text:
Woodruff v. Parham/Opinion of the Court

'Upon the whole the law of New Hampshire is, in my judgment, valid. For although the gin was an import from another State, and Congress had clearly the power to regulate such importation; yet as it had not done so, the traffic may be regulated by the State as _____ as it is landed in its territory.'

Now it is certain that if the gin was an 'import' within the meaning of the prohibition, the question could in no wise be affected by the action or non-action of Congress, and his affirmance of the judgment was only possible on the ground that he held it not to be an 'import.'

This question has been frequently before the Supreme Courts of the States, and with the exception of the decision in Louisiana, they have uniformly held the view here presented.

The case from Louisiana is rested solely upon the authority of Almy v. California. The opinion in this case was delivered by the Chief Justice.

It is true that the record showed that the bill of lading taxed by California was for gold shipped to New York; but in the argument of the case no reference is made to the question now discussed, neither in the opinion is there any reference to it, nor to the decision in the License case. On the contrary, all the illustrations used in the opinion refer to the case of foreign commerce; and whether goods shipped from one State to another were to be regarded as 'exports' within the prohibition is not touched upon. This case can therefore have no influence in deciding the present controversy.

But this is not a tax on 'imports' in any sense of the term. A tax on the proceeds of sale is in the nature of a tax on income, or on occupation measured by income, and that a portion of such income may be derived from imported goods can make no difference in testing its validity.

Mr. Justice MILLER delivered the opinion of the court.

The case was heard in the courts of the State of Alabama upon an agreed statement of facts, and that statement fully raises the question whether merchandise brought from other States and sold, under the circumstances stated, comes within the prohibition of the Federal Constitution, that no State shall, without the consent of Congress, levy any imposts or duties on imports or exports. And it is claimed that it also brings the case within the principles laid down by this court in Brown v. Maryland.

That decision has been recognized for over forty years as governing the action of this court in the same class of cases, and its reasoning has been often cited and received with approbation in others to which it was applicable. We do not now propose to question its authority or to depart from its principles.

The tax of the State of Maryland, which was the subject of controversy in that case, was limited by its terms to importers of foreign articles or commodities, and the proposition that we are now to consider is whether the provision of the Constitution to which we have referred extends, in its true meaning and intent, to articles brought from one State of the Union into another.

The subject of the relative rights and powers of the Federal and State governments in regard to taxation, always delicate, has acquired an importance by reason of the increased public burdens growing out of the recent war, which demands of all who may be called in the discharge of public duty to decide upon any of its various phases, that it shall be done with great care and deliberation. Happily for us, much the larger share of these responsibilities rests with the legislative departments of the State and Federal governments. But when, under the pressure of a taxation necessarily heavy, and in many cases new in its character, the parties affected by it resort to the courts to ascertain whether their individual rights have been infringed by legislation, and assert rights supposed to be guaranteed by the Federal Constitution, they, in every such case properly brought before us, devolve upon this court an obligation to decide the question raised from which there is no escape.

The words impost, imports, and exports are frequently used in the Constitution. They have a necessary correlation, and when we have a clear idea of what either word means in any particular connection in which it may be found, we have one of the most satisfactory tests of its definition in other parts of the same instrument.

In the case of Brown v. Maryland, the word imports, as used in the clause now under consideration, is defined, both on the authority of the lexicons and of usage, to be articles brought into the country; and impost is there said to be a duty, custom, or tax levied on articles brought into the country. In the ordinary use of these terms at this day, no one would, for a moment, think of them as having relation to any other articles than those brought from a country foreign to the United States, and at the time the case of Brown v. Maryland was decided-namely, in 1827-it is reasonable to suppose that the general usage was the same, and that in defining imports as articles brought into the country, the Chief Justice used the word country as a synonyme for United States.

But the word is susceptible of being applied to articles introduced from one State into another, and we must inquire if it was so used by the framers of the Constitution.

Leaving, then, for a moment, the clause of the Constitution under consideration, we find the first use of any of these correlative terms in that clause of the eighth section of the first article, which begins the enumeration of the powers confided to Congress.

'The Congress shall have power to levy and collect taxes, duties, imposts, and excises,. . . but all duties, imposts, and excises shall be uniform throughout the United States.'

Is the word impost, here used, intended to confer upon Congress a distinct power to levy a tax upon all goods or merchandise carried from one State into another? Or is the power limited to duties on foreign imports? If the former be intended, then the power conferred is curiously rendered nugatory by the subsequent clause of the ninth section, which declares that no tax shall be laid on articles exported from any State, for no article can be imported from one State into another which is not, at the same time, exported from the former. But if we give to the word imposts, as used in the first-mentioned clause, the definition of Chief Justice Marshall, and to the word export the corresponding idea of something carried out of the United States, we have, in the power to lay duties on imports from abroad, and the prohibition to lay such duties on exports to other countries, the power and its limitations concerning imposts.

It is also to be remembered that the Convention was here giving the right to lay taxes by National authority in connection with paying the debts and providing for the common defence and the general welfare, and it is a reasonable inference that they had in view, in the use of the word imports, those articles which, being introduced from other nations and diffused generally over the country for consumption, would contribute, in a common and general way, to the support of the National government. If internal taxation should become necessary, it was provided for by the terms taxes and excises.

There are two provisions of the clause under which exemption from State taxation is claimed in this case, which are not without influence on that prohibition, namely: that any State may, with the assent of Congress, lay a tax on imports, and that the net produce of such tax shall be for the benefit of the Treasury of the United States. The framers of the Constitution, claiming for the General Government, as they did, all the duties on foreign goods imported into the country, might well permit a State that wished to tax more heavily than Congress did, foreign liquors, tobacco, or other articles injurious to the community, or which interfered with their domestic policy, to do so, provided such tax met the approbation of Congress, and was paid into the Federal treasury. But that it was intended to permit such a tax to be imposed by such authority on the products of neighboring States for the use of the Federal government, and that Congress, under this temptation, was to arbitrate between the State which proposed to levy the tax and those which opposed it, seems altogether improbable.

Yet this must be the construction of the clause in question if it has any reference to goods imported from one State into another.

If we turn for a moment from the consideration of the language of the Constitution to the history of its formation and adoption, we shall find additional reason to conclude that the words imports and imposts were used with exclusive reference to articles imported from foreign countries.

Section three, article six, of the Confederation provided that no State should lay imposts or duties which might interfere with any stipulation in treaties entered into by the United States; and section one, article nine, that no treaty of commerce should be made whereby the legislative power of the respective States should be restrained from imposing such imposts and duties on foreigners as their own people were subjected to, or from prohibiting the exportation or importation of any species of goods or commodities whatsoever. In these two articles of the Confederation, the words imports, exports, and imposts are used with exclusive reference to foreign trade, because they have regard only to the treaty-making power of the federation.

As soon as peace was restored by the success of the Revolution, and commerce began to revive, it became obvious that the most eligible mode of raising revenue for the support of the General Government and the payment of its debts was by duties on foreign merchandise imported into the country. The Congress accordingly recommended the States to levy a duty of five per cent. on all such imports, for the use of the Confederation. To this, Rhode Island, which, at that time, was one of the largest importing States, objected, and we have a full report of the remonstrance addressed by a committee of Congress to that State on that subject. And the discussions of the Congress of that day, as imperfectly as they have been preserved, are full of the subject of the injustice done by the States who had good seaports, by duties levied in those ports on foreign goods designed for States who had no such ports.

In this state of public feeling in this matter, the Constitutional Convention assembled.

Its very first grant of power to the new government about to be established, was to lay and collect imposts or duties on foreign goods imported into the country, and among its restraints upon the States was the corresponding one that they should lay no duties on imports or exports. It seems, however, from Mr. Madison's account of the debates, that while the necessity of vesting in Congress the power to levy duties on foreign goods was generally conceded, the right of the States to do so likewise was not given up without discussion, and was finally yielded with the qualification to which we have already referred, that the States might lay such duties with the assent of Congress. Mr. Madison moved that the words 'nor lay imposts or duties on imports' be placed in that class of prohibitions which were absolute, instead of those which were dependent on the consent of Congress. His reason was that the States interested in this power, (meaning those who had good seaports), by which they could tax the imports of their neighbors passing through their markets, were a majority, and could gain the consent of Congress to the injury of New Jersey, North Carolina, and other non-importing States. But his motion failed. In the Convention of Virginia, called to adopt the Constitution, that distinguished expounder and defender of the instrument, so largely the work of his own hand, argued, in support of the authority to lay direct taxes, that without this power, a disproportion of burden would be imposed on the Southern States, because, having fewer manufactures, they would consume more imports and pay more of the imposts. So, in defending the clause of the Constitution now under our consideration, he says: 'Some States export the produce of other States. Virginia exports the produce of North Carolina; Pennsylvania those of New Jersey and Delaware; and Rhode Island, those of Connecticut and Massachusetts. The exporting States wished to retain the power of laying duties on exports to enable them to pay expenses incurred. The States whose produce was exported by other States, were extremely jealous lest a contribution should be raised of them by the exporting States, by laying heavy duties on their own commodities. If this clause be fully considered it will be found to be more consistent with justice and equity than any other practicable mode; for, if the States had the exclusive imposition of duties on exports, they might raise a heavy contribution of the other States for their own exclusive emoluments.' Similar observation, from the same source, are found in the 42d number of the Federalist, but with more direct reference to the power to regulate commerce.

Governor Ellsworth, in opening the debate of the Connecticut Convention on the adoption of the Constitution, says: 'Our being tributary to our sister States, is in consequence of the want of a Federal system. The State of New York raises 60,000 or  80,000 in a year by impost. Connecticut consumes about one-third of the goods upon which this impost is laid, and consequently pays one-third of this sum to New York. If we import by the medium of Massachusetts, she has an impost, and to her we pay tribute.' A few days later, he says: 'I find, on calculation, that a general impost of five per cent. would raise a sum of 245,000,' and adds: 'it is a strong argument in favor of an impost, that the collection of it will interfere less with the internal police of the States than any other species of taxation. It does not fill the country with revenue officers, but is confined to the seacoast, and is chiefly a water operation. . . . If we do not give it to Congress, the individual States will have it.'

It is not too much to say that, so far as our research has extended, neither the word export, import, or impost is to be found in the discussions on this subject, as they have come down to us from that time, in reference to any other than foreign commerce, without some special form of words to show that foreign commerce is not meant. The only allusion to imposts in the Articles of Confederation is clearly limited to duties on goods imported from foreign States. Wherever we find the grievance to be remedied by this provision of the Constitution alluded to, the duty levied by the States on foreign importations is alone mentioned, and the advantages to accrue to Congress from the power confided to it, and withheld from the States, is always mentioned with exclusive reference to foreign trade.

Whether we look, then, to the terms of the clause of the Constitution in question, or to its relation to the other parts of that instrument, or to the history of its formation and adoption, or to the comments of the eminent men who took part in those transactions, we are forced to the conclusion that no intention existed to prohibit, by this clause, the right of one State to tax articles brought into it from another. If we examine for a moment the results of an opposite doctrine, we shall be well satisfied with the wisdom of the Constitution as thus construed.

The merchant of Chicago who buys his goods in New York and sells at wholesale in the original packages, may have his millions employed in trade for half a lifetime and escape all State, county, and city taxes; for all that he is worth is invested in goods which he claims to be protected as imports from New York. Neither the State nor the city which protects his life and property can make him contribute a dollar to support its government, improve its throughfares or educate its children. The merchant in a town in Massachusetts, who deals only in wholesale, if he purchase his goods in New York, is exempt from taxation. If his neighbor purchase in Boston, he must pay all the taxes which Massachusetts levies with equal justice on the property of all its citizens.

These cases are merely mentioned as illustrations. But it is obvious that if articles brought from one State into another are exempt from taxation, even under the limited circumstances laid down in the case of Brown v. Maryland, the grossest injustice must prevail, and equality of public burdens in all our large cities is impossible.

It is said, however, that, as a court, we are bound, by our former decisions, to a contrary doctrine, and we are referred to the cases of Almy v. State of California and Brown v. Maryland, in support of the assertion.

The case first mentioned arose under a statute of California, which imposed a stamp tax on bills of lading for the transportation of gold and silver from any point within the State to any point without the State.

The master of the ship Rattler was fined for violating this law, by refusing to affix a stamp to a bill of lading for gold shipped on board his vessel from San Francisco to New York. It seems to have escaped the attention of counsel on both sides, and of the Chief Justice who delivered the opinion, that the case was one of inter-state commerce. No distinction of the kind is taken by counsel, none alluded to by the court, except in the incidental statement of the termini of the voyage. In the language of the court, citing Brown v. Maryland as governing the case, the statute of Maryland is described as a tax on foreign articles and commodities. The only question discussed by the court is, whether the bill of lading was so intimately connected with the articles of export described in it that a tax on it was a tax on the articles exported. And, in arguing this proposition, the Chief Justice says that 'a bill of lading, or some equivalent instrument of writing, is invariably associated with every cargo of merchandise exported to a foreign country, and consequently a duty upon that is, in substance and effect, a duty on the article exported.' It is impossible to examine the opinion without perceiving that the mind of the writer was exclusively directed to foreign commerce, and there is no reason to suppose that the question which we have discussed was in his thought. We take it to be a sound principle, that no proposition of law can be said to be overruled by a court, which was not in the mind of the court when the decision was made.

The case, however, was well decided on the ground taken by Mr. Blair, counsel for defendant, namely: that such a tax was a regulation of commerce, a tax imposed upon the transportation of goods from one State to another, over the high seas, in conflict with that freedom of transit of goods and persons between one State and another, which is within the rule laid down in Crandall v. Nevada, and with the authority of Congress to regulate commerce among the States. We do not regard it, therefore, as opposing the views which we have announced in this case.

The case of Brown v. Maryland, as we have already said, arose out of a statute of that State, taxing, by way of discrimination, importers who sold, by wholesale, foreign goods.

Chief Justice Marshall, in delivering the opinion of the court, distinctly bases the invalidity of the statutes, (1.) On the clause of the Constitution which forbids a State to levy imposts or duties on imports; and (2.) That which confers on Congress the power to regulate commerce with foreign nations, among the States, and with the Indian tribes.

The casual remark, therefore, made in the close of the opinion, 'that we suppose the principles laid down in this case to apply equally to importations from a sister State,' can only be received as an intimation of what they might decide if the case ever came before them, for no such case was then to be decided. It is not, therefore, a judicial decision of the question, even if the remark was intended to apply to the first of the grounds on which that decision was placed.

But the opinion in that case discusses, as we have said, under two distinct heads, the two clauses of the Constitution which he supposed to be violated by the Maryland statute, and the remark above quoted follows immediately the discussion of the second proposition, or the applicability of the commerce clause to that case.

If the court then meant to say that a tax levied on goods from a sister State which was not levied on goods of a similar character produced within the State, would be in conflict with the clause of the Constitution giving Congress the right 'to regulate commerce among the States,' as much as the tax on foreign goods, then under consideration, was in conflict with the authority 'to regulate commerce with foreign nations,' we agree to the proposition.

It may not be inappropriate here to refer to the License Cases.

The separate and diverse opinions delivered by the judges on that occasion leave it very doubtful if any material proposition was decided, though the precise point we have here argued was before the court and seemed to require solution. But no one can read the opinions which were delivered without perceiving that none of them held that goods imported from one State into another are within the prohibition to the States to levy taxes on imports, and the language of the Chief Justice and Judge McLean leave no doubt that their views are adverse to the proposition.

We are satisfied that the question, as a distinct proposition necessary to be decided, is before the court now for the first time.

But, we may be asked, is there no limit to the power of the States to tax the produce of their sister States brought within their borders? And can they so tax them as to drive them out or altogether prevent their introduction or their transit over their territory?

The case before us is a simple tax on sales of merchandise, imposed alike upon all sales made in Mobile, whether the sales be made by a citizen of Alabama or of another State, and whether the goods sold are the produce of that State or some other. There is no attempt to discriminate injuriously against the products of other States or the rights of their citizens, and the case is not, therefore, an attempt to fetter commerce among the States, or to deprive the citizens of other States of any privilege or immunity possessed by citizens of Alabama. But a law having such operation would, in our opinion, be an infringement of the provisions of the Constitution which relate to those subjects, and therefore void. There is also, in addition to the restraints which those provisions impose by their own force on the States, the unquestioned power of Congress, under the authority to regulate commerce among the States, to interpose, by the exercise of this power, in such a manner as to prevent the States from any oppressive interference with the free interchange of commodities by the citizens of one State with those of another.

JUDGMENT AFFIRMED.

title: Woodruff v. Parham/Opinion of the Court


text: Talk:Woodruff v. Parham/Opinion of the Court

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text:
Hinson v. Lott

THE case was this: With the same provisions of the Constitution as are quoted in the last case in force (supra, p. 123) the State of Alabama passed a statute, approved February 22d, 1866, which, by its 13th section, enacted:

'Before it shall be lawful for any dealer or dealers in spirituous liquors to offer any such liquors for sale within the limits of this State, such dealer or dealers introducing any such liquors into the State for sale shall first pay the tax-collector of the county into which such liquors are introduced, a tax of fifty cents per gallon upon each and every gallon thereof.'

Two subsequent sections, the 14th and 15th, provided the mode of enforcing the collection of the tax thus imposed.

Previous sections of the statute, it ought to be mentioned, laid a tax of fifty cents per gallon on all whiskey and all brandy from fruits manufactured in the State, and in order to collect this tax, enacted that every distiller should take out a license and make regular returns of the amount of distilled spirits manufactured by him. On this he was to pay the fifty cents per gallon.

With this statute in force, Hinson, a merchant of Mobile, filed a bill against the tax-collector for the city of Mobile, and State of Alabama, in which he set forth that he had on hand five barrels of whiskey consigned to him by one Dexter, of the State of Ohio, to be sold on account of the latter in the State of Alabama, and that he had five other barrels, purchased by himself in the State of Louisiana, and that he had brandy and wine imported from abroad (upon which he had paid the import duties laid by the United States, at the custom-house at Mobile), all of which liquors he now held and was offering for sale in the same packages in which they were imported, and not otherwise; that the tax-collector was about to enforce the collection of State and county taxes on the said liquors, for which he set up the authority of the 13th, 14th and 15th sections of the already quoted act of the Alabama legislature. Hinson insisted that this act was void as being in conflict with the Constitution of the United States, and prayed an injunction. The defendant demurred.

On final hearing, in the Supreme Court of Alabama, that court gave an elaborate opinion. Referring to the clause of the Constitution, which says, that 'Congress shall have power to regulate commerce with foreign nations and among the several States,' it admitted that opinions were to be found in the reports of the Federal courts that the power was exclusive; but that the better opinions were otherwise; and while, if Congress exercised this power, all conflicting legislation would give way, yet, subject to the superior power in Congress, the States might legislate. It proceeded:

'There is no act of Congress with which a State tax upon liquor, introduced from other States, can interfere, and, therefore, it is permissible for the State to impose a tax upon the sale of liquor introduced from another State. Such a tax is not only constitutional, but it is obviously just and proper, for a tax to the same extent is imposed upon liquor manufactured in the State.

'It is admitted that the law under consideration is broad enough to apply to liquors imported from foreign countries, but it is void only so far as it is in collision with the acts of Congress on that subject.'

Accordingly, the relief prayed was granted as to all but the State tax, and relief as to that was granted as to goods imported from abroad, but the State tax of fifty cents per gallon on the whiskey of Dexter, of Ohio, and that purchased by plaintiff in Louisiana was held to be valid.

The case was now here for review. And was argued (like the last one, though being after it, less fully) by Mr. J. A. Campbell, for the plaintiff in error, and by Mr. P. Phillips, contra: little reference being made to other sections of the statute than the 13th.

Mr. Campbell contended that this 13th section of the act in question was a plain violation of the Constitution; as well of that provision of it which says that 'no State shall levy any imposts on imports,' as of that other which declares 'that the citizens of each State shall be entitled to all the immunities and privileges of citizens of the several States.' Moreover, the State act regulated inter-state commerce.

Mr. Justice MILLER delivered the opinion of the court

title: Hinson v. Lott


text: Talk:Hinson v. Lott

title: Talk:Hinson v. Lott


text:
Hinson v. Lott/Opinion of the Court

In the argument of this case no reference has been made to any other section than the 13th of the statute in question.

If this section stood alone in the legislation of Alabama on the subject of taxing liquors, the effect of it would be that all such liquors brought into the State from other States and offered for sale, whether in the original casks by which they came into the State or by retail in smaller quantities, would be subject to a heavy tax, while the same class of liquors manufactured in the State would escape the tax. It is obvious that the right to impose any such discriminating tax, if it exist at all, cannot be limited in amount, and that a tax under the same authority can as readily be laid which would amount to an absolute prohibition to sell liquors introduced from without while the privilege would remain unobstructed in regard to articles made in the State. If this can be done in reference to liquors, it can be done with reference to all the products of a sister State, and in this mode one State can establish a complete system of non-intercourse in her commercial relations with all the other States of the Union.

We have decided, in the case of Woodruff v. Parham, immediately preceding, that the constitutional provision against taxing imports by the States does not extend to articles brought from a sister State. But if this were otherwise, and we could hold that as to such articles the rule laid down in Brown v. Maryland, concerning foreign imports, applied, it would prevent but a very little of the evil which we have described; for, under the decision in that case, it is only while the goods so imported were held in the original unbroken condition in which they came into the State, and in the hands of the first importer, that they would be protected from State taxation. As soon as they passed out of his hands into use, or were offered for sale among the community at large, they would be liable to a tax which might render their use or sale impossible.

But while the case has been argued here with a principal reference to the supposed prohbition against taxing imports, it is to be seem from the opinion of the Supreme Court of Alabama delivered in this case, that the clause of the Constitution which gives to Congress the right to regulate commerce among the States, was supposed to present a serious objection to the validity of the Alabama statute. Nor can it be doubted that a tax which so seriously affects the interchange of commodities between the States as to essentially impede or seriously interfere with it, is a regulation of commerce. And it is also true, as conceded in that opinion, that Congress has the same right to regulate commerce among the States that it has to regulate commerce with foreign nations, and that whenever it exercises that power, all conflicting State laws must give way, and that if Congress had made any rugulation covering the matter in question we need inquire no further.

That court seems to have relieved itself of the objection by holding that the tax imposed by the State of Alabama was an exercise of the concurrent right of regulating commerce remaining with the States until some regulation on the subject had been made by Congress. But, assuming the tax to be, as we have supposed, a discriminating tax, levied exclusively upon the products of sister States; and looking to the consequences which the exercise of this power may produce if it be once conceded, amounting, as we have seen, to a total abolition of all commercial intercourse between the States, under the cloak of the taxing power, we are not prepared to admit that a State can exercise such a power, though Congress may have failed to act on the subject in any manner whatever.

The question of the nature of the power to regulate commerce and how far that power is exclusively vested in Congress, has always been a difficult one, and has seldom been construed in this court with unanimity. In the very latest case on this subject, Crandall v. Nevada, the Chief Justice and Mr. Justice Clifford held that a tax on persons passing through the State by railroads or other public conveyances was forbidden to the States by that provision of the Constitution proprio vigore, and in the absence of any legislation by Congress on the subject; while a majority of the court, preferring to place the invalidity of the tax on other grounds, merely expressed their inability, on a review of the cases previously decided, to take that view of the question. But in that case the opinion of the court in Cooley v. The Port Wardens was approved, which holds that there is a class of legislation of a general nature, affecting the commercial interests of all the States, which, from its essential character, is National, and which must, so far as it affects these interests belong exclusively to the Federal government.

The tax in the case before us, if it were of the character we have suggested, discriminating adversely to the products of all the other States in favor of those of Alabama, and involving a principle which might lead to actual commercial non-intercourse, would, in our opinion, belong to that class of legislation and be forbidden by the clause of the Constitution just mentioned.

But a careful examination of that statute shows that it is not obnoxious to this objection. A tax is imposed by the previous sections of the same act of fifty cents per gallon on all whiskey and all brandy from fruits manufactured in the State. In order to collect this tax, every distiller is compelled to take our a license and to make regular returns of the amount of distilled spirits manufactured by him. On this he pays fifty cents per gallon. So that when we come in the light of these earlier sections of the act, to examine the 13th, 14th, and 15th sections, it is found that no greater tax is laid on liquors brought into the State than on those manufactured within it. And it is clear that whereas collecting the tax of the distiller was supposed to be the most expedient mode of securing its payment, as to liquors manufactured within the State, the tax on those who sold liquors brought in from other States was only the complementary provision necessary to make the tax equal on all liquors sold in the State. As the effect of the act is such as we have described, and it institutes no legislation which discriminates against the products of sister States, but merely subjects them to the same rate of taxation which similar articles pay that are manufactured within the State, we do not see in it an attempt to regulate commerce, but an appropriate and legitimate exercise of the taxing power of the States.

DECREE AFFIRMED.

Mr. Justice NELSON dissented. See his opinion in the preceding case, supra, p. 140.

title: Hinson v. Lott/Opinion of the Court


text: Talk:Hinson v. Lott/Opinion of the Court


text:
Propeller Mohawk

APPEAL from the Circuit Court for the Northern District of Illinois, the case being thus:

On the 31st of October, 1860, two parties, owners of it, shipped on board the propeller Mohawk, the vessel being then at Chicago, and as was admitted in a sipulation of record, 'in good and seaworthy condition,' two consignments of wheat, amounting to 20,200 bushels, to be delivered at Buffalo in good order and condition, dangers of navigation excepted, upon payment of freight and charges. The property was insured by an insurance company at the last-named place for $20,000. The propeller proceeded on her voyage, and after the same had been more than half completed, grounded on the 7th of November on the St. Clair Flats, near Detroit. In the effort to get her off she became disabled by the bursting of her boiler, and afterwards sunk, and was compelled to suspend her voyage for a few days to make necessary repairs.

All the wheat but 1100 bushels got wet and was damaged by the sinking of the propeller. Upon information then given to the consignee and insurers at Buffalo, the agent of the owners of the wheat immediately abandoned it to the underwriters as for a total loss, and the latter then accepted the abandonment and paid the loss to the owners as for a total loss.

On the 11th of November, the underwriters ordered their agent at Detroit to take possession of the damaged wheat, and to sell it as it lay in the vessel at the flats, and the agent thereupon did sell the damaged portion of it to one Phelps, for $1200, and took his note therefor, at 30 days. A delivery into lighters to the purchaser began on the same day. The next day (the 12th) the agent reported the sale, and on the 13th received a telegram from his company acknowledging the advices, and approving thereof. After the sale had been thus made, the company hearing that the master intended to claim freight, directed the agent to have nothing to do with the grain, unless the owners of the vessel would relinquish all claim for freight. It was arranged, however, between the agent and the master, that as the sale was a good one, it should stand, and that the freight should be left for after consideration. The whole of the damaged portion of the cargo, amounting to 19,100 bushels, was delivered by the propeller to the purchaser, Phelps, and the residue, 1100 bushels, was retained on board, and carried by the propeller to Buffalo, where it arrived safely. On that residue the insurance company tendered full freight and all other lawful charges, including a sum to cover general average charges; but refused to pay either pro rata or full freight on the wheat delivered on the flats. The master accordingly refused to deliver the 1100 bushels; the value of it being less than the freight on it and the pro rata freight on the larger quantity sold; and he asserting that he was entitled to freight on the entire shipment, either in full, or pro rata.

Soon after this (though with how correct a knowledge of facts was a matter, as it seemed, subsequently disputed by counsel), the counsel of the insurance company on the one hand, and of the shippers on the other, agreed upon a statement of facts, and on it the company brought suit in the Superior Court of Buffalo, to test the liabilities of the shippers upon the facts as then supposed. The insurance company, however, acting herein against the urgency of their agent at Detroit, 'who never expressed but one opinion, which was, that the carriers were liable and ought to be sued,' after some time discontinued this suit.

After this, this is to say, in July, 1862, and through the same agent, the claim of the company on the carriers was sold to one Barrell, for about $2300.

Libels were now filed, August, 1862, in the District Court of Illinois in the names of the owners of the wheat, claiming damages for the non-delivery of it. After hearing, the libels were dismissed. Thereupon an appeal was taken to the Circuit Court.

Barrell now presented his petition to that court, stating that the underwriters had assigned their interest in the cargo to him, and that he was equitably interested and entitled to intervenue, and have the benefit of both of the above libels. On this petition the Circuit Court consolidated both causes, and made order that he be subrogated to all the rights of the libellants, and that he have leave to file an amended libel. He did accordingly file such a libel, alleging the shipping of the cargo on board the Mohawk; that the propeller left port in good and seaworthy condition, and that after the voyage was more than half completed she was carelessly grounded on the St. Clair Flats. He also alleged the abandonment, and averred that the underwriters had suffered damages on account of the injury to the wheat, as well as for the non-delivery of the 1100 bushels detained by the propeller; and that he, as assignee of the insurance company, was entitled to recover therefore.

To this libel answer was made, denying negligence in grounding the vessel; admitting the non-delivery of the 1100 bushels of wheat, and asserting a right to hold it for freight; both that earned on the wheat actually delivered at St. Clair Flats, and on the 1100 bushels transported to Buffalo; abandonment was admitted; any assignment from the insurance company was denied; and the character of that transaction set forth with allegations, in substance, that it savored of maintenance. The substance of this answer was also proved.

The note at thirty days for $1200, given by the purchaser Phelps, was still in possession of the insurance company.

The Circuit Court affirmed the decree of the District Court, and the case was now here, on the action of Barrell, for review.

The appellant made two claims:

1. To have damages for injury to the cargo by the sinking of the propeller.

2. To have the 1100 bushels which the propeller had retained, or their value, upon paying the freight earned on that parcel only.

Mr. S. W. Fuller, with whom was Mr. Roe, for the appellant:

The first and chief question is, whether the carriers, having lost the body of the wheat through an explosion of a boiler, their own fault, they are discharged from obligation to pay the loss, owing to the insurers, who in this matter are the owners, having directed the sale of that portion of the wheat, in the circumstances of this case?

The moment of the disaster was, of course, an exigent one. The thoughts of all parties were directed obviously, and in an amicable spirit and mode of action, to saving the cargo, or of doing the best by it that circumstances allowed. In regard to everything but the matter of freight, all parties were of one mind; and the difference about this was adjusted in the same spirit which seems to have animated them in everything that was done, a spirit of present effort for the benefit of all concerned. A remission was accordingly made until a future time of the only question of difference arising. But this did not interfere with the common effort for the common advantage. It is in this way, that upon the evidence we see the parties; and upon it, we see them in no other. Least of all do we discover in what they do an attempt to fix liabilities where none existed, or to discharge them where they did. No doubt, it was the right and duty of the carrier to transport the cargo to Buffalo, according to the terms of the bills of lading, in order to earn and become entitled to freight; but the disaster to the propeller, whereby the wheat was damaged, having rendered it necessary and proper for all concerned, to join in saving as much of it as could be, the effort of the insurance company to help him, neither entitled him to full freight, nor released him from liability for loss occasioned by his negligence. Whatever acceptance was made, was in some sort compulsory and for the carrier's benefit.

We have assumed that the explosion was through the carrier's fault. Certainly it was so. An explosion is not a 'danger' incident to navigation, any more than the breaking of a chain on quiet water, or the falling of a mast when there is no wind. It occurs either from defect in the boiler, or from negligence in the engineer. Perils arising on the sea are not necessarily perils arising from the sea.

But if the vessel is not liable for the whole value of the wheat, it ought surely to demand freight upon only what it has delivered. All our preceding observations apply to this part of the case.

Mr. Beckwith, contra:

1. The insurers accepted and took possession of the damaged wheat and sold it to Phelps, and requested the propeller to deliver the property at the St. Clair Flats; they then took his note for the price. The sale was then completed, and the purchaser invested with title as against the insurers. How can they set up a claim of any kind for the non-delivery of the wheat, even supposing that the explosion did happen through their own fault, after thus taking it off the carrier's hands and preventing his delivery of it? But

2. The explosion was not through the carrier's fault. The immediate cause of damage was the sinking of the vessel; the vessel was sunk by the explosion of its boiler; the boiler exploded in an effort to set afloat the grounded vessel; and the vessel was grounded in the channel of the St. Clair Flats, without fault of its officers or men. It is admitted that the propeller left port in good and seaworthy condition; and she continued her voyage until she was grounded. Nothing had occurred, in the meantime, to disturb the good and seaworthy condition in which she set out. The admission applies as well to the condition of the boiler at the time of leaving; and, as nothing is shown to have occurred after the vessel left port to render the boiler defective, it is wrong to presume that the explosion occurred from a defect in the boiler.

3. Independently of all this, another matter, in its nature preliminary, though here put last, deserves attention from the bench. Barrell's standing in court is that of a volunteer purchasing and prosecuting a claim which his alleged assignor declined to prosecute or insist upon. The assignment did not transfer a legal title, and has merely an equitable operation. In considering the locus standi of the assignee, equitable considerations will therefore govern. The assignment savors of maintenance; the right thereunder is claimed by a volunteer; and in a court of equity the appellant would not, for these reasons, be entitled to relief. And in such a case, where a court of admiralty is called on to aid a party standing upon an equitable right, it will follow the rules of equity, and deny relief.

Reply.-As to the question of the appellant's status. The law subrogated the insurance company to the rights of the owners of the damaged cargo, and, in ignorance, the insurance company sold to the appellant a claim, which it regarded as worthless. Then, after suits had been brought in the names of the owners of the cargo, the court, for economy and convenience, allowed the two suits to be consolidated, and the real owner of the claim to be admitted to prosecute the suit. In this there was nothing champertous; nothing but what was sanctioned in Cobb v. Howard et al. As Grier, J., said, in the Propeller Monticello v. Mollison.

'The respondent is not presumed to know, or bound to inquire, as to the relative equities of parties claiming the damages. He is bound to make satisfaction for the injury he had done. When he has once made it to the injured party, he cannot be made liable to another suit at the instance of any merely equitable claimant.'

Both the 34th and 43d rules in admiralty justify what was done.

Mr. Justice NELSON delivered the opinion of the court.

title: Propeller Mohawk


text: Talk:Propeller Mohawk

title: Talk:Propeller Mohawk


text:
Propeller Mohawk/Opinion of the Court

The insurance company, having accepted the abandonment of the wheat by the owner, after the disaster to the vessel, became subrogated to all the rights of the shipper, and might have left the responsibility upon the master to refit his vessel, or procure another, and forward the wheat to its port of delivery, according to the contract in the bill of lading. The vessel could have been refitted within a short time; and this port was but a few days' navigation from the place of the disaster. Besides, it occurred in the track of vessels from Chicago, and other ports on the upper lakes, and there could have been but little difficulty in procuring the shipment in another vessel.

But no choice was left to the master, whether to refit his vessel or send on the cargo in another, or to communicate with his owners, who were in Buffalo, as to the proper course to be pursued. The second day after the disaster, the agent of the insurance company appeared with instructions to take possession of the damaged wheat, and sell it as it lay in the vessel. Possession was given up accordingly, and the wheat sold on the same day, the sale perfected, and a delivery into lighters commenced to the purchaser. After this, the company fearing that the master would charge freight upon this damaged wheat, countermanded the original order to sell, unless the master would relinquish it. This he declined to do, but suggested to the agent the sale was a favorable one, and that the question of freight might remain for after-consideration; which was agreed to.

We think it quite clear that the counter order, not to sell, came too late. The wheat had been turned over into the possession of the agent, who had sold it, and a portion had been delivered from the vessel to the purchaser. The agent had received complete possession and control of the wheat, and thereby rescinded the contract in the bill of lading for further shipment; and it required the assent of both parties to revive it. This counter order, however, and the action under it, are significant of the intent of the insurance company in accepting the delivery of the wheat. It was to receive the possession in discharge of any further responsibility of the vessel. The only thing in controversy was the claim of freight, and, undoubtedly, if the counter order had not been too late, unless the master had consented to give up the freight, he could have been compelled to forward the wheat as per bill of lading, or be answerable for the refusal or neglect.

In cases where the disaster happens in consequence of one of the perils within the exception in the bill of lading, or charter-party, the only responsibility of the vessel is to refit, and forward the cargo, or the portion saved, or if that is impracticable, to forward it in another vessel, and the owner is then entitled to freight. If part of the cargo is so far damaged as to be unfit to be carried on, the master may sell it at the intermediate port, as the agent of the shipper, for whom it may concern, and carry on the remainder. In this class of cases the vessel is only responsible for carrying on the cargo, being exempt from any damage by the exception in the contract of affreightment. And it is perfectly settled, that if the shipper voluntarily accepts the goods at the place of the disaster, or at any intermediate port, such acceptance terminates the voyage and all responsibility of the carrier, and the master is entitled to freight pro rata itineris.

The same rule, as it respects the effect of the voluntary acceptance of the goods at the place of the disaster, or intermediate port, applies in case the ship is disabled or prevented from forwarding them to the port of destination by a peril or accident not within the exception in the bill of lading.

The only difference between the cases is, that inasmuch as, in the latter, the vessel is responsible for all the damages that have resulted from the misfortune to the cargo, the proofs of the acceptance of the goods at the intermediate port, in order to operate as a discharge of the vessel, should be clear and satisfactory. The mere acceptance in such cases, and nothing else passing between the parties, ought not to preclude the shipper of his remedy. It should appear from the evidence and circumstances attending the transaction that the acceptance was intended as a discharge of the vessel and owner from any further responsibility-what would be equivalent to a mutual arrangement, express or implied, by which the original contract in the bill of lading was rescinded. The ground of the exemption from responsibility of the vessel, in both cases, is the voluntary acceptance of the goods at the intermediate port. Applying these principles to the present case, we think the court can come to but one result. It falls within the second class of cases above referred to, as the explosion of the boiler was not a peril within the exception in the bill of lading.

The acceptance, as we have already seen, was the voluntary act of the insurance company, without any solicitation or interference on the part of the master; and what would seem conclusive of the intent of the company in the transaction is, that they refused to bring a suit against the carrier to recover for the damaged wheat, although urged to it by the parties who afterwards took an assignment of the subject of litigation. Some $2300 was paid for a claim which, if real and substantial, amounted to $20,000.

What is still further evidence of the understanding of the insurance company of the effect of the acceptance and sale is, that they brought a suit to recover the value of the one thousand one hundred bushels of sound wheat, in the Superior Court of Buffalo alone; but even this was subsequently discontinued. The suit in the present case has been instituted by a volunteer, on a speculation; and we are not sorry that, upon the application of the principles of law governing it, the experiment must fail.

As to the freight, the cases we have above referred to establish that the master is entitled to freight pro rata itineris in all cases where there has been a voluntary acceptance of the goods at the port of disaster. The rate is to be ascertained by comparing the portion of the voyage performed with the entire length of it.

In the present case the goods were carried something more than half the distance; and, upon the facts as admitted in the record, the freight would exceed the value of the one thousand and one hundred bushels of wheat at the port of delivery at the time it arrived.

No balance is shown to be due to the libellant on the wheat. The libel, therefore, was properly dismissed by the court below.

DECREE AFFIRMED.

title: Propeller Mohawk/Opinion of the Court


text: Talk:Propeller Mohawk/Opinion of the Court


text:
Page:A short history of social life in England.djvu/34

14 in the neighbourhood, they are marvellous in the skill of their workmanship, and they testify to a past which is still pitifully speechless and yet, with all its barbaric attributes, contains the embryonic characteristics of our modern existence to-day.


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McKee v. United States (75 U.S. 163)

APPEAL from the District Court for Southern Illinois, condemning certain cotton claimed by John H. McKee. The case was this:

Congress, by act of July 13th, 1861, passed soon after the outbreak of the late insurrection against the United States, enacted that it might be lawful for the President, by proclamation, to declare that the inhabitants of any State or part of a State where such insurrection was existing were in a state of such insurrection, and that 'thereupon all commercial intercourse by and between the same and citizens thereof and citizens of the rest of the United States should cease, and be unlawful so long as such condition of hostility should continue.' The same act contained a proviso that the President might license and permit commercial intercourse with any such part of the section so declared in a state of insurrection as he, in his discretion, might think most conducive to the public interest; and that such intercourse, so far as by him licensed, should be carried on in pursuance of rules and regulations prescribed by the Secretary of the Treasury.

In March, 1864, a date to be noted in the present case, the only regulations prescribed by the secretary on the subject forbade the trade; these prescribing that 'commercial intercourse with localities beyond the lines of military occupation by the United States forces is strictly prohibited.'

By section 5 of the subsequent act of July 17th, 1862, it was enacted:

'That to insure the speedy termination of the present rebellion, it shall be the duty of the President of the United States to cause the seizure of all the estate and property, money, stocks, credits, and effects of the persons hereinafter named in this section, and to apply and use the same and the proceeds thereof for the support of the army of the United States.'

The enumeration of persons includes any person hereafter holding an office or agency under the government of the so-called Confederate States of America. And the section thus concludes:

'And all sales, transfers, or conveyances of any such property shall be null and void; and it shall be a sufficient bar to any suit brought by such person for the possession or use of such property, or any of it, to allege and prove that he is one of the persons described in this section.'In this state of the statutes and treasury regulations, one A. W. McKee, a resident of the then rebel portion of Louisiana, and from October till the autumn of 1864 the general agent of the Treasury Department to purchase and dispose of cotton in the State of Texas, and that part of Louisiana lying west of the Mississippi River, regions then in insurrection against the United States and within the military lines of the Confederacy, was the owner of certain cotton, the subject of the present appeal, and had it in a storehouse there on the bank of the Red River.

While thus stored within the Confederate lines, it was purchased of him there, and paid for on the 4th of March, 1864, by John H. McKee, a loyal citizen of the United States, resident at New Orleans, then in possession and under control of the government; this McKee, the purchaser, being no relative of his by blood, though an adopted son of an uncle. There was some evidence, not satisfactory, however, tending to show that the purchaser, McKee, had a license to trade in insurgent territory, issued by agents of the treasury in proposed conformity with the requirements of the act of July 13th, 1861. But, however this might have been, it seemed to be conceded that he had permission from the military commander of the forces of the United States in that department to pass through the Federal lines into the rebellious region, and bring away any property that he might purchase there; and there was even evidence tending to show that these authorities had actually granted him a license to trade.

The cotton had not yet been removed by J. H. McKee from the storehouse in which it was at the time of the purchase, when, in twelve days after the purchase, the region being now overrun by the Federal army, it was seized by a flotilla of the United States, and, in the face of protest by the purchaser, brought to Cairo and condemned.

The propriety of this condemnation was now the question on appeal.

Mr. R. M. Corwine, for the appellant; Mr. Hoar, Attorney-General, contra.

Mr. Justice DAVIS delivered the opinion of the court.

title: McKee v. United States (75 U.S. 163)


text: Talk:McKee v. United States (75 U.S. 163)


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A Dictionary of Artists of the English School

{{{AuxTOC|title=| {{center|Biographical Notice of Samuel Redgrave Preface Editor's Note to the Second Edition Note

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McKee v. United States (75 U.S. 163)/Opinion of the Court

It is a familiar principle of public law, that unlicensed business intercourse with an enemy during a time of war is not permitted. Congress, therefore, in recognition of this principle, when it declared, on the 13th day of July, 1861, that commercial intercourse between the seceding States and the rest of the United States should cease and be unlawful, after the proclamation of the President that a state of insurrection existed, authorized the President, in his discretion, to license trade. But in so far as it was licensed, it was to be conducted in accordance with the regulations prescribed by the Secretary of the Treasury. The President proclaimed the fact of insurrection, and provided for a limited commercial intercourse, and the Secretary of the Treasury fixed the manner in which this intercourse should be carried on. Under this act of Congress, the proclamation of the President, and the trade regulations established in pursuance of it, can the purchase of the property in question be protected?

It was made on the 4th of March, 1864, while the war was flagrant, by John H. McKee, a citizen of New Orleans, of A. W. McKee, a resident of Upper Louisiana, and the general agent of the Treasury Department of the Confederate States, to purchase and dispose of cotton in the State of Texas, and that part of Louisiana lying west of the Mississippi River.

Permission had been given the claimant, by the commanding officer of the Department of the Gulf, to pass through the United States lines into Upper Louisiana and bring away any property that he might purchase there. But who authorized him, while there, to make the purchase? There is no sufficient proof in the record that any treasury officer clothed him with this authority, and it is very clear that the power of the military extended no further than to protect him in going into the lines of the enemy and bringing from there any property rightfully acquired. If, as is contended, and as the evidence tends to show, the military authorities went further and granted him also a license to trade, the answer is, that this court held in The Ouachita Cotton case, reported in 6th Wallace, that such a license was void.

But even if McKee had obtained the express permission of one of the treasury agents to go into the Confederate lines and buy cotton, it would not protect him, because the agent would have been acting outside the limits of his authority, as the regulations of the department, in force at the time, strictly prohibited commercial intercourse with localities beyond the lines of military occupation by the United States forces.

There is another view of this case, which is decisive of it, if the proof was ample that the claimant had a license in conformity with treasury regulations, issued under the act of Congress of July 13th, 1861, to trade generally within insurgent territory, for the reason that such a license could give him no right to buy property of A. W. McKee, who held an important official position from the government of the Confederate States.

Section 5 of the act of Congress of July 17th, 1862, prohibited a person occupying the position of A. W. McKee from selling his property, and it follows, as he had no capacity to dispose of it, that the claimant could acquire no title to it.

All licenses to trade issued under the act of July 13th, 1861, are controlled by the provisions of the act of July 17th, 1862, and must be restricted to a permission to trade with those persons who are not within the prohibitions of the latter act. It is a well-settled principle of law, that in case of the repugnancy between two statutes, the latter one must prevail over the former. In that particular in which the prior and the latter act cannot consistently stand together, the latter act must be taken, pro tanto, as a modification or repeal of the former.

DECREE AFFIRMED.


text: Talk:McKee v. United States (75 U.S. 163)/Opinion of the Court


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Paul v. Virginia

ERROR to the Supreme Court of Appeals of the State of Virginia. The case was thus:

An act of the legislature of Virginia, passed on the 3d of February, 1866, provided that no insurance company, not incorporated under the laws of the State, should carry on its business within the State without previously obtaining a license for that purpose; and that it should not receive such license until it had deposited with the treasurer of the State bonds of a specified character, to an amount varying from thirty to fifty thousand dollars, according to the extent of the capital employed. The bonds to be deposited were to consist of six per cent. bonds of the State, or other bonds of public corporations guaranteed by the State, or bonds of individuals, residents of the State, executed for money lent or debts contracted after the passage of the act, bearing not less than six per cent. per annum interest.

A subsequent act passed during the same month declared that no person should, 'without a license authorized by law, act as agent for any foreign insurance company' under a penalty of not less than $50 nor exceeding $500 for each offence; and that every person offering to issue, or making any contract or policy of insurance for any company created or incorporated elsewhere than in the State, should be regarded as an agent of a foreign insurance company.

In May, 1866, Samuel Paul, a resident of the State of Virginia, was appointed the agent of several insurance companies, incorporated in the State of New York, to carry on the general business of insurance against fire; and in pursuance of the law of Virginia, he filed with the auditor of public accounts of the State his authority from the companies to act as their agent. He then applied to the proper officer of the district for a license to act as such agent within the State, offering at the time to comply with all the requirements of the statute respecting foreign insurance companies, including a tender of the license tax, excepting the provisions requiring a deposit of bonds with the treasurer of the State, and the production to the officer of the treasurer's receipt. With these provisions neither he nor the companies represented by him complied, and on that ground alone the license was refused. Notwithstanding this refusal lCircuit Court of the city of Petersburg, the New York companies without any license, and offered to issue policies of insurance in their behalf, and in one instance did issue a policy in their name to a citizen of Virginia. For this violation of the statute he was indicted, and convicted in the Circuit Court of the city of Petersburg, and was sentenced to pay a fine of fifty dollars. On error to the Supreme Court of Appeals of the State, this judgment was affirmed, and the case was brought to this court under the 25th section of the Judiciary Act, the ground of the writ of error being that the judgment below was against a right set up under that clause of the Constitution of the United States, which provides that 'the citizens of each State shall be entitled to all the privileges and immunities of citizens in the several States;' and that clause giving to Congress power 'to regulate commerce with foreign nations, and among the several States.'

The corporators of the several insurance companies were at the time, and still are, citizens of New York, or of some one of the States of the Union other than Virginia. And the business of insurance was then, and still is, a lawful business in Virginia, and might then, and still may, be carried on by all resident citizens of the State, and by insurance companies incorporated by the State, without a deposit of bonds, or a deposit of any kind with any officer of the commonwealth.

Messrs. B. R. Curtis and J. M. Carlisle, for the plaintiff in error:

The single question is, whether under both or either of the clauses of the Constitution relied on by the insurance agent, the act of the legislature of Virginia in the particulars complained of, is unconstitutional.

I. A corporation created by the laws of one of the States, and composed of citizens of that State, is a citizen of that State within the meaning of the Constitution.

Legislation imposing special and discriminating restrictions upon the carrying on of lawful business in one State by citizens of other States was expressly forbidden by an article of the Confederation, by which it is provided, that 'the better to secure and perpetuate mutual friendship and intercourse among the people of the different States in this Union, the free inhabitants, & c., shall be entitled to all the privileges and immunities of free citizens in the several States,. . . and the people of each State shall have free ingress and egress to and from any other State, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions, and restrictions as the inhabitants thereof respectively.'

It cannot be supposed that the Constitution-one of whose objects was to secure a more perfect Union-was intended to be less efficient in these respects than the Articles of Confederation had been. The defect in the article of the Confederation was not that it imposed too great restrictions upon the powers of the States, but that it was wholly without the protection and support of a supreme Federal power.

But insisting less upon this first head, we come to one which we deem conclusive.

II. The power conferred on Congress 'to regulate commerce,' does not exclude the commerce carried on by corporations.

(a.) The terms are broad enough to include it.

(b.) The state of facts existing at the time of the formation of the Constitution forbids the supposition that the commerce of corporations was excluded. From the time when commerce began to revive in the middle ages, corporations had been a great and important instrument of commerce. This fact is too conspicuous to be overlooked. The East India Company, founded 1599, and made perpetual in 1610, had, in its pursuit of commerce, conquered and held vast possessions. Every commercial people, from Wisby round to Venice, had employed these associations as the instruments of commerce. Morellet, a French writer on commercial subjects, whose book was published in 1770, gives a list of a large number of these companies. Postlethwaite, whose Dictionary of Trade appeared in 1774, does the same. We need but refer to The Merchant Adventurers' Company, in the time of Edward IV, to The Russian Merchants' Company, to The Levant Company, The Virginia Company, The Turkey Company, The Greenland Company, The Hudson Bay Company, The Hamburg Company, The Great Dutch East India Company. And when the Constitution was proposed, some of the States to be united under it, as ex. gr. Massachusetts and Plymouth, had their origin, and settlement, and growth under the charters of trading corporations. In 1776 Adam Smith, whose Wealth of Nations was extensively read and admired, speaks of them largely.

Even if it was not then known that corporations had been extensively employed as instruments of commerce, still it the terms of the Constitution were broad enough to include all instruments, all would be included. How much more, when the use of this instrumentality was then known, conspicuous, and of vast importance. The truth is, that the Constitution has no reference to the particular instruments to be employed. These instruments may be greatly varied, according to the views of interest and expediency of those who carry on commerce.

Single persons, general partnerships, special partnerships, associations not incorporated, but having some of the incidents, corporations technically, all these alike are agencies of commerce. The Constitution has no reference to the modes of association by which the commerce should be carried on. This was of no more importance than whether sails or steam were used in the matter.

Indeed, it seems absolutely necessary to hold commerce carried on by corporations to be included. No systematic and uniform plan would be otherwise secured, and we should have worse confusion than before the Constitution was adopted.

2. The business of insurance is commerce. It is intercourse for the purpose of exchanging sums of money for promises of indemnity against losses. The term 'commerce,' as used in the Constitution, has been authoritatively construed to have a signification wide enough to include this subject. In Gibbons v. Ogden, Chief Justice Marshall said, 'Commerce undoubtedly is traffic, but it is something more; it is intercourse. It describes the commercial intercourse between nations, and parts of nations in all its branches.'

The contract of insurance is inseparable from commerce in modern times. It has become its indispensable handmaid. Indeed the right to sell merchandise, and the right to insure it, would seem in the nature of things to be inseparable. And so necessary an incident to commerce in its narrowest sense as the contract of insurance, must fall within the principles directly applicable to that commerce itself.

In Almy v. California, Chief Justice Taney speaking of a tax on a bill of lading, uses this language:

title: Paul v. Virginia


text: Talk:Paul v. Virginia

title: Talk:Paul v. Virginia


text:
Paul v. Virginia/Opinion of the Court

'A tax or duty on a bill of lading, though differing in form from a tax on the article shipped, is in substance the same thing.'

Suppose the statute required a license to sell bills of exchange; in other words to exchange an absolute promise to pay a sum of money in New York for money paid therefor. Is there any difference as respects this matter, between an absolute promise and a conditional one? Both alike are known and indispensable instruments of commerce; both traffic for pecuniary values.

3. It is commerce between the States. A corporation in New York sends its agents to Virginia, we may suppose to sell goods or exchange. Is not that commerce of this kind? This is obvious.

4. The statute of Virginia amounts to a regulation of commerce. It prescribes the terms and conditions on which this branch of commerce may be carried on, and makes it penal to prosecute it without a compliance with those terms.

III. Is it within the power of a State to make such a regulation of commerce? The scope of the statute is not to secure uniform rights, but to destroy them. It is discrimination all through; and discrimination by States in favor of their own citizens and against the citizens of sister States. It is easy to see where such assumptions lead. In Crandall v. Nevada, the court declared unconstitutional a tax of one dollar laid by a State on passengers passing through it, as was evident, because it involved a power to lay a tax of thousands, and to prohibit travel wholly. They acted on what was said by Marshall, C. J., in Brown v. Maryland, that the power to tax involves the power to destroy. It is easy to see where such assumptions as are here pretended to be rightful would lead. Each State can prevent every other from trading by their agencies, Which are the great instruments of modern commerce, and we are back to the evils of the Confederation.

IV. In no view can such a statute be regarded as a police regulation, or as otherwise falling within the scope of the reserved powers of the States. It concerns only the exercise of a business not only lawful and permitted, but encouraged, and by this statute attempted to be protected for its own citizens. It does not at all concern the manner or the circumstances of the exercise of that business, but only the persons who shall exercise it, and discriminates between them only in respect of their being citizens of the State of Virginia, or of other States in the Union.

If it be suggested that the State has the right in this manner to protect its citizens against unsubstantial or irresponsible corporations created by other States, it may be answered that the same power and the same policy must exist in respect of partnerships of natural persons, citizens of other States, having their chief establishments there, in any other trade or commerce, and attempting to establish agencies in the State of Virginia. If, as we maintain, the statute in question is a regulation of commerce between Virginia and other States of the Union, it is upon a subject which must, in its nature, be exclusively Federal. It is plainly not one of those subjects upon which the States may legislate in the absence of legislation by Congress. It concerns nothing less than the equal right of the citizens of all the States to carry on a lawful trade or commerce in each State upon equal terms with the citizens thereof. Nothing can be more purely Federal in its nature, or more obviously beyond the reach of invidious State legislation.

Messrs. Conway Robinson and R. Bowden, for the State of Virginia, contra:

I. A corporation is a mere legal entity and can have no legal existence outside of the dominion of the State by which it is created. This was decided in Bank of Augusta v. Earle, and the case was referred to with approval by Taney, C. J., in delivering the judgment of the court in Covington Drawbridge Company v. Shepherd. In this last case, the Chief Justice, in referring to a preceding case, says, that the declaration stated that the corporation itself was a citizen of Indiana. Now, no one, we presume, ever supposed that the artificial being created by an act of incorporation could be a citizen of a State in the sense in which that word is used in the Constitution of the United States, and the averment was rejected because the matter averred was simply impossible. Yet that is one precise position of the appellant here. He insists that a corporation is a citizen of a State within the scope and meaning of the provision of the Constitution: 'That the citizens of each State shall be entitled to all privileges and immunities, of citizens in the several States.' This court has several times decided that a corporation is not a citizen within the meaning of the Constitution.

In Lafayette Insurance Co. v. French, this court says:

'The averment, that the company is a citizen of the State of Indiana, can have no sensible meaning attached to it.'

This court would not hold that either a voluntary association of persons, or an association into a body politic, created by law, was a citizen of a State within the meaning of the Constitution. And, therefore, if the defective averment in the declaration had not been otherwise supplied, the suit must have been dismissed. In Covington Drawbridge Company v. Shepherd, referring to the case just mentioned, the court uses the following language:

'Now, no one, we presume, ever supposed that the artificial being created by an act of incorporation could be a citizen of a State in the sense in which that word is used in the Constitution of the United States, and the averment was rejected because the matter averred was simply impossible.'So in Ohio and Mississippi Railroad Company v. Wheeler, Taney, C. J., for the court, says, that it had been decided in the case of The Bank v. Denning long before the case of the Bank of Augusta v. Earle came before the court, that a corporation was not a citizen in the meaning of the Constitution of the United States, and cannot maintain a suit in a court of the United States against the citizen of a different State from that by which it was chartered, unless the persons who compose the corporate body are all citizens of that State. Many more cases might be cited upon the same point.

If the assumption that a corporation was a citizen in the contemplation of the Constitution of the United States were correct, yet it would not follow, that a citizen of a State residing in one State, would be entitled to the privileges and immunities of citizens of each of the other States. Politically, it is very certain he would not, and it is not seen very clearly how he could in all other things. There is no question, that a citizen of any particular State, who removes into any other State of the Union and resides there long enough to become a citizen, is entitled to all the privileges and immunities of the latter State, without being required to be naturalized. He would become a citizen by the mere operation of the Constitution of the United States. By such removal he might lose some of his privileges, whilst he gained others; after he became a citizen of a State he could not sue a citizen of the same State in the courts of the United States. To illustrate,-a citizen of New York may sue a citizen of Virginia in the United States courts.

It is the duty of all governments to pass all laws which may be necessary to shield and protect its citizens. The companies of which the appellant claims to be the agent, are presumed to have their residence in New York, and all of their effects are there. The deposit required by the law of Virginia is for two purposes: first, to insure the payment of the taxes, and second, as an indemnity to the insured. No foreign insurance company has a right to come into Virginia by her agents, to do the business of insurance, without the consent of Virginia, and, in giving her consent, she has the perfect right to impose such reasonable conditions as she may deem necessary and proper to secure the payment of her revenue and the security of her citizens from impositions and frauds.

II. The second position taken has no foundation in a true conception of the word commerce. Insuring a house from fire, or plate-glass from breakage-this last, a sort of insurance now common in large cities-is not commerce in the sense of the Constitution, however convenient and even necessary such insurance may be to enable men to protect their houses from the ravages of one of the elements, or their shop windows from accident or mischief.

Mr. Justice FIELD, after stating the case, delivered the opinion of the court, as follows:

On the trial in the court below the validity of the discriminating provisions of the statute of Virginia between her own corporations and corporations of other States was assailed. It was contended that the statute in this particular was in conflict with that clause of the Constitution which declares that 'the citizens of each State shall be entitled to all the privileges and immunities of citizens in the several States,' and the clause which declares that Congress shall have power 'to regulate commerce with foreign nations and among the several States.' The same grounds are urged in this court for the reversal of the judgment.

The answer which readily occurs to the objection founded upon the first clause consists in the fact that corporations are not citizens within its meaning. The term citizens as there used applies only to natural persons, members of the body politic, owing allegiance to the State, not to artificial persons created by the legislature, and possessing only the attributes which the legislature has prescribed. It is true that it has been held that where contracts or rights of property are to be enforced by or against corporations, the courts of the United States will, for the purpose of maintaining jurisdiction, consider the corporation as representing citizens of the State under the laws of which it is created, and to this extent will treat a corporation as a citizen within the clause of the Constitution extending the judicial power of the United States to controversies between citizens of different States. In the early cases when this question of the right of corporations to litigate in the courts of the United States was considered, it was held that the right depended upon the citizenship of the members of the corporation, and its proper averment in the pleadings. Thus, in the case of The Hope Insurance Company v. Boardman, where the company was described in the declaration as 'a company legally incorporated by the legislature of the State of Rhode Island and Providence Plantations, and established at Providence,' the judgment was reversed because there was no averment that the members of the corporation were citizens of Rhode Island, the court holding that an aggregate corporation as such was not a citizen within the meaning of the Constitution.

In later cases this ruling was modified, and it was held that the members of a corporation would be presumed to be citizens of the State in which the corporation was created, and where alone it had any legal existence, without any special averment of such citizenship, the averment of the place of creation and business of the corporation being sufficient; and that such presumption could not be controverted for the purpose of defeating the jurisdiction of the court.

But in no case which has come under our observation, either in the State or Federal courts, has a corporation been considered a citizen within the meaning of that provision of the Constitution, which declares that the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States. In Bank of Augusta v. Earle, the question arose whether a bank, incorporated by the laws of Georgia, with a power, among other things, to purchase bills of exchange, could lawfully exercise that power in the State of Alabama; and it was contended, as in the case at bar, that a corporation, composed of citizens of other States, was entitled to the benefit of that provision, and that the court should look beyond the act of incorporation and see who were its members, for the purpose of affording them its protection, if found to be citizens of other States, reference being made to an early decision upon the right of corporations to litigate in the Federal courts in support of the position. But the court, after expressing approval of the decision referred to, observed that the decision was confined in express terms to a question of jurisdiction; that the principle had never been carried further, and that it had never been supposed to extend to contracts made by a corporation, especially in another sovereignty from that of its creation; that if the principle were held to embrace contracts, and the members of a corporation were to be regarded as individuals carrying on business in the corporate name, and therefore entitled to the privileges of citizens, they must at the same time take upon themselves the liabilities of citizens, and be bound by their contracts in like manner; that the result would be to make the corporation a mere partnership in business with the individual liability of each stockholder for all the debts of the corporation; that the clause of the Constitution could never have intended to give citizens of each State the privileges of citizens in the several States, and at the same time to exempt them from the liabilities attendant upon the exercise of such privileges in those States; that this would be to give the citizens of other States higher and greater privileges than are enjoyed by citizens of the State itself, and would deprive each State of all control over the extent of corporate franchises proper to be granted therein. 'It is impossible,' continued the court, 'upon any sound principle, to give such a construction to the article in question. Whenever a corporation makes a contract it is the contract of the legal entity, the artificial being created by the charter, and not the contract of the individual members. The only rights it can claim are the rights which are given to it in that character, and not the rights which belong to its members as citizens of a State.'

It was undoubtedly the object of the clause in question to place the citizens of each State upon the same footing with citizens of other States, so far as the advantages resulting from citizenship in those States are concerned. It relieves them from the disabilities of alienage in other States; it inhibits discriminating legislation against them by other States; it gives them the right of free ingress into other States, and egress from them; it insures to them in other States the same freedom possessed by the citizens of those States in the acquisition and enjoyment of property and in the pursuit of happiness; and it secures to them in other States the equal protection of their laws. It has been justly said that no provision in the Constitution has tended so strongly to constitute the citizens of the United States one people as this.

Indeed, without some provision of the kind removing from the citizens of each State the disabilities of alienage in the other States, and giving them equality of privilege with citizens of those States, the Republic would have constituted little more than a league of States; it would not have constituted the Union which now exists.

But the privileges and immunities secured to citizens of each State in the several States, by the provision in question, are those privileges and immunities which are common to the citizens in the latter States under their constitution and laws by virtue of their being citizens. Special privileges enjoyed by citizens in their own States are not secured in other States by this provision. It was not intended by the provision to give to the laws of one State any operation in other States. They can have no such operation, except by the permission, express or implied, of those States. The special privileges which they confer must, therefore, be enjoyed at home, unless the assent of other States to their enjoyment therein be given.

Now a grant of corporate existence is a grant of special privileges to the corporators, enabling them to act for certain designated purposes as a single individual, and exempting them (unless otherwise specially provided) from individual liability. The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created. As said by this court in Bank of Augusta v. Earle, 'It must dwell in the place of its creation, and cannot migrate to another sovereignty.' The recognition of its existence even by other States, and the enforcement of its contracts made therein, depend purely upon the comity of those States-a comity which is never extended where the existence of the corporation or the exercise of its powers are prejudicial to their interests or repugnant to their policy. Having no absolute right of recognition in other States, but depending for such recognition and the enforcement of its contracts upon their assent, if follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely; they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests in their discretion.

If, on the other hand, the provision of the Constitution could be construed to secure to citizens of each State in other States the peculiar privileges conferred by their laws, an extra-territorial operation would be given to local legislation utterly destructive of the independence and the harmony of the States. At the present day corporations are multiplied to an almost indefinite extent. There is scarcely a business pursued requiring the expenditure of large capital, or the union of large numbers, that is not carried on by corporations. It is not too much to say that the wealth and business of the country are to a great extent controlled by them. And if, when composed of citizens of one State, their corporate powers and franchises could be exercised in other States without restriction, it is easy to see that, with the advantages thus possessed, the most important business of those States would soon pass into their hands. The principal business of every State would, in fact, be controlled by corporations created by other States.

If the right asserted of the foreign corporation, when composed of citizens of one State, to transact business in other States were even restricted to such business as corporations of those States were authorized to transact, it would still follow that those States would be unable to limit the number of corporations doing business therein. They could not charter a company for any purpose, however restricted, without at once opening the door to a flood of corporations from other States to engage in the same pursuits. They could not repel an intruding corporation, except on the condition of refusing incorporation for a similar purpose to their own citizens; and yet it might be of the highest public interest that the number of corporations in the State should be limited; that they should be required to give publicity to their transactions; to submit their affairs to proper examination; to be subject to forfeiture of their corporate rights in case of mismanagement, and that their officers should be held to a strict accountability for the manner in which the business of the corporations is managed, and be liable to summary removal.

'It is impossible,' to repeat the language of this court in Bank of Augusta v. Earle, 'upon any sound principle, to give such a construction to the article in question,'-a construction which would lead to results like these.

We proceed to the second objection urged to the validity of the Virginia statute, which is founded upon the commercial clause of the Constitution. It is undoubtedly true, as stated by counsel, that the power conferred upon Congress to regulate commerce includes as well commerce carried on by corporations as commerce carried on by individuals. At the time of the formation of the Constitution a large part of the commerce of the world was carried on by corporations. The East India Company, the Hudson's Bay Company, the Hamburgh Company, the Levant Company, and the Virginia Company, may be named among the many corporations then in existence which acquired, from the extent of their operations, celebrity throughout the commercial world. This state of facts forbids the supposition that it was intended in the grant of power to Congress to exclude from its control the commerce of corporations. The language of the grant makes no reference to the instrumentalities by which commerce may be carried on; it is general, and includes alike commerce by individuals, partnerships, associations, and corporations.

There is, therefore, nothing in the fact that the insurance companies of New York are corporations to impair the force of the argument of counsel. The defect of the argument lies in the character of their business. Issuing a policy of insurance is not a transaction of commerce. The policies are simple contracts of idemnity against loss by fire, entered into between the corporations and the assured, for a consideration paid by the latter. These contracts are not articles of commerce in any proper meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one State to another, and then put up for sale. They are like other personal contracts between parties which are completed by their signature and the transfer of the consideration. Such contracts are not inter-state transactions, though the parties may be domiciled in different States. The policies do not take effect-are not executed contracts-until delivered by the agent in Virginia. They are, then, local transactions, and are governed by the local law. They do not constitute a part of the commerce between the States any more than a contract for the purchase and sale of goods in Virginia by a citizen of New York whilst in Virginia would constitute a portion of such commerce.

In Nathan v. Louisiana, this court held that a law of that State imposing a tax on money and exchange brokers, who dealt entirely in the purchase and sale of foreign bills of exchange, was not in conflict with the constitutional power of Congress to regulate commerce. The individual thus using his money and credit, said the court, 'is not engaged in commerce, but in supplying an instrument of commerce. He is less connected with it than the shipbuilder, without whose labor foreign commerce could not be carried on.' And the opinion shows that, although instruments of commerce, they are the subjects of State regulation, and, inferentially, that they may be subjects of direct State taxation.

'In determining,' said the court, 'on the nature and effect of a contract, we look to the lex loci where it was made, or where it was to be performed. And bills of exchange, foreign or domestic, constitute, it would seem, no exception to this rule. Some of the States have adopted the law merchant, others have not. The time within which a demand must be made on a bill, a protest entered, and notice given, and the damages to be recovered, vary with the usages and legal enactments of the different States. These laws, in various forms and in numerous cases, have been sanctioned by this court.' And again: 'For the purposes of revenue the Federal government has taxed bills of exchange, foreign and domestic, and promissory notes, whether issued by individuals or banks. Now, the Federal government can no more regulate the commerce of a State than a State can regulate the commerce of the Federal government; and domestic bills or promissory notes are as necessary to the commerce of a State as foreign bills to the commerce of the Union. And if a tax on an exchange broker who deals in foreign bills be a regulation of foreign commerce, or commerce among the States, much more would a tax upon State paper, by Congress, be a tax on the commerce of a State.'

If foreign bills of exchange may thus be the subject of State regulation, much more so may contracts of insurance against loss by fire.

We perceive nothing in the statute of Virginia which conflicts with the Constitution of the United States; and the judgment of the Supreme Court of Appeals of that State must, therefore, be

AFFIRMED.

title: Paul v. Virginia/Opinion of the Court


text: Talk:Paul v. Virginia/Opinion of the Court


text: United States v. Lane

title: United States v. Lane


text: Talk:United States v. Lane

title: Talk:United States v. Lane