Respondent is a distributor of whisky produced in Scotland and
shipped through United States ports directly to bonded warehouses
in Kentucky. State law provided for a tax of ten cents per gallon
on the importation of whisky into the State, which tax was
collected while the Scotch whisky was in unbroken packages in the
importer's possession. Respondent's claim for refund of the taxes
on the basis of violation of the Export-Import Clause of the
Constitution was upheld by the highest state court.
Held: A tax on the whisky, which retained its character
as an import in the original package, was clearly proscribed by the
Export-Import Clause, which was not, insofar as intoxicants are
concerned, repealed by the Twenty-first Amendment. Pp.
377 U. S.
341-346.
367 S.W.2d 267 affirmed.
MR. JUSTICE STEWART delivered the opinion of the Court.
This case requires consideration of the relationship between the
Export-Import Clause [
Footnote
1] and the Twenty-first Amendment [
Footnote 2] of the Constitution.
Page 377 U. S. 342
The respondent, a Kentucky producer of distilled spirits, is
also the sole distributor in the United States of "Gilbey's Spey
Royal" Scotch whisky. This whisky is produced in Scotland and is
shipped via the ports of Chicago or New Orleans directly to the
respondent's bonded warehouses in Kentucky. It is subsequently sold
by the respondent to customers in domestic markets throughout the
United States.
A Kentucky law provides:
"No person shall ship or transport or cause to be shipped or
transported into the state any distilled spirits from points
without the state without first obtaining a permit from the
department and paying a tax of ten cents on each proof gallon
contained in the shipment."
KRS 243.680(2)(a). Under the authority of this statute, the
Kentucky Department of Revenue, petitioner, required the respondent
to pay a tax of 10 cents on each proof gallon of whisky which it
thus imported from Scotland. It is not disputed that, as stated by
the Kentucky Court of Appeals,
"the tax was collected while the whisky remained in unbroken
packages in the hands of the original importer and prior to resale
or use by the importer."
The respondent filed a claim for refund of the taxes, upon the
ground that their imposition violated the Export-Import Clause of
the Constitution. The Kentucky Tax Commission and a Kentucky
Circuit Court denied the claim, but, on appeal, the Kentucky Court
of Appeals upheld it. 367 S.W.2d 267. We granted certiorari to
consider the
Page 377 U. S. 343
constitutional issue which the case presents. 375 U.S. 811.
The Kentucky Court of Appeals held that the tax in question,
although an occupational or license tax in form, is a tax on
imports in fact. "[T]he incidence of the tax is the act of
transporting or shipping the distilled spirits under consideration
into this state." 367 S.W.2d at 270. The court further held that
the tax cannot be characterized as an inspection measure in view of
the fact that neither the statute nor the regulations implementing
it provide for any actual inspection. Concluding, therefore, that
the tax falls squarely within the interdiction of the Export-Import
Clause, the court held that this provision of the Constitution has
not been repealed, insofar as intoxicants are concerned, by the
Twenty-first Amendment. [
Footnote
3] Accordingly, the court ruled that the respondent was
entitled to a refund of the taxes it had paid. We agree with the
Kentucky Court of Appeals, and affirm the judgment before us.
The tax here in question is clearly of a kind prohibited by the
Export-Import Clause.
Brown v.
Maryland, 12 Wheat. 419. As this Court stated
almost a century ago in
Low v. Austin,
13 Wall. 29, a case involving a California
ad valorem tax
on wine imported from France and stored in original cases in a San
Francisco warehouse,
"the goods imported do not lose their character as imports . . .
until they have passed from the control of the importer or been
broken up by him from their original cases. Whilst retaining their
character as imports, a tax upon them, in any shape, is within the
constitutional prohibition."
Id. at
80 U. S. 34.
See Hooven & Allison Co. v. Evatt, 324 U.
S. 652.
Page 377 U. S. 344
As we noted in
Hostetter v. Idlewild Bon Voyage Liquor
Corp., ante, p.
377 U. S.
330,
"[t]his Court made clear in the early years following adoption
of the Twenty-first Amendment that, by virtue of its provisions, a
State is totally unconfined by traditional Commerce Clause
limitations when it restricts the importation of intoxicants
destined for use, distribution, or consumption within its borders.
[
Footnote 4]"
What is involved in the present case, however, is not the
generalized authority given to Congress by the Commerce Clause, but
a constitutional provision which flatly prohibits any State from
imposing a tax upon imports from abroad.
"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, 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."
Hooven & Allison Co. v. Evatt, 324 U.
S. 652,
324 U. S.
665-666.
This Court has never so much as intimated that the Twenty-first
Amendment has operated to permit what the Export-Import Clause
precisely and explicitly forbids. In
State Board v. Young's
Market Co., 299 U. S. 59,
299 U. S. 62,
the Court said that the Twenty-first Amendment "abrogated the right
to import free [from Missouri or Wisconsin, under the Commerce
Clause] so far as concerns intoxicating liquors." In that case, the
appellee had argued in its brief that such a holding would imply an
invalidation of the Export-Import Clause as well, [
Footnote 5] but
Page 377 U. S. 345
the Court's opinion was careful to note,
"[t]he plaintiffs insist that to sustain the exaction of the
importer's license fee would involve a declaration that the
amendment has, in respect to liquor, freed the states from all
restrictions upon the police power to be found in other provisions
of the Constitution. The question for decision requires no such
generalization."
Id. at
299 U. S. 64. In
Gordon v. Texas, 355 U. S. 369, the
Court, in a brief per curiam, affirmed a Texas conviction for
illegal possession of 11 bottles of rum which had been imported
without a permit and to which the required Texas tax stamps were
not affixed. The state tax in that case had been held to be not a
tax on imports. [
Footnote 6] It
is clear that the gravamen of the offense in
Gordon was
the failure to obtain, or even apply for, a permit as required by
state law. Such permits, in addition to other functions, serve to
channelize the traffic in liquor, and thus to prevent diversion of
that traffic into unauthorized channels. In the present case, the
respondent has both applied for and obtained the requisite permit.
The relief it requests is not the abrogation of that requirement,
but simply a refund of the import tax.
To sustain the tax which Kentucky has imposed in this case would
require nothing short of squarely holding that the Twenty-first
Amendment has completely repealed the Export-Import Clause so far
as intoxicants are concerned. [
Footnote 7] Nothing in the language of the Amendment
nor
Page 377 U. S. 346
in its history leads to such an extraordinary conclusion. This
Court has never intimated such a view, and, now that the claim for
the first time is squarely presented, we expressly reject it.
We have no doubt that, under the Twenty-first Amendment,
Kentucky could not only regulate, but could completely prohibit,
the importation of some intoxicants, or of all intoxicants,
destined for distribution, use, or consumption within its borders.
There can surely be no doubt, either, of Kentucky's plenary power
to regulate and control, by taxation or otherwise, the
distribution, use, or consumption of intoxicants within her
territory after they have been imported. All we decide today is
that, because of the explicit and precise words of the
Export-Import Clause of the Constitution, Kentucky may not lay this
impost on these imports from abroad.
Affirmed.
MR. JUSTICE BRENNAN took no part in the disposition of this
case.
[
Footnote 1]
"No State shall, without the Consent of the Congress, lay and
Imports 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."
U.S.Const. Art. I, § 10, cl. 2.
[
Footnote 2]
"The transportation or importation into any State, Territory, or
possession of the United States for delivery or use therein of
intoxicating liquors, in violation of the laws thereof, is hereby
prohibited."
U.S.Const. Amend. XXI, § 2.
[
Footnote 3]
As the Kentucky Court of Appeals noted, two other state courts
have reached the same conclusion.
Parrott & Co. v. San
Francisco, 131 Cal. App.
2d 332, 280 P.2d 881;
State v. Board of Review, 15
Wis.2d 330, 112 N.W.2d 914.
[
Footnote 4]
See State Board v. Young's Market Co., 299 U. S.
59;
Indianapolis Brewing Co. v. Liquor Comm'n,
305 U. S. 391;
Finch & Co. v. McKittrick, 305 U.
S. 395.
[
Footnote 5]
See brief for appellees, No. 22, 1936 Term, pp.
24-25.
[
Footnote 6]
"It is apparent that the tax involved is not an import tax nor a
tax upon an importation. In fact, the instant tax could not become
an import tax because the importation must have been completed
before the tax here levied attached."
Gordon v. Sate, 166 Tex.Cr.R. 24, 27,
310
S.W.2d 328, 330.
[
Footnote 7]
Prior to the Eighteenth Amendment, Congress passed the
Webb-Kenyon Act and the Wilson Act, giving the States a large
degree of autonomy in regulating the importation and distribution
of intoxicants. Those laws are still in force. 27 U.S.C. §§ 121,
122. In
De Bary & Co. v. Louisiana, 227 U.
S. 108, the Court upheld under the Wilson Act a
Louisiana license tax imposed on the business of selling in their
original packages wines and liquors imported from abroad. There is
nothing in that decision, nor in the language of either the Wilson
Act or the Webb-Kenyon Act, to support the view that Congress
intended by those laws to consent to state taxation upon
importation of liquor.
MR. JUSTICE BLACK, with whom MR. JUSTICE GOLDBERG joins,
dissenting.
This case, like
Hostetter v. Idlewild Bon Voyage Liquor
Corp., also decided today,
ante, p.
377 U. S. 324,
deprives the States of a large part of the power which I think the
Twenty-first Amendment gives them to regulate the liquor business
by taxation or otherwise. That Amendment provides in part that
"The transportation or importation into any State . . . for
delivery or use therein of intoxicating
Page 377 U. S. 347
liquors, in violation of the laws thereof, is hereby
prohibited."
Kentucky requires persons transporting distilled spirits into
the State from without the State to obtain a permit and pay a tax
of 10 cents per gallon. This Kentucky tax as applied to liquors
imported into Kentucky from another State is, since the
Twenty-first Amendment, unquestionably valid against objections
based on either the Commerce or Equal Protection Clauses. Such was
the holding of this Court, soon after the Amendment's adoption, in
State Board v. Young's Market Co., 299 U. S.
59 (1936), where the Court held that a State is free
under the Twenty-first Amendment to levy a "heavy importation fee"
on beer brought into the State. In that case, the beer was imported
from Missouri and Wisconsin, but there is nothing in the Court's
opinion to suggest that the holding would have been different if
the beer and come from, say, Canada.
See Indianapolis Brewing
Co. v. Liquor Control Comm'n, 305 U.
S. 391 (1939);
Joseph S. Finch & Co. v.
McKittrick, 305 U. S. 395
(1939). Yet here, because the liquors Kentucky has taxed are
imports from Scotland, rather than imports from another part of the
United States, the Court holds that the Kentucky tax is barred
because Art. I, § 10, cl. 2, of the Constitution provides that
"No State shall, without the Consent of the Congress, lay any
Imports or Duties on Imports or Exports, except what may be
absolutely necessary for executing its inspection Laws. . . ."
I think this clause forbidding a State to tax imports from
abroad no more limits a State's right to tax intoxicating liquors
than does the Commerce Clause. In the first place, the Commerce
Clause applies to foreign as to interstate commerce alike. Further,
the clause against taxing imports is general like the Commerce
Clause itself. Section 2 of the Twenty-first Amendment, by
contrast, is not general in its application. It was adopted with
one specific object: to give the States unfettered
Page 377 U. S. 348
power to regulate intoxicating liquors.
State Board v.
Young's Market Co., supra, and our other cases expressly held
the State's power not to be limited either by the Commerce Clause
or by the Equal Protection Clause. Surely the Export-Import Clause
is no more exalted and no more worthy to be excepted from the
Twenty-first Amendment than are the Commerce and Equal Protection
Clauses. It seems a trifle odd to hold that an Amendment adopted in
1933 in specific terms to meet a specific twentieth century problem
must yield to a provision written in 1787 to meet a more general,
although no less important, problem. Since the Twenty-first
Amendment was designed to empower the States to tax "intoxicating
liquors" imported into the States, I cannot take it upon myself to
say that a State can tax liquors made in this country, but not
those made in Scotland -- a distinction not suggested by the
Amendment's language or its history. The Amendment, after all, does
not talk about "foreign" liquors or "domestic" liquors; it simply
speaks of "liquors" -- all liquors, whatever their origin. The
purpose of the Amendment was to give States power to regulate, by
taxation or otherwise, all liquors within their boundaries. To free
from state taxation liquors imported from abroad is to place States
at the mercy of liquor importers who want to use a State as a
storage place for distribution of their imports. It deprives a
State of the power the Twenty-first Amendment gives each State --
that is, plenary power to decide which liquors shall be admitted
into the State for storage, sale, or distribution within the State.
A State may choose to have wine only, beer only, Scotch only,
bourbon only, or none of these. As the Court said in
State
Board v. Young's Market Co., supra, at
299 U. S. 63, a
State can "either prohibit all competing importations, or
discourage importation by laying a heavy impost, or channelize
desired importations. . . ." Although I was brought up to
believe
Page 377 U. S. 349
that Scotch whisky would need a tax preference to survive in
competition with Kentucky bourbon, I never understood the
Constitution to require a State to give such preference. (My
dissenting Brother asks me to say that this statement does not
necessarily represent his views on the respective merits of Scotch
and bourbon.)
As recently as 1958, this Court reviewed the Texas conviction of
a man who had brought some bottles of rum into Texas from Mexico on
his way to his home in North Carolina, and had refused to pay Texas
alcoholic beverage taxes when asked to do so. Over objections that
this tax violated both the Export-Import Clause and the Commerce
Clause, this Court, in a three-line per curiam opinion, unanimously
affirmed the conviction.
Gordon v. Texas, 355 U.
S. 369 (1958). Briefs filed by Texas in that case had
argued that the tax was really one on "possession," not on
"importation," but these labels cannot obscure the fact that, both
in
Gordon and in this case, the same conduct was involved:
the physical importation of liquor from abroad into the State at
which point the State's interest in regulating or taxing the liquor
came into play.
Gordon did not -- just as the Twenty-first
Amendment does not -- draw nice distinctions about where imported
liquor comes from. Nor is there one word in the debates in Congress
preceding the adoption of the Amendment to suggest that the backers
of the Amendment, in seeking to give the States full and unhampered
power over liquor traffic, thought liquor coming from abroad was
less of a problem than domestic liquor or should be treated at all
differently.
A final word concerning the Court's statement that
"To sustain the tax which Kentucky has imposed in this case
would require nothing short of squarely holding that the
Twenty-first Amendment has completely repealed the Export-Import
Clause so far as intoxicants are concerned."
P.
377 U. S. 345.
This, I think, is not correct. What the
Page 377 U. S. 350
Twenty-first Amendment does mean, I believe, is that, whenever
liquor imported from anywhere outside the State, including foreign
countries, is transported physically into a State, there to come to
rest to be stored for sale and distribution, it then and there
becomes a state problem, and, like all other liquors, is subject to
state laws of all kinds. It cannot be treated as if it were liquor
passing straight through the State -- although, even then, the
State would have the power to impose regulations to prevent
diversions or other possible evils.
See Carter v.
Virginia, 321 U. S. 131
(1944). Whatever may have been the virtue or the constitutional
soundness of the fiction that articles imported from abroad are
"imports" so long as they remain "in their original packages,"
see Hooven & Allison Co. v. Evatt, 324 U.
S. 652 (1945), and dissent at
324 U. S.
686-691, that doctrine was expressly attacked in the
Senate debate on the Twenty-first Amendment as rendering the States
"powerless to protect themselves against the importation of liquor
into the States."
* 76 Cong.Rec.
4171 (1933). The Amendment was meant to bury that obstacle to state
power over liquor, and the doctrine of "original package," which
the Senate consciously rejected, should not be revived after 30
years' interment, once again to be used to deprive States of power
the Senate so clearly wanted them to have and the people so clearly
granted them. Section 2 of the Amendment, born of long and bitter
experiences in the field of liquor regulation, should not be
frustrated by us.
I would uphold the Kentucky tax.
*
"The State of Iowa passed a prohibition law prohibiting the
manufacture or sale of intoxicating liquors, except under certain
specifications made. The Supreme Court, in the case of
Leisy
Hardin, (135 U.S. 100), held the law
unconstitutional insofar as it applied to the sale by the importer
in the original package or keg. . . ."
"The States therefore were powerless to protect themselves
against the importation of liquor into the States."
76 Cong.Rec. 4171 (1933) (Senator Borah).