Court Opinion

ID: 6608008
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:15:41.128633+00
Date Added: 2024-06-11T15:58:15.489378
License: Public Domain

CONCURRING OPINION
Bland, Judge:
I, like my associates, Presiding Judge Graham and Judge Hatfield, conclude that the judgment below must be affirmed, and in this result I concur. Since some of the chief reasons which bring me to this conclusion have not been sufficiently emphasized in the foregoing opinion, and in view of the importance of the case, I will state my position as briefly as possible.
Upon the record in this case two major questions are presented: First. Is it shown by this record that the University of Illinois is an agency of the State of Illinois and as such engaged in performing a governmental function when it imported laboratory equipment for use in its educational work? Second. If it is performing a governmental function, can the Federal Government constitutionally levy an import duty’ upon such importation?
Since this case was argued in this court, the Supreme Court of the United States in Burnet v. Coronado Oil & Gas Co., 284 U. S. —, held that the assessment by the Commissioner of Internal Revenue of income and excess-profit taxes upon the net income of the lessee of public school lands of Oklahoma, which income arose from oil produced on such lands, violated the constitutional rights of the State of Oklahoma. A majority of the court held that when the State of Oklahoma leased her public school lands for the benefit of the public schools, she exercised a function strictly governmental in character. The decision is based upon the authority of Gillespie v. Oklahoma, 257 U. S. 501, which held that the State of Oklahoma had no right to tax income derived by a lessee of Indian land from sales of oil and gas received under the lease. While the decision in the Burnet case does not expressly state that the activity of a State in connection with all kinds of education is a governmental function, it does hold that the maintenance of public schools is the exercise of such a function.
If I were to pass upon the question as to whether or not the State’s maintenance of a university was strictly the exercise of a governmental function, I might regard Burnet, supra, and other cases relied upon by appellant, as very persuasive authority in favor of the affirmative of this proposition. The facts in this record, however, are quite different from those in the Burnet case. Whether the difference in the facts of the case at bar and those of the Burnet case might properly be the basis for distinguishing this case from the Burnet case, I do not feel called upon to determine. The exact question is not whether Illinois is performing a governmental function *145in the maintenance of a university, but whether it is performing a governmental function when it imports foreign merchandise to be used by such university in connection with education. In view of my conclusion on the second question, it will not be necessary for me to discuss the first.
As to the second question, I am of the opinion that the Federal Government has the constitutional authority to levy import duties, such as are provided for in the Tariff Act of 1922, upon any importation imported by the State of Illinois, regardless of the use for which the merchandise is intended.
The representatives of the States in the Constitutional Convention, in order to form the character of union desired, realized that it was necessary for the States to surrender to the Federal Government certain powers which they had enjoyed. Some of such powers were surrendered absolutely, such as the control of patents, currency, naturalization, bankruptcy, etc. Certain other powers were given the Federal Government, but not to the exclusion of the same powers being exercised by the States. In numerous instances, they vested in the Federal Government exclusive powers to do things which could not be properly done if both sovereignties operated in the same field. One of the powers given to the Federal Government was that of laying and collecting taxes, but the States did not give it the exclusive right in taxation matters. The Constitution does not say it, but it is well established that the States could not have intended to surrender their taxing powers entirely, because to do so would have been to deprive themselves of the ability to maintain government. Where the same powers are exercised by both sovereignties, controversy as to the limits of each sovereignty’s power would necessarily arise.
The Courts early held that the Constitution must be held to be a bar to the sovereignty of one government taxing the necessary and strictly governmental functions of the other, although no express language to that effect is found in the instrument. To hold otherwise would have left one sovereignty free to unduly burden and handicap the other in the exercise of the functions which each was to have and lead to a result which was destructive of the purposes which the fundamental law sought to accomplish.
Prior to the ratification of the Constitution, the States, while acting independently, levied and collected import duties. By clause 3, section 8, Article I, of the Constitution, they surrendered to the Federal Government the right to regulate commerce with foreign nations and among the other States, and by clause 1 of the same section and article, empowered the Federal Government to lay and collect duties and imposts. As far as we are advised, it has not been contended that the States intended to reserve to themselves any part of the duty of *146regulating commerce with foreign nations or among the several States. The very nature of these duties suggests that dual control in these particulars was impracticable. Dual power of levying taxes in the States, although presenting vexatious problems as to the scope of authority of the respective sovereignties must, in the very nature of things, have been within the contemplation of the framers. It is to be observed, however, that the right to lay and collect taxes by the Federal Government is granted in the same clause which granted the power to lay and collect duties and imposts, and that the power to regulate commerce between the States is granted in the same clause as the power to regulate commerce with foreign nations, but this fact does not compel the conclusion that as far as the question involved here is concerned the same limitations as to each of the powers must apply.
The Supreme Court of the United States, in Brown v. Maryland, 12 Wheat. 419, 436, 439, held that the tariff duty was the levying of a tax upon the consumer of the imported article, and it held in substances in Adair v. United States, 208 U. S. 161, Gibbons v. Ogden, 9 Wheat. 1, 196, and the Lottery Case, 188 U. S. 321, 353, that under the power to regulate interstate commerce, the Federal Government could not exercise this power in violation of the fundamental rights of the States secured by the provisions of the Constitution. The soundness of these decisions, when applied to the facts in those cases does not admit of doubt. Of course the Federal Government, uoder the guise of regulating interstate commerce, could not tax the commerce of a State out of existence, and the same principle would apply to the levying of a protective tariff duty in regulating foreign commerce, if it so burdened the States as to defeat the intent of the framers of the Constitution. Its power to regulate interstate commerce could not be exercised in such a way as to destroy the State’s fundamental rights which it had not surrendered to the Federal Government. And just here lies the distinction between these cases and the case at bar.
How could the Federal Government regulate foreign commerce by the imposition of protective tariff duties or by embargo, and thereby control, in many instances, the volume of importations, if, at the same time, the State had the right to import for its own use, upon wholly different terms, the same merchandise? It is unthinkable that the framers of the Constitution ever contemplated that the duty of regulating foreign commerce was a joint function of the States and the Union, or that the duties of the Federal Government in this respect could be carried out if interference by the States in the same field of action was tolerated.
*147Tbe Tariff Act of 1922, in its preamble, states—
An Act to provide revenue, to regulate commerce with foreign countries, to encourage the industries of the United States, and for other purposes.
Most of its dutiable provisions are definitely aimed at protecting American industries through, the regulation of foreign commerce. Furthermore, the act contains the flexible tariff provision which provides a special system of machinery for equalizing production costs without further investigation by Congress. It also contains the special proviso (section 316) for embargo and special duties which apply in case of unfair acts in the importation of merchandise. The act, therefore, is far more than a mere revenue act.
Regardless of whether the levying of a tariff duty is the laying of a tax upon the consumer of the imported article, as was held in Brown v. Maryland, supra, it is nevertheless in part the result of the exercise by the Federal Government of its power to regulate foreign commerce. See Hampton, Jr., v. United States, 276 U. S. 394. Since it is the exercise in part at least of the function of the Federal Government in regulating foreign commerce, and even though it be a tax, it is not such a tax as the Federal Government is, by the Constitution, barred from imposing upon the importer of goods.
That the imposition of duty on the particular item of importation at bar is in part the exercise by the Federal Government of its foreign commerce-regulating power, is too obvious to require extended discussion here. The context of the act under consideration and the legislative history of the dutiable status of merchandise of this character unquestionably suggest that Congress sought by the levy of this particular duty to regulate in a measure the trade in this commodity with foreign nations.
It was within the intent of the framers of the Constitution that one means of regulating the foreign commerce was the imposition of protective duties. James Madison, ofttimes styled the father of the Constitution, and who probably, during his lifetime, was more familiar with the motives prompting the actions of the framers than any other human being, was unqualifiedly of the opinion that the levying of a protective duty was the exercise of the constitutional power granted the Congress to regulate foreign commerce. In his letter of September 18, 1828, to Joseph C. Cabell, he emphatically expresses this view, giving his reasons therefor at great length and with much clearness. This letter may be found at page 9590 of the Congressional Record, volume 72, part 9, Seventy-first Congress, second session. Among the many reasons assigned for concluding that the framers of the Constitution, by the provision “the power to regulate commerce with foreign nations,” had in mind the imposition of duties which equalized *148cost of production and thus fostered domestic manufactures, were the following:
The Constitution vests in Congress expressly “the power to lay and collect taxes, duties, imposts, and excises,” and “the power to regulate trade.”
That the former power, if not particularly expressed, would have been included in the latter as one of the objects of a general power to regulate trade is not necessarily impugned by its being so expressed. Examples of this sort can not sometimes be easily avoided and are to be seen elsewhere in the Constitution. * * *
Nor can it be inferred that a power to regulate trade does not involve a power to tax it, from the distinction made in the original controversy with Great Britain, between a power to regulate trade with the Colonies and a power to tax them. * * *
* * * * * * *
8. That the encouragement of manufactures was an object of the power to regulate trade is proved by the use made of the power for that object in the first session of the First Congress under the Constitution, when among the members present were so many who had been members of the Federal convention which framed the Constitution, and of the State conventions which ratified it; each of these classes consisting also of members who had opposed and who had espoused the Constitution in its actual form. It does not appear from the printed proceedings of Congress on that occasion that the power was denied by any of them. And it may be remarked that members from Virginia in particular as well of the anti-Federal as the Federal Party, the names then distinguishing those who had opposed and those who had approved the Constitution, did not hesitate to propose duties, and to suggest even prohibitions, in favor of several articles of her production. By one a duty was proposed on mineral coal in favor of the Virginia coal pits, by another a duty on hemp was proposed to encourage the growth of that article, and by a third a prohibition even of foreign beef was suggested as a measure of sound policy. (See Lloyd’s Debates.)
In South Carolina v. United States, 199 U. S. 437, in discussing tbe powers of tbe Federal and State sovereignties to impose taxes, tbe Supreme Court of tbe United States said:
To determine the extent of the grants of power we must, therefore, place ourselves in the position of the men who framed and adopted the Constitution, and inquire what they must have understood to be the meaning and scope of those grants.
It was there further said that—
The Constitution is a written instrument. As such its meaning does not alter. That which it meant when adopted it means now.
Since it is clear that tbe States surrendered to tbe Federal Government tbe exclusive right to regulate foreign commerce by tbe imposition of import duties, it is unthinkable that they could have intended that tbe States themselves might import goods of every kind and character used in performing State functions and thereby render it impossible for tbe Federal Government to successfully and adequately regulate such commerce, and especially to regulate it so as to comply with the mandate, “All duties, imposts, and excises shall be uniform throughout the United States.”
*149The fact is conceded, and it is certainly not contestable, that the right of a State to be immune from Federal taxation carries with it the immunity of all of its subdivisions — its counties, towns, cities, and all of their respective agencies, which perform a governmental function. Under the contention of appellant, all of these agencies would have the right to import free of duty all supplies of every kind and character used in building courthouses, jails, asylums, schools, roads, bridges, etc. They would have the right to import furnishings, books, clothing, tools, and articles too numerous to enumerate as an incident of performing such governmental functions. Such enormous volume of importations by the States and their subdivisions would be possible under such circumstances as would render impossible the successful uniform regulation by the Federal Government. The framers of the Constitution could not have reasonably intended such a power being reserved to the States.
In Willcuts v. Bunn, 282 U. S. 216, the court said:
Before the power of the Congress to lay the excise tax in question can be denied in the view that it imposes a burden upon the States’ borrowing power, it must appear that the burden is real, not imaginary; substantial, not negligible.
The court there referred to an excise tax, but obviously the framers of the Constitution, in providing that the Federal Government might levy import duties in its regulation of foreign commerce, could have no occasion to levy a duty which would result in burdening the State in the performance of its governmental functions. I do not think a customs duty nor an embargo, if applied in the regulation of foreign commerce of the nation could be or does result in such a burden.
Moreover, this is not a case where the Federal Government goes into the State and levies a tax upon some State governmental activity in such a way that if carried to the extreme it would paralyze the arm of the State Government. On the contrary, it is a case where the State goes outside the United States and buys merchandise and subjects it to laws wholly Federal in character. In bringing it into the commerce of the United States, the State comes in contact with and subjects itself to the Federal Government’s laws regulating foreign commerce to which the State assented in the constitutional convention.
The Federal Government, for more than 150 years, has exercised the exclusive power of regulating the importation of foreign articles, whether imported by a State or otherwise, and as far as I am able to learn, this is the first time in the Nation’s history that any State has presented for judicial decision the question of its right to import free of duty merchandise made dutiable by an act of Congress. My conclusion that the State has no such right is for the most part based on the consideration of the fact that the existence of such a right in the State is so wholly inconsistent and destructive of other rights *150granted to tbe Federal Government as to be not within the contemplation of the framers of the Constitution.
It is admitted by the appellant that, if its claim of free importation is not sustained, the goods were properly classified by the collector.
The judgment of the United States Customs Court, overruling the protest and holding said merchandise dutiable as assessed, was proper.