The construction of a state statute must be judged by its
necessary effect; the name is not conclusive. P.
249 U. S.
394.
A law of the State of Washington requires that products of
petroleum, intended for use or consumption in the state, shall be
inspected before being sold or offered for sale, and imposes fees
for inspection by which in 10 years over $335,000 was collected, of
which only about $80,000 was disbursed for expenses, leaving a
revenue of over $255,000.
Held, in respect of such
products imported from another state for sale in Washington, that
the charge is excessive, and an unconstitutional burden on
interstate commerce.
Id.
94 Wash. 291 reversed.
The case is stated in the opinion.
Page 249 U. S. 391
MR. JUSTICE DAY delivered the opinion of the Court
Plaintiff in error filed a complaint and an amended complaint in
the Superior Court of Thurston County, Washington, to enjoin the
collection of fees prescribed by the Oil Inspection Act of that
state upon the ground that the statute was in contravention of the
Constitution of the United States. The superior court held the law
to be unconstitutional. Upon appeal, the Supreme Court of
Washington reversed the judgment. 94 Wash. 291.
The statute is the "state Oil Inspection Law" (Laws 1907, p.
412) of the State of Washington. Its provisions are thus summarized
in the opinion of the supreme court of the state:
"The inspection law referred to in the complaint was first
passed during the legislative session for the year 1905 (Laws 1905,
p. 310). That act was amended in 1907, and will be found in chapter
192 of the Laws of 1907, p. 413 (Rem.Code, § 6051
et
seq.). Section 3 (
id., § 6052) of this act provides
that all gasoline, benzine, distillate, or
Page 249 U. S. 392
other volatile product of petroleum intended for use or
consumption in this state for illuminating, manufacturing,
domestic, or power purposes, 'before being sold or offered for
sale,' shall be inspected by the state oil inspector or his
deputies. When the inspection is made, a certificate is to be
issued, and the barrel or receptacle which contains the oil must be
labeled or branded. Section 4 (
id., § 6053) of the act
contains a schedule of the fees which shall be paid for the
inspection. Section 6 (
id., § 6055) provides that, if any
person or persons, whether manufacturer, vender, or dealer, or as
agent or representative of any manufacturer, vender, or dealer,
'shall sell or attempt to sell' to any person, firm or corporation
in this state, any illuminating oil, gasoline, benzine, distillate,
or any volatile product of petroleum intended for use or
consumption within this state that has not been inspected and
branded according to the provisions of the act 'shall be guilty of
a misdemeanor.' By the Laws of 1913, chapter 60, p. 196 (Rem.Code,
§ 3000-1
et seq.), it was made the duty of the
commissioner of agriculture to exercise all the powers and perform
all the duties which, by the law of 1907, were vested in and
required to be performed by the state oil inspector."
The case was heard upon demurrer to the amended complaint.
Among other things, the amended complaint set out:
"Plaintiff is engaged in the State of California in the business
of producing and buying crude petroleum oil, and of manufacturing
and refining the same, and of shipping products of such
manufacture, to-wit, illuminating oils, gasoline, distillate, and
other volatile products of petroleum from its refineries in
California into the State of Washington, where the same are sold by
this plaintiff in large quantities for use and consumption in the
State of Washington for illuminating, manufacturing, domestic, and
power purposes. None of the products hereinbefore
Page 249 U. S. 393
referred to is manufactured by plaintiff in the State of
Washington, but all of said products are shipped into said state
from the State of California."
"The plaintiff maintains in the State of Washington wharves and
docks, tanks, warehouses, buildings, machinery, horses and wagons,
and other equipment for receiving, shipping, handling, selling, and
otherwise distributing said products shipped as aforesaid from the
State of California into the State of Washington."
The fees collected under the inspection acts are set out in the
amended bill of complaint:
"The total receipts from the fees collected under said statute,
chapter 192 of the Laws of 1907, and chapter 161, Laws of 1905, of
the State of Washington, for the inspection therein provided for of
said products mentioned in said laws intended for sale or
consumption in this state, and the total disbursements in
connection with the collection thereof, and in connection with the
administration of said laws, and the net revenue from such receipts
during the following years have respectively been the
following:"
Date Receipts Disbursements Revenue
June 30 to Dec. 31, 1905 $ 5,693.19 $4,947.70 $ 745.49
Jan. 1 to Dec. 31, 1906 $ 9,539.86 $6,610.80 $ 2,929.06
Jan. 1 to Dec. 31, 1907 $19,084.29 $7,551.70 $11,532.59
Jan. 1 to Dec. 31, 1908 $23,493.93 $8,684.87 $14,809.06
Jan. 1 to Dec. 31, 1909 $24,799.67 $8,802.90 $15,996.77
Jan. 1 to Dec. 31, 1910 $35,174.64 $8,469.00 $26,705.64
Jan. 1 to Dec. 31, 1911 $38,344.42 $8,762.85 $29,581.57
Jan. 1 to Dec. 31, 1912 $48,489.73 $8,860.80 $39,628.93
Jan. 1 to Dec. 31, 1913 $51,816.91 $8,859.00 $42,957.91
Jan. 1 to Dec. 31, 1914 $79,339.66 $8,553.75 $70,785.91
----------- ---------- -----------
$335,776.30 $80,103.37 $225,672.93
It thus appears that the expense of administration of the
statutes from 1905 to 1914 was $80,103.37. The total
Page 249 U. S. 394
receipts for the same time $335,776.30, a difference of
$255,672.93.
It is contended by the plaintiff in error that this inspection
law violates the commerce clause, Art. I, § 8, of the Constitution
of the United States, in that it directly burdens such commerce by
imposing inspection taxes far in excess of the cost of inspection.
The supreme court of the state held that the tax was not upon
property, but could be sustained as an excise or occupation tax
upon the business of selling oil within the state. The reason given
by the court for holding that the tax could not be upheld as a
property tax rested upon provisions of the state constitution.
While this Court follows the decisions of the highest court of a
state as to the meaning of statutes in cases of this character, the
name given to the statute is not conclusive. It must be judged by
its necessary effect, and if that is to violate the Constitution of
the United States, the law must be declared void.
Minnesota v.
Barber, 136 U. S. 313,
136 U. S. 319;
Crew Levick v. Pennsylvania, 245 U.
S. 292,
245 U. S. 294,
and cases cited.
That the state may pass proper inspection laws for oils brought
into its borders in interstate commerce there can be no question.
But, taking the allegations of the complaint to be true, as we must
for present purposes, the cost of the inspection was greatly less
than the tax imposed. The general principle that a state may not
impose burdens upon interstate commerce is so well settled, and has
been so often declared in the opinions of this Court, that a
repetition of the reasons which have induced these decisions would
be superfluous. In this case, the amended complaint alleges that
the oils were shipped into Washington from California. They are
brought there for sale. This right of sale as to such importations
is protected to the importer by the federal Constitution, certainly
while the same are in the original
Page 249 U. S. 395
receptacles or containers in which they are brought into this
state. Under this law, the oils cannot be lawfully sold at all
until the importer has paid the inspection fees provided in the
statute, after inspection. That inspection fees so grossly in
excess of the cost of inspection imposed upon articles brought into
the state in interstate commerce are unconstitutional was held in
Foote v. Maryland, 232 U. S. 494. In
that case, the plaintiffs were engaged in the business of packing
oysters in the City of Baltimore, and brought large quantities in
from the State of Maryland and also from the waters of the States
of Virginia and New Jersey. These oysters were inspected in
Baltimore, where they were unloaded from vessels, by officials
appointed under the provisions of the Maryland act which fixed an
inspection fee of one cent per bushel to be paid one-half by the
seller and one-half by the buyer. The case was brought to this
Court upon the ground that the inspection fee was excessive, and a
burden upon interstate commerce, and levied an unlawful tax upon
goods shipped into Maryland from other states. It was held that, in
view of the excessive nature of the inspection fees, the
requirement of the payment thereof necessarily imposed a burden
upon interstate commerce in excess of the expenses of inspection,
and that the act was therefore void. The subject was fully
considered in an opinion by the late Mr. Justice Lamar, speaking
for this Court, and after recognizing the power of the state to
impose reasonable inspection fees, and that such legislation will
not be declared void unless the fees are obviously and largely
beyond what is needed for the cost of inspection, he said:
"If, therefore, it is shown that the fees are disproportionate
to the service rendered, or that they include the cost of something
beyond legitimate inspection to determine quality and condition,
the tax must be declared void because such costs, by necessary
operation, obstruct the freedom of commerce among
Page 249 U. S. 396
the states.
McLean v. Denver & Rio Grande R. Co.,
203 U. S.
38;
Brimmer v. Rebman, 138 U. S.
78,
138 U. S. 83;
Postal
Telegraph-Cable Co. v. Taylor, 192 U. S. 64
;
Patapsco Co. v. North Carolina, 171 U. S.
345,
171 U. S. 354;
Red 'C'
Oil Co. v. North Carolina, 222 U. S. 380,
222 U. S.
394;
Savage v. Jones, 225 U. S.
501,
225 U. S. 504."
The principles stated in
Foote v. Maryland were
recognized in
Pure Oil Co. v. Minnesota, decided by this
Court at this term,
248 U. S. 248 U.S.
158. The inspection fees there in question were held not excessive,
and we said (
248 U. S.
162):
"But if such inspection charge should be obviously and largely
in excess of the cost of inspection, the act will be declared void
because constituting, in its operation, an obstruction to and
burden upon that commerce among the states the exclusive regulation
of which is committed to Congress by the Constitution."
It is said that the
Foote case did not overrule the
previous case of
General Oil Co. v. Crain, 209 U.
S. 211, and that the principles of that case should be
controlling here. In the
Crain case, this Court sustained
a tax upon oil which had been removed from the tank cars in which
it was transported into Tennessee, and which, although destined for
points beyond Tennessee, was then in storage in that state. The
distinction between that case and the one now under consideration
is obvious.
Bacon v. Illinois, 227 U.
S. 504, is also relied upon. In that case, this Court
sustained a property tax upon grain brought from another state, but
taken from the carrier and held by the owner in Illinois with full
power of disposition in that state, and although intended to be
ultimately forwarded to a point beyond the state; the property tax,
after a review of the previous decisions of this Court, was
sustained.
We reach the conclusion that the statute imposing these
excessive inspection fees, in the manner stated, upon all sales of
oils brought into the state in interstate
Page 249 U. S. 397
commerce necessarily imposes a direct burden upon such commerce,
and is therefore violative of the commerce clause of the federal
Constitution. We may remark that the conclusion at which we have
arrived has been reached by the Supreme Courts of North Dakota and
Ohio.
Bartels Northern Oil Co. v. Jackman, 29 N.D. 236;
Castle v. Mason, 91 Ohio St. 296.
It follows that the judgment of the Supreme Court of Washington
must be
Reversed.