with whom concur
Mr. Justice Peck-ham and Mr. Justice McKenna, dissenting.The delicacy of the question, the suggestion that, apart from constitutional limitations, the ruling made is, from an economic point of view, a just one, and the long and painstaking consideration which the court has given the case causes me to be reluctant to announce a dissent. This, however, is overborne by the conviction that it is my duty to dissent and state my reasons. And this because the decision now made, as it is by me understood, overrules many cases, departs from a principle which has been recognized from the beginning, and, under the assumed necessity of protecting the taxing power of the Government of the United States, establishes a doctrine which in its potentiality strips the States of their lawful .authority. It does more than this, since the theory upon which the case is decided also endows the States with a like power to divest the Government of the United States of its lawful attributes. In other words, by the ruling and the reasoning sustaining it, the ancient landmarks are .obliterated and the distinct powers belonging to both the National and state Governments are reciprocally placed the one at the mercy of the other, so as to give to each the potency of destroying the other.
The case is this: South Carolina has adopted a law by which no liquor is allowed to be brought into the State for sale or to be sold therein, except such liquor as may be bought by a board of officers appointed by state authority, which liquor is sold by state agents appointed for that purpose under regulations prescribed by the' statute. The question is, whether these agents of the State, for the act of selling liquor belonging to the State, as agents of the State, under the authority of the State, can be subjected to a license for carrying on the liquor business, levied by the internal revenue laws of the United States.
That the State, under its police authority, had the right to absolutely prohibit the sale of liquor, or to subject it to such regulations as it deemed proper, is elementary. So far-reaching *465is. that authority that a State may direct the destruction of liquor held contrary to law, without paying the value thereof, and without thereby violating the constitutional safeguards as to the taking of property. Mugler v. Kansas, 123 U. S. 623. True, by the operation of the commerce clause of the Constitution, the absolute authority of the State does not extend to prohibiting the sale in original packages of liquor brought in from other States. Leisy v. Hardin, 135 U. S. 100. But that limitation- no longer applies, since Congress has, by express legislation, permitted the power of the States to attach to all liquor shipped into one State from another, at once on its arrival, before sale in the original packages, as fully as if it had ■ been manufactured within the State. And-the validity of the statute referred to has been upheld by the court in reiterated -rulings. In re Rahrer, 140 U. S. 545, 562; Rhodes v. Iowa, 170 U. S. 412; Vance v. W. A. Vandercook Co. No. 1, 170 U. S. 438; American Express Co. v. Iowa, 196 U. S. 133; Adams Express Co. v. Iowa, 196 U. S. 147; Pabst Brewing Co. v. Crenshaw, 198 U. S. 17. Indeed, one of these cases — the Vandercook case — involved the question whether the act of South Carolina, providing for' the purchase and sale of liquor belonging to the State, as above stated, was repugnant to the Constitution of the United States, and the validity of the act in this particular was upheld by the court, because of the police power of the State and because of the provisions of the act of Congress limiting the effect of the interstate commerce clause as to liquor as already mentioned.
It -is not necessary to trace the want of authority of the United States to impose a license exaction on the agents of the State to an express provision of the Constitution, since 'the court has constantly held that the absence of authority in the Government of the United States to tax or burden the agencies or instrumentalities of a state-1 government, and the like want of authority on the part of the States to tax the agencies or instrumentalities of the National Government, results from the dual system of government which the Constitution created, *466and that the continuance in force of such a prohibition is absolutely essential to the preservation of both governments.
It would be. superfluous to review in detail the many cases decided on the subject, but in the endeavor to bring the settled doctrine clearly to the mind, I refer to the most salient of the cases.
In McCulloch v. Maryland (1819), 4 Wheat. 316, and Osborn v. Bank of the United States (1824); 9 Wheat. 738, it was held that a State could not impose a tax on the operations of the Bank of the United States or any of its branches. In Weston v. City Council of Charleston (1829), 2 Pet. 449, Bank of Commerce v. New York (1862), 2 Black, 620, Bank Tax Case (1865), 2 Wall. 200, and Banks v. Mayor (1869), 7 Wall. 16, it was decided that a State was without power to tax .stock or bonds issued by the United States for loans made to it, when held by an individual or by a corporation. In Dobbins v. Commissioners of Erie County (1842), 16 Pet. 435, it was decided that a State might not tax the compensation of an officer of the United States. And, in Van Brocklin v. Tennessee (1886), 117 U. S. 151, and cases cited on pages 167 et seq., it was held that a State might not impose a tax on any property of the United States, including real estate of which the United States had become the owner as the result of a sale to enforce the payment of direct taxes previously levied by the United States.
Conversely, the adjudications concerning the want of power in the United States to tax the States are of a like scope. In The Collector v. Day (1870), 11 Wall. 113, 127, it was decided that Congress could not impose a tax upon the salary'of a judicial officer of a State. In United States v. Railroad Co. (1872), 17 Wall. 322, it was held that the Uni ted States might not impose a tax upon the property and revenues of a municipal corporation. Two members of the court dissented (p. 334), on the ground “that the private property owned by a municipal corporation, and held merely as private property in a proprietary right, and used merely in a commercial sense for the income, gains, and profits,” was “taxable just the same as *467property owned by an individual, or any other corporation.” In Van Brocklin v. Tennessee, supra, where, as we have seen, it was held that the State of Tennessee could not tax real property within its borders while held by the United States as proprietor, in reviewing the ruling made in United States v. Railroad Co., the court said (p. 178):
"This court, in United States v. Railroad Co.,. 17 Wall. 322, held that a municipal corporation within a State could hot be taxed by the United States on’ the dividends or interest of stock or bonds held by it in a railroad or canal company, because the municipal corporation was a representative of the State, created by the State to exercise a limited portion of its powers of government, and therefore its revenues, like those of the State itself, were not taxable by the United States. The revenues thus adjudged to’ be exempt from Federal taxation were not themselves appropriated to any specific public use, nor derived from property held by the State or by the municipal corporation for any specific .public use, but were part of the general income of that corporation, held’ for the public use in no other sense than all property and income, belonging to it in its municipal character, must be so held. The reasons for exempting all the property and income of a State, or of a municipal corporation, which is a political division of the State, from Federal taxation, equally require the exemption of all the property and income of the National Government from state taxation.”
In Mercantile Bank v. New York (1887), 121 U. S. 138, 162, it was decided that the United States might not tax bonds issued by a State or one of its municipal bodies under its authority and held by private corporations. In Pollock v. Farmers’ Loan and Trust Company — the income tax case — (1894), 157 U. S. 429, although much difference of opinion was manifested in the court as to some of the questions involved, as to one, that is, the lack of authority in the United States to include in the amount of income subject to taxation by the United States money derived from interest on municipal bonds, *468the court was unanimous. The opinion, in reviewing the subject and citing approvingly The Collector v. Day, United States v. Railroad Co., the Van Brocklin case and the Mercantile Bank case, said (p. 584):
“As the States cannot tax the powers, the operations, or the‘-property of the United States, nor the means which they employ to carry their powers into execution, so it has been held that the United States have no power, under the Constitution to tax either the instrumentalities or the property of a State.”
And, lastly, in Ambrosini v. United States (1902), 187 U. S. 1, it was held that Congress could not impose a stamp tax upon a bond which the state law required to be given as a prerequisite to the right to sell liquor.
Is the ruling now made reconcilable with the cases just referred to? In other words, is it consistent with the theory of the Constitution as interpreted from the beginning? In order to give the reasons which convince me that it is riot, let me review the; contentions which are relied’upon to support the ruling.
1. It is urged that as the State of South Carolina derives revenue from the sale, by the agents of the State, of the liquor belonging to the State, therefore the United States has also the right to derive a revenue from that source. If by this contention it is intended' to suggest that the South Carolina law was not passed in. the exercise of the pólice power of that State, and must be treated as a revenue law from the .mere fact that some revenue results from the operation' of the law, the unsoundness of the proposition is demonstrated, by the previous cases. In Vandercook Co., No. 1, supra, that identical proposition was urged, and was decided to be without merit; and the same doctrine was reiterated in the cases of American Express Company v. Iowa, 196 U. S. 133; Adams Express Co. v. Iowa, 196 U. S. 147, and Pabst Brewing Co. v. Crenshaw, 198 U. S. 17. If the contention be that wherever, by the exertion of state power upon persons or things, a revenue is produced, *469there must be a corresponding right on the part of the Government of the United States to reap revenue by burdening • the like person or thing, even although in so doing a state agency or instrumentanty is taxed,' the unsoundness of the proposition and its conflict with the previous cases becomes yet more apparent. One- of the foundations upon which the •doctrine rests, denying the power of the governments, State or National, to burden the instrumentalities or agencies of each other, is that.if such burdening be permitted it might result in crippling the revenues of the Government, upon whose agency or instrumentality the tax was placed. Was- this not the ground upon which the- earlier cases were placed, and was-it not specifically declared to be the foundation of the ruling made in', the income tax case — Pollock v. The Farmers’ Loan & Trust Co., supra? The contention that because one - government may have derived income from the exertion of its authority, therefore the other government has a right to do likewise, even if the agencies of the other government be thereby taxed, reduces itself to this: That the power to burden arises from the very condition which prevents the power from existing. If pushed to its logical conclusion, the far-reaching. result of the proposition that wherever revenue1 is derived from an act by one government, therefore the other may burden the agent or instrumentality of the other may be readily illustrated. Take the National Government.* If in the exercise of its ample authority to establish national -banks a tax is imposed on such banks and a revenue derivéd, do the States thereby become entitled, without the consent of Congress, to tax banks? Take the Post Office Department. If by the carrying of the mails revenue is derived by the Government of the United States, are the States from that fact entitled to tax the instrumentalities employed by the Post Office Department? Take the ocean transport service of the United States. If under given circumstances a charge is made for transportation, and hence a revenue is earned, may the States cripple that service by taxation? It is no answer to the dem*470onstration which results from these illustrations to say that the cases concern purely governmental functions of the United States, and,, therefore, the States cannot tax the exercise of such functions. May I. ask are these functions on the part of the United States any more governmental than is the power of the government of South Carolina to absolutely control at will the liquor traffic in that State?
2. It is implied that necessity demands the recognition of the right of the Government of the United States to tax the state agencies in question because the principle, by which alone such power on the part of the United States can be denied, will inevitably result in giving the States authority to destroy the Government of the United States by adopting peculiar methods of dealing with various classes of persons or property. Thus, it is said, the state governments may acquire all farms 'within their borders and thus deprive the United States of its power to impose a direct tax on land!' That a State may import* property from foreign countries and be exempt from import duty and undersell those who pay duty and render the collection of any import tax from others by the United States impossible. But these extreme illustrations amount simply to saying that it is possible for the imagination to foreshadow conditions which, did they arise, would impair the government created by the Constitution, and because such conjectures may be indulged in, the limitations created by the Constitution for thé purpose of preserving . both the state and National Governments are to be disregarded. In other words, that the government created by the Constitution must now be destroyed, because it is possible to suggest conditions which, if they arise, would in the future-produce a like result. But the weakness of the illustrations as applied to this case is apparent. They have no relation to this case, since it is not denied that as to liquor the State has absolute power, and may prohibit the sale of all liquor, and thus prevent thev United States from deriving revenue from that source. Again, therefore, when the true relation *471of the argument to the case in hand is seen, it reduces itself to a complete contradiction, viz., a State may by prohibition prevent the United States from reaping revenue from the liquor • traffic, but any.other state regulation by which such result is accomplished may be prevented by the United States, because thereby the State has done indirectly only that which the State had the lawful power directly to do.
3. It is urged that the liquor in this case was owned by South Carolina, and in selling it the State was merely acting as a proprietor, and therefore the tax on the state agents is lawfql. .But here again the argument overlooks the absolute power possessed by the State concerning the liquor traffic, and •the consequent right of the State in the ex'ercise of its governmental functions to adopt such methods and instrumentalities as might be deemed best for the control of the traffic. Besides, the proposition is directly repugnant to the previous decisions of this court. Can anything be plainer than that the contention is directly antagonistic to the ruling made in United States v. Railroad Co., supra, which ruling was expressly approved in the subsequent cases, especially in the income tax case? Was not the United States the proprietor of the land in Tennessee, which it was held in the Van Brocklin case the State of Tennessee had no power to tax? Conceding, for the sake of argument only, that the doctrine announced in the previous cases should be qualified, certainly such qualification would be wholly unreasonable if it did not propose to. take in view-the absolute and paramount nature of the gov-' ernmental function under which the property or agency which it was proposed to tax was held or exercised. Reference is made to cases in state courts concerning the liability of municipal corporations to suits for negligence. I cannot see their appositeness to the issue here involved. Besides, the doctrine expounded in the line of cases referred to, if doctrine can be deduced from the confusion and contradiction which exists among the cases, has never received the approval of this court. On the contrary, the rulings of this court point the other way. *472' Barnes v. District of Columbia, 91 U. S. 540; Workman v. New York, 179 U. S. 552, 574. But grant that the rule applied by some state courts, in. order to determine when a municipal' corporation may be sued for a negligent act, has relation to this case, my mind sees no possibility of holding that the State of South Carolina, when by the law in question it provided for the purchase and sale of liquor by its own agents, was not • exercising á purely governmental function, in view of' the absolute power of that State over that subject, and, moreover, in view of the act of Congress making such power complete and efficacious, even as to original packages of liquor before sale.
4. It is not, of course, by me denied that however varying may be the conditions to which the Constitution is applied, that instrument means to-day what it did at the time of its adoption; but I cannot give my assent to the doctrine that a limitation, which it has been decided over and over again arises from the very nature of the Constitution, is not to be enforced in a given condition to which the Constitution applies, because it does not'appear that the framers could have contemplated that such conditions might be evolved in the course of the development of our constitutional institutions. To me it seems that no proposition could' be more absolutely destructive of constitutional, government.
Being of opinion that the State of South Carolina had complete and absolute power over the liquor traffic, and could exert, in dealing with that subject, such methods and instrumentalities as were deemed best, and that the United States was without authority to tax the'agencies which the State called into being for the purpose of dealing with the liquor traffic, I, therefore, dissent, and am authorized to say that Mb. Justice Peckham and Mb. Justice McKenna concur.