Westel Woodbury Willoughby.

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Powers of control and administration in the field of their inter-
ests may be conferred upon workers' and economic councils.
The building up of the workers' and economic coxmcils, and the
definition of their relations and duties is made a definite duty
of the national legislative body.

The weal of a nation or even the success of a government
is not chiefly determined by the character of the constitution
which it may adopt. Very much depends upon other things.
The economic and social conditions are fundamental. The
national political psychology counts for much. Certainly
inherited political traditions, ingrained political habits and
methods, the strength and intelligence of a broadly based public
opinion are often decisive factors. And the presence or absence
of a wise and statesmanlike leadership may often be the con-
ditioning circumstance in determining the line of a nation's
progress. We in America are learning the fatuousness of relying
upon the principle of "a government of laws and not of men."
It is these elements in the situation in Germany which are most
diflScult to gauge. Political opinion is still largly amorphous,
and leadership is yet unestablished. Will a genuine faith in
democracy succeed in taking root in the minds and hearts of the
German people; or will they dumbly submit to the reestablish-
ment of an autocratic and oligarchical rule; or, maddened and



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52 THE AHERICAN POLITICAL SCIENCE BEVIEW

desperate in the full realization of the utter collapse and failure
of all their previously cherished ideals and principles of life, will
they fall under the dazzling spell of an incendiary bolshevism?
Who can say? And yet the adoption of a constitution which,
while far from perfect, still reflects so clear a conception of
fundamental needs and a political philosophy so moderate and
sane affords distinct hope and encouragement that the German
nation may emerge from the present situation a fit member of
the sisterhood of democratic states.



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CONSTITUTIONAL LAW IN 1918-1919. II

THE CONSTITUTIONAL DECISIONS OF THE SITPBEME COUBT OF THE
T7NITED STATES IN THE OCTOBER TEBM, 1918

THOMAS BEED POWEUj
Columbia Univernty

VI. TAXATION

Several of the cases already considered under the commerce clause
involved further questions imder the Fourteenth Amendment.
Georgia's misuse of the mileage ratio in applying the imit rule to the
taxation of wandering cars was foimd so arbitrary as to violate the
requirement of due process.^ The minority insisted that ''the case
presents no question of taxing a foreign corporation with respect to
personal property that never has come within the borders of the state."
This was not specifically denied by the majority who seem to base
their decision on excessive valuation of property within the jurisdiction
rather than on taxation of property outside the jurisdiction. Yet in
substance the case is one of taxing extra-state values though not extra-
state tangible objects.

Missouri's excessive fee for certificates authorizing the issue of bonds
secured by railroad property within the state, which was held an im-
constitutional regulation of interstate commerce," was alleged by
complainant to be a violation of the Fourteenth Amendment as well.
The opinion of the court did not pass on the due-process question, but
the cases cited imder the conimerce clause relied also on the Fourteenth
Amendment. The St. Louis tax on manufacturers, measured by the
amoimts received for the sale of goods produced within the city,
wherever such sales occurred, was held to be a tax on manufacturing
within the city and not on property or business transactions without
the state and therefore not obnoxious to the Fourteenth Amendment.'^

« Union Tank Line v. Wright, (1919) 249 U. S. 276, 39 Sup. Ct. 276, 13 Ameri-
can Political Science Review 614.

" Union Pacific R. Co. v. Public Service Commission, (1918) 248 U. S. 67, 39
Sup. Ct. 24, 13 American Political Science Review 611.

" American Mfg. Co. v. St. Louis, (1919) 260 U. S. 469, 39 Sup. Ct. 622, 13
American Political Science Review 612.

63



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54 THE AMERICAN POLITICAL SCIENCE REVIEW

In Mackay Telegraph & Cable Co. v. Little Rock^* a company
which was subjected to a license tax on poles located on a private right
of way thought it was denied the equal protection of the laws because
some of its competitors had not been similariy hit. But the court
thought that for all that appeared the alleged discrimination might be
fortuitous or temporary, and denied relief in the absence of ofiFers "to
show an arbitrary and intentionally unfair discrimination in the aji-
ministration of the ordinance" or that the circumstances of the several
companies and their telegraph lines were so much alike as to render
any discrimination in the application of the pole tax equivalent to a
denial of the equal protection of the laws."

The due-process claim advanced in Wells Fargo & Co. v. Nevada^'
was foimded on an allegation that the assessment complained of was
made without giving the taxpayer notice and an opportunity to be
• heard. It appeared, however, that under the Nevada procedure pay-
ment of the tax could not be enforced until after a judgment ob-
tained in judicial proceedings ''wherein process issues and an oppor-
tunity is afforded for a full hearing." In accordance with established
precedents, this was held to satisfy the requirements of due process.

Absence of notice and hearing was also complained of unsuccessfully
in three cases upholding special assessments. All were declared by
the court to be governed by the principle that "where the Legislature
fixes by law the area of a sewer district or the property which is to be as-
sessed, no advance notice to the property owner of such legislative action
is necessary in order to constitute due process of law." In each case the
municipality was found to possess legislative authority in the premises
so that the cases came within the general rule. This conclusiveness of
the legislative authority was limited to the determination of the dis-
trict benefited by the improvement. It was recognized that "the
question of distributing or apportioning the burden of the cost among
the particular property owners is another matter." Complaints
directed against the apportionment require separate notice.

Withnell v. Ruecking Construction Co.**^ involved the St. Louis com-
bination of foot-frontage and area rule which in an earlier case^^ had

" (1919) 260 U. S. 94, 39 Sup. Ct. 428, 13 American Political Science Review 613.

'» (1918) 248 U. S. 165, 39 Sup. Ct. 62, 13 American Political Science Review 613.

« (1919) 249 U. S. 63, 39 Sup. Ct. 200.

" Gast Realty Co. v. Schneider Granite Co., (1916) 240 U. S. 66, 36 Sup. Ct.
254, 12 American Political Science Review 451 . See the later case between the same
parties in Schneider Granite Co. v. Gast Realty Co., (1917) 245 U. S. 288, 38 Sup.
Ct. 125, 13 American Political Science Review 70.



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CONSTITUTIONAL LAW IN 1918-1919 56

been held inapplicable to the particular situation before the court.
The earlier case had, however, sustained the one-fourth part of the
assessment levied by the foot-frontage rule, and inasmuch as the
evidence showed that the assessment in the principal case reached by
applying the combination rule was less than what it would have been
if the total cost had been apportioned according to frontage, the
Supreme Court found itself unable to say that there had been any
abuse of power. The court declared that where the assessment is in
accordance with a legislative rule, ''no previous notice or preliminary
hearing as to the nature and extent of benefits" is necessary, and that
an attack on a method so prescribed "can only succeed if it has pro-
duced results .... palpably arbitrary or grossly unreasonable."

Similar principles were repeated in Hancock v. Muskogee" where the
cost of a sewer was assessed according to the area of the abutting lots,
Mr. Justice Pitney declaring that it is settled that "whether the entire
amount or a part only of the cost of a local improvement shall be im- *
posed as a special tax upon the property benefited, and whether the
tax shall be distributed upon a consideration of the particular benefit
to particular lots or apportioned according to their frontage upon the
streets, their values, or their area, is a matter of legislative discretion,
subject, of course, to judicial relief in cases of actual abuse of po^jer
or of substantial error in executing it, neither of which is here asserted."

The objection pressed most strongly in Mt. St. Mary's Cemetery
Associati6n v. Mullins" was that a cemetery was not benefited by a
sewer and therefore could not be included in a sewer district. The
association had litigated the issue unsuccessfully in the state courts,
and had been there given the hearings deemed sufficient to satisfy the
procedural requirements of due process. The only benefit referred to
by the Supreme Court in sustaining the assessment was the fact that
the sewer served to carry away surface water. It was remarked also
that there was nothing to show that "the cemetery would not have been
benefited as to sanitation as a result of the construction of the sewers."
Without discussion it was asserted that the case was not within the
principle of an earlier decision** which excluded high land from a
drainage district on the groimd that it could not be benefited by the
enterprise. The association contended further that the assessment

w (1919) 250 U. S. 464, 39 Sup. Ct. 528.
" (1919) 248 U. S. 501, 39 Sup. Ct. 173.

w Myles Salt Co. v. Drainage District, (1916) 239 U. S. 478, 36 Sup. Ct. 204,
12 AmeTican Political Science Review 451.



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56 THE AlfERICAN POLITICAL SCIENCE BEVIBW

should be reduced because half of its tract had been conveyed for
burial lots. The state court had held that only an easement and not
the fee had been conveyed and the Supreme Court held that the
qualified interest remaining in the association was sufficient to support
the assessment. The objection that complainant had been denied the
equal protection of the laws because not placed in a district by itself,
as some other cemeteries were, was rejected on the groimd that "the
record fails to show similarity of situation and conditions."

The remaining decision on the subject of state taxation had to do
with an Alabama statute which imposed an occupation tax on persons
and corporations engaged in construction work within the state, and
made the tax on those whose chief office was without the state four times
as large as that on those whose chief office was within the state. In
reply to the claim that this discriminated against citizens of other
states, the state court had said that such citizens might have their
chief office within the state and that citizens of the state might have
their chief office without the state. A similar position, it will be
recalled, had been taken by the Supreme Court during the 1918 term
in sustaining a statute restricting licenses for insurance brokers to
residents of the state. ^ In Chalker v. Birmingham & N. W. Ry.
Co.," however, the case now under consideration, Mr. Justice McRey-
nolds said that, as the chief office of an individual is commonly in the
state of which he is a citizen, the statute would practically discriminate
against citizens of other states. The decision declaring the tax invalid
was predicated on the privileges and immunities clause of article 4,
section 2, and not on the due-process clause of the Fourteenth Amend-
ment, so the case does not shake the rule that permits discrimination
against foreign corporations not engaged in interstate commerce or
in work for the national government. There are indications, however,
that the rule is no longer regarded with favor, and it would not be
siuT)rising if before long the Supreme Court materially modifies it.

In view of the increasing number of state income taxes, the inter-
pretation of the federal income tax law reached in De Ganay v.
Lederer^' is important for state as well as national taxation. In this
case the Supreme Court answered in the affirmative the following
question certified by the Circuit Court of Appeals:

•» La Tourette v. McMaster, (1919) 248 U. S. 465, 39 Sup. Ct. 160, 13 American
Political Science Review 627.

•• (1919) 249 U. S. 522, 39 Sup. Ct. 366. See 28 Yale Law Journal 824.
•^ (1919) 250 U. S. 376, 39 Sup. Ct. 524.



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CONSTITUTIONAL LAW IN 1918-1919 67

''If an alien non-resident owns stock, bonds, and mortgages secured
upon property in the United States or payable by persons or cor-
porations there domiciled, and if the income therefrom is collected for
and remitted to such non-resident by an agent domiciled in the United
States, and if the agent has physical possession of the certificates of
stock, the bonds and the mortgages, is such income subject to an
income tax under the Act of October 3, 1913?"

After reviewing the facts of the case, including the power possessed
by the agent to sell, assign, or transfer the securities and reinvest the
proceeds of sales, Mr. Justice Day declared: ''It is difficult to con-
ceive how property could be more completely localized in the United
States. There can be no question of the power of Congress to tax the
income from such securities." The case on its facts does not go beyond
those in which intangibles have been regarded as having what is c»EJled
a "business situs" in the place where an agent does an investment
business for his principal, and therefore warrants no inference that the
Supreme Court means to aUow a state to tax income paid to non-
residents except where it can tax to him the sources of that income.
The opinion, too, is careful to mention "the authority given to th€
local agent" as an important element in the case, but it.may be worth
notiQg that there is no declaration that such element is indispensable.

The so-called Harrison Narcotic Drug Act, passed by Congress on
December 17, 1914, came before the court in United States v. Dore-
mus^^ and was sustained by a vote of five to four. The act required all
dispensers of drugs to register with the collector of internal revenue and
to pay a tax of one dollar a year. Doremus had registered and paid the
tax but he had violated the further provision forbidding the sale of
drugs except in pursuance of a written order on a form issued by the
commissioner of internal revenue. Under the statute the person filling
the order was required to file it for the inspection of treasury agents.
There were exceptions in favor of physicians, but Doremus, though a
physician, did not bring himself within the exception. He contended
that the provisions which he violated had no fiscal piuT)ose but were
purely police measures and as such were beyond the powers delegated
to Congress and an encroachment on the reserved powers of the states.
The district court and Chief Justice White together with Justices
McKenna, Van Devanter and McRejmolds agreed with him; but

•• (1919) 240 U. S. 86, 39 Sup. Ct. 214. See 4 Cornell Law Quarterly 196, 32 Har-
vard Law Review 846, and 28 Yale Law Journal 599. For a note on the decision in
the court below see 18 Columbia Law Review 459.



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58 THE AMERICAN POLITICAL SCIENCE REVIEW

the majority, speaking through Mr. Justice Day, found themselves
unable to say that the provisions in question had no relation to the
raising of revenue. They thought that they tended to keep the traffic
above board and subject to inspection, and 'Ho diminish the oppor-
tunity of imauthorized persons to obtain drugs and sell them clan-
destinely without paying the tax imposed by the federal law." The
test applied appeared from one portion of the opinion to be whether
the provisions had some or no relation to a fiscal object, and not
whether the relation if any was a reasonably close one. But earlier it
was said that ''if the legislation enacted has some reasonable relation
to the exercise of the taxing authority conferred by the Constiti^tion, it
cannot be invalidated because of the supposed motives which induced
it." While the case does not involve prohibitory taxation and there-
fore does not furnish a sure index of what the present court will say
as to the federal excise on manufacturing goods in factories in which
children are employed, it may be significant that the opinion referred
with approval to the case^^ sanctioning the supposedly prohibitive tax
on the manufacture of artificially colored oleomargarine.

VII. EMINENT DOMAIN

One who contended that the clause of the Fifth Amendment reading
"nor shall private property be taken for public use, without just com-
pensation" entitled him to compensation from a state for damages
from flooding due to the elevation of the spillway of a state-maintained
dam learned, from Palmer v. Ohio'® that the Fifth Amendment is not
a shield against state action.

Portsmouth Harbor Land & Hotel Co. v. United States'^ held that
no "taking" within the Fifth Amendment was committed by firing
projectiles across complainant's land.

In United Railroads v. San Francisco,®* the court was unable to say
from the evidence before it that the damage caused a street railroad
by having a new municipal road cross its tracks was sufficient to be
regarded as a taking of its property rather than an incidental injury
to which its franchise was subject, since the new road had not been
constructed. The bill to enjoin the new construction was dismissed

»• McCray v. United States, (1904) 195 U. S. 27, 24 Sup. Ct. 769.
•0 (1918) 248 U. S. 32, 39 Sup. Ct. 16.
" (1919) 250 U. S. 1, 39 Sup. Ct. 399.
" (1919) 249 U. S. 517, 39 Sup. Ct. 361.



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CONSTITUTIONAL LAW IN 1918-1919 69

without prejudice, however, so that the company might be entitled to
show later that the damage was sufficiently great as to constitute a
taking which must be paid for under the due-process clause of the
Fourteenth Amendment. This disposition of the case indicates that
Mr. Palmer, who unsuccessfully adduced the Fifth Amendment against
Ohio, might have had better success with the Fourteenth Amendment.
Louisville & N. R. Co. v. Western Union Telegraph Co.^ held that the
description of the right of way to be taken by a telegrapji company
.along a railroad was sufficiently definite, although the location of the
potes was not specified, where only one line of poles was to be allowed,
and they were required to be set up so as not to interfere with the
operations of the railroad, and to be subject to the stipulations set
forth in the petition, one of which contained an agreement on the part
of the telegraph company to change the line at its expense to correspond
to any chauge in the location of the* railroad tracks. "The descrip-
tion," remarked Mr. Justice Holmes, "has beij held to satisfy the
requirements of State law and it would be extravagant to ^y that
the Fourteenth Amendment made it bad." The same case held that
no constitutional rights were infringed because the hearing on the
question whether there was a right to condemn was given in a separate
equity proceeding rather than in the suit in which damages were
assessed or because the hearing on other matters was postponed imtil
it should clearly appear that the telegraph company was making the
wrongful use of the line which it was charged to contemplate making.^

VIII. RETROACTIVE CIVIL LEGISLATION

The familiar principle that the police power for the protection of
health, morals and safety cannot be bargained away was applied to
dismiss objections raised under the obligation-of-contracts clause in
three cases already considered which sustained ordinances prohibiting
the storage of oil,* requiring the removal of railroad tracks on the

" (1919) 250 U. S. 3d3, 39 Sup. Ct. 513.

•* In Orr v. Allen, (1918) 248 U. S. 35, 39 Sup. Ct. 23, the court gave no con-
sideration to a complaint against a statute creating drainage districts with power
of eminent domain, since it was clear that the objections urged were founded on
an assumed construction of the statute which the state court had expressly de-
cided it would not bear.

" Pierce Oil Corporation v. New Hope, (1919) 248 U. S. 498, 39 Sup. Ct. 172,
13 American Political Science Review 624



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60 THE AMERICAN POLITICAL 8CISNCE REVIEW

public street"^ and regulating the size and location of billboards.*'
The contracts relied on in the billboard case were those between the
company and advertisers. In the oil case the alleged contract was a
previous removal to the present location at the request of the city.
Such a request, said Mr. Justice Holmes, "does not import a contract
not to legislate if the public welfare should require it» and such a con-
tract if made would have no effect." In the railroad case it was as-
sumed thaj) the tracks were located under a franchise and that the
right granted became a vested property right, but it was insisted that
the right was held subject to the power of the city to enforce reasonable
regulations for the public safety, and the regulation in question was
foimd to be redaonable. It was implied that the degree of reasonable-
ness required to sustain a police measure might be greater when vested
rights were affected than when they were not.

In several cases the contracts claimed and relied on were held not to
possess the quality imputed to them by the objectors to changes in the
status quo ante. Northern Pacific Ry. Ck>. v. Puget Sound & W. H.
Ry. Co.*^ foimd nothing but a rule of present policy in a statute allow-
ing companies later formed to cross the tracks of existiog companies
but requiring the newcomer to pay the cost of crossing. A later
statute dividing the expenses between the crossed and the crossing
road was therefore held applicable to a company whose tracks were
laid after the former statute was passed and before the change in policy.

In United Railroads v. San Francisco'* a statute, in force at the
time of the grant of complainant's franchise, prohibiting two street
railroads from occupying or using the same street or track for more
than five blocks, was thought to be merely a declaration of present
legislative policy and a limitation for the time being on municipal
officers, but not a contract by the state, nor an authority to the mimici-
palities to contract, against a larger use of the street. This, however,
was not the groimd of the decision in the case, since the complaint
was against a use of the streets by a municipal railroad, and to this it
was answered that the court had previously decided that a ' 'covenant
by a city not to grant to any other person or corporation a privilege

•• Denver A R. G. R. Co. v. Denver, (1919) 250 U. S. 241, 39 Sup. Ct. 450, 13
American Political Science Review 618, 030.

" St. Louis Poster Advertising Co. v. St. Louis, (1919) 249 U. S.'269, 39 Sup.
Ct. 274, 13 American Political Science Review 624.

•• (1919) 250 U. S. 332, 39 Sup. Ct. 474.

" (1919) 249 U. S. 517, 39 Sup. Ct. 361, supra, footnote 92.



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CONSTITUTIONAL LAW IN 1918-1919 61

similar to that granted to the covenantee does not restrict the city
from itself exercising similar power."

Darling v. Newport News^^ held that a lease by a state of land
mider water to be used for oyster beds does not import any contract
not to permit a municipality to discharge sewage into the water over
the beds. It was doubted whether the state would have power to
make such a contract and thus tie its hands in a matter so important
for the public welfare. In Pawhushka v. Pawhushka Oil & Gas
Ck>./^ it was a city that complained because a limitation lawfully
imposed by it on the rates charged by a gas company was removed by
an order of the state corporation commission permitting the raising
of the rates. The commission acted under autiiority granted by the
legislature. The state court decided against the city, and a writ of
error to the United States Supreme Court was dismissed on the oft-
declared principle that a city has no rights under the obligation-of-con-
tracts clause in any governmental powers with which the state may
from time to time endow it.

In two other cases rates fixed by commissions were unsuccessfully
resisted in reliance on the obUgation-of -contracts clause. Englewood
V. Denver A S. P. Ry. Co.^®" held that a town ordinance granting a



Online LibraryWestel Woodbury WilloughbyThe American political science review → online text (page 6 of 77)