303 U.S. 250 (1938), 322, Western Live Stock v. Bureau of Revenue

Docket Nº:No. 322
Citation:303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823
Party Name:Western Live Stock v. Bureau of Revenue
Case Date:February 28, 1938
Court:United States Supreme Court
 
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Page 250

303 U.S. 250 (1938)

58 S.Ct. 546, 82 L.Ed. 823

Western Live Stock

v.

Bureau of Revenue

No. 322

United States Supreme Court

Feb. 28, 1938

Argued January 31, 1938

APPEAL FROM THE SUPREME COURT OF NEW MEXICO

Syllabus

1. The mere formation of a contract between persons of different States is not within the protection of the commerce clause, unless the performance is within its protection, at least in the absence of Congressional action. P. 253.

2. Taxation of a local business or occupation which is separate and distinct from the transportation and intercourse which are interstate commerce is not forbidden merely because, in the ordinary course, such transportation or intercourse is induced or occasioned by the business. P. 253.

3. A statute of New Mexico levied on all engaged within the State in the business of publishing newspapers or magazines a privilege tax of 2% on the gross receipts from the sale of advertising. Appellants, whose only office and place of business was within the State, prepared, edited, and published there a journal the circulation of which was partly interstate. Part of their receipts from advertising was derived from contracts with advertisers out of the State. Such contracts involved interstate transmission, from advertisers to appellants, of cuts, mats, information, copy, etc.; also payment through interstate facilities. Held, the tax, as applied to appellants in respect of the sums received under such advertising contracts, did not infringe the commerce clause of the Federal Constitution. Pp. 259-260.

So far as the advertising rates reflected a value attributable to the maintenance of a circulation of the magazine interstate, the burden on the interstate business was too remote and too attenuated to call for a rigidly logical application of the doctrine that gross receipts from interstate commerce may not be made the measure of a tax.

4. The commerce clause does not relieve those engaged in interstate commerce from their just share of the state tax burden, even though the cost of doing the business be thereby increased. P. 254.

5. The vice characteristic of such local taxes, measured by gross receipts from interstate commerce, as have been held invalid was that they placed on the commerce burdens of such a nature as

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were capable, in point of substance, of being imposed, or added to, with equal right by every State which the commerce touched, merely because interstate commerce was being done, so that, without the protection of the commerce clause, it would bear cumulative burdens not imposed on local commerce. The tax here involved is not subject to that objection. P. 255.

6. The business of preparing, printing and publishing magazine advertising is peculiarly local, and distinct from its circulation, whether or not that circulation be interstate commerce. P. 258.

7. In reconciling opposing demands that interstate commerce bear its share of local taxation, and, on the other hand, not be subjected to multiple tax burdens merely because it is interstate commerce, practical, rather than logical, distinctions must be sought. P. 259.

8. Fisher's Blend Station v. State Tax Comm'n, 297 U.S. 650, and Crew Levick Co. v. Pennsylvania, 245 U.S. 292, distinguished. Pp. 260-261.

41 N.M. 28, 67 P.2d 505, affirmed.

Appeal from a judgment affirming a judgment against the appellants in a suit brought by them to recover taxes paid under protest and alleged to have been unlawfully exacted.

STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

Section 201, chapter 7, of the New Mexico Special Session Laws of 1934 levies a privilege tax upon the gross receipts of those engaged in certain specified businesses.1

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Subdivision I imposes a tax of 2 percent of amounts received from the sale of advertising space by one engaged in the business of publishing newspapers or magazines. The question for decision is whether the tax laid under this statute on appellants, who sell without the state, to advertisers there, space in a journal which they publish in New Mexico and circulate to subscribers within and without the state, imposes an unconstitutional burden on interstate commerce.

Appellants brought the present suit in the state district court to recover the tax, which they had paid under protest, as exacted in violation of the commerce clause of the Federal Constitution. Article 1, § 8, cl. 3. The trial court overruled a demurrer to the complaint and gave judgment for appellants, which the Supreme Court reversed. 41 N.M. 141, 65 P.2d 863. Appellants refusing to plead further, the district court gave judgment for the appellees, which the Supreme Court affirmed. 41 N.M. 288, 67 P.2d 505. The case comes here on appeal from the second judgment under § 237 of the Judicial Code, as amended.

Appellants publish a monthly livestock trade journal which they wholly prepare, edit, and publish within the state of New Mexico, where their only office and place of business is located. The journal has a circulation in New Mexico and other states, being distributed to paid subscribers through the mails or by other means of transportation. It carries advertisements, some of which are

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obtained from advertisers in other states through appellants' solicitation there. Where such contracts are entered into, payment is made by remittances to appellants sent interstate, and the contracts contemplate and provide for the interstate shipment by the advertisers to appellants of advertising cuts, mats, information, and copy. Payment is due after the printing of such advertisements in the journal and its ultimate circulation and distribution, which is alleged to be in New Mexico and other states.

Appellants insist here, as they did in the state courts, that the sums earned under the advertising contracts are immune from the tax because the contracts are entered into by transactions across state lines, and result in the like transmission of advertising materials by advertisers to appellants, and also because performance involves the mailing or other distribution of appellants' magazines to points without the state.

That the mere formation of a contract between persons in different states is not within the protection of the commerce clause, at least in the absence of Congressional action, unless the performance is within its protection, is a proposition no longer open to question. Paul v. Virginia, 8 Wall. 168; Hooper v. California, 155 U.S. 648; New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495. Cf. Ware & Leland v. Mobile County, 209 U.S. 405; Engel v. O'Malley, 219 U.S. 128. Hence it is unnecessary to consider the impact of the tax upon the advertising contracts except as it affects their performance, presently to be discussed. Nor is taxation of a local business or occupation which is separate and distinct from the transportation and intercourse which is interstate commerce forbidden merely because, in the ordinary course, such transportation or intercourse is induced or occasioned by the business. Williams v. Fears, 179 U.S. 270; Ware & Leland v. Mobile County, supra; Browning v. Waycross,

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233 U.S. 16; General Railway Signal Co. v. Virginia, 246 U.S. 500, 510; Utah Power & Light Co. v. Pfost, 286 U.S. 165. Here, the tax which is laid on the compensation received under the contract is not forbidden either because the contract, apart from its performance, is within the protection of the commerce clause or because, as an incident preliminary to printing and publishing the advertisements, the advertisers send cuts, copy, and the like to appellants.

We turn to the other and more vexed question whether the tax is invalid because the performance of the contract for which the compensation is paid involves to some extent the distribution, interstate, of some copies of the magazine containing the advertisements. We lay to one side the fact that appellants do not allege specifically that the contract stipulates that the advertisements shall be sent to subscribers out of the state, or is so framed that the compensation would not be earned if subscribers outside the state should cancel their subscriptions. We assume the point in appellants' favor, and address ourselves to their argument that the present tax infringes the commerce clause because it is measured by gross receipts which are to some extent augmented by appellants' maintenance of an interstate circulation of their magazine.

It was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business. "Even interstate business must pay its way," Postal Telegraph-Cable Co. v....

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