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The Council City and Solomon River Railroad has completed two-thirds of its line and is evidently doing the best it can under great difficulties to build a railroad and supply a great need in the Seward Peninsula. The bill proposes merely a short extension of the time within which surveys must be filed and the road completed. The same road was relieved of license tax in the last session of Congress.
The statement of A. C. Shenstone, counsel for the company, submitted to the committee to show the need for the proposed legislation, is appended to and made a part hereof.
ARGUMENT FOR PROPOSED ACT TO AID COUNCIL CITY AND SOLOMON BIVER RAILROAD
By an act passed at the last session of Congress the time of the Council City and Solomon River Railroad to complete its first section of 20 miles as provided in sections 4 and 5 of the act entitled “An act extending the homestead laws and providing for the right of way for railroads in the district of Alaska, and for other purposes," approved May 14, 1898, and its time for filing its first map and profile of definite location of such first 20 miles was extended to the 31st day of December, 1906, and its time to thereafter complete its 30 miles, as provided in said act was extended to December 31, 1909, but by such extension it was provided that it should be extended as laid down in the homestead act, which would require a completion of 20 additional miles during the coming season and the last 10 miles the season thereafter. The railroad has constructed 34 miles, but in order to construct this 34 miles it was obliged during the past season to sell the balance of the material which it had on hand in Alaska for the completion of the other part of its 50 miles in order to enable it to procure funds to complete the 34 miles, and while it intends to issue a new bond issue to take up its present bond issue of $350,000 and to provide for funds for the completion of its entire road to Council City, it is quite problematical whether it will be able to do any work next season, and it is therefore greatly desired that the time for it to complete its road be extended to December 31, 1909, which time it now has, in an unhampered way and without being compelled to complete it in sections of 20 miles each year as the law provides.
In other words, it desires to be allowed to operate its present finished road if necessary during the next season and perhaps the season after that, when it expects to be in funds to complete the other 16 miles.
ARCHIBALD C. SHENSTONE,
Counsel for Company. O
TO MAKE SPIRITUOUS, MALT, VINOUS, AND INTOXICATING LIQUORS
OF ALL KINDS, IN INTERSTATE COMMERCE, ETC.
FEBRUARY 1, 1907.-Referred to he House Calendar and ordered to be printed.
Mr. BRANTLEY, from the Committee on the Judiciary, submitted the
[To accompany H. R. 16479.]
The Committee on the Judiciary, to whom was referred H. R. 16479, which reads as follows:
A BILL To make spirituous, malt, vinous, and intoxicating liquors of all kinds, in interstate com
merce, a special class in such commerce, and to regulate in certain cases the transportation and sale thereof.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That spirituous, malt, vinous, and intoxicating liquors of all kinds, when a part of interstate commerce, shall be a special class in such commerce, and the transportation and sale thereof shall be specially subject to the control and direction of Congress, and that any railroad company, express company, or other common carrier, or other person who shall, in connection with the transportation of spirituous, vinous, malt, and intoxicating liquors of all kinds from one State or Territory into another State or Territory, collect on, before, or after delivery, from the consignee or other person, the purchase price, or any part thereof of such liquors, or who shall in any manner act as the agent of the consignor or seller of such liquors for the purpose of selling or completing the sale thereof, saving only in the actual transportation and delivery of the same, shall be subject in so doing to all the police powers of the State or Territory into which such liquors are transported and delivered, and for this purpose in all cases of the sale of spirituous, vinous, malt, and intoxicating liquors of all kinds, in interstate commerce, where the same is sold “Collect on delivery,” the place of delivery shall be deemed and held the place of sale.
Having had the same under consideration, recommend that same be amended by striking therefrom all of lines 3, 4, 5, and 6, and the words “of Congress and” in the seventh line, so that said bill as amended will read as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That any railroad company, express company, or other common carrier, or other person who shall, in connection with the transportation of spirituous, vinous, malt, and intoxicating liquors of all kinds from one State or Territory into another State or Territory, collect on, before or after delivery, from the consignee or other person, the purchase price, or any part thereof, of such liquors, or who shall in any manner act as the agent of the consignor or seller of such liquors for the purpose of selling or completing the sale thereof, saving only in the actual transportation and
delivery of the same, shall be subject in so doing to all the police powers of the State or Territory into which such liquors are transported and delivered, and for this purpose in all cases of the sale of spirituous, vinous, malt, and intoxicating liquors of all kinds in interstate commerce, where the same is sold “Collect on delivery,” the place of delivery shall be deemed and held the place of sale. and that the caption be amended to read: "A bill to regulate in certain cases the transportation and sale of spirituous, malt, vinous, and intoxicating liquors of all kinds, in interstate commerce," and as so amended the committee recommends that the bill do pass.
In order to understand the purpose of and necessity for this proposed legislation, a brief review of the history of interstate commerce in liquor, as it has been written in the opinions of the Supreme Court and in the acts of Congress, is pertinent and proper.
Concisely stated, the Supreme Court decided, in Brown v. Maryland (12 Wheaton, 419), that a State could not exact a license fee from an importer of foreign merchandise as a condition precedent to such importer selling the imported merchandise in the original package, for until such sale was made the court held that the imported merchandise did not become commingled with the common mass of property in the State so as to become subject to its police power. This was in 1827.
In the License Cases, decided in 1847, and reported in Fifth Howard, 504, a citizen of New Hampshire was convicted of violating a State law in selling in the original package a barrel of gin received by him from Massachusetts without first having obtained a license from the State of New Hampshire. The conviction was sustained, and the license law of New Hampshire was held to be a valid exercise of its police power, as applied to an importation from another State that was sold in the original package. It will be noted that Brown v. Maryland related to a foreign importation or to foreign commerce, and that Pierce v. New Hampshire related to an importation from one State into another, or to commerce between the States.
The decision in Fifth Howard remained the law of the land until 1889, or for more than forty years, during all of which time each State regulated and controlled the sale of intoxicating liquors within its borders, whether such liquors were manufactured in the State or shipped therein from some other State. In 1889 the Supreme Court decided Leisy v. Hardin, reported in 125 U. S., 100. In this case, Pierce v. New Hampshire, in Fifth Howard, was overruled, and the rule laid down in Brown v. Maryland as applicable to foreign importotions, was made applicable to importations from one State into another, and it was held that liquor shipped into a State from another State could be sold in the original package in the State where received, regardless of the license laws or other restrictive laws or prohibitive laws of such State.
Following Leisy v. Hardin, and by reason thereof, Congress enacted in 1890 what is commonly known as the Wilson law. The same reads as follows:
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 pelice 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.
The validity of this law was upheld in re Rahrer (140 U. S., 545), and later was again upheld and construed in the Rhodes case (170 U. S., 412). In the latter case the court held the words in the act "arrival in such State or Territory” meant arrival at the point of destination and delivery to the consignee.
The effect of this act, as construed, has been to restore the exact and identical situation existing for forty-two years prior to Leisy, v. Hardin, so that now, as under Pierce v. New Hampshire, intoxicating liq iors, whether manufactured in a State or shipped therein from another State, can not be legally sold in such State without a compliance with its laws. The effect of Leisy v. Hardin has been completely overcome, and there can not be any more original package" saloons, nor is there any restriction upon the power of the State to restrict or to prohibit the sale.
The power of the States now being full and complete to regulate and control and prohibit the sale of all liquors within their respective borders, it becomes pertinent and proper to inquire why more legislation at the hands of Congress is needed, and what purpose it is proposed to accomplish by such legislation? It is properly within the scope of this report to answer these inquiries, but, first, attention is called to the particular bill under consideration, to wit, H. R. 16479. It has been discovered by reason of the decision of the Supreme Court in American Express Company v. Iowa (196 U. S., 133) that the Wilson law is defective in that it does not include and cover the operations of express companies and other common carriers engaged in handling C. 0. D. liquors. In very many of the States, perhaps the most of them, a C. O. D. delivery is held to be a sale, and the place of delivery the place of sale. The C. O. D. liquor business is prohibited within many States.
Under American Express Company v. Iowa, if the C. O. D. liquor comes from without the State its delivery and the collection of the purchase price, in other words the sale, can not be prohibited or controlled through license or otherwise by the State. Under this ruling, while everyone else within the State is subject to its police power in the matter of selling liquors, the express companies are not. The result is that not only do the express companies sell in defiance of the State law, but this privilege of selling has been shown to be the means of inducing and encouraging many evasions of the State law and has given rise to very much of the demand for amendments to the Wilson law. As illustrating the view taken of C. O. D. transactions in interstate commerce in liquors by the State courts, an express company in such a transaction was convicted in the Georgia courts of violating the State law by delivering in Georgia a package of whisky shipped from the State of North Carolina and collecting from the consignee the purchase price. The State supreme court said, in Express Company v. State (114 Ga., 226):
The consignor could not have escaped the effect of the Wilson Act by shipping the package from North Carolina to an agent of his in Dalton, Ga., and through this agent delivering it there to some one else upon such third person paying a stipulated price for the whisky. Clearly in such a case when the package reached the hands of his agent at Dalton it would have arrived in Georgia. It seems to us that the principle is not changed by the mere fact that the consignor addressed the package directly to the party to whom he intended to sell it in Dalton and made the agent of the express com. pany at that point his agent to effect such sale.
When the express company's agent at Dalton, acting for the consignor, sold the whisky to the person to whom
the package was addressed it was in legal effect the same as if the consignor had himself made such sale in Dalton. We are of the opinion that when the express company, as the agent of the consignor, effected or completed the sale in Dalton, Ga., to the consignee it was not shielded by the interstate-commerce clause in the Constitution of the United States from the operation of a penal law of this State.
A similar ruling was made by the supreme court of the State of Iowa, but when same was appealed to the Supreme Court of the United States a reversal was directed (196 U. S., 133), and thus was created the necessity for further legislation, if express companies in the act of selling liquor are to be subjected to the police power of the States.
The purpose of H. R. 16479 is to meet this necessity and to so supplement and complete the Wilson law as that the States can subject to their police powers the sale within their respective territories of all liquors, by all persons. It is realized that it is rather a difficult matter to frame a law covering this particular subject that will stand the test of the courts. A reading of 196 U. S., 133; 187 U. S., 622, and 191 U. S., 441 explains some of the difficulty. Care must be taken to so frame the law that it will not run counter to the long-established principle that one State can not invalidate or prevent the execution of a valid legal contract made in another State. In this bill the act of transportation is separated from the act of sale, and only the latter act is placed under the police power of the State.
It is easy to understand how and why a contract made in Illinois with an express company to deliver a package of whisky in Iowa can not be interfered with by the State of Iowa. The transaction is one in interstate commerce, which the State of Iowa can not control, and the contract being valid in Illinois, the State of Iowa can not prevent its execution. No reason appears, however, why, if the express company should contract further that as to this particular shipment it would act as the agent of the consignor and sell the liquor for him after it reached Iowa, that in so doing it should not be subject to the police laws of Iowa. It is true that the entire contract is but one contract, and yet there are different undertakings in it, and the purpose of this bill is to separate these undertakings and to withdraw from the undertaking to sell the protection of the interstate commerce clause attaching to the whole contract. There must be some remedy for existing conditions, and it being settled that the States are powerless to furnish it, Congress alone can do so. The bill does not seek to authorize the States to interfere with the transportation and delivery of the liquor, for that constitutes interstate commerce in its fundamental aspect; it only seeks to empower the States to interfere with the sale, by removing the restriction that now prevents such interference.
In other words, it is the sale only that can properly come under the police power of the States, and the bill undertakes to go no further than to subject the sale, or rather that part of it actually taking place within the State, to the police power of the State. If the bill undertook to declare in general terms, as does the Littlefield bill, H. R. 13655, that "in all such shipments to be paid for on delivery, commonly called C. O. D. shipments, the sale shall be held to be made at the place of destination or where the money is paid or the goods delivered," a very grave question would be raised as to the constitutionality of the measure, for such an enactment would have the effect of giving an extraterritorial effect to the law of a State. If the