Jordan v. Roche

Background

Importers brought suit after paying taxes on bay rum shipped from Porto Rico in 1907–1908. The Collector of Internal Revenue had collected taxes under the Foraker Act and federal revenue statutes. The Foraker Act said Porto Rican goods must pay a tax equal to the internal revenue tax on similar domestic articles, and tariff duties later ceased by presidential proclamation, but the internal-revenue requirement remained. Lower courts reached conflicting results, so the Second Circuit asked the Supreme Court to answer whether Porto Rican bay rum was taxable like domestic distilled spirits.

Reasoning

The core question was whether likeness to a domestic article is decided by the product’s commercial name or by what it actually is. The Court reviewed the revenue statutes that define and tax ethyl alcohol and all products of distillation, saying taxes attach to the alcoholic substance regardless of the article’s name. The Court found the Foraker Act intended comprehensive application of U.S. revenue laws to Porto Rican products. It therefore agreed with the Government that bay rum is an alcoholic distillate and is taxed on that basis. The Court also rejected the idea that a later 1909 law proved bay rum was untaxed earlier; instead Congress clarified the law after contrary court decisions.

Real world impact

The ruling makes importers responsible for internal-revenue taxes on bay rum and similar alcoholic mixtures from Porto Rico. It treats alcohol-containing products by their substance, not by commercial label, for tax purposes. The 1909 law later restated this approach after lower-court disagreements.