Board of Trustees of Univ. of Ill. v. United States

Background

The University of Illinois imported scientific apparatus for use in an educational department. Customs collected duties under the Tariff Act of 1922. The university paid the duties under protest, arguing that as a state instrumentality performing a government function it should be exempt from import taxes. The Customs Court ruled for the Government, and the Court of Customs and Patent Appeals affirmed. The Supreme Court granted review, and Chief Justice Hughes wrote the opinion.

Reasoning

The main question was whether Congress, acting under its power to regulate foreign commerce, may impose duties on goods imported by a state or its agencies. The Court explained that the Tariff Act was framed to regulate commerce with foreign nations, and that the power to regulate foreign trade is exclusive to the national government. While the power to tax is separate, laying duties has long been recognized as a common way to regulate imports. The Court said the doctrine that state instrumentalities are immune from federal taxation has limits and does not override Congress’s control over importation. Allowing states or state agencies to import free of congressional requirements would destroy the unified national control over foreign trade. The Court concluded that Congress, not the States, decides if any exemption should apply.

Real world impact

The decision means the University’s protest failed and the lower-court judgments were affirmed, so the university must pay the duties it challenged. More broadly, the ruling makes clear that states and their agencies do not automatically get duty-free treatment for imports; Congress must provide any exemption. The opinion leaves open questions about particular state functions, because the Court said it was unnecessary to decide those specific points here.