Facts: Congress enacted the Revenue Act of 1951 which mandated that “persons engaged in the business of accepting wages” must register for and pay an occupational tax. The tax applied to interstate as well as intrastate wagers. When Mr. Kahriger was found in violation to the law, he “moved to dismiss on the ground that the sections upon which the information was based were unconstitutional.”

Decision: 5 – 4 United States wins. Justice Reed delivered the Opinion of the Court.

Doctrine: Under the Constitution, Congress possesses the power to require licenses of an industry and levy an occupational tax on that industry even if that tax is on intrastate commerce and even “if the sole purpose of the statute is to penalize” that industry.

Reasoning: Kahriger argued that “Congress, under the pretense of exercising its power to tax, has attempted to penalize illegal intrastate gambling through the regulatory features of the Act and has thus infringed the police power which is reserved to the states.” He argued that the interstate commerce clause does not delegate to Congress the power to “tax a specific business” that is “not within its power to regulate.”

The Court wrote that “the precedents are many upholding taxes similar to this wagering tax as a proper exercise of the federal taxing power.” In fact, in the License Tax Cases, the Court ruled that Congress has the power to require those who sell lottery tickets or liquor to buy “a license under the Internal Revenue Act of Congress,” for by doing so, Congress has “no power of regulation nor any direct control” over those businesses. At that time, the Court ruled that “the granting of a license, therefore, must be regarded as nothing more than a mere form of imposing a tax.”

Kahriger held that since Congress’ “motive to suppress wagering” was evident, “this tax is not a proper exercise of such taxing power.” Congress attempted to discourage the practice of intrastate gambling by taxing it, stated Kahriger. Because “the sole purpose of the statute is to penalize only illegal gambling in the states through the guise of a tax measure,” stated Kahriger, it is unconstitutional. However, the Court ruled that “a federal excise tax does not cease to be valid merely because it discourages or deters the activities taxed.” The Court stated that “regardless of its regulatory effect, the wagering tax produces revenue” and is therefore a constitutional use of Congress’ taxing powers. “It is hard to understand why the power to tax should raise more doubts because of indirect effects than other federal powers,” wrote the Court. “When federal power to regulate is found, its exercise is a matter for Congress.”

Finally, the Court ruled that it was not up to the Judiciary to decide if the law would have “a crushing effect on businesses deemed unessential or inimical to the public welfare.” They put simply that the “remedy for excessive taxation is in the hands of Congress, not the Courts.”

Facts: In order to prevent foreclosures, the Minnesota legislature enacted the Minnesota Moratorium Act of 1934, which gave the states courts the power to postpone the mortgage payments of farmers and homeowners. When John Blaisdell applied for a postponement of his payments to the Home Building & Loan Association, a trial court dismissed his case. When the Minnesota Supreme Court overturned the trial court’s decision and approved his extension, the Home Building & Loan Association appealed to the Supreme Court, arguing that the law violated the Constitution.

Decision: 5 – 4 Blaisdell wins. Chief Justice Hughes delivers the Opinion of the Court.

Doctrine: State legislatures have the power to allow temporary and limited restraints on the enforcement of contracts in order to secure “the vital interests of the community.”

Reasoning: Article 1, Section 10 of the Constitution states that no state shall make any “law impairing the Obligation of Contracts.” However, the Court ruled that both the limitation of the state Legislature’s power and the power reserved to the Legislature must “be construed in harmony with each other.” In other words, neither can “be construed so as to destroy” the other. They ruled, “The question is not whether the legislative action affects contracts incidentally, or directly, or indirectly.” Rather, the question is “whether the legislation is addressed to a legitimate end and the measures taken are reasonable and appropriate to that end.”

While the Court ruled that in normal economic conditions, the state legislature would not possess the power to postpone the debts of homeowners, the Court also held that a state legislature possesses the power “to safeguard the vital interests of its people.” “While emergency does not create power,” the Court ruled, “emergency may furnish the occasion for the exercise of power.”

In fact, the Court wrote that “a temporary restraint of enforcement may be consistent with the spirit and purpose of the constitutional provision and thus be found to be within the range of the reserved power of the state to protect the vital interests of the community” in times of emergency. “The question is no longer merely that of one party to a contract as against another, but of the use of reasonable means to safeguard the economic structure upon which the goods of all depends,” wrote the Court. It would be unreasonable to hold that “the constitutional prohibition [on the Obligation of Contracts] should be so construed as to prevent limited and temporary interpositions with respect to the enforcement of contracts if made necessary by a great public calamity such as a fire, flood, or earthquake.”

The Court ruled that such an interpretation of the Constitution is reasonable. To limit the Constitution “to the interpretation which the framers, with the conditions and outlook of their time, would have placed upon” it, would be to prevent the Constitution from adapting “to the various crises of human affairs,” wrote the Court. The Court found “no warrant for the conclusion that the clause has been warped by” this interpretation.

Since “an emergency existed in Minnesota which furnished a proper occasion for the exercise of the reserved power of the state to protect the vital interests of the community,” the Minnesota law was ruled constitutional. Therefore, the Supreme Court upheld the decision of the Minnesota Supreme Court.

Facts: New York’s legislature gave two men, Robert Livingston and Robert Fulton, a monopoly on the operation of steamboats on all waters within the jurisdiction of the state. Livingston and Fulton then granted Aaron Ogden the exclusive right to operate a ferry between New York City and various ports along New Jersey’s coast. Ogden requested an injunction from the courts of New York when Thomas Gibbons ran a competing ferry on those waterways. Ogden claimed that Gibbon’s operation of vessels in those waters was violating the monopoly that the New York legislature had indirectly given him. Gibbons argued that his vessels were licensed by a 1793 congressional act that authorized vessels “employed in the coasted trade and fishers.” When the New York courts upheld Ogden’s claims, Gibbons appealed to the Supreme Court.

Decision: 9-0 Gibbon wins. Chief Justice John Marshall delivered the opinion of the Court.

Doctrine: Congress’ power to regulate Commerce “among the several states” is to create rules for the “commercial intercourse” between the states, including that which occurs within the borders of several states. When a state law interferes with Congress’ power to regulate Commerce, it is unconstitutional.

Reasoning: The Court ruled that although the Constitution “contains an enumeration of powers expressly granted by the people to their government,” there is not “one sentence in the Constitution which gives countenance” to strictly limiting the powers of government based on the explicit words of the text. “That narrow construction,” the Court argued, would “cripple the government and render it unequal to the objects for which it is declared to be instituted.”

The Constitution grants Congress the power “to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Congress’ power to regulate Commerce “is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the Constitution.” In order “to ascertain the extent of the power, it becomes necessary to settle the meaning of the words,” the Court wrote.

Defining commerce to mean solely navigation, wrote the Court, would be to “restrict a general term, applicable to many objects, to one of its significations.” On the contrary, commerce is “the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.” In a way, commerce is the trading of commodities, not just traffic.

For years, it had been widely held that the text of the Constitution includes “every species of commercial intercourse between the United and foreign nations.” Therefore, the Court argued that it is reasonable to imply that Congress also has the power to regulate all commercial intercourse among the states, since the Constitution grants Congress both the power to regulate commerce with foreign nations and among the states.

In addition, “commerce among the states cannot stop at the external boundary line of each state, but may be introduced into the interior” because, according to the Court, the word “among” in the Constitution equates to “intermingled with.” “If a foreign voyage may commence or terminate at a port within a state,” the Court wrote, then the Congress can regulate commerce “within a state.” Congress’ power to regulate Commerce may “pass the jurisdictional line of New York, and act upon the very waters to which the prohibition now under consideration applies,” the Court argued. However, although Congress’ power to regulate commerce can extend into the states, it does not apply to actions of commerce “which are completely within a state.” The Constitution’s use of the word ‘among’ “may very properly be restricted to that commerce which concerns more states than one,” wrote the Court.

“The sole question is, can a state regulate commerce with foreign nations and among the states, while Congress is regulating it?” Although debates about which powers the states possess and which the federal government possesses “must arise … in our complex system,” this does not mean that those laws must “interfere.” Some argue, wrote the Court, that although Congress has the power to regulate Commerce among the states, the states, themselves, may severally exercise the same power within their respective jurisdictions,” for this power is an “inseparable attribute of sovereignty.” However, “the act of a state inhibiting” the Congress from using any licensed ships within its territory is “in direct collision with that act,” wrote the Court. If the Constitution gives Congress this power, a state may not interfere with it. Limiting Congress’ power to regulate Commerce among the states by preventing it from using vessels in the waterways within the jurisdiction of New York is to “explain away the Constitution of our country and leave it a magnificent structure indeed, to look at, but totally unfit for use.”

Therefore, the Court ruled in Gibbons’ favor.