Source: https://supreme.justia.com/cases/federal/us/249/389/
Timestamp: 2019-04-24 16:24:18+00:00

Document:
The construction of a state statute must be judged by its necessary effect; the name is not conclusive. P. 249 U. S. 394.
A law of the State of Washington requires that products of petroleum, intended for use or consumption in the state, shall be inspected before being sold or offered for sale, and imposes fees for inspection by which in 10 years over $335,000 was collected, of which only about $80,000 was disbursed for expenses, leaving a revenue of over $255,000. Held, in respect of such products imported from another state for sale in Washington, that the charge is excessive, and an unconstitutional burden on interstate commerce. Id.
Plaintiff in error filed a complaint and an amended complaint in the Superior Court of Thurston County, Washington, to enjoin the collection of fees prescribed by the Oil Inspection Act of that state upon the ground that the statute was in contravention of the Constitution of the United States. The superior court held the law to be unconstitutional. Upon appeal, the Supreme Court of Washington reversed the judgment. 94 Wash. 291.
other volatile product of petroleum intended for use or consumption in this state for illuminating, manufacturing, domestic, or power purposes, 'before being sold or offered for sale,' shall be inspected by the state oil inspector or his deputies. When the inspection is made, a certificate is to be issued, and the barrel or receptacle which contains the oil must be labeled or branded. Section 4 (id., § 6053) of the act contains a schedule of the fees which shall be paid for the inspection. Section 6 (id., § 6055) provides that, if any person or persons, whether manufacturer, vender, or dealer, or as agent or representative of any manufacturer, vender, or dealer, 'shall sell or attempt to sell' to any person, firm or corporation in this state, any illuminating oil, gasoline, benzine, distillate, or any volatile product of petroleum intended for use or consumption within this state that has not been inspected and branded according to the provisions of the act 'shall be guilty of a misdemeanor.' By the Laws of 1913, chapter 60, p. 196 (Rem.Code, § 3000-1 et seq.), it was made the duty of the commissioner of agriculture to exercise all the powers and perform all the duties which, by the law of 1907, were vested in and required to be performed by the state oil inspector."
The case was heard upon demurrer to the amended complaint.
referred to is manufactured by plaintiff in the State of Washington, but all of said products are shipped into said state from the State of California."
"The plaintiff maintains in the State of Washington wharves and docks, tanks, warehouses, buildings, machinery, horses and wagons, and other equipment for receiving, shipping, handling, selling, and otherwise distributing said products shipped as aforesaid from the State of California into the State of Washington."
"The total receipts from the fees collected under said statute, chapter 192 of the Laws of 1907, and chapter 161, Laws of 1905, of the State of Washington, for the inspection therein provided for of said products mentioned in said laws intended for sale or consumption in this state, and the total disbursements in connection with the collection thereof, and in connection with the administration of said laws, and the net revenue from such receipts during the following years have respectively been the following:"
receipts for the same time $335,776.30, a difference of $255,672.93.
It is contended by the plaintiff in error that this inspection law violates the commerce clause, Art. I, § 8, of the Constitution of the United States, in that it directly burdens such commerce by imposing inspection taxes far in excess of the cost of inspection. The supreme court of the state held that the tax was not upon property, but could be sustained as an excise or occupation tax upon the business of selling oil within the state. The reason given by the court for holding that the tax could not be upheld as a property tax rested upon provisions of the state constitution.
While this Court follows the decisions of the highest court of a state as to the meaning of statutes in cases of this character, the name given to the statute is not conclusive. It must be judged by its necessary effect, and if that is to violate the Constitution of the United States, the law must be declared void. Minnesota v. Barber, 136 U. S. 313, 136 U. S. 319; Crew Levick v. Pennsylvania, 245 U. S. 292, 245 U. S. 294, and cases cited.
the states. McLean v. Denver & Rio Grande R. Co., 203 U. S. 38; Brimmer v. Rebman, 138 U. S. 78, 138 U. S. 83; Postal Telegraph-Cable Co. v. Taylor, 192 U. S. 64 ; Patapsco Co. v. North Carolina, 171 U. S. 345, 171 U. S. 354; Red 'C' Oil Co. v. North Carolina, 222 U. S. 380, 222 U. S. 394; Savage v. Jones, 225 U. S. 501, 225 U. S. 504."
"But if such inspection charge should be obviously and largely in excess of the cost of inspection, the act will be declared void because constituting, in its operation, an obstruction to and burden upon that commerce among the states the exclusive regulation of which is committed to Congress by the Constitution."
It is said that the Foote case did not overrule the previous case of General Oil Co. v. Crain, 209 U. S. 211, and that the principles of that case should be controlling here. In the Crain case, this Court sustained a tax upon oil which had been removed from the tank cars in which it was transported into Tennessee, and which, although destined for points beyond Tennessee, was then in storage in that state. The distinction between that case and the one now under consideration is obvious. Bacon v. Illinois, 227 U. S. 504, is also relied upon. In that case, this Court sustained a property tax upon grain brought from another state, but taken from the carrier and held by the owner in Illinois with full power of disposition in that state, and although intended to be ultimately forwarded to a point beyond the state; the property tax, after a review of the previous decisions of this Court, was sustained.
commerce necessarily imposes a direct burden upon such commerce, and is therefore violative of the commerce clause of the federal Constitution. We may remark that the conclusion at which we have arrived has been reached by the Supreme Courts of North Dakota and Ohio. Bartels Northern Oil Co. v. Jackman, 29 N.D. 236; Castle v. Mason, 91 Ohio St. 296.

References: § 6053
 § 6055
 § 3000
 § 8
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