revenues.

the application of the principle, as there cases, that fees cannot be imposed for the is no inspection at all, but the acceptance purpose of inspection upon companies doing of an affidavit made by an interested party an interstate business which are so far in in lieu thereof. Indeed, so perfunctory is excess of the expenses of such inspection as this inspection that it appears to have to make it plain that they were adopted, awakened a suspicion in the court below not as a means of paying such expenses, but “that the legislature was more concerned in as a means of raising revenue. collecting fees to swell the exchequer of the The latest of these is that of the Postal state, than in the protection of the people Teleg. Cable Co. v. Taylor, 192 U. S. 64, 48 who might drink beer.”

L. ed. 342, 24 Sup. Ct. Rep. 208, wherein a The obvious inefficacy of the inspection license fee was imposed upon the telegraph has an important bearing upon the more company which largely exceeded the entire serious objection to this act, in that the cost to the company of maintaining its line, fees for inspection bear no just relation to including repairs, reconstruction, costs of the expense, and make it evident that the labor and of material, and traveling exlaw was not passed in a bona fide exercise penses of employees, and all expenses inof the police powers of the state, but as a curred by it in a careful inspection of its convenient method of increasing the public poles and wires. The ordinance was de

Section 8 provides for an inspec- fended as a police regulation. It was ar. tion fee of one cent per gallon and two cents gued that the question of revenue was not for labeling each package containing 8 gal its object, but that the defendant had the lons, making a total fee of one and a quar- right to constantly inspect the poles and ter cents per gallon. All of these fees are wires to protect the lives of its citizens. required to be paid into the state treasury, The court found the borough to have been and pass to the general revenue fund of the sparsely settled; that it had done nothing state. The inspectors cannot even deduct in the way of inspection, and had incurred their salaries from the fees, but are paid by no liability therefor; that the fee was twenty a distinct appropriation for that purpose. times as large as was necessary to make

It is conceded in the stipulation of facts the most careful and efficient inspection that that the entire expenditure authorized on could have been made. The ordinance was account of actual inspection amounts to adjudged to be invalid, the court saying: $12,500, and that the inspection fees annu- "To uphold it in such a case as this is to ally collected amount to $350,000, or $337,- say that it may be passed for one purpose 500 in excess of the costs for inspection, and and used for another; passed as a police inthat the fees chargeable under said act upon spection measure, and used for the purpose the malt liquors manufactured out of and of raising revenue; that the enactment as brought into the state from other states and a police measure may be used as a mere subfrom foreign countries, for sale in Missouri, terfuge for the purpose of raising revenue, exceed the total authorized cost for inspec- and yet, because it is said to be an inspection, approximately, $60,000 a year. tion measure, the court must take it as such

In this connection it is pertinent to notice and hold it valid, although resulting in a that the bill in question, when first intro- rate of taxation which, if carried out duced in the house was entitled "An Act throughout the country, would bankrupt Creating the Office of Inspector of Beer and the company, were it added to the other Malt Liquors, and Providing for the Crea- taxes properly assessed for revenue, and paid tion of a Fund for the Construction of Roads by the company." and Highways;" and as originally intro- In previous cases arising under a similar duced into the senate contained the words state of facts the ordinances had been up"providing for the increase of the general held as within the police power of the revenue fund." In the bill as passed these municipality (St. Louis v. Western U. Teleg. words were stricken out, and the words Co. 148 U. S. 92, 37 L. ed. 380, 13 Sup. Ct. “providing for the inspection of beers and Rep. 485, 149 U. S. 465, 37 L. ed. 810, 13 malt liquors manufactured and sold in this Sup. Ct. Rep. 990; Western U. Teleg. Co. state” inserted in their place. Notwith-v. New Hope, 187 U. S. 419, 47 L. ed. 240, standing these changes in the title of the 23 Sup. Ct. Rep. 204), in which the ordibill as finally passed, it is evident that the nances were sustained upon the ground that main object was to increase the general fund the fees were not so excessive as to justify of the state by the amount of the inspection the inference that they were not imposed fees, less the expenses of the inspection, and as a bona fide exercise of the police powers, that the inspection was really an incident and in Atlantic & P. Teleg. Co. v. Philadelto, or an excuse for, the revenue to be de- phia, 190 U. S. 160, 47 L. ed. 995, 23 Sup. rived from the act. These facts are a cogent Ct. Rep. 817, in which the question of reaargument in favor of applying to this case sonableness was held to have been properly the rule established in a number of recent submitted to the jury, and Postal Teleg. Cable Co. v. New Hope, 192 U. S. 55, 48 L. rejection of those that were diseased, but ed. 338, 24 Sup. Ct. Rep. 204, in which the that all importation of cattle, whether sound verdict of a jury for a less amount than or diseased, was forbidden for long periods; that fixed by the ordinance was held to be and it was held that the statute was void a verdict that the charge was unreasonable, as a plain intrusion upon the exclusive doand should have been followed by a judg- main of Congress. ment for the telegraph company.

And in Reid v. Colorado, 187 U. S. 137, The facts of this case show that the in- 150, 47 L. ed. 108, 115, 23 Sup. Ct. Rep. 92, spection, as applied to malt liquors manu- 97, this court said: factured out of the state, was purely per- "Certain principles are well settled by functory, and accomplished nothing for the the former decisions of this court. One is protection of its citizens, but that the fee that the purpose of a statute, in whatever derivable therefrom was thirty times the language it may be framed, must be deteractual cost of such inspection, even when mined by its natural and reasonable effect. applied to liquors manufactured within the Henderson v. New York (Henderson v. state. A disproportion so gross can only Wickham) 92 U. S. 259, 268, 23 L. ed. 543, be accounted for upon the theory that the 548. Another is that a state may not, by act was intended for the purposes of reve- its police regulations, whatever their object, nue, and not for inspection.

unnecessarily burden foreign or interstate It is insisted, however, that, as the su- commerce.

Hannibal & St. J. R. Co. v. preme court of the state has in the case of Husen, 95 U. S. 465, 472, 24 L. ed. 527, 530. State v. Bisman, 162 Mo. 1, 62 S. W. 828, Again, the acknowledged police powers of by a majority vote, upheld the constitution a state cannot legitimately be exerted so as ality of the act as an inspection law, ap- to defeat or impair a right secured by the plied to beer of domestic manufacture, and national Constitution, any more than to denot as an act for raising revenue, we are feat or impair a statute passed by Congress bound by this definition, and are precluded in pursuance of the powers granted to it. from considering it in any other light than Gibbons v. Ogden, 9 Wheat. 1, 210, 6 L. ed. that of an inspection fee or license tax. 23, 73; Missouri, K. & T. R. Co. v. Haber, But a question of constitutional law cannot 169 U. S. 613, 625, 626, 42 L. ed. 878, 882, be answered by a definition. While, as we 18 Sup. Ct. Rep. 488, and authorities cited." have frequently said, we adopt the interpre- The reasonableness of the law as comtation of the statute of a state affixed to it pared with the cost of inspection is made by the court of last resort thereof, we still the test of the validity of the law in Pafeel at liberty, in accepting such interpreta- tapsco Guano Co. v. North Carolina Bd. of tion, to determine for ourselves whether Agri. 171 U. S. 345, 43 L. ed. 191, 18 Sup. the act is a bona fide exercise of the police Ct. Rep. 862; Willis v. Standard Oil Co. power of the state, and not intended merely 50 Minn. 290, 52 N. W. 652. as an excuse for the taxation of interstate But, treating it as an inspection law, the commerce.

question remains whether, as applied to beer As was said by this court in Mugler v. manufactured in other states, it is a bona Kansas, 123 U. S. 623, 661, 31 L. ed. 205, fide exercise of the police powers of the 210, 8 Sup. Ct. Rep. 273, 297: “If, there state to protect the health of its citizens, fore, a statute purporting to have been en and, for the reasons already given, we are acted to protect the public health, the pub-of opinion it is not. The fact that the law lic morals, or the public safety, has no real may have been valid as applied to liquors or substantial relation to those objects, or manufactured within the state does not is a palpable invasion of rights secured by remove the difficulty, as the Wilson act only the fundamental law, it is the duty of the applies to the police powers of the state to courts to so adjudge, and thereby give effect the same extent and in the same manner to the Constitution."

as though the liquors had been produced In Hannibal & St. J. R. Co. v. Husen, 95 within the state. If foreign liquors were U. S. 465, 24 L. ed. 527, the validity of the subjected to the same inspection as domestic act of the state of Missouri, which pro- liquors there would be much force in the bibited the introduction into the state of contention that the inspection was covered any Texas or Mexican cattle between the by the terms of the Wilson act; but as in months of March and November of each this case domestic liquors were actually inyear, was considered. It was insisted that spected, and foreign liquors were not in

. the law was valid as a quarantine or inspec-spected at all, the act does not apply. The tion law, as its purpose was to prevent the object of the act is merely to place foreign introduction of cattle afflicted with conta- and domestic liquors on the same footing as gious diseases. But the court pointed out respects the police powers of the state. The that no provision was made for the actual inference is drawn in the opinion of the inspection of the cattle, so as to secure the court that, upon the arrival of foreign liquors at their destination, the state may Miln Case an act of the state of New York, deal with such liquors as it pleases; in requiring the masters of vessels arriving other words, that they have passed wholly from foreign ports to report to the city beyond the Federal control as subjects of authorities the names, etc., of his passeninterstate commerce.

gers, was upheld as a proper exercise of the The Wilson act was passed in consequence police power; though subsequently, in the of our decision in Leisy v. Hardin, 135 U. S. Passenger Cases (Smith v. Turner) 7 How. 100, 34 L. ed. 128, 3 Inters. Com. Rep. 36, 283, 12 L. ed. 702, a similar law, requiring 10 Sup. Ct. Rep. 681, to the effect that a the masters of vessels to pay a certain sum state statute prohibiting the sale of liquors on account of every passenger brought from was unconstitutional, as applied to a sale a foreign country into the state, was held by the importer from another state in origi- to be inoperative, although passed under the nal packages. That case was put upon the general denomination of a health law. It ground that liquors had always been recog- was said that, although the amount of the nized by the commercial world as subjects tax was small, it might have been increased of exchange, barter, and traffic, and that the so as to become prohibitory at the discrestate could not prohibit their importation tion of the legislature; and the fact that from abroad or their sale by the importer. the tax was applied to the maintenance of To meet this exigency, and to enlarge the a marine hospital, and to the reformation powers of the state with respect to intox- of juvenile delinquents, showed that it could icating liquors, the Wilson act was passed, not be sustained as an exercise of the police declaring that upon their arrival in the power. state they should be subject to the police While we may concede that the liquors powers of the state to the same extent and in this case had arrived at their destinain the same manner as though such liquors tion, it does not follow that they were subhad been produced within such state. The ject to any law which the state chose to constitutionality of this act was sustained pass in an assumed exercise of the police in Rahrer's Case, 140 U. S. 545, 35 L. ed. power. The state has an undoubted right 572, 11 Sup. Ct. Rep. 865, although in the to inspect all goods arriving therein, but it subsequent case of Rhodes v. Iowa, 170 U. S. does not follow that it has the right to 412, 42 L. ed. 1088, 18 Sup. Ct. Rep. 664, it subject them to an inspection which is no was held that the Wilson act did not oper- inspection at all, and charge them with a ate to attach to liquors the prohibitory fee out of all proportion to the costs of even legislation of the state at the moment they a proper inspection, and call it an exercise reached the state line, or before the comple- of the police power. Though these liquors tion of the act of transportation by their had arrived at their destination, the state arrival at their point of destination and provided, by § 5 of the act, that they should delivery to the consignee.

be inspected before offering them for sale The primary, if not the sole, object of the and before they had been commingled with Wilson act was to attach the prohibitory the general mass of property. The fact laws of the state as a police measure to that they had been delivered to the conliquors the moment they were delivered to signee was of no materiality, since the act the consignee, although they might still be which the state required should be done in their original packages. The state was was one which applied a condition precedent then at liberty to forbid their sale.

to their admission to the state for commerThe act does not affect the right of in- cial purposes.

Until this act was perspection, since that right was one which formed, they were protected against an unexisted wholly independent of the act, and lawful interference. This inspection might had been applied and recognized ever since have taken place at the state line, but, for the case of New York v. Miln, 11 Pet. 102, the convenience of the state officers, as well 9 L. ed. 648, as one of the ordinary police as that of the brewers, it was postponed powers of the state, which it was at liberty until the arrival at their destination, as is to exercise quite irrespective of any Federal frequently the case in foreign countries, statute for the protection of the health of where imported goods are not examined at its citizens. The Wilson act neither cre- the frontier, but at Paris or London, upon ates, adds to, takes from, nor affects, the their arrival there; but they are not legally police powers of the state with respect to entered until such examination takes place. inspection in any particular. The power To say that their character as interstate of the state to enact inspection laws, pro-commerce existed at the state line, but had vided that such laws are intended in good been lost upon their arrival at their place faith for the protection of the people, and of destination before they had shown themnot as a covert means for raising revenue selves entitled to enter the state, is to apply by exorbitant charges, remains precisely as a test wholly irrelevant under the circumit was before the act was passed. In the 'stances. Indeed, in the case of Rhodes v.

Iowa, 170 U. S. 412, 42 L. ed. 1088, 18 Sup. commerce, in commodities to make and use Ct. Rep. 664, we held expressly that the pro- which are admitted to be lawful.” hibitory liquor laws did not apply to liquors But we are not without authority upon while in transit from their point of ship- this point. In Minnesota v. Barber, 136 ment to their delivery to the consignee. U. S. 313, 34 L. ed. 455, 3 Inters. Com. Rep. The vital question is whether the inspection 185, 10 Sup. Ct. Rep. 862, a law of Minnewas applied at a time prior to their legal sota, as in this case, prohibited the sale of importation into the state as a commercial fresh meats except after an inspection, and article. If it were, and the inspection were was sought to be sustained as a law for the a lawful one, it is a proper regulation of protection of the health of the inhabitants. interstate commerce; but, if the inspection The act required the inspection to take place were not a bona fide exercise of the police within twenty-four hours before the animals power, it was an unlawful interference with were slaughtered, and was held to be void such commerce. Whether the inspection as a law intended to be applied only to was made at the state line, or at the desti- cattle slaughtered outside the state. While nation of the goods, is absolutely imma- the question was not discussed, it was asterial.

sumed that the meats had arrived at their The case of Vance v. W. A. Vandercool destination within the state and been delivCo. 170 U. S. 438, 42 L. ed. 1100, 18 Sup. ered to their consignee, and that the inspecCt. Rep. 674, so strongly relied upon in the tion, not being a bona fide one, was an unopinion of the court, seems to me to have lawful discrimination against interstate little or no bearing on this feature of the commerce. So in the subsequent case of case, and tends rather to support the theory Brimmer v. Rebman, 138 U. S. 78, 34 L. ed. that the Wilson act had nothing to do with 862, 3 Inters. Com. Rep. 485, 11 Sup. Ct. the question of inspection. The case turned Rep. 213, a law of Virginia provided that upon the power of the consignee of liquors meat should not be sold from animals to receive them for his own use within the slaughtered 100 miles or more from the state of South Carolina, as well as the place where offered for sale, unless previ. power to sell them in the original unbroken ously inspected by local inspectors. The packages as imported, to citizens of South act was held to be void as in restraint of Carolina. It was held, in substance, that commerce between the states, and as imposthe consignee had the constitutional right ing a tax upon the products of other states. to receive them for his own use without re- Both of these acts, as does the act of Misgard to the state laws, but that under the souri in question, provided against the sale Wilson act he could no longer assert a right of uninspected merchandise, and this court to sell them in original packages in defiance held, quite irrespective of other consideraof the state laws. It was said that, al- tions, that the act was void. To the same though the state law permitted the sale of effect is Walling v. Michigan, 116 U. S. 446, liquors subject to particular restrictions and 29 L. ed. 691, 6 Sup. Ct. Rep. 454. upon certain enumerated conditions, it did For the reasons already given, I think the not follow that the law was not a manifes-act in this case is void as an inspection law, tation of the police powers of the state. and an illegal interference with interstate The case, as do all others in which the Wil-commerce, since the assumed inspection preson act has been construed, relates to the ceded the arrival of the liquors within the power to sell, and not to the power to in- state as a constituent part of its general spect. I have no criticism to make upon

property. the extract from that opinion, particularly

The consequences of this decision seem to when taken in connection with the follow- in the assumed exercise of police powers,

me extremely serious.

If the states may, ing extract from Scott v. Donald, 165 U. S. enact inspection lawś, which are not such 58, 41 L. ed. 632, 17 Sup. Ct. Rep. 265, also in fact, and thereby indirectly impose a revcited with apparent approval in the Vander- enue tax on liquors, it is difficult to see any cook Case: “The question whether a given limit to this power of taxation, or why it state law is a lawful exercise of the police may not be applied to any other articles power is still open, and must remain open, brought within the state, and the cases of to this court. Such a law may forbid en- Minnesota v. Barber, 136 U. S. 313, 34 L tirely the manufacture and sale of intoxi- ed. 455, 3 Inters. Com. Rep. 185, 10 Sup. Ct. cating liquors and be valid.

Or, it may Rep. 862, and Brimmer v. Rebman, 138 U. provide equal regulations for the inspection s. 78, 34 L. ed. 862, 3 Inters. Com. Rep. and sale of all domestic and imported 485, 11 Sup. Ct. Rep. 213, be practically

| liquors and be valid.

But the state cannot, overruled. The Wilson act does not give under the congressional legislation referred the legislature any greater authority with to, establish a system which, in effect, dis- respect to the inspection of liquors than criminates between interstate and domestic with respect to other imported articles, and,

V.

as already observed, it leaves the question CROSS APPEALS from the Circuit Court of inspection

of the United for the Wilson act receive its natural applica-trict of Kentucky to review a decree which tion,—that is, of meeting the exigency cre- enjoined the collection of certain taxes on ated by our decision in Leisy v. Hardin, and the shares of capital stock of a national enabling the states to enforce their prohib- bank, and refused to enjoin taxes of other itory liquor laws upon the arrival of the years. Affirmed. liquor within the state, as we have re- See same case below, 103 Fed. 523, 129 peatedly held,—the law has a definite and Fed. 792. distinct value, and is readily understood. I am authorized to state that the CHIEF

Statement by Mr. Justice Day: JUSTICE, Mr. Justice Brewer, and Mr. Jus

This case was here upon a former appeal, tice Day concur in this dissent.

which was dismissed for want of final decree in the court below. Covington v. Covington

First Nat. Bank, 185 U. S. 270, 46 L. ed. (198 U. S. 100)

306, 22 Sup. Ct. Rep. 645. CITY OF COVINGTON, Kentucky, and The original action was brought to enjoin

John N. Middendorf, Assessor of the City the assessment or collection of taxes on cerof Covington, Kentucky, Appts.,

tain shares of capital stock of the First

National Bank of Covington for the years FIRST NATIONAL BANK OF COVING- from 1893 to 1900, inclusive, and to enjoin TON, Kentucky. (No. 113.)

the arrest of the president and cashier of the bank for not listing such shares, and for

a decree adjudicating the same not liable FIRST NATIONAL BANK OF COVING- to taxation up to the time of the expiration TON, Kentucky, Appt.,

of the charter of the bank on November 17,

1904. CITY OF COVINGTON, Kentucky, and John upon are that, by reason of the acceptance

The principal grounds alleged and relied N. Middendorf, Assessor of the City of of the terms of the act of the general assemCovington, Kentucky. (No. 114.)

bly of Kentucky, passed in 1886, known as

the Hewitt law, an irrevocable contract had Judgment—conclusiveness as between Fed

been made between the bank and the state, eral and state courts—state taxation of whereby the former was to pay to the state national banks—discrimination.

taxes at a certain rate on its stock, sur1. An adjudication of a state court that a bank plus, and undivided profits, which, when

has a contract exemption from taxation on its paid, were to be in full of all other state, capital stock is not res judicata in the Fed county, or municipal taxes, except those eral courts as tò taxes for years other than levied on the bank's real estate.

It was the one directly involved in the judgment, averred that complainant had regularly where, by the settled law of the state, an ad- paid such taxes up to and including those judication in respect of taxes for one year

That the fact that the cannot be pleaded as an estoppel in suits in- due July 1, 1900. volving taxes of other years.

bank had such irrevocable contract had been 2. The retroactive provision of Ky. act March adjudicated and finally determined by a de

21, 1900, relating solely to national banks, by cision in the court of appeals of Kentucky which such banks are charged with a liability in a litigation wherein the state and the for taxes for past years on their capital stock, whether held within or without the state, and city of Covington and the bank were parties. are subjected to a penalty in addition for de- The bill further set up that an attempt was linquency, operates

discrimination being made to compel the complainant to against such banks, prohibited by U. S. Rev. list for taxation its shares of stock under Stat. § 5219, (U. S. Comp. Stat. 1901, p. 3502), an act of the state of Kentucky, passed where, until the passage of that act, national banks were not required to return for taxa: March 21, 1900 (Session Acts 1900, p. 65). tion shares of their capital stock held out. The act under which the taxes were assessed side of the state.

is given in the margin of the opinion in the 8. A discrimination against national banks, for- case of Covington v. First Nat. Bank, 185

bidden by U. S. Rev. Stat. § 5219, does not U. S. 270, 46 L. ed. 906, 22 Sup. Ct. Rep. necessarily result from the adoption by the state of a different method of taxation with 645, and for convenience of reference is also reference to national banks from that it has inserted in the margin here.t It was also adopted for state banks.

s“An Act Relating to the Taxation of the

Shares of Stock of National Banks. [Nos. 113, 114.]

"Whereas, the Supreme Court of the United

States has lately decided that article three Argued January 5, 1905. Decided April 17, (3), chapter one hundred and three (103), of 1905.

as

a