Cudahy Packing Co v. Hinkle

• Decision Date: 18 February 1929
• Docket Number: No. 278,278
• Parties: CUDAHY PACKING CO. v. HINKLE, Secretary of State of Washington, et al
• Court: U.S. Supreme Court

278 U.S. 460

49 S.Ct. 204

73 L.Ed. 454

CUDAHY PACKING CO.

v HINKLE, Secretary of State of Washington, et al.

No. 278.

Argued Jan. 7, 1929.

Decided Feb. 18, 1929.

Messrs. J. Harry Covington, of Washington, D. C., and S. W. Brethorst, Thomas M. Askren, and Edward B. Palmer, all of Seattle, Wash., for appellant.

Mr. Levi B. Donley, of Olympia, Wash., for appellees.

[Argument of Counsel from page 461 intentionally omitted] Mr. Justice McREYNOLDS delivered the opinion of Court.

Appellant is incorporated under the laws of Maine. Its authorized capital stock is $45,000,000. Less than $30,000,000 has been issued and the total value of the corporate property does not exceed that sum. It does an extensive business in meats and foodstuffs throughout the Union and abroad. During 1916 when the capital stock was $20,000,000 the articles of incorporation were duly filed with the proper state officer and the corporation began to carry on closely associated interstate and intrastate business in Washington. Its property therein is now worth $40,000. Gross sales by the corporation for the year ended October 31, 1926, were $231,750,000. Of these $1,313,275 were made in Washington, less than half being intrastate.

The statutory provisions here important appear in the sections of Remington's Compiled Statutes of Washington mentioned below.

Section 3852 authorizes foreign corporations to do business within the state as those organized under her laws upon compliance with conditions prescribed by sections 3853, 3854.

Section 3853 requires every foreign corporation to file with the secretary of state a certified copy of its charter, etc., and section 3854 requires appointment of a local agent.

Section 3836 (as amended by chapter 149, § 1, Laws Extraordinary Session 1925) directs that every local and foreign corporation required by law to file its articles with the secretary of state shall pay graduated filing fees, not above $3,000, reckoned upon its authorized capital stock.¹

Section 3837 (as amended by chapter 149, § 2, Laws Extraordinary Session 1925) requires every corporation, foreign or domestic, desiring to file with the secretary of state articles amendatory or supplemental articles increasing its capital stock to pay the fees prescribed in the preceding section less any sum theretofore paid.²

Section 3841 (as amended by chapter 149, § 3, Laws Extraordinary Session 1925) requires corporations, foreign and domestic, to pay annual license fees, not above $3,000, reckoned upon authorized capital stock.³

Sections 3842, 3843, 3844, 3846, 3855, and 3861 provide heavy penalties for failure to pay prescribed filing fees and license taxes.

Filing fees because of the increased capital and license taxes for 1927, both reckoned upon the authroized capital stock, were demanded of appellant. Penalties for failure to comply were threatened. By an original bill in the United States District Court, Western District of Washington, it set up the above-stated facts and asked an appropriate injunction to prevent enforcement of the demands. A court of three judges heard the cause, denied a preliminary injunction, and dismissed the bill for want of equity.

Looney v. Crane Co., 245 U. S. 178, 187, 38 S. Ct. 85, 87 (62 L. Ed. 230), examined Texas statutes which required foreign corporation to pay permit and franchise taxes graduated according to authorized capital stock and declared them in conflict with the federal Constitution because they imposed 'direct burdens on interstate commerce and moreover exerted the taxing authority of the state over property and rights which were wholly beyond the confines of the state and not subject to its jurisdiction and therefore constituted a taking without due process.' These statutes prescribed no maximum tax. In other respects they were not unlike the acts here under consideration.

Unless saved by the $3,000 limitation, the Washington enactments are subject to the constitutional objections pointed out in Looney v. Crane Co., and must be denied effect.

Baltic Mining Co. v. Massachusetts, 231 U. S. 68, 34 S. Ct. 15, 58 L. Ed. 127, upheld a tax based upon authorized capital stock but limited to $2,000 imposed by Massachusetts upon foreign corporations for the privilege of doing local and domestic business therein. Consideration was given to the fact that the corporate assets were four times the authorized capital and to the limitation. Weighing all the circumstances, the court concluded that no direct substantial burden was imposed upon interstate commerce and that property beyond the state was not taxed.

In Alpha Portland Cement Co. v. Massachusetts, 268 U. S. 203, 218, 45 S. Ct. 477, 481 (69 L. Ed. 916, 44 A. L. R. 1219), we said:

'It must now be regarded as settled that a state may not burden interstate commerce or tax property beyond her borders under the guise of regulating or taxing intrastate business. So to burden interstate commerce is prohibited by the commerce clause; and the Fourteenth Amendment does not permit taxation of property beyond the state's jurisdiction. The amount demanded is unimportant when there is no legitimate basis for the tax. So far as the language of Baltic Mining Co. v. Massachusetts, 231 U. S. 68, 87 (34 S. Ct. 15, 58 L. Ed. 127), tends to support a different view it conflicts with conclusions reached in later opinions and is now definitely disapproved.'

Baltic Mining Co. v. Massachusetts had sometimes been regarded as lending support to the theory that a tax which really burdens interstate commerce and reaches property beyond the state may be sustained if relatively small. This view did not harmonize with the principles approved by Looney v. Crane Co., and was expressly disapproved by Alpha Portland Cement Co. v. Mass.

It follows that the decree of the court below is erroneous and must be reversed.

Whether, becuase reckoned upon authorized and not upon actual capital stock, the challenged legislation fails to require like fees for equal privileges within the doctrine of Air-Way Electric Appliance Corp. v. Day, 266 U. S. 71, 45 S. Ct. 12, 69 L. Ed. 169, we need not now consider.

Reversed.

Mr. Justice BRANDEIS (dissenting).

The corporation maintains in Washington a branch office and a warehouse. There, it does a large intrastate business. Nearly one-half of the aggregate sales of $1,313,275.74 made within the state were local and were from broken packages. It is subjected to two taxes which are separate and distinct. The filing fee is payable only once and as laid was $545. The annual license fee is $580. The latter results in a charge of about one-tenth of 1 per cent. on the intrastate business. The corporation's pay roll there is more than a hundred times as large. These small taxes are obviously not more than a fair contribution to the necessary expenses of the state government. They are the same for foreign corporations as for domestic. In my opinion both taxes are valid.

If the statute sought to impose a tax on corporations engaged wholly in interstate commerce, or if the taxes laid a direct burden upon interstate commerce, or if they were laid upon property without the state, or if they were unjustly discriminatory, the fact that they are small in amount would, of course, be immaterial. Sprout v. City of South Bend, 277 U. S. 163, 171, 48 S. Ct. 502, 72 L. Ed. 833. But these taxes are not subject to any of those infirmities. The taxes are not laid upon interstate commerce. They are not measured by the amount of interstate commerce. They do not grow, or shrink, according to the volume of interstate commerce or of the capital used in it. They are not furtively directed against such commerce. The taxes would be precisely the same in amount if the corporation did in Washington no interstate business whatsoever. Nor are they taxes laid upon property without the state. Indeed, they are neither property taxes nor substitutes for property taxes. They are an excise, laid solely for the privilege of doing business as a corporation. An individual doing the same business would not be required to pay either these taxes or any substitute therefor.

General Ry. Signal Co. v. Virginia, 246 U. S. 500, 38 S. Ct. 360, 62 L. Ed. 854, requires, in my opinion, that the filing fee be held valid. There, a filing fee of $1,000 on an authorized capitalization of $5,000,000 was sustained as against a foreign corporation, under a statute limiting the maximum tax to $5,000. Here, the filing fee demanded was $545 on an authorized capital nearly ten times as great; and the maximum fee demandable in any case was limited to $3,000. The General Ry. Signal Co. Case was decided by a unanimous court and the correctness of the decision has never been questioned.

Cheney Bros. Co. v. Massachusetts, 246 U. S. 147, 154-158, 38 S. Ct. 295, 62 L. Ed. 632, requires, in my opinion, that the license fee be held valid. That case held a statute imposing an annual license tax valid as applied to all the foreign corporations which, like the Cudahy...