Stockard v. Clint Morgan

• Decision Date: 07 April 1902
• Docket Number: No. 195,195
• Parties: B. A. STOCKARD and R. C. Jones, Composing the Firm of Stockard & Jones, et al., Plffs. in Err. , v. CLINT MORGAN and J. N. McCutcheon
• Court: U.S. Supreme Court

185 U.S. 27

22 S.Ct. 576

46 L.Ed. 785

B. A. STOCKARD and R. C. Jones, Composing the Firm of Stockard & Jones, et al., Plffs. in Err.,

v CLINT MORGAN and J. N. McCutcheon.

No. 195.

Submitted March 19, 1902.

Decided April 7, 1902.

This is a writ of error to the supreme court of the state of Tennessee, brought to review a judgment of that court reversing a judgment of the court of chancery of Hamilton county in favor of complainants, and dismissing their bill.

The complainants sought to enjoin the collection of a tax imposed upon them under a statute of Tennessee, upon the ground that they were not liable for the tax because they were agents and brokers exclusively for the sale of the property of nonresident principals, and did no business of any kind for residents of the state. They also averred that the state statute, properly construed, did not include their business, but if it did, it was void as contravening the Federal Constitution in its interstate commerce clause.

The defendants by answer averred that they sought to collect the tax under the authority of the statute of the state of Tennessee, providing for the collection of a privilege tax on the occupation of the complainants as merchandise brokers, and that such statute was valid.

Other parties similarly situated commenced suits against the defendants to obtain like relief. By an agreement, which was approved by the court, all the cases were consolidated under the style of Stockard & Jones v. Morgan and others, under which title it was agreed that they should thereafter proceed as one case.

The case came to trial in the chancery court upon the following agreed statement of facts:

'In this consolidated cause the following agreement is made as to the facts relating to the matters in controversy, viz.:

'It is agreed that the several complainants in the original bills, to wit, J. H. McReynolds, Stockard & Jones, W. G. Oehmig, T. M. Carothers, and J. H. Allison are residents of Hamilton county, Tennessee.

'That said J. H. McReynolds has been carrying on business in Chattanooga, said county and state, during the present year, 1900; that said Stockard & Jones, W. G. Oehmig, T. M. Carothers, and J. H. Allison have been carrying on business in said city during the years 1897, 1898, 1899 and 1900.

'That the character of said business so carried on by the respective complainants, or the manner of conducting the business of each, is and has been as follows:

'The complainant, as the representative of nonresident parties, firms, or corporations, solicits orders for goods from jobbers or wholesale dealers in Chattanooga, Tennessee, and when such orders are obtained sends them to his nonresident principal or principals. If an order is accepted the goods are shipped by such nonresident principal or principals to the local jobber or wholesale dealer. Up to the time of the sale the goods in all instances belong to the nonresident principal or principals, and are shipped to the state of Tennessee from another state.

'In making sales or soliciting orders for the goods the complainant sometimes exhibits samples to the local jobber or wholesale dealer, and sometimes takes the orders without showing a sample.

'Unless complainant has been previously authorized by the principal or principals to sell at a fixed price, the orders are taken subject to acceptance or rejection by such nonresident principal or principals, who own the goods.

'At the end of each month, or at stated periods, the complainant is paid a commission by such nonresident principal or principals for goods previously sold on accepted orders. No commission is paid on orders taken but rejected. Complainant does not receive for his services any pay or salary from any local jobber or dealer or resident of Tennessee, nor does he assume to represent or represent or hold himself out as representing, any resident of Tennessee, or negotiate any sales of goods for residents of Tennessee. His principals are all residents of other states of the United States, and the goods sold are shipped from such other state to the state of Tennessee for delivery to buyers who reside in Tennessee.

'The complainant has an office or 'headquarters' in Chattanooga, Tennessee, where he keeps samples, stationery, and other articles; but he travels around on foot daily or frequently in drumming or soliciting orders for goods, as before stated. His principals are specific parties, firms, or corporations, all nonresidents of Tennessee and residents of other states in the United States, and he does not represent or hold himself out as representing the public in general, or negotiate or sell for any resident of Tennessee.

'The defendants and solicitors for the state of Tennessee and Hamilton county contend that, under the facts, the complainants are 'merchandise brokers,' and each of them is bound for privilege taxes under the laws of Tennessee.

'That J. H. McReynolds should pay a privilege tax for 1900 to the state of $20, and to the county of $20

'That Stockard & Jones should pay to the state $20 for each of the years 1897, 1898, 1899, and 1900, and a like sum for each of said years to the county of Hamilton.

'That each of the other complainants owe the same sums as Stockard & Jones.

'That all of the complainants should be held for proper penalties, costs, and attorneys' fees if they are held liable for such taxes.

'The complainants contend that they are engaged exclusively in interstate commerce, and are not bound for such privilege taxes; further, that the revenue laws of Tennessee appli- cable to 'merchandise brokers' do not include these complainants, so as to make them subject to privilege taxes; but even if such laws do include complainants, yet they are inoperative and void as against complainants, who are engaged solely in interstate commerce.'

By agreement of the parties two questions only were argued in the state court: (1) Whether or not complainants were merchandise brokers and subject by statute to tax as such; (2) whether or not their business constituted interstate commerce, and therefore was beyond the reach of the state's taxing power.

The chancellor held that the complainants were not liable for the privilege tax and enjoined its collection perpetually, and adjudged the costs against Hamilton county. From the judgment so entered the defendants appealed to the supreme court of the state, which, as stated, reversed the judgment and dismissed the bill, holding the complainant's business was covered by the statute, and that it did not violate the Constitution of the United States.

Messrs. Robert Pritchard, J. B. Sizer, and R. P. Woodard for plaintiffs in error.

Mr. George W. Pickle for defendants in error.

Mr. Justice Peckham, after making the foregoing statement of facts, delivered the opinion of the court:

In this case we are bound to give the same meaning to the state statute that was given to it by the supreme court of the state, and the question which remains for us to decide is whether, as so construed, the statute violates any provision of the Federal Constitution.

We think it violates the interstate commerce clause of the Constitution of the United States, and that this court has in several cases decided the principle which invalidates the statute so far as it affects the business of the complainants. The principle is contained in the cases of Brown v. Maryland, 12 Wheat 419, 6 L. ed. 678, and Welton v. Missouri, 91 U. S. 275, 23 L. ed. 347. Subsequently the case of Robbins v. Shelby County Taxing Dist. 120 U. S. 489, 30 L. ed. 694, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592, was decided, which is one of the leading cases upon the subject now in hand, and we think that it is decisive of the case before us. That case was tried upon an agreed statement of facts as follows:

'Sabine Robbins is a citizen and resident of Cincinnati, Ohio, and on the ___ day of _____, 1884, was engaged in the business of drumming in the taxing district of Shelby county, Tennessee, i. e., soliciting trade by the use of samples for the house or firm for which he worked as a drummer, said firm being the firm of 'Rose, Robbins, & Co.,' doing business in Cincinnati, and all the members of said firm being citizens and residents of Cincinnati, Ohio. While engaged in the act of drumming for said firm, and for the claimed offense of not having taken out the required license for doing said business, the defendant, Sabine Robbins, was arrested by one of the Memphis or taxing district police force, and carried before the Hon. D. P. Hadden, president of the taxing district, and fined for the offense of drumming without a license. It is admitted the firm of 'Rose, Robbins, & Co.' are engaged in the selling of paper, writing waterials, and such articles as are used in the book stores of the taxing district of Shelby county, and that it was a line of such articles for the sale of which the said defendant herein was drumming at the time of his arrest.'

The court held upon these facts that the statute of Tennessee of 1881, enacting that 'all drummers and all persons not having a regular licensed house of business in the taxing district 'of Shelby county,' offering for sale, or selling goods, wares, or merchandise therein by sample, shall be required to pay to the county trustee the sum of $10 per week, or $25 per month, for such privilege,' was void as against Robbins.

The opinion of the court was delivered by Mr. Justice Bradley, in the course of which be said (p. 494, L. ed. p. 696, Inters. Com. Rep. p. 47, Sup. Ct. Rep. p. 594):

'In a word, it may be said that in the matter of interstate commerce the United States are but one country, and are and must be subject to one system of regulations, and not to a multitude of systems. The doctrine of the freedom of that com- merce, except as regulated by Congress, is so firmly established that it is unnecessary to enlarge further upon the subject. In view of these fundamental...