Reybold v. United States, 82 U.S. (15 Wall.) 202
Case details
Bluebook Citation
Reybold v. United States, 82 U.S. (15 Wall.) 202
Full caption
Reybold v. United States.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Majority
Davis (Justice)
Majority
Swayne (Justice)
Majority
Strong (Justice)
Dissent
Swayne (Justice), joined by Davis (Justice)
Reybold v. United States.
The government chartered a vessel during the war of the rebellion; the owners agreeing to keep her “ tight, stanch, strong, well-manned,” &c., and to bear the marine risks; the war risks to be borne by the government. The vessel was to proceed, “ with the first good opportunity, to such ports and places as ordered and directed by the quartermaster of the government.” On the 20th January, 1865, the vessel being then in the Potomac at "Washington, and the navigation considerably obstructed by ice, the quartermaster consulted her captain about her condition and capacity, and was informed that she was sheathed with iron, and was of capacity to take a certain number of men and horses, which the government wanted to transport. The quartermaster then ordered the captain to receive the men and horses, and to proceed on the next morning down the river to City Point. The captain made no objection to the order, because, as he testified, “he considered it imperative as a military or er, and as such obeyed it; though if he had considered that he could have used his judgment he would not have left the wharf, as he did not p. 203consider it safe.” Having accordingly received the men and horses he set off. In going down the river the vessel, though “tight, stanch, strong, well-manned, &c.,” was wrecked by the ice. Held, that the risk was a marine risk—not one of war; and that though the acquiescence of the master deprived the act of the quartermaster of being a tortious act, no recovery could be had in the Court of Claims.
Appeal from the Court of Claims; the case being thus:
Reybold, owner of the steamer Express, chartered her to the government under a charter-party, whereby it was agreed
“That the vessel now is and shall be kept and maintained tight, stanch, strong, and well and sufficiently manned, victualled, tackled, apparelled, and ballasted, and furnished in every respect fit for merchant service at the cost and charge of her owner. And when laden shall proceed, with the first good opportunity, to such ports and places as ordered and directed by the quartermaster of the United States.
“The war risks to be borne by the United States; the marine risks to be borne by the owner?’
On the 20th and 21st of January, 1865, the vessel was at Washington; the Potomac River being then frozen over from bank to bank; the ice eight inches thick; and the channel alone, in which, nevertheless, masses of ice were floating, kept open by the current and by the passage of vessels. In consequence of this condition of the river, the navigation was suspended except by government steamers and the ferry-boats. On the 20th of January, the master received an order from the quartermaster to take certain men and horses on board and proceed “ to-morrow morning ” to a place called City Point.
Previous to giving this order, the quartermaster, in answer to his inquiries, was informed that the vessel was sheathed with iron, and was of capacity to take the men, horses, &c., ny the captain, who made no objection to the order, because, as he testified, “ he considered it imperative as a military order, and as such obeyed it; though if he had considered e could have used his judgment, he would not have left the wharf, as he did not consider it safe.”
Argument for the owner.
Having taken the men and horses on board on the 20th, he set off on the following morning for City Point.
While the vessel was crossing the river, her hull was crushed by heavy cakes of ice, and she filled and sank. The injury in sinking did not arise from any defect in the vessel or any fault on the part of her officers or crew. The Court of Claims found as conclusions of law:
1. That the peril was within the term “ marine risks,” and therefore to be borne by the owner.
2. That the charter-party placed the steamer in the military service of the United States in a time of war, and that the term was to be construed in reference to that service, and included risks from perils of the sea and seasons incident to that service, and its exigencies.
3. That the steamer, being in the military service, was subject to military orders necessary for the proper performance of the service.
It accordingly gave its decree for the United States. And from that decree the owner of the vessel appealed.
Mr. E. Fitch, for the appellant:
The master and crew were the servants of the owners, who appointed, paid, and subsisted them; and*under a right interpretation of the charter-party, the master was to see to and control the navigation of the vessel and direct her motions. The quartermaster could indeed order and direct the freight to be carried and the ports and places at which it should be delivered; in other words, control the destination and employment of the vessel. But the owners maintained the right to say what was the right mode of her navigation.
Now, whether the state of the weather and the condition of the water are suitable for the commencement of the voyage, it appertains to the office of master of the vessel to determine. “ The master must commence his voyage without delay as soon as the weather is favorable. . . . But wws« on no account sail out during tempestuous weather” So saY the codes. Indeed, by most of the ancient marine ordinances the master is required before he hoists sail to consult his
Argument for the owner.
mate, pilot, and others of the crew, as to the wind and weather. But by the law of England, or by our law, the entire management of the ship is intrusted to the master.*
In the present case the order of the quartermaster deprived the master of the steamer of the right to judge whether the “good opportunity” mentioned in the charter-party existed. It defined and specified the time for the commencement of the voyage. “ To-morroio morning” was. the point of time named for the departure of the vessel, without regard to the state of the weather or the condition of the river. The departure of the vessel at that time, in face of apparent danger, was an unskilful and negligent act of navigation, for which the United States and not the owners are responsible.
The order of the quartermaster was a military order, issued by a military officer of the United States “ acting in discharge, of his official duty” in time of war. Obedience to it could not be refused.!
But the United States are estopped from alleging that the master should not have obeyed it. They cannot be permitted to complain because the master did what they, by their duly authorized agent, commanded him to do. His act was their act, for he was acting within the scope of his authority. Nor can the fact, that the master obeyed without objection, relieve them from the responsibility of the order and its consequence. To object was no part of his duty.
It cannot be said that the master acquiesced, in the proper sense of the word, in the order given. His opinion was not asked, nor was he consulted in regard to the dangers to be encountered in making the voyage. He was asked in regard to the condition and capacity of his vessel, and to these inquiries he made true answers. But the voyage was not made the subject of negotiation or consultation between him and t e quartermaster. The order was given, and received and
Abbott on Shipping, Part 4, chapter 5, page 351 (original), and cases an ordinances cited in note thereto.
t The Venice, 2 Wallace, 276.
obeyed, as a military order simply, imperative in its terms and admitting no question.
By the term “ marine risk,” as used in the charter-party, was evidently intended such risk from' marine dangers and perils as the vessel would be subjected to while making her voyages under and in pursuance of the contract; that is, while controlled and navigated by the master and crew chosen by the owners. It was not intended that the United States could substitute some other person, by them chosen, in place of the master, and still continue the responsibility for the marine risk upon the owners. Nor was it intended that they could override the judgment.of the master by military command, and cast upon the owners the risk from marine perils thereby incurred.
Mr. G. H. Williams, Attorney-General, and Mr. C. H. Hill, Assistant Attorney-General, contra.
Mr. Justice DAVIS delivered the opinion of the court.
This case is in only one particular different from that of Morgan v. United States, decided at the last term.* Both were contracts of affreightment, with stipulations that the United States should bear the war risk and the owners the marine risk. The hiring in each case was for a particular purpose, the transportation of troops and munitions of war from place to place, as the necessities of the service might require; and although the United States were empowered to direct the manner of loading the vessels and their points of destination, yet the owners retained the control and management of them, and agreed to keep them in good repair and fit for the service in which they were engaged. In each case the loss sued for was occasioned by the perils of the sea, and in both the effort has been, notwithstanding the express terms of the contract that the owners were their own insurers against such risks, to shift the responsibility upon the United States.
* 14 Wallace, 531.
It was insisted in Morgan’s case that the owners were relieved and the government chargeable, because the master was compelled to proceed to sea by the peremptory order of the quartermaster, when, in his judgment, expressed to that officer, the state of the wind and tide rendered it hazardous to do so, but we held, as in several previous cases,* that if this were so, it was outside of the contract—a tortious act of the officer—and, therefore, not within the jurisdiction of the Court of Claims..
In the present case the master made no objection to the order requiring him to proceed on his voyage, and this constitutes the only difference between the two cases. This difference, however, instead of helping the cause of the claimant, makes the justice of the defence still clearer. It was the business of the master to know whether the navigation of the river was dangerous or not, and naturally, he would be better informed on such a subject than a quartermaster of the United States. How are we to know, in the absence of proof, that the order would have been given, or, if given, not withdrawn, had the master stated that in his opinion, in the state of the river, it was unsafe to attempt to make the voyage ? Why not speak of the danger when he told the quartermaster, in reply to an inquiry on the subject, prior to the order being given, that his vessel was sheathed with iron and had capacity to take the men and horses to City Point ? This was the time to have spoken, as the object of the inquiry was plainly to ascertain whether or not the boat, if she had the requisite capacity, was in a condition to withstand the masses of ice which were floating in the channel of the nver. It is very clear that, upon the information which was given, in the absence of any objection to the proposed voyage, the officer of the government had the right to. suppose, in the judgment of the master, it could be safely undertaken. It is no excuse to say that the master at the time knew it was unsafe to leave the wharf, but said nothing,
*
Reed v. United States, 11 Wallace, 591: United States v. Kimbal, 13 Id.
Syllabus.
because he considered the order a military one, and as such to be obeyed. It is true, by the terms of the contract of affreightment, he was subject to the orders of the quartermaster, but this contract did not require him to sail out of port during such tempestuous weather as would necessarily jeopardize the safety of his boat.
If obedience to an order given under such circumstances had been demanded, after proper objection, it would have been a tortious act on the part of an officer of the government.
In such a case, if relief is to be afforded, it must come from Congress, for the Court of Claims has no power to entertain a suit based on a consideration of this character.
If, however, the master chose to obey the order without objection, and in the course of the voyage the steamer commanded by him is lost or injured by a peril of the sea, her owners can have no just cause of complaint against the government, and must abide the consequences of their stipulation.
In every aspect of the case the judgment of the Court of Claims should be
Affirmed.
Salomons v. Graham.
A State made a contract with a person whom it employed to work for it, to pay him so much money for his work ; the money to be paid from tune to time as the work went on. The work was done. Payment was made part in money, and part in State warrants much depreciated when pai out, and which the contractor was obliged, in order to keep his engagement to the State, to sell at a heavy loss; though in the hands of the purchasers they were ultimately redeemed. The people ot the State subsequently ordained by its constitution that the debt of the bta e should not be increased so as to exceed $25,000,000. And after this, there being no money unappropriated in the treasury, and the debt of t e State then being $25,000,000, the legislature passed an act to pay t e contractor $50,331 to reimburse him the losses which he had sustain by the State’s want of good faith in paying him in money all that i owed him under its contract. On an application for a mandamus, t e
Supreme Court of the State adjudged that this act created a new debt, and so increased the debt of the State above $25,000,000, and was void. Held in this court, that no writ of error lay under the 25th section of the Judiciary Act,
Motion by Jfr. T. J. Durant to dismiss a writ of error to the Supreme Court of Louisiana, taken on assumption that the case fell within the 25th section of the Judiciary Act, quoted supra, p. 3. The case, as it appeared from some recitals and other evidences in the record, was thus:
The State of Louisiana, on the 22d March, 1866, made a contract with one Nixon, public printer, to pay him in cash, monthly, certain prices for printing to be done by him. He did the work. The State, however, paid him in cash but part of what it owed him. The balance was paid in State warrants, then much depreciated, though finally redeemed by the State. These warrants Nixon had to sell at large discounts, in order to comply with his contract to the State.
In December, 1870, the people of Louisiana ordained by their constitution that the debt of the State should not be increased so as to exceed $25,000,000.
This constitution being in force, the legislature, in March, 1871—reciting the contract with Nixon above mentioned, the kind of payments made—a part State warrants, “ which he was compelled to receive, or get nothing at all ”—his sale of them, and his losses: and reciting that “the good faith of the State required that it should make good the losses by him thus incurred”—passed an act, there being no moneys at the time in the treasury unappropriated, appropriating to him $50,331, “ to reimburse him for the loss and discount Buttered by him by reason of the premises stated, and of the failure of the State to pay him in cash, as required by its contract with him.” And the auditor of public accounts, one Graham, was required to issue his warrant for the amount.
his the auditor refused to do; and Nixon, having sold his c f° oue Salomons, Salomons applied to one of the State courts of Louisiana for a mandamus. The auditor and the attorney-general of Louisiana appeared, and showed for cause f at the constitution of Louisiana forbade the act required, for vol. xv.
that the said constitution prohibited the increase of the debt of the State beyond $25,000,000 ; and that the debt already exceeded that amount before the passage of the act in favor of Nixon. The Supreme Court of the State where the case finally came, gave judgment, refusing the mandamus. The ground was that the State had settled with Nixon ; that the appropriation made by the act of March, 1871, was the creation of a debt, and not the mere recognition of one existing at the time of the constitutional amendment, and unaffected by it, and .that there having been no moneys in the treasury when the appropriation was made to answer it, the act increased the debt of the State above $25,000,000, and was unconstitutional and void. From this judgment of the Supreme Court of Louisiana the relators took this writ of error.
Mr. J. J. Key, against the motion to dismiss, argued that the contract of the State of March 22d, 1866, with Nixon, having been in force prior to the declaration of the constitution of Louisiana, made in December, 1870, and that contract not having been rightly performed—being in fact a still existing contract, as the act of March, 1871, showed—the constitution of Louisiana violated the 10th section of the 1st article of the Constitution of the United States, which declares that no State shall pass any law impairing the obligation of contracts. The new constitution of Louisiana was such a law. The case, he argued, thus came within the 2d clause of the 25th section.
The CHIEF JUSTICE:
No question as to the repugnance of the constitution of Louisiana to the Constitution of the United States was made in the Supreme Court of the State, or decided by that court; nor is it easy to see how such a question could be made. The main question argued and decided was whether an act of the legislature increasing the debt of the State when it already exceeded $25,000,000, was repugnant to the constitution of ithe State. The court held that it was. This decision in-waived no Federal question.
Writ dismissed.
Oelrichs v. Spain.
1. In the jurisprudence of the United States, the objection that there is an
adequate remedy at law raises a jurisdictional question, and may be en-
forced by the court sua sponte, though not raised by the pleadings, nor
suggested by counsel.
2. The equity jurisdiction will be sustained when time, expense, and multi-
plicity of suits will be saved, as also when the case contains an element
of trust.
3. Securities to an injunction bond cannot go behind the decree to raise a
question of illegality as to an agreement on which it is founded.
4. A release not under seal is not a technical bar, even in a suit at law. But
even when sealed it cannot be set up in equity to defeat those who were
not parties to it, and who had separate interests.
5. An injunction bond, given to one who held the legal title to a fund, will
enable him at law to recover to the full extent damages touching the
entire fund; and a court of equity will follow the law in its proper dis-
. tribution. Mt Counsel fees are not recoverable on such bonds.
Appeal from the Supreme Court for the District of Columbia, a court (as is said, infra, p. 219) of general jurisdiction, the case being* thus:
On the 9th of November, 1842, the Bank of the United States was the owner of $500,000 of the bonds of the then independent Republic of Texas, a government, at that time, of bad pecuniary credit. Owing W. S. Wetmore $50,000, the bank assigned these bonds, with arrears of interest on them, to him as a security for the debt. In July, 1845, the Republic became one of the United States, under the name of the State of Texas, and immediately certain holders of its bonds became urgent that Congress should assume the payment of them, principal and interest. Among these holders was General James Hamilton, a person of some political influence in his day, and who had been instrumental in procuring the admission of Texas into the Union. As the Bank of the United States would gain largely if the United States Aid so assume the debt, Hamilton applied to its trustees—
the bank having itself failed, and assigned its effects—urging f em to employ him to have it done; and the trustees, in ctober, 1845, agreed with him that if he would devote his p. 212“best efforts, time,'and means to the great object of securing the recognition and payment of these claims,” and if his efforts should be successful, they would allow him a commission of ten per cent, for the service so rendered. This agreement was limited, by its terms, to two years. However, Hamilton having labored successfully, this provision as to time was not insisted on. The trustees communicated the agreement fully to Wetmore, September 16th, 1850, without mentioning the original limitation, and directing him to “hold subject to the order of Hamilton, one-tenth of any sum over and above his claim against the said bonds.” Wetmore acknowledged the receipt of this order, and promised to hold the bonds accordingly.
Through his, Hamilton’s, efforts, largely, Congress, by an act of 9th September, 1850, did assume the payment of this debt, and authorized a five per cent, stock of the United States to be issued in lieu of the bonds of Texas; the act requiring, however, that before the stock of the United States should be issued, the holders of the Texas bonds should “first file at the Treasury of the United States, releases of all claims against the United States for said bonds.’
The amount finally paid, June 3d, 1856, in behalf of the claim
held by Wetmore, was ....... $817,720 88 Wetmore having paid himself his own debt, paid the residue of
the nine-tenths to the trustees of the bank. This left in his
81,772 08
.hands, as trustee for Hamilton, the remaining one-tenth, or A considerable time before this money was payable by the United
States, Hamilton, who had long been pecuniarily embarrassed, directed Wetmore, by written orders, which Wetmore accepted, to pay out of it, when received,
To Wetmore, himself, ...... $2,500
To Corcoran & Riggs,................................... 25,000
To one Hill, . . . . . . . 33,500
with interest from certain dates; so much being due by him,
• Hamilton, for money borrowed of these persons respectively. It seemed to be admitted by all, as unquestionable, that the
trustees of the Bank of the United States were, in virtue of some agreement of an admitted priority, entitled to receive of this ............................................................................... The sum of..............................................................................
Leaving as Hamilton’s true one-tenth,
In this state of things—and when if Wetmore had been allowed to distribute the one-tenth of Hamilton, or his one-tenth less the bank’s last-named deduction, it would have paid Hill, as well as Wetmore and Corcoran & Riggs, all in full—one Spain filed a bill against Wetmore, Corcoran, & Riggs, and the trustees of the bank, Hill not being by name made' a defendant, charging that Wetmore had the $81,772.08 as the property of Hamilton, and that he, Spain, had an assignment of the whole fund made by Hamilton at an early date. The bill then alleged that Wetmore, disregarding this earlier assignment, pretended to hold the fund, subject to certain other alleged assignments of later date; the bill specifying that to Wetmore himself, and those to Corcoran & Riggs, Hill, and the trustees of the bank—and alleging that Wetmore meant to apply the fund to the payment of these last“ said recited claims,” and that the secretary was about to pay to Wetmore the said sum of $81,772.08. Asserting thus a superior equity, the bill then prayed: “ That the said Wetmore, his assignees, aiders, and abettors, may be enjoined and restrained from receiving the sum o/$81,772, being the one-tenth of the three certificates,” &c. Subpoenas were prayed against all these parties, and that the representative of Hill (Hill himself being now dead), should be made defendant when discovered. An injunction was granted “ as prayed for” A bond, in the penalty of $15,000, signed by a certain J. F. May and Henry May, in favor of Wetmore, Corcoran & Riggs, and the trustees of the bank, but not by name in favor of Hill, was filed. The writ of injunction was issued on the 31si of May, 1856, directed to Wetmore, Hamilton, Corcoran & Riggs, and the trustees of the bank. It recited the filing of the bill and its object. The restraining clause was in these words:
'You, the said W. S. Wetmore, your assignees, aiders, and a edors, are hereby restrained and enjoined from asking for or receiving the sum of $81,772.08, being the one-tenth part of the bonds or certificates,’’ &c.
his writ was served on Wetmore, and Corcoran & Riggs.
10ni that time, until the dissolution of the injunction, p. 214hereinafter mentioned, the money laid idle in the Treasury of the United States. Answers were tiled by Wetmore, Corcoran & Riggs, the trustees of the bank, and by the representative of Hill.
On motion of the defendants, it was subsequently thus ordered:
“It appearing to the satisfaction of the court that there is not sufficient security to indemnify the defendants for their costs and damages, &c.; it is ordered that the complainant file a bond in the penalty of $20,000, conditioned to pay the defendants such costs and damages as they may respectively sustain.”
Prior to this the complainant had released his injunction as to the sum of $12,051, improperly enjoined, and this had been paid by Wetmore to the bank, and a release of the injunction bond executed by the trustees of the bank. The form of that release did not appear in the record.
The second bond, ordered as above-mentioned to be filed, was filed, executed by Spain and Oelrichs. This, by consent of the parties, was ordered to stand in lieu of the bond previously filed, reserving the right of the obligees to have recourse to the original bond for interest theretofore accrued. The obligees named in this bond were Wetmore, and Corcoran & Riggs, but not Hill by name. The bond recited the injunction issued by the court to restrain the collection of the money mentioned in the writ; it recited also that certain portions of the money so enjoined had been released and paid over. The condition was:
“That if the said Spain, &c., shall prosecute the writ of in junction to effect, and pay as well the costs, damages, and charges that shall occur in said Circuit Court in Washington County, as a costs, damages, and charges that shall be occasioned by said writ oj injunction, and shall in all things obey such order and deciee as the said court shall make in the premises, then the obligation to be void and of no effect, otherwise to remain in full force an effect.”
The cause being heard it was decreed, on the 19th Feb ruary, 1861, 4 years 8 months and 16 days after the injunc tion had issued—
1. That the legal title to the fund was from the 9th November, 1849, and still is in Wetmore.
2. That from the 16th September, 1850, when the trustees of the bank notified to him their arrangement with Hamilton, and he accepted it, Wetmore held the legal title of the one-tenth as trustee of the fund.
First, to pay himself, with interest, the loan of . . . $2,500 Second, to pay Corcoran & Riggs, ..... 30,000
Third, to pay Hill, with interest from 9th March, 1852, . 33,500
From this decree Spain alone appealed. At the December Term, 1863, this court affirmed the decree with costs.* Pending the appeal, there being no supersedeas and the decree having dissolved the injunction, the treasury paid to Wetmore, on 20th March, 1861, the sum remaining due on the one-tenth, $69,720.60.
There had been previously paid to the bank, the sum improperly enjoined, to wit: 30th March, 1859, the pro rata on $12,051.48.
The sum they paid to Wetmore was in three drafts, intended to represent the interests of the parties as settled by the decree, to wit:
For Wetmore,.............................................................. $4,333 89 Corcoran,.............................................................. 30,000 69
“ Hill,............................................................. . 35,386 00
$69,720 58
Wetmore and Corcoran & Riggs were paid in full; but on Hill’s debt, as found by the decree, $52,457, there still remained unpaid $17,071.
Soon after the injunction was issued in this case, two others were issued on bills filed in the same court: one by the Jame^River and Kanawha Company, and one by Pierce Butler. In the former an injunction bond was executed in the penalty of $5000, signed by Caperton and others; in the latter, one signed by Butler and others in the penalty of $2500.
Spain v. Hamilton’s Administrator, 1 Wallace, 604.
Butler’s bill was heard with that of Spain, and subsequent to the decree in that case the James River and Kanawha Company dismissed their bill.
In both of these cases, the bonds expressly included among the obligees Hill’s executor, as well as Wetmore and Corcoran & Riggs; while in the two bonds filed in Spain’s case, as already said, neither Hill nor his executor was expressly named as obligee.
In this state of things the only child, heir, and legatee of Hill filed a bill to assert his father’s claim for damages occasioned by these several injunction bonds. To aid in this, the representatives of Wetmore, as also the executor of Hill, were joined as complainants. The securities in the two bonds in the Spain case, May and Oelrichs, and the security in the bond in the James River Company’s case, Caperton, were made defendants.
The bill was also filed against Corcoran & Riggs to seek a discovery from them as to whether any settlement had been made with them of the bond in the James River case.
It was also filed to marshal assets; and to assert the right of Hill to the whole of this latter bond, and compel Corcoran & Riggs to resort for payment to the other bonds, they being named as obligees in all, while Hill was named only in one—provided it should be decreed that the omission to name Hill specifically as obligee in the Spain bonds, prevented his looking to them for redress; a matter which was not conceded.
The bill also stated that Corcoran & Riggs has made some settlement of the $5000 bond, and prayed a discovery.
As to the bond for $2500 given by Butler, the complainant stated its payment by his representatives; and as to these representatives, the representatives of Henry May, one of Spain’s securities, Spain himself, Ellis and Child, parties to the James River bond, all non-residents and beyond the jurisdiction—the bill prayed that process might issue against them if they should come within the jurisdiction.
On this bill, answers, and proofs, the cause was tried and
Argument for the appellants.
decrees rendered asserting Hill’s right to resort to the Spain bonds for redress of damages, and referring Corcoran & Riggs to the bonds on which they were named and Hill was not; and also allowing both Hill and them to recover counsel fees paid in attending to the injunction. The items thus appeared:
Corcoran & Riggs for damages, interest on the amount of their lien during the term payment was delayed by the injunction, a term of 4 years, 8 months, and 16 days, .... $8,475 00 Their counsel fees in the adverse litigation, .... 1,000 00
$9,475 00
Deduct the amount they received upon the bond given in behalf
of the James River and Kanawha Company, . . . 5,000 00
Balance, ......... $4,475 00
Of this sum, $2455.94 was charged on May’s bond, and $2019.06 on Oelrichs’s.
To Hill’s estate for loss of principal by reason of the fact that part of the fund which would otherwise have been applied to it in part payment was absorbed for the interest due the prior claims,....................................................................................... $827 41 Interest on $36,214.35 for 4 years, 8 months, and 16 days, . 10,230 55 Counsel fees in the adverse litigation, ..... 1,500 00
$12,557 96
Deduct the amount received on the Butler bond, . . . 2,500 00
Balance,......................................................................... $10,057 96
Of this sum there was charged to May’s bond $5027.15, and to Oelrichs’s, $5030.81.
May and Oelrichs now appealed, and the case was before this court tor final adjudication.
Messrs. T. T. Crittenden and T. J. Durant, for the appellants: 1. The court is without jurisdiction of the action, since a plain, adequate, and complete remedy could have been ad at law,” as well under the well-known 16th section of the Judiciary Act, as on settled rule independent of it. And e r®ason is plain. A suit on h bond against principals and sureties is, in its nature, a suit at the common law.
"• But if the court below had jurisdiction, the decree
Argument for the appellants.
rendered is erroneous. The decree is, in part, in favor of Hill’s estate, but his administrator is not named in the bill as a defendant, nor in the order of injunction, nor in the writ of injunction, nor in the injunction bonds, and no injunction was asked against Hill’s estate. In no way, under these facts, can the sureties on the injunction bonds be made liable to Hill’s estate.
3. By the non-performance of his undertaking within the two years Hamilton was not entitled to receive or claim one-tenth part, or any portion of the fund; nor were Wetmore, or Corcoran & Riggs, or the representatives of Hill.
Further, the employment of Hamilton by the trustees of the bank, for a contingent compensation, was for the purpose of obtaining legislation to procure the payment of the claim of the trustees, and in doing so, to use personal and secret influence on legislators. For this reason, as well as by reason of champerty appearing on the face of the agreement, neither Hamilton nor his assignees could have maintained any action or title, or acquired any interest under or by virtue of the agreement.* The injunction bond, therefore, did not injure them.
4. The trustees of the Bank of the United States were joint obligees with Wetmore, Corcoran & Rigg8 - They released these injunction bonds, with consent of all parties. This, in law, releases the bond in loto, as the action, if maintained at all, must be in names of all the obligees in bond.
5. The act of Congress shows that Hill’s administrator having omitt6d to file his release as required by law, neither he nor Wetmore could legally claim his share of the money during the pendency of Spain’s bill, and in fact he obtained his money in 1861 by a blunder of the accounting officers, and wrongfully. There was nothing in the injunction, even if it had named him, to prevent his filing his release so as to be qualified to claim the money when the injunction was dissolved. His not filing it even then shows he was not prevented by the injunction.
Tool Company v. Norris, 3 Wallace, 45.
Argument for the appellees.
6. The counsel fees were wrongly allowed. Such an allowance tends to lower the standard of professional honor, and has by the best courts been discouraged.*
Messrs. P. Phillips, J. M. Carlisle, and J. D. McPherson, contra:
I. As to jurisdiction. To oust the jurisdiction of equity, the remedy at law must be as “ practicaland* as efficient to the. ends of justice and its prompt administration, as the remedy in equity.”f Now, here, it was surely the interest of the parties to the several bonds, to be brought together in one suit, where their relative rights could be determined, and thus save the necessity of another suit for contribution and apportionment.
On a promise under seal, a suit at law must be in the name of the party to the instrument. A third party, for whose benefit it was made, cannot maintain the action. It was, therefore, the undoubted right of Hill, as cestui que trust, to assert in a court of equity his equitable title in the bonds filed in Spain’s case, without reference to the legal title in the trustee which might be enforced at law.
The Court of Chancery in the District of Columbia, where the bill below was filed, is a court of general jurisdiction,| and as to such a court nothing is intended to be out of its jurisdiction which is not shown to be so. It is requisite that the plea must not only showr that equity has no jurisdiction, but what court has, and whether it is able to afford a complete remedy.
If Hill cannot recover on Spain’s bonds, because not expressly named, then, as Corcoran & Riggs are named in all the bonds, and Hill only in one, equity will compel the former persons to indemnify themselves out of the bonds in which Hill is not named; and if they have already collected
---- •----------------------- -----------------------
Day v. Woodworth, 13 Howard, 370; The Baltimore, 8 Wallace, 378;
timpson v. The Railroads, 1 Wallace, Jr., 164; Gadsden Bank of Georgetown, 5 Richardson, 342.
Argument for the appellees.
the amount of the James River bond in which Hill is named, equity will place him to this extent in their situation in reference to Spain’s bonds.*
If neither Corcoran & Riggs nor Hill are entitled to recover on Spain’s bonds, then, as against the same defendants, ' equity will prefer Hill’s right to indemnity out of the James
River bond, as they had received the full amount for which the court had decreed their lien, while a large amount decreed to Hill remained unpaid. Further, under any circumstances, Hill was entitled to an account against Corcoran & Riggs, and to a decree against them for such portion of the sum received by them from the James River bond as his claim bore to theirs.
Now, looking to the fact that each of the defendants in Spain’s suit was entitled to make his election as to whether he would resort to the first bond, looking: also to the several bonds and the various defendants, and to the character of the questions which they gave rise to, and which will be obvious to any intelligent lawyer on reading the case, it cannot be maintained that, if there was a remedy at law, it was as “practical and as efficient to the ends of justice and its prompt administration, as the remedy in equity.”
Our position also is, that the bonds executed in favor of Wetmore, cover not only that portion of the fund in which he had a personal interest, but also the other portion which he held in trust for Corcoran & Riggs and Hill, that the bond was in fact a security attached to the fund enjoined, and was made to him as trustee for these parties. It is true that no subpoena was served on Hill, but the bill prayed that his representative, when discovered, should be made a party. On the face of the bill, Hill’s interest is specifically stated. He was a necessary party to the suit. Before, as well as after filing his answer, he was bound to obey the injunction, though not served with process; and if he disobeyed, was liable to attachment. The bond, when filed, was for the
*
Alston Munford, 1 Brockenbrough, 279; Cornish v. Wills°n> ® 299; Cheesebrough v. Millard, 1 Johnson’s Chancery, 412.
Argument for the appellees.
benefit of all the defendants enjoined, whether served or not.*
That these bonds were not intended as indemnity, merely for the personal claim of $2500, which Wetmore held, is manifest, because
1st. Spain describes the fund he wishes to enjoin, as amounting to the large sum of $81,000. At the same time he sets forth particularly the fact that Wetmore only claimed for himself the sum of $2500, and that the large remainder Wetmore professed to hold for Corcoran & Riggs and Hill. But he enjoins the whole sum.
2d. Having thus stated that much the larger portion of the fund belonged to other parties than Wetmore, the court could never have consented to enjoin the whole fund on a bond securing only the party who had the smallest interest therein.
3d. The order for the bond requires the bond to be “ conditioned to pay the defendants such costs, and damages as they may respectively sustain by reason of the injunction.”
4th. When, therefore, the court approved the bond, and by consent of the defendants substituted it for the first, the court, as well as the defendants, must have understood it to be such a bond as the order directed to be given.
The prayer is for an injunction against Wetmore, “his assignees, aiders, and abettors,” restraining them from asking for or receiving the sum of $81,000, and the writ which was issued on this prayer is to the same effect.
In another portion of the bill, the prayer is, “ that the said Wetmore, and all and each of the said named defendants, their assignees, aiders, and abettors, may be enjoined,” &c.
Now, construing the bonds in reference to this prayer, Hill is directly included; for Hamilton is one of the “ said named defendants,” and Hill is his “ assignee.”
This is certain, that Corcoran & Riggs and Hill were deprived of the use of $69,720, less the small amount due to etmore, for five years, by reason of Spain’s injunction
Cumberland Co. v. Hoffman Co., 39 Barbour, 19.
Argument for the appellees.
operating on the whole fund. Practically, the injunction operated as directly on them as if they had been specifically named in the writ of injunction. The decree establishes that these parties were the owners of the fund when the injunction was issued. That in point of fact they have been greatly damnified, is not, and cannot be denied. The sole question is, have they in law any redress on these bonds for the wrongs thus inflicted? If they have not, it is not because they were not entitled to an indemnity, but because by accident, omission, or fraud, they have been deprived of it.
II. Then it is asserted that Hamilton had no interest in the fund, because his agreement with the bank was void as against the policy of the law, and it is thence inferred that no damage has accrued to any one by the injunction bonds; But it is not against this policy that one may agree to address the legislature by argument in favor of a certain measure. We need not, however, enter into this subject, for the objection is wholly misapplied. This is not an action to enforce the agreement, but one which relates solely to the disposition of money paid on such agreement.* Besides, if the question could have ever been made, it cannot be now, after the decree in the former case, where the bank and Spain were parties, and where the decree was based on the fact that Hamilton did own the fund. Oelrichs and May identified themselves with that litigation, and though not technically parties, are bound by the decree in it as much as if they had been named on the record.
III. It is next maintained that the release by the trustees of the bank discharged the bond as to those obligees who did not release. But this rule cannot apply to a case where the interest of the obligees is separate and distinct. No act of one under such circumstances could quality, much less destroy, the rights of another. Even if the release had been by the present complainants, equity would not give it effect beyond the intention of the parties and the justice of the case.f
*
Brooks v. Martin, 2 Wallace, 78. f Clagett v. Salmon, 5 Gill & Johnson, 315.
Argument for the appellees.
IV. Again, it is urged that no loss of interest has accrued, because the claim was never presented in such a form as to authorize its payment by the treasury if no injunction had been granted. The bill of Spain prayed the injunction, on the averment “ that the Secretary of the Treasury is about to pay to said Wetmore the sum of $81,772.08.” The attempt is now made to controvert this sworn statement, and to prove that no payment could have been made, because neither Hamilton nor Hill had filed releases, as were required by the Secretary of the Treasury. If the law required this, the presumption is that the releases have been filed; the money has been paid. This presumption is not rebutted by the admission that these releases are not found in a certain file of papers in the department. The act requires releases from the “ holders of the securities.” Neither Hamilton nor Hill, his assignee, had any interest in the certificates. Hamilton had only a personal demand upon the bank for his commissions, when the sum of money was collected and paid over.
But, again: What necessity was there to file these releases after the injunction lodged in the department which forbade all parties from receiving the fund enjoined ? This payment could not take place until the injunction was dissolved and the interest of the several parties ascertained. When the decree was presented showing that neither Hamilton nor Hill had any interest in the'certificates, and decreeing that Wetmore was alone entitled to receive the whole sum (if, in fact, no releases were filed), w*e can do no otherwise ..than conclude that the secretary considered such releases unnecessary, and therefore waived them.
V. As to counsel fees. Hill is entitled to include the counsel fees paid in consequence of the injunction. Whether counsel fees are recoverable in actions ex contractu is not the question. On this point the decisions are not harmonious, •lhe claim here is founded on the express terms of the obligation, which is to pay “ as well the costs, damages, and charges as shall occur in said Circuit Court, as all costs, damages, and charges as shall be occasioned by said writ of injunction.” These “ costs, damages, and charges,” superadded, are not p. 224referable to the Circuit Court, for they are specifically provided for, and if they do not cover counsel fees they are meaningless. In Edwards v. Bodine,** the condition of the injunction bond was “to pay such damages as the parties may sustain by reason of the injunction.” The court allowed the fees, saying:
“ Here it is not matter of discretion—the condition is imperative.”
The same rule is applied to attachment bonds, f
Mr. Justice SWAYNE delivered the opinion of the court This litigation grows out of a prior suit, to which it is necessary briefly to advert iu order to render intelligible the issues to be decided in the case before us.
The Bank of the United States assigned to William 8. Wetmore certain bonds of the State of Texas as security for a debt which the bank owed him. He surrendered the bonds to the State and received in their stead certificates of indebtedness which he deposited in the Treasury of the United States for payment, under the act of Congress of the 9th of September, 1850, and the explanatory act of February 28th, 1855. The bank thereafter transferred one-tenth of the certificates, less the amount due to Wetmore, to General James Hamilton. Hamilton subsequently became indebted to Wetmore and gave Wetmore a lien upon his share of the fund to secure the payment of the debt and interest. He gave like liens to Corcoran & Riggs, to James Robb & Co., and to H. R. W. Hill. Robb & Co. transferred their claim to Hill. The trustees of the bank also claimed a part of the one-tenth as not embraced in the transfer to Hamilton. Before the fund was paid over by the Treasury Department, Albert C. Spain, as guardian of Mary McCrae, a lunatic, filed a bill in
* 11 Paige, 226; and see Aldrich®. Reynolds, 1 Barbour’s Chancery, 616; Corcoran v. Judson, 24 New York, 107; Prader v. Grimm, 28California, 12; Bronson v. Railroad, 2 Wallace, 283.
f Seay v. Greenwood, 21 Alabama, 496 ; Trapnall v. McAfee, 3 Metcalfe, p. 225equity, wherein he asserted a prior and paramount lien upon the fund in behalf of his ward, and, prayed an injunction to prevent the defendants from receiving any part of the amount in question until the claim set up in the bill should have been passed upon by the court. To this bill Wetmore and the other claimants, except Hill, were made parties defendant. An injunction was granted as prayed for, and on the 31st of May, 1856, an injunction bond was executed. The penalty was $15,000. The obligees were Wetmore and the other defendants. The obligors were John F. and Henry May. The condition was that Spain “ should prosecute the writ of injunction with effect and pay all damages and costs” which the obligees, “or any of them, shall sustain by the granting of this injunction.” On the 23d of April, 1856, a further bond was given, pursuant to the order of the court, in the penal sum of twenty thousand dollars. The obligees were Wetmore and others. Hill was not one of them. The obligors were Spain and Oelrichs. The condition was that Spain should prosecute the writ of injunction “with effect and satisfy and pay as well the costs, damages, and charges which shall accrue in said Circuit Court of Washington County, as all costs, damages, and charges which shall be occasioned by said writ of injunction, unless the said court shall decree to the contrary.”
By consent of parties it was thereupon ordered by the court that this bond should be filed in lieu of the prior bond, “ reserving the right to the obligees to have recourse to the original bond for interest theretofore accrued, at the election of the obligees, and not otherwise.”
On the 31st of May, 1856, the James River and Kanawha Company having filed a bill and procured a like injunction, gave bond in the sum of $5000. The obligees were Wetmore and all the other adverse claimants of the fund, including Spain and the executor of Hill. The obligors were Thomas H. Ellis, Hugh Caperton, and Robert Ou Id. The^ condition of the bond was that the company “ shall well and truly prosecute the said suit with effect and shall answer all amages and costs which the defendants, or either of them,
vol. xv. 15 p. 226may sustain by the granting of this injunction, in case it shall be dissolved.” On the 20th of June, 1856, Pierce Butler procured a like injunction and gave bond in the sum of $2500. The obligees were Wetmore and the other claimants of the fund, including Hill’s executor. The conditiou was that Butler should “pay and satisfy all costs and damages that may accrue to the obligees, or either of them, by reason of said injunction, in case the same shall be dissolved.” In the progress of the cause, Spain dismissed his injunction as to the claim of the trustees of the bank for the sum of $12,051.50. That amount was paid to them, and they thereupon released their claim under the injunction bonds. By agreement of counsel the cases of Spain and Butler were heard together. The court decreed that there should be first paid to Wetmore the principal and interest of his debt, amounting together, including the cost of audit, to $4333.66. That there should be next paid to Corcoran & Riggs the amount of their lien, $30,000. And, thirdly, to the representatives of Hill the debt due to his estate, found to be then, with interest, $52,457.
The amount applicable to this demand, after satisfying the demands of Wetmore and Corcoran & Riggs, was $38,171. This left a balance due Hill’s estate of $14,285.54 unsatisfied and unprovided for. The case was removed to this court by appeal, and the decree of the court below was here affirmed.* The James River and Kanawha Company dismissed their bill. Corcoran & Riggs subsequently collected upon the bond executed by Ellis, Caperton & Quid the sum of $5000. The penalty of the bond of Butler, $2500, was paid to the complainant, J. Dick Hill.
This bill is brought by the executors of Wetmore, the executor of H. R. W. Hill, and J. Dick Hill, his devisee and only heir-at-law, against John F. May, William W. Corcoran, George W. Riggs, Hugh Caperton, and Henry Oelrichs. It .gives sufficient reasons for not making additional parties whose presence wrould otherwise be necessary, though not p. 227indispensable, in this litigation. The object of the bill is to enforce in favor of Hill’s estate the liability for damages arising under the injunction bonds, and if need be to marshal the assets. The executors of Wetmore claim nothing except in trust for the benefit of Hill’s estate.
*
Spain v. Hamilton’s Adm., 1 Wallace, 604.
The court below allowed Corcoran & Riggs for damages, interest on the amount of their lien during the time payment was delayed by the injunction, being a period of four years eight months and sixteen days.
The interest, thus computed, makes the sum of . . $8,475 00 The court also allowed them for counsel fees in the
adverse litigation,..................................................... 1,000 00
From this was deducted the amount they received upon
bond given in behalf of the James River and Kanawha Co.,..................................................... 5,000 00
Balance,...................................................................$4,475 00
Of this sum, $2455.94 was apportioned to May’s bond, and $2019.06 to Oelrichs’s.
The damages awarded to Hill’s estate were as follows: Loss of principal by reason of the fact that part of the
fund which would otherwise have been applied to it in part payment was absorbed for the interest upon the prior claims, ...... $827 41
Interest on $36,214.35 for 4 yrs. 8 mos. 16 days, . . 10,230 55 Counsel fees in the adverse litigation, .... 1,500 00
$12,557 96
Deduct the amount received on the Butler bond, . . 2,500 00
Balance,................................................................ $10,057 96
Of this sum there was appropriated to May’s bond $5027.15, and to Oelrichs’s, $5030.81.
May and Oelrichs appealed, and the case is now before this court for final adjudication.
It has been insisted by the counsel for the appellants that t ere is a complete remedy at law, and that the bill must, erefore, be dismissed. Such must be the consequence if t e objection is well taken. In the jurisprudence of the p. 228United States this objection is regarded as jurisdictional, and may be enforced by the court sud sponte, though not raised by the pleadings nor suggested by counsel.*
The 16th section of the Judiciary Act of 1789 provides, “ that suits in equity shall not be sustained in any case where plain, adequate, and complete remedy can be had at lawbut this is merely declaratory of the pre-existing rule, and does not apply where the remedy is not “plain, adequate, and complete;” or, in other words, “ where it is not as practical and efficient to the ends of justice and to its prompt administration, as the remedy in equity.”!
Where the remedy at law is of this character, the party seeking redress must pursue it. In such cases the adverse party has a constitutional right to a trial of the issues of fact by a jury.!
But this principle has no application to the case before us. Upon looking into the record it is clear to our minds, not only that the remedy at law would not be as effectual as the remedy in equity, but we do not see that there is any effectual remedy at all at law. If the injunction bonds were sued upon at law, and judgments recovered, a proceeding in equity would still be necessary to settle the respective rights of the several obligees to the proceeds. The direct proceeding in equity will save time, expense, and a multiplicity of suits, and settle finally the rights of all concerned in one litigation. Besides, there is an element of trust in the case, which, wherever it exists, always confers jurisdiction in equity.
It has been urged that Hamilton’s arrangement with the bank was illegal and void, and never fulfilled on his part, and that he had no title to the residuum of one-tenth of the certificates to which his assignment related. It is a sufficient answer to say that the trustees of the bank were parties to the former suit, and that the court recognized and affirmed p. 229the validity of the claim by administering the fund arising from it. The appellants cannot go behind the decree in the case in which their bonds were given. The law and the facts of that case, as settled by the court, are conclusive of their rights in this proceeding. They cannot be permitted to raise any question as to either.
*
2
The release given by the trustees of the bank cannot avail the defendants. If it were not by a sealed instrument, it would not be a technical bar even in a suit at law. In what form it was given is not disclosed in the record. But if it were properly executed under seal, it cannot in equity affect the severable and separate rights of parties to the bonds other than those by whom it was executed.
It is true that neither Hill nor his representatives were parties to either the bond of May or the bond of Oelrichs, and that they were not named in the writ of injunction issued upon the filing of the first bond. But Spain’s bill averred that Wetmore held the fund in trust fopHill. Wetmore was an obligee in both bonds. The legal title to the entire fund was in him, and was never divested. It was extinguished by the payment of the money by the Treasury Department, and its distribution pursuant to the decree of the court. Wetmore diiring his lifetime, and after his death, his legal representatives, might have recovered upon the bonds at law to the full extent of the damages touching the entire fund. Such was his and their legal right. Equity would have distributed the proceeds, if need be, according to his rights and the equities of the other parties in interest. In this case equity follows the law as regards the liability of the appellants, and, having the proceeds in hand, will distribute them in this proceeding.*
The objection that proper releases were not filed in the Treasury Department is untenable. The proofs establish three facts:
The fund would have been paid over earlier but for the injunction.
*
Livingston v. Moore, 7 Peters, 547; Riddle v. Mandeville, 5 Cranch, * 3 Dallas, 306. j- Tesse et al. v. Huntingdon et al., 23 Howard, 2; Whittemore v. Cutter,
It was paid after the injunction was dissolved.
The delay caused by the injunction was the period for which interest was allowed by the court below.
Whether the payment was, or would have been, improperly made, is an inquiry which does not arise in this case, and with which the appellants have nothing to do.
It is sufficient for the purpose of this case that there was, in fact, such delay, and that it proceeded from the cause alleged in the bill.
The decree of the court below was preceded by the report of a master, which the decree affirmed and followed. Upon looking into the report we find it clear and able, and we are entirely satisfied with it, except in one particular. We think that both the master and the court erred in allowing counsel fees as a part of the damages covered by the bonds.
In Arcambel v. Wiseman,* decided by this court in 1796, it appeared “ by an estimate of the damages upon which the decree was founded, and which was annexed to the record, that a charge of $1600 for counsel fees in the courts below had been allowed.” This court held that it “ought not to have been allowed.” The report is very brief. The nature of the case does not appear. It is the settled rule that counsel fees cannot be included in the damages to be recovered for the infringement of a patent, f They cannot be allowed to the gaining side in admiralty as incident to the judgment beyond the costs and fees allowed by the statute.^
In actions of trespass where there are no circumstances of aggravation, only compensatory damages can be recovered, and they do not include the fees of counsel. The plaintiff is no more entitled to them, if he succeed, than is the defendant if the plaintiff be defeated. Why should a distinction be made between them? In certain actions ex debcto vindictive damages may be given by the jury. In regard to that class of cases this court has said: “It is true that p. 231damages assessed by way of example may indirectly compensate the plaintiff for money expended in counsel fees, but the amount of these fees cannot be taken as the measure of punishment or a necessary element in its infliction.”* The point here in question has never been expressly de-' cided by this court, but it is clearly within the reasoning of the case last referred to, and we think is substantially determined by that adjudication. In debt, covenant and assumpsit damages are recovered, but counsel fees are never included. So in equity cases, where there is no injunction bond, only the taxable costs are allowed to the complainants. The same rule is applied to the defendant, however unjust the litigation on the other side, and however large the expensa litis to which he may have been subjected. The parties in this respect are upon a footing of equality. There is no fixed standard by which the honorarium can be measured. Some counsel demand much more than others. Some clients are willing to pay more than others. More counsel may.be employed than are necessary. When both client and counsel know that the fees are to be paid by the other party there is danger of abuse. A reference to a master, or an issue to a Jury, might be necessary to ascertain the proper amount, and this grafted litigation might possibly be more animated and protracted than that in the original cause. It would be an office of some delicacy on the part of the court to scale down the charges, as might sometimes be necessary.
1
Gallison, 429; Stimpson v. The Railroads, 1 Wallace, Jr., 164. J The Baltimore, 8 Wallace, 378.
We think the principle of disallowance rests on a solid foundation, and that the opposite rule is forbidden by the analogies of the law and sound public policy.
The amount of the allowance in this case may be remitted here, as was done in the case in 3d Dallas, and the decree of the Circuit Court will thereupon be affirmed. Otherwise tne decree will be reversed, and the cause remanded for the reformation of the decree.
In conformity to this opinion.
Case of the State Freight Tax.
[Reading Railroad Company v. Pennsylvania.]
1. The transportation of freight, or of the subjects of commerce, is a constituent part of commerce itself. 2. A tax upon freight, transported from State to State, is a regulation of commerce among the States. 3. Whenever the subjects in regard to which a power to regulate commerce is asserted are in their nature National, or admit of one uniform system or plan of regulation, they are exclusively within the regulating control of Congress. 4. Transportation of passengers or merchandise through a State, or from one State to another, is of this nature. 5. Hence a statute of a State imposing a tax upon freight, taken up within the State and carried out of it, or taken up without the State and brought within it, is repugnant to that provision of the Constitution of the United States, which ordains that “ Congress shall have power to regulate commerce with foreign nations and among the several States, and with the • -Indian tribes.”
Error to the Supreme Court of Pennsylvania; the case being thus:
On the 25th of August, 1864, the Legislature of Pennsylvania passed an act entitled “An act to provide additional revenue for the use of the Commonwealth.” It enacted—
“Section 1. That the president, treasurer, cashier, or other financial officer, of every railroad company, steamboat company, canal company,' and slackwater navigation company, and all other companies now or hereafter doing business within this State, and upon whose works freight may be transported, whether by such company or by7 individuals, and whether such company shall receive compensation for transportation, for transportation and toll, or shall receive tolls only, except turnpike companies, plank-road companies, and bridge companies, shall, within thirty days after the first days of January, April, July, and October of every year, make return in writing to the auditor-general, under oath or affirmation, stating fully and particularly the number of tons of freight carried over, through, or upon the works of said company, for the three months immediately preceding each o p. 233the above-mentioned days; and each of the companies, except as aforesaid, shall, at the time of making such return, pay to the State treasurer, for the use of the Commonwealth, on each two thousand pounds of freight so carried, tax at the following rates, viz.:
“ First, on the product of mines, quarries, and clay-beds, in the condition in which said products may be taken therefrom, 2 cents.
“ Second, on hewn timber, animal food, including live stock ; also, on the products of the forest, vegetable, and other agricultural products, the value of which has not been increased by labor, 3 cents.
“ Third, on all other articles, 5 cents.
“Where the same freight shall be carried over and upon different but continuous lines, said freight shall be chargeable with tax as if it had been carried but upon one line, and the whole tax shall be paid by such one of said companies as the State treasurer may select and notify thereof. Corporations whose lines of improvements are used by others for the transportation of freight, and whose only earnings arise from tolls charged for such use, are authorized to add the tax hereby imposed to said tolls and collect the same therewith, but in no case shall tax be twice charged on the same freight carried on or over the same line of improvements: Provided, That every company now or hereafter incorporated by this Commonwealth, whose line extends into any other State, and every corporation, company, or individual of any other State, holding and enjoying any franchises, property, or privileges whatever in this State, by virtue of the laws thereof, shall make returns of freight and pay for the freight carried over, through, and upon that portion of their lines within this State, as if the whole of their respective lines were in this State.”
[It is a fact that is referred to in the argument, and which
, therefore, well enough be here noted, that the roads of some railroad companies in Pennsylvania traverse the whole o t at great State. That is the ease with the railroad of the ennsylyania Railroad Company (the great “Pennsylvania entral ); also of the Philadelphia and Erie. Other roads are very short; hardly Pennsylvania roads at all. This is e case with the Lake Shore Road in what is known in
Triangle;” the small part of the State orders on Lake Erie. The east terminus of the road p. 234receives converging roads from the whole State of New York, from New Jersey, and from all New England, and from its western end roads diverge again over the whole "West. So the New York and Erie Railroad, whose line for its main great extent runs along the south line of New York, but which, from a necessity of the soil in New York, had to make a small curvature which brings it for a few miles into Pennsylvania. So the Philadelphia, Wilmington and Baltimore, in its chief length in Maryland and Delaware, its northern terminus only in Pennsylvania. So other roads.]
On the 25th of October, 1866, the accounting officers of Pennsylvania stated an account under the statute already quoted between the Commonwealth and the Reading Railroad Company, “ for tax on tonnage for the quarters ending December 31st, 1865, and March 31st, and June 30th, 1866.” The company named is a corporation created under the laws of Pennsylvania, and is engaged in the sole business of transporting freights for hire, and carrying no commodities of its own. An important part of its business is carrying coal from the mountains of Pennsylvania to a place called Port Richfnond, near Philadelphia, a distance of about one hundred miles; the whole road being in Pennsylvania. A portion of the coal transported to Port Richmond is sold there to consumers, but by far the larger portion is intended for exportation to points beyond the limits of Pennsylvania, and is transferred at Port Richmond into vessels destined for such points. A considerable quantity of coal is also transported by the railroad company to a point on the Schuylkill Canal, where it is loaded in barges and exported beyond the State. The company was charged by the State:
For freight transported to points within the State of Penn-
sylvania, . . . . . . . . • $38,361 For that exported to points without the State, . . • 46,520
$84,881
The latter sum the railroad company refused to pay. P set up that the statute of 1864, to the extent that it imposed a tax on freight other than that both received and deliveie p. 235within the State of Pennsylvania, was unconstitutional and void, because, among other reasons, it was in conflict with the Constitution of the United States, which ordains that “Congress shall have power to regulate commerce with foreign nations, and among the several States.”
Suit being brought in the Common Pleas of Dauphin County, the jury found that the freight in question was originally destined for exportation beyond the boundaries of Pennsylvania, and that it was actually exported, in a continuous course of transportation, in the cars of the defendants, to points on the river Delaware, or the Schuylkill Canal, and thence in vessels. Being instructed by the court (Pear - son, J.) that such a finding should be followed by a verdict for the defendants, verdict and judgment so went.
The charge of the judge was but a reiteration of the opinion which he had previously expressed iu other cases on the constitutional point in question, and which appeared to have been acquiesced in by the Commonwealth of Pennsylvania, since, although writs of error were taken to the judgments m those cases, he observed that they were never argued, “as they were considered correctly decided by the then Attorney-General of Pennsylvania, the Honorable W. M. Meredith.” However, a writ of error was taken from the Supreme Court of Pennsylvania to the judgment entered on the verdict in the present cause, and it resulted in the judgment of the Court of Common Pleas being reversed by the higher tribunal;* that court admitting the force of the argument that could be made against their view, but conceiving that ‘a case ot simple doubt should be resolved favorably to the State act, leaving the correction of the error, if there was any> to the Federal judiciary.”
To understand the full force of the argument in the opinion that court, the reader must refer to the opinion itself. Among other grounds on which it rested the reversal, were these:
That the products carried from points within the State to p. 236points without, or from points without to points within, were not discriminated against and required to pay more than other products carried wholly within the State, all paid the same exact freight; a charge for transportation simply.
*
See 62 Pennsylvania State, 286.
That this tax was not imposed as, or intended to be, a regulation of commerce, in other words a rule by which commerce was to be governed; but was a tax to raise money for the support of government, and made, therefore, in the exercise of an authority which flowed from the power to tax for revenue. Adverting to the case of Brown v. Maryland,,* and to the question put there by Chief Justice Marshall, as about a thing plainly unconstitutional,—
“What restrains a State from taxing any article passing through it from one State to another, for the purpose of traffic? Or from taxing the transportation of articles passing from the State itself to another State, for commercial purposes?”—
the Supreme Court of Pennsylvania said:
“The Chief Justice had reference io specific burdens. These subjects must not be singled out and taxed, for this would be discrimination affecting intercourse, invidious and inviting retaliation from other States or foreign powers. But he did not mean by these illustrations, that those who use the artificial works, constructed by the State, or under their franchise, might so do without oonpensation, because they transported their goods on them for such purposes, or that they are not bound to share with our citizens the equal burdens, which is the price they must pay for availing themselves of these facilities.”
That in virtue of her unquestioned power to improve her own resources and to regulate her internal affairs, the State had built up a network of railways and canals, and had improved natural channels, and that in virtue of her right of eminent domain and her power to legislate on her interna affairs and the creations of her own sovereignty, she had a right to exact tolls, charges, and fares for their use, and that whether this was done by a direct charge on the tonnage or
Argument against the tax.
by a tax on the corporations who used the franchise was unimportant.
The court stated that it would not rest the case on the debatable ground of State power to regulate interstate commerce in the absence of Congressional legislation on the same subject. The case, having been brought here, was twice argued.
Messrs. James E. Gowen and Robert E. Lamberton, for the plaintiffin error; a brief of'Mr. J. IF. Simonton, for other railroad companies interested with the plaintiff in error in the question involved, being filed by leave of the court.
I. Assuming that the act in question is a regulation of interstate commerce, and therefore interferes with the constitutional authority of Congress, the first point to be considered is, whether its applicability to the domestic, as well as to the extra-territorial, commerce of the State excludes it from the operation of the constitutional provision. In other words, is a regulation of commerce, which would be unconstitutional ij confined to foreign commerce, rendered constitutional by being extended to domestic commerce also ?
If this question must be answered affirmatively, the attempt of the framers of the Constitution to secure commerce between the States from State regulation has been unsuccessful. The simple expedient of including its own domestic commerce within its commercial regulations will enable any State to regulate, to any extent, the commerce between the States which happens to be carried on within its territorial limits. The price to be paid for such a prerogative, would, in most cases, be trifling. The citizens of Pennsylvania can well afford to submit to a commercial regulation which taxes, for their benefit, the millions of tons of freight which are transported through or from their State. A regulation of commerce which taxes the vast tonnage of the great thoroughfares which traverse the State from east to west and from north to south; which taxes the tonnage of the Pennsylvania, of the Erie, of the Lake Shore, of the
Argument against the tax.
Philadelphia, Wilmington, and Baltimore, and other railroads over which freight is transported, through or from the State; which compels foreign consumers of coal, and the other mineral products of Pennsylvania, to pay tribute for the privilege of having them transported, either by natural or artificial channels, by rivers or by railroads, is not likely to be considered oppressive by the people of Pennsylvania. A State through whose territory a single line of railroad passes would not hesitate to regulate railroad commerce without discriminating in favor of its own domestic commerce, if the regulations proposed would render the comiherce of a continent tributary to its treasury. The steamboat traffic of the Mississippi would be a tempting subject for the commercial regulations of the several States within whose boundaries it is carried on. None of the evils which induced the framers of the Constitution to invest Congress with the power of regulating commerce between the States would be avoided under such an interpretation of the Constitution.* The increase of the States and the vast increase of commerce between them would render the burdens of State regulations a hundredfold more onerous than they were before the Constitution was adopted. Can it be supposed that, at the present time, a citizen of California would not object to paying transit duties in every State through which his merchandise may happen to be transported, on its passage from the Atlantic to the Pacific, merely because the same duties were imposed upon domestic transportation within those States. He would justly argue that the duties collected inured to the benefit of the citizens of the States which imposed them, and not to his benefit.
Practically, therefore, the prohibition against State regulations of interstate commerce would be nugatory, if « could be evaded by extending such regulations to domestic as well as to extra-territorial commerce; and no interpretation of the Constitution which permits such an evasion can
*
See The Federalist, No. 7, by Mr. Hamilton, depicting the injurious consequences of permitting the several States to regulate commerce.
Argument against the tax.
be legitimate. Indeed, unless it can be shown that a statute which regulateso commerce between the States as well as commerce in the State, is not a regulation of commerce between the States, the argument is at an end.
In Crandall v. The State of Nevada,* a statute enacted that there should “ be levied and collected a capitation tax of $1, upon every person leaving the State by any railroad, stage-coach, or other vehicle engaged and employed in the business of transporting passengers for hire.” But the unanimous judgment of this court condemned the statute as unconstitutional. A majority of the court did not think the statute a regulation of commerce, though a part did. But all held the statute unconstitutional and void. The right of citizens of the United States to pass from point to point of the National territory, unrestricted by State regulations, was emphatically asserted. Would the statute have been constitutional if it had also taxed the right of passage within the State of Nevada? Can any State tax, and, by taxing, prohibit the passage of citizens of the United States, from, into, and through her territory, because she imposes a similar tax and a similar prohibition upon the right of passage within her territory ? Can a State tax imported wines in the hands of the importers by a statute which taxes all wines, domestic as well as foreign ?f
II. Considering the case, then, as if the tax imposed by the act in question had been expressly confined to the transportation of the freight through, into, or from Pennsylvania, the imposition of such a tax a regulation of commerce between the States ?
If taxing interstate commerce is not regulating it, it is not easy to imagine what would be. In Broivn v. Maryland,
6 Wallace, 35 ; and see Clarke, Treasurer of the State of Delaware, v. The Philadelphia, Wilmington, and Baltimore Railroad Company, in the ourt of Errors and Appeals of Delaware, A.D. 1871, and the opinion of ates, C.; also The Erie Railway Company v. The State of New Jersey (2 room, 531), which, in all material respects, is identical with that now before the court.
t Low v. Austin, 13 Wallace, 29.
Argument against the tax.
Marshall, C. J., when speaking of the power of a State to tax its own citizens or their property, within its territory, refers to the imposition of a State tax upon goods passing through or from the State, as an extreme illustration, apparently, of an encroachment upon the reserved power of Congress to regulate commerce. He says:
<l If the States may tax all persons and property found in their territory, what shall restrain them from taxing goods in their transit through the State, from one part to another, for the purpose of re-exportation ? The laws of trade authorize this operation, and general commerce requires it. Or what restrains a State from taxing any article passing through it, from one State to another, for the purposes of traffic ? Or from taxing the transportation of articles passing from the State itself, to another State, for commercial purposes? These cases are all within the sovereign power of taxation, but would obviously derange the measures of Congress to regulate commerce, and affect, materially, the purposes for which the power was given.”
There is nothing (as there wTas assumed by the court below to be) in the language quoted, which warrants the inference that “specific burdens” on the subjects mentioned were referred to. The Chief Justice was speaking of the power claimed for the States, to tax all persons and properly found on their territory; and he meant to assert that a State tax on all property within its limits could not be levied on goods in transit through or from the State.
The main object of conferring upon Congress the power to regulate commerce among the several States, was to put an end to the onerous and vexatious taxes and duties with which it had bpen burdened by State legislation. It does not seem to have occurred to the framers of the Constitution, that the States might still continue to tax interstate commerce, notwithstanding the grant of this power to Congress; but perhaps there never has been a case yet where the validity of a State tax law has been questioned on the ground of its being a regulation of interstate commerce, in which an attempt has not been^made to show that the law was no a regulation of commerce, but merely an exercise of the
Argument against the tax.
State power of taxation. The present case is no exception, but no advantage can be derived from repeating the reasons which have in former cases led this court to reject such reasoning.
Will it be said that the statute in question only incidentally and indirectly affects interstate commerce, inasmuch as the tax complained of is levied, not on the goods transported, but on the business of the transporting companies?
This distinction, even if it were substantial—which is not admitted—does not tend to show that the tax is not a regulation of commerce. On the contrary, the fact that the transportation itself, and not the goods transported, is taxed, renders the tax the more plainly a tax upon commerce. It is the very commerce itself that is taxed, and not the subjects with which it deals. The imposition of a tax on every ton of coal mined in Pennsylvania would not be a tax on commerce; but a tax on the transportation of the coal from the mines to the consumer, is as clearly a tax on the commerce in coal as any that can be imagined.*
What is “commerce?” Washington, J., in Corfield v. Coryell,tells us: ,
“Commerce with foreign nations, and among the several States, can mean nothing more than intercourse with those nations and among those States, for the purposes of trade, be the object of the trade what it may, and thus intercourse must include all thez means by which it can be carried on, whether by the free navigation of the waters of the several States, or by a passage overland through the States, where such passage becomes necessary to the commercial intercourse between the States.”
Beasley, C. J., in The Erie Railway Company v. The State *of New Jersey,\* speaks to the same effect. He says:
If there can be no commerce between the States without goods, so there can be none without the transportation of goods, c two must be united to constitute interstate commerce. So
*
Argument against the tax.
it is not certain, then, that a duty on one of these two elements in commerce must, in the nature of things, operate as a tax upon the other. As commerce, the two things are indissoluble; are they divisible, for the purpose of taxation? I think it may be laid down as a general rule, universally applicable to all cases arising under the clause of the Constitution now considered, that whenever the taxation of a commodity would amount to a regulation of commerce, so will the taxation of an inseparable incident, or a necessary concomitant of such commodity. The object being to protect the merchandise from all exactions in its transit over a State, by a rule of construction, as necessary as it is elementary, w’e must imply a protection to -the means required to effect such a passage, because, without such implication, the privilege intended to be secured is defeated.”
That the transportation of freight was intended by the legislature, in the act of 1864, to be the subject of the tax, is as clear as words can make it. A tax upon goods is not per se a tax upon commerce, much less upon interstate commerce in the goods, for they may never become subjects of commerce; but how the transportation of goods from a consignor in the State to a consignee out of the State can be taxed without taxing, and therefore without regulating interstate commerce, it is not easy to see.
In Brown v. Maryland, it was argued at the bar, that the tax was not upon the article imported, but upon the occupation of the importer. But says Marshall, C. J.:
“It is impossible to conceal from ourselves that this is varying the form without varying the substance. It is treatingia prohibition, which is general, as if it were confined to a particu ar mode of doing the forbidden thing. All must perceive that t e tax on the sale of an article imported only fortsale, is a tax on the article itself. It is true that the State may tax occupations generally; but this tax must be paid by those who employ t e individual, or is a tax on his business. The lawyer, the p ysl cian, or the mechanic, must either charge more on the article in which he deals, or the thing itself is taxed through his person. This .the State has a right to do, because no constitutional pro hibition extends to it. So a tax on the occupation of an importer is ;in like .manner a tax on importation. It must add to the price
Argument against the tax. y
of the article, and be paid by the consumer or by the importer himself in like manner as a direct duty on the article itself would be made (paid?). This the State has no right to do, because it is prohibited by the Constitution.”
In Almy v. California,* a tax upon a bill of lading was held to be substantially and really a tax upon the exports for which the bill of lading was to be used.
In both these cases cited, this court acted on what Grier, J., with his ponderous sense, says in the Passenger Cases.-f
“ We have to deal with things, and we cannot change them by changing their names. Can a State levy a duty on vessels engaged in commerce and not owned by her own citizens, by changing its name from a ‘duty on tonnage’ to ‘a tax on the master?’ or an impost on imports, by calling it a charge on the owner or supercargo, and justify the evasion of a great principle by producing a dictionary or a dictum to prove that a ship captain is not a vessel, nor a supercargo an impost?”
That a tax either on the transportation of goods or on goods themselves while being transported must ultimately be paid by the consumer is too clear for argument. “ When this tax is laid on the transportation of the merchandise, there is no room for doubt that, by the operation of well-known laws, it must pass from the carrier to the thing earned, and,, in the precise ratio of the statutory burden, enhance their price in the market. The consumer must pay the custom, whether it be placed on the goods or upon their transportation. The result then is, that this imposition on the business of transportation, which, it is argued, is constitutional, produces the same effect—-neither more nor less upon the private business of the owner of the goods, as would be produced by a direct tax on the goods themselves, which latter form of taxation would be undeniably unconstitutional. This substantial identity in the results Would seem to favor strongly an inference of the substantial identity in the causes producing them. The conclusion, rorn this course of reasoning, therefore is, that if the trans-
* 24 Howard, 169. f 7 Id. 458.
v Argument against the tax.
portation of merchandise in transitu from State to State can be taxed by a State in the form of law now before this court, the constitutional provision under consideration affords no protection whatever to the owner of goods which are the subjects of such transportation.”*
The Supreme Court of Pennsylvania considers, however, that the tax may lawfully be exacted as compensation for the use of works constructed under the eminent domain of the State. But,
1. The rivers of Pennsylvania were not constructed under the State power of eminent domain, and the tax imposed by the statute on every ton of freight transported within the territorial limits of Pennsylvania, by a steamboat company, cannot be considered as a compensation for privilege of using the public works of the State. The law applies alike to all means of transportation, whether on the navigable rivers passing through the State, the great lakes of the West, or any line of canal or railroad. If goods are laden at Olean, in the State of New York, to be carried on the steamboats, or any other boats of a transportation company, to New Orleans, they may be taxed by the ton, so soon as the boat with its freight crosses the line of Pennsylvania; and thus our great rivers be no longer free to the commerce of all the citizens of every State through which it passes.
2. The State has parted with the right to exact tolls for the use of the railroads and canals owned by the canal and railroad companies of Pennsylvania. The Philadelphia and Reading Railroad Company, and not the State of Pennsylvania, has the right to charge toll for the use of its railroads.
The absence of an intention to exact a toll for the use of artificial roads or water-courses when they imposed the tax in controversy, is also made manifest by the fact that the tax is not .graduated by the length of transportation. A ton of freight which passes but a few miles through the territory of Pennsylvania is taxed as much as a ton which has been transported three hundred miles. The through freight
_________________________ , ________ -
*
Per Beasley, C. J., in Erie Railway Company v. New Jersey, ut supra.
Argument against the tax.
of the Philadelphia, Wilmington and Baltimore, or of the Lake Shore, or of the New York and Erie lines, all of them very short roads, is taxed as heavily as that of the Pennsylvania Kailroad, which traverses the whole length of Pennsylvania.
How then can the tax on transportation, levied by the act in question, be treated as compensation for the use of artificial highways, and what advance towards a proper determination of this case is made by discussing the question of the right of a State to demand toll for the use of the railroads and canals which she owns? Once admit that a tax on transportation within or through the territory of a State may be sustained by treating it as a toll for the use of highways, and there is no limit to the burdens which may be imposed on interstate commerce. What proportion of the commerce by land between the States of this Union is not carried on by means of artificial roads? and where ordinary county or State roads, the control of which has been retained by the Commonwealth, are used, the theory would be much more plausible than in the case of railroads and canals constructed by companies.
Would the decision of this court in Crandall v. Nevada have been in favor of the right of a State to tax passengers in transit from her territory if it had been argued that the tax was a compensation for the use of the road on which they were travelling?
III. The statute in question interferes with that freedom of transit of goods and persons between one State and another which must necessarily exist under a political organization like ours.
lhe case of Crandall v. Nevada seems to settle this. It is true that the tax there declared unconstitutional was a tax on the passage of persons and not of property; but the reasoning of the court is as applicable to the one case as to the other; and in Woodruff v. Parham* the rule laid down ui Crandall v. Nevada is spoken of as securing “freedom of tiansit of goods and persons between one State and another.”
* 8 Wallace, 138.
Argument in favor of the tax.
Mr. F. Carroll Brewster, Attorney-General of Pennsylvania, and Mr. Lewis Wain Smith, contra:
Before considering the points of law raised by the plaintiffs in error, it is of importance to discern from the words of the act the exact practical working of the tax in its execution.
First. It is an act to raise additional revenue, and the mode of the collection of the tax is identical with the collection of the other taxes to which the Commonwealth looks for nearly all her revenue.
Second. The tax is imposed on all the corporations in the State, and is charged against each of them in proportion to all the tons carried, without any discrimination between those carried exclusively within the State, or those intended for transportation abroad.
Third. The company is allowed thirty days after the end of each quarter in which to report the number of tons carried, and sixty days more in which to pay the tax settled, so that the goods carried have all of them, before this tax becomes due or payable, passed beyond the jurisdiction of the State, if they were intended for shipment abroad, and no claim or lien whatever has attached to them. It is the franchise of the corporation which is liable for the non-payment of the tax.
Fourth. The tax, although familiarly called a “ tonnage tax,” is, in actual results, a tax on the corporation, graded by the amount of business it transacts in its province o transporter; and if the term “ tonnage tax” implies it is a tax on a ton, it is erroneous, the 2000 pounds which go to make up a Pennsylvania ton being merely a convenient standard whereby to measure the business done by the coiporation.
If such a tax be unconstitutional, it must be because it is the exercise of a power expressly and directly prohibited to the State by the Constitution of the United States. Every presump.tion is in favor of its legality. It is a means, an one of great importance, through which the State of Penn-
Argument in favor of the tax.
sylvania séeks to raise the funds necessary to the maintenance of the administration of the government of the State. Taxation for such a purpose is the exercise of a high and unquestioned privilege of a sovereign, and no far-drawn analogy or dubious passage can be allowed to rob her of the right which is absolutely necessary to her existence as a State—the right to raise revenue by taxation. It must ever be remembered, in considering questions arising under our complex system of government, that within its own sphere, each government, that of the United States, and that of the States, is sovereign. In exercising its power within that sphere, its acts are governed- only by its own pleasure. And this view of the relation of the States to the National government is stated with great preciseness and force by this court in the recent case of The Collector v. Day* where the Federal government sought to tax under its law, levying a general income tax, the salary of a judge of a State. Speaking of“ the separate and independent condition of the States in our complex system, as recognized by the Constitution, and the existence of which,” say the court, “ is so indispensable, that without them the general government itself would disappear from the family of nations,” this court in the case cited say:
“ It would seem to follow as a reasonable, if not a necessary consequence, that the means and instrumentalities employed for carrying on the operations of their governments, for preserving their existence, and fulfilling the high and responsible duties assigned to them in the Constitution, should be left free and unimpaired; should not be liable to be crippled, much less defeated, by the taxing power of another government, which power acknowledges no limits but the will of the legislative body imposing the tax, and more especially those means and instrumentalities which'are the creation of their sovereign and reserved rights. Without this power and the exercise of it, we risk nothing in saying that no one of the States under the form of government guaranteed by the Constitution could long preserve its existence.”
* 11 Wallace, 113.
Argument in favor of the tax.
IS THEN THE STATUTE IN QUESTION SUCH A REGULATION OF COMMERCE AS IS IN VIOLATION OF THE CONSTITUTION OF THE
United States ?
1. If it is a “regulation of commerce,” the State of Pennsylvania has a right, under the clause referred to, to make such regulation, Congress not having forbidden the same by legislation.
The clause which vests in Congress the power to regulate commerce does not, ipso facto, take from the States the right to also regulate commerce, provided that the regulations of the latter do not come in conflict with those of the former. If there be any conflict, it is conceded that the State law at once falls. But in the present case no such question arises. Congress has not passed any law regulating commerce between the States. There can, therefore, be no conflict with a superior enactment, and the only question remaining is, whether the power regulating commerce vested in Congress is exclusive. It is submitted that there is no decision of this court which can be said to so decide. Analogies may be drawn, or the individual dicta of judges cited, but there is no judicial decision which settles the question. On the other hand, wherever the issue has been presented it has been avoided, and declarations from the bench abound in all the reports, disclaiming any intention of so deciding. On the other hand, the opinions of a majority of the judges, taken from their decision, bear towards the doctrine, that until Congress sees fit to exercise the power vested in it, the States have a right to regulate commerce, so far as the same are local in their nature, and do not arrive to a National rule.*
It is true that the view of the question favorable to the exclusiveness of Congressional power is sustained by the decision of this court in the cases of Brown v. Maryland, Gibbons v. Ogden,f and by the decision of a divided court in the Passenger Cases.^ But the case of Gibbons v. Ogden was
*
Sturges v. Crowninshield, 4 Wheaton, 122, 192; Houston v. Moore, 5 Id. 1; License Cases, 5 Howard, 578 ; Cooley v. Port-Wardens, 12 Id. 299. Crandall Nevada, 6 Wallace, 35, and other cases. f 9 Wheaton, 226. t 7 Howard, 416.
Argument in favor of the tax.
decided on the ground that the State grant of an exclusivo right to the waters of a navigable river was in conflict with that branch of commerce as to which Congress has made direct legislation, and being repugnant to it must give way. Had the court been of the opinion that the grant was unconstitutional, merely because it was an attempt of a State to regulate commerce, the decision would have been based on that ground; but the court expressly avoided giving any such an opinion. So far as the Passenger Cases are concerned, the decision of the court was such as to greatly weaken the opinion, even had it been based exclusively on the ground of the exclusiveness of the power of Congress. However all this may be, the later cases of Gilman v. Philadelphia* of Hinson v. Lott,^ and of Crandall v. Nevada, more than balance whatever inclination the previous decisions might have had.
Indeed, Gilman v. The City of Philadelphia is emphatic in its recognition of the principle we contend for, if the meaning of the decision is rightly stated by Clifford, J., in a dissent which he made from it. He says:
The precise doctrine advanced, as I understand the opinion, is that Congress has not passed any act regulating the navigation of the river, and that inasmuch as there is no Federal regulation upon the subject, the law of the State legislature authorizing the erection of .the bridge is a valid law, even if the ridge be an obstruction to navigation, because the State law is not in conflict with any act of Congress giving protection to the otherwise paramount right of navigation.”
s there anything in the idea that a State can regulate inteistate commerce, if Congress omits to do so, which is inconsistent with the intent of the clause inserted in the institution giving Congress the power to regulate commeice? We fail to see any such thing. At the time of the w °^h°n ^ie ^on8^tu^ou th* 3 commerce of the country thT U1C^ene(^ by the imposition of imposts and exposts by seveial States, and by the regulations of commerce im-
* 3 Wallace, 713. f 8 Id. 150.
Argument in favor of the tax.
posed by them. The power to regulate commerce was vested in Congress, so that at any time it could pass a law regulating commerce, so as to relieve it from all the burdens so vexatious under the Confederation. That power was given to Congress to exercise, should it see fit, and should the exigencies of the occasion require. If, as Johnson, J., says, in his opinion in Gibbons v. Ogden, which will doubtless be relied on in reply, “all the laws bearing on commerce dropped lifeless from the statute-book,” it was not necessarily because the power of regulating commerce had ceased to be in the States, but because each State knew that if it persisted in its impositions Congress would exercise the power, and thus cancel its laws by the passage of one paramount. The moment that the direful picture, drawn by the plaintiffs in error, should be painted in experience, Congress could exercise its power and sweep all such State laws into utter nullity.
2. The tax is not such a regulation of commerce as to be included in the power given to Congress, supposing that power to be exclusive.
In order that we may discover whether the act now alleged to be unconstitutional is a “regulation of commerce,” it is necessary to see what is “commerce,” and what amounts to a “ regulation.” “ Commerce,” says Marshall, C. J., m Gibbons v. Ogden, li is undoubtedly traffic; but it is something more. It is intercourse. It describes the commercial intercourse between nations and parts of nations in all its branches, and is regulated by prescribed rules for carrying on that intercourse.” And again he says: “It is the power to regulate, that is, to prescribe the rules by which commerce is to be governed.” This corresponds with the derivation of the word “regulate,” and furnish.es us with the key to what is meant by a regulation of commerce. “ Regula, a rule—Regulate, to adjust by rule: as, to regulate weights and measures; to regulate the assize of bread; to regulate trade.”* We can, therefore, paraphrase the term “power
*
Webster.
Argument in favor of the tax.
to regulate commerce ” by the words, “ power to prescribe rules which govern the intercourse of one nation with another.” Can the tax in question be considered in any way a rule to govern the intercourse of the people of Pennsylvania with those of other States ? Does it make a rule to govern the shipment of a ton of coal passing out of the State ? It clearly does not, for a ton of coal is shipped just as freely, without either the knowledge or interference of the State, as though there was no such law in force. It is not until months after the ton has been shipped that the State knows the fact: it is not until months later that the tax is payable by the company. How then can this be a rule to govern the intercourse ? And the same reasoning applies to goods brought into the State from abroad. They are delivered to the consignees, and the packages broken and the goods sold before the railroad company is asked .to pay the tax in question. There is nothing, then, which connects the tax with the goods or the intercourse. There can be no such thing as a rule where there is nothing which it aflects. It is essential to a regulation that it have something to regulate. But here it neither regulates the carrier, nor the shipper, nor the purchaser, nor the goods transported. How then is it a regulation of commerce, when it does not affect any of the things that go to make up commerce ? It is only by sublimating the meaning of commerce into the naked word “intercourse,” and then maintaining that this tax interferes with “intercourse” by making the profits of the transporter less, and consequently removing from him a portion of the incentive to business, that this tax can be construed to mean a regulation of commerce. But if the rule of interpretation taken by this court is such, that anything is a regulation of commerce which tends to diminish the profits of transportation; then there is no tax levied by a State which is not within such a construction, and therefore invalid, for all taxation interferes more or less with production and consumption. If the State cannot tax the receipts a transportation company in proportion to the number of tons carried by it, and on which freight has been paid, then
Argument in favor of the tax.
it cannot tax the dividends declared, for the dividends are a portion of these very receipts, and derived from the same source, viz., received from traffic intended to be sent abroad. Indeed, if the plaintiffs in error be right, it is difficult to see what is left for the State to tax. It can lay no tax which will not more or less affect commerce; more or less prevent consumption; and without consumption there can be no commerce.
There must, therefore, be some point at which all will concur, that the power of a State to impose a tax which may affect commerce, by diminishing the profits of the transporter, is valid; otherwise the States would be left without a revenue. Now where does the power of Congress to regulate commerce begin, and that of the State to impose a tax cease? The decisions heretofore made by this court afford a solution to this question. Taking the definition of a regulation of commerce which we have given, we find it to mean a rule to govern intercourse. If then any act be passed by the State amounting to a rule, which either directly affects the goods, or the consignor or consignee, or the transportation of the goods or their sale, it can be considered a regulation of commerce. But any act of a State which taxes the business of any of its citizens, or franchise of any corporation, or their profits, and only interferes with commerce so far as to check consumption or diminish profits, does not amount to a rule to govern intercourse, and is a legitimate exercise of the rightful power of taxation never surrendered by the State to the Federal government. Taking this, then, as a standard, around which to classify the various decisions of the courts bearing on this subject, let us examine the conclusions arrived at. In Brown v. Maryland, relied on by the plaintiffs in error, a license was imposed by Maryland on every foreign importer, before he could break a package or sell any foreign goods. This was a rule which directly affected the sale of the goods, for before the sale took place it was necessary o comply with the rule, and the cost of the license was thus made a prerequisite to engaging in foreign commerce. T 18 was held unconstitutional, because, by making a license a
Argument in favor of the tax.
prerequisite to sale, it clogged intercourse. It was a rule which affected directly that portion of commerce which consisted in selling imported goods. Had the State of Maryland required every merchant, at the end of every year, to pay a tax on the amount of profits he derived from his business, irrespective of what part of those profits were derived from internal trade and what came from foreign trade, can it be contended that anything in its decision leads to the inference that such a tax would have been held unconstitutional? On the contrary, we have a decision of this court in Nathan v. State of Louisiana* directly opposite to the idea of the unconstitutionality of such a tax as that stated. In that case the State levied a tax on the business of foreign exchange brokers, and it was held constitutional.
None of the decisions of this court have ever gone so far as to interfere with State taxation, except in cases in which the tax was in such a form as to primarily be a rule to govern commerce, and only a tax in its secondary effects. Applying this test, the case of Gibbons v. Ogden ceases to bear against the right of the States to impose this tax. That was nothing but a direct regulation of commerce by reason of its operating on every steamboat which, in the course of commerce, plied the Hudson River. It established a rule to govern intercourse between the States, by giving the right to that intercourse exclusively to the grantees of the State of New York. So also in Almy v. California, cited against us. That -was the imposition by California of a stamp duty on every bill of lading of gold or silver exported. As the bill of lading wms an essential part of every consignment, such a tax was equivalent to a direct tax on the gold or silver, the payment of which was necessary before the goods could become commodities of commerce. This was the establishment of a rule to govern the shipment of the particular articles. It was a tax only in its secondary effect: primarily it was an imposition on commercial intercourse. It had not the usual features of nearly every bond fide tax law, viz., a general im-
* 8 Howard, 73.
Argument in favor of the tax.
position of duties for the raising of revenue. It singled out the articles principally exported, and by levying the tax on them showed the intention was to clog commerce, by charging on it the cost of State expenses. It was, however, decided unconstitutional by this court, on the ground that it was a duty on exports.
Crandall v. The State of Nevada, also cited against us, is a striking illustration of this test. The law then in dispute levied a tax on transportation companies, at a rate per capita on every passenger leaving the State or passing through it. In that case, as the State looked to the carrier after the passenger had passed beyond its limits and did not directly clog commerce by establishing a rule to govern intercourse, the court was not prepared to hold it such a regulation of commerce as was contemplated by the Constitution, and only decided adversely to the law on principles entirely distinct from all connection with its being a regulation of commerce.
In Steamship Co. v. Port Wardens,* a law of the State of Louisiana taxing every vessel entering the port of New Orleans five dollars, without regard to any preference of service by officers of the State or pilots, was held unconstitutional. The effect of the tax was the same as though, before any vessel could enter the port, she was compelled to pay five dollars for the privilege of entering. This was a rule to govern intercourse, and, of course, fell within the clause referred to.
The Passenger Cases establish the same rule. They were directly based on the ground that the law in question established a rule to govern intercourse.
Looking next at cases in which the laws of the various States have been upheld by this court, it will be found that many of them, although complained^ of as regulations ot commerce, were upheld as valid because they did no amount to a rule to govern intercourse, but merely aftecte intercourse secondarily, while their primary result was the exercise of a power undeniably vested in the State. And
* 6 Wallace, 33.
Argument in favor of the tax.
first among these is the case of Willson v. The Blackbird Creek Marsh Co.* decided as early as 1829, in which Chief Justice Marshall (who had already written the opinion in Brown v. Maryland and Gibbons v. Ogden) delivered the unanimous judgment of the court. In that case the bridge was erected over a navigable stream, and entirely cut off all navigation. Yet it was held to be a constitutional exercise of a power never surrendered by the State of Delaware. Although it is undisputed that the bridge interfered with intercourse, yet as it was primarily intended as a local improvement, and was an exercise of the right of the State, and its interference with commerce was the secondary effect of its erection, the act was lawful. It was not a rule to govern intercourse. So also in City of New York v. Miln^ decided eight years later. In that case, while it cannot be doubted that the imposition of penalties by New York against the captains of vessels failing to report the number of passengers, was a regulation of commerce, yet as it was not a rule to govern intercourse in its primary effect, but was the exercise of the police power of the State in the firsDplace, and a regulation of commerce in the second place only, it was held constitutional. In Groves v. Slaughter^ the question of the constitutionality of an act forbidding the importation of slaves from any State into Mississippi was considered and the act sustained. It was intended as a local police measure, and while it might affect interstate commerce still it was primarily an exercise of a right conceded to the State. But stronger is the case of Cooley v. Board of Wardens^ decided in 1851. The law of Pennsylvania, imposing upon every vessel entering the port of Philadelphia, which neglects or refuses to take a pilot, a forfeit of one-half pilotage, to go to the Society for the Relief of Disabled Pilots, was held onstitutional. “ The power to regulate commerce includes various subjects, upon some of which there should be a uninrm rule, and upon others different rules in different localitics THizi •
• aiie power is exclusively in Congress in the former,
Argument in favor of the tax.
but not so in the latter.” The power to regulate pilots is a regulation of commerce, but as the law was primarily local in its operations, and intended, in good faith, to be an exercise of an undoubted right of the State, its secondary effect on commerce did not make it illegal, and the decision is approved in Crandall v. Nevada, decided over sixteen years later. But still more decided is Gilman v. Philadelphia, decided in 1865, and to which we have already referred.* This settled the right of a State to erect a bridge over a navigable river, even if it does interfere with navigation, provided Congress has not legislated on the subject, and that if the act of a State does not amount to a rule to govern intercourse, it may be lawfully enacted, even if it does interfere with commerce. The statement of the distinction is clearly drawn in the words of Swayne, J., who delivered the opinion. He says:
“The States may exercise concurrent power in all cases but three: 1st. Where the power is lodged exclusively in the Federal Constitution. 2d. Where it is given to the United States and prohibited to the States. 3d. Where, from the nature and subjects of the power, it must necessarily be exercised by the Federal government exclusively.”
The power here in question does not fall within either of these exceptions. It is no objection to distinct substantive powers that they may be exercised upon the same subject within their respective boundaries. In some instances their action becomes blended, in some the action of the State governments displaces the action of the Nation: in others the action of the State is void, because it seeks to reach objects beyond the limits of State authority.
The distinction between interference with commerce and a regulation of commerce is clearly recognized by the court in this case, and the case furnishes an answer to the complaint that allowing the States power to interfere with interstate commerce would lead to evils in traffic.
From the various recent decisions of the court, we think
* Supra, p. 249.
Argument in favor of the tax.
then that it may be considered that, whatever may have been the tenor of the earlier cases, it is now settled that there are many forms of regulations which affect commerce which it is within the powers of the States to make, not excluding the cases of bridges, pilots, quarantine and police measures, all of which have been always recognized as being vested in the States as well as Congress. That there also belongs to the States the right to pass laws which are in exercise of the reserved rights of the States, even it they be regulations of commerce, provided that the regulation be local in its nature and does not amount to a national rule, and one which uniformly affects the whole country.
Does the tax now under discussion “ institute a regulation of commerce of a national character,” or one which “ has a uniform operation over the whole country ?” Surely the dealing between the Reading Railroad and the Commonwealth of Pennsylvania as to the taxes on its business of shipping coal from the mines' to Port Richmond, in Philadelphia, is not a national regulation. But a distinct argument of the proposition is fortunately rendered unnecessary by the decision in Crandall v. State of Nevada. It was there held that the tax under dispute was not such a one as to come in conflict with the constitutional provision. Now the tax in that case was similar in its operation to the one at present before the court, with the exception that the tax in the Nevada case bore much more directly on the person transported than this one does on the goods carried, and was also a discrimination against a particular class of traffic. Unlike the Nevada tax, this is uniform in its operation on all classes and makes no discrimination. The Nevada tax and the tax in Pennsylvania present a curious resemblance, and differ only in that the former one is much stronger in As bearing against the constitutional provision than the latter. Yet this court admitted in that case, that as the tax was not a uniform rule of the whole country, or national in lts character, it was not in conflict with the constitutional Restriction, Congress having failed to legislate upon the subject. There has been no act of Congress since passed which vol. xv. 17
Argument in favor of the tax.
bears upon the subject. If, then, the tax imposed in 1867 was not unconstitutional, how can the one now before the court be so, when it is a counterpart of the former, so far as its relations to transportation are concerned?
3. The law in question is an exercise of the power of taxation reserved to the States under the Constitution, is equal in its operation, bond fide in its character, making no discrimination against non-residents, and is levied on the franchise of every corporation in proportion to its business.
A State can levy a tax on the franchises of its own corporations. This has been repeatedly decided. The State of Pennsylvania contends that under the undeniable right to tax the franchises of her citizens she has seen fit to levy this tax. The tax is payable by the company in proportion to the amount of freight carried. Now, that this is a tax on the franchise of the company is apparent, when it is remembered that all of the receipts of the great majority of railroads in Pennsylvania are derived from freight. In the case of the Reading Railroad Company, the now plaintiff in error, their business is almost exclusively a transportation business, and the value of their franchises to themselves can be graded exactly by the amount of freight carried, for almost all their receipts are derived from freight. Can it be successfully contended that the Commonwealth could not have charged a tax on the income of this company at any rate she pleased? Yet the income is derived exclusively from freight. Why, then, can she not tax the company by amount of freight carried, at so much per 1000 pounds, as well as at so much on each dollar of income received from carrying that freight. If this company got one dollar from every 2000 pounds of freight carried, could not the State levy a tax of two cents on every dollar of income, before there should be any dividend? If she could, why can she not measure the business of the company by the amount of freight, and not by the amount of receipts, and lay a tax on the franchise of the company of two cents on each 2000 pounds?
The practical effect of the tax in question is to make its
Argument in favor of the tax.
amount vary with the amount of the freight of the different transporting companies, and grades the proportion which each shall pay to .the State in accordance with the value which the franchises granted to each by the State, have been to the corporation during the period covered by the tax. Not only is this a proper exercise of the power of taxation, but it is in the form which has been especially commended by this court. The question of taxation, according to the amount of business done by a corporation, came before the court in Society for Savings v. Coite.* That was a tax levied on the gross deposits of a saving bank, in its hands on a certain day. It was contended that the United States securities held by it could not be thus taxable, as they were exempt from State taxation. The court held such a tax to be on the franchise of the corporation, and sustained it. The court said:
“Different modes of taxation are adopted in different States. Fixed sums are in some instances required to be annually paid into the treasury of the State, and in others a prescribed percentage is levied on the stock, assets, or property, owned or held by the corporation, while in others the sum required to be paid is left indefinite, to be ascertained in some mode by the amount of business •which the corporation shall transact within a defined period. Experience shows that the latter mode is better calculated to effect justice among the corporations required to contribute to the public burdens than any other which has been devised, as its tendency to graduate the required contribution to the value of the privileges
granted, and to the extent of their exercise.”
The business of transportation is as much the business of the railroad companies, as is that of receiving deposits the business of the savings bank. If, then, a tax on the total amount of deposits at a certain day, is a tax on the franchise, why is not a tax on the total amount of freight carried, a like tax on franchise? And the court held not only that such a tax was legal, but justly commended it as the most equitae that could be devised.
6 Wallace, 608; and see Provident Institution v. Massachusetts, lb. 623.
Argument in favor of the tax.
But a stronger argument in favor of the State is found in the fact that it is a bond, fide tax, levied by her to raise revenue in an equitable manner from the corporations which owe their existence to her dominion. The tax is levied upon every ton of goods carried, whether they be shipped by a citizen of Pennsylvania, of New Jersey, or any other State. The burdens fall equally heavily on all classes of business, and do not charge upon the foreign citizens a penny more than is charged upon our own. It may be that if a tax is illegal as levied against a citizen of another State, it cannot be made legal by levying it against a citizen of Pennsylvania. But the fallacy of the argument is found in confounding the cause and effect. It is not because it is a tax law that the act can be complained of. It is because it amounts to a regulation of commerce; and when we show that it does not amount to a regulation of commerce, but is a bond fide tax law, we show that it is constitutional. It is fallacious to start with the premise that it is illegal as to certain parties. The fact that there is no discrimination is evidence of good faith on the part of the State. It removes it from any suspicion of unfairness, and makes the plaintiff come here, not as injured parties seeking protection, but as a corporation seeking to escape from paying her share of a tax which must be borne by all its fellow-corporations. The effect of the tax, so far as traffic is concerned, is well stated in the opinion of the Supreme Court of Pennsylvania. It says:
“ It is evident that it does not matter whence or whither these tons travel, so that there be no discrimination to forbid or to burden their entrance into or exit from the State; and being a tax on the benefit and the privilege of transportation on works constructed for this end, it bears equally on all. Nor can ’ make any difference, that the company is allowed to add this tax on its franchises to the tolls or charges on the freight itself. It is the owner of the freight who enjoys both the privilege an the facility this valuable franchise affords, and whose toll coal be increased by the State to the same extent if the works were in her hands. It falls upon those who use the road, not because it is a regulation of commerce, but because it is a subject of in
Argument in favor of the tax.
ternal regulation, to which he is bound to contribute. There is in fact and authority, a substantial distinction between an act which simply operates as a burden on commerce and one which attempts to regulate it. No one can doubt the power of a State to tax her own coal, iron, lumber, grain, and other products of her mines and soil, and the persons and occupations of those engaged in their production or their transportation, and yet these burdens eventually fall on those who consume them, whether they live in or out of the State. Yet clearly such taxation is no regulation of •commerce. The State in laying a common tax on all such articles is not bound and cannot be presumed to know where they will be consumed, nor to inquire the destination of those who traffic in or transport them. If she do not discriminate between that which goes out or comes in and that which remains within, it cannot be said that she in any sense attempts to regulate commerce with other States, or to impose a duty on imports or exports. In principle, where there is no discrimination, there is no difference between a tax on a transporter, whether in gross or measured by the ton he carries, and a tax on a farmer, the manufacturer, the miner, the merchant, or the broker, measured by the business he does. Yet all the impositions are burdens which reach the consumer wherever he lives. The fallacy of the argument which insists that the burdens of internal transportation shall not be shared by the distant consumer, on the ground that it is an import or export duty, or a regulation of commerce, is seen in the fact that to exempt articles going out of the State, would be to discriminate in favor of the foreign and against the domestic consumer. Coal carried from the mines to Richmond, on the Delaware, and there disposed of, is conceded to be liable to the tax, but if intended to be sent forward to places without the State, it is said not to be liable; what is this but- to impose a tax on our own citizens, which those beyond the State are not to bear? Pennsylvanians are citizens of the same Union, and entitled to its equal protection against such discrimination.”
, The argument is weighty. A resident of Camden, opposite Philadelphia, can have coal shipped to him from the niines, and cannot be taxed. A resident of Philadelphia Kffist pay the tax. Hence it would follow that if the con-
Argument in favor of the tax.
struction contended for by the plaintiffs in error be correct, the citizens of Philadelphia, whose State has chartered the Reading Railroad, whose capital is to a large extent involved in it, whose authorities protect its mines, its property, and grant to it its franchise, could be underbid in their own market by a citizen of New Jersey, merely because he was a citizen of that State, which has nothing whatever to do with the continuance, existence, or safety of either the corporation or its property. Pennsylvania coal, from Pennsylvania mines, transported by a Pennsylvania company, could be bought in Camden cheaper than in Pennsylvania. The constitution never intended such a discrimination by a State against its own citizens. In Padelford v. Savannah,* the court said:
“ It is not said in Brown v. Maryland, that the State must discriminate in favor of the foreigner, and not tax him when she . taxes her own citizens. Now, what was the object of the prohibition? In a word, was its object to put foreigners in a better condition than natives? We know that the object was not to put citizens of another State in that better condition.”
This point has already had the attention of this court in Woodruff v. Parham.f A tax was there levied on the gross sales at auction of auctioneers in Mobile, Alabama. It was proved that a large amount of the sales were of packages, unbroken, which came from Georgia. It was contended that a tax could not be levied by Alabama on these consignments. The court upheld the tax, and clearly showed that it was never intended by the constitution to discriminate against a citizen of a State and in favor of citizens of other States. Miller, J., says:
“ The case of Brown v. Maryland, as we have already said, arose out of a statute of that State, taxing by way of discrimination, importers who sold, by wholesale, foreign goods.”
But the view of the court on the subject of discrimination is yet more decidedly stated in Hinson v. Lott. In that case
f 8 Wallace, 123.
* 14 Georgia, 438.
Argument in favor of the tax.
Georgia levied a tax of fifty cents on each gallon of whisky brought into the State from a sister State for sale and sold in the original cask. She, also, by the same act, levied a like tax of fifty cents on every gallon of whisky manufactured and sold in the State. The first she collected as a tax, the latter as a license. When the section imposing the tax on imported liquors came before the court, Miller, J., said:
“As the act institutes no legislation which discriminates against the products of sister States, but merely subjects them to the same rate of taxation which similar articles pay that are manufactured within the State, we do not see in it an attempt to regulate commerce, but an appropriate and legitimate exercise of the taxing power of the State.”
So, also, in the present case. As the tax does not discriminate against citizens of other States, but merely charges all alike, it is not an attempt to regulate commerce, but is an * exercise of the taxing power of the State.
And it is a fact worthy of note, that all the research of the learned counsel for the plaintiff in error has failed to discover a single case in which this court has overturned a State tax law, which is bond fide in its provisions, which contains no covert attempt to regulate commerce, but enacts, without discrimination, a tax alike for residents or non-residents, in proportion to the business carried on under the protection of the State which imposes the tax.
If the proposition of the plaintiff in error be correct, and the goods shipped to points outside the State be free from taxation, because the tax then would be to regulate commerce, why cannot the citizens of Pennsylvania object to paying any tax on their goods, on the ground that by freemg the non-resident and charging the resident, there is an unjust discrimination against the resident? All are citizens of one common Union, all are entitled to the same position y the Constitution of the United States. Why, then, should e Pennsylvanian be charged two cents when the citizen o New Jersey is exempt? Does not the State, by such a iscrimination, regulate commerce, by putting the resident
Argument in favor of the tax.
at a disadvantage, and has he not a like right to claim protection ? Such a defence to taxation, if good, would bankrupt the Commonwealth, by depriving her of all her revenue.
4. This is a tax imposed by the State as compensation for the use of artificial works created by her authority, and in exercise of her right of eminent domain.
It cannot be denied that the Commonwealth of Pennsylvania, had she seen fit, could have refused to allow the Reading Railroad to be built. It owes its existence entirely to her pleasure. No consideration of interstate traffic could have availed anything so far as to compel her to authorize its erection. And she may still destroy the Reading Railroad, and forfeit its franchises, unless restrained by the rights of the corporation. There is nothing in the shape of an authority vested in the United States courts which could # for a moment restrain her from, to-morrow, tearing up every rail between Reading and Philadelphia. If, then, the power to regulate commerce vested in Congress, is not such a power as to compel the building of the road, or to prevent its destruction when the State sees fit, how can it be that the power to regulate commerce is such as to prevent • the State charging the parties using the road? If she can refuse to create, if she can destroy, why can she not tax for the existence? A distinction between .a tax and a regulation of commerce has been frequently7 recognized by this court.*
This view is thus ably7 stated in the opinion of the Supreme Court of Pennsylvania:
‘‘Among the most important reserved State rights, and one directly connected with the question before us, is that of eminen domain. This undoubted power has been exercised in the improvement of navigable streams, and in building and establis ing ferries over them, and in the construction of roads, turn pikes, canals, and railroads; and has been repeatedly recognize in authoritative decisions. Under this invaluable powei t e
*
Argument in favor of the tax.
States have built up a network of railways and canals, and have improved natural channels through which the commerce of the whole Union is coursing, like the life-blood throughout the natural system. This was not done under any supposed authority to regulate interstate commerce, or to aid in the execution of the Federal power over commerce between the States; but was done under the unquestioned power of the State to improve her own resources, and to regulate her internal affairs. Yet, does any one doubt the grand and beneficial impulse given to interstate commerce by this exercise of State power? And who can doubt that the State has a right to compensation for the expenditure of her means and the benefit she has conferred on all who use her works ? They were built by herself or under her franchises, and the right to exact tolls, charges, and fares for their use, is a necessary consequence of her power to construct them. Nor does it make any difference what form her compensation takes—whether that of a direct charge on the tonnage using the road, or that of a tax on the corporations who use her franchises—her right is to exact the compensation from those who use her works. To gainsay this is to deny her right of eminent domain, and her power to legislate upon her internal affairs and the creations of her own sovereignty. If these works were, as once some of them were, in her own hands, what provision in the Federal Constitution would forbid her to increase her revenue by an increase of the charge of transportation over them? When in the hands of creatures exercising her franchises, what clause in any instrument forbids her to tax the franchises, and authorize the tax to be added to the pre-existing tolls and charges? To legislate once, is not to exhaust her power over the subject of tolls or charges, but to legislate at all is to assert her power. Whether it be called a toll or tax, what is this but to increase a charge which she can rightfully demand ? The right to demand any toll or charge upon all articles transported, or fares for passage, is derived from her grant, and the power to determine their extent depends upon her discretion. It is a right of which she cannot be deprived, and of which she is the only judge, unless, perhaps, the power should be so unreasonable and oppressively exercised, as to afford evidence of a design, by a fraudulent use of the power, to interdict or ruinously affect the commerce of other States. To say, because her citizens engage in mining fbr an extraterritorial market, or because mer-
Argument in favor of the tax.
ehandise may pass over these works out of or into the State, that to exact tolls and charges for the minerals or merchandise transported over them, or to tax the franchises of those engaged in the work, is a regulation of commerce, is to confound all just distinctions, and to destroy the most sacred right of a State. Her power to levy revenue from transportation over these works may be seen in her power over the works themselves. If compensation were denied her by way of revenue, who can dispute her power to suffer her own works to fall into decay and ruin j or, when unfettered by a charter contract, to repeal the charters under which they were built? Interstate commerce might suffer, but what power could control the act? Then, on what principle is it she cannot levy a tax on these instrumentalities, for the privileges granted, because the products carried are destined’for points without, or from without to points within the State ? It is carriage or destination which gives the right of toll, tax, or charge. It is not levied on them because the products go out or come in, but because they have the privilege and the benefit of transportation.”
To this argument the plaintiffs, referring to it in anticipation, reply,* “that the rivers of Pennsylvania are not constructed by the State power of eminent domain,” and that a tax is imposed on every ton transported within the territorial limits of Pennsylvania by every steamboat.
To this we rejoin, that all of the rivers in Pennsylvania (with the possible exception of a small part of the Alleghany) are, for the purpose of transportation, artificial highways. The Schuylkill, Susquehanna, and Lehigh, are all of them navigable only by reason of artificial works created at great expense, and that the evident intention of the act, as well as its practical workings, all show that it is only on companies owning artificial works, that the charge is to be made. The words of the act are too clear on the subject for argument. They read, that the “officers of. every railroad company, steamboat company, canal company, and slack-water navigation company, and all other companies now or hereafter doing business in this State, and upon whose works freight
* Supra, p. 245.
Eeply.
may be transported, whether by such company or by individuals, and whether such company shall receive compensation for transportation, for transportation and toll, or shall receive toll only, shall be,” &c. It will thus be seen that it is only on companies having works that the tax is charged.
Reply. It is argued for the State of Pennsylvania that, if the tax in question be a regulation of interstate commerce, it is not such a regulation as Congress alone can make; and that until Congress has legislated on the subject, the State legislation is valid.
When we consider the circumstances which induced the people of the United States to confer upon Congress the power to regulate commerce among the several States, the evils that existed and were intended to be avoided, and the plain import of the words used in the Constitution itself, the argument is hard to maintain.
What benefit could have been expected from investing Congress with the power to regulate interstate commerce, if the States themselves were to retain the power—the exercise of which had proved so vexatious ? It could not have been supposed that uniformity and system would be produced by introducing a new element of discord. If the regulations established by thirteen distinct legislatures were found to be inconvenient and oppressive, the interference of another legislature would seem to have been a most unfortunate plan of relief. The difficulty is not obviated by referring to the supremacy of the acts of Congress when constitutionally enacted. Admit that a State regulation of commerce must fall when it comes in conflict with a Federal regulation, yet it cannot be supposed that Congress was expected to adopt a system of commercial regulation which would anticipate and preclude every possible exercise of State power on the subject. Johnson, J., in his concurring opinion in Gibbons v. Ogden,* says:
The history of the times will, therefore, sustain the opinion
Reply.
that the grant of power over commerce, if intended to be commensurate with the evils existing and the purpose of remedying these evils, could only be commensurate with the power of the States over the subject. And this opinion is supported by a very remarkable evidence of the general understanding of the whole American people when the grant was made. There is not a State in the Union in which there did not, at that time, exist a variety of commercial regulations, concerning which it is too much to suppose that the whole ground covered by these regulations was immediately assumed by actual legislation under the authority of the Union. But where was the existing statute on this subject that a State attempted to execute? or by what State was it thought necessary to repeal these statutes? By common consent these laws dropped lifeless from their statute-books for want of the restraining power that had been relinquished to Congress.”
It is true that, in the case just referred to, the decision of the court was rested upon the ground that the law of New York, which gave to Livingston and Fulton the exclusive right to navigate the waters of the State of New York, was in conflict with the laws of the United States providing for vessels to carry on the coasting trade; and this was all that it was necessary to decide. But the following extract, from the opinion of Marshall, C. J., by whom the opinion of the court was delivered, shows that the concurrent power of the States to regulate commerce was by no means recognized:
“It has been contended by the counsel for the appellant, that, as the word ‘to regulate’ implies in its nature full power over the thing to be regulated, it excludes necessarily the action of all others that would perform the same operation on the same thing. That regulation is designed for the entire result, applying to those parts which remain as they were, as well as to those which are altered. It produces a uniform whole, which is as much disturbed and deranged by changing what the regulating power designs to have introduced, as that on which it has operated. There is great force in the argument, and the court is no satisfied that it has been refuted.”
And again, it is said by the same eminent judge, that “When each government (State or Federal) exercises t e
Reply.
power of taxation, neither is exercising the power of the other. But when a State proceeds to regulate commerce with foreign nations, or among the several States, it is exercising the very power that is granted Congress, and is doing the very thing which Congress is authorized to do. There is no analogy, then,, between the power of taxation and the power of regulating commerce.”
So Mr. Justice Grier said in Norris v. The City of Boston* (one of the Passenger Cases),
“Congress has regulated commerce and intercourse with foreign nations and between the several States, by willing that it shall be free; and it is therefore not left to the discretion of each State in the Union, either to refuse a right of passage to persons or property through her territory, or to exact a duty for permission to exercise it.”
The idea that both Congress and the State governments may possess and exercise the right to regulate interstate commerce is as anomalous as that of the power to direct the movement of an army being lodged in several commanders at the same time.
The power to regulate commerce among the several States is given to Congress in the same clause and in the same words by which the power to regulate commerce with foreign nations is given; and any argument against the exclusiveness of this power in the one case must equally be applicable to the other. It is impossible to suggest any distinction. The grant in each case was made in the same language and under the same circumstances. Yet who would now contend that the State of Pennsylvania can regulate its commerce with Great Britain?
It is not proposed to examine the various cases in which * the extent of the jurisdiction of Congress over foreign and interstate commerce, has been discussed by the judges of the Supreme Court of the United States. There has been conflict of opinion on the subject. In the opinion of McLean, in Smith v. Turner^ (Passenger Case), will be found a re-
* 7 Howard, 464. f lb., 393.
Reply.
view of the previous decisions and opinions on this point. The learned judge asserts most emphatically the exclusiveness of the jurisdiction of Congress. To the same effect is the opinion of Wayne, J., in the same case, p. 410. In the course of hi's opinion, Judge Wayne gives a statement of the circumstances under which the case of The City of New York v. Miln,* was decided. On the question, whether the power of Congress to regulate foreign or interstate commerce in all cases and under all circumstances is exclusive, however conflicting these opinions, it may safely be stated that nothing can be found in the reported decisions of this tribunal to raise a doubt as to the unconstitutionality of any attempt on the part of the State governments to interfere with the free exchange, between the several States, of all articles that can be made the subjects of commerce, where such exchange is not in conflict with regulations established for sanitary or police purposes.
The distinction suggested by the judge who delivered the opinion of the majority of the court, in Cooley v. The Board of Wardens,f that “whatever subjects of this power are in their nature national, or admit only of one uniform system or plan of regulation, may justly be said to be of such a nature as to require exclusive legislation by Congress,” if applied to the present case would seem to conclude the question. The right of passage for persons or goods through, from, or into the several States of the Union, is one of national importance, and especially a fit subject for national regulations, and it has been regulated by being left free and untrammelled. Whether the distinction referred to is to be considered as authoritatively established, may well be doubted. It appears to have commanded the assent of the majority of the court in the case in which it was announced,, and to have led to a decision in favor of the validity of our Pennsylvania pilot laws, although they were admitted to be regulations of commerce. But in the case of The Steamship Company v. Port Wardens^ (which the other side seek
* 11 Peters, 102. f 12 Howard, 311. J 6 Wallace, 31.
to evade, but a decision which was approved in Crandall v. Nevada, and Hinson v. Lott,*'on which they rely), we find it decided that
“A statute of a State enacting that the masters and wardens of a port within it should be entitled to demand and receive, in addition to other fees, the sum of five dollars, whether called out to perform any service or not, for every vessel arriving in that port, is a regulation of commerce within the meaning of the Constitution, and also a duty on tonnage, and is unconstitutional and void and the reasoning on which this decision is based seems quite inconsistent with the theory that the States have any concurrent power to regulate interstate commerce, except so far as it may be incidentally affected by quarantine or other like provisions.
Mr. Justice STRONG delivered the opinion of the court.
We are called upon, in this case, to review a judgment of the Supreme Court of Pennsylvania, affirming the validity of a statute of the State, which the plaintiffs in error allege to be repugnant to the Federal Constitution.
The case presents the question whether the statute in question,—so far as it imposes a tax upon freight taken up within the State and carried out of it, or taken up outside the State and delivered within it, or, in different words, upon all freight other than that taken up and delivered within the State,—is not repugnant to the provision of the Constitution of the United States which ordains “that Congress shall have power to regulate commerce with foreign nations and among the several States,” or in conflict with . the provision that “ 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.”
The question is a grave one. It calls upon us to trace the
* 8 Wallace, 152.
line, always difficult to be traced, between the limits of State sovereignty in imposing taxation, and the power and duty of the Federal government to protect and regulate interstate commerce. While, upon the one hand, it is of the utmost importance that the States should possess the power to raise revenue for all the purposes-of a State government, by any means, and in any manner not inconsistent with the powers which the people of the States have conferred upon the Genera] Government, it is equally important that the domain of the latter should be preserved free from invasion, and that no State legislation should be sustained which defeats the avowed purposes of the Federal Constitution, or which assumes to regulate, or control subjects committed by that Constitution exclusively to the regulation*of Congress.
Before proceeding, however, to a consideration of the direct question whether the statute is in direct conflict with any provision of the Constitution of the United States, it is necessary to have a clear apprehension of the subject and the nature of the tax imposed by it. It has repeatedly been held that the constitutionality, or unconstitutionality of a State tax is to be determined, not by the form or agency through which it is to be collected, but by the subject upon which the burden is laid. This was decided in the cases of Bank of Commerce v. Ww York City,* in The Bank Tax Case,] Society for Savings v. Coitef. and Provident Bank v. Massachusetts.^ In all these cases it appeared that the bank was required by the statute to pay the tax, but the decisions turned upon the question, what was the subject of the tax, upon what did the burden really rest, not upon the question from whom the State exacted payment into its treasury. Hence, where it appeared that the ultimate burden rested upon tbe property of the bank invested in United States securities, it Was held unconstitutional, but where it rested upon tbe franchise of the bank, it was sustained.
Upon what, then, is the tax imposed by the act of August 25th, 1864, to be considered as laid ? Where does the sub-
* 2 Black, 620. f 2 Wallace, 200. J 6 Id. 594. § lb. 611- p. 273stantial burden rest? Very plainly it was not intended to be, nor is it in fact, a tax upon the franchise of the carrying companies, or upon their property, or upon their business measured by the number of tons of freight carried. On the contrary, it is expressly laid upon the freight carried. The companies are required to pay to the State treasurer for the use of the Commonwealth, “ on each two thousand pounds of freight so carried,” a tax at the specified rates. And this tax is not proportioned to the business done in transportation. It is the same whether the freight be moved one mile or three hundred. If freight be put upon a road and carried at all, tax is to be paid upon it, the amount of the tax being determined by the character of the freight. And when it is observed that the act provides “where the same freight shall be carried over and upon different but continuous lines, said freight shall be chargeable with tax as if it had been carried upon one line, and the whole tax shall be paid by such one of said companies as the State treasurer may select and notify thereof,” no room is left for doubt. This provision demonstrates that the tax has no reference to the business of the companies. In the case of connected lines thousands of tons may be carried over the line of one company without any liability of that company to pay the tax. The State treasurer is to decide which of several shall pay the whole. There is still another provision in the act which shows that the burden of the tax was not intended to be imposed upon the companies designated by it, neither upon their franchises, their property, or their business. The provision is as follows: “ Corporations whose lines of improvements are used by others for the transportation of freight, mid whose only earnings arise from tolls charged for such nse, are authorized to add the tax hereby imposed to said tolls, and to collect the same therewith.” Evidently this contemplates a liability for the tax beyond that of the company required to pay it into the treasury, and it authorizes the burden to be laid upon the freight carried, in exemption 0 the corporation owning the roadway. It carries the tax over a°d beyond the carrier to the thing carried. Improvevol. xv. 18 p. 274ment companies, not themselves authorized to act as carriers, but having only power to construct and maintain roadways, charging tolls for the use thereof, are generally limited by their charters in the rates of toll they7 are allowed to charge. Hence the right to increase the tolls to the extent of the tax was given them in order that the tax might come from the freight transported, and not from the treasury of the companies. It required no such grant to companies which not only own their roadway but have the right to transport thereon. Though the tolls they may exact are limited, their charges for carriage are not. They can, therefore, add the tax to the charge for transportation without further authority.* In view of these provisions of the statute it is impossible to escape from the conviction that the burden of the tax rests upon the freight transported, or upon the consignor or consignee of the freight (imposed because the freight is transported), and that the company authorized to collect the tax and required to pay it into the State treasury is, in effect, only a tax-gatherer. The practical operation of the law has been well illustrated by anotherf when commenting upon a statute of the State of Delaware very similar to the one now under consideration. He said, “ The position of the carrier under this law is substantially that of one to whom public taxes are farmed out—who undertakes by contract to advance to the government a required revenue with power by suit or distress to collect a like amount out of those upon whom the tax is laid. The only imaginable difference is, that, in the case of taxes farmed out, the obligation to account to the government is voluntarily assumed by contract and not imposed by law, as upon the carrier under this act; also, that different means are provided for raising the tax out of those ultimately chargeable with it.”
Considering it, then, as manifest that the tax demanded by the act is imposed, not upon the company, but upon the
* Vide Boyle v. The Reading Railroad Company, 54 Pennsylvania State, 310; Cumberland Valley Railroad Co.’s Appeal, 62 Id. 218.
f Chancellor Bates in Clarke v. Philadelphia, Wilmington, and Baltimore Railroad Co.
freight carried, and because carried, we proceed to inquire whether, so far as it affects commodities transported through the State, or from points without the State to points within it, or from points within the State to points without it, the act is a regulation of interstate commerce. Beyond all question the transportation of freight, or of the subjects of commerce, for the purpose of exchange or sale, is a constituent of commerce itself. This has never been doubted, and probably the transportation of articles of trade from one State to another was the prominent idea in the minds of the framers of the Constitution, when to Congress was committed the power to regulate commerce among the several States. A power to prevent embarrassing restrictions by any State was the thing desired. The power was given by the same words and in the same clause by which was conferred power to regulate commerce with foreign nations. It would be absurd to suppose that the transmission of the subjects of trade from the State to the buyer, or from the place of production to the market, was not contemplated, for without that there could be no consummated trade either with foreign nations or among the States. In his work on the Constitution,* Judge Story asserts that the sense in which the word commerce is used in that instrument includes not only traffic, but intercourse and navigation. And in the Passenger Cases,f it was said: “ Commerce consists in selling the superfluity, in purchasing articles of necessity, as well productions as manufactures, in buying from one nation and selling to another, or in transporting the merchandise from the seller to the buyer to gain the freight.” Nor does it make any difference whether this interchange of commodiles is by land or by water. In either case the bringing of the goods from the seller to the buyer is commerce. Among btates it must have been principally by land when the Constitution was adopted.
J-nen, why is not a tax upon freight transported from ate to State a regulation of interstate transportation, and, p. 276therefore, a regulation of commerce among the States ? Is it not prescribing a rule for the transporter, by which he is to be controlled in bringing the subjects of commerce into the State, and in taking them out ? The present case is the best possible illustration. The legislature of Pennsylvania has in effect declared that every ton of freight taken up within the State and carried out, or taken up in other States and brought vyithin her limits, shall pay a specified tax. The payment of that tax is a condition, upon which is made dependent the prosecution of this branch of commerce. And as there is no limit to the rate of taxation she may impose, if she can tax at all, it is obvious the condition may be made so onerous that an interchange of commodities with other States wrould be rendered impossible. The same power that may impose a tax of two cents per ton upon coal carried out of the State, may impose one of five dollars. Such an imposition, whether large or small, is a restraint of the privilege or right to have the subjects of commerce pass freely from one State to another without being obstructed by the intervention of State lines. It would hardly be maintained, we think, that had the State established custom-houses on her borders, wherever a railroad or canal comes to the State line, and demanded at these houses a duty for allowing merchandise to enter or to leave the State upon one of those railroads or canals, such an imposition would not have been a regulation of commerce with her sister States. Yet it is difficult to see any substantial difference between the supposed case and the one we have in hand. The goods of no citizen of New York, New Jersey, Ohio, or of any other State, may be placed upon a canal, railroad, or steamboat within the State for transportation any distance, either into or out of the State, without being subjected to the burden. Nor can it make any difference that the legislative purpose was to raise money for the support of the State government, and not to regulate transportation. It is not the purpose of the law, but its effect, which we are now considering. Nor is it at all material that the tax is levied upon all freight, as well that which is wholly p. 277internal as that embarked in interstate trade. We are not at this moment inquiring further than whether taxing goods carried because they are carried is a regulation of carriage. The State may tax its internal commerce, but, if an act to tax interstate or foreign commerce is unconstitutional, it is not cured by including in its provisions subjects within the domain of the State. Nor is a rule prescribed for carriage of goods through, out of, or into a State any the less a regulation of transportation because the same rule may be applied to carriage which is wholly internal. Doubtless a State may regulate its internal commerce as it pleases. If a State chooses to exact conditions for allowing the passage or carriage of persons or freight through it into another State, the nature of the exaction is not changed by adding to it similar conditions for allowing transportation wholly within the State.
*
§ 1057. f 7 Howard, 416.
We may notice here a position taken by the defendants in error, and stoutly defended in the argument, that the tax levied, instead of being a regulation of commerce, .is compensation for the use of the works of internal improvement constructed under the authority of the State and by virtue of franchises granted by the State; in other words, that it is a toll for the use of the highways, a part of which, in right of her eminent domain, the State may order to be paid into her treasury. We are asked, if the works were in her own hands, if she were the owner of them, what provision in the Federal Constitution would forbid her to increase her revenue hy an increase of the charge of transportation over them ? When in the hands of creatures exercising her franchises, what clause in any instrument forbids her to tax the franchises, and to authorize the tax to be added to existing tolls and franchises ?
That this argument rests upon a misconception of the statute is to our minds very evident. We concede the right aild power of the State to tax the franchises of its corpora-ions,and the right of the owners of artificial highways, wheer such owners be the State or grantees of franchises from e State, to exact what they please for the Use of their ways. p. 278That right is an attribute of ownership. But this taxisnot laid upon the franchises of the corporation, nor upon those who hold a part of the State’s eminent domain. It is laid upon those who deal with the owners of the highways or means of conveyance. The State is not herself the owner of the roadways, nor of the motive power. The tax is not compensation for services rendered by7 her or by her agents. It is something beyond the cost of transportation or the ordinary charges therefor. Having no ownership in the railroads or canals the State has no title to their income, except so far as she reserved it in the charters of the companies. Tolls and freights are a compensation for services rendered, or facilities furnished to a passenger or transporter. These are not rendered or furnished by the State. A tax is a demand of sovereignty; a toll is a demand of proprietor-ship. The tax levied by this act is therefore not a toll. It is not exacted in compensation for the use of the roadway; and if it were, the right to make terms for the use of the roadway is in the grantee of the franchises, not in the grantor. But, in truth, the State has no more right to demand a portion of the tolls which the grantees of her franchises may exact than she would have to demand a portion of the rents of land which she had sold. She may tax by virtue of her sovereignty, and measure the tax by income, but the income itself is beyond her reach. All this, however, is abstract and apart from the case before us. That the act of 1864 was not intended to assert a claim for the use of the public works, or a claim for a part of the tolls, is too apparent to escape observation. The tax was imposed upon freight carried by steamboat companies, whether incorporated by the State or not, and whether exercising privileges granted by the State or not. It reaches freight passing up and down the Delaware and the Ohio Rivers carried by companies who derive no rights from grants of Pennsylvania, who are exercising no part of her eminent domain; and, as we have noticed heretofore, the tax is not proportioned to services rendered, or to the use made of canals or railways. It is the same, whether the transportation be long or short. It must p. 279therefore be considered-an exaction, in right of alleged sovereignty, from freight transported, or the right of transportation out of, or into, or through the State—a burden upon interstate intercourse.
If, then, this is a tax upon freight carried between States, and a tax because of its transportation, and if such a tax is in effect a regulation of interstate commerce, the conclusion seems to be inevitable that it is in conflict with the Constitution of the United States. It is not necessary to the present case to go at large into the much-debated question whether the power given to Congress by the Constitution to regulate commerce among the States is exclusive. In the earlier decisions of this court it was said to have been so entirely vested in Congress that no part of it can be exercised by a State.* It has, indeed, often been argued, and sometimes intimated, by the court that, so far as Congress has not legislated on the subject, the States may legislate respecting interstate commerce. Yet, if they can, why may they not add regulations to commerce with foreign nations beyond those made by Congress, if not inconsistent with them, for the power over both foreign and interstate commerce is conferred upon the Federal legislature by the same words. And certainly it has never yet been decided by this court that the power' to regulate interstate, as well as foreign commerce, is not exclusively in Congress. Cases that have sustained State laws, alleo:ed to be regulations of commerce among the States, have been such as related to bridges or aams across streams wholly within a State, police or health laws, or subjects of a kindred nature, not strictly commercial regulations. The subjects were such, as in Gilman v. Philadelphia^ it was said “ can be best regulated by rules and provisions suggested by the varying circumstances of different localities, and limited in their operation to such localities espectively,” However this may be, the rule has been asserted with great clearness, that whenever the subjects over which a power to regulate commerce is asserted are in their
t 3 Wallace, 713.
nature national, or admit of one uniform system or plan of regulation, they may justly be said to be of such a nature as to require exclusive legislation by Congress.* Surely transportation of passengers or merchandise through a State, or from one State to another, is of this nature. It is of national importance that over that subject there should be but one regulating power, for if one State can directly tax persons or property passing through it, or tax them indirectly by levying a tax upon their transportation, every other may, and thus commercial intercourse between States remote from each other may be destroyed. The produce o’f Western States may thus be effectually excluded from Eastern markets, for though it might bear the imposition of a single tax, it would be crushed under the load of many. It was to guard against the possibility of such commercial embarrassments, no doubt, that the power of regulating commerce among the States was conferred upon the Federal government. . In Almy v. The State of California,] it was held by this court that a law of the State imposing a tax upon bills of lading for gold or silver transported from that State to any port or place without the State, was substantially a tax upon the transportation itself, and was therefore unconstitutional. True, the decision was rested on the ground that it was a tax upon exports, and subsequently, in Woodruff v. Parham,] the court denied the correctness of the reasons given for the decision; but they said at the same time the case was well decided for another reason, viz., that such a tax was a regulation of commerce—a tax imposed upon the transportation of goods from one State to another, over the high seas, in conflict with that freedom of transit of goods and persons between one State and another, which is within the rule laid down in Crandall v. Nevada,§ and with the authority of Congress to regulate commerce among the States.
*
Cooley «. Port Wardens, 12 Howard, 299; Gilman«. Philadelphia,supra,', Crandall «. The State of Nevada, 6 Wallace, 42. f 24 Howard, 169. J 8 Wallace, 123. g 6 Id. 3.
In Crandall v. The State of Nevada, where it appeared that the legislature of the State had enacted that there should “be levied and collected a capitation tax of one dollar upon every person leaving the State by any railroad, stage-coach, or other vehicle engaged or employe^ in the business ot transporting passengers for hire,” and required,the proprietors, owners, and corporations so engaged to make monthly reports of the number of persons carried, and to pay the tax, it was ruled that though required to be paid by the carriers, the tax was a tax upon'passengers, for the privilege of being carried out- of the State, and not a tax on the business of the carriers. For that reason it was held that the law imposing it was invalid, as in conflict with the Constitution of the United States. A majority of the court, it is true, declined to rest the decision upon the ground that the tax was a regulation of interstate commerce, and therefore beyond the power of the State to impose, but all the judges agreed that the State law wTas unconstitutional and void. The Chief Justice and Mr. Justice Clifford thought the judgment should have been placed exclusively on the ground that the act of the State legislature was inconsistent with the power conferred upon Congress to regulate commerce among the several States, and it does not appear that the other judges held that it was not thus inconsistent. In any view of the case, however, it decides that a State cannot tax persons for passing through, or out of it. Interstate transportation of passengers is beyond the reach of a State legislature. And if State taxation of persons passing from one State to another, or a State tax upon interstate transportation of passengers is unconstitutional, a fortiori, if possible, is a State tax upon the carriage of merchandise from State to State, in conflict with the Federal Constitution. Merchandise is the subject of commerce. Transportation is essential to commerce; and every burden laid upon it is pro tanto a restriction. Whatever, therefore, may be the true doctrine respecting the exclusiveness of the power vested in Congress to regulate commerce among the States, we regard it as established that no State can impose a tax upon freight transported from p. 282State to State, or upon the transporter because of such transportation.
But while holding this, we recognize fully the power of each State to tax at its discretion its own internal commerce, and the franchises, property, or business of its own corporations, so that interstate intercourse, trade, or commerce, be not embarrassed or restricted. That must remain free.
The conclusion of the whole is that, in our opinion, the act of the legislature of Pennsylvania of August 25th, 1864, so far as it applies to articles carried through the State, or articles taken up in the State and carried out of it, or articles taken up without the State and brought ihto it, is unconstitutional and void.
Judgment reversed, and the record is remitted for further proceedings
In accordance with this opinion.
Mr. Justice SWAYNE (with whom concurred Mr. Justice DAVIS), dissenting.
I dissent from the opinion just read. In my judgment, the tax is imposed upon the business of those required to pay it. The tonnage is only the mode of ascertaining the extent of the business. That no discrimination is made between freight carried wholly within the State, and that brought into or carried through or out of it, sets this, as I think, in a clear light, and is conclusive on the subject.
Note.
At the same time with the preceding case was adjudged another, that of