The federal Constitution prohibits a state from regulating
interstate commerce, but at the same time authorizes it to burden
that commerce by the collection of the expenses if absolutely
necessary for enforcing its inspection laws.
There is an essential difference between policing and
inspection, and a state cannot include the expense of the former as
part of the expense of the latter in determining the amount which
it can raise as an inspection tax which affects interstate
commerce.
As inspection necessarily involves expense, it is primarily for
the legislature to determine the amount, and even though the
revenue be slightly in excess of the expense, the courts should not
interfere.
There is a presumption that the legislature will reduce
inspection fees to a proper sum if the amount originally fixed
proves to be unreasonably in excess of the amount required.
Red
"C" Oil Co. v. North Carolina, 222
U. S. 393.
Effect must be given by the courts to the provisions of the
Constitution, and where it does appear that the amount of
inspection fees are disproportionate to the inspection service
rendered or include something beyond inspection, the tax must be
declared void as obstructing the freedom of interstate
commerce.
A state statute imposing an inspection tax, the proceeds of
which are to be and actually are used partly for inspection and
partly for other purposes such as policing state territory, is
necessarily void as imposing a burden on interstate commerce in
excess of the expense absolutely necessary for inspection, and so
held as to the Maryland Oyster Inspection Tax of 1910.
The question of constitutionality of an inspection law depends
not only upon whether the excess proceeds of the tax may be used
for other purposes, but whether they actually are so used, and it
is the duty of the courts to determine whether the tax is excessive
and the excess is
Page 232 U. S. 495
so used so as to protect citizens against payment of fees not
authorized by the Constitution.
Turner v. Maryland,
107 U. S. 38,
distinguished, and
Brimmer v. Rebman, 138 U.
S. 83, followed.
While the excess of a state inspection tax may be valid as a tax
on property within the state, if it does not appear that the
legislature would have separately imposed such a property tax, the
whole tax must be declared void if it is unconstitutional as to
interstate commerce.
117 Md. 335 reversed.
The plaintiffs are engaged in packing oysters taken from the
waters of Maryland, Virginia, and New Jersey, and shipped to
Baltimore, where they are inspected under the provisions of the
Maryland Oyster Law. This comprehensive statute contains 82
sections, one of which (§ 69) provides for the appointment of
20 special inspectors, to be paid $45 per month each, during the
season. They are required to inspect all oysters in the district to
which they are assigned, and to give a certificate to buyer and
seller in substantially the following form:
"I hereby certify that I have this day inspected for Captain
________ of the schooner ________, a cargo of oysters, sold to
________, and found the same to contain _____ bushels of
merchantable oysters, and _____ bushels of unmerchantable oysters.
. . ."
The section further provides that
"a charge of one cent per bushel is hereby levied to help defray
the expenses of such inspection and the other expenses of the state
Fishery Force, upon all oysters unloaded from vessels at the place
where said oysters are to be no further shipped in bulk in
vessels."
The fee was to be charged equally to the buyer and seller, and
in case it was not paid at the end of the week, the property of the
party indebted was to be levied on and sold by the Comptroller "as
in cases of taxes in default, without further process of law."
Page 232 U. S. 496
The four plaintiffs refused to pay the inspection fees charged
against them between October, 1910, and April, 1911. The
Comptroller threatened to enforce collection by levy and sale, and
they filed a bill in the Circuit Court of Baltimore City seeking an
injunction on the ground that the inspection fees were excessive
and constituted a burden on interstate commerce and a violation of
the provision of the Constitution that
"no state shall, without the consent of the Congress, lay any
imposts or duties on imports or exports, except what may be
absolutely necessary for executing its inspection laws."
The case was heard on an agreed statement of facts which, in
addition to those above recited, showed that the Act of April,
1910, was a reenactment of sections of a prior statute (Code of
Maryland, c. 72) which was substantially like the present law, with
the same charge of one cent a bushel for measuring oysters.
Extracts from various annual reports of the Comptroller were
stipulated into the record. They show that the salaries of the
inspectors amounted to about $14,000 per annum. After the deduction
of salaries of these inspectors there was for 1909 and 1910
respectively, an excess of $22,010 and $28,680. This annual excess
was carried to the credit of the Oyster Fund, provided for both in
the repealed and reenacted oyster law. In the report of the
Comptroller for 1909, he says:
"The tax as to one cent per bushel on all oysters inspected in
this state, as enacted by Chapter 488 of the Acts of 1908, has been
sufficient not only to pay the cost of such inspections, but also
to carry to this [Oyster] Fund the balance or excess of
$22,010.95."
In the report for 1910, he says:
"During the fiscal year ending September 30, 1910, the receipts
of taxes on oysters amounted to $43,671.94. The disbursements for
account of salaries of the measurers and inspectors of oysters were
$14,991, leaving a balance or excess
Page 232 U. S. 497
of $28,680.94, which was carried to the credit of the Maryland
State Oyster Fund."
"The receipts from dredging and tonging licenses show a heavy
shrinkage by reason of fewer boats being engaged in the industry;
nevertheless the excess tax of one cent per bushel on oysters sold
amounted to $28,680.94, making the fund self-sustaining for the
year [1911]."
Section 30 of the Oyster Law referred to provides that the
Oyster Fund shall only be drawn upon for
"the purpose of maintaining sufficient and proper police
regulations for the protection of fish and oysters in Maryland
waters, and in the payment of the officers and men, and keeping in
repair and supplying the necessary means of sailing the boats and
vessels of the State Fishery Force."
After a hearing and consideration of the facts submitted, the
circuit court held that the inspection tax was valid, refused to
enjoin its collection, and dismissed the bill. That judgment was
affirmed by the Court of Appeals (117 Md. 335), and the case was
brought here by writ of error.
Page 232 U. S. 502
MR. JUSTICE LAMAR, after making the foregoing statement of
facts, delivered the opinion of the Court.
The plaintiffs are engaged in the business of packing oysters in
the City of Baltimore, and, during the season of 1910-11 purchased
736,000 bushels, of which 494,000 bushels were taken from the
waters of the State of Maryland, 228,000 from the waters of the
State of Virginia, and 14,118 from the State of New Jersey. These
oysters were inspected in Baltimore by officers appointed under the
provisions of the Maryland statute, which fixed an inspection fee
of one cent per bushel to be paid one half by the seller and one
half by the buyer. The plaintiffs having refused to pay the
inspection charge assessed against them, litigation followed. The
decision was against their claim of immunity under Art. I,
§§ 8 and 10, of the Constitution. The case was then
brought here on the ground that the inspection fee of one cent per
bushel charge was excessive, that it interfered with interstate
Page 232 U. S. 503
commerce, and levied an unlawful impost duty upon goods shipped
into Maryland from other states.
1. The Constitution prohibits a state from regulating interstate
commerce, but at the same time authorizes the collection of the
necessary expenses of its inspection laws, with the result that
interstate commerce is to that extent lawfully burdened. Inspection
is intended to determine the weight, condition, quantity, and
quality of merchandise to be sold within or beyond the state's
borders. It is usually "accomplished by looking at or weighing or
measuring the thing to be inspected." (
People v. Compagnie
Generale Transatlantique, 107 U. S. 62),
though there may be cases in which some degree of supervision or
policing is required in order to secure the proper certification of
the property intended for sale or shipment. But, while the two
duties may sometimes overlap, there is a difference between
policing and inspection, and if the state imposes upon one set of
officers the performance of the two duties, and pays the whole or a
part of the joint expenses out of inspection fees, it must be made
to appear that such tax does not materially exceed the cost of
inspection -- the burden in such cases being on those seeking to
collect the combined charge. For if the cost of inspection is so
intermingled with other expenses as to make it impossible to
separate the two, interstate commerce might be burdened by fees
collected both for inspection and revenue, for a lawful and for an
unlawful purpose. Such is the contention here, the plaintiffs
insisting that the fees are collected partly for inspecting oysters
and partly for the cost of policing the waters of Chesapeake Bay,
while the defendant insists that the charge is collected and spent
solely for inspection.
2. Inspection necessarily involves expense, and the power to fix
the fee, to cover that expense, is left primarily to the
legislature, which must exercise discretion in determining the
amount to be charged, since it is impossible
Page 232 U. S. 504
to tell exactly how much will be realized under the future
operations of any law. Beside, receipts and disbursements may so
vary from time to time that the surplus of one year may be needed
to supply the deficiency of another. If, therefore, the fees exceed
cost by a sum not unreasonable, no question can arise as to the
validity of the tax so far as the amount of the charge is
concerned. And even if it appears that the sum collected is beyond
what is needed for inspection expenses, the courts do not
interfere, immediately on application, because of the presumption
that the legislature will reduce the fees to a proper sum.
Red
"C" Oil Mfg. Co. v. North Carolina, 222
U. S. 393. But when the facts show that what was known
to be an unnecessary amount has been levied, or that what has
proved to be an unreasonable charge is continued, then they are
obliged to act in the light of those facts, and to give effect to
the provision of the Constitution prohibiting the collection by a
state of more than is necessary for executing its inspection laws.
In such inquiry, they treat the fees fixed by the legislature for
inspection proper as
prima facie reasonable, and do not
enter into any nice calculation as to the difference between cost
and collection; nor will they declare the fees to be excessive
unless it is made clearly to appear that they are obviously and
largely beyond what is needed to pay for the inspection services
rendered. Still, effect must be given to the provision of the
Constitution, which, in unusual and emphatic terms, permits the
state to collect only what is "absolutely necessary." If,
therefore, it is shown that the fees are disproportionate to the
service rendered or that they include the cost of something beyond
legitimate inspection to determine quality and condition, the tax
must be declared void because such costs, by necessary operation,
obstruct the freedom of commerce among the states.
McLean v.
Denver & Rio Grande R. Co., 203 U. S.
38;
Brimmer v.
Rebman, 138
Page 232 U. S. 505
U.S. 83;
Postal Telegaph-Cable Co. v. Taylor,
192 U. S. 64;
Patapsco Co. v. North Carolina, 171
U. S. 354;
Red "C" Oil Co. v. North Carolina,
222 U. S. 394;
Savage v. Jones, 225 U. S. 501.
3. The unreasonableness of inspection fees may appear from the
language of the act, as in
Foote v. Clagett, 116 Md. 228,
where a charge of two cents a bushel on oysters was collected,
under a statute which provided that one half was to be used for
inspection and the other half was to be used for replacing shells
on the natural beds for the purpose of increasing the oyster crop.
That law was declared void by the Court of Appeals of Maryland
because of the provision that one half of the inspection fee should
be applied to other than the inspection purpose. The present
statute contains language susceptible of the same construction, for
it provides for an inspection fee of one cent per bushel to be
"levied to help pay the salary of the inspectors and the other
expenses of the State Fishery Force."
As the act itself makes a clear distinction between inspection
expenses "and other expenses," the question at once arises as to
whether the state did not provide for the collection of more than
was "absolutely necessary for executing its inspection laws,"
thereby rendering the statute void because it included the cost of
"something beyond legitimate inspection to determine quality and
condition."
Brimmer v. Rebman, 138 U.
S. 83.
This objection, apparent on the face of the act, was sought to
be answered by the suggestion that § 69, which levied the tax,
was but a part of an elaborate system of inspection running through
the whole law, "the enforcement of which was an inseparable part of
the duty of the State Fishery Force," and that "the expense of such
inspection is a component part of all the expenses of that force."
117 Md. 335. It was urged that, in addition to inspecting oysters
as they were unloaded from vessels,
Page 232 U. S. 506
the Fishery Force performed other inspection duties such as
preventing what were known as "buy-boats" from secretly carrying
culls and other unmerchantable oysters beyond the limits of the
state for consumption or transplanting. But even if it be conceded
that these or like services could be classed as inspection within
the meaning of the Constitution, they form only a part of the many
and various duties imposed upon the Fishery Force. That
organization is supplied with men and boats, and required to
patrol, day and night, the waters of Chesapeake Bay to prevent
unlicensed boats from taking oysters from improper tonging or
dredging, and to see that shells and culls are returned to the
natural beds -- provisions intended for the preservation of the
supply, rather than determining the merchantable quality of oysters
offered for sale. Other noninspection duties might be named, but
the foregoing will suffice to show that inspection, policing, and
business expenses are to be paid for out of inspection fees.
3. But the commingling of these various duties, paid for out of
a fund raised for inspection, does not necessarily show that the
fee is excessive. For the presumption of invalidity arising from
such intermingling might be met by carrying the burden of showing
that, while the statute required payment out of which joint fund,
the collections were not sufficient, but only helped, to pay the
definitely ascertained expenses of inspection. The question of
reasonableness therefore may be considered in the light of the
practical operation of the law with a view of determining with
reasonable certainty the permanent relation between the amount
collected and the cost of inspecting. The Court of Appeals of
Maryland, following the intimation in
Turner v. Maryland,
107 U. S. 38,
declined to pass on the question, upon the ground that a court
could not decide whether "a charge or duty under an inspection law
is or is not excessive." That suggestion,
Page 232 U. S. 507
however, is opposed to the distinct rulings in
Brimmer v.
Rebman, supra, and other cases above cited, which hold that it
is the duty of the courts to pass upon the question, so as to
protect the private citizen against the payment of inspection fees
larger than those authorized by the Constitution.
4. The Maryland statute provided for that kind of inspection
that could be performed by "looking at or measuring the thing to be
inspected" (
107 U. S. 107
U.S. 62). It fixed the amount of salary to be paid the inspectors
for such services, so that the cost was definitely known. The
receipts, too, are reasonably certain in view of collections in the
past.
The present statute is a reenactment of an old law levying the
same charge of one cent per bushel. Under the operations of that
law, it appeared that about 4,000,000 bushels were inspected each
year, producing a revenue of $40,000, one third of which was
sufficient to pay the salaries of the inspectors, the other two
thirds being appropriated to the "other expenses of the Fishery
Force." The Comptroller, in his annual reports, called the
attention of the legislature to the fact that, as required, this
"excess" had been credited to the Oyster Fund. This fund was to be
used not for inspection purposes, but for
"maintaining sufficient and proper police regulations for the
protection of fish and oysters in Maryland waters, and the payment
of the officers and men, and for keeping in repair and supplying
the necessary means of sailing the boats and vessels of the State
Fishery Force."
Even during the year following the enactment of the new statute,
and the failure of many to pay, pending the decision as to the
validity of the tax, the collections were in excess of the cost of
inspection. In the light of the operation of the previous act, and
the failure to show that the amount collected under the new would
not be more than was necessary for the expenses of inspection
proper,
Page 232 U. S. 508
the present statute must be held to be void. The excess
collected may have been valid as a tax on property in Maryland, but
was a burden on interstate commerce when levied upon oysters coming
from other states. This fact renders the whole tax void, because
there is no claim that the intrastate commerce can be separated
from the interstate shipments, or that the legislature would have
taxed one and left the other untaxed.
Judgment reversed and the case remanded for further
proceedings not inconsistent with this opinion.
