Senate Document No. 150, of the present session of Congress, which was printed February 8, 1904, wherein, on page 9, it says that the bill will

not prevent anyone from buying liquors wherever they are legally sold in his State or out of it, but only prevents liquor dealers outside of a State from invading it to sell "original packages" of liquors to "speak easies" by the aid of the interstate-commerce powers of Congress. By comparing this law with a sample of State laws following it will be seen that the Hepburn bill does not prevent buying liquors for private use.

And statements to similar effect were made by every speaker, as I recall it, since I have been in this room, except by Mrs. Foster, who frankly admitted that her purpose was to wipe out the manufacture and sale of intoxicating liquors entirely. Either she understands the purpose of the bill better or she is a little more honest in admitting its purpose.

If we can show, therefore, that this right and this power to prohibit the carrying on the business of selling within the State already exist. under the laws, and are sufficiently safe-guarded and protected, then we must conclude that our temperance and prohibition friends have been unnecessarily stampeded by the decision of the Supreme Court in the case of Rhodes v. Iowa, and that there is no necessity for this legislation at all, if it goes no further than its advocates claim. But if we can show, in addition, that the effect of this bill, if enacted into a law, would be to accomplish the very thing declared by all its advocates not to be the purpose of the bill, then surely this committee will not only feel themselves untrammeled by the action taken by this committee in the last Congress, but, in view of the variance between the avowed purposes intended to be accomplished and the effect of this bill, will not hesitate to reject it; and such action may all the more readily be taken in view of the further fact that even if the effect of the bill, as thus disclosed, was the hidden purpose of its promoters, such purpose and effect have been declared by the Supreme Court to be violative of the Constitution of the United States.

Mr. POWERS. Right there, Judge Hough, I would like to ask you a question.

Mr. HOUGH. Certainly.

Mr. POWERS. There is one question in my mind that seems to me to be the entire pith of the question of the constitutionality of the bill, and this is the question I would like to hear you upon. I suppose it will be conceded that the several States surrendered to the National Government the exclusive control over interstate commerce between the several States and Territories, and it is probably conceded that the National Government may not surrender its exclusive control over interstate commerce except by an amendment to the Constitution. Nobody has said that it is the intention to surrender to the States by an act of Congress exclusive control over an article of commerce the control over which is vested in the National Government.

Mr. HOUGH. It is an attempt to delegate a part of the power it possesses under that clause of the Constitution to the extent that it will give the States the right to regulate shipments without necessarily involving the right to sell, and I cover that when I come to it in this argument, and I will be very glad to answer any further questions on

that line when I get through. But I have prepared this with reference to presenting this one point, and I would like to keep this idea in mind which I have started in upon, and would like to keep it continuously in the minds of the members.

Mr. POWERS. Very well.

Mr. HOUGH. Now, on the first point, as to the necessity, since the only difference in the prohibition situation occasioned by the decision of the Supreme Court in the case of Leisy v. Hardin was with reference to the sale of intoxicating liquors in such prohibition districts in the original packages, it is to be assumed that such prohibition laws were being, prior to such decision, satisfactorily and adequately enforced in prohibition districts where the popular sentiment really favored such legislation; and it must be conceded that the effect of the decision in the case of Leisy v. Hardin was to give the importer of intoxicating liquors the right to sell in such prohibition districts in contravention of the local laws as long as the liquor remained in the original packages.

The Supreme Court of the United States in the cases of Rhodes v. Iowa (170 U. S., 412) and Vance v. Vandercook (170 U. S., 438) has emphatically declared that the effect of the act of August 8, 1890, known as the "Wilson Act," was to remove the protection which the interstate-commerce clause of the Federal Constitution and the failure of Congress to legislate thereon had thrown around original packages, in so far as the right to sell or carry on the business of selling in the prohibition districts was concerned.

In the latter case the court says (p. 445):

It is also certain that the settled doctrine is that the power to ship merchandise from one State into another carries with it, as an incident, the right in the receiver of the goods to sell them in the original packages, any State regulation to the contrary notwithstanding: that is to say, that the goods received by interstate commerce remain under the shelter of the interstate-commerce clause of the Constitution until by a sale in the original package they have been mingled with the general mass of property in the State. This last proposition, however, whilst generically treated, is no longer applicable to intoxicating liquors, since Congress in the exercise of its lawful authority has recognized the power of the several States to control the incidental right of sale in the original packages of intoxicating liquors shipped into one State from another, so as to enable the States to prevent the exercise by the receiver of the accessory right of selling intoxicating liquors in original packages, except in conformity to lawful State regulations.

In other words, by virtue of the act of Congress, the receiver of intoxicating liquors in one State sent from another can no longer assert a right to sell in defiance of the State law in the original packages, because Congress has recognized to the contrary. The act of Congress referred to, chapter 728, was approved August 8, 1890, and is entitled An act to limit the effect of the regulations of commerce between the several States and with foreign countries in certain cases." It reads as follows: (Here follows the act.) The scope and effect of this act of Congress have been settled in In re Rahrer (140 U. S., 545). and Rhodes v. Iowa (ante, 412). In the first of these cases the constitutional power of Congress to pass the enactment in question was upheld, and the purpose of Congress in adopting it was declared to have been to allow State laws to operate on liquor shipments into one State from another, so as to prevent the sale in the original package in violation of State laws.

In the second case the same view was taken of the statute, and although it was decided that the power of the State did not attach to the intoxicating liquors when in course of transit and until receipt and delivery, it was yet reiterated that the obvious and plain meaning of the act of Congress was to allow the State laws to attach to intoxicating liquors received by interstate commerce shipments before sale in the original package, and therefore at such a time as to prevent such sale if made unlawful by the State law.

This citation and the decision in the case of Rhodes . Iowa ought to clearly settle my first proposition.

They at last clearly demonstrate that the effect of the Wilson Act was to restore the situation or the condition of things as they existed prior to the decision in the case Leisy v. Hardin, in so far as the right of a State was concerned to prohibit the sale of intoxicating liquors at any place within the State. This being so, it is demonstrated that the reasons which were given in the report of this committee at the last Congress as to the necessity for the proposed legislation did not in fact exist; they existed only in the stampeded imagination of the prohibitionists.

There is no reason therefore why the prohibition laws in the various States of the Union should not be as vigorously enforced to-day as they ever were prior to the original-package decision. If they were not so enforced it must be due to the lack of moral sentiment behind those laws to stimulate which this national legislation is sought.

Such being the state of the law with reference to the right to prohibit sales, it occurs to me that the real grievance of the prohibitionists is not against the interstate-commerce clause of the Federal Constitution or any clause of the Constitution, but against the law of "sales."

Roughly speaking, a sale is a contract, and a contract is a meeting of the minds, and therefore the sale is effected at the place where the minds meet.

Applying these principles of the law of sales, the United States circuit court of appeals of the fifth circuit decided, in the case of De Bary . Souer (101 Fed. Rep., 425), that where a wholesale liquor firm located in the city of New York received at their place of business orders for liquor, and accepts them there, the sale is made there and not elsewhere, no matter where the goods may be delivered. This was the case, I may state, brought against the United States involving the recovery of a tax paid under the internal-revenue laws which had been assessed for carrying on the business at another place than New York; and all these cases to which I am calling attention are cases that have arisen under the United States internal-revenue laws. The Department is enforcing these laws, seeking as far as possible to require people who are carrying on the business of selling to pay the special tax to the Government for carrying on such business.

To the same effect is the judgment of the United States circuit court of appeals for the ninth circuit in the case of United States v. Chevallier (107 Fed., 434), wherein it was held that where a wholesale liquor dealer located in San Francisco receives orders from his traveling salesman in Oregon which are accepted and filled at the place of business in San Francisco the sale is made and the liquor is sold in San Francisco and not in Oregon.

To the same effect is the judgment of the United States court in Iowa in the very case referred to in the argument on the floor of the House by Judge Smith in the last Congress.

The liability for the special tax under the United States internalrevenue laws is for carrying on the business of selling, and it has been held under those laws that making a single sale incurs the liability. See Ledbetter ". United States (170 U. S., 606).

The case in question is that of the United States v. Adams Express Company (119 Fed., 240).

In this case the Adams Express Company was indicted in Iowa under the United States internal-revenue law for carrying on the business of selling liquor without having paid the special tax on account of carrying what is known as a Ĉ. O. D. shipment from Dallas, Ill., to Birmingham, Iowa. The court in that case held that the interstate-commerce clause of the Constitution was not involved, and the only question was whether the defendant by carrying such a shipment and receiving the purchase price had sold the liquors.

The decision of the court was that the sale had been made by the party who delivered the shipment to the express company in Illinois, and that that conclusion of the court was in perfect harmony with the decisions of the supreme court of Iowa itself, stating the law of 66 sales."

In other words, it holds that the general principles as to the place where a sale is made are not affected by the fact that the payment is to be in cash when delivered.

To the same effect is the judgment of the United States court in Kentucky in the case of United States v. Parker (121 Fed., 596), which was also a case of C. O. D. shipment.

And, finally, to the same effect is the very recent decision of the Supreme Court of the United States in the case of Norfolk and Western R. R. Co. v. Sims, decided December 7,,1903, and reported in No. 4 of the advance sheets of the October term, January 15, 1904. In that case the Supreme Court says:

A sale really consists of two separate and distinct elements. First, a contract of sale which is complete when the offer is made and accepted; and second, a delivery of the property which may precede, be accompanied by, or followed by the payment of the price as may have been agreed upon between the parties. The substance of the sale is the agreement to sell and its acceptance.

And though the shipment was a C. O. D. shipment, the court held that the sale was made where the order was received and accepted.

Such transactions as are referred to in these authorities can not offend against the police regulations of any State which are limited to prohibiting the selling or the carrying on of the business of selling intoxicating liquors in such State, and no State legislation can have any effect upon or control such a transaction unless the State legislation can be given extraterritorial force and effect, and any State law which attempts this, with or without the aid of Federal legislation, necessarily abandons the legitimate domain of the police power and enters the realm of interstate-commerce regulations. (Rhodes v. Iowa, supra.)

This is an impossible feat, for three reasons; and this brings us to my second position:

First. No State law can possibly have any greater extraterritorial force than any other State law, and therefore if the law of one State should forbid a thing to be done beyond its territorial limits which under the laws of a sister State could or should be done, an irreconcilable conflict instantly arises.

As was said in the case of Bowman v. C. and N. W. Rwy. (125 U. S., 465):

In the present case the defendant is sued as a common carrier in the State of Illinois, and the breach of duty alleged against it is a violation of the law of that State in refusing to receive and transport goods which, as a common carrier, by

that law it was bound to accept and carry. It interposes as a defense a law of the State of Iowa which forbids the delivery of such goods within that State. Has the law of Iowa any extraterritorial force which does not belong to the law of the State of Illinois? If the law of Iowa forbids the delivery and the law of Illinois requires the transportation, which of the two shall prevail? How can the former make void the latter?

Second. Independent of this irreconcilable conflict it would amount to regulating to interstate commerce on the part of the State over and above the enforcement of any police regulation. This the State can not do, nor can such power be delegated by Congress.

As was said in the case of In re Rahrer (140 U. S., 560):

It does not admit of argument that Congress can neither delegate its own powers nor enlarge those of a State.

And third, because it would have the effect of abridging the personal right guaranteed by the Constitution itself of bringing into a State wines or liquors for one's own use.

In the case of Vance v. Vandercook (170 U. S., 438) the Supreme Court, in holding that part of the South Carolina dispensary law unconstitutional which interfered with the right of a citizen to ship into the State for his own use and in holding the rest of the law constitutional, said, discussing the rest of the law:

But the weight of the contention is overcome when it is considered that the interstate-commerce clause of the Constitution guarantees the right to ship merchandise from one State to another and protects it until the termination of the shipment by delivery at the place of consignment, and this right is wholly unaffected by the act of Congress which does not allow State authority to attach to the original package before sale, but only after delivery.

Scott v. Donald, supra; Rhodes v. Iowa, supra: It follows that under the Constitution of the United States every resident of South Carolina is free to receive for his own use liquor from other States, and that the inhibitions of a State statute do not operate to prevent liquors from other States from being shipped into such State on the order of a resident for his use. This demonstrates the unsoundness of the contention that if State agents are the only ones authorized to buy liquor for sale in a State, and they select the liquor to be sold from particular States, the products of other States will be excluded. They can not be excluded if they are free to come in for the use of any resident of South Carolina who may elect to order them for his use.

The products of other States will be, of course, excluded from sale in the original packages in the State, but as the right of the State to prevent the sale in original packages of intoxicants coming from other States, in consequence of the State law forbidding the sale of any but certain liquor, attaches to the original packages from other States by virtue of the act of Congress, the inability to make such sales arises from a lawful State enactment. To hold the law unconstitutional because it prevents such sales in the original package Iwould be to decide that the State law was unconstitutional because it exerted a power which the State had a lawful right to exercise. Indeed, the law of the State here under review does not purport to forbid the shipment into the State from other States of intoxicating liquors for the use of a resident, and if it did so it would upon principle, and under the ruling in Scott v. Donald, to that extent be in conflict with the Constitution of the United States.

It is argued that the foregoing considerations are inapplicable, since the State law now before us, while it recognizes the right of residents of other States to ship liquor into South Carolina for the use of residents therein, attaches to the exercise of that right such restrictions as virtually destroy it.

But the right of persons in one State to ship liquor into another State to a resident for his own use is derived from the Constitution of the United States, and does not rest upon the grant of the State law. Either the conditions attached by the State law unlawfully restrain the right or they do not. If they do-and we shall hereafter examine this contention-then they are void. then there is no lawful ground of complaint on the subject.

1

If they no not,