Carter v . Carter Coal Company
The 1936 Supreme Court verdict of Carter v. Carter Coal Company had its origins in a 1935 piece of legislation known alternately as the Guffey-Snyder Act and the Bituminous Coal Conservation Act. The purpose of this legislation was to make coal mining practices fairer by creating a board whose purpose was to set regulations concerning wages and working hours. As part of this legislation's terms, coal manufacturers were given the option of paying a tax of 15% on all coal produced. If they did so, they would receive 90% of the tax they paid back.
The Carter coal Company chose to pay this tax, leading to a lawsuit by a shareholder named Carter. The case was first heard in the Supreme Court of the District of Columbia. In his lawsuit, Carter also filed suit against the Commissioner of the Internal Revenue Service. The purpose of his lawsuit was to prevent the company from paying the tax, which he felt it could not afford to do.
In considering the case, the district court ruled that the provisions of the Guffey-Snyder act concerned with worker wages and hours were not constitutional. However, they ruled that the legislation's provisions concerned with taxation were constitutional, since coal was essential to the United States and its production part of the process of interstate commerce, which can be regulated by Congress under the Commerce Clause of the Constitution. The court then ruled against Carter, who appealed the case to the Supreme Court.
In considering Carter v. Carter Coal Company, the Supreme Court had to consider two separate questions. One was whether the provisions of the law concerned with workers' rights, wages and hours were constitutional. The other question at stake in Carter v. Carter Coal Company was whether the provisions of the law establishing the optional refundable tax were constitutional.
The Supreme Court's verdict in Carter v. Carter Coal Company was delivered 5 to 4 and declared that both portions of the law were unconstitutional. The Court first considered the part of the law concerned with workers' rights and wages. In its verdict in Carter v. Carter Coal Company, the Court concluded that since no part of the Commerce Clause concerned worker welfare, Congress was exceeding its constitutional authority in issuing regulations on this subject.
In considering the taxation portion of the case of Carter v. Carter Coal Company, the Court ruled that the portions of the law concerning taxation and labor were so intertwined that they were not separable. Therefore, a violation of the constitution in one portion of the law almost certainly led to a violation in the other half of the law. Furthermore, the Supreme Court found that while production of coal led to interstate commerce on a regular basis, the actual production and manufacture of coal was a local rather than interstate commerce. Therefore, the Supreme Court found that the legislation had exceeded Congress' authority.