Carter v. Carter Coal Co.

Facts

In response to problems caused by the Great Depression, Congress passed the Bituminous Coal Conservation Act of 1935, which established regulatory bodies for setting prices and regulating labor practices. Congress passed the 'Bituminous Coal Conservation Act of 1935,' to stabilize the bituminous coal mining industry and promote its interstate commerce; to provide for cooperative marketing of bituminous coal; to levy a tax on such coal and provide for a drawback under certain conditions; to declare the production, distribution, and use of such coal to be affected with a national public interest; to conserve the national resources of such coal; to provide for the general welfare, and for other purposes. The constitutional validity of the act is challenged in each of the suits. D was engaged in the business of mining coal. Carter (P), a stockholder of Carter Coal Co. (D), sued the corporation to prevent it from paying a tax and complying with the law. The Supreme Court of the District of Columbia found that the production of bituminous coal is a local activity carried on within state borders; that coal is the nation's greatest and primary source of energy, vital to the public welfare, of the utmost importance to the industrial and economic life of the nation and the health and comfort of its inhabitants, and that its distribution in interstate commerce should be regular, continuous, and free of interruptions, obstructions, burdens, and restraints. Other findings are to the effect that such coal is generally sold f.o.b. mine, and the predominant portion of it shipped outside the state in which it is produced; that the distribution and marketing is predominantly interstate in character, and that the intrastate distribution and sale are so connected that interstate regulation cannot be accomplished effectively unless transactions of intrastate distribution and sale be regulated. The court further found the existence of a condition of unrestrained and destructive competition in the system of distribution and marketing such coal, and of destructive price-cutting, burdening and restraining interstate commerce and dislocating and diverting its normal flow. The court concluded as a matter of law that the bringing of the suit was not premature; that the plaintiff was without legal remedy, and rightly invoked relief in equity; that the labor provisions of the act and code were unconstitutional for reasons stated, but the price-fixing provisions were valid and constitutional; that the labor provisions are separable; and, since the provisions with respect to price-fixing and unfair competition are valid, the taxing provisions of the act could stand. Therefore, except for granting a permanent injunction against collection of the 'taxes' accrued during the suit, the court denied the relief sought and dismissed the bill. Appeals were taken to the United States Court of Appeals for the District of Columbia by the parties, but pending hearing and submission in that court, petitions for writs of certiorari were presented asking us to review the decree of the Supreme Court of the District without awaiting such hearing and submission. Because of the importance of the question and the advantage of a speedy final determination thereof, the writs were granted. The United States conceded that the tax was a penalty, and its validity depended on whether the regulation was within federal commerce power.

Issues

Rule of Law

Holding and Decision

Legal Analysis

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