334 U.S. 653 (1948), 14, Central Greyhound Lines, Inc. v. Mealey

Docket Nº:No. 14
Citation:334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633
Party Name:Central Greyhound Lines, Inc. v. Mealey
Case Date:June 14, 1948
Court:United States Supreme Court

Page 653

334 U.S. 653 (1948)

68 S.Ct. 1260, 92 L.Ed. 1633

Central Greyhound Lines, Inc.



No. 14

United States Supreme Court

June 14, 1948

Argued October 13, 1947



1. The validity of a state tax under the Federal Constitution was challenged before the State Tax Commission of New York and on review before the Appellate Division of the Supreme Court. Notwithstanding a claim that the only question presented was one of statutory construction, the Court of Appeals of New York expressly sustained the constitutionality of the tax and certified in its remittitur that it had done so. On appeal to this Court, held: the constitutional question is properly before this Court for review. Pp. 654-655.

2. A common carrier by motor vehicle challenged the validity under the Federal Constitution of a New York tax on its gross receipts from transportation of passengers between two points in the State but over a route 42.53% of which was in New Jersey and Pennsylvania.

Held: New York may constitutionally tax gross receipts from the transportation apportioned as to the mileage within the State; but the tax on gross receipts from that portion of the mileage outside the State unduly burdens interstate commerce, in violation of the Commerce Clause of the Constitution. Pp. 655-664.

296 N.Y. 18, 68 N.E.2d 855, reversed.

The constitutionality of a tax levied by New York on gross receipts of a common carrier from transportation

Page 654

between two points in New York, but largely through New Jersey and Pennsylvania, was sustained by the State Tax Commission, the Appellate Division of the Supreme Court of New York (266 A.D. 648, 44 N.Y.S.2d 652), and the Court of Appeals of New York (296 N.Y. 18, 68 N.E.2d 855). On appeal to this Court, reversed and remanded, p. 664.

FRANKFURTER, J., lead opinion

MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

[68 S.Ct. 1262] This is a proceeding arising out of a determination by the Tax Commission of the New York, sustained by the courts of the State, whereby § 186-a of the New York Tax Law was construed to impose a tax on appellant's gross receipts from transportation between points within the State but over routes that utilize the highways of Pennsylvania and New Jersey. The appellant contends, against contrary conclusions below, that, since the taxed transportation was interstate commerce, New York may not constitutionally tax the gross receipts from such transportation. In any event, it submits that the State may validly tax only so much of these gross receipts as are attributable to the mileage within the State. Before dealing with these issues, we must dispose of an objection to our right to deal with them.

Page 655

The State urges that the constitutional claims here pressed by the appellant were not passed upon by the New York Court of Appeals. The record does not sustain this challenge to our jurisdiction. The constitutional issues were undeniably raised before the State Tax Commission and on review before the Appellate Division of the Supreme Court, 266 A.D. 648, 44 N.Y.S.2d 652. The suggestion that these issues were not before the Court of Appeals is based on its statement that the question urged there was "not one of constitutional taxing power, but of statutory construction." 296 N.Y. 18, 24, 68 N.E.2d 855, 858. But the court proceeded to pass upon the constitutional issues, and expressly held that "there is no constitutional objection to taxation of total receipts here. This is not interstate commerce. . . ." 296 N.Y. at 25, 68 N.E.2d at 859. Its amended remittitur stated explicitly that a question arising under the Commerce Clause of the Constitution "was presented and passed upon," and that, in sustaining the tax, the court "held that the aforesaid statute as so construed is not repugnant to that provision of the Federal Constitution." This amendment was not a retrospective injection of a nonexistent federal question, but a formal certification that a federal claim had been presented and was adjudicated by the Court of Appeals. It is properly here for review. § 237(a) of the Judicial Code, 28 U.S.C. § 344(a).

This case serves to remind once more that courts do not adjudicate abstractions, such as "what is interstate commerce?" Also, it again illustrates that, even if it be found that certain transactions in fact constitute interstate commerce, such conclusion does not answer the further inquiry whether a particular assertion of power by a State over such transactions offends the Commerce Clause. Article 1, § 8, cl. 3.

It is too late in the day to deny that transportation which leaves a State and enters another State is "Commerce

Page 656

. . . among the several states" simply because the points from and to are in the same State. Hanley v. Kansas City Southern R. Co., 187 U.S. 617; Western Union Tel. Co. v. Speight, 254 U.S. 17; Missouri Pacific R. Co. v. Stroud, 267 U.S. 404. In reaching the opposite conclusion, the State court relied upon three decisions of this Court: Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192; Ewing v. Leavenworth, 226 U.S. 464; New York ex rel. Cornell Steamboat Co. v. Sohmer, 235 U.S. 549. The Ewing case was based on the Lehigh Valley case; the Cornell Steamboat case relied on the Ewing and the Lehigh Valley decisions. The holding in the Lehigh Valley case was defined with precision by Mr. Justice Holmes in the Hanley case. He accounted for some State decisions which disregarded interstate commerce as a matter of fact, tested by the actual transaction, as

made simply out of deference to conclusions drawn from Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, and we are of opinion that they carry their conclusions too far.

He pointed out that, in the Lehigh Valley case, "the tax `was determined in respect of receipts for the proportion of the transportation within the State.' 145 U.S. 201. Such a proportioned tax has been sustained in the case of commerce admitted to be interstate.

Hanley v. Kansas City Southern R. Co., supra, at 621. This limited scope of the Lehigh Valley case was the basis of decision in United States Express Company v. Minnesota, 223 U.S. 335. In that case, the Minnesota Supreme Court had interpreted the Lehigh Valley decision

as allowing a recovery of taxes upon that proportion of the earnings derived from the carriage wholly within the state. This seems to us the safer rule, and avoids any question of taxing interstate commerce, and we adopt and apply it to this case. Nine percent. of the taxes recovered on this class of earnings should be deducted from the amount

Page 657

of the recovery.

114 Minn. 346, 350, 131 N.W. 489, 490. On writ of error to the Supreme Court of Minnesota, this Court upheld the State court's application of the Lehigh Valley decision. 223 U.S. 335, 341-342.

In view, however, of some contrariety of views to which the opinion in the Lehigh Valley case has given rise, it calls for a more candid consideration than merely quoting phrases from it congenial to a particular decision. The Lehigh Valley case was this. The Lehigh Valley Railroad Company attacked the validity of a Pennsylvania statute taxing the company's gross receipts from its line between Mauch Chunk, Pennsylvania, and Phillipsburg, New Jersey. The Pennsylvania Railroad operated a connecting line between Phillipsburg and Philadelphia. The Lehigh and the Pennsylvania had arranged for continuous transportation of through passengers and freight between Mauch Chunk and Philadelphia. The trial court had found, as appears from the record, that the

total receipts from this transportation, seven percent of which were collected by the Lehigh Valley Railroad Company at the point of shipment and the remainder by the Pennsylvania Railroad Company at point of destination, were apportioned between the companies upon a mileage basis -- that is to say, each company's share was in the proportion that the number of miles carried by it bore to the total number of miles carried.

It sustained the tax on the ground that the transportation was in substance "purely internal." The Supreme Court of Pennsylvania affirmed on the trial court's opinion. Lehigh Valley R. Co. v. Commonwealth, 1 Monag., Pa. 45, 17 A. 179.

When the case got here, the Lehigh Valley contended that the transportation between Mauch Chunk and Phillipsburg constituted interstate commerce, and therefore beyond the taxing power of Pennsylvania, because Phillipsburg, while on the Delaware River border between

Page 658

Pennsylvania and New Jersey, was in New Jersey, and reached by the railroad via an interstate bridge. Pennsylvania, on the other hand, ignoring the stretch over the interstate bridge (apparently on the theory of de minimis), insisted that the gross receipts were deemed to be "wholly from traffic within the state" because so treated by the railroad itself. This was based on the fact that the Lehigh Valley and the Pennsylvania Railroad had apportioned the receipts from their through traffic, and the amount of the gross receipts which Pennsylvania taxed was the proportion which the railroads inter sese attributed to the Lehigh Valley as its share of the earnings within...

To continue reading