§ 456. “Intoxicating Liquids.”

As an introduction to a study of this section, reference may be made to the leading provisions of the Constitution with reference to trade and commerce. The first fundamental rule is that the Federal Parliament may make laws with respect to trade and commerce with other countries and among the States (sec. 51—i.). The next rule is that after the imposition of uniform duties of customs the Federal Parliament acquires exclusive power to impose duties of customs and excise, and to grant bounties on the production or export of goods (sec. 90). The result of these two rules is to leave to the States a concurrent power to deal with inter-state and foreign commerce, but to take from them the power to deal with customs, excise, and bounties. The concurrent power, however, may not be exercised in a manner inconsistent with Federal legislation. The third rule is that each State retains the sole and exclusive power to deal with the manufacture, production, use, and consumption of articles of commerce, and the sole and exclusive power to regulate the internal trade and commerce of the State — that is, trade and commerce which begins and ends in the State—subject to the limitation that it may not grant bounties on the production of goods (sec 51—iii.). The next important rule is, that on and after a certain event trade and commerce and intercourse among the States, whether by internal carriage or ocean navigation, shall be absolutely free (sec. 92). This mandate, in favour of the freedom of inter-state trade and commerce, is as binding on the Federal Parliament as on the States. Neither the Federal Parliament nor the States are permitted to make any rule or regulation of commerce obstructing the free transportation of goods, wares, and merchandise from one State into another. To this rule of freedom sec. 113 is intended to enable the States to make an exception or qualification

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in the case of fermented, distilled, or other intoxicating liquids. As to the manner in which the section will operate several cases decided in the United States under a corresponding law will afford a valuable guide.

Prior to the year 1888, the law of the State of Iowa permitted the sale of foreign liquors imported under the laws of the United States, subject to the condition that the sale was effected by the importer in the original casks and packages. In 1888 the law was amended so as to provide that, whether imported or not, wine could not be sold in Iowa except for sacramental purposes, nor alcohol except for specified chemical purposes, nor intoxicating liquors, including ale and beer, except for pharmaceutical and medicinal purposes, and not even for those limited purposes except by registered pharmaceutists having proper permits. Certain brewers doing business in the State of Illinois shipped beer in sealed packages to Keokuk in the State of Iowa, where it was offered for sale in the original packages. A certain quantity of the beer was seized by Hardin, the City Marshall of Keokuk, under colour of authority of the law of Iowa. The brewers then brought an action against Hardin to recover the beer seized. The local court gave judgment for the plaintiffs on the ground that the State law was invalid. This judgment was reversed by the Supreme Court of Iowa. The brewers appealed to the Supreme Court of the United States, which allowed the appeal and restored the judgment of the local court. The ground of the decision was that the State could not pass a law obstructing free trade and intercourse between the States. At the same time the court suggested no doubt as to the power of the State to control the sale of imported articles, once they had become mixed with the general mass of property in the State. (Leisy v. Hardin [1890], 135 U.S. 100.)

It was in consequence of the decision in Leisy v. Hardin that on 8th August, 1890, a statute was passed by Congress now known as the Wilson Act, which provided:—

“That all fermented, distilled, or other intoxicating liquors or liquids transported into any State or Territory or remaining therein for use, consumption, sale or storage therein, shall upon arrival in such State or Territory be subject to the operation and effect of the laws of such State or Territory enacted in the exercise of its police powers, to the same extent and in the same manner as though such liquids or liquors had been produced in such State or Territory, and shall not be exempt therefrom by reason of being introduced therein in original packages or otherwise.”

As soon as this Act was passed it was challenged as involving an unconstitutional delegation of power by Congress. The power conferred by the Act was used by several States, and its meaning and constitutionality became the subject of judicial decision. No doubt as to its constitutionality was suggested by any of the courts. An Act passed by Congress in 1886, providing that the transportation of and traffic in nitroglycerine and other high explosives might be regulated or prohibited by the States, had never been questioned. It had been the settled practice of Congress to grant to the States on the sea-board permission to collect duties at their ports for the improvement of harbours, the erection of piers and light-houses, and the appointment of health officers. Such laws did not amount to a delegation of power by Congress to the States. So with reference to such a law as the Wilson Act. It delegated no power to the States; it conferred no additional authority on the States; it merely removed an impediment to the operation of State law. State statutes passed before the Wilson Act were not void but only inoperative; they became effective at once upon the passage of the Federal statute without being re-enacted. (Re Rahrer, 140 U.S. 545; Prentice and Egan, Commerce Clause, p. 81.)

The construction of the Wilson Act was a more difficult question. The most important point was whether under its provisions a State could forbid the introduction of intoxicating liquors within its limits. In the case of State v. Rhodes, 90 Iowa, 496, it was held that liquor becomes subject to the police laws of the State immediately upon its arrival within the State, and that under the law of Iowa its transportation was unlawful. This construction of the statute was not adopted by the Supreme Court of the United States, which held that the Federal statute did not authorize a State to

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forbid the introduction of intoxicating liquor, but recognized the right of transportation and permitted the State law to operate upon the liquor only when its carriage was completed, and when it had reached its destination and been delivered to the consignee. (Rhodes v. Iowa, 170 U S. 412.)

The Wilson Act has been further considered by the courts in litigation arising out of the South Carolina Dispensary Act. This law forbade the sale of intoxicating liquor, within the State, by any private individuals. It prohibited the importation of liquor for use by the importer, but permitted the use of domestic liquor. It vested in the State the sole right to sell liquor. Officers were appointed throughout the State to dispense liquor at convenient places, and the profits arising from the business were appropriated to the State, county, and municipal treasuries. This law was declared void by the Supreme Court of South Carolina. (McCullough v. Brown, 41 S. Carol. 220; Prentice and Egan, Commerce Clause, p. 80.) The decision in that case has since been overruled, but some of its doctrines have been approved of in Federal courts. This Dispensary Act, it is said, is not a proper exercise of the police power so far as it discriminates between inter-state and domestic commerce, in articles the manufacture and use of which are lawful. A State could not forbid the importation of liquor for use by the importer while it permitted the use of domestic liquors. (Donald v. Scott, 67 Fed. Rep. 854 and 165 U.S. 558.) In the case of Vance v. Vandercook Co., 170 U.S. 438, it was held that the fact of the State law permitting the sale of liquor, subject to certain restrictions, did not prevent the law from being an exercise of police power. The Federal Act, it was said, was passed to allow State regulations to operate on the sale of original packages of intoxicants brought from other States; it was not intended that a State should be unable to control the liquor traffic except by prohibition. The effect of the decision in this case is that the importation of intoxicating liquors, for use by the importer, cannot be prohibited under the Wilson Act, but that upon their importation for sale they come within the operation of the Act and State laws founded thereon. (Prentice and Egan, Commerce Clause, p. 81.)

Section 113 may now be compared with the Wilson Act, on which it is founded. It will be at once seen that it is not intended to authorize the States to prohibit the introduction of intoxicating liquids; once introduced they cannot be prevented from reaching their destination—the consignee. What the section provides is that intoxicating liquids, upon passing into any State for use, consumption, sale, or storage, shall become subject to the laws of the State as if they had been produced in the State. They are liable to the same licensing laws as locally produced intoxicants; they are liable to the same restrictive and regulating laws; they are liable to the same prohibitive laws. Their sale may be restricted to certain limited purposes; or to certain defined localities; it may be allowed to be conducted by certain qualified persons only; or it may be forbidden altogether. The only condition to the legality of the liquor laws of a State is that they must apply without discrimination to intoxicants locally produced as well as to those imported.

The liquor laws of a State would only be allowed to apply to intoxicants passing into a State for use, consumption, sale, or storage. They would not imply to intoxicants passing into a State for the purpose of being transported directly and without the intervention of a sale into another State. (See notes, § 163, pp. 528, 548, supra.)

PROHIBITION AND LOCAL OPTION.—The Federal Parliament has not control over the liquor traffic as extensive as that exercised by the Parliament of Canada, which has power to regulate “trade and commerce” generally. The Federal Parliament can deal only with trade and commerce with other countries and among the States. This excludes the trade and commerce which begins and ends in a State. A federal law authorizing the establishment of a system of local option under which the sale of liquor could be prohibited in defined areas, or restricted to defined areas, would not be a law relating to trade and commerce “among the States,” but a law relating to trade and commerce in those defined localities “within the States.”

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The Federal Parliament has no power to directly prohibit the manufacture of intoxicants or to establish a local option system in any State. It has, however, the exclusive power to impose duties of customs and excise. This will enable it to tax heavily, or lightly, all intoxicating liquids imported into the Commonwealth, or produced in any State—a power which may be exercised in a manner calculated to influence the liquor traffic in a material degree (sec. 90). The Federal Parliament has also the exclusive authority to grant bounties on the production or export of goods (sec. 90). This will enable it, if thought necessary, to directly encourage the manufacture of intoxicants by a pecuniary subsidy. The Parliament of a State would probably be able, under sec. 113, to prohibit the production, or sale, of intoxicants within the State limits, but should the Federal Parliament pass a law offering bounties for the production or export of those intoxicants, an inconsistency would arise, and the State law in that case would be invalid to the extent of the inconsistency (sec. 110). (See this question discussed, p. 548, supra.)

States may not raise forces. Taxation of property of Commonwealth or State.

114. A State shall not, without the consent of the Parliament of the Commonwealth, raise or maintain457 any naval or military force, or impose any tax on property of any kind belonging to the Commonwealth458, nor shall the Commonwealth459 impose any tax on property of any kind belonging to a State.

UNITED STATES.—No State shall, without the consent of Congress, lay any duty of tonnage, keep troops or ships of war in time of peace .… or engage in war unless actually invaded, or in such imminent danger as will not admit of delays. — Const. Art. I., sec. X., sub-s. 3. CANADA.—No lands or property belonging to Canada or any Province shall be liable to taxation.—B.N.A. Act, 1867, sec. 125.

HISTORICAL NOTE.—As introduced in the Sydney Convention of 1891, the clause ran:—

“A State shall not, without the consent of the Parliament of the Commonwealth, impose any duty of tonnage, or raise or maintain any naval or military force, or impose any tax on any land or other property belonging to the Commonwealth.”

In Committee, on Sir Samuel Griffith's motion, the words “nor shall the Commonwealth impose any tax on any land or property belonging to a State” were added. (Conv. Deb., Syd. [1891], 883.) At the Adelaide session, 1897, the clause was introduced in substantially the same form. In Committee, Mr. Henry asked how the words “tonnage dues” would affect Marine Boards and Harbour Trusts, which were dependent for revenue on tonnage dues. Mr. Barton thought the words unnecessary, since if they were payments for services they ought not to be interfered with, and if taxes they would be unconstitutional as interfering with free trade. The words were omitted. At the Melbourne session, the clause was shortly discussed. (Conv. Deb., Melb., p. 653.) A verbal transposition was made after the fourth report.