288 U.S. 249 (1933), 176, Nashville, Chattanooga & St. Louis Railway Co. v. Wallace

Docket Nº:No. 176
Citation:288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730
Party Name:Nashville, Chattanooga & St. Louis Railway Co. v. Wallace
Case Date:February 06, 1933
Court:United States Supreme Court

Page 249

288 U.S. 249 (1933)

53 S.Ct. 345, 77 L.Ed. 730

Nashville, Chattanooga & St. Louis Railway Co.



No. 176

United States Supreme Court

Feb. 6, 1933

Argued December 12, 1932



1. Whether an appeal to this Court from a judgment of a state court in a proceeding under a state "declaratory judgments" law, presents a "case or controversy" within the jurisdiction of this Court depends not upon the name or the form, but upon the nature and substance, of the proceeding and the effect of the judgment upon the rights asserted by the appellant. P. 260.

2. The Tennessee Declaratory Judgments Act, as construed by the Supreme Court of the State, may be invoked only when the complainant asserts rights which are challenged by the defendant, and presents for decision an actual controversy to which he is a party, capable of final adjudication by the judgment to be rendered, and no judgment will be rendered when all the parties who will be adversely affected by it are not before the court. In a suit under the Act to secure a judicial determination that a tax levied against

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the complainant, and about to be enforced by defendant state officers, was invalid under the Federal Constitution, which, in substance, differed from the ordinary injunction suit only in the absence of a prayer for an injunction and of an allegation of irreparable injury -- Held that a judgment upholding the tax and affirming dismissal of the bill on the merits was reviewable by this Court. Pp. 260-264.

3. While the ordinary course of judicial procedure results in a judgment requiring an award of process or execution to carry it into effect, such relief is not an indispensable adjunct to the exercise of the judicial function. P. 263.

4. The Constitution does not require that the case or controversy should be presented by traditional forms of procedure, invoking only traditional remedies; the judiciary clause defined and limited judicial power, not the particular method by which that power might be invoked. P. 264.

5. When the judicial power is invoked to review judgments of state courts, the ultimate constitutional purpose is protection of rights arising under the Constitution and laws of the United States; changes by the States in the form or method by which federal rights are brought to final adjudication in their courts do not preclude review by this Court so long as the case retains the essentials of an adversary proceeding, involving a real, not a hypothetical, controversy which is finally determined by the judgment below. P. 264.

6. As the prayer for relief by injunction is not a necessary prerequisite to the exercise of judicial power, allegations of threatened irreparable injury, which are material only if an injunction is asked, may likewise be dispensed with if, in other respects, the controversy is real and substantial. P. 264.

7. A railroad company brings gasoline into Tennessee, stores it in its tanks, and withdraws and uses it as required as a source of motive power for moving its interstate trains in that State and in others. No ascertainable part of the gasoline when imported has a destination beyond the local storage tanks. Held:

(1) That, upon being unloaded and stored, the gasoline ceases to be a subject of interstate commerce, and loses its immunity as such from state taxation. P. 265.

(2) A Tennessee "privilege tax" on the storage of gasoline within the State and its withdrawal from storage for sale or use, when applied to petitioner's gasoline, is not a tax on the use of the gasoline as an instrument of commerce, and burdens the function

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of interstate commerce too indirectly and remotely to transgress constitutional limitations. P. 267.

8. The power to tax property -- the sum of all the rights and powers incident to ownership -- necessarily includes the power to tax its constituent parts. As the gasoline in storage could be taxed by the State as property notwithstanding its prospective use as an instrument of interstate commerce, the State can likewise tax the successive exercise of two of the powers incident to it ownership, storage and withdrawal from storage, both completed before interstate commerce begins. P. 268.

9. The constitutional power to levy taxes doe not depend upon the enjoyment by the taxpayer of any special benefit from the use of the funds raised by taxation. P. 268.

10. The allegations of the bill showing a heavier state tax burden upon railroads than upon common carriers by motor bus fall short of alleging a discrimination forbidden by the commerce clause or by the Fourteenth Amendment. P. 268.


APPEAL from the affirmance of a decree dismissing a bill challenging a Tennessee excise tax.

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STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

Appellant brought suit in the Chancery Court of Davidson County, Tennessee, under the Uniform Declaratory Judgments Act of that state, * c. 29, Tennessee Public Acts, 1923, to secure a judicial declaration that a state excise tax levied on the storage of gasoline, c. 5, Tennessee Public Acts, 1923, as amended by c. 67, Tennessee Public Acts, 1925, is, as applied to appellant, invalid under the commerce clause and the Fourteenth Amendment of the Federal Constitution. A decree for appellees was affirmed by the Supreme Court of the State, and the case comes here on appeal under § 237(a) of the Judicial Code.

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After the jurisdictional statement required by Rule 12 was submitted, this Court, in ordering the cause set down for argument, invited the attention of counsel to the question "whether a case or controversy is presented in view of the nature of the proceedings in the state court." This preliminary question, which has been elaborately briefed and argued, must first be considered, for the judicial power with which this Court is invested by Art. 3, § 1 of the Constitution, extends by Art. 3, § 2, only to "cases" and "controversies"; if no "case" or "controversy" is presented for decision, we are without power to review the decree of the court below. Muskrat v. United States, 219 U.S. 346.

In determining whether this litigation presents a case within the appellate jurisdiction of this Court, we are concerned not with form, but with substance. See Fidelity National Bank v. Swope, 274 U.S. 123; compare Gasoline Products Co. v. Champlin Refining Co., 283 U.S. 494, 498. Hence, we look not to the label which the legislature has attached to the procedure followed in the state courts, or to the description of the judgment which is brought here for review, in popular parlance, as "declaratory," but to the nature of the proceeding which the statute authorizes, and the effect of the judgment rendered upon the rights which the appellant asserts.

Section 1 of the Tennessee Declaratory Judgments Act confers jurisdiction on courts of record "to declare rights . . . whether or not further relief is or could be claimed," and provides that

no action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and [53 S.Ct. 347] effect, and such declaration shall have the force and effect of a final judgment or decree.

By § 2, it is provided that

any person . . . whose rights, status or other legal relations are affected by a statute . . . may have determined any question of

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construction or validity arising under the . . . statute . . . and obtain a declaration of rights . . . thereunder.

Under § 6, the Court may refuse to render a declaratory judgment where, if rendered, it "would not terminate the uncertainty or controversy giving rise to the proceeding." Declaratory judgments may, in accordance with § 7, be reviewed as are other orders, judgments or decrees, and, under § 8, "further relief based on a declaratory judgment or decree may be granted whenever necessary or proper." Section 11 requires that,

when declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding.

This statute has often been considered by the highest court of Tennessee, which has consistently held that its provisions may only be invoked when the complainant asserts rights which are challenged by the defendant and presents for decision an actual controversy to which he is a party, capable of final adjudication by the judgment or decree to be rendered. Miller v. Miller, 149 Tenn. 463, 261 S.W. 965; Goetz v. Smith, 152 Tenn. 451, 465, 278 S.W. 417; Hodes v. Hamblen County, 152 Tenn. 395, 277 S.W. 901; Cummins v. Shirp, 156 Tenn. 595; 3 S.W.2d 1062; Tennessee Eastern Electric Co. v. Hannah, 157 Tenn. 582, 587, 12 S.W.2d 372, Perry v. Elizabethton, 160 Tenn. 102, 106, 22 S.W.2d 359; Nashville Trust Co. v. Drake, 162 Tenn. 356, 359, 36 S.W.2d 905. It has also held that no judgment or decree will be rendered when all the parties who will be adversely affected by it are not before the Court. Harrell v. American Home Mortgage Co., 161 Tenn. 646, 32 S.W.2d 1023; Sadler v. Mitchell, 162 Tenn. 363, 367, 36 S.W.2d 891.

Proceeding in accordance with this statute, appellant filed its bill of complaint in the state Chancery Court,

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joining as defendants the appellees, the Attorney General and the state officials charged with the duty of collecting the gasoline privilege tax imposed by the Tennessee statute. The complaint alleged that appellant is engaged in purchasing gasoline outside the state, which it stores within the state pending its use within and without the state in the conduct of appellant's business as an interstate rail carrier; that appellees assert that the statute...

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