The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1905-12-06
D|SPENSAR|ES OF
STATETO Be TAXED
Supreme Court Asserts
Governments Right.
SOUTH CAROLINA CASE
The Decision of The Court of Claims
That the Real Purpose of the Dis.
pensary Was Money Making
Was Affirmed. Three jus.
tees Dissent.
tices Dissent.
lBy the ASSOCIATED Preso. }

Washington, Dec. 4.-The Supreme
Court of the United States today de-
cided that the National Government
pensaries of South Carolina. The opin-
ion was delivered by Justice Brewer
in the case of the State of South Caro-
lima VS.. the United States. This ac-
ton was instituted by the State of
South Carolina to recover 100000 paid
to the revenue Officers of the National
Government on account of the sale OF
liquors by the State and county dis
pensers under the dispensary law. The
State took the position that as the
dispensers sold liquor without profit
they should not be taxed by the gov
eminent. but the tax has been col
lected since 1898. This is said to have
been the first case IN which a State
unites in an undertaking the exercise
of its police power together with the
prosecution of a commercial business.
The court of claims dismissed the pc
titiOn on the ground that the exercise
of police power was but thinly dis
guised, holding that the real purpose
was money-making and this decision
was today affirmed.
The contention on behalf of the
State was that as the United States
is beyond the reach of State taxation,
so is the State equally beyond the
reach of United States taxation. that
neither the property nor the agencies
and the instrumentalitieS used by the
State for the transaction of its bust
ness can be subjected to any burden
OF taxation by the United States. In
support of the proceeding by the ma
tional authorities it was urged that
while this may be true as to any
strictly governmental functions, yet
when the State engages in what was
looked upon at the time of the adop-
ton of the constitution as private
business. he individuals acting for the
State in the transaction of that bust
ness, the individuals acting for the
State in the transaction of that bust
ness become amenable to the taxing
powers of the United States. The court
sustains the latter contention.
Admitting that the delicate question
of preserving the even balance be-
tween the National Government and
the State Governments was involved
in the case. Justice Brewer laid down
the general proposition that there is
no constitutional Limitation on the
power of the general government to
collect license taxes. Looking at the
constitution in the light of the condi-
tons surrounding it at the time of its
adoption, it is obvious, he said that
over license taxes to the National Gov
eminent meant that the power should
be complete and never thought that
the States by extending their func-
tions could practically destroy it.
1.-The trainers of the Constitution
were not anticipating that a State
would attempt to monopolize any bus
mess heretofore carried on by indi-
viduals. Further, it may be noticed
that the tax is not imposed on any
property Belonging to the State, but
is charge on business before any
profits are realized therefrom."
Quoting various decisions he de-
duced the following general conclu-
sion: these decisions, while not con-
trolling the question, in the. United
States, the thought has been that the
exemption of the State agencies and
instrumentalties from national taxa
ton is limited to those which are of a
strictly governmental character and
does not extend to those which are
used by the State in the carrying on
of an ordinary private business. The
opinion dwelt at length upon the pos
sible consequences of conceding the
position of South Carolina in the COM
munity as follows:
THE right of South Carolina to con-
troll the sale of liquor by the dispen-
sary system has been sustained. The
profits from the business in the year
of 1901 were over half million of
dollars. Mingling the thought of profit
with the necessity of regulation may
induce the State to take possession in
like manner, of tobacco, and all other
objects of internal revenue tax. Ii