The Bay of Mobile being included within the statutory definition
of the port of Mobile, contracts for the purchase of cargoes of
foreign merchandise before or after the arrival of the vessel in
the said bay, where the goods by the terms of the contract, are not
to be at the risk of the purchaser until delivered to him in said
bay, do not constitute the purchaser an "importer," and the goods
so purchased and sold by him, though in the original packages, may
be properly subjected to taxation by the state.
Error to the Supreme Court of Alabama, the question involved
arising upon that clause of the Constitution which ordains that "no
state shall lay any imposts on imports, or exports, except what may
be absolutely necessary for executing its inspection laws."
The facts were these:
The City of Mobile is situated on the west bank of the Mobile
River, a short distance above its entry into the Bay of Mobile. The
bay stretches about thirty miles below the city, and is connected
with the Gulf of Mexico by a narrow strait. The Town of Mobile, by
an Act of Congress passed 22 July, 1813, [
Footnote 1] was designated as the only port of entry
for a collection district bounded by West Florida on the east, and
Louisiana on the west, and comprising the bays, inlets, and rivers
emptying into the gulf. The Bay of Mobile is a part of this
district. Vessels anchor twenty-five miles below the city, and are
unladen there upon lighters, which bring their cargoes to the town.
Those coming from Great Britain frequently bring a cargo of salt,
and cargoes of this kind are generally sold in advance of their
arrival, or as soon as they reach the bay, before bulk is broken,
or they are unloaded.
In this state of commercial practice, one Waring was in the
habit of buying and selling salt thus imported. His custom was to
purchase the entire cargo, which came in sacks, before the goods
were entered at the custom house, and usually before the arrival of
the vessel, or while it was
Page 75 U. S. 111
in the lower bay. When it arrived in the lower bay, he furnished
his own lighters, and took the cargo from off the vessel. Until the
time of such delivery the risk remained in the shippers. The
consignees made the entries, presented the invoices and bills of
lading, made the necessary deposit of coin for the estimated amount
of the duties, and procured the permits, and when the duties were
finally liquidated as required by law and the regulations of the
Treasury Department, they adjusted and paid the balance.
When Waring sold the salt he sold it in the original packages,
to traders, in large quantities and for resale.
In the year 1866, the corporate authorities of Mobile imposed a
tax for municipal purposes upon all sales of merchandise in that
city, and claimed of Waring a tax upon the sales of salt that he
had made for six months preceding the date of the ordinance, under
its conditions. He refused to pay, assigning for a reason that the
salt disposed of by him was an import from a foreign country, and
that the sales being made by him in the way they were, in the
original packages, were still an "import," and thus under the
clause of the Constitution above quoted, he was not liable. The
mayor arrested and fined him. The chancellor on a bill filed
declared the tax illegal. The supreme court of the state on appeal
held otherwise. They did not regard Waring as an importer, and
considered that the constitutional prohibition upon the states to
levy duties or taxes on imports had no application to him.
Waring accordingly brought the cause here for review.
Page 75 U. S. 113
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Merchants and traders, engaged in selling merchandise in the
City of Mobile in the State of Alabama, are required by an
ordinance passed by the corporate authorities to pay a tax to the
city equal to one-half of one percent on the gross amount of their
sales, whether the merchandise was sold at private sale or at
public auction; and if they were so engaged the six months next
preceding the 1st day of April, 1866, they were also required,
within fifteen days thereafter, to return, under oath, to the
collector of taxes, the gross amount of their sales during that
period of time; and the
Page 75 U. S. 114
provision was, that if any such merchant or trader neglected or
failed to make such return, he should be subject to such a fine,
not exceeding fifty dollars per day, as the mayor of the city might
impose for each day's failure or refusal.
Sales of merchandise were made by the complainant within that
period to a large amount, and he was duly notified that he was
required to make return, under oath, of the gross amount of such
sales, and having neglected and refused to comply with that
requirement within the time specified in the ordinance, the mayor
of the city caused a summons to be issued and duly served,
commanding the complainant to appear before him, as such mayor, to
answer for such neglect, but he refused to obey the commands of the
summons, and thereupon a warrant was issued, and he was arrested
and brought before the mayor to answer for such contempt; and after
hearing he was sentenced to pay a fine of fifty dollars for a
breach of the before-mentioned ordinance. Subsequently, a second
notice of a similar character was given, and the complainant still
neglecting and refusing to make the required returns, he was again
summoned to appear before the mayor to answer for the neglect, but
he refused a second time to obey the commands of the precept, and,
thereupon, such proceedings were had that he was again found guilty
of contempt and was sentenced to pay an additional fine of fifty
dollars.
Regarding these proceedings as unwarranted, the complainant
filed a bill in equity against the mayor and tax collector of the
city, in the local chancery court, in which he prayed that the
respondents might be enjoined from collecting the fines adjudged
against him, and from any attempt to collect the tax, and that the
tax might be adjudged to be null and void. Proofs were taken and
the parties were heard, and the final decree of the chancellor was,
that the complainant was entitled to the relief asked, and that the
injunction should be made perpetual; but that decree, on the appeal
of the respondents to the supreme court of the state, was, in all
things, reversed, and the supreme court entered a decree that the
bill of complaint should be dismissed. Whereupon
Page 75 U. S. 115
the complainant in the Chancery Court sued out a writ of error,
under the 25th section of the Judiciary Act, and removed the cause
into this Court.
Exemption from state taxation in this case is claimed by
complainant upon the ground that the sales made by him were of
merchandise, in the original packages, as imported from a foreign
country, and which was purchased by him, in entire cargoes, of the
consignees of the importing vessels before their arrival, or while
the vessels were in the lower harbor of the port.
By the terms of the Act of the 22d of July, 1813, it is
provided,
"that from and after the 1st day of August next, the town of
Mobile shall be and the same is hereby established the sole port of
entry for the district, including the shores, waters, and inlets of
the Bay and River Mobile, and of the other rivers, creeks, inlets,
and bays emptying into the Gulf of Mexico, east of the said River
Mobile, and west thereof, to the eastern boundary of the State of
Louisiana. [
Footnote 2]"
Mobile is the sole port of entry of the district, and next to
New Orleans, is the largest cotton market in the United States, but
vessels of large draft cannot cross the inner bar, and,
consequently, are compelled to anchor in the lower harbor, some
twenty or twenty-five miles below the city. Small vessels, such as
can cross the inner bar, go up to the wharves to discharge and
receive cargo, but large vessels, such as are usually employed to
transport cotton, find their only anchorage in the lower harbor,
where they are unloaded on their arrival, and where they receive
their cargoes for the return voyage. Loading and unloading are
accomplished by means of lighters, which sometimes are furnished by
the ship and sometimes by the shipper, for the purpose of loading,
and sometimes by the importer, and sometimes by the vendee of the
merchandise, for the purpose of unloading, and for transporting the
same to the private stores of the purchasers or the public
warehouses. [
Footnote 3]
Ships frequently go there in ballast for cargoes of cotton,
Page 75 U. S. 116
and those going there for that purpose from Liverpool frequently
carry salt, using it in many cases as ballast instead of the
articles more usually employed, which do not pay freight. Such
shipments are made by the owners or charterers of the vessel, and
the salt, whether stowed as cargo or used as ballast, is usually
consigned to the agents of the vessel. Purchases of salt imported
under such circumstances were made by the complainant to a very
large amount, and the record shows that he sold the salt at his
place of business in the city to traders and large consumers in the
original packages. The contracts to purchase were made before the
goods were entered at the custom house, with the consignees of the
salt, sometimes before and sometimes after the arrival of the
vessel at the anchorage in the lower harbor, but the terms of the
contract in all cases were that the risk should continue to be in
the shipper until the salt was delivered to the complainant over
the side of the vessel into his lighters. He agreed to furnish the
lighters and to bring them alongside of the vessel, and the
contract was that the salt, when it was transshipped into the
lighters of the complainant, became his property, and he assumed
the risk and expense of transporting the same to the wharf and from
thence to his own warehouse or place of business; but if the goods
were lost before such delivery the agreement to purchase was not
obligatory.
Viewed in the light of these conceded facts the defendants
contend that the complainant was not the importer of the salt, that
the salt was imported by the owners of the vessel, and that the
sale of the salt as made by the consignees to the complainant was a
sale of imported merchandise.
Goods imported from a foreign country are required to be entered
at the custom house of the port where the vessel voluntarily
arrives with intent to unlade the cargo, and the settled law is
that no one but the owner or consignee, or in case of his sickness
or absence, his agent or factor, is authorized to discharge that
obligation. [
Footnote 4]
Page 75 U. S. 117
Importers of foreign merchandise must conform to the
requirements of law and the regulations of the Treasury Department.
American ships are forbidden to bring goods from any foreign port
into the United States unless the master thereof shall have on
board a manifest in writing, signed by the proper person,
describing the goods and the vessel, and containing the name of the
port where the goods were taken on board, and the name of the port
for which the same are consigned or destined. [
Footnote 5]
Masters commanding any such ships, laden with such goods, on
their arrival within four leagues of our coast, or within any of
the bays, harbors, ports, or inlets thereof, are required, upon
demand, to produce such manifest to such officer of the customs as
shall come on board their ship, for his inspection, and it is made
the duty of the said officer of the customs to certify the fact of
compliance with that requirement and the day when it was so
produced. Next requirement is that the master shall, within
twenty-four hours after the arrival of any such ship at any port
established by law, or within any harbor, inlet, or creek thereof,
repair to the office of the chief officer of the customs and make a
report of the arrival of the vessel. He may, if he sees fit,
present his manifest at the same time, but if he omits so to do,
the requirement is that he shall, within forty-eight hours, make a
further report in writing to the collector of the district, which
report shall be in form and shall contain all the particulars
contained in the manifest. [
Footnote 6]
Imported goods may be entered for consumption or for
warehousing, but it will not be necessary to refer to the course of
proceeding when the goods are deposited in warehouse, as all the
importations in this case were entered for consumption. Such entry
must be in writing and must be made to the collector of the
district within fifteen days after the required report is filed by
the master. The form of the entry is prescribed by law and by the
regulations of the Treasury Department, and the provision is that
the owner
Page 75 U. S. 118
or consignee making the entry shall also produce to the
collector and naval officer, if any, the original invoice or
invoices of the goods, or other documents received in lieu thereof
or concerning the same, in the same state in which they were
received, with the bills of lading for the importation. [
Footnote 7]
Goods imported in any ship or vessel from any foreign port or
place are required to be landed in open day, and the express
provision of law is that none such shall be landed or delivered
from such ship or vessel "without a permit from the collector and
naval officer, if any, for such unlading and delivery." [
Footnote 8] Congress therefore has
prescribed the rule of decision, and while that provision remains
in force, no goods brought in any ship or vessel from any foreign
port or place, unless falling within some exceptional rule, can
lawfully be unladen or delivered from any such ship or vessel
within the United States without a permit from the collector for
such unlading or delivery; and the 62d section of the same act
provides "that all duties on goods, wares, and merchandise imported
shall be paid
or secured to be paid before a permit shall
be granted for landing the same," which shows to a demonstration
that all the salt in this case was imported before the property in
the same became vested in the complainant. [
Footnote 9]
Authority to grant a permit does not exist until the duties are
paid or secured to be paid, and the duties are never paid or
secured to be paid before the goods are imported, nor before they
are entered for consumption. Before the permit is received by the
inspector on board the ship or vessel, no one has authority to
remove the hatches or to break bulk, but the cargo is under the
charge of the officer of the customs. Following the notice of the
arrival of the vessel and the exhibition of the manifest, the next
step is to make the entry, which should always be accompanied by
the invoice and bill of lading. Examination of the entry is usually
made by the entry clerk, and if found to be correct, the collector
proceeds to estimate the duties "on the invoice, value, and
quantity," and if the estimated amount of duty is paid
or
secured
Page 75 U. S. 119
to be paid as required by law, the collector certifies
the invoice and grants a permit in due form for the delivery of the
cargo, first designating the packages, one in ten, to be sent to
the public store for examination, and marking the same on the
entry, invoice, and permit. [
Footnote 10]
Reference need not be made to the subsequent proceedings of the
appraisers, weighers, and gaugers, preparatory to the liquidation
of the duties, as no one pretends that any of those acts can be
performed before the goods are imported.
In order to obtain a permit to discharge the salt into the
lighters in this case, the proof is full to the point, that a
deposit of coin had to be made at the custom house by the
consignees, and that the duties were finally paid by them as
liquidated, after the true weight of the salt was ascertained by
the return of the weighers. They made the entries, presented the
invoices and bills of lading, made the necessary deposit of coin
for the estimated amount of the duties, and procured the permits,
and when the duties were finally liquidated as required by law and
the regulations of the Treasury Department, they adjusted and paid
the balance.
Whether the contracts to purchase were made before or after the
vessel arrived in the bay is quite immaterial, as the agreement
was, that the risk should continue to be in the owner or consignees
until they delivered the salt into the complainant's lighters,
alongside of the vessel. Delivery, under the terms of the contract,
could not be made before the vessel arrived, nor before the salt
was legally entered at the custom house, as the hatches could not
be removed for any such purpose until the permit was received from
the collector.
Undoubtedly goods as sea may be sold by the consignees to
arrive, and if they endorse and deliver the bill of lading to the
purchaser, and he accepts the same under the contract as the proper
substitute for the actual delivery and acceptance of the goods, the
effect of the transaction is to vest a perfect title in the
purchaser, discharged of all right of stoppage
Page 75 U. S. 120
in transitu on the part of the vendor and endorser of
the bill of lading. [
Footnote
11]
Nothing of the kind, however, was done in this case. On the
contrary, the agreement was, that the loss, if before the delivery
of the goods into the lighters, should fall on the shippers.
Influenced by these considerations the court is of the opinion that
the shippers or consignees were the importers of the salt, and that
the complainant was the purchaser of the importers, and the second
vendor of the imported merchandise.
Opposed to that view is the suggestion that goods are not
regarded as having been imported into the United States until the
vessel transporting the same from the foreign market has arrived at
someone of our maritime ports with the intent to unlade the cargo.
Where the voyage
is not ended, and
there is no
obstruction to prevent its being continued, the rule in that
behalf is as contended by the complainant. Decided cases to that
effect are quite numerous and decisive, as applied in controversies
involving the inquiry, whether the goods imported in a given case
are affected by a new law or the repeal of an old one, whereby
import duties are increased or diminished. [
Footnote 12]
Well founded exceptions, however, exist to that general rule,
and among the number is one created by the 85th section of the
principal collection act. [
Footnote 13]
By that section it is provided that
"Where a ship or vessel shall be prevented by ice from getting
to the port or place at which her cargo is intended to be
delivered, the collector of the district may receive the report and
entry of such ship or vessel, . . . and grant a permit for unlading
or landing the goods imported, at any place within his
district,
Page 75 U. S. 121
which shall appear to him most convenient and proper. Variations
from the usual course of proceedings in such matters are also
necessarily made at all the ports and places where lighters are
required in loading and unloading ships and vessels engaged in
commerce and navigation."
More than half a century has elapsed since the act of Congress
was passed establishing the town of Mobile the sole port of entry
for that district, and the record furnishes abundant reason to
conclude that the course of proceedings throughout that entire
period, in respect to imported goods brought there from foreign
countries in ships and vessels whose draft was such that they could
not cross the inner bar, has been the same as that heretofore
described. Permanent as the obstruction to navigation is, the case
is much stronger even than the one for which provision is made in
the principal collection act, and after such long acquiescence by
all interested in the course pursued by the officers of the
customs, the court is of the opinion that the proceedings may well
be sustained.
Congress has the power to regulate commerce with foreign
nations, and among the several states, and with the Indian tribes,
and the Constitution also provides that no state shall, without the
consent of the Congress, lay any imposts or duties on imports or
exports, except what may be absolutely necessary for executing its
inspection laws, with a view to raise a revenue for state purposes.
The State of Maryland passed a law requiring all importers of
foreign articles, enumerated in the law, and other persons selling
the same by wholesale, before they should be authorized to sell the
imported articles, to take a license, for which they were required
to pay fifty dollars, and in case of refusal or neglect, the
provision was, that they should forfeit the amount of the license
tax and be subject to a fine of one hundred dollars. [
Footnote 14] Subsequently an
importing merchant, resident in the state, refused to pay the tax,
and the state court sustained the validity of the state law, and
imposed on him the penalty
Page 75 U. S. 122
therein prescribed. Dissatisfied with the judgment he removed
the cause into this Court by writ of error, and this Court held,
Marshall, C.J., giving the opinion of the Court, that the state law
was a tax on imports, and that the mode of levying it, as by a tax
on the occupation of the importer, merely varied the form in which
the tax was imposed without varying the substance; that while the
articles imported remained the property of the importer in his
warehouse in the original forms or packages in which they were
imported, a tax upon them was too plainly a duty on imports to
escape the prohibition of the Constitution, but the court admitted
that whenever the importer has so acted upon the thing imported
that it has become incorporated and mixed with the mass of property
in the country, it must be considered as having lost its
distinctive character as an import, and as having become subject to
the taxing power of the state.
Sales by the importer are held to be exempt from state taxation
because the importer purchases, by the payment of the duty, a right
to dispose of the merchandise as well as to bring it into the
country, and because the tax, if it were held to be valid, would
intercept the import, as an import, in the way to become
incorporated with the general mass of property, and would deny it
the privilege of becoming so incorporated until it should have
contributed to the revenue of the state. [
Footnote 15]
But the sales of the goods imported in this case were made by
the shippers or consignees, and the complainant was the purchaser,
and not the first vendor of the imported merchandise, and it is
settled law in this Court that merchandise in the original packages
once sold by the importer is taxable as other property. [
Footnote 16]
When the importer sells the imported articles, or otherwise
mixes them with the general property of the state by breaking up
the packages, the state of things changes, as was said by this
Court in the leading case, as the tax then
Page 75 U. S. 123
finds the articles already incorporated with the mass of
property by the act of the importer.
Importers selling the imported articles in the original packages
are shielded from any such state tax, but the privilege of
exemption is not extended to the purchaser, as the merchandise, by
the sale and delivery, loses its distinctive character as an
import.
Decree affirmed.
[
Footnote 1]
3 Stat. at Large 35.
[
Footnote 2]
3 Stat. at Large 35.
[
Footnote 3]
The Bark Edwin, 1 Clifford 325;
Same
Case, 24 How. 389.
[
Footnote 4]
The Mary, 1 Gallison 206;
The Boston, ib.,
239;
United States v. Lyman, 1 Mason 482; 1 Stat at Large
655;
Conrad v. Pacific Insurance
Co., 6 Pet. 262;
Gray v. Lawrence, 3
Blatchford 117.
[
Footnote 5]
1 Stat. at Large 644.
[
Footnote 6]
1
ib. 649.
[
Footnote 7]
1 Stat. at Large 656. Gen.Reg. (1857) 145.
[
Footnote 8]
Ib.. 665.
[
Footnote 9]
Ib., 673.
[
Footnote 10]
Gen.Reg. (1857) 145.
[
Footnote 11]
Audenried v. Randall, 16 American Law Register 664;
Newsom v. Thornton, 6 East 41;
Pratt v. Parkman,
24 Pickering 42.
[
Footnote 12]
United States v.
Vowell, 5 Cranch 372;
Schooner Mary, 1
Gallison 209;
The Boston, ib., 245;
United States v.
Arnold, 1
ib. 353;
Same v. Lindsey, 1
ib. 365;
Harrison v.
Vose, 9 How. 381;
United States v. Lyman,
1 Mason 482;
Meredith v. United
States, 13 Pet. 494.
[
Footnote 13]
1 Stat. at Large 694.
[
Footnote 14]
Brown v.
Maryland, 12 Wheat. 437.
[
Footnote 15]
Brown v.
Maryland, 12 Wheat. 443;
Almy
v. California, 24 How. 173
[
Footnote 16]
Pervear v.
Commonwealth, 5 Wall. 479.