The State ex rel. International Shoe Company v. Chapman

• Decision Date: 10 October 1927
• Docket Number: 27786
• Parties: The State ex rel. International Shoe Company v. Oliver Chapman, as License Collector of City of St. Louis
• Court: Missouri Supreme Court

300 S.W. 1076

318 Mo. 99

The State ex rel. International Shoe Company v. Oliver Chapman, as License Collector of City of St. Louis

No. 27786

Supreme Court of Missouri

October 10, 1927

Motion for Rehearing Overruled December 2, 1927.

Record quashed (in part).

Frank Y. Gladney and R. E. Blake for relator.

(1) It is admitted on the record that the sales against which the protested part of the tax demand was made are exclusively and purely transactions in interstate and foreign commerce. On the facts shown the concession is necessitated by familiar authorities. Butler Bros. Shoe Co. v. Rubber Co., 156 F. 1; Swift & Co. v. United States, 196 U.S 398; Text Book Co. v. Pigg, 217 U.S. 91; Kansas City v. McDonald, 175 S.W. 917; Pennsylvania Railroad Co. v. Clark Bros., 238 U.S. 456; Norfolk & Western Railroad v. Sims, 191 U.S. 441; Addyston Pipe Co. v. United States, 175 U.S. 246. (2) The merchant's license tax is a tax on gross receipts, viz "One dollar on each one thousand dollars or fractional part thereof of sales made by such merchant." It is a tax measure pure and simple, imposed for revenue purposes, in contrast with a police or inspection ordinance. It withholds for the use of the city a part of every dollar received from such sales. The tax, therefore, is a direct tax burden on the sales embraced thereby. Crew Levick Co. v Pennsylvania, 245 U.S. 292. (3) If a state statute deals with commerce in general terms so that it is susceptible of being construed (a) to include interstate commerce or (b) to exclude it, in recognition of the exclusive control of Congress over interstate commerce, the court will adopt the latter construction. American Banana Co. v. United Fruit Co., 213 U.S. 347; Stanley v. Wabash Ry. Co., 100 Mo. 435; McCabe v. Railway Co., 186 F. 966; Commonwealth v. Gagne, 153 Mass. 205; Commonwealth v. Peoples Express Co., 201 Mass. 575; State v. L. & N. Ry. Co., 177 Ind. 556; Schultz v. Parker, 158 Iowa 42; State v. Railway Co., 152 Wis. 350. (4) The privilege that is taxed must be one that the city can grant or prohibit. This excludes interstate sales. Crutcher v. Kentucky, 141 U.S. 47; Standard Oil Co. Case, 218 Mo. 376; Vance v. Vandercook, 170 U.S. 456. (5) The city's contention that this merchant's license tax imposes a valid tax burden on interstate commerce has been anticipated and refuted in a great variety of cases. Thus: (a) A tax on the gross receipts of a merchant derived from commerce both domestic and interstate and foreign is void. Crew Levick Co. v Pennsylvania, 245 U.S. 292; Bowman v. Continental Oil Co., 256 U.S. 642; Sonnenborn v. Keeling, 262 U.S. 506. (b) A tax on the gross receipts of an express company derived from handling both domestic and interstate shipments is void. Fargo v. Stevens, 121 U.S. 230; Meyer v. Wells, Fargo & Co., 223 U.S. 298. (c) A tax on the gross receipts of a railroad company derived from handling intrastate and interstate freight is void. State Rate Freight Tax Case, 15 Wall. 232; Philadelphia Co. v. Pennsylvania, 122 U.S. 326. (d) A tax on the gross receipts of a telegraph company derived from sending messages within the State and among the several States is void. Western Union v. Texas, 105 U.S. 460; Ratterman v. Western Union, 127 U.S. 411; Western Union v. Seay, 132 U.S. 472. (6) The fact that relator's interstate and foreign commerce is transacted from its office in St. Louis in no degree removes such commerce from the protection of the Federal Government. Pensacola Tel. Co. v. Western U. Tel. Co., 96 U.S. 711. (7) Relator concedes the right of the city to license and to tax its domestic business. It has tendered (and still stands ready to pay) the full amount of tax due on all its sales in Missouri. The city cannot make it a condition of granting relator a license to carry on domestic commerce that relator shall pay a tribute of $ 80,000 because of its interstate and foreign sales. Western Union v. Foster, 247 U.S. 114; Cement Co. v. Massachusetts, 268 U.S. 218; Western Union v. Kansas, 216 U.S. 1; Pullman Co. v. Kansas, 216 U.S. 56; Barrett v. New York, 232 U.S. 31; Looney v. Crane Co., 245 U.S. 187-8. (8) The fact that relator's domestic sales and its interstate and foreign sales are all parts of one and the same activity originating in St. Louis does not alter the fact that domestic commerce is subject to the exclusive power of the State, while interstate and foreign commerce is subject to exclusive regulation by Congress. New York ex rel. v. Knight, 192 U.S. 27. (9) Relator's privilege of engaging in interstate and foreign commerce cannot be brought within the merchants' license tax by calling it (as the Board of Equalization did) "the privilege of pursuing the business of merchant in the city of St. Louis." Robbins v. Taxing District, 120 U.S. 697.

Julius T. Muench and Oliver Senti for respondent; Eugene C. Slevin of counsel.

(1) The fundamental rule of statutory construction is to ascertain and give effect to the intention of the Legislature. 36 Cyc. 1106. The same rule governs the construction of ordinances. St. Louis v. Murta, 283 Mo. 82. (2) Taxes may be measured by the value of property which is not taxable. State ex rel. v. Brinkop, 238 Mo. 298; Van Allen v. Assessor, 70 U.S. 573. (3) The construction given a statute for a long period by those charged with its administration is entitled to great consideration in determining its true meaning. State ex rel. v. Davis, 273 Mo. 660; State ex rel. v. Gordon, 266 Mo. 394. (4) The rule is well established that when a Statute exercises its legitimate and rightful power to tax an occupation or privilege, it may rightfully measure that taxation either by property or the receipts of property, neither of which are themselves taxable. Society of Savings v. Coite, 73 U.S. 594; Provident Ins. Co. v. Mass., 73 U.S. 611; Home Ins. Co. v. New York, 134 U.S. 594; State of Maine v. Grand Trunk Railway, 142 U.S. 217; Ficklen v. Taxing District, 145 U.S. 1; Clark v. Titusville, 184 U.S. 329; Wisconsin Co. v. Powers, 191 U.S. 379; Galveston Railway Co. v. Texas, 210 U.S. 217; Flint v. Stone Tracy Co., 220 U.S. 165; U.S. Express Co. v. Minnesota, 223 U.S. 335; U.S. Glue Co. v. Oak Creek, 227 U.S. 321; Baltic Mining Co. v. Mass., 231 U.S. 68; Kansas City Railroad v. Kansas, 240 U.S. 227; N.W. Mutual Ins. Co. v. Wisconsin, 247 U.S. 132; Shaffer v. Carter, 252 U.S. 37; Hump Hairpin Co. v. Emmerson, 258 U.S. 290; Pullman v. Richardson, 261 U.S. 330; Continental Oil Co. v. Walker, 285 F. 729; St. Louis v. United Rys. Co., 263 Mo. 387, 445. (5) License taxes, the amount of which is measured by the volume of sales for the previous year, do not violate the Commerce Clause of the Federal Constitution. American Mfg. Co. v. St. Louis, 270 Mo. 40, 250 U.S. 459. (6) The aggregate amount of relator's license taxes, both as a manufacturer and as a merchant, is less than the tax it would be required to pay if its personal property in the city of St. Louis were assessed in accordance with the ordinary method of taxation. (a) The license taxes imposed on the relator are not only for the privilege of doing business in the city, but are in effect a commutation tax levied in the place of all other taxes on its personal property in the city. N.W. Mutual Ins. Co. v. Wisconsin, 247 U.S. 132. (b) Ordinances imposing such license taxes in an amount not in excess of that which might lawfully be imposed by the ordinary methods of taxation are not violative of the Commerce Clause of the Federal Constitution, although the amount thereof is measured by the volume of the taxpayer's sales for the previous year, a part of which sales were made in interstate commerce. N.W. Mutual Ins. v. Wisconsin, 163 Wis. 484, 247 U.S. 132; U.S. Express Co. v. Minnesota, 223 U.S. 335; Cudahy Packing Co. v. Minn., 246 U.S. 450; State of Maine v. Grand Trunk Railway, 142 U.S. 217; Baltic Mining Co. v. Mass., 231 U.S. 68; Hump Hairpin Co. v. Emmerson, 258 U.S. 290. (7) Taxes have been repeatedly sustained where the proceeds of interstate commerce have been used as one of the elements in the process of determining their amount. (a) The decisive question is whether such taxes affect interstate commerce so directly and immediately as to amount to a genuine and substantial regulation of or restraint upon such commerce. Hump Hairpin Mfg. Co. v. Emmerson, 258 U.S. 290. (b) The whole scheme of taxation should be taken into account. Galveston Ry. Co. v. Texas, 258 U.S. 388.

OPINION

Blair, J.

This is an original proceeding in certiorari, whereby relator seeks to quash the record of the Board of Merchants' and Manufacturers' Tax Equalization of the city of St. Louis, made on July 27, 1926, in the matter of the assessment of merchants' license taxes against relator for year ending July 1, 1926. Said board having adjourned soon after its entry, the record here challenged is now in the custody and under the control of respondent in his official capacity as license collector.

The facts, together with applicable provisions of the city charter and ordinances, have been fully stipulated. Respondent is license collector of the city of St. Louis. The Board of Merchants' and Manufacturers' Tax Equalization, to which we will refer as "board," meets on the third Tuesday of June each year and continues in existence for a six weeks' session, if so required, but not longer. Among other duties, the board "shall determine all matters of appeal, equalization, revision or correction of assessment or of any other matter properly coming before said board." [Rev. Code 1914, sec. 335.]

By Section 407 of said Revised Code, the word "merchant" is thus defined: "Whoever shall deal in the selling of any goods, wares or merchandise at any store, stand or place occupied for that purpose within the city, or at the...