# Pickard v. Pullman Southern Car Company

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United States Supreme Court
117 U.S. 34
Pickard v. Pullman Southern Car Company
Argued: March 1, 1886. ---
Section 28 of article 2 of the constitution of Tennessee of 1870 contains these provisions: 'All property shall be taxed according to its value, that value to be ascertained in such manner as the legislature shall direct, so that taxes shall be equal and uniform throughout the state. No one species of property from which a tax may be collected shall be taxed higher than any other species of property of the same value. But the legislature shall have power to tax merchants, peddlers, and privileges, in such manner as they may from time to time direct.' On the sixteenth of March, 1877, the legislature of Tennessee passed an act, entitled 'An act declaring the mode and manner of valuing the property of telegraph companies for taxation, and of taxing sleeping cars,' (Laws 1877, c. 16, p. 26,) the sixth section of which provided as follows: 'That the running and using of sleeping cars or coaches on railroads in Tennessee, not owned by the railroads upon which they are run or used, is declared to be a privilege, and the companies owning and running or using said cars or coaches are required to report, on or before the first day of May of each year, to the comptroller, the number of cars so used by them in this state; and they shall be required to pay to the comptroller by the first of July following $50 for each and every of said cars or coaches used or as run over said roads; and if the said privilege tax herein assessed be not paid as aforesaid, the comptroller shall enforce the payment of the same by distress warrant.' Under this act the comptroller of the state claimed that there was due from the Pullman Southern Car Company, a corporation of Kentucky, to the state, for each of the years 1878, 1879, and 1880, a privilege tax of $50 on each one of 38 sleeping cars run and used on railroads in Tennessee, and not owned by the railroad companies on whose roads they were used, but owned by the Pullman Company. The aggregate amount of the taxes claimed was $5,700, and the comptroller instituted proceedings to collect them from that company, which, under the provisions of a statute of the state, paid the money under protest, and it was paid into the state treasury, with notice to the comptroller that it was paid under protest, and the company, within the time prescribed by the statute, and in August, 1881, brought an action at law against the comptroller to recover the $5,700, in the circuit court of the United States for the Middle district of Tennessee.
The declaration alleges, among other things, that the sleeping cars, for the running or use of which the taxes were claimed and collected, were not run or used by the plaintiff during any one of the years 1878, 1879, or 1880, but were run and used by certain railroad companies in Tennessee, though they were owned during that time by the plaintiff, which permitted those railroad companies to run and use them under certain contract stipulations; that the sleeping cars so run and used were, during the whole of the years 1878, 1879, and 1880, employed by them in interstate commerce, being run into and through Tennessee, from and into other states, transporting passengers from other states into or across Tennessee, or from Tennessee into other states; and that, therefore, such taxes and the collection thereof were illegal and contrary to the constitution of the United States. There was a demurrer to the declaration, raising, among other things, the question above stated, but, on a hearing, the demurrer was overruled, the opinion of the court being delivered by Mr. Justice MATTHEWS. 22 Fed. Rep. 276. The conclusion arrived at in the opinion, which accompanies the record, was that the levying of a privilege tax on the running and using, on railroads in Tennessee, of sleeping cars not owned by those railroads, was, as applied to such cars when employed in interstate transportation, a regulation of commerce among the states, and contrary to the constitution of the United States, and therefore void. Leave being given to the defendant to plead over, nil debet was pleaded, and the issue was tried by the court without a jury, by a written stipulation between the parties, which embodied an agreed statement of facts, on which the cause was heard. The agreed statement sets forth that the plaintiff is a Kentucky corporation, having its chief office and place of business at Louisviller and that, since 1872, it has been engaged at Louisville in manufacturing railway cars, known as drawing-room cars and sleeping cars, and in hiring those cars to various railroad companies in Tennessee and other states, under the following form of contract:
'This indenture, made this nineteenth day of June, A. D. 1872, between the Louisville & Nashville Railroad Company, the party of the first part, and the Pullman Southern Car Company, of the second part: Whereas, the said party of the second part is now engaged in the business of manufacturing railway cars, known as drawing-room and sleeping cars, under certain patents belonging to them, and of hiring the same to railroad companies, and receiving therefor income and revenue by the sale to passengers of seats and berths, and accommodations therein; and whereas, the said party of the first part is desirous of availing itself of the use on and over its lines of road of the cars constructed under the sleeping and drawing-room car patents now the property of said second party, and also of connections by means of said cars with other lines of railroad, whereon said cars are now operated by said second party: Now this contract witnesseth that the said party of the second part, in consideration of the covenants and agreements of the party of the first part, hereinafter mentioned to be by them kept and performed, hereby agrees with the said party of the first part that they will furnish drawingroom cars and sleeping cars to be used by said party for the transportation of passengers, sufficient to meet the requirements of travel on and over their line of railroad, and on and over all lines of railroad which they now control or may hereafter control, by ownership, lease, or otherwise, the said cars so furnished to be satisfactory to the general superintendent of the first party.
'(2) The said party of the second part agrees that they will keep the carpets, upholstery, and bedding of each of the said cars in good order and repair, and renew and improve the same, when necessary, at their own expense excepting repairs and removals made necessary by accident or casualty; it being understood that the said first party shall repair all damages to said cars, of every kind, occasioned by accident or casualty during the continuance of this agreement.
'(3) The said party of the second part hereby agrees, at their own expense and cost, to furnish one or more employes, as may be needful, upon each of said cars, whose duties shall be to collect fares for the accommodations furnished in said cars, and generally to wait upon passengers therein, and provide for their comfort.
'(4) The said party of the first part hereby agrees that the general officers of said second party, and the employes named in article third of this agreement, shall be entitled to free passage over the lines of the first party, when they are on duty for the second party.
'(5) The party of the second part hereby agrees that the general officers of the first party shall be entitled to free passes in any of the cars furnished by said second party under this agreement.
'(6) It is hereby mutually agreed that the said employes of the second party named in article third of this agreement shall be governed by and subject to the rules and regulations of the said first party, which are or may be adopted from time to time, for the government of their own employes, and, in the event of any liability arising against said first party for personal injury, death, or otherwise of any employes of said second party, it is hereby distinctly understood and agreed that the said first party shall be liable only to the same extent they would be if the person injured was an employe in fact of said first party, and for all liability in excess thereof shall be indemnified and paid by said second party.
'(7) The party of the first part, in consideration of the use of the aforesaid cars, hereby agrees to haul the same on the passenger trains on their line of road, and on all roads which they now control or may hereafter control by ownership, lease, or otherwise, and also on all passenger trains on which they may, by virtue of contracts or running arrangements with other roads, have the right to use such cars in such manner as will best accommodate passengers desiring the use of said cars; and the said party of the first part shall, at their own expense, furnish fuel for the cars and materials for the lights, shall wash and cleanse said cars, and shall also keep said cars in good order and repair, including renewals of worn-out parts, and all things appertaining to said cars, necessary to keep them in first-class condition, except such as are provided for in article second of this agreement.
'(8) The party of the first part agrees to furnish said party of the second part, at convenient points, room and conveniences for airing and storing bedding.
'(9) The said party of the first part further agrees that the said party of the second part shall be entitled to collect from each and every person occupying said cars, such sums for said occupancy as may be usual on competing lines furnishing equal accommodations, and that such rules and regulations shall be agreed upon as will most favor the renting of seats and couches in said cars.
'(10) The party of the first part hereby agrees to permit the party of the second part to place their tickets for seats and couches for sale in such of the railroad ticket offices as may be desired by said second party, and such services shall be performed by and as part of the general duties of the ticket agents, and without charge to the party of the second part; proceeds of such sales to be at the risk of said second party.
'(11) The party of the first part hereby agrees that said second party shall have the exclusive right, for a term of fifteen years from the date hereof, to furnish for the use of the first party drawing-room or parlor cars and sleeping cars, including reclining-chair cars, on all the passenger trains of said first party, and over their entire lines of railroad, and on all railroads which they may control, or may hereafter control, by ownership, lease, or otherwise, and also on all passenger trains on which they may, by virtue of contracts or running arrangements with other roads, have the right to use such cars, and that they will not contract with any other parties to run said class of cars on or over said lines of road during said period of fifteen years.
'The said second party, for the consideration aforesaid, hereby guaranties said first party against all damages of whatsoever kind which may be by said first party incurred in consequence of any infringement of patent rights in the construction and use of any of said cars which may be used by said second party upon the lines of said first party under this arrangement; it being the meaning and intent of this article that the said second party shall secure said first party against all manner of expenditures which may be incurred by said first party in consequence of any litigation connected with alleged infringements of patent rights for the interior arrangements of said cars, and that they will pay off and discharge all judgments obtained at any time against said first party on account of such infringements.
'(12) It is mutually agreed between the parties hereto that in case either of said parties shall at any time hereafter fail to keep and perform any of the covenants herein contained to be by them respectively kept and performed, then and in that case, after written notice shall have been given to the defaulting party thereto of the default complained of, if the said defaulting party shall refuse or neglect to make good, keep, and perform such unfulfilled covenants and conditions of this agreement within a reasonable time after such notice, the other party shall be at liberty to declare this contract ended, and no longer in force.'
The agreed statement further sets forth that the plaintiff has never had any branch office or establishment of any kind in Tennessee, unless the fact that the plaintiff has placed its tickets for sale with railway agents in that state constitutes the offices of such agents branch offices or establishments of the plaintiff; that it has never had any ticket agents of its own in Tennessee, except in so far as the ticket agents of the railway companies with whom the tickets of the plaintiff have been placed for sale may be regarded as the agents of the plaintiff; that the plaintiff has never had any other agents, officers or employes in Tennessee, except the conductors and porters which it furnishes with its cars under its contracts with the railroad companies; that the cars furnished by the plaintiff under those contracts constitute all the property owned by it in Tennessee, and the business done by it under those contracts such as it is, is the only business done by it in Tennessee; that the cars furnished by it under those contracts (with the exception of two sleeping cars running between Nashville and Memphis) are used in transporting passengers from other states into or across Tennessee, and from points in Tennessee to points in other states; that the same cars also transport passengers from points in Tennessee to other points in that state whenever they properly apply for such transportation, but the number of such passengers bears an inconsiderable proportion to the other passengers transported in those cars; that those cars run into, out of, or across, Tennessee, making such stops as the trains to which they are attached make; that, in the case of passengers traveling across Tennessee, or from points out of it to points in it, their sleeping-car tickets are purchased and paid for before they enter Tennessee, but in the case of passengers from points in Tennessee to points in other states, or in Tennessee, the tickets are purchased and paid for in Tennessee; that the railroad companies of Tennessee with whom such contracts were made were duly chartered by that state or organized or operated under its laws, with power to transport passengers for hire; that they are taxed by that state on the value of their roads, rolling stock, and other tangible property, and also on the value of their franchises; that from March 16, 1877, to the present time, the Memphis & Charleston Railroad Company, and the East Tennessee, Virginia & Georgia Railroad Company, both of them Tennessee corporations, have owned sleeping cars which they have run and used during that time as sleeping cars upon their respective roads, and they have not been required by the state to pay any tax for running or using said sleeping cars upon their roads, except in so far as such a tax may have been included in the tax assessed on the value of their franchises; and that the 38 cars before mentioned included the two cars run between Nashville and Memphis.
The agreed statement sets forth the other facts hereinbefore contained necessary to a recovery; and on the twenty-ninth of December, 1884, a judgment was entered, which states that the cause was heard on an agreed statement of facts, and that it is thereby made a part of the record at large in the cause, and that the court found the issue joined in favor of the plaintiff. It then sets forth the material facts contained in the agreed statement, and awards a judgment for $5,400, for the taxes on the 36 cars, and for $1,089.90 interest, and for costs, assigning as a reason that the state had no power to impose a privilege tax on the plaintiff for running or using the 36 cars in the state, the tax being a regulation of commerce between the states, and therefore a violation of the constitution of the United States. To reverse this judgment the defendant has sued out a writ of error.
J. B. Heiskell,
[Argument of Counsel from pages 42-43 intentionally omitted] Thos. L. Dodd, and S. A. Champion, for plaintiff in error.
O. A. Loc
hrane and Edward S. Isham, for defendant in error.
BLATCHFORD, J.

## Notes

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).
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