "was not the principal matter
litigated, but was put in the record for the purpose of obtaining
this writ of error." As, however, the protection of the Fourteenth
Amendment was invoked in the answer, and as this defense is at
least plausible upon its face, the motion to dismiss must be
denied, but, the case having also been submitted upon the merits,
we shall proceed to discuss the constitutional objection to the
act.
It is scarcely necessary to say that the question whether the
defendant were a manufacturer within the meaning of the Louisiana
Constitution is one dependent upon the construction of that
constitution, and that the interpretation given to it by the state
supreme court, raising as it does no question of contract, is
obligatory upon this Court, but as that court held the defendant
liable upon the ground that it was engaged in the business of
refining sugar, the further question is presented
Page 179 U. S. 92
whether it is denied the equal protection of the laws because of
the exemption from the tax of planters grinding and refining their
own sugar and molasses.
The act in question does undoubtedly discriminate in favor of a
certain class of refiners, but this discrimination, if founded upon
a reasonable distinction in principle, is valid. Of course, if such
discrimination were purely arbitrary, oppressive, or capricious,
and made to depend upon differences of color, race, nativity,
religious opinions, political affiliations, or other considerations
having no possible connection with the duties of citizens as
taxpayers, such exemption would be pure favoritism, and a denial of
the equal protection of the laws to the less favored classes. But,
from time out of mind, it has been the policy of this government
not only to classify for purposes of taxation, but to exempt
producers from the taxation of the methods employed by them to put
their products upon the market. The right to sell is clearly an
incident to the right to manufacture or produce, and it is at least
a question for the legislature to determine whether anything done
to prepare a product most perfectly for the needs of the market
shall not be treated as an incident to its growth or production.
The act is not one exempting planters who use their sugar in the
manufacture of articles of a wholly different description, such as
confectionery, preserves, or pastry, or such as one which should
exempt the farmer who devoted his corn or rye to the making of
whisky, while other manufacturers of these articles were subjected
to a tax. A somewhat different question might arise in such case,
since none of these articles are the natural products of the farm
-- such products only becoming useful by being commingled with
other ingredients. Refined sugar, however, is the natural and
ultimate product of the cane, and the various steps taken to
perfect such product are but incident to the original growth.
With reference to the analogous right of importation, it was
said by this Court at an early day, in
Brown v.
Maryland, 12 Wheat. 419, that the right to sell was
an incident to the right to import foreign goods, and that a
license tax upon the sale of imported goods, while still in the
hands of the importer in
Page 179 U. S. 93
their original packages, was in conflict with that provision of
the Constitution which prohibits a state from laying an impost or
duty upon imports.
Congress, too, has repeatedly acted upon the principle of the
Louisiana statute. Thus, after having imposed by Act of August 2,
1813, a license tax upon the retailers of wines and spirits, for
the purpose of providing for the expense of the war with Great
Britain, it was further enacted by an Act of February 8, 1815, 3
Stat. 205, c. 40, that it should not be construed
"to extend to vine dressers who sell at the place where the same
is made, wine of their own growth; nor shall any vine dresser for
vending solely at the place where the same is made, wine of his own
growth, be compelled to take out license as a retailer of
wine."
So too, in the Internal Revenue Act of 1862, 12 Stat. 432, c.
119, a license tax was imposed (sec. 64) upon retail dealers in all
goods, wares, and merchandise, but with a proviso, in section 66,
that the act should not be construed
"to require a license for the sale of goods, wares, and
merchandise made or produced and sold by the manufacturer or
producer at the manufactory or place where the same is made or
produced; to vinters who sell at the place where the same is made,
wine of their own growth; nor to apothecaries, as to wines or
spirituous liquors which they use exclusively in the preparation or
making up of medicines for sick, lame, or diseased persons."
Another paragraph of the same section (64) exempts distillers
who sell the products of their own stills from a tax as wholesale
dealers in liquors. While no question of the power of Congress is
involved, these instances show that its general policy does not
differ from that of the act in question, and that the
discrimination is based upon reasonable grounds.
So, too, this Court has had repeated occasion to sustain
discriminations founded upon reasons much more obscure than this.
Thus, in
Railroad Company v. Richmond, 96 U. S.
521, a municipal ordinance was sustained declaring that
no car or vehicle of any kind "belonging to or used by the
Richmond, Fredericksburg & Potomac Railroad Company shall be
drawn or propelled by steam" upon a certain street, although no
other company was named in the ordinance, the Court held
Page 179 U. S. 94
that, as no other corporation had the right to run locomotives
in that street, no other corporation could be in a like situation,
and that the ordinance, while apparently limited in its operation,
was general in its effect, as it applied to all who could do what
was prohibited.
"All laws should be general in their operation, but all places
within the same city do not necessarily require the same local
regulation. While locomotives may with very great propriety be
excluded from one street, or even from one part of a street, it
would be sometimes unreasonable to exclude them from all."
In
Pembina Mining Co. v. Pennsylvania, 125 U.
S. 181, it was decided that the equal protection clause
did not prohibit a state from requiring, for the admission within
the limits of a corporation of another state, such conditions as it
chooses, though in that case it exacted a license tax from such
corporations, which it did not exact from corporations of its own
creation. In
Missouri Railroad Co. v. Mackey, 127 U.
S. 205, it was said that this clause did not forbid
special legislation,
"and when legislation applies to particular bodies or
associations, imposing upon them additional liabilities, it is not
open to the objection that it denies to them the equal protection
of the laws if all persons brought under its influence are treated
alike under the same conditions."
To the same effect is
Walston v. Nevin, 128 U.
S. 578.
The power of taxation under this provision was fully considered
in
Bell's Gap Railroad Co. v. Pennsylvania, 134
U. S. 323, in which it was said not to have been
intended to prevent a state from changing its system of taxation in
all proper and reasonable ways. It may, if it chooses, exempt
certain classes of property altogether; may impose different
specific taxes upon different trades or professions; may vary the
rates of excise upon various products; may tax real and personal
estate in a different manner; may tax visible property only, and
not securities; may allow or not allow deductions for
indebtedness.
"All such regulations, and those of like character, so long as
they proceed within reasonable limits and general usage, are within
the discretion of the state legislature or the people of the state
in framing their Constitution."
See also Home
Page 179 U. S. 95
Insurance Company v. New York, 134 U.
S. 594;
St. Louis &c. Railway v. Paul,
173 U. S. 404.
In
Pacific Express Company v. Seibert, 142 U.
S. 339, a state statute defining an express company to
be such as carried on the business of transportation on contracts
for hire with railroad or steamboat companies did not invidiously
discriminate against the express companies defined by it by
exempting other companies carrying express matter in vehicles of
their own. This case is specially pertinent to the one under
consideration.
See also Giozza v. Tiernan, 148 U.
S. 657;
Columbus Railroad v. Wright,
151 U. S. 470;
Duncan v. Missouri, 152 U. S. 377;
Western Union Telegraph Co. v. Indiana, 165 U.
S. 304;
Adams Express Co. v. Ohio state
Auditor, 165 U. S. 194.
The Constitution of Louisiana classifies the refiners of sugar
for the purpose of taxation into those who refine the products of
their own plantations and those who engage in a general refining
business and refine sugars purchased by themselves or put in their
hands by others for that purpose, imposing a tax only upon the
latter class. To entitle a party to the exemption it must appear
(1) that he is a farmer or a planter; (2) that he grinds the cane
as well as refines the sugar and molasses; (3) that he refines his
own sugar and molasses, meaning thereby the product of his own
plantation. Whether he may also refine the sugar of others may be
open to question, although, by its express terms, the act does not
apply to planters who granulate syrup for other planters during the
rolling season. The discrimination is obviously intended as an
encouragement to agriculture, and does not deny to persons and
corporations engaged in a general refining business the equal
protection of the laws.
The judgment of the Supreme Court of the Louisiana is
Affirmed.
MR. JUSTICE HARLAN concurred in the result.
MR. JUSTICE WHITE did not participate in the decision of this
case.
