Dooley v. United States (183 U.S. 151)/Dissent Fuller

Mr. Chief Justice Fuller, with whom concurred Mr. Justice Harlan, Mr. Justice Brewer, and Mr. Justice Peckham, dissenting:

This is an action brought to recover back duties levied and collected under the Porto Rican act of April 12, 1900 (31 Stat. at L. 77, chap. 191), at San Juan, on articles shipped to that port by citizens of New York from the state of New York. Plaintiffs were engaged in the business of commission merchants, having their main office in the city of New York and a branch office at San Juan.

The 2d section of the act provides that, from the time of its passage, 'the same tariffs, customs, and duties shall be levied, collected, and paid upon all articles imported into Porto Rico from ports other than those of the United States, which are required by law to be collected upon articles imported into the United States from foreign countries,' with some exceptions not material here.

The 3d section, by which these duties are imposed, reads: 'That on and after the passage of this act all merchandise coming into the United States from Porto Rico and coming into Porto Rico from the United States shall be entered at the several ports of entry upon payment of fifteen per centum of the duties which are required to be levied, collected, and paid upon like articles of merchandise imported from foreign countries; and, in addition thereto, upon articles of merchandise of Porto Rican manufacture coming into the United States and withdrawn for consumption or sale, upon payment of a tax equal to the internal revenue tax imposed in the United States upon the like articles of merchandise of domestic manufacture;' and it was further provided that articles of merchandise manufactured in the United States coming into Porto Rico should, after entry, be subject to whatever internal revenue taxes might be in force on the island. And also that whenever the legislative assembly of Porto Rico should have enacted and put into operation a system of local taxation, and proclamation thereof had been made, 'all tariff duties on merchandise and articles going into Porto Rico from the United States or coming into the United States from Porto Rico shall cease.'

Assuming that 'the United States' as referred to is the United States as constituted at the date of the proclamation of the treaty, the act, explicitly recognizing the distinction between tariff duties and internal taxes, is in respect of such duties an act to raise revenue by taxing the commerce of the people of every state and territory.

The fact that the net proceeds of the duties are appropriated by the act for use in Porto Rico does not affect their character any more than if so appropriated by another and separate act. The taxation reaches the people of the states directly, and is national, and not local, even though the revenue derived therefrom is devoted to local purposes.

Customs duties are duties imposed on imports or exports, and, according to the terms of this act, these are customs duties, not levied according to the rule of uniformity, and laid on exports as well as imports.

By the 1st clause of § 8 of article 1 of the Constitution, Congress is empowered to lay and collect duties, imposts, and excises, subject to the rule of uniformity, but this court has held that customs duties are only leviable on foreign commerce (Woodruff v. Parham, 8 Wall. 123, 19 L. ed. 382), and that the uniformity required is geographical merely (Knowlton v. Moore, 178 U.S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747). By the 3d clause of the same section, Congress is empowered 'to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.' The power to tax and the power to regulate commerce are distinct powers, yet the power of taxation may be so exercised as to operate in regulation of commerce.

'No tax or duty shall be laid on any articles exported from any state.

'No preference shall be given by any regulation of commerce or revenue to the ports of one state over those of another; nor shall vessels bound to or from one state be obliged to enter, clear, or pay duties in another.'

These provisions were intended to prevent the application of the power to lay taxes or duties, or the power to regulate commerce, so as to discriminate between one part of the country and another. The regulation of commerce by a majority vote, and the exemption of exports from duties or taxes, were parts of one of the great compromises of the Constitution.

If, after the cession, Porto Rico remained a foreign country, the prohibition of clause 5 would be fatal to these duties; while if Porto Rico became domestic, then, as they are customs duties, they could not be sustained, according to Woodruff v. Parham, under the 1st clause of § 8; and were also prohibited by clause 5 of § 9, whether customs duties or not, if the application of that clause is not limited to foreign commerce.

The prohibition that 'no tax or duty shall be laid on articles exported from any state' negatives the existence of any power in Congress to lay taxes or duties in any form on articles exported from a state, irrespective of their destination, and, this being so, the act in imposing the duties in question is invalid, whether Porto Rico after its passage was a foreign or reputed foreign territory, a domestic territory, or a territory subject to be dealt with at the will of Congress regardless of constitutional limitations.

Confessedly the prohibition applies to foreign commerce, and the question is whether it is confined to that; in order words, whether language which embraces all articles exported can be properly restricted to particular exports. On what ground can the insertion in this comprehensive denial of power of the words 'to foreign countries,' thereby depriving it of effect on commerce other than foreign, be justified?

If the words 'exported from any state' apply only to articles exported from a state to a foreign country, it would seem to follow that the broad power granted to Congress 'to lay and collect taxes,' for the purposes specified in the Constitution, may be exerted in the way of taxation on articles exported from one state to another. The right to carry legitimate articles of commerce from one state to another state without interference by national or state authority was, it has always been supposed, firmly established and secured by the Constitution. But that right may be destroyed or greatly impaired if it be true that articles may be taxed by Congress by reason of their being carried from one state to another.

Undoubtedly the clause confines the power to lay customs duties or imposts to imports only. This was so stated by Mr. Hamilton in the thirty-second number of The Federalist: 'The 1st clause of the same section [§ 8] empowers Congress 'to lay and collect taxes, duties, imposts, and excises;' and the 2d clause of the 10th section of the same article declares that 'no state shall, without the consent of Congress, lay any imposts or duties on imports or exports, except for the purpose of executing its inspection laws.' Hence would result an exclusive power in the Union to lay duties on imports and exports, with the particular exception mentioned. But this power is abridged by another clause, which declares that no tax or duty shall be laid on articles exported from any state; in consequence of which qualification it now only extends to the duties on imports.'

Nevertheless, because the clause secured that object, it is not to be assumed that it was not also intended to secure unrestrained intercourse between the different parts of a common country.

As was said in Gibbons v. Ogden, the right of intercourse between state and state was derived 'from those laws whose authority is acknowledged by civilized man throughout the world. . . . The Constitution found it an existing right, and gave to Congress the power to regulate it.' 9 Wheat. 211, 6 L. ed. 73. From this grant, however, the power to regulate by the levy of any tax or duty on articles exported from any state was expressly withheld.

In Woodruff v. Parham, 8 Wall. 132, 19 L. ed. 384, Mr. Justice Miller, in support of the conclusion that clause 1 of § 8 was confined as to customs duties to foreign commerce, said: 'Is the word 'impost,' here used, intended to confer upon Congress a distinct power to levy a tax upon all goods or merchandise carried from one state into another? Or is the power limited to duties on foreign imports? If the former be intended, then the power conferred is curiously rendered nugatory by the subsequent clause of the 9th section, which declares that no tax shall be laid on articles exported from any state, for no article can be imported from one state into another, which is not, at the same time, exported from the former.'

In that case, clause 2 of § 10 was under consideration: 'No state shall, without the consent of Congress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws; and the net produce of all duties and imposts, laid by any state on imports or exports, shall be for the use of the Treasury of the United States; and all such laws shall be subject to the revision and control of the Congress.'

It was held that this referred to foreign commerce only, and 'that no intention existed to prohibit, by this clause, the right of one state to tax articles brought into it from another.' This was reaffirmed in Brown v. Houston, 114 U.S. 622, 630, 29 L. ed. 257, 260, 5 Sup. Ct. Rep. 1091, 1095, and Mr. Justice Bradley said: 'But in holding, with the decision in Woodruff v. Parham, that goods carried from one state to another are not imports or exports within the meaning of the clause which prohibits a state from laying any impost or duty on imports or exports, we do not mean to be understood as holding that a state may levy import or export duties on goods imported from or exported to another state. We only mean to say that the clause in question does not prohibit it. Whether the laying of such duties by a state would not violate some other provision of the Constitution-that, for example, which gives to Congress the power to regulate commerce with foreign nations, among the several states, and with the Indian tribes-is a different question.'

The question has been repeatedly answered by this court to the effect 'that no state has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, for the reason that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to Congress.' Lyng v. Michigan, 135 U.S. 166, 34 L. ed. 153, 3 Inters. Com. Rep. 146, 10 Sup. Ct. Rep. 726. But if that power of regulation is absolutely unrestricted as respects interstate commerce, then the very unity the Constitution was framed to secure can be set at naught by a legislative body created by that instrument.

Such a conclusion is wholly inadmissible. The power to regulate interstate commerce was granted in order that trade between the states might be left free from discriminating legislation, and not to impart the power to create antagonistic commercial relations between them.

The prohibition of preference of ports was coupled with the prohibition of taxation on articles exported. The citizens of each state were declared 'entitled to all privileges and immunities of citizens in the several states,' and that included the right of ingress and egress, and the enjoyment of the privileges of trade and commerce. Slaughter-House Cases, 16 Wall. 36, 21 L. ed. 394.

And so the court, in Woodruff v. Parham, as the quotation from its opinion by Mr. Justice Miller demonstrates, did not put upon the absolute and general prohibition of power to lay any tax or duty on articles exported from any state that narrow construction which would limit it to exports to a foreign country, and would concede the power to Congress to impose duties on exports from one state to another in regulation of interstate commerce.

The power to lay duties in regulation of commerce with foreign nations is relied on as the source of power to pass laws for the protection and encouragement of domestic industries, and except for this clause the same effect would be attributed to the power to regulate commerce among the states. This, however, the clause, literally read, prevents, and to limit its application to foreign commerce, as the power to lay customs duties under the 1st clause of § 8 has been limited, would defeat the manifest purpose of the Constitution by enabling discriminating taxes and duties to be laid against one section of the country as distinguished from another.

And if the prohibition be not confined to foreign commerce, then it applies to all commerce not wholly internal to the respective states, and the destination of articles exported from a state cannot affect, or be laid hold of to affect, the result.

In short, clause 5 operates, and was intended to operate, to except the power to lay any tax or duty on articles exported from the general power to regulate commerce, whether interstate or foreign. And this is equally true in respect of commerce with the territories, for the power to regulate commerce includes the power to regulate it, not only as between foreign countries and the territories, but also by necessary implication as between the states and territories. Stoutenburgh v. Hennick, 129 U.S. 141, 32 L. ed. 637, 9 Sup. Ct. Rep. 256.

Nothing is better settled than that the states cannot interfere with interstate commerce, yet it is easy to see that if the exclusive delegation to Congress of the power to regulate commerce did not embrace commerce between the states and territories, the interference by the states with such commerce might be justified.

Again, if in any view these duties could be treated as other than custom duties the result would be the same, inasmuch as the goods were articles exported from New York, and there was a total lack of power to lay any tax or duty on such articles.

The prohibition on Congress is explicit, and noticeably different from the prohibition on the states. The state is forbidden to lay 'any imposts or duties;' Congress is forbidden to lay 'any tax or duty.' The state is forbidden from laying imposts or duties 'on imports or exports,' that is, articles coming into or going out of the United States. Congress is forbidden to tax 'articles exported from any state.'

The plain language of the Constitution should not be made 'blank paper by construction,' and its specific mandate ought to be obeyed.

As said in Marbury v. Madison, 'It is declared that 'no tax or duty shall be laid on articles exported from any state.' Suppose a duty on the export of cotton, of tobacco, or of flour; and a suit instituted to recover it. Ought judgment to be rendered in such a case? Ought the judges to close their eyes on the Constitution, and only see the law?' 1 Cranch, 178, 2 L. ed. 74.

Nor is the result affected by the fact that the collection of these duties was at Porto Rico.

In Brown v. Maryland, 12 Wheat. 437, 6 L. ed. 685, Chief Justice Marshall said: 'An impost, or duty on imports, is a custom or a tax levied on articles brought into a country, and is most usually secured before the importer is allowed to exercise his rights of ownership over them, because evasions of the law can be prevented more certainly by executing it while the articles are in its custody. It would not, however, be less an impost or duty on the articles if it were to be levied on them after they were landed. The policy and consequent practice of levying or securing the duty before or on entering the port does not limit the power to that state of things, nor, consequently, the prohibition, unless the true meaning of the clause so confines it. What, then, are 'imports?' The lexicons inform us they are 'things imported.' If we appeal to usage for the meaning of the word, we shall receive the same answer. They are the articles themselves which are brought into the country. 'A duty on imports,' then, is not merely a duty on the act of importation, but is a duty on the thing imported. It is not, taken in its literal sense, confined to a duty levied while the article is entering the country, but extends to a duty levied after it has entered the country.'

And so of exports. They are the things exported,-the articles themselves. A duty on exports is not merely a duty on the act of exportation, but is a duty on the article exported, and the article exported remains such until it has reached its final destination. The place of collection is purely incidental, and immaterial on the question of power.

But we are told that these duties were laid, not on articles exported from the state of New York, but on articles imported into Porto Rico. The language used, however, precludes this contention, and there is nothing in the act to indicate that at some particular point on a voyage articles exported were to cease to be such and to become imports, and nothing in the facts in this case to indicate a sea change of that sort as to these goods. The geographical origin of the shipment controls, and, as heretofore said, it is not material whether the duties were collectible at the place of exportation or at Porto Rico. They were imposed on articles exported from the state of New York, and before the articles had reached their ultimate destination and been mingled with the common mass of property on the island.

Chief Justice Marshall disposed of the suggested evasion thus: 'Suppose revenue cutters were to be stationed off the coast for the purpose of levying a duty on all merchandise found in vessels which were leaving the United States for foreign countries; would it be received as an excuse for this outrage were the government to say that exportation meant no more than carrying goods out of the country, and as the prohibition to lay a tax on imports, or things imported, ceased the instant they were brought into the country, so the prohibition to tax articles exported ceased when they were carried out of the country?' 12 Wheat. 445, 6 L. ed. 688.

There is no difference in principle between the case supposed and that before us. The course of transportation is arrested until the exaction is paid.

The proposition that because the proceeds of these duties were to be used for the benefit of Porto Rico they might be regarded as if laid by Porto Rico itself with the consent of Congress, and were therefore lawful, will not bear examination. No money can be drawn from the Treasury except in consequence of appropriations made by law. This act does not appropriate a fixed sum for the benefit of Porto Rico, but provides that the money collected, and collected from citizens of the United States in every port of the United States, shall be placed in a separate fund or subsequently in the treasury of Porto Rico, to be expended for the government and benefit thereof. And although the destination of the proceeds in this way were lawful, it would not convert duties on articles exported from the states into local taxes.

States may, indeed, under the Constitution, lay duties on foreign imports and exports, for the use of the Treasury of the United States, with the consent of Congress, but they do not derive the power from the general government. The power pre-existed, and it is its exercise only that is subjected to the discretion of Congress.

Congress may lay local taxes in the territories, affecting persons and property therein, or authorize territorial legislatures to do so, but it cannot lay tariff duties on articles exported from one state to another, or from any state to the territories, or from any state to foreign countries, or grant a power in that regard which it does not possess. But the decision now made recognizes such powers in Congress as will enable it, under the guise of taxation, to exclude the products of Porto Rico from the states as well as the products of the states from Porto Rico; and this, notwithstanding it was held in De Lima v. Bidwell, 182 U.S. 1, 45 L. ed. 1041, 21 Sup. Ct. Rep. 743, that Porto Rico after the ratification of the treaty with Spain ceased to be foreign and became domestic territory.

My Brothers Harlan, Brewer, and Peckham concur in this dissent.

We think it clear on this record that plaintiffs were entitled to recover, and that the judgment should be reversed.