State v. North

27 Mo. 464

Opinions

Scott, Judge,

delivered the opinion of the court.

The defendants, who composed a copartnership, were indicted, under the second section of the act entitled “ An act to tax and license merchants” (R. C. 1855, p. 1073), for dealing as merchants without a license. On the trial, it appeared that the defendants carried on business as merchants ; that they sold manufactured articles which were of the growth and produce of the state of Massachusetts and other states of the Union, and were imported by them into this state and sold in the original packages as imported. The court declared the law to be, that if tlie defendants were copartners in business as merchants, and, during the time covered by the indictment, did, at St. Louis county, deal in the selling of goods, wares and merchandise as described in the indictment, which were articles manufactured in other sister states of this Union, and the growth and produce of such states, and then imported by defendants into this state and sold in the original unbroken packages, at a store occupied by them for that purpose, without a license authorizing them so to deal, they are guilty as charged in the indictment. The following instruction asked by the defendants was refused: “ That if the defendants neither received for sale nor sold at their store in St. Louis any other goods, except such as were imported into this state from other states of the Union by defendants and sold by them in the original unbroken packages as imported, then the defendants are not guilty, and the court will so find.”

The first section of the act to which reference has been made defines a merchant to be a person, or copartnership of persons, who shall deal in the selling of goods, wares and merchandise at any store, stand or place occupied for that purpose. The second section of the same act imposes a fine of not less than fifty nor more than five hundred dollars upon every person or copartnership of persons who shall deal as a merchant without a license first obtained. The third section of the act provides that merchants “ shall pay an ad valorem tax, equal to that which is levied upon real estate, upon all goods, wares and merchandise purchased by them, except such as may be the growth, produce or manufacture of this state, and except such manufactured articles as may be the growth or produce of other states.” By the subsequent provisions of the act, a license is obtained by giving-bond for the payment, on the first of November, of all taxes which may then be due for the twelve months ending on the first November upon the merchant’s license as a vendor of goods, wares and merchandise. And it was made the duty of every licensed merchant, on the first day of November of each year, to file in the office of the clerk of the court granting the license a statement of the amount of all goods, wares and merchandise (excepting such as may be the growth, produce or manufacture of this state, and except such unman-ufactured articles as may be the growth or produce of other states) received for sale within the year then ending.

From the foregoing statement of the law and facts of this case, it will be seen that it presents the question of the power of the states, in the exercise of the right of taxation, to discriminate between products of this state and those manufactured in our sister states. It will be seen that the discrimination is made, whatever guise it may assume, or by whatever name it may be called. It clearly appears from the statute that it exempts from tax or license the merchant who deals in goods the growth or produce of this state, while those who deal in the like goods of other states are compelled to take out a license, which can only be obtained by paying an ad valorem tax on all the goods received for sale. And can a more important question arise affecting the peace of the states — one that more deeply concerns the harmony and good understanding towards each other which should pervade the several states composing this Union ? Happily for the people of the United States they have a government that was organized in an enlightened age, when there lived men whose wisdom and intelligence were sufficient, and whose patriotism prompted them, to set forth the causes which led to its adoption. The papers and resolves, that had their origin in a desire to amend the articles of confederation, shed a great light to guide us in the interpretation of the powers of that government by which the old confederacy was replaced. The motives to the formation of the federal government were not only blessings in anticipation, but an anxiety to be delivered from evils wide-spread in their operation and threatening to deprive us of all the advantages derived from the toils and sacrifices of the revolution had a large share in promoting that great design. Some of the greatest of these evils had their source in the powers with which the states were sepa rately clothed of laying duties on imports and of regulating commerce; powers which, though the constitution considers as substantive and distinct, yet in their exercise frequently run into each other and mingle together. The extent to which the power to regulate commerce may be exercised can not be fully defined by prospective laws. It is a power whose exercise depends on contingencies which can not be foreseen. Motive agents not yet conceived may ultimately come into use, which may cause a necessity for the exertion of this power. It was said in the case of Gibbons v. Ogden, 9 Wheat. 1, that, as the words “ to regulate” imply in their nature full power over the thing to be regulated, it excludes necessarily the action of all others that would perform the same operation on the same thing. That regulation is designed for the entire result, applying to those parts which remain as they were as well as to those which are altered. It produces a uniform whole, which is as much disturbed and deranged by changing what the regulating power designed to leave untouched as that on which it has operated. But though the enactments of Congress for the regulation of commerce are supreme, and those regulations, whether they are express or arise by necessary implication, are equally binding, and supersede state regulation, yet it is conceived that the states, in the exercise of the power of regulating their own internal affairs — whether in enacting police laws, laws for the preservation of the health of their citizens, or laws for the improvement of their navigable streams — may, in an enlarged sense of the phrase, be said to exercise the power of regulating commerce ; and such regulation will be constitutional, unless it interferes with provisions enacted by Congress in pursuance to the federal constitution. In this sense are understood those who maintain that the power to regulate commerce is concurrent between Congress and the states ; that the power, in all its branches and ramifications, is not so exclusively vested by the constitution in Congress as that all state legislation, which may fall within the rango of the power of regulating commerce, will be unconstitu tional, though not in conflict with any act of Congress. It would be a bold proposition that the states of this Union have a concurrent power, in the regulation of commerce, with the Congress of the United States, in all matters but those in which there is an express prohibition on them by the constitution. The power to regulate commerce with foreign nations and among the several states and with the Indian tribes having been conferred by the constitution on Congress, and the power to lay and collect duties and imposts being vested in the same body, with an express prohibition on the States, without the consent of Congress, from laying any imposts or duties on imports or exports except what may be absolutely necessary for their inspection laws, it is conceived that the history of the time during which the confederation of the United States of America existed, the form of government supplanted by the present constitution, will show that the law, whose validity is the subject of consideration, is in conflict with the spirit and meaning of the federal constitution.

A want of power to raise revenue for its support was not the only defect in the old confederation of the states as a system of government. The articles of confederation left the power of regulating commerce in the states, except the restriction contained in the sixth article, which was a limited and temporary one. The want of a single and united body to regulate commerce was sensibly felt and caused loud complaints against the government. The state of Virginia, which was always active in proposing and eager in accepting means offered for the alteration of the articles of confederation so as to endow them with greater energy and power, on the 30th November, 1785, resolved, “ that the relative situation of the United States has been found on trial to require uniformity in their commercial regulations as the only effectual policy for obtaining in the ports of foreign nations a stipulation of privileges reciprocal to those enjoyed by the subjects of such nations in the ports of the United States, for preventing animosities which can not fail to arise among the several states from tlie interference of partial and separate regulations ; and whereas such uniformity can be best concerted and carried into effect by the federal councils, which, haying been instituted for the purpose of managing the interests of the states in cases which can not be so well provided for by measures individually pursued, ought to be invested with authority in this case, as being within the reason and policy of their institution.” These are the sentiments of a body of men, whose acts had an immediate agency in bringing about the measures that led to the adoption of the present federal constitution.

The “ Federalist,” after declaring that one of the principal purposes to be answered by the Union is the regulation of commerce with other nations and between the states, maintains that “ a unity of commercial as well as political interests can only result from a unity of government; that the competitions of commerce would be fruitful sources of contention. The states less favorably circumstanced would be desirous of escaping from the disadvantages of local situation and of sharing in the advantages of their more fortunate neighbors. Each state, or separate confederacy, would pursue a system of commercial polity peculiar to itself. This would occasion distinctions, preferences and exclusions, which would beget discontent. The habits of intercourse, to which we have been accustomed from the earliest settlement of the country, would give a keener edge to those causes of discontent than they would naturally have independent of this circumstance. We should be ready to denominate injuries those things which were in reality the justifiable acts of independent sovereignties consulting a distinct interest. The spirit of enterprise which characterizes the commercial part of America left no occasion of improving itself unimproved. It is not at all probable that this unbridled spirit would pay much respect to those regulations of trade by which particular states might endeavor to secure exclusive benefits to their own citizens. The infraction of these regulations on the one side, the efforts to prevent and repel them on the other, would naturally lead to outrages, and these to reprisals and wars.”

Judge Marshall, who lived under the confederation and was an historian of the events of that time, says: “ The oppressed and degraded state of commerce previous to the adoption of the constitution can scarcely be forgotten. It was regulated by foreign nations with a single view to their own interests, and our disunited efforts to counteract their restrictions were rendered impotent by want of combination. Congress, indeed, possessed the power of making treaties, but the inability of the federal government to enforce them became so apparent as to render that power, in a great degree, useless. Those who felt the injury arising from this state of things, and those who were capable of estimating the influence of commerce on the prosperity of nations, perceived the necessity of giving the control over this important subject to a single government. It may be doubted whether any of the evils proceeding from the feebleness of. the federal government contributed more to that great revolution which introduced the present system than the deep and general conviction that commerce ought to be regulated by Congress.” (12 Wheat. 446.)

These citations, coming from the sources they do, should be sufficient to satisfy us that the necessity for the regulation of commerce and the laying of imposts and duties by a single government were great and moving causes in the formation of the federal constitution, and that experience showed that the exercise of these powers could not be confided to the several states without causing rivalries, restrictions and exclusions, which would finally end in the termination of their union.

It has been observed that the law under review involved the exercise of the power by the state to discriminate in taxation between articles the manufacture of this state and those the manufacture of other states, and it may be added of foreign nations. As commerce may be regulated in many ways, it will not be denied that one of the methods of exercising this power is the imposition of discriminating taxes or duties on articles the manufacture of other states or nations. During the existence of the confederacy, and at the time of the adoption of the federal constitution, the states do not seem to have turned their attention to the protection of domestic manufactures. The population being agricultural and commercial, its wealth was mostly derived from the sale and exchange of its products with other nations. Hence we do not find any complaints in relation to the imposing of discriminating taxes or duties, except so far as they may have been laid to counteract the policy of those states which, having a sea-board, would tax the imports or exports of other states, which, having no ports of their own, were obliged to export and import through the territory of the states more favorably situated for commerce. But, whatever may be the motive for the tax, whether revenue, restriction, retaliation, or protection of domestic manufactures, it is equally a regulation of commerce, and in effect an exercise of the power of laying-duties on imports; and its exercise by the states is entirely at war with the spirit of the constitution, and would render vain and nugatory the power granted to Congress in relation to those subjects. Can any power more destructive to the union and harmony of the states be exercised than that of imposing discriminating taxes or duties on imports from other states ? Whatever may be the motive for such taxes, they can not fail to beget irritation and to lead to retaliation; and it is not difficult to foresee that an indulgence in such a course of legislation must inflame and produce a state of feeling that would seek its gratification in any- measures regardless of the consequences. We all remember that some years ago, when it was proposed in our councils to lay a discriminating tax on the products of some of our sister states, that the measure had its origin in a feeling of hostility engendered by a course of conduct on their part conceived to be inimical to the policy of this state. Fortunately, the measure proposed was not adopted; and however much we may sympathize in the opposition to the conduct complained of, we can not but express our satisfaction that our legislative records were not made to bear any such law.

But it is when considered in reference to our foreign commerce that this power in the states seems most destructive to one of the important ends proposed by the adoption of the federal constitution. After the treaty of 1783, foreign nations would not contract treaties of commerce and navigation with the United States. As there was no power to regulate commerce in the central government, they did not think it worth while to enter into obligations with a nation which had no legislative control over the subjects about which they would treat, and whose treaties might be frustrated by any member of the confederacy. Great Britain refused to negotiate with us on account of the weakness of our government and its want of authority to regulate commerce. Now that the power to regulate commerce has been delegated by the states, and the power of laying duties on imports taken away from them, can it be maintained that there is still an authority to lay a tax which shall discriminate between the products of the citizens of the states and the like products of foreign nations ? What nation would treat with the general government, if the advantages secured to it by a treaty with that government were at the will of the several states composing the Union ? If a foreign nation, for a fair equivalent, should obtain from the federal government the right to import its products free of duty, how would that government justify itself in the eyes of the world if the states composing the Union should single out the imports from that nation and subject them to a tax which would prevent a sale of them ?

Under a power to levy a discriminating tax between domestic and foreign products, commerce may not only be regulated, but indirectly a duty may be laid on imports. In laying a tax discriminating against the imports from foreign nations or the sister states, a duty is as effectually laid as though the tax had been demanded before the importation was allowed. What is the difference between'collecting the tax before the import is admitted and singling it out from all others after it has been admitted and subjecting it to the same tax ?

It is maintained that the supreme court of the United States, in the case of Brown v. The State of Maryland, 12 Wheat. 448, decides that, although the states can not tax imports while they are in the original bales or boxes in which they were imported, yet, when the boxes are broken up and the imported goods become incorporated into the mass of the property of the state, those goods become- subject to taxation like all other ¡sroperty in the state. This is not denied. We do not conceive that the opinion, which denies to the states the power to lay discriminating taxes on the products of other states or of foreign nations, at all abridges or impairs the power in the states to lay and collect taxes. While it is admitted that all the property in the state subject to private ownership is liable to. taxation, it is no diminution of this power so to limit its exercise as to prevent a discriminating tax between similar articles. The abolishment of the discriminating tax will be.the means of increasing the revenue; as, if the tax on all the property is made equal to the discrimination, or if the property exempt by way of discrimination is made subject to taxes, the revenue will be increased. Can a restraint on the abuse of a power fairly be said to be a limitation of that power ? Is it a diminution of the power of taxation to hold that the general assembly can not require that the property of the left-handed only shall pay all the revenue of the state ; or that men born in a particular state shall bear all the taxes ? Is it an abridgment of the power of raising revenue to maintain that a law can not be passed which imposes a tax on an article made in Boston, while a similar article made in Charleston is exempted ? that a cloth manufactured in England shall pay a tax, while similar cloth made in France shall be free from taxation ? Although the states may not be bound to find purchasers for goods imported into them, yet it is insisted that they can not so abuse the power of taxation as to drive an imported article from the market by an unfair and unequal discrimina ting tax. There is no difference in principle between laying a'duty before an article is imported and the imposing a discriminating tax, which, after its importation and incorporation into the mass of the property of the state, prevents its sale. That which can not be done directly can not be done indirectly. (Brown v. State of Maryland, 12 Whea. 448-9.)

But it is said that the passage of the law under consideration is nothing more than the exercise of the power of laying taxes, a power unquestionably belonging to the states; and that its enactment was conceived in no design to regulate commerce with foreign nations or among the several states. It is true, in the law before us there is no discrimination against particular states or nations. It is against all states and nations. But, a power to discriminate against all carries with it a power of discrimination as to individuals. If the general power is sanctioned, it is not easy to perceive the principle by which it can be arrested in its more limited exercise. If a law actually violates the constitution, its nullity must be declared, notwithstanding there may have been no intent in the makers of the law to violate that instrument. The constitutionality of a law can not depend upon the motives of its makers. The uprightness of the intention of the lawgiver in the enactment of a law may excuse him in a moral point of view, but it can add nothing to its constitutional validity. When the state of Maryland imposed a tax on a branch of the Bank.of the United States situated within her jurisdiction, the law could not escape the objections of its want of conformity to the constitution by the argument that taxation did not necessarily and unavoidably destroy. It was answered, that the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create; that the exercise of such a power was inconsistent vyitli the right of the government to use the means employed ; and that they were not driven to the perplexing inquiry, so unfit for the judicial department, what degree of taxation is the legitimate use, and what degree may amount to the abuse of power ? (4 Whea. 430-1.) In Brown v. The State of Maryland, 12 Wheat. 439, it was said that “ it is obvious that the same power which imposes a light duty can impose a very heavy one which amounts to a prohibition. Questions of power do not depend on the degree to which it may be exercised. If it may be exercised at all, it must be exercised at the will of those in whose hands it is placed. The question is, where does the power reside; not, how far it will be probably abused; and the greater or less extent in which it may be exercised does not enter into the inquiry concerning its existence. When we are inquiring whether a particular act is within this prohibition, the question is, not whether the state may so legislate as to hurt itself, but whether the act is within the words and mischief of the prohibitory clause.”

We do not conceive that this case involves the right of the state to tax professions, occupations or trades. Such a power in the states has been sanctioned in the case of Nathan v. The State of Louisiana, 8 How. 73. The same right was recognized in the case of Brown v. Maryland, 12 Wheat. 439; yet its recognition did not prevent the court from declaring a state law to be unconstitutional which required all importers of foreign goods by the bale or package to take out a license on which a tax was levied. So here, the question is not whether a license to do business may be taxed, but whether, under color of a license, a tax may be imposed which is not warranted by the constitution. If the tax is unconstitutional, the form by which it may be attempted to be collected is a matter of no importance. Can a state lay a discriminating tax on goods after their importation ? If it can not do it directly, then the same thing can not be accomplished by any indirect means. The requiring of every dealer in goods which have been imported to take out a license, on which a tax is levied, is the same thing as imposing the tax on the goods themselves.

From the view we have taken of this subject, it will be seen that it is not deemed a matter of any importance whether the power of laying a discriminating tax is exercised on the original-package or bale in which the merchandise was imported, or whether it is exercised on the goods themselves after they have been incorporated into the mass of the property of the state. It is obvious that if the laying of a discriminating tax is unconstitutional, the time at which the power is exerted, or the condition of the goods at the time of its exercise, can not change the nature of the act.

We have not been enabled to ascertain that the question before us has ever received a direct determination. In the case of Biddle v. The Commonwealth, 13 S. & R. 405, the law required every person dealing in the selling of any goods, wares, or merchandise, wines or distilled liquors — except such as were of the growth, produce or manufacture of the United States — to take out a license for vending such goods, for which license certain duties were to be paid. There was also an exception in favor of importers who sold in the original cask, case, box or package, in which the goods were imported. The court held this law to be constitutional. But in the opinion nothing is said in relation to the question of the power of the states to lay a discriminating tax against foreign merchandise. In the case of Pierce v. The State of New Hampshire, 13 N. H. 582, Judge Parker said: “ Should an attempt be made by a state to prohibit the sale of imported iron, or salt, or sugar, or cotton goods, within its limits, or to tax articles the produce of another state beyond the rate of similar articles produced-witliin its own borders, it would very readily be seen that such legislation was not a regulation of internal police merely, but that its design and effect, if admitted, must be the regulation of foreign commerce or commerce among the states also.” In the case of the People v. Huntingdon, 4 N. Y. Leg. Obs. 197, Judge Smith concurs in opinion with Judge Parker, and adds: “ Under whatever name or pretence such a law might be passed, it must be regarded as a fraudulent attempt to override the constitution, and hence could not be sustained.” In the case of Brown v. The State of Maryland, 12 Wheat. 439, it was held that a law was unconstitutional which required all importers of foreign goods bj the bale or package to take out a license on which a tax was imposed. It was held that such a law violated the provision of the constitution which prohibited the states from laying imposts and duties on imports or exports, and also that which declares that Congress shall have power to regulate commerce with foreign nations among the several states and with the Indian tribes. Judge Marshall, after an able opinion against the constitutional validity of such a law, remarked: “ In conclusion, it may be proper to add that we suppose the principles laid down in this case to apply equally to importations from a sister state. We do not mean to give any opinion on a tax discriminating between foreign and domestic articles.” We do not consider that the “license cases,” as they are termed, reported in 5 How. 504, as deciding any thing in hostility to the views we have expressed. Those cases stand on a ground entirely different from those on which our opinion rests.

The foregoing intimations of opinion on this question will be sufficient, we trust, to defend us from the imputation of introducing any novelty into our constitutional law. We have not sought this task ; it has been forced upon us, and we have entered upon its discharge with a due sense of the responsibility under which we labor. If we have erred, we feel confident that we have erred on the side of safety and in a desire to cherish peace and good-will among the states of the Union. We do not conceive that the opinion that we entertain in the least injuriously affects the power of taxation of the state. On the contrary, by requiring the same tax to be levied on like articles produced or manufactured in this state, we rather increase the revenue. Nothing is to be gained by the exercise of the power of laying a discriminating tax. If it is lawful for one state to do it, it is equally so to the others. Laws will be passed in retaliation of those we may enact, and so we may be losers in the end. Situated as the state of Missouri is, she should be one of the last to enter on such a course of legislation. Without a sea-board, far in the interior, cut off from all outlets to foreign com- merco, she would be one of the greatest sufferers in a contest of such a nature. If we have erred in applying to the law under consideration the principle that a tax discriminating between foreign and domestic articles can not be imposed, we feel confident, nevertheless, that the principle is a correct one. No one can rise from reading the history of the events out of which our present constitution had its existence, without a conviction that the power of laying a discriminating tax on the importations from other states and nations was never designed to be left with the several states. That is a power only to be exercised by a single body, and that body has been created with ample power for the protection of the interests of all the states.

' The 19th section of the bill of rights, which declares that all property subject to taxation in this state shall be taxed in proportion to its value, has been repeatedly construed by this court to mean, not that all the property in the state must be taxed, but that when any article of property is selected for taxation, it shall be taxed in proportion to its value and not specifically; and the general assembly may therefore not only levy an ad valorem tax on the goods of merchants, but may also impose a tax on their occupation, to be collected in the form of license.

On the facts as agreed, the defendants should have been acquitted; and the judgment will be reversed and the defendants discharged from their recognizance;

Judge Richardson concurring ; Judge Napton dissenting.