United States v. Constantine

1935-12-09

Headline: Court strikes down federal $1,000 excise on state‑illegal liquor sales as a penalty, blocking federal enforcement and leaving states, not the federal government, to punish illegal alcohol businesses.

Holding: The Court held that the $1,000 special excise on selling liquor contrary to state law is a penalty, not a tax, and therefore beyond federal power after the Eighteenth Amendment’s repeal.

Real World Impact:

Stops federal imposition of the $1,000 penalty on state‑illegal liquor sellers.
Reinforces that states, not the federal government, punish local criminal conduct.
Makes similar large federal exactions tied to state crimes vulnerable to challenge.

Topics: alcohol regulation, federal vs state power, taxes vs penalties, prohibition‑era law

Summary

Background

A restaurant owner in Birmingham sold malt liquor in violation of city and state law and paid the ordinary $25 liquor license tax but did not pay a separate $1,000 special excise Congress had imposed. The federal government prosecuted under the Revenue Act’s special $1,000 provision. A federal appeals court held the $1,000 charge became inoperative after repeal of the Eighteenth Amendment; the government asked the Supreme Court to decide the issue.

Reasoning

The central question was whether the $1,000 charge was a valid federal tax or really a penalty aimed at punishing conduct that violated state law. The Court looked at how the charge worked in practice: it was forty times larger than the normal $25 tax in the respondent’s situation, it applied only when the business violated state law, and its amount and operation suggested deterrence rather than revenue. The Court concluded the exaction was a federal penalty exceeding federal power and therefore could not stand after the repeal of the national prohibition amendment. The Court affirmed the judgment in favor of the restaurant owner.

Real world impact

The decision prevents the federal government from imposing that additional $1,000 punishment on people running alcohol businesses contrary to state law, leaving primary authority to the states to punish such conduct. Because the ruling treats the item as a penalty rather than a tax, similar federal efforts to impose large, crime‑related exactions risk being struck down. The opinion also emphasizes the boundary between federal fiscal powers and state police powers.

Dissents or concurrances

A dissenting opinion argued Congress could reasonably classify illegal, furtive businesses for heavier excise treatment and that courts should not probe legislative motive; the dissent would have upheld the $1,000 charge as a permissible tax.