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established "closed ports" for purchasing, made tentative offers of large stores of the products to depress the market, fixed the price below the cost of production to drive competitors out of business, issued false warehouse receipts for turpentine and rosin and were guilty of numerous other acts to accomplish the purpose stated. The defense was that the statute was so vague as to be inoperative on its criminal side, that the acts and things would not have constituted an offense if they had been done, and that such acts were too vaguely charged in the indictment. The Court, against the contentions of Nash, held that there was no constitutional difficulty in the way of enforcing the criminal part of the act, that the acts alleged if done by intent would convert what on their face might be no more than ordinary acts of competition or the small dishonesties of trade into a conspiracy of the wider scope, and that the counts in the indictment were not bad for uncertainty. The Court further declared that no specific unlawful or overt act must necessarily be alleged in a criminal proceeding under the Sherman Act since the statute makes the act of conspiring in itself a criminal offense. But the judgment on the conviction of Nash and others was reversed by the Supreme Court because of errors in the instructions of the trial Court to the jury.
6. The Federal Taxing Power as Affecting Commerce.
MCCRAY v. UNITED STATES.
195 U. S., 27. 1904.
This case arose in the District Court of the United States for the Southern District of Ohio and was an action brought by the United States against Leo W. McCray to recover a penalty of $50.00 for a violation of the Acts of Congress requiring that internal revenue stamps at the rate of 10 cents per pound be affixed to packages of oleomargarine, artificially colored to look like butter. The Act of Congress of August 2, 1886, after defining butter and oleomargarine, provided, as follows: "That upon oleomargarine which shall be manufactured and sold, or removed for consumption or use there shall be assessed and collected a tax of two cents per pound, to be paid by the manufacturer thereof. The tax levied by this section shall be represented by coupon stamps," etc. The Act of May 9, 1902, amended the foregoing act by increasing the tax on oleomargarine from two to ten cents per pound, but contained this proviso: "Provided, when oleomargarine is free from artificial coloration that causes it to look like butter of any shade of yellow, the said tax shall be one-fourth of one cent per pound."
* ** *
The government claimed that McCray had purchased for resale oleomargarine colored to look like butter, upon which there were stamps at the rate of one-fourth of a cent per pound only, whereas there should have been stamps at the rate of ten cents per pound. McCray made answer, admitting the purchase for resale of the said oleomargarine, but asserted that while it was true that the product was of a yellow color, yet this result was not caused by artificial
coloring, but was solely due to the fact that the butter used in making the oleomargarine had a deep yellow color imparted to it by a substance known as Wells-Richardson improved butter color, a product the use of which in butter was not forbidden by the government. He claimed that the use of such butter did not amount to an artificial coloration of the oleomargarine, itself, within the meaning of the above statute, even though a yellow color was produced in the oleomargarine. But the principle contention of McCray was that the statutes in question were unconstitutional because they deprived him of his property without due process of law, inasmuch as the tax at the rate of ten cents per pound arbitrarily discriminated against the oleomargarine in favor of butter to the extent of destroying the oleomargarine industry for the benefit of the butter industry.
The district court gave judgment in favor of the United States from which decision an appeal was taken directly to the Supreme Court because of the importance of the questions involved, arising under the Constitution.
MR. JUSTICE WHITE delivered the opinion of the court:
Leaving out of view the proviso to the 8th Section of the Act of 1886 as amended and reënacted by the 3d Section of the Act of 1902, it is beyond question that a tax of ten cents a pound is imposed upon oleomargarine. As the product was admitted by the answer to be oleomargarine, it follows that it was subject to the tax of 10 cents a pound, unless by the proviso, the oleomargarine was of such a character as to entitle it to the benefits of a lower rate of taxation. Now, the proviso reads: "Provided, when oleomargarine is free from artificial coloration that causes it to look like butter of any shade of yellow, said tax shall be one-fourth of one cent per pound." As it was admitted that the oleomargarine was of a shade of yellow causing it to look like butter, and as it was also admitted that this shade of yellow had been imparted by an artificial coloring matter used to color the butter which formed one of the ingredients from which the oleomargarine was manufactured, it results, if the text of the statute be applied that the oleomargarine was not within the proviso because it was not free from artificial coloring matter causing it to look like butter. This necessarily follows, since the right to enjoy the lower rate of tax is made by the proviso to depend upon whether, as a matter of fact, the oleomargarine was free from artificial coloring matter, and not upon the mere method adopted for imparting the artificial color. As the oleomargarine in question was in fact not free from artificial coloration we think that a construction which would take it out of the general rule imposing the ten cent tax upon all oleomargarine, and bring it within the exception embracing only oleomargarine free from artificial coloration, would be not an interpretation of the statute, but a disregard of its unambiguous provisions.
The decisions of this court from the beginning lend no support whatever to the assumption that the judiciary may restrain the exercise of lawful power on the assumption that a wrongful purpose or motive has caused the power to be exerted. As we have previously said, from the beginning no case can be found announcing such a doctrine, and on the contrary, the doctrine of a number of cases is inconsistent with its existence. As quite recently pointed out by this court in Knowlton v. Moore, 178 U. S. 41, the often quoted statement of Chief Justice Marshall in M'Culloch v. Maryland, 4 Wheat. 316, that the power to tax is the power to destroy, affords no support whatever to the proposition that where there is a lawful power to impose a tax, its imposition may be treated as without the power because of the destructive effect of the exertion of the authority. *
Yet again, in Veazie Bank v. Fenno, 8 Wall. 533, where a tax levied by Congress on the circulating notes of state banks was assailed on the ground that the tax was intended to destroy the circulation of such notes, and was besides, the exercise of a power to tax a subject not conferred upon Congress, it was said, as to the first contention (p. 548): "It is insisted, however, that the tax in the case before us is excessive, and so excessive as to indicate a purpose on the part of Congress to destroy the franchise of the bank, and is, therefore, beyond the constitutional power of Congress. The first answer to this is that the judicial cannot prescribe to the legislative department of the government limitations upon the exercise of its acknowledged powers. The power to tax may be exercised oppressively upon persons, but the responsibility of the legislature is not to the courts, but to the people by whom its members are elected. So, if a particular tax bears heavily upon a corporation or a class of corporations it cannot for that reason only be pronounced contrary to the Constitution.'
In Treat v. White, 181 U. S. 264, referring to a stamp duty levied by Congress, it was observed: "The power of Congress in this direction is unlimited. It does not come within the province of this court to consider why agreements to sell shall be subject to the stamp duty, and agreements to buy, not. It is enough that Congress, in this legislation, has imposed a stamp duty upon one and not upon the other."
It being thus demonstrated that the motive or purpose of Congress in adopting the acts in question may not be inquired into, we are brought to consider the contentions relied upon to show that the acts assailed were beyond the power of Congress, putting entirely out of view all considerations based upon purpose or motive. * * Since, as pointed out in all the decisions referred to, the taxing power conferred by the Constitution knows no limits except those expressly stated in that instrument, it must follow, if a tax be within the lawful power, the exertion of that
power may not be judicially restrained because of the results to arise from its exercise. * *
The proposition that where a tax is imposed which is within the grant of powers, and which does not conflict with any express constitutional limitation, the courts may hold the tax to be void because it is deemed that the tax is too high, is absolutely disposed of by the opinions in the cases hitherto cited, and which expressly hold, to repeat again the language of one of the cases (Spencer v. Merchant) that "The judicial department cannot prescribe to the legislative department limitations upon the exercise of its acknowledged powers. The power to tax may be exercised oppressively upon persons; but the responsibility of the legislature is not to the courts, but to the people by whom its members are elected."
Whilst undoubtedly both the 5th and 10th Amendments qualify in so far as they are applicable, all the provisions of the Constitution, nothing in those amendments operates to take away the grant of power to tax conferred by the Constitution upon Congress. The contention on this subject rests upon the theory that the purpose and motive of Congress in exercising its undoubted powers may be inquired into by the courts, and the proposition is therefore disposed of by what has been said on that subject.
The right of Congress to tax within its delegated power being unrestrained, except as limited by the Constitution, it was within the authority conferred on Congress to select the objects upon which an excise should be laid. It therefore follows, that in exerting its power, no want of due process of law could possibly result, because that body chose to impose an excise on artificially colored oleomargarine and not upon natural butter artificially colored. The judicial power may not usurp the functions of the legislative in order to control that branch of the government in the performance of its lawful duties. This was aptly pointed out in the extract heretofore made from the opinion in Treat v. White, 181 U. S. 264.
Let us concede that if a case was presented where the abuse of the taxing power was so extreme as to be beyond the principles which we have previously stated, and where it was plain to the judicial mind that the power had been called into play, not for revenue, but solely for the purpose of destroying rights which could not be rightfully destroyed consistently with the principles of freedom and justice upon which the constitution rests, that it would be the duty of the courts to say that such an arbitrary act was not merely an abuse of a delegated power, but was the exercise of an authority not conferred. This concession, however, like the one previously made, must be without influence upon the decision of this cause for the reasons previously stated; that is, that the manufacture of artificially colored oleomargarine may be prohibited by a free government without a violation of fundamental rights. Affirmed.
THE CHIEF JUSTICE, MR. JUSTICE BROWN, and MR. JUSTICE PECKHAM dissent.
Note 1.-Compare the above case with Plumley v. Massachusetts, 155 U. S. 460, infra.
Note 2.-Bailey v. Drexel Furniture Company, 259 U. S. 20, (1922) — known as Second Child Labor Act case. After the decision in Hammer v. Dagenhart, 247 U. S. 251, Congress passed the Act of February 24, 1919, imposing a tax of 10 per cent of the net profits of the year upon an employer who knowingly has employed during any portion of the taxable year, a child within the age limits therein prescribed. The Supreme Court of the United States in an opinion by Chief Justice Taft decided that this was not a valid exercise by Congress of its powers of taxation, but is an unconstitutional regulation by the use of the so-called tax as a penalty for the employment of child labor in the states, which, under the 10th Amendment is exclusively a state function. The court said: “Grant the validity of this law, and all that Congress need do hereafter, in seeking to take over to its control any one of the great number of subjects of public interest, jurisdiction of which the states have never parted with, and which are reserved to them by the 10th Amendment, would be to enact a detailed measure of complete regulation of the subject and enforce it by a so-called tax upon departures from it. To give such magic to the word 'tax' would be to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the states."
Note 3.-See also First Child Labor case, infra.
7. The Federal Police Power as Affecting Commerce.
FIRST EMPLOYERS' LIABILITY CASE.
HOWARD v. ILLINOIS CENTRAL RAILROAD CO.
207 U. S. 463. 1908.
The administratrix of Will Howard brought an action for damages occasioned by the death of the intestate while serving as a fireman on a locomotive actually engaged in moving an interstate commerce train. It was alleged that the intestate met his death through no fault of his, but solely through the fault of his fellow servants. The right of action was based on the Act of Congress of June 11, 1908, commonly known as the Employers' Liability Act, which provided that "every common carrier engaged in trade or commerce" in the District of Columbia or in the territories or between the several states shall be liable for the death or injury of "any of its employees," which may result from the negligence of "any of its officers, agents or employees." This act attempted to remove the employees of interstate carriers from the effect of the fellow servant doctrine prevailing in many states. The court below decided that the Act of Congress, which was the basis of the cause of action, was repugnant to the Constitution of the United States.