Carter v. Carter Coal Co.


Congress passed Bituminous Coal Conservation Act of 1935, which allowed for the setting of coal prices and proscribed unfair labor practices.  Finally, the act instituted a fifteen percent tax on all coal produced.  For those who complied with the other components of the Act, the tax was lowered to 1.5 percent.  Plaintiff was a stockholder of Defendant corporation and brought suit, seeking to keep it from complying with the Act.  He also sought to specifically keep the corporation from paying the imposed tax.  At trial the court found that the labor provisions were a violation of the Congressional power to regulate interstate commerce, but the provisions fixing prices and instituting the tax were upheld.


  1. Whether the tax and price fixing provisions of the Act are constitutional.
  2. Whether the unfair labor provisions of the Act are constitutional.


No and no.  The unfair labor provisions are not a constitutional exercise of Congressional authority.  Congress does not have general police power, and therefore cannot regulate for the “general welfare.”  The coal production process occurs before “commerce” becomes eligible for regulation by Congress.  The good is in its production phase and occurs within state line in the production phase and therefore cannot be properly regulated by Congress at that stage.  Congress, therefore, cannot properly regulate any good in its production stage (even where there is full intent to sell the good across state lines), where the production is within state lines.  This would effectively regulate “pre-commerce.”  Congress more properly regulates trade, transportation, and exchange of goods.

Because the price fixing provision and tax provision is so related to the provision concerning unfair labor practices, it too cannot be as constitutional.  The tax provision is a penalty for non-compliance with the unconstitutional provision regarding labor standards.  The court cannot consider the stand alone constitutionality of the price fixing provision because of this relation.  Where the unfair labor standards are unconstitutional and simultaneously tied directly to the fixation of price, they cannot be separated.  As such, the price fixing portion of the Act is bound with the unconstitutionality of the unfair labor portion.

Leave a Reply