State v. French

• Decision Date: 16 February 1892
• Citation: 14 S.E. 383,109 N.C. 722
• Parties: STATE v. FRENCH et al.
• Court: North Carolina Supreme Court

14 S.E. 383

109 N.C. 722

STATE v. FRENCH et al.

Supreme Court of North Carolina

February 16, 1892

Appeal from criminal court, New Hanover county; MEARES, Judge.

William A. French and George R. French were convicted of failing to file for taxation a statement of the total amount of their purchases, as required by Laws 1891, c. 323. Defendants appeal. Affirmed.

Geo Davis and Geo. Rountree, for appellants.

The Attorney General and A. M. Waddell, for the State.

CLARK J.

By the act to raise revenue, (Laws 1891, c. 323, § 22,) it is enacted as follows: "Every merchant, jeweler, grocer druggist, or other dealer who shall buy and sell goods wares, and merchandise, of whatever name or description, not specially taxed elsewhere in this act, shall, in addition to his ad valorem tax upon his stock, pay as a license tax one-tenth of one per centum on the total amount of his purchases in or out of the state (except purchases of farm products from the producer,) for cash or credit, whether such persons herein mentioned shall purchase as principal or through an agent or commission merchant." The special verdict brings the defendants completely within the provisions of the act, finding, among other facts, that the defendants purchased goods in other states, brought them into this state, and sold them here, but made no purchases within this state. The policy or advisability of such taxation rests with the legislative branch of the government alone. The sole question committed to the courts is as to the constitutional power of the legislature to lay the tax. It is conceded by the learned counsel of the defendants that such tax is not a property tax, but, as truly stated on the face of the act, is a license tax, for the privilege of carrying on the business specified. Such license tax is not prohibited by the constitution of North Carolina, but is expressly authorized by section 3, art. 5, thereof. ^[1] Albertson v Wallace, 81 N.C. 479; State v. Cohen, 84 N.C. 771.

Nor is this mode of taxation forbidden by the fourteenth amendment to the United States constitution, ^[2] which guaranties to all persons the equal protection of the laws. It has been repeatedly held that the fourteenth amendment in no wise affects the right of the state to adjust its system of taxation in accordance with its own constitution,--"to classify property for taxation; subjecting one kind of property to one rate of taxation, and another kind to another rate; distinguishing between franchises, licenses, and privileges, and visible and tangible property, and between real and personal property." Insurance Co. v. State of New York, 134 U.S. 594, 606, 10 S.Ct. 593; Railroad Co. v. Pennsylvania, 134 U.S. 232, 237, 10 S.Ct. 593. Both of these cases are cited and approved by the same court in a very recent case, (Express Co. v Seibert, 12 S.Ct. 250,) in which the opinion was filed January 4, 1892. the defense, indeed, rests entirely upon the position that the tax, so far as it respects goods purchased in other states and brought into this state, is void, as being in violation of the federal constitution, (article 1, § 8,) which gives to congress the power to "regulate commerce with foreign nations, and among the several states, and with the Indian tribes." Under the decisions of the supreme court of the United States, if the "business," the carrying on of which is made liable to the tax, was that of interstate commerce, such as the offering for sale or selling goods in one state to be shipped to the buyer, who is in another state, as in Robbins v. Taxing-Dist., 120 U.S. 489, 7 S.Ct. 592, (known commonly as the "Drummers' Case,") or a tax on the transportation of passengers or freight from one state to another, (State Freight Cases, 15 Wall. 232; Freight Discrimination Cases, 95 N.C. 428, 434,) or the transmission of telegrams across state lines, (Leloup v. Port of Mobile, 127 U.S. 640, 8 S.Ct. 1380,) such tax would be inhibited. But the business here subjected to the privilege tax in neither by the terms of the law nor in its purport, to be gathered by any reasonable construction, "interstate dealings." The tax is not on any dealings between parties outside of the state and the defendants within the state, nor on the transportation of goods into the state. The "business" taxed and intended to be taxed is that of "buying and selling goods, wares, and merchandise, "i.e., carrying on a mercantile business in this state. The fact that such trade or occupation, exercised in this state, is carried on in goods, wares, or merchandise which had their origin out of the state, cannot make it "interstate commerce." The commerce is "intrastate." It is carried on in this state between the defendants and other parties in this state. It is an occupation or trade exercised here, under North Carolina laws, and protected by them from violence and illegal interference; from robbery and thieves. Should the purchaser of "goods, wares, and merchandise" from the defendants subsequently ship the goods to another state, this would not make the dealing between them "interstate," even though the defendants at the time of such sale knew of the buyer's intention to so ship the goods. Brown v. Houston, 114 U.S. 622, 5 S.Ct. 1091. Neither, for like reasons, could the fact that the "occupation" taxed deals in merchandise, some or all of which originated elsewhere than in North Carolina, make it "interstate" traffic. Woodruff v. Parham, 8 Wall. 123. The interstate dealings were terminated when the goods were delivered at the store of the defendants. The "business" subsequently carried on, of vending and disposing of them, is intrastate traffic, upon which the state can levy its license tax. The tax is not laid on the purchases nor on the sales. It is laid as a "license tax" on every "merchant," etc., who shall "buy and sell goods, wares, and merchandise;" evidently meaning to tax the occupation of carrying on such business in this state. As a mode merely of graduating the tax by some approximation to the volume of business done, (which is just,) it is provided that such license tax shall be "one-tenth of one per...