1. Goods imported from a foreign country, upon which the duties
and charges at the custom house have been paid are not subject to
state taxation whilst remaining in the original cases, unbroken and
unsold, in the hands of the importer, whether the tax be imposed
upon the goods as imports or upon the goods as part of the general
property of the citizens of the state which is subjected to an
ad valorem tax.
2. Goods imported do not lose their character as imports and
become incorporated into the mass of property of the state until
they have passed from the control of the importer, or been broken
up by him from their original cases.
The statutes of California in force in 1868 provided that "all
property of every kind, name, and nature whatsoever within the
state" (with certain exceptions) should be subject to taxation
according to its value. In 1868, and for several years before and
at the time of commencing this action, Low and others were
importing, shipping, and commission merchants in the City of San
Francisco, California. In 1868, they received on consignment from
parties in France certain champagne wines upon which they paid the
duties and charges of the custom house. They then stored the wines
in their warehouse in San Francisco in the original cases in which
the wines were imported, where they remained for sale. Whilst in
this condition, they were assessed as the property of the said Low
and others for state, city, and county taxes under the general
revenue law of California above mentioned. Low and the others
refused to
Page 80 U. S. 30
pay the tax, asserting that it was levied in contravention of
that provision [
Footnote 1] of
the Constitution, which ordained that
"No state shall, without the consent of the Congress, lay any
imposts or duties on imports or exports"
&c.
Upon the refusal, one Austin, at the time collector of taxes for
the City and County of San Francisco, levied upon the cases of wine
thus stored for the amount of the tax assessed, and was about to
sell them when Low and the others paid the amount and the charges
incurred under protest. They then brought the present action in one
of the district courts of the state to recover back the money paid,
there arguing that the illegality of the tax was settled by the
case of
Brown v. State of Maryland, [
Footnote 2] in which this Court declared an act of
the State of Maryland requiring all persons who should sell
imported goods by wholesale, bale, or package to take out a license
from the state, for which they were required to pay $50, to be in
conflict with the provision of the Constitution of the United
States above quoted -- this Court there holding that the license
was a tax upon the articles imported, that it intercepted the goods
before they had become mingled with the mass of the property of the
state, and therefore that it was a tax upon the goods as imports,
and consequently within the constitutional inhibition.
The district court gave judgment for the plaintiffs, holding
that the law under which the tax was levied was void.
The collector, Austin, now took the case to the Supreme Court of
California. The view of that court did not coincide with the view
of the district court. Referring to the case of
Brown v. State
of Maryland, above quoted and relied on by the importers to
show the illegality of the tax, the Supreme Court of California
said:
"It is contended that the property taxed in this case had not
become incorporated with the mass of the general wealth of the
Page 80 U. S. 31
state, simply because it was still the property of the importer,
in the original packages in which it was imported."
"We see nothing in this which even tends to show that the
property had not become incorporated with the general wealth of the
state. We see no reason why imported goods exposed in the store of
a merchant for sale do not constitute a portion of the wealth of
the state, as much as domestic goods similarly situated. Nor do we
see the slightest difference whether the importer is also the
merchant who sells or whether the goods are in the original
packages or not. In either case, the goods are exposed for sale in
the markets for the profit which may be realized from selling. They
may be equally the basis of credit, and alike they require and
receive the benefit of the police laws of the state, and upon every
principle of equality should contribute to pay for their
protection. Possibly the plaintiff, who is a commission merchant,
has in his store champagne wines manufactured in Sonoma or Los
Angeles, which he is offering to sell in the same market, in
precisely similar packages. In what possible sense can one be said
to constitute a portion of the wealth of the state in which the
other does not? The object of the constitutional restriction is
said to be to prevent the state from imposing a tax upon commerce
to discriminate against foreign goods. It certainly cannot be
intended to discriminate against domestic productions by exempting
foreign goods from its share of the cost of protecting it."
"A tax which is imposed alike upon all the property of the state
cannot in any sense be considered a tax upon commerce. It has no
tendency to discourage importations. Exemption from the tax might
encourage importations, but certainly it was not the purpose of the
restriction to compel the state to offer a bounty to foreign
produce over domestic. The tax prohibited must be a tax upon the
character of the goods as importations, rather than upon the goods
themselves as property."
The Supreme Court of California accordingly reversed the decree
of the district court, and to that decree of reversal the present
writ was taken.
Page 80 U. S. 32
MR. JUSTICE FIELD delivered the opinion of the Court.
The simple question presented in this case for our consideration
is whether imported merchandise, upon which the duties and charges
at the custom house have been paid, is subject to state taxation,
whilst remaining in the original cases, unbroken and unsold, in the
hands of the importer.
The decision of this Court in the case of
Brown v.
Maryland [
Footnote 3]
furnishes the answer to the question. The distinction between that
case and the present case does not affect the principle affirmed,
which equally governs both.
In that case, the question arose whether an act of the
Legislature of Maryland requiring importers of foreign goods by the
bale or package to pay the state a license tax before selling them
in the form and condition in which they were imported was valid and
constitutional. The Court held the act in conflict with the
provision of the Constitution which declares that no state shall,
without the consent of Congress, lay any impost or duty on imports
or exports except what may be absolutely necessary for executing
its inspection laws.
In the elaborate opinion of Mr. Chief Justice Marshall, the
whole subject of the power of Congress over imports is considered
and the line marked where the power of Congress over the goods
imported ends and that of the state begins, with as much precision
as the subject admits. After observing that the prohibition of the
Constitution upon the states to lay a duty on imports, and their
acknowledged power to tax persons and property may come in
conflict, he says, speaking for the Court:
"The power and the restriction on it, though quite
distinguishable when they do not approach each other, may yet, like
the intervening colors between white and black, approach so nearly
as to perplex the understanding, as colors perplex the vision in
marking the distinction between them. Yet the distinction exists,
and must be marked as the cases arise. Till they do arise, it might
be premature to state any rule as being universal in its
application. It is sufficient for the present to say generally
Page 80 U. S. 33
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. [
Footnote
4]"
In that case it was also held that the authority given to import
necessarily carried with it a right to sell the goods in the form
and condition -- that is, in the bale or package in which they were
imported, and that the exaction of a license tax for permission to
sell in such case was not only invalid as being in conflict with
the constitutional prohibition upon the states, but also as an
interference with the power of Congress to regulate commerce with
foreign nations.
The reasons advanced by the Chief Justice not only commend
themselves by their intrinsic force to all minds, but they have
received recognition and approval by this Court in repeated
instances. Mr. Chief Justice Taney, who was at the time eminent at
the bar as he was afterwards eminent on the bench, argued the case
on behalf of the State of Maryland, and in the
License
Cases [
Footnote 5] he
referred to his position and observed that, at that time, he
persuaded himself that he was right, and thought that the decision
of the Court restricted the powers of the state more than a sound
construction of the Constitution of the United States would
warrant. "But farther and more mature reflection," the great judge
added,
"has convinced me that the rule laid down by the Supreme Court
is a just and safe one, and perhaps the best that could have been
adopted for preserving the right of the United States, on the one
hand, and of the states, on the other, and preventing collision
between them. The question, I have already said, was a very
difficult one for the
Page 80 U. S. 34
judicial mind. In the nature of things, the line of division is
in some degree vague and indefinite, and I do not see how it could
be drawn more accurately and correctly, or more in harmony with the
obvious intention and object of this provision in the Constitution.
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. [
Footnote 6]"
The Supreme Court of California appears from its opinion to have
considered the present case as excepted from the rule laid down in
Brown v. Maryland, because the tax levied is not directly
upon imports as such, and consequently the goods imported are not
subjected to any burden as a class, but only are included as part
of the whole property of its citizens which is subjected equally to
an
ad valorem tax. But the obvious answer to this position
is found in the fact, which is, in substance, expressed in the
citations made from the opinions of Marshall and Taney, that the
goods imported do not lose their character as imports and become
incorporated into the mass of property of the state 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. The question is not as to the extent of the tax or its
equality with respect to taxes on other property, but as to the
power of the state to levy any tax. If at any point of time between
the arrival of the goods in port and their breakage from the
original cases, or sale by the importer, they become subject to
state taxation, the extent and the character of the tax are mere
matters of legislative discretion.
There are provisions in the Constitution which prevent
Page 80 U. S. 35
one state from discriminating injuriously against the products
of other states or the rights of their citizens in the imposition
of taxes, but where a state, except in such cases, has the power to
tax, there is no authority in this Court nor in the United States
to control its action, however unreasonable or oppressive. The
power of the state, except in such cases, is absolute and supreme.
[
Footnote 7]
The argument for the tax on the wines in the present case, that
it is not greater than the tax upon other property of the same
value held by citizens of the state, would justify a like tax upon
securities of the United States, in which form probably a large
amount of the property of some of her citizens consists; yet it has
been repeatedly held that such securities are exempted from state
taxation, whether the tax be imposed directly upon them by name or
upon them as forming a part in the aggregate of the property of the
taxpayer. [
Footnote 8] The rule
is general that whenever taxation by a state is forbidden or would
interfere with the full exercise of a power vested in the
government of the United States over the same subject, it cannot be
imposed. Imports, therefore, whilst retaining their distinctive
character as such, must be treated as being without the
jurisdiction of the taxing power of the state.
It follows that the judgment of the Supreme Court of California
must be
Reversed.
[
Footnote 1]
Art. I, ยง 10.
[
Footnote 2]
25 U. S. 12 Wheat.
419.
[
Footnote 3]
25 U. S. 12 Wheat.
419.
[
Footnote 4]
25 U. S. 12
Wheat. 441.
[
Footnote 5]
46 U. S. 5 How.
575.
[
Footnote 6]
See also Almy v. State of
California, 24 How. 169;
Woodruff
v. Parham, 8 Wall. 123;
Hinson v.
Lott, 8 Wall. 148.
[
Footnote 7]
Woodruff v.
Parham, 8 Wall. 123;
Hinson v.
Lott, 8 Wall. 148.
[
Footnote 8]
Bank of Commerce v. New York
City, 2 Black 620.
