The Constitution of the United States of America: Analysis and Interpretation Part 32

Definition

At the time the Const.i.tution was adopted, many persons understood the terms _ex post facto_ laws, to "embrace all retrospective laws, or laws governing or controlling past transactions, whether * * * of a civil or a criminal nature."[1470] But in the early case of Calder _v._ Bull,[1471] the Supreme Court decided that the phrase, as used in the Const.i.tution, applies only to penal and criminal statutes. But although it is inapplicable to retroactive legislation of any other kind,[1472]

the const.i.tutional prohibition may not be evaded by giving a civil form to a measure which is essentially criminal.[1473] Every law which makes criminal an act which was innocent when done, or which inflicts a greater punishment than the law annexed to the crime when committed, is an _ex post facto_ law within the prohibition of the Const.i.tution.[1474]

A prosecution under a temporary statute which was extended before the date originally set for its expiration does not offend this provision even though it is inst.i.tuted subsequent to the extension of the statute's duration for a violation committed prior thereto.[1475] Since this provision has no application to crimes committed outside the jurisdiction of the United States against the laws of a foreign country, it is immaterial in extradition proceedings whether the foreign law is _ex post facto_ or not.[1476]

What Const.i.tutes Punishment

An act of Congress which prescribed as a qualification for practice before the federal courts an oath that the attorney had not partic.i.p.ated in the Rebellion was found unconst.i.tutional since it operated as a punishment for past acts.[1477] But a statute which denied to polygamists the right to vote in a territorial election, was upheld even as applied to a person who had not practiced polygamy since the act was pa.s.sed, because the law did not operate as an additional penalty for the offense of polygamy but merely defined it as a disqualification of a voter.[1478] A deportation law authorizing the Secretary of Labor to expel aliens for criminal acts committed before its pa.s.sage is not _ex post facto_ since deportation is not a punishment.[1479] Likewise an act permitting the cancellation of naturalization certificates obtained by fraud prior to the pa.s.sage of the law was held not to impose a punishment but simply to deprive the alien of his ill-gotten privileges.[1480]

Change in Place or Mode of Trial

A change of the place of trial of an alleged offense after its commission, is not an _ex post facto_ law. If no place of trial was provided when the offense was committed, Congress may designate the place of trial thereafter.[1481] A law which alters the rule of evidence to permit a person to be convicted upon less or different evidence than was required when the offense was committed is invalid,[1482] but a statute which simply enlarges the cla.s.s of persons who may be competent to testify in criminal cases is not _ex post facto_ as applied to a prosecution for a crime committed prior to its pa.s.sage.[1483]

Clause 4. No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

DIRECT TAXES

The Hylton Case

The crucial problem under this section is to distinguish "direct" from other taxes. In its opinion in Pollock _v._ Farmers' Loan and Trust Co., we find the Court declaring: "It is apparent * * * that the distinction between direct and indirect taxation was well understood by the framers of the Const.i.tution and those who adopted it."[1484] Against this confident dictum may be set the following brief excerpt from Madison's Notes on the Convention: "Mr. King asked what was the precise meaning of _direct_ taxation? No one answered."[1485] The first case to come before the Court on this issue was Hylton _v._ United States,[1486]

which was decided early in 1796. Congress had levied, according to the rule of uniformity, a specific tax upon all carriages, for the conveyance of persons, which shall be kept by, or for any person, for his own use, or to be let out for hire, or for the conveying of pa.s.sengers. In a fict.i.tious statement of facts, it was stipulated that the carriages involved in the case were kept exclusively for the personal use of the owner and not for hire. The princ.i.p.al argument for the const.i.tutionality of the measure was made by Hamilton, who treated it as an "excise tax,"[1487] while Madison both on the floors of Congress and in correspondence attacked it as "direct" and so void, inasmuch as it was levied without apportionment.[1488] The Court, taking the position that the direct tax clause const.i.tuted in practical operation an exception to the general taxing powers of Congress, held that no tax ought to be cla.s.sified as "direct" which could not be conveniently apportioned, and on this basis sustained the tax on carriages as one on their "use" and therefore an "excise." Moreover, each of the judges advanced the opinion that the direct tax clause should be restricted to capitation taxes and taxes on land, or that at most, it might cover a general tax on the aggregate or ma.s.s of things which generally pervade all the States, especially if an a.s.sessment should intervene; while Justice Paterson, who had been a member of the Federal Convention, testified to his recollection that the princ.i.p.al purpose of the provision had been to allay the fear of the Southern States lest their Negroes and lands should be subjected to a specific tax.[1489]

From the Hylton to the Pollock Case

The result of the Hylton case was not challenged until after the Civil War. A number of the taxes imposed to meet the demands of that war were a.s.sailed during the postwar period as direct taxes, but without result.

The Court sustained successively as "excises" or "duties," a tax on an insurance company's receipts for premiums and a.s.sessments;[1490] a tax on the circulating notes of State banks,[1491] an inheritance tax on real estate,[1492] and finally a general tax on incomes.[1493] In the last case, the Court took pains to state that it regarded the term "direct taxes" as having acquired a definite and fixed meaning-to-wit, capitation taxes, and taxes on hand.[1494] Then, almost one hundred years after the Hylton case, the famous case of Pollock _v._ Farmers'

Loan and Trust Company[1495] arose under the Income Tax Act of 1894.[1496] Undertaking to correct "a century of error" the Court held, by a vote of five-to-four, that a tax on income from property was a direct tax within the meaning of the Const.i.tution and hence void because not apportioned according to the census.

Restriction of the Pollock Decision

The Pollock decision encouraged taxpayers to challenge the right of Congress to levy by the rule of uniformity numerous taxes which had always been reckoned to be excises. But the Court evinced a strong reluctance to extend the doctrine to such exactions. Purporting to distinguish taxes levied "because of ownership" or "upon property as such" from those laid upon "privileges,"[1497] it sustained as "excises"

a tax on sales on business exchanges;[1498] a succession tax which was construed to fall on the recipients of the property transmitted, rather than on the estate of the decedent,[1499] and a tax on manufactured tobacco in the hands of a dealer, after an excise tax had been paid by the manufacturer.[1500] Again, in Thomas _v._ United States,[1501] the validity of a stamp tax on sales of stock certificates was sustained on the basis of a definition of "duties, imposts and excises." These terms, according to the Chief Justice, "were used comprehensively to cover customs and excise duties imposed on importation, consumption, manufacture and sale of certain commodities, privileges, particular business transactions, vocations, occupations and the like."[1502] On the same day it ruled, in Spreckels Sugar Refining Co. _v._ McClain,[1503] that an exaction denominated a special excise tax imposed on the business of refining sugar and measured by the gross receipts thereof, was in truth an excise and hence properly levied by the rule of uniformity. The lesson of Flint _v._ Stone Tracy Co.[1504] is the same.

Here what was in form an income tax was sustained as a tax on the privilege of doing business as a corporation, the value of the privilege being measured by the income, including income from investments.

Similarly, in Stanton _v._ Baltic Mining Co.[1505] a tax on the annual production of mines was held to be "independently of the effect of the operation of the Sixteenth Amendment * * * not a tax upon property as such because of its ownership, but a true excise levied on the results of the business of carrying on mining operations."[1506]

A convincing demonstration of the extent to which the Pollock decision had been whittled down by the time the Sixteenth Amendment was adopted is found in Billings _v._ United States.[1507] In challenging an annual tax a.s.sessed for the year 1909 on the use of foreign built yachts--a levy not distinguishable in substance from the carriage tax involved in the Hylton case as construed by the Supreme Court-counsel did not even suggest that the tax should be cla.s.sed as a direct tax. Instead, he based his argument that the exaction const.i.tuted a taking of property without due process of law upon the premise that it was an excise, and the Supreme Court disposed of the case upon the same a.s.sumption.

In 1921 the Court cast aside the distinction drawn in Knowlton _v._ Moore between the right to transmit property on the one hand and the privilege of receiving it on the other, and sustained an estate tax as an excise. "Upon this point" wrote Justice Holmes for a unanimous court, "a page of history is worth a volume of logic."[1508] This proposition being established, the Court has had no difficulty in deciding that the inclusion in the computation of the estate tax of property held as joint tenants,[1509] or as tenants by the entirety,[1510] or the entire value of community property owned by husband and wife,[1511] or the proceeds of insurance upon the life of the decedent,[1512] did not amount to direct taxation of such property. Similarly it upheld a graduated tax on gifts as an excise, saying that it was "a tax laid only upon the exercise of a single one of those powers incident to ownership, the power to give the property owned to another."[1513] In vain did Justice Sutherland, speaking for himself and two a.s.sociates, urge that "the right to give away one's property is as fundamental as the right to sell it or, indeed, to possess it."[1514]

Miscellaneous

The power of Congress to levy direct taxes is not confined to the States which are represented in that body. Such a tax may be levied in proportion to population in the District of Columbia.[1515] A penalty imposed for nonpayment of a direct tax is not a part of the tax itself and hence is not subject to the rule of apportionment. Accordingly, the Supreme Court sustained the penalty of fifty percent which Congress exacted for default in the payment of the direct tax on land in the aggregate amount of twenty million dollars which was levied and apportioned among the States during the Civil War.[1516]

Clause 5. No Tax or Duty shall be laid on Articles exported from any State.

TAXES ON EXPORTS

This prohibition applies only to the imposition of duties on goods by reason of exportation.[1517] The word "export" signifies goods exported to a foreign country, not to an unincorporated territory of the United States.[1518] A general tax laid on all property alike, including that intended for export, is not within the prohibition, if it is not levied on goods in course of exportation nor because of their intended exportation.[1519] Where the sale to a commission merchant for a foreign consignee was consummated by delivery of the goods to an exporting carrier, the sale was held to be a step in the exportation and hence exempt from a general tax on sales of such commodity.[1520] The giving of a bond for exportation of distilled liquor is not the commencement of exportation so as to exempt from an excise tax spirits which were not exported pursuant to such bond.[1521] A tax on the income of a corporation derived from its export trade is not a tax on "articles exported" within the meaning of the Const.i.tution.[1522]

Stamp Taxes

A stamp tax imposed on foreign bills of lading,[1523] charter parties,[1524] or marine insurance policies,[1525] is in effect a tax or duty upon exports, and so void; but an act requiring the stamping of all packages of tobacco intended for export in order to prevent fraud was held not to be forbidden as a tax on exports.[1526]

Clause 6. No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay duties in another.

THE "NO PREFERENCE" CLAUSE

The limitations imposed by this section were designed to prevent preferences as between ports on account of their location in different States. They do not forbid such discriminations as between individual ports. Acting under the commerce clause, Congress may do many things which benefit particular ports and which incidentally result to the disadvantage of other ports in the same or neighboring States. It may establish ports of entry, erect and operate lighthouses, improve rivers and harbors, and provide structures for the convenient and economical handling of traffic.[1527] A rate order of the Interstate Commerce Commission which allowed an additional charge to be made for ferrying traffic across the Mississippi to cities on the east bank of the river was sustained over the objection that it gave an unconst.i.tutional preference to ports in Texas.[1528] Although there were a few early intimations that this clause was applicable to the States as well as to Congress,[1529] the Supreme Court declared emphatically in 1886 that State legislation was unaffected by it.[1530] After more than a century the Court confirmed, over the objection that this clause was offended, the power which the First Congress had exercised[1531] in sanctioning the continued supervision and regulation of pilots by the States.[1532]

Alaska is not deemed to be a State within the meaning of this clause.[1533]

Clause 7. No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

APPROPRIATIONS

This clause is a limitation upon the power of the executive department and does not restrict Congress in appropriating moneys in the Treasury.[1534] That body may recognize and pay a claim of an equitable, moral or honorary nature. Where it directs a specific sum to be paid to a certain person, neither the Secretary of the Treasury nor any court has discretion to determine whether the person is ent.i.tled to receive it.[1535] In making appropriations to pay claims arising out of the Civil War, the Court held that it was lawful to provide that certain persons, i.e., those who had aided the rebellion, should not be paid out of the funds made available by the general appropriation, but that such persons should seek relief from Congress.[1536] The Court has also recognized that Congress has a wide discretion as to the extent to which it shall prescribe details of expenditures for which it appropriates funds and has approved the frequent practice of making general appropriations of large amounts to be allotted and expended as directed by designated government agencies. Citing as an example the act of June 17, 1902[1537] where all moneys received from the sale and disposal of public lands in a large number of States and territories were set aside as a special fund to be expended under the direction of the Secretary of the Interior upon such projects as he determined to be practicable and advisable for the reclamation of arid and semi-arid lands within those States and territories, the Court declared: "The const.i.tutionality of this delegation of authority has never been seriously questioned."[1538]

PAYMENT OF CLAIMS

No officer of the Federal Government is authorized to pay a debt due from the United States, whether reduced to judgment or not, without an appropriation for that purpose.[1539] After the Civil War, a number of controversies arose out of attempts by Congress to restrict the payment of the claims of persons who had aided the Rebellion, but had thereafter received a pardon from the President. The Supreme Court held that Congress could not prescribe the evidentiary effect of a pardon in a proceeding in the Court of Claims for property confiscated during the Civil War,[1540] but that where the confiscated property had been sold and the proceeds paid into the Treasury, a pardon did not of its own force authorize the restoration of such proceeds.[1541] It was within the competence of Congress to declare that the amounts due to persons thus pardoned should not be paid out of the Treasury and that no general appropriation should extend to their claims.[1542]

Clause 8. No t.i.tle of n.o.bility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or t.i.tle, of any kind whatever, from any King, Prince, or foreign State.

In 1871 the Attorney General of the United States ruled that: "A minister of the United States abroad is not prohibited by the Const.i.tution from rendering a friendly service to a foreign power, even that of negotiating a treaty for it, provided he does not become an officer of that power, but the acceptance of a formal commission, as minister plenipotentiary, creates an official relation between the individual thus commissioned and the government which in this way accredits him as its representative, which is prohibited by this clause of the Const.i.tution."[1543]

Section 10. No State Shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pa.s.s any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any t.i.tle of n.o.bility.

Powers Denied to the States