Source: http://supreme.nolo.com/us/145/1/case.html
Timestamp: 2019-04-24 05:51:39+00:00

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(2) That under the circumstances, the complainants could not resort to the court simply on the ground that the authorities had refused to issue a new license without the payment of the stipulated tax.
Robbins v. Shelby County Taxing District, 120 U. S. 489, examined and distinguished from this case.
This case having been submitted on briefs, the submission was set aside by the court and an oral argument ordered. When the case was reached neither party appeared by counsel, but an offer was again made to submit on the briefs. The court thereupon ordered the case dismissed for want of prosecution in the manner directed by its previous order, but subsequently this dismissal was set aside on motion, and argument was heard.
This case was submitted January 4, 1889, under the 20th rule. On the 4th of February, 1889, the submission was set aside, and the case was restored to the docket, to stand for oral argument. On the 6th of November, 1891, it was assigned for argument. When reached on the 24th of that month, an offer was again made to submit on the briefs. The Court thereupon ordered the case dismissed for failure to prosecute it in the manner directed by the court.
This was a bill filed in the Chancery Court of Shelby County, Tennessee, by C. L. Ficklen and Cooper & Company against the taxing district of Shelby county and Andrew J. Harris, County Trustee.
"commercial agents or merchandise brokers, located within the taxing district of Shelby County, where their respective firms rent a room for the purpose of keeping and at times exhibiting their samples and carrying on their correspondence with their respective principals. That they use no capital in their business. That they handle or deal in no merchandise, and are neither buyers nor sellers; they only engage in negotiating sales for their respective principals. They do precisely the same business that commercial drummers do, the only difference being that they are stationary, while the commercial drummers are transitory and go from place to place and secure a temporary room at each town or city in which to exhibit their samples. That each solicits orders for the sales of the merchandise of their respective principals, and forwards the same to them, when such orders are filled by shipping the goods direct to the purchasers thereof in the County of Shelby."
and all the merchandise so sold was in other states than Tennessee, where the sales were made, and was shipped into Tennessee, when the orders were forwarded and filled.
That at least nine-tenths of the sales negotiated and effected by complainants Cooper & Co., and at least nine-tenths of their gross commissions, were derived from merchandise of nonresident firms or persons, and which merchandise was shipped into Tennessee from other states after the sales were effected.
"Every person or firm dealing in cotton, or any other article whatever, whether as factor, broker, buyer, or seller on commission or otherwise, ($50) fifty dollars per annum, and, in addition, every such person or firm shall be taxed ad valorem (10 cts.) ten cents on everyone hundred dollars of amount of capital invested or used in such business, provided, however, that if such person or firm carry on the cotton or other business in connection with the grocery or any other business, the capital invested in both shall only be taxed once; but such person or firm must pay the privilege tax for both occupations, and provided further that if the persons taxed in this subsection have no capital invested, they shall pay 2 1/2 percent on their gross yearly commissions, charges, or compensations for said business, and at the time of taking out their said license they shall give bond to return said gross commissions, charges, or compensation to the trustee at the end of the year, and at the end of the year they shall make return to said trustee accordingly, and pay to him the said 2 1/2 percent."
the same unless complainants would also pay the income tax for the year 1887.
From the bill and exhibits attached, it appeared that complainants, in January, 1887, each paid the sum of $50 for the use of the taxing district, and executed bonds agreeably to the requirements of the law in that behalf, and received licenses as merchandise brokers within the limits of the district for the year 1887, and that in January, 1888, they tendered, as commercial brokers, to the trustee $50.25 each, as their privilege tax and charges for the year 1888, which he refused to accept because they refused to pay for the year 1887 2 1/2 percent upon their gross commissions derived from their business for the year 1887, although they executed bonds in January, 1887, to report said gross commissions.
"That an injunction issue to restrain the defendants, or either of them, from instituting any suit or proceeding against them, or either of them, for the collection of said 2 1/2 percent tax upon their respective gross commissions from their said business, or from issuing any warrant for their arrest for their failure to pay the same for the year 1887, and that defendants be also restrained from in any way interfering with them in the carrying on their said business for the year 1888, and upon final hearing they (the defendants) be restrained perpetually from collecting from them, or either of them, said 2 1/2 percent tax upon their said gross commissions from their said business, and from collecting said privilege tax of $50, and they pray for general relief, and will ever pray,"
and one-half percent on their commissions, to the extent that those commissions were upon sales of property owned by residents of Tennessee, and perpetuating the injunction in all other respects.
privilege tax under the said provision of the federal Constitution."
"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,"
"whether it is competent for a state to levy a tax or impose any other restriction upon the citizens or inhabitants of other states for selling or seeking to sell their goods in said state before they are introduced therein,"
"the imposition of taxes upon persons residing within the state, or belonging to its population, and upon avocations and employments pursued therein not directly connected with foreign or interstate commerce, or with some other employment or business exercised under authority of the Constitution and laws of the United States."
"To say that the tax, if invalid as against drummers from other states, operates as a discrimination against the drummers of Tennessee, against whom it is conceded to be valid, is no argument, because the state is not bound to tax its own drummers, and if it does so whilst having no power to tax those of other states, it acts of its own free will, and is itself the author of such discrimination. As before said, the state may tax its own internal commerce; but that does not give it any right to tax interstate commerce."
of the Tennessee Laws of 1881, which embraced a different subject matter from section sixteen of that chapter. For the year 1887, they paid the $50 tax charged, gave bond to report their gross commissions at the end of the year, and thereupon received, and throughout the entire year held, a general unrestricted license to do business as such brokers. They were thereby authorized to do any and all kinds of commission business, and became liable to pay the privilege tax in question, which was fixed in part and in part graduated according to the amount of capital invested in the business or, if no capital were invested, by the amount of commissions received. Although their principals happened during 1887 as to the one party to be wholly nonresident and as to the other largely such, this fact might have been otherwise then and afterwards, as their business was not confined to transactions for nonresidents.
In the case of Robbins, the tax was held in effect not to be a tax on Robbins, but on his principals, while here the tax was clearly levied upon complainants in respect of the general commission business they conducted, and their property engaged therein, or their profits realized therefrom.
No doubt can be entertained of the right of a state legislature to tax trades, professions, and occupations in the absence of inhibition in the state constitution in that regard, and where a resident citizen engages in general business subject to a particular tax, the fact that the business done chances to consist, for the time being, wholly or partially in negotiating sales between resident and nonresident merchants of goods situated in another state does not necessarily involve the taxation of interstate commerce forbidden by the Constitution.
But here the tax was not laid on the occupation or business of carrying on interstate commerce or exacted as a condition of doing any particular commission business, and complainants voluntarily subjected themselves thereto in order to do a general business.
"an agency of a line of railroad between Chicago and New York, established in San Francisco for the purpose of inducing passengers going from San Francisco to New York to take that line at Chicago, but not engaged in selling tickets for the route, or receiving or paying out money on account of it, is an agency engaged in interstate commerce, and a license tax imposed upon the agent for the privilege of doing business in San Francisco is a tax upon interstate commerce, and is unconstitutional."
This was because the business of the agency was carried on with the purpose to assist in increasing the amount of passenger traffic over the road, and was therefore a part of the commerce of the road, and hence of interstate commerce.
"The corporate franchises, the property, the business, the income of corporations created by a state, may undoubtedly be taxed by the state, but in imposing such taxes, care should be taken not to interfere with or hamper, directly or by indirection, interstate or foreign commerce or any other matter exclusively within the jurisdiction of the federal government."
And this, of course, is equally true of the property, the business, and the income of individual citizens of a state. It is well settled that a state has power to tax all property having a situs within its limits, whether employed in interstate commerce or not. It is not taxed because it is so employed, but because it is within the territory and jurisdiction of the state. Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196.
And it has been often laid down that the property of corporations holding their franchises from the government of the United States is not exempt from taxation by the states of its situs. 85 U. S. Peniston, 18 Wall. 5; 76 U. S. S. 23� v. Pacific Railroad, 9 Wall. 579; Western Union Tel. Co. v. Attorney General,@ 125 U. S. 530.
"The exaction of a license fee is an ordinary exercise of the police power by municipal corporations. When, therefore, a state expressly grants to an incorporated city, as in this case, the power 'to license, tax, and regulate ferries,' the latter may impose a license tax on the keepers of ferries, although their boats ply between landings lying in two different states, and the act by which this exaction is authorized will not be held to be a regulation of commerce."
Again, in Maine v. Grand Trunk Railway Co., 142 U. S. 217, we decided that a state statute which required every corporation, person, or association operating a railroad within the state to pay an annual tax for the privilege of exercising its franchise therein, to be determined by the amount of its gross transportation receipts, and further provided that, when applied to a railroad lying partly within and partly without a state, or to one operated as a part of a line or system extending beyond the state, the tax should be equal to the proportion of the gross receipts in the state, to be ascertained in the manner provided by the statute, did not conflict with the Constitution of the United States. It was held that the reference by the statute to the transportation receipts, and to a certain percentage of the same, in determining the amount of the excise tax was simply to ascertain the value of the business done by the corporation and thus obtain a guide to a reasonable conclusion as to the amount of the excise tax which should be levied. In this respect, the tax was unlike that levied in Philadelphia Steamship Co. v. Pennsylvania, supra, where the specific gross receipts for transportation were taxed as such -- taxed "not only because they are money, or its value, but because they were received for transportation."
Since a railroad company engaged in interstate commerce is liable to pay an excise tax according to the value of the business done in the state, ascertained as above stated, it is difficult to see why a citizen doing a general business at the place of his domicile should escape payment of his share of the burdens of municipal government because the amount of his tax is arrived at by reference to his profits. This tax is not on the goods, nor on the proceeds of the goods, nor is it a tax on nonresident merchants; and, if it can be said to affect interstate commerce in any way, it is incidentally, and so remotely as not to amount to a regulation of such commerce.
We presume it would not be doubted that if the complainants had been taxed on capital invested in the business, such taxation would not have been obnoxious to constitutional objection, but because they had no capital invested, the tax was ascertained by reference to the amount of their commissions, which, when received, were no less their property than their capital would have been. We agree with the supreme court of the state that the complainants, having taken out licenses under the law in question to do a general commission business, and having given bond to report their commissions during the year, and to pay the required percentage thereon, could not, when they applied for similar licenses for the ensuing year, resort to the courts because the municipal authorities refused to issue such licenses without the payment of the stipulated tax. What position they would have occupied if they had not undertaken to do a general commission business, and had taken out no licenses therefor, but had simply transacted business for nonresident principals, is an entirely different question which does not arise upon this record.
yet I feel sure that the present decision will be cited as having that effect.
"will only prevent the levy of a tax, or the requirement of a license for making negotiations for the conduct of interstate commerce, and it may well be asked where the state gets authority for imposing burdens on that branch of business any more than for imposing a tax on the business of importing from foreign countries, or even on that of postmaster or United States marshal. The mere calling the business of a drummer a privilege cannot make it so. Can the state legislature make it a Tennessee privilege to carry on the business of importing goods from foreign countries? If not, has it any better right to make it a state privilege to carry on interstate commerce? It seems to be forgotten in argument that the people of this country are citizens of the United States, as well as of the individual states, and that they have some rights under the Constitution and laws of the former independent of the latter, and free from any interference or restraint from them."
"It is strongly urged, as if it were a material point in the case, that no discrimination is made between domestic and foreign drummers -- those of Tennessee and those of other states; that all are taxed alike. But that does not meet the difficulty. Interstate commerce cannot be taxed at all, even though the same amount of tax should be laid on domestic commerce, or that which is carried on solely within the state. This was decided in the case of State Freight Tax, 15 Wall. 232. The negotiation of sales of goods which are in another state for the purpose of introducing them into the state in which the negotiation is made is interstate commerce. A New Orleans merchant cannot be taxed there for ordering goods from London or New York, because in the one case it is an act of foreign, and in the other of interstate, commerce, both of which are subject to regulation by Congress alone. "
In Philadelphia & Southern Steamship Co. v. Pennsylvania, 122 U. S. 326, a tax imposed in Pennsylvania upon the gross receipts of a steamship company incorporated under the laws of that state, such gross receipts being derived from the transportation of persons and property by sea, between different states, and to and from foreign countries, was held to be a regulation of interstate and foreign commerce, and therefore unconstitutional.
In Asher v. Texas, 128 U. S. 129, a state law exacting a license tax to enable a person within the state to solicit orders and make sales there for a person residing in another state, was held to be repugnant to the commerce clause of the Constitution.
a sociis, if the clause be taken, as it should be, in connection with the other clauses and parts of that act. But it is indistinguishable from that held void in Robbins v. Shelby County Taxing District and Asher v. Texas, 128 U. S. 129, as being a regulation of interstate commerce so far as applicable to persons soliciting, as Hennick was, the sale of goods on behalf of individuals or firms doing business outside of the District."
In McCall v. California, 136 U. S. 104, it was held that a license tax imposed by an ordinance enacted by the Board of Supervisors of the City and County of San Francisco upon an agent engaged at that city in the business of soliciting travel for a line of railroad between Chicago and New York, was invalid under the commerce clause of the Constitution.
In Norfolk &c. Railroad Co. v. Pennsylvania, 136 U. S. 114, a tax imposed by Pennsylvania upon a railroad company incorporated in another state, and whose line extended from Philadelphia into other states, for the privilege of keeping an office in Pennsylvania to be used by its officers, stockholders, agents, and employees was a tax upon commerce among the states, and therefore void.
In Crutcher v. Kentucky, 141 U. S. 47, the Court adjudged to be void an act of the Legislature of Kentucky so far as it forbade foreign express companies from carrying on business between points in that state and points in other states without first obtaining a license from the state.
precedent of Ficklen's right to a license for 1888 that he should pay the required percent of the gross commissions earned by him in 1887 in interstate business. This is a very clever device to enable the taxing district of Shelby County to sustain its government by taxation upon interstate commerce. If the ordinance in question had, in express terms, made the granting of a license as merchandise broker depend upon the payment by the applicant of a given percent upon his earnings in the previous year in interstate business, the court, I apprehend, would not have hesitated to pronounce it unconstitutional. But it seems that if the local authorities are discreet enough not to indicate in the ordinances under which they act their purpose to tax interstate business, they may successfully evade a constitutional provision designed to relieve commerce among the states from direct local burdens. The bond which Ficklen gave should not, in my opinion, be construed as embracing his commissions earned in business upon which no tax can be constitutionally imposed by a state.
The result of the present decision is that while, under Robbins v. Shelby County Taxing District, a license tax may not be imposed in Tennessee upon drummers for soliciting there the sale of goods to be brought from other states; while, under Leloup v. Port of Mobile, a local license tax cannot be imposed in respect to telegrams between points in different states, and while, under Stoutenburgh v. Hennick, commercial agents cannot be taxed in the District of Columbia for soliciting there the sale of goods to be brought into the District from one of the states, the Taxing District of Shelby County may require, as a condition of granting a license as merchandise broker, that the applicant shall pay a license fee, and, in addition, 2 1/2 percent upon the gross commissions received, not only in the business transacted by him that is wholly domestic, but in that which is wholly interstate.

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