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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 in lieu thereof. Indeed, so perfunctory is this inspection that it appears to have awakened a suspicion in the court below "that the legislature was more concerned in collecting fees to swell the exchequer of the state, than in the protection of the people | Teleg. Cable Co. v. Taylor, 192 U. S. 64, 48 who might drink beer."

an interstate business which are so far in excess of the expenses of such inspection as to make it plain that they were adopted, not as a means of paying such expenses, but as a means of raising revenue.

The latest of these is that of the Postal

L. ed. 342, 24 Sup. Ct. Rep. 208, wherein a license fee was imposed upon the telegraph company which largely exceeded the entire cost to the company of maintaining its line, including repairs, reconstruction, costs of labor and of material, and traveling expenses of employees, and all expenses incurred by it in a careful inspection of its poles and wires. The ordinance was defended as a police regulation. It was argued that the question of revenue was not its object, but that the defendant had the

The obvious inefficacy of the inspection has an important bearing upon the more serious objection to this act, in that the fees for inspection bear no just relation to the expense, and make it evident that the law was not passed in a bona fide exercise of the police powers of the state, but as a convenient method of increasing the public revenues. Section 8 provides for an inspection fee of one cent per gallon and two cents for labeling each package containing 8 gallons, 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 required to be paid into the state treasury, and pass to the general revenue fund of the state. The inspectors cannot even deduct their salaries from the fees, but are paid by a distinct appropriation for that purpose. It is conceded in the stipulation of facts that the entire expenditure authorized on account of actual inspection amounts to $12,500, and that the inspection fees annually collected amount to $350,000, or $337,500 in excess of the costs for inspection, and that the fees chargeable under said act upon the malt liquors manufactured out of and brought into the state from other states and from foreign countries, for sale in Missouri, exceed the total authorized cost for inspection, approximately, $60,000 a year.

In this connection it is pertinent to notice that the bill in question, when first introduced in the house was entitled "An Act Creating the Office of Inspector of Beer and Malt Liquors, and Providing for the Creation of a Fund for the Construction of Roads and Highways;" and as originally introduced into the senate contained the words "providing for the increase of the general revenue fund.” In the bill as passed these words were stricken out, and the words "providing for the inspection of beers and malt liquors manufactured and sold in this state" inserted in their place. Notwithstanding these changes in the title of the bill as finally passed, it is evident that the main object was to increase the general fund of the state by the amount of the inspection fees, less the expenses of the inspection, and that the inspection was really an incident to, or an excuse for, the revenue to be derived from the act. These facts are a cogent argument in favor of applying to this case the rule established in a number of recent

wires to protect the lives of its citizens. The court found the borough to have been sparsely settled; that it had done nothing in the way of inspection, and had incurred no liability therefor; that the fee was twenty times as large as was necessary to make the most careful and efficient inspection that could have been made. The ordinance was adjudged to be invalid, the court saying: "To uphold it in such a case as this is to say that it may be passed for one purpose and used for another; passed as a police inspection measure, and used for the purpose of raising revenue; that the enactment as a police measure may be used as a mere subterfuge for the purpose of raising revenue, and yet, because it is said to be an inspection measure, the court must take it as such and hold it valid, although resulting in a rate of taxation which, if carried out throughout the country, would bankrupt the company, were it added to the other taxes properly assessed for revenue, and paid by the company."

In previous cases arising under a similar state of facts the ordinances had been upheld as within the police power of the municipality (St. Louis v. Western U. Teleg. Co. 148 U. S. 92, 37 L. ed. 380, 13 Sup. Ct. Rep. 485, 149 U. S. 465, 37 L. ed. 810, 13 Sup. Ct. Rep. 990; Western U. Teleg. Co. v. New Hope, 187 U. S. 419, 47 L. ed. 240, 23 Sup. Ct. Rep. 204), in which the ordinances were sustained upon the ground that the fees were not so excessive as to justify the inference that they were not imposed as a bona fide exercise of the police powers, and in Atlantic & P. Teleg. Co. v. Philadelphia, 190 U. S. 160, 47 L. ed. 995, 23 Sup. Ct. Rep. 817, in which the question of reasonableness was held to have been properly 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.

The facts of this case show that the inspection, as applied to malt liquors manufactured out of the state, was purely perfunctory, and accomplished nothing for the protection of its citizens, but that the fee derivable therefrom was thirty times the actual cost of such inspection, even when applied to liquors manufactured within the state. A disproportion so gross can only be accounted for upon the theory that the act was intended for the purposes of revenue, and not for inspection.

It is insisted, however, that, as the supreme court of the state has in the case of State v. Bixman, 162 Mo. 1, 62 S. W. 828, by a majority vote, upheld the constitutionality of the act as an inspection law, applied to beer of domestic manufacture, and not as an act for raising revenue, we are bound by this definition, and are precluded from considering it in any other light than that of an inspection fee or license tax. But a question of constitutional law cannot be answered by a definition. While, as we have frequently said, we adopt the interpretation of the statute of a state affixed to it by the court of last resort thereof, we still feel at liberty, in accepting such interpretation, to determine for ourselves whether the act is a bona fide exercise of the police power of the state, and not intended merely as an excuse for the taxation of interstate

commerce.

As was said by this court in Mugler v. Kansas, 123 U. S. 623, 661, 31 L. ed. 205, 210, 8 Sup. Ct. Rep. 273, 297: "If, therefore, a statute purporting to have been enacted to protect the public health, the public morals, or the public safety, has no real or substantial relation to those objects, or is a palpable invasion of rights secured by the fundamental law, it is the duty of the courts to so adjudge, and thereby give effect to the Constitution."

In Hannibal & St. J. R. Co. v. Husen, 95 U. S. 465, 24 L. ed. 527, the validity of the act of the state of Missouri, which prohibited the introduction into the state of any Texas or Mexican cattle between the months of March and November of each year, was considered. It was insisted that the law was valid as a quarantine or inspection law, as its purpose was to prevent the introduction of cattle afflicted with contagious diseases. But the court pointed out that no provision was made for the actual inspection of the cattle, so as to secure the

And in Reid v. Colorado, 187 U. S. 137, 150, 47 L. ed. 108, 115, 23 Sup. Ct. Rep. 92, 97, this court said:

"Certain principles are well settled by the former decisions of this court. One is that the purpose of a statute, in whatever language it may be framed, must be determined by its natural and reasonable effect. Henderson v. New York (Henderson v. Wickham) 92 U. S. 259, 268, 23 L. ed. 543, 548. Another is that a state may not, by its police regulations, whatever their object, unnecessarily burden foreign or interstate commerce. Hannibal & St. J. R. Co. v. Husen, 95 U. S. 465, 472, 24 L. ed. 527, 530. Again, the acknowledged police powers of a state cannot legitimately be exerted so as to defeat or impair a right secured by the national Constitution, any more than to defeat or impair a statute passed by Congress in pursuance of the powers granted to it. Gibbons v. Ogden, 9 Wheat. 1, 210, 6 L. ed. 23, 73; Missouri, K. & T. R. Co. v. Haber, 169 U. S. 613, 625, 626, 42 L. ed. 878, 882, 18 Sup. Ct. Rep. 488, and authorities cited."

The reasonableness of the law as compared with the cost of inspection is made the test of the validity of the law in Patapsco Guano Co. v. North Carolina Bd. of Agri. 171 U. S. 345, 43 L. ed. 191, 18 Sup. Ct. Rep. 862; Willis v. Standard Oil Co. 50 Minn. 290, 52 N. W. 652.

But, treating it as an inspection law, the question remains whether, as applied to beer manufactured in other states, it is a bona fide exercise of the police powers of the state to protect the health of its citizens, and, for the reasons already given, we are of opinion it is not. The fact that the law may have been valid as applied to liquors manufactured within the state does not remove the difficulty, as the Wilson act only applies to the police powers of the state to the same extent and in the same manner as though the liquors had been produced within the state. If foreign liquors were subjected to the same inspection as domestic liquors there would be much force in the contention that the inspection was covered by the terms of the Wilson act; but as in this case domestic liquors were actually inspected, and foreign liquors were not inspected at all, the act does not apply. The object of the act is merely to place foreign and domestic liquors on the same footing as respects the police powers of the state. The inference is drawn in the opinion of 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 other words, that they have passed wholly beyond the Federal control as subjects of interstate commerce.

The Wilson act was passed in consequence of our decision in Leisy v. Hardin, 135 U. S. 100, 34 L. ed. 128, 3 Inters. Com. Rep. 36, 10 Sup. Ct. Rep. 681, to the effect that a state statute prohibiting the sale of liquors was unconstitutional, as applied to a sale by the importer from another state in original packages. That case was put upon the ground that liquors had always been recognized by the commercial world as subjects of exchange, barter, and traffic, and that the state could not prohibit their importation from abroad or their sale by the importer. To meet this exigency, and to enlarge the powers of the state with respect to intoxicating liquors, the Wilson act was passed, declaring that upon their arrival in the state they should be subject to the police powers of the state to the same extent and in the same manner as though such liquors had been produced within such state. The constitutionality of this act was sustained in Rahrer's Case, 140 U. S. 545, 35 L. ed. 572, 11 Sup. Ct. Rep. 865, although in the subsequent case of Rhodes v. Iowa, 170 U. S. 412, 42 L. ed. 1088, 18 Sup. Ct. Rep. 664, it was held that the Wilson act did not operate to attach to liquors the prohibitory legislation of the state at the moment they reached the state line, or before the completion of the act of transportation by their arrival at their point of destination and delivery to the consignee.

The primary, if not the sole, object of the Wilson act was to attach the prohibitory laws of the state as a police measure to liquors the moment they were delivered to the consignee, although they might still be in their original packages. The state was then at liberty to forbid their sale.

The act does not affect the right of inspection, since that right was one which existed wholly independent of the act, and had been applied and recognized ever since the case of New York v. Miln, 11 Pet. 102, 9 L. ed. 648, as one of the ordinary police powers of the state, which it was at liberty to exercise quite irrespective of any Federal statute for the protection of the health of its citizens. The Wilson act neither creates, adds to, takes from, nor affects, the police powers of the state with respect to inspection in any particular. The power of the state to enact inspection laws, provided that such laws are intended in good faith for the protection of the people, and not as a covert means for raising revenue by exorbitant charges, remains precisely as it was before the act was passed. In the

requiring the masters of vessels arriving from foreign ports to report to the city authorities the names, etc., of his passengers, was upheld as a proper exercise of the police power; though subsequently, in the Passenger Cases (Smith v. Turner) 7 How. 283, 12 L. ed. 702, a similar law, requiring the masters of vessels to pay a certain sum on account of every passenger brought from a foreign country into the state, was held to be inoperative, although passed under the general denomination of a health law. was said that, although the amount of the tax was small, it might have been increased so as to become prohibitory at the discretion of the legislature; and the fact that the tax was applied to the maintenance of a marine hospital, and to the reformation of juvenile delinquents, showed that it could not be sustained as an exercise of the police power.

It

While we may concede that the liquors in this case had arrived at their destination, it does not follow that they were subject to any law which the state chose to pass in an assumed exercise of the police power. The state has an undoubted right to inspect all goods arriving therein, but it does not follow that it has the right to subject them to an inspection which is no inspection at all, and charge them with a fee out of all proportion to the costs of even a proper inspection, and call it an exercise of the police power. Though these liquors had arrived at their destination, the state provided, by § 5 of the act, that they should be inspected before offering them for sale and before they had been commingled with the general mass of property. The fact that they had been delivered to the consignee was of no materiality, since the act which the state required should be done was one which applied a condition precedent to their admission to the state for commercial purposes. Until this act was performed, they were protected against an unlawful interference. This inspection might have taken place at the state line, but, for the convenience of the state officers, as well as that of the brewers, it was postponed until the arrival at their destination, as is frequently the case in foreign countries, where imported goods are not examined at the frontier, but at Paris or London, upon their arrival there; but they are not legally entered until such examination takes place. To say that their character as interstate. commerce existed at the state line, but had been lost upon their arrival at their place of destination before they had shown themselves entitled to enter the state, is to apply a test wholly irrelevant under the circumstances. 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 while in transit from their point of shipment to their delivery to the consignee. The vital question is whether the inspection was applied at a time prior to their legal importation into the state as a commercial article. If it were, and the inspection were a lawful one, it is a proper regulation of interstate commerce; but, if the inspection were not a bona fide exercise of the police power, it was an unlawful interference with such commerce. Whether the inspection was made at the state line, or at the destination of the goods, is absolutely immaterial.

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But we are not without authority upon this point. In Minnesota v. Barber, 136 U. S. 313, 34 L. ed. 455, 3 Inters. Com. Rep. 185, 10 Sup. Ct. Rep. 862, a law of Minnesota, as in this case, prohibited the sale of fresh meats except after an inspection, and was sought to be sustained as a law for the protection of the health of the inhabitants. The act required the inspection to take place within twenty-four hours before the animals were slaughtered, and was held to be void as a law intended to be applied only to cattle slaughtered outside the state. While the question was not discussed, it was assumed that the meats had arrived at their The case of Vance v. W. A. Vandercook 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 previpower 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 righting a tax upon the products of other states. to receive them for his own use without regard to the state laws, but that under the Wilson act he could no longer assert a right to sell them in original packages in defiance of the state laws. It was said that, although the state law permitted the sale of liquors subject to particular restrictions and 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 when taken in connection with the follow

ing extract from Scott v. Donald, 165 U. S. 58, 41 L. ed. 632, 17 Sup. Ct. Rep. 265, also cited with apparent approval in the Vandercook Case: "The question whether a given state law is a lawful exercise of the police power is still open, and must remain open, to this court. Such a law may forbid entirely the manufacture and sale of intoxicating liquors and be valid. Or, it may provide equal regulations for the inspection and sale of all domestic and imported liquors and be valid. But the state cannot, under the congressional legislation referred to, establish a system which, in effect, discriminates between interstate and domestic 25 S. C.-36.

Both of these acts, as does the act of Missouri in question, provided against the sale of uninspected merchandise, and this court held, quite irrespective of other considerations, that the act was void. To the same effect is Walling v. Michigan, 116 U. S. 446, 29 L. ed. 691, 6 Sup. Ct. Rep. 454.

The consequences of this decision seem to me extremely serious. If the states may, in the assumed exercise of police powers, in fact, and thereby indirectly impose a revenact inspection laws, which are not such enue tax on liquors, it is difficult to see any limit to this power of taxation, or why it may not be applied to any other articles brought within the state, and the cases of Minnesota v. Barber, 136 U. S. 313, 34 L ed. 455, 3 Inters. Com. Rep. 185, 10 Sup. Ct. Rep. 862, and Brimmer v. Rebman, 138 U. S. 78, 34 L. ed. 862, 3 Inters. Com. Rep. 485, 11 Sup. Ct. Rep. 213, be practically overruled. The Wilson act does not give the legislature any greater authority with respect to the inspection of liquors than with respect to other imported articles, and,

as already observed, it leaves the question CE

ROSS APPEALS from the Circuit Court of the United States for the Eastern Dis

enjoined the collection of certain taxes on the shares of capital stock of a national bank, and refused to enjoin taxes of other years. Affirmed.

of inspection exactly where it found it. If the Wilson act receive its natural applica-trict of Kentucky to review a decree which tion, that is, of meeting the exigency created by our decision in Leisy v. Hardin, and enabling the states to enforce their prohibitory liquor laws upon the arrival of the liquor within the state, as we have repeatedly held,-the law has a definite and distinct value, and is readily understood.

I am authorized to state that the CHIEF JUSTICE, Mr. Justice Brewer, and Mr. Justice Day concur in this dissent.

(198 U. S. 100)

CITY OF COVINGTON, Kentucky, and John N. Middendorf, Assessor of the City of Covington, Kentucky, Appts.,

υ.

FIRST NATIONAL BANK OF COVINGTON, Kentucky. (No. 113.)

FIRST NATIONAL BANK OF COVINGTON, Kentucky, Appt.,

บ.

CITY OF COVINGTON, Kentucky, and John N. Middendorf, Assessor of the City of Covington, Kentucky. (No. 114.) Judgment-conclusiveness as between Federal and state courts state taxation of

national banks-discrimination.

1. An adjudication of a state court that a bank has a contract exemption from taxation on its capital stock is not res judicata in the Federal courts as to taxes for years other than the one directly involved in the judgment, where, by the settled law of the state, an ad

Judication in respect of taxes for one year cannot be pleaded as an estoppel in suits involving taxes of other years.

2. The retroactive provision of Ky. act March 21, 1900, relating solely to national banks, by which such banks are charged with a liability for taxes for past years on their capital stock,

whether held within or without the state, and are subjected to a penalty in addition for delinquency, operates as a discrimination against such banks, prohibited by U. S. Rev. Stat. § 5219, (U. S. Comp. Stat. 1901, p. 3502), where, until the passage of that act, national banks were not required to return for taxation shares of their capital stock held outside of the state.

8. A discrimination against national banks, forbidden by U. S. Rev. Stat. § 5219, does not necessarily result from the adoption by the state of a different method of taxation with reference to national banks from that it has adopted for state banks.

[Nos. 113, 114.]

See same case below, 103 Fed. 523, 129 Fed. 792.

Statement by Mr. Justice Day:

This case was here upon a former appeal, 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. 906, 22 Sup. Ct. Rep. 645.

The original action was brought to enjoin the assessment or collection of taxes on certain shares of capital stock of the First National Bank of Covington for the years from 1893 to 1900, inclusive, and to enjoin the arrest of the president and cashier of the bank for not listing such shares, and for a decree adjudicating the same not liable to taxation up to the time of the expiration of the charter of the bank on November 17, 1904.

The principal grounds alleged and relied upon are that, by reason of the acceptance of the terms of the act of the general assembly of Kentucky, passed in 1886, known as the Hewitt law, an irrevocable contract had been made between the bank and the state, whereby the former was to pay to the state

taxes at a certain rate on its stock, surplus, and undivided profits, which, when paid, were to be in full of all other state, county, or municipal taxes, except those levied on the bank's real estate. It was averred that complainant had regularly paid such taxes up to and including those due July 1, 1900.

That the fact that the

bank had such irrevocable contract had been adjudicated and finally determined by a decision in the court of appeals of Kentucky in a litigation wherein the state and the city of Covington and the bank were parties. The bill further set up that an attempt was being made to compel the complainant to list for taxation its shares of stock under an act of the state of Kentucky, passed March 21, 1900 (Session Acts 1900, p. 65). The act under which the taxes were assessed is given in the margin of the opinion in the case of Covington v. First Nat. Bank, 185 U. S. 270, 46 L. ed. 906, 22 Sup. Ct. Rep. 645, and for convenience of reference is also inserted in the margin here.† It was also

"An Act Relating to the Taxation of the Shares of Stock of National Banks.

"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.

the acts of 1891, 1892, and 1893 is void and

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