Hubbard v. Lowe

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The decision in Hubbard v. Lowe, 226 F. 135 (S.D.N.Y. 1915), appeal dismissed, 242 U.S. 654 (1916), is the leading precedent for striking down a federal statute as unconstitutional under the Origination Clause.

The trial Judge Charles Merrill Hough was presented with a challenge to the constitutionality of the Cotton Futures Act of 1914, which was major federal legislation attempting to reduce speculative trading in cotton futures, by regulating color, quality and other attributes of cotton. Judge Hough observed that:

[E]very one who has studied the investigations, reports, and discussions preceding and producing that passage of the act knows that nothing was further from the intent or desire of the lawmakers than the production of revenue, nevertheless the result of their efforts is a revenue bill within the constitutional meaning.

Id. at 137.

The Cotton Futures Act imposed “a tax intended to be prohibitive,” id., just as ObamaCare is being defended today as imposing a tax in order to deter people from going without health insurance.

The Hubbard court held: “It is immaterial what was the intent behind the statute; it is enough that the tax was laid, and the probability or desirability of collecting any taxes is beside the issue.” 226 F. at 137. The court struck down the Cotton Futures Act because it did not originate in the House. It harmonized prior decisions that had upheld statutes against challenge under the Origination Clause, by observing that the prior decisions all assumed full application of the Clause to federal statutes. “If these courts had not assumed that a revenue bill of Senate origin was a nullity, why spend so much time in proving that the act under consideration was not such a bill?” Id. at 140.

Accordingly, the court ruled that “[t]he Cotton Futures Act is not, and never was, a law of the United States. It is one of those legislative projects which, to be a law, must originate in the lower house.” Id. at 141. The decision was made easier by how the Senate had marked its bill as a Senate bill, but the underlying rationale of the ruling is clear: if a revenue-raising bill originated in the Senate rather than the House, then it is void ab initio by virtue of Article I, Section 7.

Congress subsequently reenacted the Cotton Futures Act in compliance with the Origination Clause, which mooted the appeal.