1. Where, upon review here of state court decisions, the
existence of an asserted federal right or immunity depends upon the
appraisal of undisputed facts of record, or where reference to the
facts is necessary to the determination of the precise meaning of
the federal right or immunity, as applied, this Court is free to
reexamine the facts as well as the law in order to determine for
itself whether the asserted right or immunity is to be sustained.
P.
324 U. S.
659.
2. Since it appears on consideration of petitioner's course of
business and of the circumstances attending the importation that
petitioner was the inducing and efficient cause of bringing the
fibers into the country, which is importation, petitioner, not the
foreign sellers or the agents, was the importer of fibers brought
from the Philippine Islands and other places outside the United
States, and the constitutional immunity from state taxation of the
imported fibers survived their delivery to petitioner. Pp.
324 U. S. 659,
324 U. S.
664.
3. For the purpose of determining whether petitioner was the
importer in the constitutional sense, it is immaterial whether
title to the merchandise vested in the petitioner at the time of
shipment or only after its arrival in this country. P.
324 U. S.
662.
4. When merchandise is brought here from another country, the
extent of its immunity from state taxation turns on the essential
nature of the transaction, considered in the light of the
constitutional purpose, and not on the formalities with which the
importation is conducted or on the technical procedures by which it
is effected. P.
324 U. S.
663.
5. The purpose of the constitutional prohibition of state taxes
on imports is to protect the exclusive power of the national
government to tax imports and to prevent what, in matter of
substance, would amount to the imposition of additional import
duties by States in which the property might be found or stored
before its sale or use. P.
324 U. S. 664.
6. The constitutional immunity of the imports from state
taxation was not lost by their storage (in the original packages)
in warehouses
Page 324 U. S. 653
at petitioner's factory pending their use in petitioner's
manufacturing operations for which they were imported. Pp.
324 U. S. 664,
324 U. S.
668.
7. For the purpose of the constitutional immunity, it is
immaterial whether the imported merchandise is stored (in the
original packages) in the importer's warehouse at the port of entry
or in an interior State. P.
324 U. S.
664.
8. Upon the record in this case, there is no reason to consider
whether, for purposes of the constitutional immunity, the mere
presence of some fibers in the factory was so essential to current
manufacturing requirements that they could be said to have entered
the process of manufacture, and hence were already put to the use
for which they were imported. P.
324 U. S.
667.
9. Such discriminations as there may be against domestic and in
favor of foreign producers of goods in this situation are implicit
in the constitutional provision and in its purpose to protect
imports from state taxation. P.
324 U. S.
667.
10. The difficulty of ascertaining in particular cases when an
original package is broken arises out of the original package rule
itself. P.
324 U. S.
668.
11. Reconciliation of the competing demands of the
constitutional immunity of imports and of the state's power to tax
is an extremely practical matter. P.
324 U. S.
668.
12. In view of the constitutional authority of Congress to
consent to state taxation of imports, and hence to lay down its own
test for determining when the immunity ends, there is no convincing
practical reason for abandoning the original package rule, or, if
it is to be retained in the case of imports for sale, for rejecting
it in the case of imports for manufacture. P.
324 U. S.
668.
13. Articles brought from the Philippine Islands into the United
States are imports subject to the constitutional provisions
relating to imports -- both because they are brought into the
United States and because the place whence they are brought is not
a part of the United States in the constitutional sense to which
the provisions with respect to imports are applicable. Pp.
324 U. S. 668,
324 U. S.
679.
142 Ohio St. 235, 51 N.E.2d 723, reversed.
Certiorari, 321 U.S. 762, to review a judgment sustaining an
assessment of state taxes.
Page 324 U. S. 654
MR. CHIEF JUSTICE STONE delivered the opinion of the Court.
Respondent, a tax official of the state of Ohio, has assessed
for state
ad valorem taxes certain bales of hemp and other
fibers belonging to petitioner. The fibers had been brought from
the Philippine Islands or from other places outside the United
States. When assessed for the tax, they were stored in the original
packages in which they had been imported, in petitioner's warehouse
at its factory at Xenia, Ohio, preliminary to their use by
petitioner in the manufacture of cordage and similar products.
The State Board of Tax Appeals sustained the assessment for the
three years in question, 1938, 1939, and 1940. Petitioner then
brought the present proceeding in the Supreme Court of Ohio to
review the Board's determination. That court rejected petitioner's
contention that the fibers are imports, immune from state taxation
under Article, I, § 10, cl. 2, of the Constitution, which prohibits
state taxation of imports or exports, and it sustained the tax. 142
Ohio St. 235, 51 N.E.2d 723.
The State Court recognized that
Brown v.
Maryland, 12 Wheat. 419, established the rule that
imports in their original packages may not be taxed by a state. But
it thought that the present case fell within the qualification upon
that rule laid down in
Waring v. The
Mayor, 8 Wall. 110. The
Waring case held
that, since a purpose of importation is sale, imports are immune
from state taxation only so long as they are in the hands of the
importer, and lose their immunity upon being sold by him. The
Supreme Court of Ohio held that petitioner acquired title to the
merchandise here taxed after its arrival in this country. It
concluded from this that the foreign
Page 324 U. S. 655
sellers or their agents, and not petitioner, were the importers,
and that the merchandise, after the sale to petitioner, had ceased
to be an import constitutionally immune from state taxation.
In any case, the Ohio court thought that, even if petitioner
were the importer and the merchandise were immune from taxation on
its receipt by petitioner, it nevertheless ceased to be an import,
and lost its immunity as such, upon its storage at petitioner's
warehouse awaiting its use in manufacturing. The Court thought that
Brown v. Maryland, supra, laid down a rule applicable only
to imports for the purpose of sale, and that imports for use
became, upon storage, even if still in the original package, so
intermingled with the common mass of property within the state as
to be subject to the state power of taxation. [
Footnote 1] The Court found it unnecessary to
decide whether the fibers brought from the Philippine Islands,
which are not a foreign country, could be imports within the
meaning of the constitutional immunity, since they would be taxable
in any event upon the two grounds already stated.
We granted certiorari, 321 U.S. 762, because of the novelty and
importance of the constitutional questions raised. The questions
for decision are (1) whether, with respect to the fibers brought
from foreign countries, petitioner was their importer; if so, (2)
whether, as stored in petitioner's warehouse, they continued to be
imports at the time of the tax assessment, and (3) whether the
fibers brought from the Philippine Islands, despite the place of
their origin, are likewise imports rendered immune from taxation by
the constitutional provision.
The Constitution confers on Congress the power to lay and
collect import duties, Art. I, § 8, and provides that
"no
Page 324 U. S. 656
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 it's inspection Laws. . . ."
Art. I, § 10, Cl. 2. These provisions were intended to confer on
the national government the exclusive power to tax importations of
goods into the United States. That the constitutional prohibition
necessarily extends to state taxation of things imported, after
their arrival here and so long as they remain imports, sufficiently
appears from the language of the constitutional provision itself
and its exposition by Chief Justice Marshall in
Brown v.
Maryland, supra. We do not understand anyone to challenge that
rule in this case.
It is obvious that, if the states were left free to tax things
imported after they are introduced into the country and before they
are devoted to the use for which they are imported, the purpose of
the constitutional prohibition would be defeated. The fears of the
framers, that importation could be subjected to the burden of
unequal local taxation by the seaboard at the expense of the
interior states, would be realized as effectively as though the
states had been authorized to lay import duties. [
Footnote 2] It is evident, too, that, if the
tax immunity of imports, commanded by the Constitution, is to be
reconciled with the right of the states to tax goods after their
importation has become complete and they have become a part of the
common mass of property within a state, "there must be a point of
time when the prohibition ceases, and the power of the state to tax
commences."
Brown v. Maryland, supra, 25 U. S.
441.
In
Brown v. Maryland, supra, the state sought to impose
a license tax on the sale by the importer of goods stored in his
warehouse in the original packages in which they
Page 324 U. S. 657
were imported. In holding the levy to be a prohibited tax on
imports, Chief Justice Marshall said (pp.
25 U. S.
441-442):
"It is sufficient for the present to say generally that, when
the importer has so acted upon the thing imported that it has
become incorporated and mixed up with the mass of property in the
country, it has, perhaps, lost its distinctive character as an
import, and has become subject to the taxing power of the state;
but while remaining the property of the importer, in his warehouse,
in the original form or package in which it was imported, a tax
upon it is too plainly a duty on imports, to escape the prohibition
in the Constitution."
Although one Justice dissented in
Brown v. Maryland,
supra, from that day to this, this Court has held, without a
dissenting voice, that things imported are imports entitled to the
immunity conferred by the Constitution; that that immunity survives
their arrival in this country and continues until they are sold,
removed from the original package, or put to the use for which they
are imported.
Waring v. The Mayor, supra, 75 U. S.
122-123;
Low v. Austin,
13 Wall. 29,
80 U. S. 32-33;
Cook v. Pennsylvania, 97 U. S. 566,
97 U. S. 573;
May v. New Orleans, 178 U. S. 496,
178 U. S. 501,
178 U. S.
507-508;
Burke v. Wells, 208 U. S.
14,
208 U. S. 21-22,
208 U. S. 24;
Gulf Fisheries Co. v. MacInerney, 276 U.
S. 124,
276 U. S.
126-127;
McGoldrick v. Gulf Oil Corp.,
309 U. S. 414,
309 U. S.
423.
All the taxed fibers, with the exception of those brought from
the Philippine Islands, which will presently be separately
considered, were brought to this country from foreign lands and
were undoubtedly imports, clothed as such with a tax immunity which
survived their importation, until the happening of some event
sufficient to alter their character as imports. As we have said,
the Supreme Court of Ohio found such events in what it deemed to be
a sale of the merchandise to petitioner after it had been landed in
the United States, and in the further circumstance
Page 324 U. S. 658
that, by storing the merchandise in the warehouse at
petitioner's factory, it had become a part of the common mass of
property subject to state taxation, and so could no longer be
regarded as an import.
Resolution of either point in favor of respondent is decisive of
the case. Hence, we must first consider whether petitioner, rather
than the foreign producers or shippers acting through their
American agents, was the importer. If so, the tax immunity of the
imported merchandise survived its receipt by petitioner and we must
determine the further question whether petitioner's subsequent
treatment of the merchandise deprived it of its character, and
hence its immunity, as an import.
I
Petitioner's relationship to the merchandise at the time of
importation and afterward is of significance only in determining
whether, as the state court has found, the relationship was so
altered after importation that it can be said that the purpose of
the importation had been fulfilled. If it had, there was no longer
either occasion or reason for the further survival of the immunity
from taxation. That relationship is to be ascertained by reference
to all the circumstances attending the importation, particularly as
shown by the long established course of business by which
petitioner's supply of fibers has been brought into the country for
use in manufacturing its finished product.
The state introduced no evidence, and there is no dispute in
point of substance as to petitioner's evidence. The latter consists
of the oral testimony of petitioner's general manager, some
examples of the contracts by which petitioner procured the
merchandise to be brought to this country, and two stipulations
containing statements, admitted to be true, which were made by the
American agents of the producers and shippers of the
merchandise.
Page 324 U. S. 659
Both the Board of Tax Appeals and the state court, without
specially finding some of the facts which we regard as of
controlling significance, contented themselves with stating the
facts generally. They inferred from these facts that petitioner
technically was but a purchaser of the merchandise after it had
been imported into this country. They concluded that petitioner was
not the importer, and the fibers had ceased to be imports after the
sale to petitioner.
In all cases coming to us from a state court, we pay great
deference to its determinations of fact. But when the existence of
an asserted federal right or immunity depends upon the appraisal of
undisputed facts of record, or where reference to the facts is
necessary to the determination of the precise meaning of the
federal right of immunity as applied, we are free to reexamine the
facts as well as the law in order to determine for ourselves
whether the asserted right or immunity is to be sustained.
Kansas City Southern R. Co. v. Albers Commission Co.,
223 U. S. 573,
223 U. S. 591;
Truax v. Corrigan, 257 U. S. 312,
257 U. S. 325;
First National Bank v. Hartford, 273 U.
S. 548,
273 U. S. 552,
and cases cited;
Fiske v. Kansas, 274 U.
S. 380,
274 U. S.
385-386;
Norris v. Alabama, 294 U.
S. 587,
294 U. S.
589-590.
In this case, it appears without contradiction that petitioner,
in the regular course of its business, contracts for its
manufacturing requirements of hemp, jute, sisal and other fibers,
before their shipment to this country, and sometimes even before
they are produced in the various foreign countries of their origin.
Petitioner's negotiations for the purchase are carried on with
brokers located in New York City, who represent the foreign
producers. After an agreement as to price, petitioner enters into a
firm contract to purchase the fibers. A standard form of contract
is executed in duplicate or triplicate by petitioner and the broker
who signs as agent for or "for account of" his named principal. The
contract specifies
Page 324 U. S. 660
the kind and amount of fibers purchased, the time of shipment,
the American port to which the shipment is to be made, and
frequently the steamship company, designated by petitioner, upon
whose vessel the merchandise is to be shipped. While the contract
gave the seller the option to make deliveries from merchandise
warehoused in the United States, no such deliveries were made of
any of the merchandise here in question.
The price is a "landed price," which includes as its components
the contract cost of the goods at point of origin, the normal
charges for ocean freight, marine and war risk insurance, and
United States customs clearance (including customs duties in the
case of hemp, which alone of the purchased merchandise is subject
to import duties), and the expense of arranging for transshipment
from the port of entry to petitioner at Xenia, Ohio. Any variation
from the normal rates for these components (other than the contract
cost of the goods at point of origin) is for account of petitioner.
"Extra value" insurance covering any increase in value of the
merchandise over the contract price during the voyage is effected,
if petitioner requests, at its expense.
Upon shipment, the merchandise is consigned to the broker in
this country or to a banker, either on an order or a straight bill
of lading, in either case with directions to "Notify The Hooven
& Allison Co." When the bales of purchased merchandise are
loaded for shipment on board vessel at the point of origin, they
are given distinctive markings referable to petitioner's contract.
A declaration is then cabled to the New York broker referring to
the contract upon which the shipment is made, stating the name of
the vessel, the approximate number of bales shipped, their
identification marks, and the approximate date of arrival in the
United States. The broker communicates this information to
petitioner, and sometimes follows it, before arrival of the
shipment at the port of entry, with
Page 324 U. S. 661
a
pro forma invoice which states the approximate
tonnage and value of the shipment. Petitioner then gives
instructions to the broker for the shipment from the port to
Xenia.
The broker enters the shipment at the custom house in its own
name as an accommodation to the petitioner, which has no facilities
for clearance of the goods through the customs. The broker then
ships the merchandise upon a straight bill of lading to Xenia,
where it is delivered by the carrier to petitioner. At that time,
petitioner pays the freight and, ten to fifteen days after the
receipt of the final invoice, it pays the purchase price to the
broker. It is stipulated that the sale is upon the unsecured credit
of petitioner, and it does not appear that there is any retention
of a security title either by the foreign seller, the broker, or
any intervening banker to secure payment by petitioner of the
purchase price.
From all this, it is clear that, from the beginning, after the
contract of purchase is signed, the foreign producer is obligated
to sell the merchandise on credit, to ship it to an American port,
and to deliver it to petitioner, which is obligated to accept and
pay for it. Performance of the contract calls for, and necessarily
results in, importation of the merchandise from its country of
origin to the United States. Petitioner's contracts of purchase are
the inducing and efficient cause of bringing the merchandise into
the country, which is importation. Examination of the documents and
consideration of the course of business can leave no doubt that the
petitioner not only causes the importation, but that the purpose
and necessary consequence of it are to supply petitioner with the
raw material for its manufacture of cordage at its factory in
Ohio.
From the moment of shipment, the taxed merchandise was
identified and appropriated to the purchase contract and to that
ultimate purpose by both the seller and the buyer. Petitioner could
resell the merchandise while it
Page 324 U. S. 662
was in transit. The risk of loss from change in market value was
on petitioner, save as it might insure against such loss at its own
expense. The right to demand, receive, and use the merchandise,
subject only to the payment of the contract "landed price," was in
petitioner. And obviously, if the possibility of the seller's right
of stoppage
in transitu, the carrier's lien, or the
necessity of payment of customs duties are to be regarded as
inconsistent with importation, there would be few importations and
few importers in the constitutional sense. For there are few who
are not subject to some or all of these contingencies.
Here, it is agreed that the sale was on credit. So far as
appears in those instances where the merchandise was consigned to a
banker, it was for the purpose of financing the producer or
shipper, pending receipt of the merchandise and payment for it by
petitioner, which appears always to have purchased on credit and to
have received the merchandise before payment, and never to have
given security for its payment. There was therefore no occasion for
an implied reservation of a security "title" as against petitioner
in either the sellers or their agents, or the banker in those cases
where the goods were consigned on shipment to a banker.
For the purpose of determining whether petitioner was the
importer in the constitutional sense, it is immaterial whether the
title to the merchandise imported vested in him who caused it to be
brought to this country at the time of shipment or only after its
arrival here. [
Footnote 3]
Decision in
Waring v. The Mayor supra, upon which the
Supreme Court of Ohio relied, did not turn on technical
questions
Page 324 U. S. 663
of passage of title. [
Footnote
4] For, in determining the meaning and application of the
constitutional provision, we are concerned with matters of
substance, not of form. When the merchandise is brought from
another country to this, the extent of its immunity from state
taxation turns on the essential nature of the transaction,
considered in the light of the constitutional purpose, and not on
the formalities with which the importation is conducted or on the
technical procedures by which it is effected. It is common
knowledge to lawyers and businessmen that vast quantities of
merchandise are annually imported into this country by purchasers
resident here, for sale or manufacture here. Sometimes the buyer
completes the purchase abroad, in person, and ships to this
country; sometimes, as in this case, the purchase is on unsecured
credit, but more often it is under contracts by which the vendor
reserves in himself or his agent or a banker a lien or title as
security for payment of the purchase price on or after arrival. To
say that the purchaser is any the less an importer in the one case
than in the others is to ignore
Page 324 U. S. 664
the constitutional purpose and substitute form for
substance.
As we have said, the constitutional purpose is to protect the
exclusive power of the national government to tax imports and to
prevent what, in matter of substance, would amount to the
imposition of additional import duties by states in which the
property might be found or stored before its sale or use. It is
evident that the constitutional prohibition envisages the present
quite as much as if the petitioner had sent his own agent abroad,
where he had purchased and paid for the merchandise and shipped it
to petitioner in this country. The purpose and result of the
transaction are the same in either case. The apprehended evils of
the local taxation of imports after their arrival here are the
same.
It is enough for present purposes that the merchandise in this
case was imported, and that petitioner was the efficient cause of
its importation, the purpose and effect of which was petitioner's
acquisition of the merchandise for its manufacture into finished
goods. We conclude that petitioner was the importer, and that the
merchandise in its hands was entitled to the constitutional tax
immunity, surviving delivery of the imports to it.
II
We turn now to the question whether the immunity was lost by the
storage of the merchandise in the original packages in petitioner's
warehouse at its factory pending its use in petitioner's
manufacturing operations. For the purpose of the immunity, it has
not been thought, nor is there reason for supposing, that it
matters whether the imported merchandise is stored in the original
package in the importer's warehouse at the port of entry or in an
interior state. The reason for the original package doctrine, as
fully expounded in
Brown v. Maryland, supra, is that,
unless
Page 324 U. S. 665
the immunity survives to some extent the arrival of the
merchandise in the United States, the immunity itself would be
destroyed. For there is no purpose of taxing importation itself --
even its ultimate suppression -- which could not be equally
accomplished by laying a like tax on things imported after their
arrival and while they are in the hands of the importer.
On the other hand, the immunity is adequately protected and the
state power to tax is adequately safeguarded if, as has been the
case ever since
Brown v. Maryland, supra, an import is
deemed to retain its character as such "while remaining the
property of the importer in his warehouse, in the original form or
package in which it was imported,"
see Brown v. Maryland,
supra, 25 U. S. 442,
or until put to the use for which it was imported. Chief Justice
Marshall, in
Brown v. Maryland, supra, pp.
25 U. S.
442-443, rejected the suggestion that "an importer may
bring in goods, as plate, for his own use, and thus retain much
valuable property exempt from taxation." Plainly, if and when
removed from the package in which they are imported or when used
for the purpose for which they are imported, they cease to be
imports, and their tax exemption is at an end. It is quite another
matter to say, and Chief Justice Marshall did not say, that,
because they may be taxed when used, the importer may not hold them
tax free until the original packages are broken or until they are
put to the use for which they are imported. He said, p.
25 U. S.
443:
"The same observations [
i.e., the importer has mixed
the goods with the common mass of property, rendering them taxable]
apply to plate or other furniture
used by the
importer."
(Italics added.)
We have often indicated the difference in this respect between
the local taxation of imports in the original package and the like
taxation of goods, either before or after their shipment in
interstate commerce. In the one case,
Page 324 U. S. 666
the immunity derives from the prohibition upon taxation of the
imported merchandise itself. In the other, the immunity is only
from such local regulation by taxation as interferes with the
constitutional power of Congress to regulate the commerce, whether
the taxed merchandise is in the original package or not. The
regulatory effect of a tax, otherwise permissible, is not in
general affected by retention of the merchandise in the original
package in which it has been transported.
Woodruff
v. Parham, 8 Wall. 123;
Brown v. Houston,
114 U. S. 622;
American Steel & Wire Co. v. Speed, 192 U.
S. 500,
192 U. S. 521;
Sonneborn Bros. v. Cureton, 262 U.
S. 506,
262 U. S.
508-513;
Baldwin v. G.A.F. Seelig, Inc.,
294 U. S. 511,
294 U. S.
526-527.
This Court has pointed out on several occasions that imports for
manufacture cease to be such and lose their constitutional immunity
from state taxation when they are subjected to the manufacture for
which they were imported,
May v. New Orleans, supra,
178 U. S. 501;
Gulf Fisheries Co. v. MacInerney, supra, 276 U. S. 126;
McGoldrick v. Gulf Oil Corporation, supra, 309 U. S. 423,
or when the original packages in which they were imported are
broken,
Low v. Austin, supra, 80 U. S. 34;
May v. New Orleans, supra, 178 U. S.
508-509. But no opinion of this Court has ever said or
intimated that imports held by the importer in the original package
and before they were subjected to the manufacture for which they
were imported, are liable to state taxation. On the contrary, Chief
Justice Taney, in affirming the doctrine of
Brown v.
Maryland, in which he appeared as counsel for the State,
declared, as we now affirm:
"Indeed, goods imported, while they remain in the hands of the
importer, in the form and shape in which they were brought into the
country, can in no just sense be regarded as a part of that mass of
property in the State usually taxed for the support of the State
government."
License Cases,
5 How, 504,
46 U. S.
575.
Page 324 U. S. 667
In
Brown v. Maryland, supra, the imported merchandise
held in original packages in the importer's warehouse for sale was
deemed tax immune. We do not perceive upon what grounds it can be
thought that imports for manufacture lose their character as
imports any sooner or more readily than imports for sale. The
constitutional necessity that the immunity, if it is to be
preserved at all, survive the landing of the merchandise in the
United States and continue until a point is reached, capable of
practical determination, when it can fairly be said that it has
become a part of the mass of taxable property within a state is the
same in both cases.
It cannot be said that the fibers were subjected to manufacture
when they were placed in petitioner's warehouse in their original
packages. And it is unnecessary to decide whether, for purposes of
the constitutional immunity, the presence of some fibers in the
factory was so essential to current manufacturing requirements that
they could be said to have entered the process of manufacture, and
hence were already put to the use for which they were imported,
before they were removed from the original packages. Even though
the inventory of raw material required to be kept on hand to meet
the current operational needs of a manufacturing business could be
thought to have then entered the manufacturing process, the
decision of the Ohio Supreme Court did not rest on that ground, and
the record affords no basis for saying that any part of
petitioner's fibers, stored in its warehouse, were required to meet
such immediate current needs. Hence, we have no occasion to
consider that question.
It is said that our decision will result in discrimination
against domestic and in favor of foreign producers of goods. But
such discriminations as there may be are implicit in the
constitutional provision and in its purpose
Page 324 U. S. 668
to protect imports from state taxation. It is also suggested
that it will be difficult to ascertain in particular cases when an
original package is broken -- a difficulty which arises not out of
the present decision, but out of the original package rule itself,
which we do not understand to be challenged here. Moreover, this
supposed difficulty does not seem to have baffled judicial decision
in any case in the more than a hundred years which have followed
the decision in
Brown v. Maryland, supra.
As was emphasized in
Brown v. Maryland, supra, the
reconciliation of the competing demands of the constitutional
immunity and of the state's power to tax is an extremely practical
matter. In view of the fact that the Constitution gives Congress
authority to consent to state taxation of imports, and hence to lay
down its own test for determining when the immunity ends, we see no
convincing practical reason for abandoning the test which has been
applied for more than a century, or why, if we are to retain it in
the case of imports for sale, we should reject it in the case of
imports for manufacture. Unless we are to ignore the constitutional
prohibition, we cannot say that imports for manufacture are not
entitled to the immunity which the Constitution commands, and we
see no theoretical or practical grounds for saying, more than in
the case of goods imported for sale, that the immunity ends while
they are in the original package and before they are devoted to the
purpose for which they were imported.
III
There remains the question whether the fibers which petitioner
brought from the Philippine Islands and stored in its warehouse in
the original packages are also imports, constitutionally immune
from state taxation.
Respondents argue that the Philippine Islands are not a foreign
country, and that only articles brought here
Page 324 U. S. 669
from foreign countries are imports within the meaning of the
constitutional provision. Goods transported from one state to
another are not imports, since they are articles originating in the
United States and not brought into it.
Woodruff v. Parham,
supra; Sonneborn Bros. v. Cureton, supra; Baldwin v. G.A.F. Seelig,
Inc., supra. It is petitioner's argument that merchandise
brought from the Philippines to the United States is an import
because it is brought into the United States from a place without,
even though not from a foreign country. Implicit in this argument
is the contention that the Philippines, while belonging to the
United States as a sovereign, are not part of it, and that
merchandise brought from the Philippines is an import because it
originates outside of, and is brought into, the territory
comprising the several states which are united under and by the
Constitution, territory in which the constitutional prohibition
against the state taxation of imports is alone applicable.
The Constitution provides us with no definition of the term
"imports" other than such as is implicit in the word itself.
Imports were defined by Chief Justice Marshall in
Brown v.
Maryland, supra, 25 U. S. 437,
as "things imported" and "articles brought into a country." He
added:
"If we appeal to usage for the meaning of the word, we shall
receive the same answer. They are the articles themselves which are
brought into the country."
He thus defined imports by reference not to their foreign
origin, but to the physical fact that they are articles brought
into the country from some place without it. Since most imports
originate in foreign countries, courts have not unnaturally fallen
into the habit of referring to imports as things brought into this
country from a foreign country.
Waring v. The Mayor, supra;
Woodruff v. Parham, supra; Pittsburgh & Southern Coal Co. v.
Louisiana, 156 U. S. 590,
156 U. S. 600;
Patapsco Guano Co. v. North
Carolina,
Page 324 U. S. 670
171 U. S. 345,
171 U. S. 350;
May v. New Orleans, supra. [
Footnote 5] But the Constitution says nothing of the
foreign origin of imports, and in none of these cases was it
necessary to decision to formulate the rule in terms of origin in a
foreign country. In each case, the result would have been the same
if the Court had treated imports merely as articles brought into
the country from a point without.
Chief Justice Marshall's definition has received support in
cases holding or suggesting that fish caught in the open sea and
brought into this country are imports entitled to the
constitutional protection, although they did not come from a
foreign country.
Gulf Fisheries Co. v. Darrouzet, 17 F.2d
374, 376;
Booth Fisheries Corp. v. Case, 182 Wash. 392,
395, 47 P.2d 834. In
Gulf Fisheries Co. v. MacInerney,
supra, we found it unnecessary to decide the point. In that
case, the fish had been subjected to a manufacturing process after
their arrival in port and before they were taxed. Hence, even if
originally imports, they had ceased to be such, and were no longer
immune from the challenged state tax.
See also Fishermen's
Cooperative Assn. v. State, 193 Wash. 413, 88 P.2d 593, 92
P.2d 202. The definition of imports as articles brought into the
country finds support also in the circumstance that it has never
been seriously doubted that merchandise brought into the United
States from without is subject to the power of Congress to impose
customs duties, even though the merchandise is not of foreign
origin. And the occasion for protecting the
Page 324 U. S. 671
power of the national government to lay and collect customs
duties upon such merchandise, is precisely the same as in the case
of that of foreign origin. Hence, it is plain that such
importations, although not of foreign origin, are within the design
and purpose of the constitutional prohibition against the local
taxation of imports.
We find it impossible to say that, merely because merchandise,
brought into the country from a place without does not come from a
foreign country, it is not an import envisaged by the words and
purpose of the constitutional prohibition. The interpretation in
Brown v. Maryland, supra, the occasional judicial
decisions that foreign origin is not a necessary characteristic of
imports so long as they are brought into the country from a place
without it, and the purpose of the constitutional prohibition are
alike persuasive that there may be imports in the constitutional
sense which do not have a foreign origin.
The fact that the merchandise here in question did not come from
a foreign country, if the contention be accepted that the
Philippines are not to be regarded as such, is therefore without
significance. It is material only whether it came from a place
without the "country." Hence, in determining what are imports for
constitutional purposes, we must ascertain the territorial limits
of the "country" into which they are brought. Obviously, if the
Philippines are to be regarded as a part of the United States in
this sense, merchandise brought from the Philippines to the United
States would not be brought into the United States from a place
without, and would not be imports, more than articles transported
from one state to another.
The term "United States" may be used in any one of several
senses. It may be merely the name of a sovereign occupying the
position analogous to that of other sovereigns in the family of
nations. It may designate the territory over which the sovereignty
of the United States extends,
Page 324 U. S. 672
or it may be the collective name of the states which are united
by and under the Constitution. [
Footnote 6]
When
Brown v. Maryland, supra, was decided, the United
States was without dependencies or territories outside its then
territorial boundaries on the North American continent, and the
Court had before it only the question whether foreign articles
brought into the Maryland could be subjected to state taxation. It
seems plain that Chief Justice Marshall, in his reference to
imports as articles brought into the country, could have had
reference only to articles brought into a state which is one of the
states united by and under the Constitution, and in which alone the
constitutional prohibition here involved is applicable.
The relation of the Philippines to the United States, taken as
the collective name of the states which are united by and under the
Constitution, is in many respects different from the status of
those areas which, when the Constitution was adopted, were brought
under the control of Congress and which were ultimately organized
into states of the United States.
See Balzac v. Porto
Rico, 258 U. S. 298,
258 U. S.
304-305, and cases cited. Hence, we do not stop to
inquire whether articles brought into such territories, or brought
from such territories into a state, could have been regarded as
imports constitutionally immune from state taxation. We confine the
present discussion to the question whether such articles, brought
from the Philippines and introduced into the United States, are
imports so immune.
We have adverted to the fact that the reasons for protecting
from interference, by state taxation, the constitutional
Page 324 U. S. 673
power of the national government to collect customs duties,
apply equally whether the merchandise brought into the country is
of foreign origin or not. The Constitution has not made the foreign
origin of articles imported the test of importation, but only their
origin in a place over which the Constitution has not extended its
commands with respect to imports and their taxation. Hence, our
question must be decided not by determining whether the Philippines
are a foreign country, as indeed they have been held not to be
within the meaning of the general tariff laws of the United States,
Fourteen Diamond Rings v. United States, 183 U.
S. 176,
cf. De Lima v. Bidwell, 182 U. S.
1;
Dooley v. United States, 182 U.
S. 222, and within the scope of other general laws,
Faber v. United States, 221 U. S. 649;
cf. Huus v. New York & P. R. S.S. Co., 182 U.
S. 392;
Gonzales v. Williams, 192 U. S.
1;
West India Oil Co. v. Domenech, 311 U. S.
20, but by determining whether they have been united
governmentally with the United States by and under the
Constitution.
That our dependencies, acquired by cession as the result of our
war with Spain, are territories belonging to, but not a part of,
the Union of states under the Constitution was long since
established by a series of decisions in this Court beginning with
The Insular Tax Cases in 1901;
De Lima v. Bidwell,
supra, 182 U. S. 244;
Dooley v. United States, supra, 182 U.
S. 222;
Downes v. Bidwell, 182 U.
S. 244;
Dooley v. United States, 183 U.
S. 151,
and see also Public Utility Commissioners v.
Ynchausti & Co., 251 U. S. 401,
251 U. S.
406-407;
Balzac v. Porto Rico, supra. This
status has ever since been maintained in the practical construction
of the Constitution by all the agencies of our government in
dealing with our insular possessions. It is no longer doubted that
the United States may acquire territory by conquest or by treaty,
and may govern it through the exercise of the power of Congress
conferred by § 3 of Article IV of the Constitution "to dispose of
and make all needful Rules and Regulations
Page 324 U. S. 674
respecting the Territory or other Property belonging to the
United States."
Dooley v. United States, supra, 183 U.S.
at
183 U. S. 157;
Dorr v. United States, 195 U. S. 138,
195 U. S. 149;
Balzac v. Porto Rico, supra, 258 U. S. 305;
Cincinnati Soap Co. v. United States, 301 U.
S. 308,
301 U. S.
323.
In exercising this power, Congress is not subject to the same
constitutional limitations as when it is legislating for the United
States.
See Downes v. Bidwell, supra; Territory of Hawaii v.
Mankichi, 190 U. S. 197;
Dorr v. United States, supra; Dowdell v. United States,
221 U. S. 325,
221 U. S. 332;
Ocampo v. United States, 234 U. S. 91,
234 U. S. 98;
Public Utility Commissioners v. Ynchausti & Co.,
supra, 251 U.S.
251 U. S.
406-407;
Balzac v. Porto Rico, supra. And, in
general, the guaranties of the Constitution, save as they are
limitations upon the exercise of executive and legislative power
when exerted for or over our insular possessions, extend to them
only as Congress, in the exercise of its legislative power over
territory belonging to the United States, has made those guaranties
applicable.
See Balzac v. Porto Rico, supra. The
constitutional restrictions on the power of Congress to deal with
articles brought into or sent out of the United States do not apply
to articles brought into or sent out of the Philippines. Despite
the restrictions of §§ 8 and 9 of Article I of the Constitution,
such articles may be taxed by Congress, and without apportionment.
Downes v. Bidwell, supra. It follows that articles brought
from the Philippines into the United States are imports in the
sense that they are brought from territory which is not a part of
the United States into the territory of the United States,
organized by and under the Constitution, where alone the import
clause of the Constitution is applicable.
The status of the Philippines as territory belonging to the
United States, but not constitutionally united with it, has been
maintained consistently in all the governmental relations between
the Philippines and the United
Page 324 U. S. 675
States. Following the conquest of the Philippines, they were
governed for a period under the war power. After annexation by the
Treaty of Paris of December 10, 1898, military government was
succeeded by a form of executive government. By the Spooner
Amendment to the Army Appropriation Bill of March 2, 1901, c. 803,
31 Stat. 895, 910, it was provided that
"all military, civil, and judicial powers necessary to govern
the Philippine Islands . . . shall, until otherwise provided by
Congress, be vested in such person and persons and shall be
exercised in such manner as the President of the United States
shall direct, for the establishment of civil government and for
maintaining and protecting the inhabitants of said islands in the
free enjoyment of their liberty, property, and religion. . . ."
On July 1, 1902, Congress provided for a complete system of
civil government by the original Philippine Organic Act, c. 1369,
32 Stat. 691. Step by step, Congress has conferred greater powers
upon the territorial government, and those of the federal
government have been diminished correspondingly, although Congress
retains plenary power over the territorial government until such
time as the Philippines are made independent. This process
culminated in the Act of March 24, 1934, c. 84, 48 Stat. 456,
providing for the independence of the islands. The adoption by the
Philippines and approval by the United States of a constitution for
the the Philippine Islands, as provided by the Act, have prepared
the way for their complete independence.
The Act of 1934 made special provisions for the relations
between the two governments pending the final withdrawal of
sovereignty of the United States from the Philippines and, in
particular, provided for a limit on the number and amount of
articles produced or manufactured in the Philippine Islands that
might be "exported" to the United States free of duty. § 6. It
provided for the complete withdrawal and surrender of all right of
possession,
Page 324 U. S. 676
supervision, jurisdiction, control, or sovereignty of the United
States over the Philippines on the 4th of July following the
expiration of ten years from the date of the inauguration of the
new government, organized under the Constitution provided for by
the Independence Act. [
Footnote
7] § 10(a). The new Philippine Constitution was adopted on
February 8, 1935, and the new government under it was inaugurated
on November 14, 1935. By the provisions of the Independence Act,
the United States retained certain powers with respect to our trade
relations with the Islands, with respect to their financial
operations and currency, and the control of their foreign
relations. The power of review by this Court of Philippine cases is
continued and extended to all cases involving the Constitution of
the the Philippine Islands. § 7(6). Thus, by the organization of
the new Philippine government under the constitution of 1935, the
Islands have been given, in many aspects, the status of an
independent government, which has been reflected in its relations
as such with the outside world. [
Footnote 8]
Page 324 U. S. 677
In the meantime, and ever since
The Insular Tax Cases,
supra, Congress has often treated as imports articles brought
to the United States from the Philippines. By the Act of August 29,
1916, c. 416, 39 Stat. 548, 48 U.S.C. § 1042, the territorial
government of the Philippines was authorized to enact tariff laws.
The Sugar Quota Law, 7 U.S.C. § 608a(1), defined as imports the
amounts of sugar permitted to be brought into the United States
from the Philippines, and prohibited such importation in excess of
prescribed quotas. The Act of June 14, 1935, c. 240, 49 Stat. 340,
48 U.S.C. § 1236a, provided for restriction of the amount of hard
fibers and its products which could be brought annually from the
Philippines to the United States.
See also 48 U.S.C. §
1236. And the Independence Act,
supra, 48 U.S.C. §
1236(a)(b), also regulated the amount of "export tax" which might
be levied by the Philippines on articles shipped to the United
States from the Philippine Islands. [
Footnote 9]
The Independence Act, while it did not render the Philippines
foreign territory,
Cincinnati Soap Co. v. United States,
supra, 301 U. S.
318-320, treats the Philippines as a foreign country for
certain purposes. In 48 U.S.C. § 1238(a)(1), it established
immigration quotas for Filipinos coming to the United States, as if
the Philippines were a separate country, and in that connection
extended to Filipinos the immigration laws relating to the
exclusion or expulsion of aliens. It also provided, 48 U.S.C. §
1238(a)(2), that citizens of the Philippine Islands who are not
citizens of the United States shall be considered as if they were
aliens. For purposes of 8 U.S.C. §§ 154 and 156, relating to
deportation, the Philippine Islands are declared to be a foreign
country. 48 U.S.C. § 1238(a)(4). Foreign
Page 324 U. S. 678
service officers of the United States may be assigned to the
Philippines, and are to be considered as stationed in a foreign
country. 48 U.S.C. § 1238a. And the Independence Act, § 6, 48 Stat.
456, 460, provides that,
"when used in this section in a geographical sense, the term
'United States' includes all Territories and possessions of the
United States, except the Philippine Islands, the Virgin Islands,
American Samoa, and the island of Guam."
As we have said, the Philippines have frequently dealt with
other countries, as a sovereignty distinct from the United
States.
The United States acquired the Philippines by cession without
obligation to admit them to statehood or incorporate them in the
Union of states or to make them a part of the United States, as
distinguished from merely belonging to it. As we have seen, they
are not a part of the United States in the sense that they are
subject to and enjoy the benefits or protection of the
Constitution, as do the states which are united by and under it. In
particular, the constitutional provisions governing imports and
exports and their taxation do not extend to articles brought into
or out of the Philippines. The several acts of Congress providing
for the government of the Philippines have not altered their status
in these respects, and Congressional legislation governing trade
relations of the United States with the Philippines has not only
been consistent with that status, but has often treated articles
brought from the Philippines to the United States as imports. Our
tariff laws, in their practical operation, have in general placed
merchandise brought from the Philippines into the United States in
the same relationship to the constitutional taxing power of the
national government and the states as articles brought here from
foreign countries.
The national concern in protecting national commercial relations
by exempting imports from state taxation would seem not to be
essentially different or less in the
Page 324 U. S. 679
case of merchandise brought from the Philippines, which are not
included in the territory organized under the Constitution, but for
which we have assumed a national responsibility, than in the case
of articles originating on the high seas or in foreign countries.
As we have said, the reasons for protecting from state taxation
articles thus brought into the territorial United States are the
same in either case. The advantages and disadvantages, if any,
which result from the tax immunity, are inherent in the import
clause. But those advantages and disadvantages in the case of the
Philippines are no more beyond the reach of Congress than in the
case of other imports. Congress is left free by the terms of the
import clause to remove the prohibition of state taxation of
imports, and with it the advantages or disadvantages, whatever they
may be, arising from the tax immunity. Congress, through the
commerce clause, possesses the same power of control of state
taxation of all merchandise moving in interstate or foreign
commerce. And Congress is free, as in the case of other imports, to
regulate the flow of merchandise from the Philippines into the
United States by the imposition of either customs duties or
internal revenue taxes.
We conclude that practical as well as theoretical considerations
and the structure of our constitutional system require us to hold
that articles brought from the Philippines into the United States
are imports, subject to the constitutional provisions relating to
imports both because, as was said in
Brown v. Maryland,
they are brought into the United States, and because the place from
whence they are brought is not a part of the United States in the
constitutional sense to which the provisions with respect to
imports are applicable.
Reversed.
[
Footnote 1]
The Supreme Court of Washington has held contrary to the
decision of the Ohio Court.
See Washington Chocolate Co. v.
King County, 21 Wash. 2d 630, 152 P.2d 981.
[
Footnote 2]
See Madison, Debates in the Federal Convention of 1787,
August 28, 1787 (Hunt & Scott ed.).
[
Footnote 3]
Section 1483(1) of 19 U.S.C., provides that merchandise imported
into the United States "shall be held to be the property of the
person to whom the same is consigned." We do not deem this
provision to be significant here, since it is designed merely to
identify the person liable for the payment of customs duties, and
since, as we have said, the time when title passes to petitioner is
immaterial to decision.
[
Footnote 4]
In the
Waring case, the purchaser, claiming tax
immunity as the importer, purchased the merchandise, after its
shipment from abroad, from the American consignee, sometimes before
and sometimes after its arrival in the port of entry. Risk of loss
was to be on the seller until the merchandise was entered at the
custom house and delivered from the vessel into the purchaser's
lighters alongside. The Court thought it immaterial whether the
purchase contract was entered into before or after arrival. Since
the risk of loss remained on the shipper until the custom house
entry and delivery to the purchaser, it held that the shipper or
the consignee was the importer; that the purchaser's sale of the
goods, which was taxed, was the second sale after importation, and
for that reason was not free of tax. In these circumstances, it is
clear that the purchaser was not the cause of the importation, that
the purchaser had no control over or right to demand the
merchandise before arrival in port and that the foreign shipper,
who bore the risk of loss and retained control of the merchandise
and the right to control it until its delivery to petitioner, was
the importer.
[
Footnote 5]
In
Dooley v. United States, 183 U.
S. 151, the Court sustained under the Foraker Act of
April 12, 1900, c.191, 31 Stat. 77, the levy and collection of a
tax in Puerto Rico upon goods brought there from New York. The tax
was held to be a valid exercise of the power of Congress to enact
laws for the government of a dependency acquired by treaty,
see
Downes v. Bidwell, 182 U. S. 244. The
Court stated also as an alternative ground, but one unnecessary for
decision, that the levy was not a prohibited tax on exports, since
Puerto Rico was not a foreign country.
[
Footnote 6]
See Langdell, "The Status of our New Territories," 12
Harv.L.Rev. 365, 371;
see also Thayer, "Our New
Possessions," 12 Harv.L.Rev. 464; Thayer, "The Insular Tariff Cases
in the Supreme Court," 15 Harv.L.Rev. 164; Littlefield, "The
Insular Cases," 15 Harv.L.Rev. 169, 281.
[
Footnote 7]
Since the war with Japan and that country's temporary occupation
of the Philippines, Congress has provided that the date of the
independence of the Philippines may be advanced by the President of
the United States, upon his proclamation of their liberation and
the restoration of the normal functions of government. Act of June
29, 1944, c. 322, Public Law No. 380, 78th Cong., 2d Sess., 58
Stat. 625.
[
Footnote 8]
The Philippine Commonwealth participated as a signatory in the
following: Agreement and Protocol Regarding Production and
Marketing of Sugar of May 6, 1937; Universal Postal Convention of
May 23, 1939; Declaration by United Nations of January 1, 1942 (the
Philippines signed the Declaration on June 14, 1942); Agreement for
United Nations Relief and Rehabilitation Administration of November
9, 1943; United Nations Monetary and Financial Conference at
Bretton Woods, New Hampshire, of July 1 to 22, 1944; The Protocol
Prolonging the International Agreement Regarding the Regulation of
Production and Marketing of Sugar of August 31, 1944; The
International Civil Aviation Conference of November 1 to December
7, 1944.
[
Footnote 9]
This Court has referred to goods brought here from the
Philippines as "imports."
See Cincinnati Soap Co. v. United
States, 301 U. S. 308,
301 U. S.
320.
MR. JUSTICE REED, dissenting in part.
My disagreement with the Court is confined to that portion of
the opinion which determines that the Philippine
Page 324 U. S. 680
Islands is not a part of this "country" as that word is defined
in the opinion.
The practical effect of the decision is to place the products of
those territories and possessions which have not been incorporated
into our "country" as integral parts thereof -- Puerto Rico, the
Philippines, Guam, Canal Zone, and perhaps other territories or
possessions -- at a considerable advantage over the competing
products of states of the continental United States. It enables
importers, whether for manufacture or sale, from these possessions
to keep on hand, tax free, quantities of nontaxable original
packages of imported goods, such as clothing, embroideries,
liquors, tobacco, sugars, vegetable oils, and fibres. Freedom from
taxation has today become an appreciable advantage. Furthermore,
this freedom from state taxation is gained through an
interpretation of Constitutional power, and therefore is beyond the
reach of equalization by the states alone in all circumstances and
by the Congress except by complex tariff legislation which would
only reach warehoused imports from dependencies. The Congressional
relief to producers of the several states of the Union therefore is
an awkward approach, which will create irritation with the
importing territories by reason of countervailing tariff
increases.
These are only practical disadvantages of today's decision which
should not override a Constitutional requirement, but, as it does
not seem to me the Constitution clearly calls for this sacrifice of
markets by producers in the states, I would not construe the
Constitution to put the Philippines entirely beyond the pale of the
American economic union. I do not see the necessity for such a
ruling, and, in fact I think the Constitution calls for precisely
the opposite conclusion for the following reasons.
(1) In the consideration of the taxability by Ohio of shipments
from the Philippines which have completed
Page 324 U. S. 681
their journey from the Philippines but remain intact in their
original packages, the significant Constitutional provision is
Article I, Section 10, Clause 2, which reads as follows:
"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 it's inspection Laws: and the
net Produce of all Duties and Imposts laid by any State on Imports
or Exports shall be for the Use of the Treasury of the United
States, and all such Laws shall be subject to the Revision and
Controul of the Congress."
The Constitution contains no definition of the word "imports,"
and nothing appears in its history or in the decisions of this
Court which indicate that the word was used otherwise in this
section than in its normal meaning of a thing brought into the
limits of the nation which possesses power over the external
commerce which may flow into a state or states which are subject to
the prohibitions of the quoted Constitutional provision. Normally,
these imports are from foreign countries, and hence there are many
references to imports in legislation and decisions which indicate
that the source of imports is foreign countries. [
Footnote 2/1]
Lands are either within the sovereign power of the United States
or are outside and beyond that power. When conquest ripens into
cession, lands lose their foreign
Page 324 U. S. 682
character and become a part of the territories of the victor.
[
Footnote 2/2] The United States
has been content to leave its possessions with a large measure of
self-government. To the Philippines it has promised full
independence, but the time for the fulfillment of that promise has
not arrived. Until that date, the United States has
responsibilities toward the Philippines, and has exercised power
unilaterally to make further concessions to the Islands. [
Footnote 2/3] Until complete independence
is reached, the citizens of the Philippines owe allegiance to the
United States, and every Philippine official recognizes this duty.
48 Stat. 456. The interrelation between the United States and the
Philippines is for both a basis for amicable relations after
complete dissolution of the existing ties. [
Footnote 2/4]
(2) This Court, however, determines that an import under Article
I, Section 10, Clause 2, is a commodity brought into this
"country," and that the Philippines is not a part of this "country"
within the meaning which the Court attributes to that word. The
Court is of the view that this "country" includes only those
sections of the lands under our jurisdiction which have been so
incorporated into our system by act of Congress as to be entitled
to government under all provisions of the Constitution, rather than
by Clause 2, Section 3, Article IV, regarding "Territory . . .
belonging to the United States."
Downes
v.
Page 324 U. S. 683
Bidwell, 182 U. S. 244. As
a basis for this distinction, the Court depends upon a statement in
Brown v. Maryland, 12 Wheat. at
25 U. S. 437,
that a "duty on imports is a custom or tax levied on articles
brought into a country." The Court must make this argument to
support its position, as, of course, the Philippines is not a
foreign country.
Cincinnati Soap Co. v. United States,
301 U. S. 308,
301 U. S.
319.
There are a number of reasons why I think that this reliance on
this language of
Brown v. Maryland leaves the opinion
without support in its conclusion that shipments from the
Philippines are imports. In the first place, in
Brown v.
Maryland, there was no occasion to distinguish between
articles brought into the country and articles brought from foreign
places. The words used are descriptive of commerce from foreign
lands. Secondly,
Woodruff v.
Parham, 8 Wall. 123,
75 U. S. 131,
interprets the meaning of "brought into the country" as used in
Brown v. Maryland as follows, pp.
25 U. S.
131-132:
"In the case of
Brown v. Maryland, the word imports, as
used in the clause now under consideration, is defined, both on the
authority of the lexicons and of usage, to be articles brought into
the country, and impost is there said to be a duty, custom, or tax
levied on articles brought into the country. In the ordinary use of
these terms at this day, no one would for a moment think of them as
having relation to any other articles than those brought from a
country foreign to the United States, and at the time the case of
Brown v. Maryland was decided -- namely, in 1827 -- it is
reasonable to suppose that the general usage was the same, and
that, in defining imports as articles brought into the country, the
Chief Justice used the word country as a synonym for United
States."
See also American Steel & Wire Co. v. Speed,
192 U. S. 500,
192 U. S. 520.
Thirdly, the writer of the opinion in
Brown v. Maryland
referred, p.
25 U. S. 439,
to the purpose of the prohibition against state taxation of imports
as a thing desirable
Page 324 U. S. 684
"to preserve . . . our commercial connections with foreign
nations." The dissent referred repeatedly to foreign merchandise,
as did counsel in their argument. Fourthly, the suggestion that the
Court's view is supported by the decisions that sea products are
imports seems to me unfounded. Deep sea products come from waters
beyond the national sovereignty or jurisdiction, and hence are
imports under any definition. American fisheries even may require,
unless American bottoms are American territory, legislation to
relieve their catch of general tariff charges.
Procter &
Gamble Mfg. Co. v. United States, 19 C.C.P.A. (Customs) 415.
The required conclusion, it seems to me, is that an import is an
article brought from beyond the sovereignty or jurisdiction of the
United States.
De Lima v. Bidwell, 182 U. S.
1,
182 U. S.
180.
(3) Land within the jurisdiction of the United States cannot
export to the United States under Section 10, Article I, any more
than one state can export to or import from another state.
American Steel & Wire Co. v. Speed, 192 U.S. at
192 U. S. 520.
When the
Insular Cases determined that articles from the
lands Spain ceded to us were subject to tariff duties at the will
of Congress, the decisions were based on the power of Congress to
impose duties unequally,
i.e., without uniformity, despite
Article I, Section 8, Clause 1, of the Constitution, [
Footnote 2/5] on commodities from lands
under our flag because these lands had not been incorporated by act
of Congress into the Union as an integral part of the United
States.
Downes v. Bidwell, 182 U.
S. 244,
182 U. S. 298
et seq.; Dorr v. United States, 195 U.
S. 138,
195 U. S. 149;
Balzac v. Porto Rico, 258 U. S. 298,
258 U. S. 305.
The question as to the meaning of imports or imported was
Page 324 U. S. 685
not discussed. Whether or not the articles were imports, so long
as the lands of their origin were not an integral part of the
United States, the Congress could put such duties as it chose on
the products. It does not follow that, because the Philippines is
not an integral part of the United States, its shipments are
imports under Article I, Section 10, unless the view of the Court's
opinion of today is adopted that an import is an article brought
into the United States as that country is defined in the Court's
opinion. The argument advanced by the Court to sustain its
declaration that the articles brought from the Philippines are
imports would have made shipments from the Louisiana Purchase,
Downes v. Bidwell, 182 U. S. 244,
182 U. S.
322-333; Florida,
id., pp.
182 U. S.
333-334, and Hawaii,
Hawaii v. Mankichi,
190 U. S. 197,
190 U. S. 219,
also imports until these territories were incorporated into the
United States. History refutes such a position.
We are thus left to define the word import as used in Section
10, Article I, in its normal sense to accomplish the purpose of the
section. It may have had several purposes.
Brown v. Maryland,
supra, at
25 U. S. 439.
Whether it was to grant the union a source of revenue, to preserve
harmony among its members, or to avoid state tariffs which would
affect relations with foreign governments, the purpose is not
advanced by molding Philippine shipments into imports in the
Constitutional sense. Revenue may be exacted by the federal
government from Philippine products brought into the states and a
state cannot collect a duty from such articles if they are not
imports.
Downes v. Bidwell, 182 U.
S. 244;
Woodruff v.
Parham, 8 Wall. 123,
75 U. S. 133;
Coe v. Errol, 116 U. S. 517,
116 U. S. 526.
No light can come from the history of the adoption of the section.
The idea of an American possession was not in being. But, since the
Founding Fathers were creating a commercial as well as a political
entity, it seems more consonant with their purpose to define
imports under the section as things
Page 324 U. S. 686
brought into the territory under the jurisdiction or sovereignty
of the American government.
(4) Such a conclusion probably meant little to the Philippines.
Congress has provided for their early independence. But the
principle established by this decision will persist for the other
lands which became American by the Treaty of Paris. The Court's
opinion disclaims determination of any rights beyond the
Philippines, but the basis upon which the decision rests supports
similar rights for all lands covered by the Treaty of Paris.
Similar articles covered all the ceded lands. [
Footnote 2/6] Puerto Rico is in the same status as
the Philippines.
Balzac v. Porto Rico, 258 U.
S. 298,
258 U. S. 305.
Today's decision thus assumes a continuing importance which
justifies setting out my reasons for dissenting.
[
Footnote 2/1]
Products of the sea brought in as imports are a minor
variation.
Tariff Act of 1930, 46 Stat. 590, provides that dutiable
articles are those "imported from any foreign country." The
Philippines is not a foreign country under a tariff act which
prohibits importation from a foreign country of goods made by
convict labor. 28 Op.Atty.Gen. 422. The Philippines is not foreign
country under the tariff laws.
De Lima v. Bidwell,
182 U. S. 1,
182 U. S. 197;
Fourteen Diamond Rings v. United States, 183 U.
S. 176;
Dooley v. United States, 182 U.
S. 222,
182 U. S. 234;
Dooley v. United States, 183 U. S. 151;
American Steel & Wire Co. v. Speed, 192 U.
S. 500,
192 U. S.
520.
[
Footnote 2/2]
American Insurance Co. v.
Canter, 1 Pet. 511,
26 U. S. 542;
Fleming v.
Page, 9 How. 603,
50 U. S. 614;
Dooley v. United States, 182 U. S. 222,
182 U. S.
233.
[
Footnote 2/3]
Philippine Independence Act of March 24, 1934, 48 Stat. 456;
amending the Philippine Independence Act as to trade and financial
relations and rights of Philippine citizens in the United States
and all places subject to its jurisdiction, act of August 7, 1939,
53 Stat. 1226; suspending the export tax on Philippine products,
act of December 22, 1941, 55 Stat. 852; Filipino Rehabilitation
Commission Act of June 29, 1944, 58 Stat. 625.
[
Footnote 2/4]
Address of President Sergio Osmena on the occasion of the
Reestablishment of the Commonwealth Government in Manila, February
27, 1945.
[
Footnote 2/5]
Article I, Section 8, Clause 1:
"The Congress shall have Power To lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the common
Defence and general Welfare of the United States; but all Duties,
Imposts and Excises shall be uniform throughout the United States.
. . ."
[
Footnote 2/6]
Treaty of Paris, December 10, 1898, 30 Stat. 1754:
"Article II. Spain cedes to the United States the island of
Porto Rico and other islands now under Spanish sovereignty in the
West Indies, and the island of Guam in the Marianas or
Ladrones."
"Article III. Spain cedes to the United States the archipelago
known as the Philippine Islands, and comprehending the islands
lying within the following line. . . ."
MR. JUSTICE BLACK, dissenting.
In
Brown v.
Maryland, 12 Wheat. 419, 422 [argument of counsel
-- omitted], Marshall, C.J., pointedly rejected the argument that
the rule announced in that case would permit an importer to "bring
in goods . . . for his own use, and thus retain much valuable
property exempt from taxation." [
Footnote 3/1] Today, this Court,
Page 324 U. S. 687
in holding that an Ohio manufacturer may escape payment of a
nondiscriminatory state
ad valorem tax on goods imported
from abroad and held for use in its factory, interprets Marshall's
opinion in a manner which squarely conflicts with his own
interpretation of the rule he announced.
It has, from the very beginning, been recognized that " . . .
there must be a point of time when the prohibition [to tax] ceases,
and the power of the state to tax commences;" although the task of
drawing this line is so difficult that no general rule "universal
in its application" can be stated, yet that line nevertheless " . .
. exists, and must be marked as the cases arise."
Brown v.
Maryland, supra, 25 U. S. 441.
The Court did there draw an arbitrary line of demarcation marking
the boundary of a state's power to tax property "imported for
sale." It held that, as to property imported for sale,
"while remaining the property of the importer, in his warehouse,
in the original form or package in which it was imported, a tax
upon it is too plainly a duty on imports to escape the prohibition
in the Constitution."
Brown v. Maryland, supra, at
25 U. S. 442.
The right to sell, it was there said, was an element of the right
to import, and thus a state tax imposed before, or as a condition
upon, the sale would substantially impair the right of sale granted
by the government to importers. The Court reinforced its conclusion
by referring to its belief that a state tax on the importer would
increase the cost to the ultimate domestic purchasers, and that the
effect of this would be to enable the great seaport states
indirectly to levy tribute upon consumers of imported articles
living in the nonseaport states, a practice which the
constitutional clause here invoked was intended to prevent.
[
Footnote 3/2]
Page 324 U. S. 688
While the rule announced in
Brown v. Maryland has at
times been severely criticized,
see e.g., 46 U.
S. 5 How. 504, opinion of Mr. Justice Daniel,
46 U. S.
615-617, and has in some cases been narrowly restricted
in its application, [
Footnote 3/3]
it has been, and still is, the general rule of decision in this
Court as regards imports for sale from foreign countries. But
neither the rule nor the reasoning in
Brown v. Maryland
nor any of the cases which followed it support the Court's holding
that one who imports an article for his own use or consumption can
enjoy the full benefits of ownership and simultaneously claim an
immunity from state taxation on the ground that it is still an
import. The Court, in
Brown v. Maryland, was in reality
treating goods in the hands of an importer for sale as though they
were still in transit until the first sale had been made. This was
in accord with the interpretation of the rule by Chief Justice
Taney in the
License Cases, supra, 46 U. S. 575.
He there said that, while imported articles
"are in the hands of the importer for sale . . . , they may be
regarded as merely
in transitu, and on their way to the
distant cities, villages, and country for which they are destined,
and where they are expected to be used and consumed, and for the
supply of which they were in truth imported."
But the fibers here were not
in transitu in any
possible sense of the phrase. Every conceivable relationship they
had once borne to the process of importation had ended. They were
at rest in the petitioner's factory along with its other raw
materials, having arrived at the point where they were "to be used
and consumed" in current production,
Page 324 U. S. 689
and kept as a "backlog" to assure constant operation of the
plant.
Brown v. Maryland and the cases which followed it stand
for the rule that one who pays import duties on goods intended for
sale thereby purchases the right to sell the goods, free from state
taxation so long as the goods are held in the original package.
Until today, none of this Court's decisions have ever held or even
intimated that one who imports goods for his own use purchases from
the federal government, by payment of import duties, a right to
hold them free from liability for state taxes, after they have
reached the end of their import journey and are being held for use
in the importer's factory. Neither the "purchase of a right to
sell" argument nor any of the other reasons deemed relevant to
support the "import for sale original package" doctrine call for
its extension to goods imported for use.
It is clear under the doctrine of
Brown v. Maryland
that, after sale by an importer, imported goods are subject to
state taxation. The opinion of the Court today holding that goods
held for use are immune from state taxation results in this rather
odd situation: one who imports goods himself and holds them for his
own use in his factory is not liable to state taxes on such goods;
but, if he bought the goods from one engaged in the business of
importing, he would be liable to taxation on the same goods. The
artificiality of this tax distinction suggests grave reasons to
question the soundness of the Court's interpretation of the rule.
Furthermore, implicit in Marshall's opinion is a recognition of the
importance of protecting goods imported for sale from
discrimination in the form of taxes. The net effect of today's
opinion is to accomplish just such discrimination in favor of goods
imported for use and against goods imported for sale.
Again, state taxation of previously imported goods held for use
in manufacturing does not afford the great seaport
Page 324 U. S. 690
states an opportunity to tax imports to the detriment of other
states. This was one of the apprehended evils which the "import for
sale" rule in
Brown v. Maryland was fashioned to prevent.
The most fertile imagination would be hard put to prove that it
would injure or threaten any other state for Ohio to collect its
nondiscriminatory
ad valorem tax on fibers held for use in
that state. Certainly the Court advances no persuasive argument in
this respect. On the contrary, it does appear that Ohio, as well as
other states, will be injured by a constitutional interpretation
which denies Ohio the right to collect the tax. Ohio is injured by
the Court's new rule because it cannot apportion its tax fairly
upon all who carry on business under the protection of Ohio's
laws.
The rule announced by the Court also discriminates against other
states. Their products held for use are subject to state taxation.
Products from abroad are not. Wines offer an illustration. Wines,
stocked in one's private cellar, produced from California or New
York grapes, are held for future use in the original package or
otherwise, are subject to state taxation. Today's rule renders a
state wholly powerless to tax wines imported from abroad and held
for future use side by side with taxable wines made in the United
States. Thus, through constitutional interpretation, all foreign
products are granted a tax subsidy at the expense of the individual
states affected. If I thought the Constitution required such tax
discriminations against American products, I should agree to the
Court's opinion. The whole history of events leading up to the
Constitution, and this Court's opinions in construing it, persuade
me that no such consequence was ever contemplated by those who
wrote or approved our Constitution.
A final word as to today's new constitutional doctrine.
Precisely how it is to be applied the Court does not tell
Page 324 U. S. 691
us. From one part of the Court's opinion, it appears that the
state can never tax these fibers at all, since it seems to be said
the state can never tax until they "are subjected to the
manufacture for which they were imported." Another part of the
opinion indicates they can be taxed when the original package is
broken. Previous opinions of this Court have indicated the
difficulties and defects of an original package doctrine. [
Footnote 3/4] Are these fibers to be taxed
when the "reed" which covers them is removed, or must the state
wait until it can prove one of the steel bands has been broken?
Other questions suggest themselves in regard to wine imported for
use and stored in one's private cellar for individual consumption.
When, if at all, can a state tax it? Is it when the wine reaches
the cellar, or must the state withhold its taxing hand until the
wine is "subjected to the [consumption] for which it was imported"?
Or can the state tax each crate when the owner, or someone for him,
removes the crate's top with a crowbar? If the wine is imported in
large casks, does it become taxable when the stopper is removed
from the bunghole, or only when a part or all of it has been
consumed? The states are entitled to have a definite answer to
these practical questions.
MR. JUSTICE DOUGLAS, MR. JUSTICE MURPHY, and MR. JUSTICE
RUTLEDGE join in this opinion. MR. JUSTICE DOUGLAS is of the view
that, accepting the Court's ruling that these products are
"imports," the rule should be applied without discrimination
against the Philippines.
[
Footnote 3/1]
Counsel for Maryland had argued that to permit state tax
immunity in that case would result in granting immunity to "an
importer who may bring in goods, as plate, for his own use, and
thus retain much valuable property exempt from taxation." In reply
to this argument, Marshall rejected the assumption that the
principles then announced would grant state tax exemptions to
imports that had reached their ultimate destination and were being
used or held for use by the importer. "The tax," he said,
"finds the article already incorporated with the mass of
property by the act of the importer. He has used the privilege
[
i.e., of sale] he has purchased, and has himself mixed
them up with the common mass, and the law may treat them as it
finds them. The same observations apply to plate, or other
furniture used by the importer."
P.
25 U. S.
443.
[
Footnote 3/2]
To the same effect,
See Woodruff v.
Parham, 8 Wall. 123,
75 U. S.
134-136.
[
Footnote 3/3]
See e.g., May v. New Orleans, 178 U.
S. 496;
Burke v. Wells, 208 U. S.
14;
Sonneborn Bros. v. Cureton, 262 U.
S. 506;
Gulf Fisheries Co. v. MacInerney,
276 U. S. 124;
Baldwin v. G.A.F. Seelig, Inc., 294 U.
S. 511,
294 U. S. 526.
See also Mexican Petroleum Corp. v. South Portland, 121
Me. 128, 115 A. 900;
Tres Ritos Ranch Co. v. Abbott, 44
N.M. 556, 105 P.2d 1070.
[
Footnote 3/4]
324
U.S. 652fn3/3|>Note 3,
supra.
MR. JUSTICE MURPHY, concurring in part.
With MR. JUSTICE BLACK's view that whatever constitutional tax
immunity the merchandise in question may have had was lost by
virtue of its storage in petitioner's
Page 324 U. S. 692
warehouse pending its use in petitioner's manufacturing
operations, I agree. But the Court holds otherwise on that issue.
We therefore are met with the further issue as to whether the fact
that the merchandise was shipped from the Philippine Islands to the
United States made the merchandise an import within the meaning of
Article I, Section 10, Clause 2 of the Constitution, and therefore
immune from state taxation. As to that problem, I am convinced that
the affirmative answer given by the CHIEF JUSTICE is the correct
one, and I concur in that portion of his opinion.
That affirmative answer, in my estimation, is compelled in good
measure by practical considerations. The moral and legal
obligations owed the Philippine Islands by the United States are,
so far as I am aware, matchless and unique. The United States is
committed to a policy of granting complete independence to the
Philippines. It has already granted their people and their
officials a large measure of autonomy. But, until the sovereignty
of the United States is finally withdrawn, the United States
retains plenary and unrestricted powers over them and is
responsible for their welfare.
We have as a nation exhibited an ideal and a selfless concern
for the wellbeing of the Philippine people, a concern that has been
deepened by the devastation that war has brought to their land.
Since the Islands were ceded to us, we have at once fostered their
economic development through preferential trade agreements and
encouraged their desires for freedom and independence. Their
industries and their agriculture have gradually been adjusted in
contemplation of their eventual sovereign independence. But war has
stricken their land and their peoples. Their growing economy has
been largely decimated by over three years of ruthless invasion and
occupation. Filipinos in countless numbers have yielded up
Page 324 U. S. 693
not only their property but their lives and their liberties.
Their economic and social structure has fallen about them in
ruins.
Now, with the Islands liberated, our moral and legal obligations
are greater than ever before. Our responsibility for providing
urgent relief and rehabilitation has been readily assumed. But the
more complex and difficult duty of helping to reconstruct the
Philippine economic structure remains to be fulfilled. It is clear
that the Philippines cannot safely be thrown into the world market
and left to shift for themselves. For the foreseeable future, at
least, their economy must be closely linked to that of the United
States, without either country abandoning or retreating from the
common ideal of independence for the Philippines.
Accordingly, it is my view that, if it is reasonably possible to
do so, we should avoid a construction of the term "imports," as
used in Article I, Section 10, Clause 2 of the Constitution, that
would place Philippine products at a disadvantage on the American
market to the advantage of products from other countries or that
might be a means of impeding the economic rehabilitation of the
Philippines. If we can justifiably construe that term to prohibit
state taxation on shipments from the Philippines, we shall to that
extent have conformed to the national policy of aiding the
Philippine reconstruction. Any taxation or tariff on Philippine
shipments that may be felt to be necessary from the standpoint of
the United States would then become a matter solely for Congress,
which could properly balance any conflicting interests of the two
nations.
Such a construction, in my estimation, is entirely fair and
reasonable. There are, to be sure, statements by this Court to the
effect that the term "imports" refers only to those goods brought
in from a country foreign to the United States.
Woodruff
v. Parham, 8 Wall. 123,
75 U. S.
136;
Page 324 U. S. 694
Dooley v. United States, 183 U.
S. 151,
183 U. S. 154.
But such statements, as pointed out by the Court today, were
unnecessary to the decision of the issues there involved, and
cannot control the problem presented here. It has also been held
that the Philippine Islands are not a foreign country within the
meaning of tariff laws specifically referring to any "foreign
country."
Fourteen Diamond Rings v. United States,
183 U. S. 176;
De Lima v. Bidwell, 182 U. S. 1. The
inapplicability of these cases is obvious.
It further appears that Congress has usually avoided the use of
the term "imports" in the enactment of legislation affecting trade
with the Philippines and other dependencies, and that the term has
been regarded by certain government agencies as inapplicable to
articles coming from the Philippines. But such usage clearly cannot
affect our interpretation of a constitutional provision.
As appears more fully in the Court's opinion, there is thus no
controlling authority requiring us to hold that shipments from the
Philippines are not imports within the meaning of Article I,
Section 10, Clause 2 of the Constitution. Under such circumstances,
the interpretation of this constitutional provision adopted by the
CHIEF JUSTICE is a permissible one. And, in view of what I conceive
to be the practical considerations, it is a highly necessary and
desirable one. Only under that interpretation can this part of the
Constitution be consistent with our duties as trustee for the
Philippines.