Logan v. Brown

• Decision Date: 01 September 1911
• Parties: LOGAN v. BROWN, County Clerk.
• Court: Tennessee Supreme Court

141 S.W. 751

LOGAN v. BROWN, County Clerk.

Supreme Court of Tennessee.

September __, 1911.

Appeal from Chancery Court, Campbell County; H. G. Kyle, Chancellor.

Suit by W. M. Logan against J. E. Brown, County Clerk. From a decree for complainant, defendant appeals. Reversed, and bill dismissed.

Attorney General Cates and John Jennings, for appellant. Clarence Templeton, for appellee.

GREEN, J.

This bill was filed by the complainant to recover a wholesale liquor dealer's privilege tax exacted of him by the defendant, the clerk of the county court of Campbell county. The tax was paid under protest, and suit brought for its recovery within the statutory time.

From a decree in favor of the complainant, defendant has appealed to this court. A stipulation as to the facts of the case is filed, as follows:

"It is agreed that on the trial of this case the following facts shall be considered as properly proven:

"The complainant, William Logan, a citizen and resident of Campbell county, Tenn., and living in the town of Jellico, on March 14, 1911, opened and has since been conducting a wholesale business of selling liquors to citizens and residents of other states than the state of Tennessee. Said business has been and is being conducted in the following manner: Complainant's storehouse and place of business is in Jellico, Tenn., where the complainant keeps on hand a stock of liquors, wines, brandies, gins, and beers of an aggregate value of $3,000 to $3,500. These goods the complainant buys in wholesale quantities from liquor dealers in other states, and pays for them by check mailed by him in the post office at Jellico, Tenn. He orders these goods by mail; the orders being mailed by him at the post office in Jellico, Tenn. He places some orders with traveling salesmen representing nonresident liquor dealers. These orders, placed with such traveling salesmen, are likewise paid by checks, mailed at the post office in Jellico, Tenn. All of these orders, so filled by said nonresident liquor dealers, are delivered to a common carrier at a point in such foreign state for delivery to the complainant at Jellico, Tenn. All beer is thus purchased by complainant in quantities of not less than one barrel of bottled beer, and no keg beer is handled by him. All other goods are purchased by the complainant in this manner, in quantities of not less than two cases. A case is a box or package consisting of 12 quarts, or 24 pints, or 48 half pints. These goods are stored by the complainant at his place of business in Jellico, Tenn., where the complainant then proceeds and conducts a selling business as follows:

"Complainant makes all sales by means of mail orders received by him at the post office at Jellico, Tenn., having been previously mailed to him by nonresidents of the state of Tennessee at points within other states than the state of Tennessee. These mail orders are accompanied by checks or post office or express money orders. Complainant makes no sales to any parties in the state of Tennessee. All goods purchased by him are purchased from parties outside of Tennessee, and all goods sold by him are sold to parties outside of Tennessee. The wholesale packages which he buys are stored by him at his place of business and broken for sale and shipment according to the demands of his sales. All sales made by complainant are consummated by packing the goods which he has sold and placing them in the office and charge of a common carrier of freight or express at Jellico, Tenn., for transportation to the party making the order outside of the state. The complainant refused and resisted the payment of the privilege tax demanded by the defendant, on the grounds stated in the bill, but paid same on the 7th and 8th of June, 1911, in the amounts stated in the bill, and for the reason that the clerk of the county court of Campbell county, with a duly authorized officer, was present at his place of business with a distress warrant, demanding payment thereof, or threatening a levy and sale of his property upon his refusal. Payment was made under protest and duress, and so received by the defendant. Complainant took out and paid for United States revenue license, as required by the United States statutes, and not for the purpose or intention of violating the liquor laws of Tennessee. The complainant's application for said government license shows on its face that complainant applied for same for the sole purpose of doing an interstate business."

As will be seen from this statement, the complainant is a resident of Tennessee, has a place of business in Jellico, Tenn., and a considerable stock of liquors there, which he is engaged in selling. Obviously he is a wholesale liquor dealer. As such, he is liable for the privilege tax imposed on that business by chapter 479, Acts of 1909, unless he is relieved therefrom by reason of the fact that he is making his sales to parties outside the state.

The circumstance that he purchases all his stock without the state has no weight in the case. The act of Congress, known as the Wilson act (Act Aug. 8, 1890, c. 728, 26 Stat. 313 [U. S. Comp. St. 1901, p. 3177]), provides:

That all fermented, distilled, or other intoxicating liquors or liquids transported into any state or territory, or remaining therein, for consumption, sale or storage therein, shall upon arrival in such state or territory, be subject to the operation and effect of the laws of such state or territory, enacted in the exercise of its police powers, to the same extent, and in the same manner, as though such liquids or liquors had been produced in such state or territory, and shall not be exempt therefrom by reason of being introduced therein in original packages or otherwise."

So it is frankly conceded by learned counsel for complainant that the question here would be the same and complainant would have the same rights, whether his liquors in stock were shipped into this state, or produced in this state. The only question, therefore, is whether complainant's business is exempt from the privilege tax demanded by the state, on account of the fact that his sales have been made to nonresidents. In other words, is the taxation of a business such as his a violation of the commerce clause (article 1, § 8) of the federal Constitution?

The stock of goods which he has in his storehouse is certainly not exempt from state taxation. Even though he imports it for the express purpose of reshipping and distributing all of it to parties outside of the state, still it has come "to rest" within the limits of the state, and is therefore subject to taxation. American Steel & Wire Company v. Speed, 192 U. S. 500, 24 Sup. Ct. 365, 48 L. Ed. 538; General Oil Co. v. Crain, 209 U. S. 211, 28 Sup. Ct. 475, 52 L. Ed. 745.

Neither is the complainant protected from the privilege tax by the commerce clause of the federal Constitution, in our opinion, and this, we think, is true for several reasons:

First. The liquor traffic is a well-recognized subject of police regulation. The exaction of a license fee from a liquor dealer is an ordinary exercise of police power. The mere levy of an occupation tax upon a liquor dealer, a resident of Tennessee, with his house and business establishment in Tennessee, even though he ships his sales to other states, cannot be held to be a regulation of commerce between the states. Certainly it is no more a regulation of commerce than the imposition of a tax upon the owners of ferries whose boats ply between landings in different states. The power of the state so to tax ferries was upheld in Ferry Co. v. East St. Louis, 107 U. S. 365, 2 Sup. Ct. 257, 27 L. Ed. 419.

A license was required in that case by the city of East St. Louis, and the court said:

"The exaction of a license fee is an ordinary exercise of police power by municipal corporations. When, therefore, a state expressly grants to an incorporated city, as in this case, the power to license, tax, and regulate ferries, the latter may impose a license tax on the keepers of ferries, although the boats ply between landings lying in two different states, and the act by which this exaction is authorized will not be held to be a regulation of commerce." Ferry Co. v. East St. Louis, supra; also Fanning v. Gregoire, 16 How. 534, 14 L. Ed. 1043; Conway v. Taylor, 1 Black, 603, 17 L. Ed. 191.

S...