253 U.S. 412 (1920), 165, F. S. Royster Guano v. Virginia

Docket Nº:No. 165
Citation:253 U.S. 412, 40 S.Ct. 560, 64 L.Ed. 989
Party Name:F. S. Royster Guano v. Virginia
Case Date:June 07, 1920
Court:United States Supreme Court

Page 412

253 U.S. 412 (1920)

40 S.Ct. 560, 64 L.Ed. 989

F. S. Royster Guano



No. 165

United States Supreme Court

June 7, 1920

Argued March 19, 22, 1920




A state law which taxes all the income of local corporations derived from business done outside of the State and business done within it, while exempting entirely the income derived from outside the State by local corporations which do no local business, is arbitrary, and violates the equal protection clause of the Fourteenth Amendment. P. 415.


The case is stated in the opinion.

PITNEY, J., lead opinion

MR. JUSTICE PITNEY delivered the opinion of the Court.

Plaintiff in error is a corporation created by and existing under the laws of Virginia, engaged in the business of manufacturing and selling commercial fertilizers. It operates a manufacturing plant in the county of Norfolk in that State and several plants in other States. From the operation of its plant in Virginia, it made net profits during the year ending December 31, 1916, amounting in round figures to $260,000, and from the operation of its plants in other States during the same year made net profits amounting to about $270,000. Under the revenue law of

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the State (Act April 16, 1903, Va. Acts, c. 148, p. 155, as amended by Act March 22, 1916, Va. Acts, c. 472, p. 793), plaintiff in error returned for taxation as income the former amount, omitting the latter. Under appropriate provisions of law, the state officials added the latter amount, and assessed an income tax against plaintiff in error upon the aggregate. It petitioned the corporation court of the City of Norfolk for relief from so much of the tax as represented the $270,000, among other reasons, upon the ground that, so far as chapter 472 of 1916 taxed that part of its business which was transacted outside of the limits of Virginia, the law imposed upon plaintiff in error a burden not placed upon domestic corporations doing no part of their business in Virginia but transacting business beyond the limits thereof, such corporations, by chapter 495 of 1916 (Va. Acts, p. 830), being expressly exempted from a tax on income derived from business done without the limits of the State; and hence chapter 472, as applied to the business of plaintiff in error transacted beyond the limits of the State, denied to it the equal protection of the laws, in violation of the Fourteenth Amendment. Other points were raised, but they require no mention. The Corporation Court having sustained the tax, plaintiff in error applied to the Supreme Court of Appeals of the State for a writ of error and supersedeas to review the judgment. That court being of opinion that the decision was right, the application was denied and an order entered in effect affirming the judgment of the Corporation Court, whereupon this writ of error, directed to the Supreme Court of Appeals in accordance with the practice indicated in Norfolk Turnpike Co. v. Virginia, 225 U.S. 264, 269, was sued out under § 237, Judicial Code, as amended September 6, 1916, 39 Stat. 726.

The statute thus assailed (Va. Acts 1916, c. 472) imposes an income tax of 1 percentum upon "the aggregate amount of income of each person or corporation," subject

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to specified deductions and exemptions, including in income "all profits from earnings of any partnership or business done in or out of Virginia," and also "all other gains and profits derived from any source whatever." Under this act, as applied to plaintiff in error by the state officers, whose action was sustained by the court of last resort, a tax was imposed upon the income derived from its plants without the State as well as from that within the State. At the same time, chapter 495, Acts 1916 (p. 830), approved on the same day, was in force. This reads as follows:

Whereas, certain corporations have been organized under the laws of Virginia, and it is anticipated that certain others will be organized thereunder, which do no business within this State; therefore -- 1. Be it enacted by the General...

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