Memphis & L. R. R. Co. v. Nolan

• Citation: 14 F. 532
• Court: U.S. District Court — Western District of Tennessee
• Decision Date: 09 September 1882
• Parties: MEMPHIS & LITTLE ROCK R. CO. v. NOLAN, Comptroller, etc., and another, County Clerk, etc.

14 F. 532

MEMPHIS & LITTLE ROCK R. CO. v. NOLAN, Comptroller, etc., and another, County Clerk, etc.

United States Circuit Court, W.D. Tennessee.

September 9, 1882

B. C Brown and Weatherford & Estes, for plaintiff.

G. P M. Turner, Atty. Gen., for defendants.

HAMMOND D.J.

This is an application for a preliminary injunction to restrain the defendants, who are tax-collecting officers of the state and county, respectively, from collecting the privilege tax imposed by law on the defendants for doing business as an express company in the state of Tennessee. The plaintiff denied that it was an express company, claiming that its express freight department was only a part of its general freight-carrying business, so conducted for its own and the convenience of the public. On an agreed statement of facts the state courts, by a final judgment of the supreme court decided that the two classes of business were distinct, and that the defendant was liable for this license or privilege tax. Memphis & L.R.R. Co. v. State, MSS. (Jackson, April, 1882.) The bill here claims relief on the ground that the defendant 'is solely engaged in interstate commerce; that the tax, hereinafter mentioned, sought to be imposed upon it by the state of Tennessee, under the pretense that orator is an express company, is a tax upon interstate commerce, and as such is forbidden by the constitution of the United States, and is illegal and void. ' The facts alleged are that this railroad company has its terminus only in this state, crossing the river here by transfer boat, using the streets of Memphis by special license, and that every parcel of freight is carried or brought between the different states, and that none of its business is done solely within this state.

Passing all other questions like that of our jurisdiction, of which, perhaps, there is now no reasonable doubt, and that of the estoppel claimed by the litigation in the supreme court, as a matter res judicata, I am of opinion that the application must be denied on the merits. I should feel, on the cases cited by the learned counsel for the plaintiff, great difficulty in determining this question, for there is much force in the argument that this privilege tax is only an indirect mode for taxing the commerce itself. The supreme court has repeatedly said, what Mr. Justice Bradley says in Railroad Co. v. Maryland, 21 Wall. 456, 472, that 'it is often difficult to draw the line between the power of the state and the prohibition of the constitution. ' The distinctions made by the cases seem somewhat arbitrary; but this is possibly unavoidable, owing to the nature of the subject. As I read the cases, the principle is that so long as it is not a direct tax on the property carried in the commerce between the states, imposed either on the goods or indirectly collected from them, and is only a tax on the franchises granted to the carrier in consideration of the grant, or, what is the same thing, a tax or tribute demanded for the privilege of doing the business, the prohibition of the constitution does not apply. Of course, in analogy to our state adjudications, if, under the disguise of taxing a franchise or privilege, the state should undertake, by excessive taxation, to obstruct or prohibit the business of interstate commerce, the constitutional provision would protect against it. There is no claim of that in this case; and no intention to either obstruct or prohibit this defendant from doing this business can be inferred from these statutes. Fortunately for us, here the supreme court itself has drawn the line, and this case finds a direct precedent in the case of Osborne v. Mobile, 16 Wall. 479, where the right of the state of Alabama to authorize the city of Mobile to impose a license or privilege tax on an express company engaged in interstate commerce was sustained.

The injunction is refused.

See Ex parte Thornton, 12 F. 551, note. See, as to restraining collection of tax, Second Nat. Bank v. Caldwell, 13 F. 434, note.

INTERSTATE COMMERCE. Article 1, Sec. 8, subd. 3, of the federal constitution vests congress with the power to regulate interstate commerce, every part of which is indicated by the term. ^[1] The term 'commerce' refers to trade, ^[2] or traffic and exchange of commodities. ^[3] Commerce is intercourse, ^[4] and is not limited to the mere buying and selling, but comprehends active commercial intercourse, ^[5] for the purposes of trade, whether by land or water, ^[6] or communication by telegraph, ^[7] and includes the buying and selling of exchange. ^[8]

Transportation is essential to commerce, as the transportation of articles from one state to another ^[9] for gain or for purchase, or exchange of commodities, ^[10] or passengers ^[11] on railroads through the several states, or between the states; ^[12] so a tax on freight taken out of or brought into a state is invalid; ^[13] and a state law laying a distinct tax on a foreign corporation for transportation of goods in trains from state to state, is unconstitutional. ^[14] Commerce includes navigation as well as traffic, ^[15] and obstacles or burdens laid on it are regulations of commerce, ^[16] and state statutes imposing the same on interstate commerce are in conflict with the federal constitution. ^[17]

DOMESTIC COMMERCE. The power conferred on congress by the commercial clause of the constitution is exclusive, so far as relates to matters within its purview, of a national character, and which admits or requires uniform regulation affecting all the states; ^[18] but the commercial clause of the constitution is not operative on persons and things within the boundaries of the state jurisdiction, ^[19] and it neither regulates nor prohibits taxation; ^[20] so taxation by a state on business done within its boundaries is valid. ^[21] The constitutionality or unconstitutionality of a state tax is to be determined by the subject upon which the burden falls, and not by the form or agency through which it is collected. The effect and not the purpose of the law is to be considered. It is not cured by including subjects within the domain of the state. ^[22]

A state may regulate its own internal commerce, ^[23] when it does not interfere with the free navigation of the waters of the state for purposes of interstate commerce. ^[24] Not everything which affects commerce amounts to a regulation of it. ^[25]

STATE AUTHORITY TO TAX. Where the tax imposed is only a tax on the privilege of doing business within the state, it is not in violation of the constitution; ^[26] so the tax on a franchise is lawful, ^[27] and a state may authorize a city to impose a license or privilege tax on an express company engaged in interstate commerce. ^[28] The states have power to tax, notwithstanding the tax may have some indirect bearing on foreign commerce. ^[29] So a state may require a portion of the earnings of a railroad to be paid to the state, ^[30] and a tax on the gross receipts of a transportation company is a tax on the fruits of transportation and is valid. ^[31] It is not a tax on commerce, ^[32] and so of the gross receipts of warehousemen derived from the exercise of the special privilege, ^[33] or of a railroad. ^[34] Telegraph lines are considered as partaking of the nature of realty, in analogy to the new doctrine that railroads and rolling stock are so treated and consequently such property is liable to state and county taxes, notwithstanding they also pay a privilege tax. ^[35] Though telegraph companies may be subject to congressional regulations, they are also subject to occupation taxes, at least till congress otherwise provides; ^[36] but a tax on telegraph messages to points without the state is unconstitutional. ^[37] Laws imposing half pilotage fees are not regulations of commerce; but a law which requires every vessel to pay a specific sum to the port-wardens, whether called on to perform any service or not, is a regulation of commerce. ^[38] A city may be empowered to lay a tax on steam-boats having that city as their home port according to their value; ^[39] but an act requiring owners of steam-boats to file a statement in writing, setting forth the name of the vessel and of the owner or owners, and their residence and interest, was held void as to steam-boats which had taken out a coasting license. ^[40]

TAX ON EXPORTS. A tax on freight taken out of or brought into a state is invalid. ^[41] So a tax on ores exported before smelting, and exempting all ores smelted in the state, is a regulation of commerce and void. ^[42] So the produce of one state lying in the port of another state, awaiting shipment, is not subject to taxation in the latter state. ^[43] Property belonging to a citizen of another state, in its transit to market to such state, and not offered for sale during transit, is not subject to taxation. ^[44] So, where a person purchased corn from various parties, caused it to be removed to the railway, and there to be put in cribs temporarily to await transportation, and with the purpose to have it carried beyond the state, held, that it was in commercial transit and not taxable by the state. ^[45] But there must be a purpose to ship immediately, or as soon as transportation can be conveniently obtained, followed up by actual shipment in a reasonable time. ^[46] An act imposing a stamp duty on bills of lading for goods transported from the state is void. ^[47]

TAX ON IMPORTS. Goods imported, in the hands of the importer, are not a mass of the property of the state, ^[48] but after they have been broken up for use or for retail, and been incorporated or mixed up with the property of the state, a tax may be imposed on them; ^[49] but if a state singles out imports as a special object for any impost or duty, it is unlawful; ^[50] the articles cease...