Source: https://supreme.justia.com/cases/federal/us/198/17/
Timestamp: 2019-04-19 04:36:51+00:00

Document:
A state statute which operates upon beer and malt liquors shipped from other states after their arrival and while held for sale and consumption within the state, is not an interference with interstate commerce in view of the provisions of the Wilson Act.
The regulation of the sale of liquor is essentially a police power of the state, and a provision in a state law, tending to determine the purity of malt liquor sold in the state, is an exercise of the same power.
The purpose of the Wilson Act is to make liquor, after its arrival in a state, a domestic product, and to confer power on the states to deal with it accordingly. The police power is hence to be measured by the right of the state to control or regulate domestic products and this creates a state, and not a federal, question as respects the commerce clause of the Constitution, and this Court cannot review the determination of the state court that the statute involved in this case was not a revenue, but an inspection, measure.
A state regulation, valid under the Wilson Act, as to liquors shipped from another state after delivery at destination is not an interference with interstate commerce because it affects traffic in, and deters shipments of, the article into that state.
The rule that state inspection laws, which do not provide adequate inspection and impose a burden beyond the cost of inspection, are repugnant to the commerce clause of the Constitution does not apply to liquor after they have ceased to be articles of interstate commerce under the provisions of the Wilson Act.
assailed was that the exactions complained of were regulations of commerce repugnant to the Constitution of the United States. It was in addition specially averred that, so far as the law imposed a charge on beer shipped from Wisconsin into Missouri and held there by the consignee for sale and shipment for consumption in other states, the Missouri law was repugnant to the commerce clause because in this particular it discriminated in favor of beer manufactured in Missouri and held for sale or shipment for consumption in other states.
The bill was amended and demurred to. Whilst the court considered the law not to be in conflict with the commerce clause on the general grounds alleged, it nevertheless concluded, because of the averment concerning discrimination as to beer shipped into Missouri for reshipment to other states, that the demurrer could not be sustained. 120 F. 144. An answer was thereupon filed, as also a replication, and subsequently the cause was submitted upon the pleadings and an agreed statement of facts. The Supreme Court of Missouri having decided that the law in question did not provide for any charge or burden upon beer or other malt liquors shipped into Missouri and held there for reshipment to points outside of the state, the court below, adhering to its previous opinion as to the general averments of the bill and applying the construction given by the supreme court of the state to the statute, held that it did not discriminate, and dismissed the suit.
"An Act Creating the Office of Inspector of Beer and Malt Liquors of the state, and Providing for the Inspection of Beer and Malt Liquors Manufactured and Sold in This state."
within the state from using any material or chemical in the manufacture of beer or other malt liquors other than pure hops or pure extract of hops, or barley, malt, or wholesome yeast or rice. It is provided that the inspector or his deputies shall keep a record of those engaged in the manufacture, brewing, and sale of malt liquors within the state, and of the quantity manufactured or sold, and shall make a full report to the governor concerning the same, and imposes upon the officials named the duty of inspecting all beer or other malt liquors manufactured or sold within the state, to see that they conform to the standard of purity which the law requires. The act further imposes an inspection fee, charge, or license, accompanied with provisions for a label or stamp to be affixed upon the packages containing the beer or other malt liquor so manufactured or offered for sale within the state.
"SEC. 5. Every person, persons, or corporation, who shall receive for sale, or offer for sale, any beer or other malt liquors other than those manufactured in this state, shall, upon receipt, of same, and before offering for sale, notify the inspector, who shall be furnished with a sworn affidavit, subscribed by an officer authorized to administer oaths, from the manufacturer thereof, or other reputable person having actual knowledge of the composition of said beer or other malt liquors, that no material other than pure hops, or the extracts of hops, or pure barley, malt, or wholesome yeast, or rice, was used in the manufacture of same; upon the receipt of said affidavit the inspector shall inspect and label the packages containing said beer or malt liquors, for which services he shall receive like fees as those imposed upon the manufacturers of beer and malt liquors in this state."
relied upon is the assertion that the statute constitutes a regulation of commerce, and is hence repugnant to the commerce clause of the Constitution of the United States.
The subject with which the statute deals is beer and other malt liquors. Plainly it operates upon such liquors only when manufactured in the state or, if shipped from other states, after their arrival in the state, and when they are held there for sale and consumption therein.
"That all fermented, distilled, or other intoxicating liquors or liquids transported into any state or territory, or remaining therein, for use, consumption, sale, or storage therein, shall, upon arrival in such state or territory, be subject to the operation and effect of the laws of such state or territory enacted in the exercise of its police powers, to the same extent and in the same manner as though such liquids or liquors had been produced in such state or territory, and shall not be exempt therefrom by reason of being introduced therein in original packages or otherwise."
"Congress has now spoken and declared that imported liquors or liquids shall, upon arrival in a state, fall within the category of domestic articles of a similar nature."
an earlier period of time than would otherwise be the case, it is not within its competency to do so."
In Rhodes v. Iowa, 170 U. S. 412, the purport of the act was again passed upon. Reiterating the ruling made in the Rahrer case, it was decided that, whilst the Wilson Act caused liquors shipped into Iowa from another state to be divested of their character as articles of interstate commerce after their delivery in Iowa to the person to whom consigned, nevertheless the act did not authorize the laws of Iowa to be applied to such merchandise whilst in transit from another state and before delivery in Iowa.
from ordering liquors from outside of the state of his residence for his own consumption, and not for sale.
Quite recently at this term, in American Express Co. v. Iowa, 196 U. S. 133, and Adams Express Co. v. Iowa, 196 U. S. 147, the construction affixed to the Wilson Act in the previous cases was applied, and the power of the State of Iowa to control the sale of liquors shipped from another state into that state, after their delivery to the consignee, was upheld.
1st. The Wilson Act, it is argued, subjects liquors shipped from one state into another, after their arrival at their destination, only to the "laws of such state or territory enacted in the exercise of its police powers. . . ." As, it is said, the law of Missouri was not enacted in the exercise of the police power, hence malt liquor received from another state, and held in Missouri for sale, retained its character as an article of interstate commerce until sold to the original package.
conditions upon the business of manufacturing and selling beer and malt liquors in this state, which business the state may absolutely suppress, or permit upon such terms as the legislature may prescribe. We construe the act in view of all its parts and in connection with other license laws of this state, and hold that the fee exacted is the price which the state demands for the privilege of doing the business of brewing and selling beer and malt liquors in this state, and it is immaterial by what name it is called."
As, then, the Supreme Court of Missouri has determined that the statute does not conflict with the state constitution, and is valid because it is a police regulation imposing conditions upon the business of manufacturing and selling beer in Missouri, a traffic which it is conceded the state had the power to prohibit entirely, it follows that we are without power, from a consideration of the state constitution, to treat the law as invalid because of the revenue provisions of the state constitution or other limitations imposed by that Constitution upon the state government. It necessarily results from this that the assailed law comes directly within the express terms of the Wilson Act. The determination of this question by the Supreme Court of Missouri as to liquor manufactured in Missouri, in the absence of discrimination, is necessarily conclusive, also, as to the character of the law when applied to a similar article shipped from other states into Missouri after arrival at its destination, and when held for sale and consumption in that state. This must be the case, since, as we have seen, the Wilson Act, to use the words of In re Rahrer, places liquor coming from another state after its arrival "within the category of domestic articles of a similar nature."
object which it was intended to accomplish, and, besides, would overrule the previous decisions of this Court upholding and enforcing that statute.
"The confusion of thought which is involved in the proposition to which we have just referred is embodied in the principle upon which the court below mainly rested its conclusion. That is,"
"if all alcoholic liquors, by whomsoever held, are declared contraband, they cease to belong to commerce, and are within the jurisdiction of the police power; but so long as their manufacture, purchase, or sale, and their use as a beverage in any form, or by any person, are recognized, they belong to commerce, and are without the domain of the police power."
state law to govern the sale of the original package only where the sales of all liquor were forbidden, this object could have found ready expression, whilst, on the contrary, the entire context of the act manifests the purpose of Congress to give to the respective states full legislative authority, both for the purpose of prohibition as well as for that of regulation and restriction with reference to the sale in original packages of intoxicating liquors brought in from other states.
2d. Conceding, it is argued, that the Missouri statute attached to the liquor after delivery at its destination in Missouri, nevertheless, as the burdens which the statute imposed were of such a character as to affect traffic in the article, and hence operated to deter shipments into Missouri, therefore the statute must be treated as if it bore upon the liquor while still in transit as a subject of interstate commerce. This proposition simply amounts to contending that the Wilson Act should be disregarded, since to enforce it would give the states power to regulate interstate traffic in liquor. If, when a state has but exerted the power lawfully conferred upon it by the act of Congress, its action becomes void as an interference with interstate commerce because of the reflex or indirect influence arising from the exercise of the lawful authority, the result would be that a state might exert its power to control or regulate liquor; yet if it did so, its action would amount to a regulation of commerce, and be void. And this would be but to say at one and the same time that the power could and could not be exercised. But the proposition would have a much more serious result, since to uphold it would overthrow the distinction between direct and indirect burdens upon interstate commerce, by means of which the harmonious workings of out constitutional system has been made possible.
decisions of this Court determining when particular inspection laws amounted to a regulation of commerce, citing Atlantic & Pacific Telegraph Co. v. Philadelphia, 190 U. S. 160, and Postal Telegraph-Cable Co. v. New Hope, 192 U. S. 55. These cases, however, simply considered state laws which operated upon interstate commerce. To apply them to the Missouri law necessarily involves deciding that the malt liquors to which that law applied had not ceased to be articles of interstate commerce, and therefore again, merely disregards the Wilson Act and the decisions of this Court concerning it. Indeed, the whole argument upon which the entire case of the plaintiff in error proceeds rests upon this fallacious assumption, since it admits, on the one hand, the validity of the Wilson law, and yet seeks to take this case out of the reach of its provisions by distinctions which have no foundation in reason unless it be that that law is to be disregarded or held to be unconstitutional.
as though such liquors or liquids had been produced in such state or territory, and shall not be exempt therefrom by reason of being introduced in original packages or otherwise."
The opinion practically concedes that the act must, if constitutional, be supported as an inspection law, passed under the police power of the state, and such was the position taken by the Supreme Court of Missouri. It was admitted in that case both by the majority and minority judges that the act could not be supported as a revenue measure, because in conflict with the Constitution of the state.
To determine the question whether it can be supported as an inspection law, it is necessary to consider at some length the nature of its provisions.
The agreed statement of facts shows that the plaintiff manufactures in the State of Wisconsin ten different kinds or grades of beer and malt liquors, each kind being separately manufactured and requiring special treatment; that it ships into the State of Missouri annually not less than 15,000 barrels of malt liquors, of 31 gallons each, of the aggregate value of $100,000; that there are a large number of domestic manufacturers of malt liquor in the State of Missouri, whose annual productions amount to over 2,250,000 barrels of beer of the aggregate value of $12,250,000, of which 1,275,000 are sold within the state; that there are other manufacturers outside of the state standing in the same position as the plaintiff, who annually ship into the state not less than 165,000 barrels of the aggregate value of $10,725,000, beside that imported from abroad; that plaintiff is licensed to carry on business in Missouri; that such business consists of shipping into the state, for the purposes of selling therein or reshipping therefrom, the product of its manufacture in Wisconsin; that, in the usual course of its business, it is compelled to maintain large warehouses in the state, as well as an office, as a necessary adjunct to the conduct of its business; that it maintains no manufactory in Missouri, and that it disposes of its beer in the original packages in which it is shipped.
The object of the act is declared by § 4 to be to exclude the use of any substance, material, or chemical, in the manufacture of malt liquors other than pure hops, or pure extract of hops, or pure barley, malt, or wholesome yeast or rice. So far as beer manufactured within the state is concerned, the inspection is made, or at least may be made, State v. Bixman, 162 Mo. 1, 34, of the ingredients of the beer in the mash tub and before the beer is actually brewed. The inspector goes to the brewery and makes his test by taking a sample of the mash of the beer there fermenting, and, although thousands of gallons may be made from one mash, a single inspection is sufficient. With respect to beer manufactured outside of the state, section 5 requires that the consignee of the beer shall notify the inspector, who shall be furnished with a sworn affidavit, subscribed by an officer authorized to administer oaths, from the manufacturer thereof or other reputable person having actual knowledge of the composition of said beer or malt liquors, that no material other than pure hops, or the extract of hops, or pure barley, malt, or wholesome yeast or rice, was used in the manufacture of the same.
"Upon the receipt of said affidavit, the inspector shall inspect and label the packages containing said beer or malt liquors, for which services he shall receive like fees as those imposed upon the manufacturers of beers and malt liquors in this state."
would require the opening of each package, or at least a sample package, which would practically ruin the contents. As it is impossible to suppose that the legislature should have contemplated that the inspectors should visit breweries outside of the state and inspect the mash, or that they should open the packages after their receipt in the state, and thus spoil the beer, it would seem that the inspectors have no alternative but to accept the affidavit as a basis of their inspection. This is said to be the manner in which the law is practically administered. Indeed, the agreed facts show that the beer involved in this case was inspected while still in the hands of the plaintiff, that the packages were never opened, but the affidavit was accepted as a sufficient compliance with the act.
While this may be the only inspection practicable, it is really no inspection at all, since it is dependent entirely upon the veracity of the person making the affidavit. There is no power given to these inspectors to investigate the truth of the statements contained in these affidavits except, possibly, by tasting or analyzing the beer. There is no penalty provided for making a false affidavit, nor can the state proceed against the manufacturer, who is beyond the jurisdiction of the court. There is no assurance that the affidavit, which may be made in the state of manufacture as well as in Missouri, has any relation to the particular shipment to which it is sought to apply it, and there is no power given even to open the boxes in which bottled liquors purport to be enclosed, to examine their contents. The object of inspection laws is to require such examination of the thing inspected as will insure to the public a safe and wholesome article. Obviously, to secure this, the inspection must be made by officers appointed for that purpose; at least it cannot be delegated, as it virtually is in this case, to the manufacturer. The requirement of an affidavit, and the acceptance of this in lieu of an actual inspection, make the affiant, who is the manufacturer or his agent, the sole judge of the fact whether the liquor contains only the ingredients allowed by law. We cannot treat this as a bona fide inspection.
To justify an inspection in law, there must be an inspection in fact.
"that the legislature was more concerned in collecting fees to swell the exchequer of the state than in the protection of the people who might drink beer."
The obvious inefficacy of the inspection has an important bearing upon the more serious objection to this act in that the fees for inspection bear no just relation to the expense, and make it evident that the law was not passed in a bona fide exercise of the police powers of the state, but as a convenient method of increasing the public revenues. Section 8 provides for an inspection fee of one cent per gallon and two cents for labeling each package containing eight gallons, making a total fee of one and a quarter cents per gallon. All of these fees are required to be paid into the state treasury, and pass to the general revenue fund of the state. The inspectors cannot even deduct their salaries from the fees, but are paid by a distinct appropriation for that purpose.
malt liquors manufactured out of and brought into the state from other states and from foreign countries, for sale in Missouri, exceed the total authorized cost for inspection, approximately $60,000 a year.
In this connection, it is pertinent to notice that the bill in question, when first introduced in the house, was entitled "An Act Creating the Office of Inspector of Beer and Malt Liquors, and Providing for the Creation of a Fund for the Construction of Roads and Highways," and, as originally introduced into the senate, contained the words "providing for the increase of the general revenue fund." In the bill as passed, these words were stricken out, and the words "providing for the inspection of beers and malt liquors manufactured and sold in this state" inserted in their place. Notwithstanding these changes in the title of the bill as finally passed, it is evident that the main object was to increase the general fund of the state by the amount of the inspection fees, less the expenses of the inspection, and that the inspection was really an incident to, or an excuse for, the revenue to be derived from the act. These facts are a cogent argument in favor of applying to this case the rule, established in a number of recent cases, that fees cannot be imposed for the purpose of inspection upon companies doing an interstate business which are so far in excess of the expenses of such inspection as to make it plain that they were adopted, not as a means of paying such expenses, but as a means of raising revenue.
"To uphold it in such a case as this is to say that it may be passed for one purpose and used for another; passed as a police inspection measure and used for the purpose of raising revenue; that the enactment as a police measure may be used as a mere subterfuge for the purpose of raising revenue, and yet, because it is said to be an inspection measure, the court must take it as such and hold it valid, although resulting in a rate of taxation which, if carried out throughout the country, would bankrupt the company were it added to the other taxes properly assessed for revenue and paid by the company."
In previous cases arising under a similar state of facts, the ordinances had been upheld as within the police power of the municipality, St. Louis v. Telegraph Co., 148 U. S. 92, 149 U. S. 149 U.S. 465; Western Union Tel. Co. v. New Hope, 187 U. S. 419, in which the ordinances were sustained upon the ground that the fees were not so excessive as to justify the inference that they were not imposed as a bona fide exercise of the police powers, and in Atlantic & Pacific Telegraph Co. v. Philadelphia, 190 U. S. 160, in which the question of reasonableness was held to have been properly submitted to the jury, and Postal Telegraph-Cable Co. v. New Hope, 192 U. S. 55, in which the verdict of a jury for a less amount than that fixed by the ordinance was held to be a verdict that the charge was unreasonable, and should have been followed by a judgment for the telegraph company.
to liquors manufactured within the state. A disproportion so gross can only be accounted for upon the theory that the act was intended for the purposes of revenue, and not for inspection.
It is insisted, however, that, as the supreme court of the state has in the case of State v. Bixman, 162 Mo. 1, by a majority vote, upheld the constitutionality of the act as an inspection law applied to beer of domestic manufacture, and not as an act for raising revenue, we are bound by this definition and are precluded from considering it in any other light than that of an inspection fee or license tax. But a question of constitutional law cannot be answered by a definition. While, as we have frequently said, we adopt the interpretation of the statute of a state affixed to it by the court of last resort thereof, we still feel at liberty, in accepting such interpretation, to determine for ourselves whether the act is a bona fide exercise of the police power of the state, and not intended merely as an excuse for the taxation of interstate commerce.
"If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety has no real or substantial relation to those objects or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution."
held that the statute was void as a plain intrusion upon the exclusive domain of Congress.
"Certain principles are well settled by the former decisions of this Court. One is that the purpose of a statute, in whatever language it may be framed, must be determined by its natural and reasonable effect. Henderson v. New York, 92 U. S. 259, 92 U. S. 268. Another is that a state may not, by its police regulations, whatever their object, unnecessarily burden foreign or interstate commerce. Railroad Company v. Husen, 95 U. S. 465, 95 U. S. 472. Again, the acknowledged police powers of a state cannot legitimately be exerted so as to defeat or impair a right secured by the national Constitution any more than to defeat or impair a statute passed by Congress in pursuance of the powers granted to it. Gibbons v. Ogden, 9 Wheat. 1, 22 U. S. 210; Missouri, Kansas & Texas Ry. Co. v. Haber, 169 U. S. 613, 169 U. S. 625-626, and authorities cited."
The reasonableness of the law as compared with the cost of inspection is made the test of the validity of the law in Patapsco Guano Co. v. North Carolina Board of Agriculture, 171 U. S. 345; Willis v. Standard Oil Co., 50 Minn. 290.
act does not apply. The object of the act is merely to place foreign and domestic liquors on the same footing as respects the police powers of the state. The inference is drawn in the opinion of the Court that, upon the arrival of foreign liquors at their destination, the state may deal with such liquors as it pleases -- in other words, that they have passed wholly beyond the federal control as subjects of interstate commerce.
The Wilson Act was passed in consequence of our decision in Leisy v. Hardin, 135 U. S. 100, to the effect that a state statute prohibiting the sale of liquors was unconstitutional as applied to a sale by the importer from another state in original packages. That case was put upon the ground that liquors had always been recognized by the commercial world as subjects of exchange, barter, and traffic, and that the state could not prohibit their importation from abroad or their sale by the importer. To meet this exigency and to enlarge the powers of the state with respect to intoxicating liquors, the Wilson Act was passed, declaring that, upon their arrival in the state, they should be subject to the police powers of the state to the same extent and in the same manner as though such liquors had been produced within such state. The constitutionality of this act was sustained in Rahrer's Case 140 U. S. 545, although, in the subsequent case of Rhodes v. Iowa, 170 U. S. 412, it was held that the Wilson Act did not operate to attach to liquors the prohibitory legislation of the state at the moment they reached the state line, or before the completion of the act of transportation by their arrival at their point of destination and delivery to the consignee.
and had been applied and recognized ever since the case of New York v. Miln, 11 Pet. 102, as one of the ordinary police powers of the state, which it was at liberty to exercise quite irrespective of any federal statute for the protection of the health of its citizens. The Wilson Act neither creates, adds to, takes from, nor affects, the police powers of the state with respect to inspection in any particular. The power of the state to enact inspection laws, provided that such laws are intended in good faith for the protection of the people, and not as a covert means for raising revenue by exorbitant charges, remains precisely as it was before the act was passed. In the Miln case, an act of the State of New York requiring the masters of vessels arriving from foreign ports to report to the city authorities the names, etc., of his passengers was upheld as a proper exercise of the police power, though subsequently, in the Passenger Cases, 7 How. 283, a similar law, requiring the masters of vessels to pay a certain sum on account of every passenger brought from a foreign country into the state, was held to be inoperative although passed under the general denomination of a health law. It was said that, although the amount of the tax was small, it might have been increased so as to become prohibitory at the discretion of the legislature, and the fact that the tax was applied to the maintenance of a marine hospital and to the reformation of juvenile delinquents showed that it could not be sustained as an exercise of the police power.
of the act that they should be inspected before offering them for sale and before they had been commingled with the general mass of property. The fact that they had been delivered to the consignee was of no materiality, since the act which the state required should be done was one which applied a condition precedent to their admission to the state for commercial purposes. Until this act was performed, they were protected against an unlawful interference. This inspection might have taken place at the state line, but, for the convenience of the state officers as well as that of the brewers, it was postponed until the arrival at their destination, as is frequently the case in foreign countries, where imported goods are not examined at the frontier, but at Paris or London, upon their arrival there; but they are not legally entered until such examination takes place. To say that their character as interstate commerce existed at the state line, but had been lost upon their arrival at their place of destination before they had shown themselves entitled to enter the state, is to apply a test wholly irrelevant under the circumstances. Indeed, in the case of Rhodes v. Iowa, 170 U. S. 412, we held expressly that the prohibitory liquor laws did not apply to liquors while in transit from their point of shipment to their delivery to the consignee. The vital question is whether the inspection was applied at a time prior to their legal importation into the state as a commercial article. If it were, and the inspection were a lawful one, it is a proper regulation of interstate commerce; but, if the inspection were not a bona fide exercise of the police power, it was an unlawful interference with such commerce. Whether the inspection was made at the state line or at the destination of the goods is absolutely immaterial.
"The question whether a given state law is a lawful exercise of the police power is still open, and must remain open, to this Court. Such a law may forbid entirely the manufacture and sale of intoxicating liquors and be valid. Or it may provide equal regulations for the inspection and sale of all domestic and imported liquors and be valid. But the state cannot, under the congressional legislation referred to, establish a system which in effect discriminates between interstate and domestic commerce in commodities to make and use which are admitted to be lawful."
that the meats had arrived at their destination within the state and been delivered to their consignee, and that the inspection, not being a bona fide one, was an unlawful discrimination against interstate commerce. So, in the subsequent case of Brimmer v. Rebman, 138 U. S. 78, a law of Virginia provided that meat should not be sold from animals slaughtered a hundred miles or more from the place where offered for sale unless previously inspected by local inspectors. The act was held to be void as in restraint of commerce between the states and as imposing a tax upon the products of other states. Both of these acts, as does the act of Missouri in question, provided against the sale of uninspected merchandise, and this Court held, quite irrespective of other considerations, that the act was void. To the same effect is Walling v. Michigan, 116 U. S. 446.
For the reasons already given, I think the act in this case is void as an inspection law and an illegal interference with interstate commerce, since the assumed inspection preceded the arrival of the liquors within the state as a constituent part of its general property.
repeatedly held -- the law has a definite and distinct value, and is readily understood.

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