Source: http://supreme.nolo.com/us/97/566/case.html
Timestamp: 2019-04-24 06:40:38+00:00

Document:
1. A tax laid by a state on the amount of sales of goods made by an auctioneer is a tax on the goods so sold.
2. The statute of Pennsylvania of May 20, 1853, modified by that of April 9, 1859, requiring every auctioneer to collect and pay into the state treasury a tax on his sales is, when applied to imported goods in the original packages, by him sold for the importer, in conflict with secs. 8 and 10 of Art. I of the Constitution of the United States, and therefore void as laying a duty on imports and being a regulation of commerce.
"An Act to incorporate the Commercial Mutual Insurance Company of Philadelphia, relative to the state duty on domestic and foreign articles in the Counties of Philadelphia and Allegheny,"
"An Act to modify the existing laws of the Commonwealth and to provide more effectually for the collection of the state tax or duty on auction sales in the City of Philadelphia and County of Allegheny,"
approved April 9, 1859, P.L. 1859, 435.
The defendant claims that said sales of foreign goods are exempt from taxation because said acts of assembly, so far as they relate to such taxation, are in direct conflict with secs.
8 and 10 of Art. I of the Constitution of the United States, and for that and other reasons void, and inasmuch as the foreign goods so taxed as aforesaid were sold in bulk, as they were imported by the importer, said defendant, Cook, acted simply as his salesman.
That as the said goods had never been sold for consumption or resale by the importer and had never been divided by him into smaller quantities by breaking up the casks or packages in which they were originally imported, the said goods had not lost their character as imports, and therefore that any such tax is unconstitutional and ought not to be levied.
That if the court should be of the opinion that the acts of assembly are constitutional, then judgment should be entered for the commonwealth, but if not, then for the defendant, Cook, costs to follow the judgment and either party reserving the right to sue out a writ of error.
"The state duty to be paid on sales by auction in the Counties of Philadelphia and Allegheny shall be on all domestic articles and groceries, one-half of one percent; on foreign drugs, glass, earthenware, hides, marble work, and dye woods, three-quarters of one percent."
"Said auctioneers shall pay into the treasury of the commonwealth a tax or duty of one-fourth of one percent on all sales of loans or stocks, and shall also pay into the treasury aforesaid a tax or duty, as required by existing laws, on all other sales to be made as aforesaid, except on groceries, goods, wares, and merchandise of American growth or manufacture, real estate, shipping, or livestock, and it shall be the duty of the auctioneer having charge of such sales to collect and pay over to the state treasurer the said duty or tax, and give a true and correct account of the same quarterly, under oath or affirmation, in the form now required by law."
foreign goods sold at auction, and by the last statute, while all sales of foreign or imported goods are taxed, those arising from groceries, goods, wares, and merchandise of American growth or manufacture are exempt from such tax.
It appears that the law also required these auctioneers to take out a license, to make report of such sales, and to pay into the treasury the taxes on these sales.
The defendant refused to pay the tax for which he was liable under this law for the sale of goods which had been imported and which he had sold for the importers in the original packages. In the suit, in which judgment was rendered against him in the Supreme Court of Pennsylvania, he defended himself on the ground that these statutes were void, because forbidden by secs. 8 and 10 of Art. I of the Constitution of the United States.
The clauses referred to are those which give to Congress power to regulate commerce with foreign nations and forbid a state, without the consent of Congress, to levy any imposts or duties on imports. The case stated shows that the goods sold by defendant were imported goods, and that they were sold by him in the packages in which they were originally imported. It is conceded by the Attorney General of the state, that if the statute we have recited is a tax on these imports, it is justly obnoxious to the objection taken to it.
is to collect this tax and pay it into the treasury. From whom is he to collect it if not from the owner of the goods? If the tax was intended to be levied on the auctioneer, he would not have been required first to collect it and then pay it over. It was, then, a tax on the privilege of selling foreign goods at auction, for such goods could only be sold at auction by paying the tax on the amount of the sales.
The question as thus stated has long ago and frequently been decided by this Court.
"It is demanded of the captain, and not from every separate passenger, for the convenience of collection. But the burden evidently falls on the passenger, and he in fact pays it either in the enhanced price of his passage or directly to the captain before he is allowed to embark for the voyage."
Because it was such a tax, the majority of the Court held it to be unconstitutional and void.
there that the tax was laid on the business of the railroad and stage coach companies, and the sum of one dollar exacted for each passenger was only a mode of measuring the business to be taxed. But the Court said, as in Passenger Cases, that it was a tax which must fall on the passenger and be paid by him for the privilege of riding through the state by the usual vehicles of travel.
"The case presents the question whether the statute in question -- so far as it imposes a tax upon freight taken up within the state and carried out of it or taken up outside the state and delivered within it or, in different words, upon all freight other than that taken up and delivered within the state -- is not repugnant to the provision of the Constitution of the United States."
It was argued here again that the tax was one on the business and franchises of the railroad companies which were required to pay it, but the Court, reviewing the authorities, said that the inquiry was upon what did the burden really rest, and not upon the question from whom the state exacted payment into its treasury. This language was abundantly supported by the cases concerning tax on the national banks, namely Bank of Commerce v. New York City, 2 Black 620; Bank Tax Cases, 2 Wall. 200; Society for Savings v. Coite, 6 Wall. 594; Provident Institution v. Massachusetts, id., 611.
the vessel or owner for the exercise of the right of landing their passengers in that city, as was the statute held void in the Passenger Cases."
"So, in like manner, the license tax exacted by the State of Missouri from dealers in goods which are not the product or manufacture of the state, before they can be sold from place to place within the state, must be regarded as a tax upon such goods themselves, and the question presented is whether legislation, thus discriminating against the products of other states in the conditions of their sale by a certain class of dealers, is valid under the Constitution of the United States."
And it was decided that it was not. See also Waring v. The Mayor, 8 Wall. 110.
The tax on sales made by an auctioneer is a tax on the goods sold within the terms of this last decision, and indeed within all the cases cited, and when applied to foreign goods sold in the original packages of the importer, before they have become incorporated into the general property of the country, the law imposing such tax is void as laying a duty on imports.
In Woodruff v. Parham, 8 Wall. 123, and Hinson v. Lott, id., 148, it was held that a tax laid by a law of the state in such a manner as to discriminate unfavorably against goods which were the product or manufacture of another state was a regulation of commerce between the states forbidden by the Constitution of the United States. The doctrine is reasserted in the case of Welton v. State of Missouri, supra. The Congress of the United States is granted the power to regulate commerce with foreign nations in precisely the same language as it is that among the states. If a tax assessed by a state injuriously discrimination against the products of a state of the Union is forbidden by the Constitution, a similar tax against goods imported from a foreign state is equally forbidden.
A careful reader of the history of the times which immediately preceded the assembling of the convention that framed the American Constitution cannot fail to discover that the need of some equitable and just regulation of commerce was among the most influential causes which led to its meeting. States having fine harbors imposed unlimited tax on all goods reaching the Continent through their ports. The ports of Boston and New York were far behind Newport, in the State of Rhode Island, in the value of their imports, and that small state was paying all the expenses of her government by the duties levied on the goods landed at her principal port. And so reluctant was she to give up this advantage that she refused for nearly three years after the other twelve original states had ratified the Constitution to give it her assent.
In granting to Congress the right to regulate commerce with foreign nations and among the several states and with the Indian tribes, and in forbidding the states without the consent of that body to levy any tax on imports, the framers of the Constitution believed that they had sufficiently guarded against the dangers of any taxation by the states which would interfere with the freest interchange of commodities among the people of the different states, and by the people of the states with citizens and subjects of foreign governments.
The numerous cases in which this Court has been called on to declare void statutes of the states which in various ways have sought to violate this salutary restriction, show the necessity and value of the constitutional provision. If certain states could exercise the unlimited power of taxing all the merchandise which passes from the port of New York through those states to the consumers in the great West, or could tax -- as has been done until recently -- every person who sought the seaboard through the railroads within their jurisdiction, the Constitution would have failed to effect one of the most important purposes for which it was adopted.
A striking instance of the evil and its cure is to be seen in the recent history of the states now composing the German Empire. A few years ago, they were independent states, which, though lying contiguous, speaking a common language, and belonging to a common race, were yet without a common government.
The number and variety of their systems of taxation and lines of territorial division, necessitating customs officials at every step the traveler took or merchandise was transported, became so intolerable that a commercial, though not a political, union was organized called the German Zollverein. The great value of this became so apparent, and the community of interest so strongly felt in regard to commerce and traffic, that the first appropriate occasion was used by these numerous principalities to organize the common political government now known as the German Empire.
While there is perhaps no special obligation on this Court to defend the wisdom of the Constitution of the United States, there is the duty to ascertain the purpose of its provisions and to give them full effect when called on by a proper case to do so.

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