Helson v. Commonwealth Kentucky Board

• Citation: 49 S.Ct. 279,73 L.Ed. 683,279 U.S. 245
• Decision Date: 08 April 1929
• Docket Number: No. 296,296
• Parties: HELSON et al. v. COMMONWEALTH of KENTUCKY, by BOARD, Revenue Agent
• Court: United States Supreme Court

279 U.S. 245

49 S.Ct. 279

73 L.Ed. 683

HELSON et al.

v COMMONWEALTH of KENTUCKY, by BOARD, Revenue Agent.

No. 296.

Argued Feb. 27 and 28, 1929.

Decided April 8, 1929.

Mr. James G. Wheeler, of Paducah, Ky., for plaintiffs in error.

Mr. James M. Gilbert, of Frankfort, Ky., for defendant in error.

[Argument of Counsel from page 246 intentionally omitted] Mr. Justice SUTHERLAND delivered the opinion of the Court.

This is an action brought by the Commonwealth of Kentucky against plaintiffs in error to recover an amount levied under § 1, c. 120, Acts 1924,¹ which imposes a tax of three cents per gallon on all gasoline sold within the commonwealth at wholesale. The words 'sold 'at wholesale," as used in the act, are defined to include 'any and all sales made for the purpose of resale or distribution or for use,' and also to include any person who shall purchase such gasoline without the state 'and sell or distribute or use the same within the state.' The tax was increased from three cents to five cents a gallon by section 1, c. 169, Acts 1926, and part of the amount sued for was computed at the latter rate.

Plaintiffs in error are engaged in operating a ferryboat on the Ohio river between Kentucky and Illinois. They do an exclusively interstate business. They are citizens and residents of Illinois. Their office and place of business and the situs of all their personal property is in that state. The motive power of the boat is created by the use of gasoline, all of which is purchased and delivered to plaintiffs in error in Illinois. It is stipulated that 75 per cent. of this gasoline was actually consumed within the limits of Kentucky, but all of it in the making of interstate journeys. The tax in question was computed and imposed upon the use of the gasoline thus consumed.

The trial court rendered judgment for the commonwealth, which was affirmed by the state court of appeals. Metropolis Ferry Co. v. Commonwealth, 225 Ky. 45, 7 S.W.(2d) 506. The validity of the statute as applied by the state courts was assailed upon the grounds: (1) That it violated the provisions of the state Constitution requiring that taxes should be uniform upon all property of the same class; and (2) that it was in controvention of the commerce clause and other provisions of the federal Constitution. The state court of appeals held that the tax was not a property tax, but an excise, and, therefore, the uniformity clause of the state Constitution was not involved. The claim under the commerce clause of the federal Constitution was denied on the ground that the tax was confined to gasoline used within the limits of the state and the commerce clause was not affected. It is with the latter question only that we are here concerned.

Regulation of interstate and foreign commerce is a matter committed exclusively to the control of Congress, and the rule is settled by innumerable decisions of this court, unnecessary to be cited that a state law which directly burdens such commerce by taxation or otherwise constitutes a regulation beyond the power of the state under the Constitution. It is likewise settled that transportation by ferry from one state to another is interstate commerce and immune from the interfence of such state legislation. Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 217, 5 S. Ct. 826, 29 L. Ed. 158; Mayor of Vidalia v. McNeely, 274 U. S. 676, 680, 47 S. Ct. 758, 71 L. Ed. 1292. The power vested in Congress to regulate commerce embraces within its control all the instrumentalities by which that commerce may be carried on. Gloucester Ferry Co. v. Pennsylvania, supra, 114 U. S. page 204, 5 S. Ct. 826, 29 L. Ed. 158. A state cannot 'lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on.' Leloup v. Port of Mobile, 127 U. S. 640, 648, 8 s. Ct. 1380, 1384 (32 L. Ed. 311); Lyng v. Michigan, 135 U. S. 161, 166, 10 S. Ct. 725, 34 L. Ed. 150; Ozark Pipe Line v. Monier, 266 U. S. 555, 562, 45 S. Ct. 184, 69 L. Ed. 439. While a state has power to tax property having a situs within its limits, whether employed in interstate commerce or not, it cannot interfere with interstate commerce through the imposition of a tax which is, in effect, a tax for the privilege of transacting such commerce. Adams Express Company v. Ohio, 166 U. S. 185, 218, 17 S. Ct. 604, 41 L. Ed. 965.

The following are a few of the cases illustrating the many applications of these principles.

A state statute imposing a tax upon freight, taken up within the state and carried out of it, or taken up without the state and brought within it, was held, in the case of the State Freight Tax, 15 Wall. 232, 21 L. Ed. 146, to constitute a regulation of interstate commerce in conflict with the Constitution. The court said (15 Wall. 275, 276):

'Then, why is not a tax upon freight transported from state to state a regulation of interstate transportation, and, therefore, a regulation of commerce among the states? Is it not prescribing a rule for the transporter, by which he is to be controlled in bringing the subjects of commerce into the state, and in taking them out? The present case is the best possible illustration. The Legislature of Pennsylvania has in effect declared that every ton of freight taken up within the state and carried out, or taken up in other states and brought within her limits, shall pay a specified tax. The payment of that tax is a condition upon which is made dependent the prosecution of this branch of commerce. And as there is no limit to the rate of taxation she may impose, if she can tax at all, it is obvious the condition may be made so oneous that an interchange of commodities with other states would be rendered impossible. The same power that may impose a tax of two cents per ton upon coal carried out of the state may impose one of five dollars. Such an imposition, whether large or small, is in restraint of the privilege or right to have the subjects of commerce pass freely from one state to another without being obstructed by the intervention of state lines.'

A state or state municipality is without power to impose a tax upon persons for selling or seeking to sell the goods of a nonresident within the state prior to their introduction therein, Stockard v. Morgan, 185 U. S. 27, 22 S. Ct. 576, 46 L. Ed. 785; or for securing or seeking to secure the transportation of freight or passengers in interstate or foreign commerce, McCall v. California, 136 U. S. 104, 10 S. Ct. 881, 34 L. Ed. 392; Texas Transp. Co. v. New Orleans, 264 U. S. 150, 44 S. Ct. 242, 68 L. Ed. 611, 34 A. L. R. 907. Nor can a state impose a tax on alien passengers coming by vessels from foreign countries. New York v. Compagnie Gen. Transatlantique, 107 U. S. 59, 2 S. Ct. 87, 27 L. Ed. 383. And see Passenger Cases, 7 How. 283, 12 L. Ed. 702. In Minot v. Philadelphia, W. & B. R. Co., 2 Abb. U. S. 323, 343, 17 Fed. Cas. 458, 464, No. 9,645, it was held that a state law imposing a tax for the use within the state of locomotives, passenger and freight cars, and for the use of rolling stock generally, was a license fee exacted for the privilege of such use. It appearing that larger portion of the locomotives, etc., was used for the interstate transportation of persons and property, the court held that the statute constituted a regulation of such commerce. In the course of the opinion, by Mr. Justice Strong, it is said:

'It is of national importance that in regard to such subjects there should be but one regulating power, for if one state can directly tax persons and property passing through it, or...