Red 'C' Oil Manufacturing Company v. Board of Agriculture of North Carolina/Opinion of the Court

In view of the full reference to and the review of decided cases made by the district judge in the opinion by him delivered, we content ourselves with a comparatively brief discussion of the questions pressed at bar.

These all come to two propositions, which are thus stated by counsel:

'1. That the North Carolina oil inspection act is unconstitutional and void in that, under the guise of exercising a police power, the general assembly of North Carolina is really attempting to impose a revenue tax upon interstate commerce.

'2. That the said inspection act is unconstitutional, in that the general assembly of North Carolina has attempted to delegate to the board of agriculture legislative powers.'

As to the first proposition, we append in the margin a clear and adequate summary of the act, made by the judge below:

Sec. 1. 'That all kerosene or other illuminating oils sold or offered for sale in this state shall be subject to inspection and test to determine the safety and value for illuminating purposes.' All manufacturers, wholesalers, and jobbers, before selling or offering for sale, in this state, any kerosene or other oil, for illuminating purposes, are required to file with the commissioner of agriculture a statement showing that they desire to do business in the state, and to furnish the name or brand of the oil or oils which they desire to sell, with the names and address of the manufacturer, and that such oil will comply with the requirements of the law.

Sec. 2. Power is conferred upon the commissioner of agriculture to collect samples of any illuminating oil offered for sale in this state, and have the same analyzed. The inspection of oil, as authorized by the act, is to be made under the direction of the board of agriculture, which is authorized 'to make all necessary rules and regulations for the inspection of such oil, and to adopt standards of safety, purity, or absence from objectionable substances, and luminosity, when not in conflict with this act, and which they may deem necessary to provide the people of the state with satisfactory illuminating oil.'

The board of agriculture is required to appoint oil inspectors not exceeding in number one from each congressional district, whose compensation shall not exceed $1,000 a year and expenses. They are given power to examine all barrels, tanks, or other vessels containing kerosene or other illuminating oils, to see that they are properly tagged, and shall, as directed, collect and test samples of oil offered for sale in different sections of the state, and when instructed, collect and send samples to the Department of Agriculture for examination.

Sec. 3. 'For the purpose of defraying the expenses connected with the inspection, testing, and analyzing oils in this state, there shall be paid to the commissioner a charge of 1/2 cent per gallon, which payment shall be made before delivery to agents, dealers, or consumers in this state.' Provision is made for attaching to each barrel, tank car, and other containers, a tag or stamp to be furnished by the commissioner of agriculture, showing that the tax has been paid. When oil is shipped in tank cars or other large containers, the manufacturer or jobber shall give notice to the commissioner of agriculture of every shipment, with the name and address of the person, company, or corporation to whom it is sent, and the number of gallons, on the day the shipment is made.

The bill, as we have stated, was filed when the statute had been in force but two days, and when, of necessity, the result of its operations was conjectural. We are asked now to hold that, although the general assembly declared in the statute that the charge or tax authorized to be imposed was made 'for the purpose of defraying the expenses connected with the inspection, testing, and analyzing of oils in this state,' the real purpose of the legislature was to levy a tax for revenue, in violation of the commerce clause of the Constitution. Reading the statute as an entirety, or in connection with the supplemental legislation of March 9, 1909, we find no adequate reason for imputing to the general assembly of North Carolina an attempt to do one thing under the guise or pretense of doing another. The mere designation of the exaction as a tax is not sufficient to warrant the deduction that the charge authorized for the inspection was not one really for such purpose. We cannot lightly attribute improper motives to the lawmaking power. Florida C. & P. R. Co. v. Reynolds, 183 U.S. 471, 46 L. ed. 283, 22 Sup. Ct. Rep. 176; Ellis v. United States, 206 U.S. 246, 51 L. ed. 1047, 27 Sup. Ct. Rep. 600, 11 A. & E. Ann. Cas. 589. Putting out of view, therefore, questions of motive, two subsidiary contentions remain; viz: (a) that oil is not a proper subject of inspection; and (b) that the tax in question is so excessive on its face as to be unconstitutional. The conceded fact that in thirty-five states of the Union oil inspection laws are in force is sufficient to adversely dispose of the first of these contentions. As stated by the court below:

'While there is much diversity of opinion in respect to the danger of explosion from the use of kerosene oil, and of the power to ascertain its illuminating capacity, it is evident that the question has not so far passed beyond the domain of debate, that the legislature may not subject it to reasonable inspection before permitting its sale in the state. The court cannot say that such a law has no reasonable relation to the public safety or welfare.'

The contention that the tax is so excessive on its face as to conclusively evidence the unconstitutionality of the burden, if imposed as a mere inspection charge, is, we think, also without merit. Prima facie the charge must be deemed to be reasonable. Western U. Teleg. Co. v. New Hope, 187 U.S. 419, 47 L. ed. 240, 23 Sup. Ct. Rep. 204. Again, as said by the court below:

'It appears from an examination of the various oil inspection laws in force in the United States that the charges for inspection vary from 1/2 to 1 1/2 cents per gallon, and that in states wherein population and other conditions are similar to those in this state the charge is about the same as that fixed by the act.'

Looking at the elements which may have possibly entered into the calculation of the general assembly as to what would be a reasonable inspection charge, we cannot, to quote from the opinion in the Patapsco Guano Case, 171 U.S. 354, 43 L. ed. 194, 18 Sup. Ct. Rep. 862, 'conclude that the charge is so seriously in excess of what is necessary for the objects designed to be effected as to justify the imputation of bad faith, and change the character of the act.'

In disposing of the contention just stated we are not at liberty to travel outside of the record and take judicial notice of the operation of the act since the transcript of record was filed in this court. We here reiterate what was said in the case last cited: 'If the receipts are found to average largely more than enough to pay the expenses, the presumption would be that the legislature would moderate the charge.' If the trial made of the act establishes the fact to be as asserted, that the exaction in question is excessive, the presumption is that, in the orderly conduct of the public business of the state, the necessary correction will be made to cause the act to conform to the authority possessed, which is to impose a fee solely to recompense the state for the expenses properly incurred in enforcing the authorized inspection. What relief should be awarded in the event the legislature of North Carolina failed in its positive duty in this particular is not a question open for consideration upon this record, as no such failure of duty on the part of the legislature had occurred or could possibly have happened when this suit was commenced, a few days after the passage of the act.

The remaining contention is that the act is repugnant to the state Constitution because it attempts to delegate to the board of agriculture the exercise of legislative powers. The legislative requirement was that the illuminating oils furnished in North Carolina should be safe, pure, and afford a satisfactory light, and it was left to the board of agriculture to determine what oils would measure up to these standards. We think a sufficient primary standard was established, and that the claim that legislative powers were delegated is untenable. Buttfield v. Stranahan, 192 U.S. 492, 48 L. ed. 534, 24 Sup. Ct. Rep. 349; Union Bridge Co. v. United States, 204 U.S. 364, 51 L. ed. 523, 27 Sup. Ct. Rep. 367; St. Louis I. M. & S. R. Co. v. Taylor, 210 U.S. 281, 52 L. ed. 1061, 28 Sup. Ct. Rep. 616; United States v. Grimaud, 220 U.S. 506, 55 L. ed. 563, 31 Sup. Ct. Rep. 480.

We have not attempted to enumerate the objections urged against the rules and regulations adopted by the board of agriculture. The court below was clearly right when it observed that if, as the complainant alleged, the standard of safety fixed by the board was unreasonably high, or the method of testing oil unsatisfactory, and not such as was in general use, or the regulations in other respects were unjust or oppressive, it should seek relief by applying to the board of agriculture to modify them. A law cannot be declared invalid because, in the opinion of the court, it does not accord with sound policy. The appeal for redress in such case must be to the lawmaking power.

Decree affirmed without prejudice.