216 U.S. 344
WILLIAM J. MOXLEY, a Corporation Organized and Existing under the Laws of the State of Illinois,
HENRY L. HERTZ, Collector of Internal Revenue for the First Collection District of Illinois.
Argued December 13 and 14, 1909.
Decided February 21, 1910.
[216 U.S. 344, 345] Mr. John Maynard Harlan for Wm. J. Moxley.
[216 U.S. 344, 346] Solicitor General Bowers for the Collector.
Mr. Justice McKenna delivered the opinion of the court:
The certificate cannot easily be condensed, therefore we give it in full. It is as follows:
It, as it will be observed, is implied in the certificate, and it is also contended at bar, that the facts of this case distinguish it from Cliff v. United States, supra. What the decision was in that case, therefore, becomes the first subject of inquiry. And an element of that inquiry is the act of Congress under which the tax in controversy was imposed, of which 2 and 8 are only necessary to quote:
Sec. 8. That upon oleomargarine which shall be manufactured and sold, or removed for consumption or use, there shall be assessed and collected a tax of 10 cents per pound, to be paid by the manufacturer thereof; and any fractional part of a pound in a package shall be taxed as a pound: provided, when oleomargarine is free from artificial coloration that causes it to look like butter of any shade of yellow, said tax shall be 1/4 of 1 cent per pound' [italics ours]. [Act of August 2, 1886, as amended May 9, 1902, 32 Stat. at L. 194, chap. 784, 3, U. S. Comp. Stat. Supp. 1909, p. 864.]
The defendant in that case was charged with having knowingly purchased and received for sale oleomargarine which had not been properly stamped according to law. It was shown that out of 160 ounces of which the compound was composed, only 1 1/2 ounces were palm oil, and the following ruling of the commissioner was introduced in evidence:
The contention was that Congress having, in 2, defined oleomargarine to consist of certain substances, the color [216 U.S. 344, 353] which resulted from the use of such substances, or any of them, was a natural, not an artificial, coloration. The contention, and the argument of counsel to support it, was given at length, so that its full extent and strength should be shown. Among other things, this was said: 'Howsoever minute may be the quantity of palm oil used, it is none the less a vegetable oil, a statutory, or, so to speak, a natural, ingredient of oleomargarine, and displaces in the finished product an equal volume of some other statutory ingredient of oleomargarine, as, for instance, cotton- seed oil.' And it was argued that the statute conferred 'no power upon the commissioner to prescribe the formula for the manufacture of oleomargarine, or the proportion of the different ingredients, or to exclude any ingredient except upon the ground of its being deleterious to health.' The argument could not be misunderstood or evaded. It asserted the purity of the oleomargarine under the law, and that its color came from its purity, not from any illegal addition to it. The contention, therefore, was direct, and unqualified by any consideration of the relative quantity of the ingredients. Its force was recognized, but it was nevertheless rejected, and in reply it was pointed out that the statute was not enacted to permit the manufacture of oleomargarine, but to prevent its sale 'as and for butter.' And it was decided 'that when any substance, although named as a possible ingredient of oleomargarine, substantially serves only the function of coloring the mass, and so as to cause the product to 'look like butter of any shade of yellow,' it is an artificial coloration.' It was stated that palm oil is a vegetable oil, and one of the substances authorized to be used by 2 in the composition of oleomargarine. But this, it was added, did not exempt the product from the higher tax if the palm oil or any other 'statutory ingredient,' to use the phrase of counsel, was used only for coloring. The statute was carefully analyzed, and the words, 'and other coloring matter,' in 2, were declared to have an obvious purpose. 'It was to prevent,' it was said, 'excluding from the operation of the stat- [216 U.S. 344, 354] ute anything in its nature oleomargarine [that is, to exempt from the higher tax anything in its nature oleomargarine] by the addition of a substance not in reality an ingredient, but serving substantially only the purpose of coloring the product to cause it to look like butter.' And it was further said: 'The fact that one of the ingredients of this compound is palm oil does not show that such oil does anything else than color the product composed of other ingredients, and if it does substantially only this, it is rightfully styled an artificial coloration.' This language brings us to the point of distinction between that case and the case at bar. It is put beyond controversy that oleomargarine may be subject to the higher tax though its color result from a 'statutory ingredient.' To relieve from such consequence the ingredient must be there in substantial quantity,-in quantity substantial enough to contribute to the product something more than color. And this, it is insisted, the palm oil does in the case at bar, and the case is, therefore, it is further insisted, distinguished from the Cliff Case. The contention is that the defendant in the Cliff Case 'stood upon the narrow proposition that palm oil being a vegetable oil, and, therefore, being a statutory ingredient of oleomargarine, it made no difference whether the amount of it used was small or large, or whether the sole purpose of its use was to impart the desired color; coloration due to its use was not, within the meaning of the statute, 'artificial coloration."
It is further urged that 'Cliff made no effort whatever to show what, if any, were the effects of palm oil upon the oleomargarine other than giving color to it,' but admitted, for the purpose of the case, 'that the sole and only function of the palm oil was to make the oleomargarine 'look like butter of a shade of yellow."
He did not show, as he might have shown, it is further urged, 'what are found as facts in this case, namely: that palm oil in its nature is suitable for food; that, for many years prior to 1902, it had been used for food, and that, when [216 U.S. 344, 355] so used, it was found healthful and digestible; and that palm oil had been successfully used in oleomargarine prior to May 9, 1902, the date of the passage of the amendment which, for the first time, made the tax upon oleomargarine that is free from artificial coloration smaller than the tax upon oleomargarine that is not free from artificial coloration. Prior to May 9, 1902, all oleomargarine was taxed under the original oleomargarine law passed in 1886, at the rate of 2 cents per pound, regardless of whether it was free or not free from artificial coloration.'
Are these contentions sustained by the facts certified? Do they show that the palm oil has substantially any other purpose than to color the product? It is certified that palm oil is a purely vegetable oil, 'is perfectly wholesome, is readily digested, and has long been used as an article of food in countries where it is produced.' These are useful qualities, undoubtedly; and the extent of their contribution by the presence of 1/2 of 1 per cent of palm oil is attempted to be estimated. It is the ingredient, the certificate says, that gives to the oleomargarine a 'shade of yellow' and makes it resemble butter; that is, enables it to seem what it is not, and so far, at least, to defeat the purpose of the law against coloration. And the certificate further recites that, 'in addition to coloring the oleomargarine in resemblance to butter, the palm oil probably gives to the oleomargarine slightly better grain of texture, causing it to act more like butter in the frying pan, and it also caused said oleomargarine to have a better physiological effect upon the persons who ate it; but such function of the palm oil, other than as coloring matter, was slight, and but for the coloring imparted to the oleomargarine would not probably been used in its manufacture.'
We do not think these facts take the case out of the ruling in the Cliff Case. There is no more substantial contribution of character to the compound in this case than in that. The amount of palm oil used in that case was something greater than in this, and the purpose of its use was the same. It, of [216 U.S. 344, 356] course, added whatever qualities it possessed and could exist in a fraction of 1 per cent of the product of which it made a part. This did not need explicit statement, and it gains nothing now by explicit statement. What effect is claimed for it? It gives, it is said, a slightly better grain of texture, a better physiological effect upon those who eat it. But those effects are 'slight,' it is certified. What is meant by 'slight?' It is the word of a rather indeterminate meaning. It usually implies unimportance or insignificance, and is practically given that meaning in the certificate. The palm oil, it is certified, contributes so little to the value or quality of the oleomargarine that, but for its coloring power, it would not be used. It may be, as counsel says, that the motive of its use cannot make it illegal, and that one cannot become an offender against the law by doing what it permits. But the question here is not what the law permits. That was decided in the Cliff Case. The question here is whether we shall exaggerate a slight use of a 'statutory ingredient' into a substantial use of it, and by doing so bring its use within the permission of the statute, and relieve the product of which it is a 'slight' part from a tax of 10 cents.
We have so far considered this case on the authority of the Cliff Case, deeming it unnecessary to repeat the reasoning of the latter, as though the question was res integra. It may be well, however, to develop the argument of counsel somewhat further. It is presented in a summary way in the following syllogism:
We are not called upon to consider whether the first premise of counsel's syllogism is sustained by McCray v. United States, supra, but we are concerned to say, to meet a contention of counsel, that it will not be put into antagonism with the Cliff Case by the meaning we have given the latter. On the contrary, the cases support each other. In both, this court declined to follow arguments based upon the mere letter of the statute, in destruction of its manifest intention. The contention in the McCray Case was that butter, whether artificially colored or not, was an authorized ingredient of oleomargarine, and, when added to oleomargarine, made it free from artificial coloration. This was pronounced an 'obvious non sequitur.' The product, it was said, would be 'oleomargarine,' but it would not be 'oleomargarine free from artificial coloration within the intendment of the proviso' of 2.
It follows from these views that the first question certified must be answered in the affirmative; the second and third questions do not call for specific answers on this record.