The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1883-03-08
SLEEPING-CAR TAX VOID.
The Act of 1881 Repugnant to the
United States Constitution.
The Taxation on Receipts of Sleeping-Car
Companies an Unlawful Interference
with Interstate Commerce.

Court, holding void and imperative the law
to tax the receipts of palace and sleeping car
companies:
State of Indiana, on the relation of Edward Fl.
Wolfe, Auditor of State, VS.. The Pullman Palace
car Company
The Legislature of Indiana, on the goth day of
March, 1881, passed an act entitled IAN act con-
corning taxation" the eighty-seyenth section Of
which reads as follows:
Every joint stock association, company or
and through this State, OF any part
thereof passengers and travellers in pal
ace cars, drawing-room cars, sleeping
cars or chair-cars, on contract with any railroad
company, or the managers, lessee, agent or re-
ceiver thereof, shall be held and deemed TO be a
sleepingcar company. Every such sleeping-car
company doing business in this State shall an
nualy, between the 1st day of April and the LIST
day of June, report to the Auditor OF State,
under oath OF an officer agent of such cor
pOratien, the gross amount OF all its receipts,
within or without the State, for fares earned or
business dole by such company within this
State, for the year then next preceding the LIST
day Of April of the current year; and
in computing such gross receipts
tanced traversed in this State bears to the
whole distance paid for. At the time OF making
such report, such company shall pay into the
treasury o. the State, the snm Of 50 on every
800 OF such receipts. Every sleeping-car COM
psny failing or refusing for more than thirty
dsys after the let day OF June. to render an &C.
tax Ss'''t theresa a1 shall forfeit ' saS for
each additional day such report
and payment shall be delayed, to be recovered
in an action in the name of the State OF Indiana,
on the relation of the Auditor of State, in any
court Of competent jurisdiction, and the attor-
ey-general shall conduct such prosecutions aud,
such sleeping-car company SO failing or refus
ing, shall be prohibited from carrying on such
business until such payment is made. All rail-
road com panies in this State, the persons
managing or operating the same, are prohibited
from hauling any ears OF any sleeping
and for each violation of this
prohibition, shall be liable TO pay to the State of
Indiana the sum of 800, to bo recovered Ia
proper action by the State"
The first paragraph of the complaint AYERS,
that the defendant the Pullman Palace-oar
Company, is "A joint stock company organized un-
der the laws of Illinois; that it now is aud for
long time has been engaged in the business OF
carrying to, from aud through the State OF
indiana, passengers and travellers in palace-cars,
drawlngroom cars, sleeping-ears, and chalrcars;
that IL failed and refused to report the Auditor
of State, as required by law, the gross amount of
all its receipts within and Without the State, for
fares earned or business done by it within the
State for the year preceding the first day of
April, 1881, computing such gross receipts re-
quired by the above quoted section. and failed
and refused to pay into the treasury of the State
two dollars upon every one hundred dollars of
such gross receipts, which, from the 10Th
day of March, 1881, to the 29th
day of May, 1882, amounted to 100000.
1t lie further averred that, by failing to make
der the statute, the defendant has incurred pen
alties amounting to $4,000, for which sum
Judgment is demanded.
The second paragraph AYERS that, for the year
ending the 3lst day Of March, 1881. the defend
ant, while engaged in the business described in
,he fret paragraph, earned and col
alone the sum of S156,931.ls, and for the
year ending the 3lst day of March, 1892, the
further sum OF $780, 92652, and that these sums
were received within and without the State.
Judgment is demanded in this paragraph for
tax of 50 on each 500 of such gross receipts for
these two years.
The right OF State to tax property within its
territory or jurisdiction and protected by it's
laws, cannot he questioned so long as no provi-
sion of the Federal constitution violated.
This right OF taxing for revenue may be
exercised in any mode or form that the
taxed by the State whose creatures they are.
They may be taxed on their stock, their fran
chises their grUss receipts, or their not receipts
and they may be taxed upon their receipts as
part of their common property or funds in their
treasures, although such receipts have been de-
rived from the business OF commerce between
the States. But while the taxing power of the
State is thus unlimited subjects
within its Jurisdiction, IL ia new
ertheless true that this power cannot
be exercised on persons and property beyond
the States territory or jurisdiction. The laws OF
a State have no extra territorial effect.
(Srate tax on foreign-held bonds, Is Wall, 30O)
The defendant is an illinois joint stock company
engaged in tbs business of transporting pas
sengers through the States. Indiana claims the
ffgnL TO TAX the gross fectlpGS OF tHlB COM
pany i'll its treasury in Illinois. which were
earned within this State. Part of these
receipts, and doubt the greater part,
were not even collected In Indiana. The mere
fact that the money was earned in doing business
In Indiana gives the latter State no right to tax
IL in the treasury OF the defendant in Illinois.
The taxes and penalties sued for are uuauth or-
lzed for another reason: The Federal cOnsJitu-
uon gives to Congress ths exclusive "power to
regulate commerce with foreign nations and
amongst the several States" This provision was
intended to secure the absolute freedom OF in
terstate commerce and communication
from all State restrictions, exactions
and burdens. By 1t State is forbid
den to impose any tax upon freight or passen-
gers in transitu from State to State, or upon the
carrier, for the right or privilege OF engaging in
such business. The transportation of merchan-
disc aud passengers from State to State is inter-
state commerce, and the thing which the States
are forbidden is the regulation of commerce. Ii
is idle to say that the right to carry pas
seBgers from State to State is secured by the
commercial clause of the Federal constitution,
from State exactions, II State may declare by
its Legislature, that this right shall not be exer
esed within its limits unless its consent is first
had and paid for. Indiana, by its statute exacts
the tax OF foreign companies only, and they are
prohibited from carrying on their business
within the State II they fail refuse to pay the
tax. Why this discrimination against foreign
companies, unless 1t was Intended chat they
should pay for the privilege of Transporting
passengers through the State. A State can regu-
late It's Internal commerce as it pleases, but no
State can exclude from its limits corporations of
other States as carriers of passengers from state
TO State, nor can any State charge corporations,
whether organized by its own laws or the laws
OF other States. for the privilege of engaging in
commerce within its limits. II Indiana may
act per cent OF the gross earnings of cOrpo-
Fations organized under the laws of
other States, as a condition upon which they
will be permitted to pass over it's territory as
carriers OF passengers, OF course 1t may exact
more, and other States may make similar exao-
tons. The right asserted in this case amounts
TO a restraint or regulation of commerce between
the States, and its enforcement would render
the protection of the Federal constitution I'M
real. Ir the tax is sustained, it is
plain that il will ultimately fall
upon the passengers and become tax upon
them for the privilege Of crossing the State BY
a statute of Nevada, it was declared that a ca pi-
tation tax of one dollar should be levied upon
every person leaving the State, by railroad,
stage-coach, or other vehicle employed in trans
porting passengers for hire, and the persons then
engaged in the transportation OF them were re-
qnired to make monthly reports of the number of
passenge carried and TO pay the tax. 1t was held
that this was tax upon the privilege of being
carried out of the State; that a State cannot tax