Case Name: THE STATE OF SOUTH CAROLINA v. THE UNITED STATES
Court: Supreme Court of the United States
Jurisdiction: United States
Decision Date: 1905-12-04
Citations: 41 Ct. Cl. 503
Docket Number: 
Parties: THE STATE OF SOUTH CAROLINA v. THE UNITED STATES.
Judges: Mr. Justice White delivered a dissenting opinion, in which Mr. Justice Peckham and Mr. Justice McKenna concurred.
Reporter: United States Court of Claims Reports
Volume: 41
Pages: 503–504

Head Matter:
THE STATE OF SOUTH CAROLINA v. THE UNITED STATES.
[39 C. Cls. R., 257; 199 U. S. R., 437.]
On the claimant’s Appeal.
The State of South Carolina buys and sells alcoholic liquors for a profit under and as a part of its well-known dispensary system. The internal-revenue officers of the United States com-_ pel the State dispensary commissioner to pay a special tax of $100 a year as a wholesale liquor dealer and the county dispensers $25 a year as retail liquor dealers. The dispensers have no proprietary interest in the liquor sold or in the profits derived therefrom, and the money is in fact paid by the State treasurer under protest. r]
The court below decides:
1. The buying and selling of alcoholic liquors for a profit stamps upon the South Carolina dispensai’y system a commercial character in addition to that of a police regulation.
2. The framers of the Constitution had before them three purposes: The construction of a new National Government; the establishment of a dual system of government with the distribution of powers between the General or National Government and the local or State governments; the placing of certain immutable restrictions upon the powers of government to secure' the individual rights of the citizen. They attempted no restrictive legislation, but left the people of the United States free to make their own laws.
3. The national authority to “ lay and collect taxes, duties, imposts, and excises ” is expressly given; the police power, whether of the National or State governments, is neither given nor restricted by the Constitution.
4. The police power is the power to impose those restraints upon private rights which are necessary for the general welfare. It is a power inherent in all governments, needing neither grant nor recognition by the Constitution.
5. The general welfare is one thing; exemption from taxation is another. If a State unites in one undertaking an exercise of the police power with a commercial business, the National Government can not be compelled to aid the operation of the police power by foregoing its constitutional right to lay and collect an impost or excise on the business part of the transaction.
C. The Constitution contains no grant of power, express or implied, which authorizes the General • Government to tax a State through its means and instrumentalities of government; but an excise on the dealer is a tax upon the consumer; and the exemption of the State from taxation extends no further than the functions belonging to a State in its ordinary capacity.
7. The principle which rules and guides in such cases is this: The exemption of sovereignty extends no further than the attributes of sovereignty.
The opinion of the court below is affirmed on the same grounds.

Opinion:
Mr. Justice Brewer
delivered the opinion of the Supreme Court December 4, 1905.
Mr. Justice White delivered a dissenting opinion, in which Mr. Justice Peckham and Mr. Justice McKenna concurred.