Landmark Supreme Court Case: U.S. v. Butler (1936)

by Kwaisi France · August 4, 2020

U.S. v. Butler (1936) is the 64th landmark Supreme Court case, the 27th in the Economics module, featured in the KTB Prep American Government and Civics series designed to acquaint users with the origins, concepts, organizations, and policies of the United States government and political system. The goal is greater familiarization with the rights and obligations of citizenship at the local, state, national, and global levels and the history of our nation as a democracy. While there is overlap, these landmark cases are separated into cases addressing:

The Supreme Court

The Supreme Court is the highest court in the United States. Article III of the U.S. Constitution created the Supreme Court and authorized Congress to pass laws establishing a system of lower courts. The Constitution elaborated neither the exact powers and prerogatives of the Supreme Court nor the organization of the Judicial Branch as a whole. Thus, it has been left to Congress and to the Justices of the Court through their decisions to develop the Federal Judiciary and a body of Federal law.

The number of Justices on the Supreme Court changed six times before settling at the present total of nine in 1869. Since the formation of the Court in 1790, there have been only 17 Chief Justices* and 102 Associate Justices, with Justices serving for an average of 16 years. On average a new Justice joins the Court almost every two years.

The Supreme Court of the United States hears about 100 to 150 appeals of the more than 7,000 cases it is asked to review every year. That means the decisions made by the 12 Circuit Courts of Appeals across the country and the Federal Circuit Court are the last word in thousands of cases.

Court of Appeals

In the federal court system’s present form, 94 district level trial courts and 13 courts of appeals sit below the Supreme Court. The 94 federal judicial districts are organized into 12 regional circuits, each of which has a court of appeals. The appellate court’s task is to determine whether or not the law was applied correctly in the trial court. Appeals courts consist of three judges and do not use a jury.

The appellate courts do not retry cases or hear new evidence. They do not hear witnesses testify. There is no jury. Appellate courts review the procedures and the decisions in the trial court to make sure that the proceedings were fair and that the proper law was applied correctly.

A court of appeals hears challenges to district court decisions from courts located within its circuit, as well as appeals from decisions of federal administrative agencies. In addition, the Court of Appeals for the Federal Circuit has nationwide jurisdiction to hear appeals in specialized cases, such as those involving patent laws, and cases decided by the U.S. Court of International Trade and the U.S. Court of Federal Claims.

District Courts

The nation’s 94 trial courts are called U.S. District Courts. At a trial in a U.S. District Court, witnesses give testimony and a judge or jury decides who is guilty or not guilty — or who is liable or not liable. District courts resolve disputes by determining the facts and applying legal principles to decide who is right.

Trial courts include the district judge who tries the case and a jury that decides the case. Magistrate judges assist district judges in preparing cases for trial. They may also conduct trials in misdemeanor cases.

There is at least one district court in each state, and the District of Columbia. Each district includes a U.S. bankruptcy court as a unit of the district court.

Bankruptcy Courts

Federal courts have exclusive jurisdiction over bankruptcy cases involving personal, business, or farm bankruptcy. This means a bankruptcy case cannot be filed in state court. Bankruptcy Appellate Panels (BAPs) are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals, and must be established by that circuit. Five circuits have established panels: First Circuit, Sixth Circuit, Eighth Circuit, Ninth Circuit, and Tenth Circuit.

U.S. v. Butler (1936)

Butler Facts:

In the 1933 Agricultural Adjustment Act, Congress implemented a processing tax on agricultural commodities, from which funds would be redistributed to farmers who promised to reduce their acreage. The Act intended to solve the crisis in agricultural commodity prices, which was causing many farmers to go under, by increasing the prices of certain farm products by decreasing the quantities produced.

Authority to determine which crops would be affected was granted to the Secretary of Agriculture. He decided that one of the crops should be cotton, and Butler received a tax claim as a receivers of the Hoosal Mills Corp., a cotton processor.

Butler Legal Questions and Answers

Q: Did Congress exceed its constitutional taxing and spending powers with the Act?

A: Yes. The Agricultural Adjustment Act was unconstitutional because it attempted to regulate and control agricultural production, an area reserved to the states by the Tenth Amendment.

Butler Conclusion

6-3 decision ruling the Agricultural Adjustment Act is an unconstitutional exercise of power. Congress’ Spending Power (Article I, Section 8) is restricted to situations in which it is being used for the general welfare of the people. Agricultural production historically lies beyond the authority of the federal government to regulate.

Although Congress does have the power to tax and appropriate funds, in this case those activities were “but means to an unconstitutional end.” That is, Congress was using the spending power as an enforcement mechanism to control activity that was completely within the authority of the states.

Butler was the last case in which the Supreme Court struck down an Act of Congress as an overextension of its spending power, and part of a series of cases decided by the conservative Supreme Court of the time period which declared unconstitutional parts of Franklin D. Roosevelt’s New Deal legislation. The fact that the Court struck down the Act despite an expansive interpretation of the Spending Clause reflects the turmoil in the Court at this critical time. Indicating that turmoil and the fact that Butler was a turning point in the Court’s thinking, in later jurisprudence Butler has been referenced to support expansion of authority under the Spending Clause (Steward Machine Company v. Davis, (1937)) and to dissent from such expansion (South Dakota v. Dole, (1987)).

Quimbee on U.S. v. Butler (1936)

Next Economics Case: Carter v. Carter Coal (1936)

Previous Economics Case: Gold Clause Cases (1935)

Next Case: U.S. v. Curtiss-Wright (1936)

Previous Case: Humphrey’s Executor. (1935)

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