3 (3 DALL.) U.S. 171

Case Year: 1796

Case Ruling: 3

Opinion Justice: Seriatim Opinions: Chase, Iredell, Paterson

FACTS

In 1794 Congress passed legislation imposing a tax on carriages owned for personal use. It was enacted in the form of an excise with the rate per carriage being the same throughout the United States. The tax was partisan in nature, having been enacted by the Federalist majorities in Congress whose support came largely from the northern states. Because the residents of the southern states, a Democratic-Republican stronghold, owned a disproportionately large number of carriages, they would pay the brunt of the tax. Supporters of the Democratic-Republicans therefore argued that a tax on carriages should not be classified as an excise, but as a direct tax. The Constitution requires direct taxes to be apportioned on the basis of population, which would shift the tax burden to the more populated northern states.

In order to answer this specific question, as well as the more general one of what the term “direct tax” means, a court test was arranged. Daniel Hylton, a resident of Virginia, was charged by the federal government with not paying a tax on his carriages. He responded by claiming that the tax was unconstitutional because it was not apportioned on the basis of population. Hylton and the government were clearly cooperating in the lawsuit; both wanted the tax upheld, and both concluded that the best way to reach that goal was to have the case heard in federal court where members of the Federalist Party dominated the judgeships. Toward that end, they stipulated that Hylton owned 125 carriages for personal use when he actually owned only one. The tax on 125 carriages would be $2,000, meeting the threshold for federal court jurisdiction at the time. The parties agreed to waive any right to a jury trial so that a judge would determine the outcome. The government also conceded that if the tax was upheld, it would only charge Hylton $16 in taxes.

The strategy worked perfectly. The tax was declared a valid excise tax by the lower court, and the Supreme Court, also in the control of the Federalists, affirmed, providing a limited definition to the term “direct tax.” Hylton v. United States was the first case that asked the Supreme Court to consider the constitutionality of a federal statute. It would be seven years later, in Marbury v. Madison, that the Court would not only consider a statute’s constitutionality but would actually strike down a law found repugnant to the Constitution.

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CHASE, JUSTICE.

By the case stated, only one question is submitted to the opinion of this court; whether the law of Congress, of the 5th of June, 1794, entitled, ‘An act to lay duties upon carriages, for the conveyance of persons,’ is unconstitutional and void? The principles laid down, to prove the above law void, are these: That a tax on carriages, is a direct tax, and, therefore, by the constitution, must be laid according to the census, directed by the constitution to be taken, to ascertain the number of Representatives from each State: And that the tax in question, on carriages, is not laid by that rule of apportionment, but by the rule of uniformity, prescribed by the constitution, in the case of duties, imposts, and excises; and a tax on carriages, is not within either of those descriptions....

The great object of the Constitution was, to give Congress a power to lay taxes, adequate to the exigencies of government; but they were to observe two rules in imposing them, namely, the rule of uniformity, when they laid duties, imposts, or excises; and the rule of apportionment, according to the census, when they laid any direct tax.

If there are any other species of taxes that are not direct, and not included within the words duties, imposts, or excises, they may be laid by the rule of uniformity, or not; as Congress shall think proper and reasonable....

The Constitution evidently contemplated no taxes as direct taxes, but only such as Congress could lay in proportion to the census. The rule of apportionment is only to be adopted in such cases where it can reasonably apply; and the subject taxed, must ever determine the application of the rule.

If it is proposed to tax any specific article by the rule of apportionment, and it would evidently create great inequality and injustice, it is unreasonable to say, that the Constitution intended such tax should be laid by that rule.

It appears to me, that a tax on carriages cannot be laid by the rule of apportionment, without very great inequality and injustice. For example: Suppose two States, equal in census, to pay 80,000 dollars each, by a tax on carriages, of 8 dollars on every carriage; and in one State there are 100 carriages, and in the other 1000. The owners of carriages in one State, would pay ten times the tax of owners in the other. A. in one State, would pay for his carriage 8 dollars, but B. in the other state, would pay for his carriage, 80 dollars.

It was argued, that a tax on carriages was a direct tax, and might be laid according to the rule of apportionment, and (as I understood) in this manner: Congress, after determining on the gross sum to be raised was to apportion it, according to the census, and then lay it in one State on carriages, in another on horses, in a third on tobacco, in a fourth on rice; and so on. I admit that this mode might be adopted, to raise a certain sum in each State, according to the census, but it would not be a tax on carriages, but on a number of specific articles; and it seems to me, that it would be liable to the same objection of abuse and oppression, as a selection of any one article in all the States. I think, an annual tax on carriages for the conveyance of persons, may be considered as within the power granted to Congress to lay duties. The term duty, is the most comprehensive next to the generical term tax; and practically in Great Britain, (whence we take our general ideas of taxes, duties, imposts, excises, customs, etc.) embraces taxes on stamps, tolls for passage, etc. etc. and is not confined to taxes on importation only. It seems to me, that a tax on expence is an indirect tax; and I think, an annual tax on a carriage for the conveyance of persons, is of that kind; because a carriage is a consumeable commodity; and such annual tax on it, is on the expence of the owner. I am inclined to think, but of this I do not give a judicial opinion, that the direct taxes contemplated by the Constitution, are only two, to wit, a capitation, or poll tax, simply, without regard to property, profession, or any other circumstance; and a tax on LAND. I doubt whether a tax, by a general assessment of personal property, within the United States, is included within the term direct tax. As I do not think the tax on carriages is a direct tax, it is unnecessary, at this time, for me to determine, whether this court, constitutionally possesses the power to declare an act of Congress void, on the ground of its being made contrary to, and in violation of, the Constitution; but if the court have such power, I am free to declare, that I will never exercise it, but in a very clear case. I am for affirming the judgment of the Circuit Court.

PATTERSON, JUSTICE.

The question is, whether a tax upon carriages be a direct tax? If it be a direct tax, it is unconstitutional, because it has been laid pursuant to the rule of uniformity, and not to the rule of apportionment. In behalf of the Plaintiff in error, it has been urged, that a tax on carriages does not come within the description of a duty, impost, or excise, and therefore is a direct tax. It has, on the other hand, been contended, that as a tax on carriages is not a direct tax; it must fall within one of the classifications just enumerated, and particularly must be a duty or excise. The argument on both sides turns in a circle; it is not a duty, impost, or excise, and therefore must be a direct tax; it is not tax, and therefore must be a duty or excise. What is the natural and common, or technical and appropriate, meaning of the words, duty and excise, it is not easy to ascertain. They present no clear and precise idea to the mind. Different persons will annex different significations to the terms. It was, however, obviously the intention of the framers of the Constitution, that Congress should possess full power over every species of taxable property, except exports. The term taxes, is generical, and was made use of to vest in Congress plenary authority in all cases of taxation. The general division of taxes is into direct and indirect. Although the latter term is not to be found in the Constitution, yet the former necessarily implies it. Indirect stands opposed to direct. There may, perhaps, be an indirect tax on a particular article, that cannot be comprehended within the description of duties, or imposts, or excises; in such case it will be comprised under the general denomination of taxes....

The question occurs, how is such tax to be laid, uniformly or apportionately? The rule of uniformity will apply, because it is an indirect tax, and direct taxes only are to be apportioned. What are direct taxes within the meaning of the Constitution? The Constitution declares, that a capitation tax is a direct tax; and, both in theory and practice, a tax on land is deemed to be a direct tax. In this way, the terms direct taxes, and capitation and other direct tax, are satisfied.... Whether direct taxes, in the sense of the Constitution, comprehend any other tax than a capitation tax, and tax on land, is a questionable point. If Congress, for instance, should tax, in the aggregate or mass, things that generally pervade all the states in the Union, then, perhaps, the rule of apportionment would be the most proper, especially if an assessment was to intervene. This appears by the practice of some of the states, to have been considered as a direct tax. Whether it be so under the Constitution of the United States, is a matter of some difficulty; but as it is not before the court, it would be improper to give any decisive opinion upon it. I never entertained a doubt, that the principal, I will not say, the only, objects, that the framers of the Constitution contemplated as falling within the rule of apportionment, were a capitation tax and a tax on land. Local considerations, and the particular circumstances, and relative situation of the states, naturally lead to this view of the subject. The provision was made in favor of the southern States. They possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the Constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union after the same rate or measure: so much a head in the first instance, and so much an acre in the second. To guard them against imposition in these particulars, was the reason of introducing the clause in the Constitution, which directs that representatives and direct taxes shall be apportioned among the states, according to their respective numbers....

... I am, therefore, of opinion, that the judgment rendered in the Circuit Court of Virginia ought to be affirmed.

IREDELL, JUSTICE.

I agree in opinion with my brothers, who have already expressed theirs, that the tax in question, is agreeable to the Constitution; and the reasons which have satisfied me, can be delivered in a very few words, since I think the Constitution itself affords a clear guide to decide the controversy. The Congress possess the power of taxing all taxable objects, without limitation, with the particular exception of a duty on exports. There are two restrictions only on the exercise of this authority: 1. All direct taxes must be apportioned. 2. All duties, imposts, and excises must be uniform. If the carriage tax be a direct tax, within the meaning of the Constitution, it must be apportioned. If it be a duty, impost, or excise, within the meaning of the Constitution, it must be uniform. If it can be considered as a tax, neither direct within the meaning of the Constitution, nor comprehended within the term duty, impost or excise; there is no provision in the Constitution, one way or another, and then it must be left to such an operation of the power, as if the authority to lay taxes had been given generally in all instances, without saying whether they should be apportioned or uniform; and in that case, I should presume, the tax ought to be uniform; because the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution. As all direct taxes must be apportioned, it is evident that the Constitution contemplated none as direct but such as could be apportioned. If this cannot be apportioned, it is, therefore, not a direct tax in the sense of the Constitution. That this tax cannot be apportioned is evident. Suppose 10 dollars contemplated as a tax on each chariot, or post chaise, in the United States, and the number of both in all the United States be computed at 105, the number of Representatives in Congress. This would produce in the whole---1050. The share of Virginia being 19-105 parts, would be---Dollars 190. The share of Connecticut being 7-105 parts, would be---70. Then suppose Virginia had 50 carriages, Connecticut--2. The share of Virginia being 190 dollars, this must of course be collected from the owners of carriages, and there would therefore be collected from each carriage---3 80. The share of Connecticut being 70 dollars, each carriage would pay---35. If any state had no carriages, there could be no apportionment at all. This mode is too manifestly absurd to be supported, and has not even been attempted in debate....

There is no necessity, or propriety, in determining what is or is not, a direct, or indirect, tax in all cases....

It is sufficient, on the present occasion, for the court to be satisfied, that this is not a direct tax contemplated by the Constitution, in order to affirm the present judgment; since, if it cannot be apportioned, it must necessarily be uniform.

I am clearly of opinion, this is not a direct tax in the sense of the Constitution, and, therefore, that the judgment ought to be affirmed.

WILSON, JUSTICE.

As there were only four Judges, including myself, who attended the argument of this cause, I should have thought it proper to join in the decision, though I had before expressed a judicial opinion on the subject, in the Circuit Court of Virginia, did not the unanimity of the other three Judges, relieve me from the necessity. I shall now, however, only add, that my sentiments, in favor of the constitutionality of the tax in question, have not been changed.

CUSHING, JUSTICE.

As I have been prevented, by indisposition, from attending to the argument, it would be improper to give an opinion on the merits of the cause.

By the Court. Let the judgment of the Circuit Court be affirmed.

The Chief Justice, ELLSWORTH, was sworn into office in the morning; but not having heard the whole of the argument, he declined taking any part in the decision of this cause.