HEYMAN V. HAYS
| Decision Date | 23 February 1915 |
| Citation | 236 U. S. 178 |
| Court | U.S. Supreme Court |
ERROR TO THE SUPREME COURT
OF THE STATE OF TENNESSEE
The rulings of this Court concerning the operation of the commerce clause of the federal Constitution rest upon the broad principle of the freedom of commerce between the states, and of the equal right of a citizen of one state to freely contract either to receive merchandise from, or to send merchandise into, another state. An. Express Co. v. Iowa, 196 U. S. 133.
The right to engage in interstate commerce is not the gift of a state; it cannot he regulated or restrained by a state, nor can a state exclude from its limits a corporation engaged in such commerce. West v. Kansas Natural Gas Co., 221 U. S. 229.
The selling of liquor under a strictly mail-order business and the delivery within the state to a carrier for through shipment to another state to fill such orders in interstate commerce is beyond the control of the state.
Substance, and not form, controls in determining whether a particular transaction is one of interstate commerce, and the mere method of delivery is a negligible circumstance if, in substantial effect, the transaction is such under the facts.
The protection against imposition by the direct burdens upon the right to do interstate commerce is practical and substantial, and embraces those acts which are necessary to the complete enjoyment of the right protected.
The mere fact that a concern doing a strictly interstate business has goods on hand within the state capable of being used in intrastate commerce, and to which attention is given, does not take the business out of the protection of the commerce clause and allow the state to impose a privilege tax on such concern.
Delivery to a carrier within the state for the sole purpose of through shipment to another state in fulfillment of a previous order from the latter state is not, in a practical sense, the doing of business within the state so as to subject the business to a privilege tax, and so held as to the privilege tax attempted to be imposed by a county in Tennessee on a concern doing a strictly mail-order business confined to shipments to other states.
The facts, which involve the constitutionality under the commerce clause of the federal Constitution of a privilege tax imposed by state authority on a wholesale liquor business confined exclusively to filling mail orders from points outside the state, are stated in the opinion.
As a prelude, we give a mere outline of the relevant laws of Tennessee. In 1909, the manufacture in the state of "intoxicating liquors for the purpose of sale" was prohibited. All liquors were included except alcohol of a stated degree of proof "for chemical, pharmaceutical, medical, and bacteriological purposes." The state court held this act constitutional. Motlow v. State, 125 Tenn. 548. In the same year (1909), the sale of liquors as a beverage was forbidden within four miles of any schoolhouse, public or private, whether school was in session or not. This law was held constitutional, and it is said in the argument that it was construed as excluding all sales of liquor throughout the state except sales by a druggist under a physician's prescription and sales for mechanical, medicinal, sacramental, and other like purposes. State v. Kelly, 123 Tenn. 556.
In Tennessee, the system of taxation embraces ad valorem property taxes, merchants' taxes by a percentage on their capital, and privilege taxes for the right to engage in business of a prescribed character. In 1909, a privilege tax was imposed upon wholesale and retail liquor dealers. The prohibitory liquor law (the four-mile law) was held not to embrace a mail-order business -- that is, orders by mail from other states and the shipment from Tennessee to such other states by carrier -- because such business was interstate commerce not within state control. State v. Kelly, 123 Tenn. 556.
In 1912, this suit was commenced to enjoin the collection of a county privilege tax for carrying on a wholesale liquor business in 1912, and to recover back the sum of a like tax for the same year which had been collected by the state over protest. It was in substance averred that, having on hand in the state a stock of liquors, the complainant firm had found it unprofitable to seek to carry on the business of selling within the state, and therefore had, prior to that time, abstained from all attempts to carry on business in the state by selling any liquor directly or indirectly therein, and had confined its activities to a mail-order business -- that is, the soliciting of orders from persons in other states by mail, the receipt of such orders, and the filling of the same by delivering the liquor to a carrier for through transportation out of the state. Averring that such business was purely interstate commerce which the state or county had no right to directly burden, it was alleged that the attempt of the state and county to impose the privilege taxes in question was an unlawful interference with, and a direct burden upon, interstate commerce, and therefore void. The bill was demurred to as stating no case. The demurrer was overruled, and, the defendants electing to plead no further, a decree went in favor of the complainants for the repayment of the one tax and enjoining the enforcement of the other. The supreme court reversed this judgment, and, because of the asserted repugnancy of the tax whose validity was thus sustained to the Constitution of the United States, this writ of error was prosecuted.
In Am. Express Co. v. Iowa, 196 U. S. 133, 143, referring to previous rulings concerning concerning the operation of the commerce clause, it was said:
And again, in West v. Kansas Natural Gas Co., 221 U. S. 229, where the law of a state prohibiting the piping out from the state of natural gas was held to be repugnant to the commerce clause, it was observed, page 221 U. S. 260:
"At this late day, it is not necessary to cite cases to show that the right to engage in interstate commerce is not the gift of a state, and that it cannot be regulated or restrained by a state, or that a state cannot exclude from its limits a corporation engaged in such commerce."
Indeed, in the opinion of the court below, there was not the slightest intimation of doubt concerning this elementary doctrine, nor any suggestion that, if the complainant firm did no business in the state, and confined its activities exclusively to transactions of interstate commerce, there was any power to impose the privilege taxes in controversy. And no doubt was expressed concerning the fact that, abstractly and inherently, the selling of liquor under a strictly mail-order business, and the...
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