Source: http://supreme.nolo.com/us/192/500/case.html
Timestamp: 2019-04-21 07:22:24+00:00

Document:
In a constitutional sense, "imports" embrace only goods brought from a foreign country, and do not include merchandise shipped from one state to another. The several states are not, therefore, controlled as to such merchandise by constitutional prohibitions against the taxation of imports, and goods brought from another state, and not from a foreign country, are subject to state taxation after reaching their destination and whilst held in the state for sale.
Woodruff v. Parham, 8 Wall. 123, Brown v. Houston, 114 U. S. 622, have never been overruled directly or indirectly by Leisy v. Hardin, 135 U. S. 100; Lyng v. Michigan, 135 U. S. 161, or other cases resting on the rule expounded in those cases.
to be delivered in the same packages, through the storage company to purchasers in various states.
if it embraces all persons doing a like business there is no discrimination.
The facts are stated in the opinion of court.
"All property, real, personal, or mixed, shall be taxed. . . . 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 at 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. The portion of a merchant's capital used in the purchase of merchandise sold by him to nonresidents and sent beyond the state shall not be taxed at a higher rate than the ad valorem tax on property."
"No article manufactured of the produce of this state shall be taxed otherwise than to pay inspection fees."
"The term 'merchants,' as used in this act, includes all persons, co-partnerships, or corporations engaged in trade or dealing in any kind of goods, wares, merchandise, either on land or in steamboats, wharf boats, or other craft stationed or plying in the waters of this state, and confectioners, whether such goods, wares, or merchandise be kept on hand for sale or the same be purchased and delivered for profit as ordered."
"persons, copartners, and joint stock companies engaged in the manufacture of any goods, wares, merchandise, or other articles of value shall pay an ad valorem tax upon the actual cash value of their property, real, personal, or mixed, . . ."
"Provided, the value of articles manufactured from the produce of the state in the hands of the manufacturer shall be deducted in assessing the property."
"all growing crops of whatever nature or kind -- the direct product of the soil of this state -- in the hands of the producer or his immediate vendee, and manufactured articles from the produce of this state in the hands of the manufacturer."
after unsuccessfully pressing, through the administrative channels provided by the law of Tennessee, its objections, paid the tax under protest, and thereupon, as authorized by the law of Tennessee, commenced this suit to recover the amount paid.
were moving in the channels of interstate commerce from the place where the goods were manufactured, for delivery to the persons to whom in effect they had been sold. Second. Because, as the State of Tennessee exempted from taxation articles manufactured from the produce of that state, no tax could be imposed by Tennessee upon articles manufactured from the produce of other states without operating a discrimination against articles manufactured from the produce of other states. Issue was joined on the complaint. The trial court, deducing from the proof conclusions of ultimate fact in favor of the complainant, entered a decree in favor of the steel company. The case was taken to the supreme court of the state. In that court, the validity of the tax was upheld and the judgment below was reversed. The questions raised concerning the repugnancy of the tax to the Constitution of the United States were expressly considered, and decided adversely to the steel company. This writ of error was thereupon prosecuted.
"Complainant is a corporation created under the laws of New Jersey. Its situs is in the State of New Jersey, and its principal business office is situated at Chicago, Ill. It is engaged in the manufacture of nails, staples, barbed and smooth wire at different points north of the Ohio River. None of its manufactories are situated in Tennessee, and all of its products consigned to Memphis are shipped from points beyond the limits of this state."
the Patterson Transfer Company had been engaged in the business of transferring passengers and freights to and from the various depots at Memphis, and from the landings on the Mississippi River. Appellee entered into an arrangement with the Patterson Transfer Company whereby said company was to receive its manufactured products at Memphis, assort them so as to separate the different kinds of nails, staples, and wire, and then to deliver them either to the jobbers at Memphis or to the jobbers beyond the limits of Tennessee, over the various lines of railroads and steamboats running into Memphis, as directed by complainant."
"None of complainant's products are ever sold to the Patterson Transfer Company, or are by it sold to others, and neither its officers nor employees have any knowledge whatever of the price at which goods are sold by complainant. Under the arrangement between them, the business of the Patterson Transfer Company in connection with complainant's products is confined to their transfer to the warehouses, their assortment in the warehouses, the keeping of them in storage, and their subsequent delivery to the customers of the complainant under its general or special orders, as below indicated."
"The goods of complainant are manufactured at different points, and it is convenient and useful, from a business point of view, to mass them at some place at which they can be assorted, and from which they can be distributed to complainant's customers. It is impracticable to assort the goods either at the river landing or at the railroad depots when they reach Memphis, and, in order to facilitate the work, the Patterson Transfer Company has rented three warehouses in which the goods are stored for the purpose of assortment and distribution, and for other purposes below indicated. These warehouses are rented exclusively for this purpose, and the manufactured products of complainant, and no other goods, are stored therein."
contracts exclusively with jobbers, and in each instance where a contract is made, it is embodied in writing, on a form prepared by complainant, in which is set down the amount of goods which constitutes the subject of the contract and the time agreed upon within which they are to be delivered. The goods so contracted for are described as so many kegs of nails, so many kegs of staples, so many reels of barbed wire, or so many coils of smooth wire, according to the terms of the contract, in respect of the quantity agreed upon. But the contract does not specify the grade and quality of the goods desired. The grade and quality are left open, to be subsequently specified when the customer desires a delivery, as below stated. The customer can, when he makes his specification, select any grade of goods he desires, and, upon so selecting, they will be delivered to him, up to the quantity contracted for, within the time agreed upon at prices contracted for applicable to the several grades. In fixing the price of its goods, the complainant always, except when necessary to lower prices in order to meet competition, figures in the freight on the goods."
"As above indicated, it is shown in the evidence that there are many different kinds of nails, as well as different kinds of barbed and smooth wire, and it is expressly stipulated in the contract that the customer shall have the privilege of specifying, during the life of the contract the kind of wire or kind of nails or staples he desires delivered to him under the contract. These contracts also specify from sixty to ninety days as the time within which the products are to be delivered, and at any time during the period prescribed in the contract, the customer may designate the kind of goods he desires delivered under it."
jobbers, ascertaining the amount of goods they will require within sixty or ninety days, and the contract is prepared to the purport above indicated, in which the complainant obligates itself to deliver at the prices stated, as above mentioned, the amount of goods contracted for therein, and the customer agrees to receive and pay for that quantity upon the goods' being delivered to him after he shall have made, and according to, his specification, which he may make during the life of the contract, the customer reserving the right, in the face of the contract, to specify the exact grade or quality of goods he desires delivered under it. He does this after the making of the contract and at any time he desires to do so within the life of the contract by writing out his specification showing precisely what grade of goods he desires, and forwards this specification to the office of complainant in Chicago, and then the goods, under an order from the Chicago office, addressed to the Patterson Transfer Company at Memphis, are selected by the latter out of the mass of goods belonging to the complainant in the aforesaid warehouses in Memphis, and are shipped by the said Patterson Transfer Company to the customer who has signed the specification. This order from the complainant to the Patterson Transfer Company is effected through the agency of a copy of the specification, which is forwarded to the latter from the complainant's central office at Chicago, it being understood, according to the course of business between the two companies, that the Patterson Transfer Company will select out of the mass of goods those set out in the specification, and will ship them to the customer whose name is signed to the specification, upon receiving such copy of the specification from the central office at Chicago."
contracts with the Memphis jobbers, in the following manner: the Memphis jobber makes out his specification in duplicate, and addresses a letter to complainant, as in any other case; but, instead of forwarding this letter and his specification directly to complainant, he delivers the letter to the Patterson Transfer Company, and the Patterson Transfer Company at once delivers the goods so specified, attaching the dray receipt to a copy of the specification, and forwards the specification, letter, and dray receipt to the office of complainant in Chicago, and that office makes out an invoice and sends it directly to the jobber. Another variation is made in the course of the business, in favor of the Memphis jobbers, to the following effect: any jobber in Memphis who is a recognized customer of the complainant can, without any previous written contract, or other special agreement, make out a specification of the goods he desires and hand this, in duplicate form, to the Patterson Transfer Company. Upon this being done, it is the duty of the Patterson Transfer Company, under its general instructions from the complainant, to select out of the mass of goods in the warehouses goods corresponding to those contained in the specification, and deliver them to such jobber, this delivery being usually made by the next day, or, at most, within two or three days. Other deliveries on specifications sent direct to the Chicago office are not usually made within less than six or eight days, and sometimes a longer period is required. When the Patterson Transfer Company receives from Memphis jobbers the specifications which are the special subject of this paragraph, one copy is kept by it and the other copy is forwarded to the office at Chicago, where, upon its arrival and reception, the customer is charged with the goods specified at current prices."
general contracts previously referred to, pursuant to specifications thereunder made and under specifications made without previous written contracts, the latter covering about two and one-half percent of all the goods kept on hand."
"No one but an agreed or recognized customer of the complainant can make out a specification or have goods delivered from the storehouses of the Patterson Transfer Company, and no goods are ever delivered or distributed to anyone by the Patterson Transfer Company except under the express directions of complainant or under general directions given by complainant to the said Patterson Transfer Company in favor of recognized and approved customers of the complainant whose names are furnished by it to the Patterson Transfer Company."
"The testimony further shows that the quantity of goods which the complainant keeps on hand at Memphis fluctuates considerably owing to the State of trade from time to time. Sometimes the stock is as low in value as $30,000, and sometimes the complainant has on hand a stock of the value of more than $100,000."
"Some of the goods -- a very small amount -- are shipped to Memphis by rail. Nearly all of these goods which come to the hands of the Patterson Transfer Company from this complainant are transported to Memphis on barges belonging to transportation companies in which complainant has no interest, and which are engaged in the carrying trade. As a general rule, while the complainant endeavors to secure contracts covering its output before the goods are manufactured, yet it does not always do so, but, taking advantage of the seasons when there is a goods stage of water in the rivers, which must be used in floating its products from its mills to Memphis, it masses its goods at the latter point in anticipation of future sales."
a certain time on barges to the port of Memphis. These barges are met at the river landing by the Patterson Transfer Company, which receives the goods, transfers them to its warehouses, and assorts them. Then from time to time it ships the goods on specifications as before explained. On receiving the goods, they are credited to the complainant on the books of the Patterson Transfer Company, and, on being shipped out, they are charged on the same books to the complainant. When the goods reach Memphis, they are always consigned to the complainant in care of the Patterson Transfer Company."
"All the goods forwarded to Memphis are products of the factories of complainant. No part of them is ever purchased by it. Its sales agents are exclusively engaged in selling these products. They are produced by complainant beyond the limits of this state, and are made the subject of contracts by its sales agents throughout the southwest in the manner before explained. These sales agents report all contracts effected by them directly to the office in Chicago, whether made with the jobbers at Memphis or elsewhere beyond the limits of this state. All invoices for goods, when sold by specifications in the manner above stated, are made out at the office at Chicago and forwarded directly to the customer in the manner and under the circumstances previously stated."
"Some of the complainant's goods are produced at one factory and some at another, and, consequently, when a purchaser contracts for the delivery to him within sixty to ninety days of a certain number of packages, it frequently turns out that some of the goods desired are the product of one factory and some of another, and it is accordingly most convenient in the conduct of complainant's business that goods from complainant's various factories should be massed at some point where they can be dealt with in the manner before explained."
and each coil weighing 100 pounds; the barbed wire on reels, the wire on each reel weighing 100 pounds. Each package is separately and distinctly made up at the factories for convenience of transportation, and is in this form delivered to the common carriers. In this form they are delivered at the initial point of transportation. In this form they are transported in barges, or by railroads, to Memphis, and received by the Patterson Transfer Company. In this form they are assorted at the warehouses by the Patterson Transfer Company, and delivered by it to the complainant's customers at Memphis under the circumstances previously stated, or to the various lines of steamboats and railroads running out of Memphis, consigned, under circumstances previously stated, to customers beyond the limits of Tennessee, and in this form they ultimately come to the hands of complainant's customers in such foreign state. Each package is separate and distinct in itself, and while no particular package is consigned to any special customer, each keg of nails and staples is marked so as to show exactly what the package contains, and each coil and reel of wire is marked with a tag showing what the coil or reel contains, and no package is ever changed in any particular from the time it leaves the factory until it ultimately reaches the hands of the customer."
"The testimony shows that Memphis has, within recent years, become, by reason of its accessibility to railway and river transportation, a great distributing point, and it was selected as the basis of the operations which are the subject of the present controversy by reason of these exceptional advantages."
"Other facts proven by the complainant are as follows: the testimony of Mr. Young, the tax assessor, shows that none of the cotton shipped into Memphis from the surrounding states pays any tax whatever, and that the manufacturers of lumber in Memphis pay no tax on lumber made from logs which are produced from the soil of this state."
below was right in deciding that the goods were not in transit, but, on the contrary, had reached their destination at Memphis and were there held in store at the risk of the steel company, to be sold and delivered as contracts for that purpose were completely consummated. All question, therefore, as to the power of the state to levy the merchants' tax based on the contrary contention, being without merit, may be put out of view. The other propositions pressed upon our attention require consideration. They relate to two subjects: first, the asserted want of power of the State of Tennessee to tax because the goods were imported from another state, and were yet, it is contended, in the original packages, and second because of the alleged discrimination asserted to result from the provision of the state constitution exempting goods manufactured from the produce of the state.
were subject to state taxation after they had reached their destination and whilst held in the state for sale. This is as conclusively foreclosed by the decisions of this Court as is the doctrine resting upon the decision in Brown v. Maryland. Woodruff v. Parham, 8 Wall. 123; Brown v. Houston, 114 U. S. 622. The doctrine upon which the cases rest was this -- that imports, in the constitutional sense, embrace only goods brought from a foreign country, and consequently do not include merchandise shipped from one state to another. The several states therefore not being controlled as to such merchandise by the prohibition against the taxation of imports, it was held that the states had the power, after the goods had reached their destination and were held for sale, to tax them, without discrimination, like other property situated within the state.
Those two cases decided, the one more than thirty-five and the other more than eighteen years ago, are decisive of every contention urged on this record depending on the import and the commerce clause of the Constitution of the United States. The doctrine which the two cases announced has never since been questioned. It has become the basis of taxing power exerted for years by all the states of the Union. The cases themselves have been approvingly referred to in decisions in this Court too numerous to be cited, and we therefore content ourselves by mentioning two of the cases where the doctrine was restated. Ement v. Missouri, 156 U. S. 296; Kelley v. Rhoads, 188 U. S. 1. But it is strenuously insisted that the principle of the cases referred to, reiterated again and again and uniformly followed for so long a period of time, has been by inevitable implication overruled by the cases of Leisy v. Hardin, 135 U. S. 100; Lying v. Michigan, 135 U. S. 161, and other cases resting on the rule expounded in those cases.
destination, and the question was not the power of the state to tax them, but its authority to treat the goods as not the subjects of interstate commerce, and to prohibit their introduction or sale. This was held to be a regulation within the constitutional sense, and therefore void. The cases therefore did not decide that interstate commerce was to be considered as having completely terminated at one time for the purposes of import taxation, and at a different period for the purposes of interstate commerce. But both cases, whilst conceding that interstate commerce was completely terminated only after the sale at the point of destination in the original packages, were rested upon the nature and operation of the particular exertion of state authority considered in the respective cases.
is made that, under the facts found by the court below, it was erroneously held that the steel company, because of the business which it carried on in the State of Tennessee, was a merchant within the statutes, and the power to review this question, it is insisted, should be exerted because the question is federal in its nature. The contention is without merit. As the levy of the merchants' tax violated no federal right, the mere determination of who were merchants within the state law involved no federal question. The construction of the state law being conclusive and embracing all persons doing a like business with the steel company, it follows that there was no discrimination. Conceding it to be true, as argued, that in the past there would seem to have been conflict of opinion in the court of Tennessee in interpreting various statutes concerning the merchants' tax, this contrariety does not concern the meaning of the statute construed in this case. As that statute has been construed by the state court as applying to all merchants and as embracing alike all persons engaged in the character of business which the steel company was carrying on, it follows that there is no ground upon which to predicate the complaint of undue discrimination. Nor do we think that the opinion of the Supreme Court of Tennessee in Benedict v. Davidson County, not yet officially reported, 67 S.W. 806, conflicts with the views just expressed. That case involved not a merchants' tax, but the validity of a general ad valorem levy on property as such, and therefore affords no ground for the contention that manufacturers in Tennessee who shipped the goods by them made from the products of the state to a depot for sale, and there sold them under conditions and circumstances identical with those presented here, could not be taxed as merchants under the law of Tennessee.

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