Baltic Mining Co. v. Commonwealth

• Decision Date: 04 January 1911
• Citation: 93 N.E. 831,207 Mass. 381
• Parties: BALTIC MINING CO. v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

207 Mass. 381

93 N.E. 831

BALTIC MINING CO. v. COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

January 4, 1911

COUNSEL

C. A. Snow, J. H. Knight, and W. P. Evarts, for petitioner.

Dana Malone, Atty. Gen., and Andrew Marshall, Asst. Atty. Gen for the Commonwealth.

OPINION

KNOWLTON C.J.

This is a petition in equity, brought under St. 1909, c. 490, pt. 3 § 70, for an abatement of an excise tax of $500 paid by the petitioner under section 56 of this chapter. The petitioner's contention is that the statute under which the tax was imposed is in violation of the Constitution of the United States.

The question presented is the same that was decided by this court, after full consideration and the citation of many authorities, in Attorney General v. Electric Storage Battery Company, 188 Mass. 239, 74 N.E. 467, when it was held that the statute was constitutional. Since this decision the cases of Western Union Telegraph Company v Kansas, 216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355, and Pullman Company v. Kansas, 216 U.S. 56, 30 S.Ct. 232, 54 L.Ed. 378, have been decided by the Supreme Court of the United States, in which it was held that a statute of Kansas imposing a tax upon foreign corporations was unconstitutional. The petitioner contends that these case require us to overrule our former decision. In the first of the two cases the decision was by five of the nine justices, the other four dissenting. In the decision of the second some of the justices did not participate, but those who took part were divided in opinion as in the first case. The question before us is whether the law laid down by the majority of the Supreme Court of the United States shows that the excise tax in the present case was unlawfully imposed.

When we considered the statute in the former case we held that it was inapplicable to corporations that maintain a place of business within the commonwealth only for interstate commerce, and the opinion recognized the fact that no corporation or individual could be prevented from engaging in interstate commerce within the commonwealth, by ordering that the injunction against the defendant, forbidding the prosecution of its business so long as it disobeyed the law, should except so much of its business as was a part of interstate commerce. The statute was construed as contemplating only this kind of an injunction.

It becomes necessary to consider the substance of the law established by the two decisions of the Supreme Court, in its application to a case like the present. In each of the cases three opinions were written, one by Mr. Justice Harlan and one by Mr. Justice White, these two concurring in the judgment of the court, and one by Mr. Justice Holmes, dissenting. We do not understand that the majority of the court intended to change the law laid down in former decisions; but the difference of opinion among the justices seems to have arisen chiefly from their different views of the two cases then before the court, as to the effect of the proper application to them of established rules of law.

We understand that the majority agree in the following views: A state may impose any terms it chooses as a condition of permitting a foreign corporation to do business in it, so long as it does not deprive the corporation of any rights secured to it by the Constitution of the United States. Subject to this limitation of its power, a state may arbitrarily prevent any foreign corporation from doing business within it. To every person and corporation, the right of engaging in interstate commerce in every state, subject only to regulation of the business by Congress, is secured by the Constitution of the United States. States can pass no laws for the direct regulation of interstate commerce, although under the police power they may legislate in the public interest in any matter of local concern upon which there is no congressional legislation, even though the state's action affects interstate commerce indirectly and incidentally. The courts will look through the form of legislation to ascertain its true meaning and effect. In the two cases before the court, in which the statute purported to require a fee only in reference to the privilege of engaging in local business within the state, the question was whether the enforcement of the statute would directly interfere with interstate commerce and impose a burden upon it, so that, in Substance and effect, the statute was different from the purport of the form of its language.

We understand that the court regarded the functions of each of the corporations as such that, practically, it could not give up its business within the state, for the prosecution of which the fee was exacted, without a very great injury to its interstate business, because the two classes of business were so connected that it was very difficult if not impracticable to separate them, and that therefore the state could not arbitrarily deprive these two corporations of the privilege of doing a local business without inflicting great wrong upon them by diminishing or destroying the interstate business that each of them had a right to do. As against each of these two corporations, carrying on the business for which they were respectively incorporated, the state had not an arbitrary right to impose such a burden on the local business as practically would compel it to abandon its interstate business. Looking then to the question whether the fee charged for the privilege of doing the local business was lawful as a reasonable tax or demand for the benefit conferred, the court held that, as against corporations like these, the mode of determining it showed it to be unreasonable, and therefore unwarrantable.

The corporation before us in the present case is of a very different kind, and the legislation of this commonwealth differs much from that of Kansas. No such question as that considered in Western Union Telegraph Company v. Kansas, ubi supra, could arise under our statutes in reference to the taxation of a telegraph company or a railroad company. Upon such companies an excise tax is imposed, determined by taking a part of their capital stock proportioned to the length of their lines in this commonwealth, as compared with the length of all their lines. St. 1909, c. 490, pt. 3, §§ 40, 41, 43, 52, 72.

The taxation in question in this case is only that upon foreign corporations. Sections 54-56. The term 'foreign corporations' means those established under laws other than those of this commonwealth, for purposes for which domestic corporations may be organized under the provisions of St. 1903, c. 437, § 7. St. 1903, c. 437, § 56. These are corporations formed for any lawful purpose which is not excluded by the provisions of section 1 of this chapter, with certain named exceptions. Those excluded under section 1 are banks, savings banks, cooperative banks, trust companies, surety or indemnity companies, safe deposit companies, insurance companies, railroad or street railway companies, telegraph or telephone companies, gas or electric light and heat or power companies, canal, aqueduct of water companies, cemetery or crematory companies, and all corporations which now have or may hereafter have the right to take or demand land, or to exercise franchises in public ways, granted by the commonwealth or by any county, city or town. The foreign corporations which are subject to taxation under St. 1909, c. 490, pt. 3, § 56, in the manner in which the petitioner was taxed, are those having a usual place of business in this commonwealth, or engaged permanently or temporarily, with or without a usual place of business therein, in the construction, alteration or repair of a building, bridge, railroad, railway or structure of any kind, except those for the taxation of which special provision is made. St. 1903, c. 437, §§ 58-60. Express provision is made for the taxation of express companies, foreign and domestic. See St. 1909, c. 490, pt. 3, §§ 72-76.

It is not the policy of our law, in dealing with corporations foreign or domestic, whose purpose is to furnish and agency for the transaction of commercial business by making transfers for pay through transportation or the transmission of intelligence from state to state, as well as in a single state, to impose a tax estimated upon the basis of earnings or property in other states. Our statutes relative to the taxation of railroad, telegraph and express companies illustrate our methods. ...