Ruppert v. Caffey/Opinion of the Court

By the Act of August 10, 1917, c. 53, § 15, 40 Stat. 276, 282 (Comp. St. 1918, § 3115 1/8 l), a war measure known as the Lever Act, Congress prohibited the use after September 9, 1917, of food materials or feeds in the production of distilled spirits for beverage purposes and authorized the President to limit of prohibit their use in the production of malt or vinous liquors for beverage purposes, so far as he might, from time to time, deem it essential to assure an adequate supply of food, or deem it helpful in promoting the national security or defense. Under the power so conferred the President, by proclamation of December 8, 1917, prohibited the production after January 1, 1918, of any 'malt liquor except ale and porter' containing more than 2.75 per centum of alcohol by weight. By proclamation of September 16, 1918, the prohibition was extended to 'malt liquors, including near beer, for beverage purposes, whether or not such malt liquors contain alcohol'; and by proclamation of March 4, 1919, the prohibition was limited 'to intoxicating malt liquors.' Under section 2 of the act (section 3115 1/8 ee) the duty of enforcing the above provisions was assigned to the Commissioner of Internal Revenue. This act contained no provision prohibiting the sale of intoxicating or other liquors.

On November 21, 1918, the so-called War-Time Prohibition Act (40 Stat. 1045, c. 212) was approved. It provided that:

'After May first, nineteen hundred and nineteen, until the     conclusion of the present war and thereafter until the      termination of demobilization, the date of which shall be      determined and proclaimed by the President of the United      States, no grains, cereals, fruit, or other food product      shall be used in the manufacture or production of beer, wine,      or other intoxicating malt or vinous liquor for beverage      purposes. After June thirtieth, nineteen hundred and     nineteen, until the conclusion of the present war and      thereafter until the termination of demobilization, the date      of which shall be determined and proclaimed by the President      of the United States, no beer, wine, or other intoxicating      malt or vinous liquor shall be sold for beverage purposes      except for export. * *  * ' Section 1.

On February 6, 1919, the Commissioner of Internal Revenue ruled (Treasury Decision 2788) that a beverage containing as much as one-half of 1 per centum of alcohol by volume would be regarded as intoxicating within the intent of the Act of November 21, 1918, and that after May 1, 1919, persons would not be permitted to qualify as brewers if the alcoholic content of their product equaled or exceeded that percentage. In so ruling the Commissioner adopted and applied to this prohibitory act the same classification of malt liquors which had been applied in administering the laws concerning the taxation of beer and other similar fermented liquors.

For since 1902 (Treasury Decision 514) fermented liquor containing as much as one-half of 1 per centum of alcohol had been treated as taxable under Revised Statutes, §§ 3339 and 3242 (Comp. St. §§ 6143, 5965), and this classification was expressly adopted in the War Revenue Act October 3, 1917, c. 63, § 307, 40 Stat. 311 (Comp. St. 1918, § 6144b). The correctness of this construction of the act was promptly and earnestly controverted by the brewers, who insisted that Congress had intended to prohibit the production only of such beer or other malt liquors as were in fact intoxicating. The attempt was then made to remove the doubt by new legislation before May 1, 1919, when the act would by its terms become operative. On February 26 the House Committee on the Judiciary reported favorably an amendment to H. R. 13581 providing:

'The words 'beer, wine or other intoxicating malt or vinous     liquors' in the war prohibition act shall be construed to      mean any liquors which contain in excess of one-half of one      per centum of alcohol.'

The Sixty-Fifth Congress ended on March 4 without acting on this bill, and the Sixty-Sixth Congress did not convene in extra session until May 19. On June 30, the House Committee on the Judiciary reported substantially the same provision as section 1 of title 1 of H. R. 6810; but it was not enacted until October 28, 1919, when as the Volstead Act (Act Oct. 28, 1919, c. 85) it was passed over the President's veto.a

Immediately after the passage of the Volstead Act, this suit was brought in the District Court of the United States for the Southern District of New York by Jacob Ruppert against Caffey, United States Attorney, and McElligott, Acting Collector of Internal Revenue, to enjoin the enforcement as against the plaintiff of the penalties provided in the War-Time Prohibition Act as amended by the Volstead Act. It was heard below on plaintiff's motion for a preliminary injunction and defendants' motion to dismiss, and, having been dismissed, was brought here by direct appeal under section 238 of the Judicial Code (Comp. St. § 1215). The bill alleged that plaintiff, the owner of a brewery and appurtenances, was on October 28, 1919, engaged in the manufacture of a beer containing more than one-half of 1 per centum of alcohol by volume, and less than 2.75 per centum by weight or 3.4 per centum by volume, and had then on hand a large quantity of such beer, and that this beer was not in fact intoxicating. Plaintiff contended (1) that the act of November 21, 1918, had become void or had expired by its own terms before the bill was filed; (2) that its prohibition by its terms was limited to beer which was in fact intoxicating; (3) that the Act of October 28, 1919, title 1, § 1, which purported to extend the prohibition to the manufacture and sale of beer not in fact intoxicating, exceeded the war power of Congress; and that thereby violation of rights guaranteed to plaintiff by the Fifth Amendment was threatened.

This case was heard and decided below with Dryfoos et al. v. Edwards and it was argued here on the same day with that case and Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 40 Sup. Ct. 106, 64 L. Ed. --, decided December 15, 1919. For the reasons set forth in the opinion in those cases, the Act of November 21, 1918, was and remained valid as against the plaintiff and had not expired. For the same reasons section 1 of title 1 of the Act of October 28, 1919, was not invalid, merely because it was new legislation. But it is insisted that this legislation is nevertheless void as against the plaintiff, because Congress could not, even under its full war powers, prohibit the manufacture and sale of nonintoxicants, and, at all events, could not without making compensation, extend the prohibition to nonintoxicating liquor acquired before the passage of the act. These objections require consideration.

First. May the plaintiff show as a basis for relief that the beer manufactured by it with alcoholic content not greater than 2.75 per centum in weight and 3.4 per centum in volume is not in fact intoxicating? The government insists that the fact alleged is immaterial since the passage of the Volstead Act by which the prohibition of the manufacture and sale is extended to all beer and other malt liquor containing as much as one-half of 1 per centum of alcohol by volume.

If the war power of Congress to effectively prohibit the manufacture and sale of intoxicating liquors in order to promote the nation's efficiency in men, munitions and supplies is as full and complete as the police power of the states to effectively enforce such prohibition in order to promote the health, safety and morals of the community, it is clear that this provision of the Volstead Act is valid and has rendered immaterial the question whether plaintiff's beer is intoxicating. For the legislation and decisions of the highest courts of nearly all of the states establish that it is deemed impossible to effectively enforce either prohibitory laws or other laws merely regulating the manufacture and sale of intoxicating liquors, if liability or inclusion within the law is made to depend upon the issuable fact whether or not a particular liquor made or sold as a beverage is intoxicating. In other words, it clearly appears that a liquor law, to be capable of effective enforcement must, in the opinion of the Legislatures and courts of the several states, be made to apply either to all liquors of the species enumerated, like beer, ale or wine, regardless of the presence or degree of alcoholic content; or if a more general description is used, such as distilled, rectified, spirituous, fermented, malt, or brewed liquors, to all liquors within that general description regardless of alcoholic content;b or to such of these liquors as contain a named percentage of alcohol; and often several such standards are combined, so that certain specific and generic liquors are altogether forbidden and such other liquors as contain a given percentage of alcohol.

A test often used to determine whether a beverage is to be deemed intoxicating within the meaning of the liquor law is whether it contains one-half of 1 per cent. of alcohol by volume. A survey of the liquor laws of the states reveals that in sixteen states the test is either a list of enumerated beverages without regard to whether they contain any alcohol or the presence of any alcohol in a beverage, age, regardless of quantity;c in eighteen States it is the presence of as much as or more than one-half of 1 per cent. of alcohol;d in six states, 1 per cent. of alcohol;e in one state, the presence of the 'alcoholic principle';f and in two states, 2 per cent. of alcohol.g Thus in forty-two of the forty-eight states-Maryland appears in two classes above-a malt liquor containing over 2 per cent. of alcohol by weight or volume is deemed, for the purpose of regulation or prohibition, intoxicating as a matter of law. Only one state has adopted a test as high as 2.75 per cent. by weight or 3.4 per cent. by volume.h Only two states permit the question of the intoxicating character of an enumerated liquor to be put in issue.i In three other states the matter has not been made clear either by decision or legislation.j The decisions of the courts as well as the action of the Legislatures make it clear-or, at least, furnish ground upon which Congress reasonably might conclude-that a rigid classification of beverages is an essential of either effective regulation or effective prohibition of intoxicating liquors.k

Purity Extract Co. v. Lynch, 226 U.S. 192, 33 Sup. Ct. 44, 57 L. Ed. 184, determined that state legislation of this character is valid and set forth with clearness the constitutional ground upon which it rests:

'When a state exerting its recognized authority undertakes to     suppress what it is free to regard as a public evil, it may      adopt such measures having reasonable relation to that end as      it may deem necessary in order to make its action effective. It does not follow that because a     transaction separately considered is innocuous it may not be      included in a prohibition the scope of which is regarded as      essential in the legislative judgment to accomplish a purpose within the admitted power of the government.' 226 U.      S. 201, 33 Sup. Ct. 46, 57 L. Ed. 184. 'It was competent for     the Legislature of Mississippi to recognize the difficulties      besetting the administration of laws aimed at the prevention      of traffic in intoxicants.

It prohibited, among other things, the sale of 'malt     liquors.' In thus dealing with a class of beverages which in      general are regarded as intoxicating, it was not bound to      resort to a discrimination with respect to ingredients and      processes of manufacture which, in the en deavor to eliminate innocuous beverages from the      condemnation, would facilitate subterfuges and frauds and      fetter the enforcement of the law. A contrary conclusion     logically pressed would save the nominal power while      preventing its effective exercise.' 226 U.S. 204, 33 Sup. Ct. 47, 57 L. Ed. 184. 'The state, within the limits its we have stated, must decide upon the     measures that are needful for the protection of its people,      and, having regard to the artifices which are used to promote      the sale of intoxicants under the guise of innocent beverages, it would constitute an unwarrantable departure      from accepted principle to hold that the prohibition of the      sale of all malt liquors, including the beverage in question,      was beyond its reserved power.' 226 U.S. 205, 33 Sup. Ct. 47, 57 L. Ed. 184.

That the federal government would, in attempting to enforce a prohibitory law, be confronted with difficulties similar to those encountered by the states is obvious; and both this experience of the states and the need of the federal government of legislation defining intoxicating liquors as was done in the Volstead Act was clearly set forth in the reports of the House Committee on the Judiciary in reporting the bill to the 65th Congress, 3d Session, Report 1143, February 26, 1919, and to the 66th Congress, 1st Session, Report 91, June 30, 1919. Furthermore, recent experience of the military forces had shown the necessity of fixing a definite alcoholic test for the purpose of administering the limited prohibitory law included in the Selective Service Act of May 18, 1917, c. 15, § 12, 40 Stat. 76, 82 (Comp. St. 1918, § 2019a).l And the Attorney General, calling attention specifically to the claim made in respect to the 2.75 per cent. beer, had pointed out to Congress that definition of intoxicating liquor by fixed standards was essential to effective enforcement of the prohibition law.m It is therefore clear both that Congress might reasonably have considered some legislative definition of intoxicating liquor to be essential to effective enforcement of prohibition and also that the definition provided by the Volstead Act was not an arbitrary one.

Plaintiff's argument is equivalent to saying that the war power of Congress to prohibit the manufacture and sale of intoxicating liquors does not extend to the adoption of such means to this end as in its judgment are necessary to the effective administration of the law. The contention appears to be, that since the power to prohibit the manufacture and sale of intoxicating liquors is not expressly granted to Congress, but is a power implied under section 8 of article 1 of the Constitution, which authorizes Congress 'to make all laws which shall be necessary and proper for carrying into execution' powers expressly enumerated, the power to prohibit nonintoxicants would be merely an incident of the power to prohibit intoxicants, and that it cannot be held to exist, because one implied power may not be grafted upon another implied power. This argument is a mere matter of words. The police power of a state over the liquor traffic is not limited to the power to prohibit the sale of intoxicating liquors supported by a separate implied power to prohibit kindred nonintoxicating liquors so far as necessary to make the prohibition of intoxicants effective; it is a single broad power to make such laws, by way of prohibition, as may be required to effectively suppress the traffic in intoxicating liquors. Likewise the implied war power over intoxicating liquors extends to the enactment of laws which will not merely prohibit the sale of intoxicating liquors but will effectually prevent their sale. Furthermore, as stated in Hamilton v. Kentucky Distilleries & Warehouse Co., supra, while discussing the implied power to prohibit the sale of intoxicating liquors:

'When the United States exerts any of the powers conferred     upon it by the Constitution, no valid objection can be based      upon the fact that such exercise may be attended by the same      incidents which attend the exercise by a state of its police      power. * *  * '

The distinction sought to be made by plaintiff between the scope or incidents of an express power and those of an implied power has no basis in reason or authority. Thus, the Constitution confers upon Congress the express power 'to establish post offices and post roads.' Article 1, § 8, cl. 7. From this is implied the power to acquire land for post offices in the several states, Battle v. United States, 209 U.S. 36, 28 Sup. Ct. 422, 52 L. Ed. 670; and as an incident of this implied power to acquire land, the further power is implied to take it by right of eminent domain, Kohl v. United States, 91 U.S. 367, 23 L. Ed. 449. Likewise, the Constitution confers by clause 3 the express power 'to regulate commerce * *  * among the several states'; but ther is implied for this purpose also the power to grant to individuals franchises to construct and operate railroads from state to state. California v. Pacific Railroad Co., 127 U.S. 1, 39, 8 Sup. Ct. 1073, 32 L. Ed. 150. Incidental to this implied power to construct or authorize the construction of a railroad is the further implied power to regulate the relations of the railroad with its employes, Second Employers' Liability Cases, 223 U.S. 1, 47, 32 Sup. Ct. 169, 56 L. Ed. 327, 38 L. R. A. (N. S.) 44; to require safety appliances upon cars, even when used in intrastate commerce, Southern Railway v. United States, 222 U.S. 20, 32 Sup. Ct. 2, 56 L. Ed. 72; and to regulate freight rates even to the extent of affecting intrastate rates, American Express Co. v. Caldwell, 244 U.S. 617, 37 Sup. Ct. 656, 61 L. Ed. 1352. Whether it be for purposes of national defense, or for the purpose of establishing post offices and post roads, or for the purpose of regulating commerce among the several states, Congress has the power 'to make all laws which shall be necessary and proper for carrying into execution' the duty so reposed in the federal government. While this is a government of enumerated powers, it has full attributes of sovereignty within the limits of those powers. In re Debs, 158 U.S. 564, 15 Sup. Ct. 900, 39 L. Ed. 1092. Some confusion of thought might perhaps have been avoided, if, instead of distinguishing between powers by the term 'express and implied,' the term 'specific and general' had been used. For the power conferred by clause 18 of section 8 'to make all laws which shall be necessary and proper for carrying into execution' powers specifically enumerated is also an express power. Since Congress has power to increase war efficiency by prohibiting the liquor traffic, no reason appears why it should be denied the power to make its prohibition effective.

Second. Does the fact that title 1 of the Volstead Act took effect upon its passage render section 1 invalid as against the plaintiff? Prohibition of the manufacture of malt liquors with alchoholic content of one-half of 1 per cent. or more is permissible only because, in the opinion of Congress, the war emergency demands it. If, in its opinion, the particular emergency demands the immediate discontinuance of the traffic Congress must have the power to require such discontinuance. To limit the power of Congress so that it may require discontinuance only after the lapse of a reasonable time from the passage of the act would seriously restrict it in the exercise of the war powers. Hardship resulting from making an act take effect upon its passage is a frequent incident of permissible legislation; but whether it shall be imposed rests wholly in the discretion of the lawmaking body. That the prohibition of the manufacture of nonintoxicating beer, if permissible at all, may be made to take effect immediately follows necessarily from the principle acted upon in Mugler v. Kansas, 123 U.S. 623, 669, 8 Sup. Ct. 273, 31 L. Ed. 205, since the incidents attending the exercise by Congress of the war power to prohibit the liquor traffic are the same as those that attend the states' prohibition under the police power. In the Mugler Case, also, the breweries were erected at a time when the state did not forbid the manufacture of malt liquors, and there it was alleged that the prohibition, which became effective almost immediately, would reduce the value of one of the breweries by three-fourths and would render the other of little value. Here as there, the loss resulting to the plaintiff from inability to use the property for brewery purposes, is an incident of the peculiar nature of the property and of the war need which, we must assume, demanded that the discontinuance of use be immediate. Plaintiff cannot complain because a discontinuance later would have caused him a smaller loss. This, indeed, appears to be conceded so far as concerns the brewery and appurtenances. The objection on the ground that the prohibition takes effect immediately is confined to the prohibition of the sale of the beer on hand at the time of the passage of the act. But as to that also we cannot say that the action of Congress was unreasonable or arbitrary.

Plaintiff contends however that even if immediate prohibition of the sale of its nonintoxicating beer is within the war power, this can be legally effected, only provided compensation is made; and it calls attention to the fact that in Barbour v. Georgia, 249 U.S. 454, 459, 39 Sup. Ct. 316, 63 L. Ed. 704, following some earlier cases, the question was reserved whether, under the police power, the states could prohibit the sale of liquor acquired before the enactment of the statute. It should, however, be noted that, among the judgments affirmed in the Mugler Case, was one for violation of the act by selling beer acquired before its enactment (see 123 U.S. 625, 627, 8 Sup. Ct. 273, 31 L. Ed. 205), and that it was assumed without discussion that the same rule applied to the brewery and its product (123 U.S. 669, 8 Sup. Ct. 273, 31 L. Ed. 205). But we are not required to determine here the limits in this respect of the police power of the states; nor whether the principle is applicable here under which the federal government has been declared to be free from liability to an owner, 'for private property injured or destroyed during war, by the operations of armies in the field, or by measures necessary for their safety and efficiency' (United States v. Pacific Railroad, 120 U.S. 227, 239, 7 Sup. Ct. 490, 495 30 L. Ed. 634); in analogy to that by which states are exempt from liability for the demolition of a house in the path of a conflagration (see Lawton v. Steele, 152 U.S. 132, 136, 14 Sup. Ct. 499, 38 L. Ed. 385); or for garbage of value taken (Reduction Co. v. Sanitary Works, 199 U.S. 306, 26 Sup. Ct. 100, 50 L. Ed. 204; Gardner v. Michigan, 199 U.S. 325, 26 Sup. Ct. 106, 50 L. Ed. 212); or for unwholesome food of value destroyed (North American Storage Co. v. Chicago, 211 U.S. 306, 39 Sup. Ct. 101, 53 L. Ed. 195, 15 Ann. Cas. 276; Adams v. Milwaukee, 228 U.S. 572, 584, 33 Sup. Ct. 610, 57 L. Ed. 971), for the preservation of the public health. Here, as in Hamilton v. Kentucky Distilleries & Warehouse Co., supra, there was no appropriation of private property, but merely a lessening of value due to a permissible restriction imposed upon its use.

It is urged that the act is particularly oppressive in respect to the beer on hand, because the plaintiff was engaged in manufacturing and selling a nonintoxicating beverage expressly authorized by the President in his proclamation of December 8, 1917, and prohibited by him later, only when conservation of all the food products of the country became necessary. The facts afford no basis on which to rest the claim of an equity in the plaintiff's favor. The specific permission from the President to manufacture 2.75 per cent. beer was not on the ground that such beer was nonintoxicating; nor was it a declaration by him that this beer was in fact nonintoxicating. The permission extended to all 'ale and porter' which, every one knows, are intoxicating liquors.n This permission to make 2.75 per cent. beer was withdrawn December 1, 1918, under proclamation of September 16, 1918; and no permission to manufacture specifically 2.75 per cent. beer was ever thereafter given by the President. His later proclamation (March 4, 1919) merely limited the prohibition of the use of foodstuffs to use in the production of 'intoxicating liquors.' Whether 2.75 per cent. beer was intoxicating was thus left by the President, not only without a decision, but without even an intimation. The statement of plaintiff that the 2.75 per cent. beer on hand was manufactured under permission of the President is wholly unfounded. It was not until July 1, 1919, when the War-Time Prohibition Act became operative in this respect that there was any prohibition of the sale of any liquors. So far as appears, all the beer which the plaintiff had on hand at the time of the passage of the Volstead Act was manufactured by the plaintiff long after the President had ceased to have any authority to forbid or to permit.

Decree affirmed.

Mr. Justice McREYNOLDS, with whom concurred Mr. Justice DAY, and Mr. Justice VAN DEVANTER, dissenting.