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Carter v. Carter Coal Company (1936)

Carter v. Carter Coal Company

298 U.S. 238; 56 S.Ct. 855; 80 L.Ed. 1160 (1936)

Vote: 5-4

The facts of the case are these: “The Bituminous Coal Act of 1935 created a national commission with authority to regulate wages and prices for the coal industry. A 15 percent tax was levied on all coal sold at the mine, and producers who accepted the federal regulations were entitled to a 90 percent rebate of assessed taxes. Carter, a stockholder in the Carter Coal Company, brought suit seeking to enjoin the company from paying the tax or complying with the code.”

The issues in this case are these: 1. Does the federal government have the authority to regulate an activity before that activity becomes part of interstate commerce?

The holding in the case is that: 1. The Court in this case, finds that the federal government does not have the authority to affect a local function.

The majority opinion written by Mr. Justice Sutherland states in part: “… The proposition, often advanced and as often discredited, that the power of the federal government inherently extends to purposes affecting the nation as a whole with which the states severally cannot deal or cannot adequately deal, and the related notion that Congress, entirely apart from the powers delegated by the Constitution, may enact laws to promote the general welfare, have never been accepted but always definitely rejected by this court…. …The general purposes which are act recites… are beyond the power of Congress except so far, and only so far, as they may be realized by an exercise of some specific power granted by the Constitution…. We shall find no grant of power which authorized Congress to legislate in respect of these general purposes unless it be found in the commerce clause—and this we now consider…. …The word ‘commerce’ is the equivalent of the phrase ‘intercourse for the purposes of trade.’ Plainly, the incidents leading up to and culminating in the mining of coal do not constitute such intercourse. The employment of men, the fixing of their wages, hours of labor and working conditions, the bargaining in respect of these things—whether carried on separately or collectively—each and all constitute intercourse for the purposes of production, not of trade… …the production of every commodity intended for interstate sale and transportation has some effect upon interstate commerce may be, if it has not already been, freely granted; and we are brought to the final and decisive inquiry, whether here that effect is direct, as the ‘preamble’ recites, or indirectly. The distinction is not formal, but substantial in the highest degree, as we pointed out in the Schechter case… Much stress us put upon the evils which come from the struggle between employers and employees over the matter of wages, working conditions, and the right of collective bargaining, etc., and the resulting strikes, curtailment and irregularity of production and effect on prices; and it is insisted that interstate commerce is greatly affected thereby…. And the controversies and evils, which it is the object of the act to regulate and minimize, are local controversies and evils affecting local work undertaken to accomplish that local result. Such effect as they may have upon commerce, however extensive it may be, is secondary and indirect. An increase in the greatness of the effect adds to its importance. It does not alter its character…. We now declare, that the want of power on the part of the federal government is the same whether the wages, hours of service, and working conditions, and the bargaining about them, are related to production before interstate commerce has begun, or to sale and distribution after it has ended….”

Mr. Chief Justice Hughes, writes a separate opinion dissenting, in this case, he states in part: “The power to regulate interstate commerce embraces the power to protect that commerce from injury, whatever may be the source of the dangers which threaten it, and to adopt any appropriate means to that end. … Congress thus has adequate authority to maintain the orderly conduct of interstate commerce and to provide for the peaceful settlement of disputes which threaten it. … But Congress may not use this protective authority as a pretext for the exertion of power to regulate activities and relations within the States which affect interstate commerce only indirectly. … But … the act also provides for the regulation of prices of bituminous coal sold in interstate commerce and prohibits unfair methods of competition in interstate commerce. Undoubtedly transactions in carrying on interstate commerce are subject to the federal power to regulate that commerce and the control of charges and the protection of fair competition in that commerce are familiar illustrations of the exercise of the power, as the Interstate Commerce Act, the Packers and Stockyards Act, and the Anti-Trust Acts abundantly show. … In this view, the Act, and the Code for which it provides, may be sustained in relation to the provisions for marketing in interstate commerce, and the decisions of the courts below, so far as they accomplish that result, should be affirmed.

Mr. Justice Cardozo, writes a separate opinion dissenting, in this case, he states in part: “…I am satisfied that the Act is within the power of the central government in so far as it provides for minimum and maximum prices upon sales of bituminous coal in the transactions of interstate commerce and in those of intrastate commerce where interstate commerce is directly or intimately affected. Whether it is valid also in other provisions that have been considered and condemned in the opinion of the Court, I do not find it necessary to determine at this time. Silence must not be taken as importing acquiescence…. I am authorized to state that Mr. Justice Brandies and Mr. Justice Stone join in this opinion.

The significance of this case, was that it was one of the final blows to Congress and the Executive by the Court on the matter of the ‘Commerce Clause.’ Today, we see what the ‘Commerce Clause’ has birthed, looking at things such as ‘Obamacare,’ is directly out of the ‘Commerce Clause’ criteria. The fact that in 1936, the Court stated that the federal government could not regulate intrastate activities, to now knowing that the federal government can now regulate everything, from what you eat, to what you buy, to whether you have the right to not buy something. Before ‘Obamacare’ passed, I said this: “If the federal government can MAKE you buy health insurance, than they can MAKE you buy a new car, or a new computer…”

Works Cited: American Constitutional Law: Sources of power and restraint, Volume I, Fourth Edition, Pg. 133-135, Chapter 2: Congress and the Development of National Power. Otis H. Stephens, Jr. and John M. Scheb II.

Legal Brief by: David A.W. Hittle

July 5, 2013