Mountain States Telephone & Telegraph Co. v. Cooney
| Decision Date | 21 May 1934 |
| Docket Number | No. 1495.,1495. |
| Parties | MOUNTAIN STATES TELEPHONE & TELEGRAPH CO. v. COONEY, Governor, et al. |
| Court | U.S. District Court — District of Montana |
Milton Smith, Jr., and J. R. Turnquist, both of Denver, Colo., and Gunn, Rasch, Hall & Gunn, of Helena, Mont., for plaintiff.
Raymond T. Nagle, Atty. Gen., of Montana, and Enor K. Matson, Asst. Atty. Gen., of Montana, for defendants.
Before GARRECHT, Circuit Judge, and PRAY and BOURQUIN, District Judges.
In this suit to enjoin local taxes, the hearing is interlocutory and final.
The statute (Mont. Sess. Laws, 1933, c. 174, amended 1933-34, Ex. Sess. c. 54) provides that all operating telephone lines and furnishing service in Montana shall pay for each phone used in such business, an occupation license tax for revenue of 20 cents to $2 per year, dependent upon the number of phones and rates charged. Nonpayment or/ and shifting the burden to patrons may be heavily penalized. The receipts are to be credited to the state's emergency fund until the Governor proclaims no longer so required, and thereafter to the general fund.
Plaintiff is a Colorado corporation owning and operating the only state-wide telephone system in Montana, employing over 34,000 phones subject to the tax, all of which are available for interstate and foreign communication by connection with 30,000,000 phones, and which have been and are so used in number some 10,000 since the tax was imposed, increasing monthly, and in due time it is reasonably likely all will be.
The interstate revenues are 4 to 8 per cent. of the total revenues by plaintiff received. It pays the usual property taxes in Montana, and the corporation license or occupation taxes which are a percentage of its intrastate revenues.
In respect to the impost involved, its contention is it is obnoxious to many and doubtless all provisions of the Constitution, federal and state, even remotely applicable. Briefs filed are anything but that, but we find it unnecessary to note and attempt to distinguish and reconcile the multitude of hairline cases cited, leaving the task, if feasible, to the court of them and to which appeal will be taken. For it is clear that the suit is indistinguishable in principle from the Adams Express Case, 232 U. S. 14, 34 S. Ct. 203, 58 L. Ed. 483, and the Continental Oil Case, 256 U. S. 642, 41 S. Ct. 606, 65 L. Ed. 1139, the rule of which condemns the tax for repugnancy to the commerce clause of the Federal Constitution (Const. art. 1, § 8, cl. 3). That is to say, said clause to Congress reserves regulation of interstate and foreign commerce, the states have no power therein, a tax like to this at bar upon instrumentalities and not commodities is a burden upon such commerce and in legal effect a regulation of it, in consequence of which it is void.
In Adams Case, the city undertook to exact a license occupation tax for revenue in amount $5 per year upon express wagons. Adams doing interstate and intrastate express business with 341 wagons, brought suit like to this at bar to enjoin collection of the tax as in contravention of the commerce clause.
Sustaining the contention, Mr. Justice Hughes observed that, though the tax might be construed to apply to intrastate business alone, yet as both varieties of business employed the same wagons and separation was impracticable, to constrain the company to pay the tax and secure a license because of its intrastate business would be to virtually coerce it to pay a tax and secure a license to do its interstate business, and unconstitutional for reasons aforesaid.
In the Continental Case the state imposed a license occupation tax for revenue in amount $50 per year upon each gasoline station. The oil company had 37 stations in the state, doing business interstate and intrastate, the former but 5.5 per cent. of the total, and brought suit like to this at bar. Applying the rule of the Adams Case, though not citing it, the tax was held void, for that, even if the state court would construe the tax to apply only to intrastate business, both varieties were necessarily done at any one station and the tax on the intrastate business, as a prerequisite to lawful business, was an impost upon the interstate business as well, illegal, and unenforceable against even the intrastate business.
Both said cases are cited with approval in Sprout's Case, 277 U. S. 171, 48 S. Ct. 502, 505, 72 L. Ed. 833, 62 A. L. R. 45, in...
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Cooney v. Mountain States Telephone Telegraph Co
...by the District Court of three judges (28 U.S.C. § 380 (28 USCA § 380)) which entered a final decree permanently enjoining enforcement. 7 F.Supp. 12. The defendants, state officers, bring this The District Court received evidence and made findings of fact substantially as follows: Plaintiff......