Joseph v. Carter Weekes Stevedoring Co Same v. John Clark Son

• Decision Date: 10 March 1947
• Docket Number: Nos. 29 and 30,s. 29 and 30
• Citation: 330 U.S. 422,67 S.Ct. 815,91 L.Ed. 993
• Parties: JOSEPH, Comptroller of City of New York, et al. v. CARTER & WEEKES STEVEDORING CO. SAME v. JOHN T. CLARK & SON. Re
• Court: U.S. Supreme Court

330 U.S. 422

67 S.Ct. 815

91 L.Ed. 993

JOSEPH, Comptroller of City of New York, et al.

v CARTER & WEEKES STEVEDORING CO.

SAME

v. JOHN T. CLARK & SON.

Nos. 29 and 30.

Reargued Nov. 12, 1946.

Decided March 10, 1947.

Mr. Isaac C. Donner, of New York City, for petitioners.

Mr. Samuel M. Lane, of New York City, for respondents.

Mr. Justice REED delivered the opinion of the Court.

These two writs of certiorari bring before this Court contentions in reg rd to the application to the respective respondents, Carter & Weekes Stevedoring Company and John T. Clark & Son, of New York City, of the general business tax laws covering, when both cases are considered, the years 1937 to 1941, inclusive.¹ The character of the taxes in issue will appear from a section, set out below, of a local law imposing the tax for 1939 and 1940.² The respective taxpayers are liable also for the general income and ad valorem taxes of the State and City of New York. Both respondents are corporations engaged in the business of general stevedoring. For these cases, the business of respondents may be considered as consisting only of taking freight from a convenient place on the pier or lighter wholly within the territorial limits of New York City and storing it properly for safety and for handling in or on the outgoing vessel alongside, or of similarly unloading a vessel on its arrival. The vessels moved in interstate or foreign commerce, without a call at any other port of New York. We do not find it necessary to consider separately interstate and foreign commerce. The Commerce Clause covers both.

Through statutory proceedings unnecessary to particularize, the Comptroller of the City of New York determined that the respondents were liable for percentage taxes upon the entire gross receipts from the above activities for the years in question under the provisions of the respective local laws to which reference has been made. Review of these determinations was had by respondents in the Supreme Court of New York County, Appellate Division. The determinations of the Comptroller were annulled on the authority of Puget Sound Stevedoring Company v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68; Matter of Clark & Son v. McGoldrick, 269 App.Div. 685, 54 N.Y.S.2d 380, 383. These orders were affirmed by the Court of Appeals, Carter & Weekes Stevedoring Co. v. McGoldrick, 294 N.Y. 906, 908, 63 N.E.2d 112, and remittiturs issued stating that the Court of Appeals affirmed on the ground that the local laws as applied in these cases were in violation of Article I, § 8, Clause 3, of the Constitution of the United States.³ Writs of certiorari to his Court were sought and granted on the issue of whether or not this tax on these respondents constituted an unconstitutional burden on commerce.

Petitioners recognize the force of the Puget Sound case as a precedent. Their argument is that subsequent holdings of this Court have indicated that the reasons which underlay the decision are no longer controlling in judicial examination of the constitutionality of state taxation of the gross proceeds derived from commerce, subject to federal regulation. They cite, among others, these later decisions: Western Live Stock v. Bureau of Internal Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944; Southern Pacific Co. v. Gallagher, 306 U.S. 167, 59 S.Ct. 389, 83 L.Ed. 586; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876; Department of Treasury of Indiana v. Wood Preserving Corporation, 313 U.S. 62, 61 S.Ct. 885, 85 L.Ed. 1188.

In the Puget Sound case a state tax on gross receipts, indistinguishable from that laid by New York City in this case, was held invalid as applied to stevedoring activities exactly like those with which we are here concerned. The Puget Sound opinion pointed out, 302 U.S. at page 92 et seq., 58 S.Ct. at page 73, 82 L.Ed. 68, that transportation by water is impossible without loading and unloading. Those incidents to transportation occupy the same relation to that commerce whether performed by the crew or by stevedore, contracting independently to handle the cargo. The movement of cargo off and on the ship is substantially a continuation of the transportation. Cf. Baltimore & O.S.W.R. Co. v. Burtch, 263 U.S. 540, 44 S.Ct. 165, 68 L.Ed. 433.

It is trite to repeat that the want of power in the confederation to regulate commerce was a principal reason for the adoption of the Constitution. The Commerce Clause bears no limitation of power upon its face and, when the Congress acts under it, interpretation has suggested none, except such as may be prescribed by the Constitution. Gibbons v. Ogden, 9 Wheat. 1, 196, 6 L.Ed. 23; United States v. Carolene Products Co., 304 U.S. 144, 147, 58 S.Ct. 778, 780, 781, 82 L.Ed. 1234; North American Co. v. Securities and Exchange Commission, 327 U.S. 686, 704, 66 S.Ct. 785, 795, 796. On the other hand, the Constitution, by words, places no limitation upon a state's power to tax the things or activities or persons within its boundaries. What limitations there are spring from applications to state tax situations of general clauses of the Constitution. E.g., Art. I § 10, Cl. 2 and 3; New York Indians, 5 Wall. 761, 18 L.Ed. 708; Board of County Commissioners v. United States, 308 U.S. 343, 60 S.Ct. 285, 84 L.Ed. 313; Bell's Gap R. Co. v. Pennsylvania, 134 U.S. 232, 237, 10 S.Ct. 533, 535, 33 L.Ed. 892; Lawrence v State Tax Commission, 286 U.S. 276, 284, 52 S.Ct. 556, 558, 559, 76 L.Ed. 1102, 87 A.L.R. 374; Henderson Bridge Co. v. City of Henderson, 173 U.S. 592, 614—15, 19 S.Ct. 553, 561, 562, 43 L.Ed. 823; New York Rapid Transit Corporation v. City of New York, 303 U.S. 573, 581—82, 58 S.Ct. 721, 725, 726, 82 L.Ed. 1024. From the Commerce Clause itself, there comes, also, an abridgment of the state's power to tax within its territorial limits. This has arisen from long continued judicial interpretation that, without congressional action, the words themselves of the Commerce Clause forbid undue interferences by the states with interstate commerce⁴ and that this rule applies in full force to an unapportioned⁵ tax on the gross proceeds from interstate business,⁶ where the taxes were not in lieu of ad valorem taxes on property.⁷

We do not think that a tax on gross income from stevedoring, obviously a 'continuation of the transportation,' is a tax apportioned to income derived from activities within the taxing state. The transportation in commerce, at the least, begins with loading and ends with unloading. Loading and unloading has effect on trans- portation outside the taxing state because those activities are not only preliminary to but are an essential part of the safety and convenience of the transportation itself.

When we come to weigh the burden or interference of this tax on the gross receipts from interstate commerce, the purposes of that portion of the Commerce Clause—the freeing of business from unneighborly regulations that inhibit the intercourse which supplies reciprocal wants by commerce⁸—is a significant factor for consideration. An interpretation of the text to leave the states free to tax commerce until Congress intervened would have permitted intolerable discriminations. Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 162 A.L.R. 844, and cases collected in notes 13, 14, 15 and 16. Nevertheless, a proper regard for the authority of the states and their right to require interstate commerce to contribute by taxes to the support of the state governments which make their interstate commerce possible, has led Congress, over a long period to leave intact the judicial rulings, referred to above, that apportioned, non-discriminatory gross receipt taxes or those fairly levied in lieu of property taxes conformed to the requirements of the Commerce Clause. As the power lies in Congress under the Clause to make any desired adjustment in the taxation area, its acquiescence in our former rulings on state taxation indicates its agreement with the adjustments of the competing interests of commerce and necessary state revenues.⁹ There is another reason that may be the basis for the acceptance, almost complete, by Congress of the judicial interpretations in this field. This is that a wide latitude exists for permissible state taxation. This term, in an effort to show that the reach of the Circuit Court did not destroy the state's power to make commerce pay its way, we elaborated the fact that taxes on the commerce itself was not the sole source of state revenue from that commerce. Freeman v. Hewit supra, 329 U.S. 249, 254, 67 S.Ct. 274, 277, see also Adams Mfg. Co. v. Storen, supra, 304 U.S. at page 310, 58 S.Ct. at page 915, 85 L.Ed. 1365.

A power in a state to tax interstate commerce or its gross proceeds, unhampered by the Commerce Clause, would permit a multiple burden upon that commerce. This has been noted as ground for their invalidation. Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 255, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944. The selection of an intrastate incident as the taxable event actually carries a similar threat to the commerce but, where the taxable event is considered sufficiently disjoined from the commerce, it is thought to be a permissible state levy.¹⁰ This result generally is reached because the local incident selected is one that is essentially local and is not repeated in each taxing unit. In the present case, the threat of a multiple burden, except in the few instances in the record of interstate, in distinction to foreign, commerce, is absent. The multiple burden on interstate transportation from taxation of the gross receipts from stevedoring arises from the possibility of a similar tax for unloading. The actual effect on the cost of carrying on the commerce does not differ from that imposed by any other tax exaction—ad valorem, net income or excise. Cf. Western Live Stock v. Bureau of Revenue, ...