Source: https://openjurist.org/262/us/506
Timestamp: 2019-04-19 03:00:30+00:00

Document:
CURETON, Atty. Gen. of Texas, et al.
Messrs. J. M. McCormick and Francis Marion Etheridge, both of Dallas, Tex., for appellants.
This is an appeal from a decree of a United States District Court under section 238, Judicial Code (Comp. St. § 1215), in a case in which a law of Texas is claimed to be in contravention of the Constitution of the United States. The law in question is article 7377 of the Revised Civil Statutes of Texas, approved May 16, 1907. Acts Tex. 1907, p. 479. It provides that every individual, firm, or corporation, foreign or domestic, engaging as a wholesale dealer in coal oil or other oils refined from petroleum, shall make a quarterly report to the state comptroller, showing the gross amount, collected and uncollected, from any and all sales made within the state during the quarter next preceding, and that an occupation tax shall be paid by such dealer equal to 2 per cent. of the gross amount of such sales, collected or uncollected.
Our conclusion must depend on the answer to the question: Is this a regulation of, or a burden upon, interstate commerce? We think it is neither. The oil had come to a state of rest in the warehouse of the appellants, and had become a part of their stock, with which they proposed to do business as wholesale dealers in the state. The interstate transportation was at an end, and, whether in the original packages or not, a state tax upon the oil as property or upon its sale in the state, if the state law levied the same tax on all oil or all sales of it, without regard to origin, would be neither a regulation nor a burden of the interstate commerce of which this oil had been the subject.
This has been established so far as property taxes on the merchandise are concerned by a formidable line of authorities. Brown v. Houston, 114 U. S. 622, 5 Sup. Ct. 1091, 29 L. Ed. 257; Coe v. Errol, 116 U. S. 517, 6 Sup. Ct. 475, 29 L. Ed. 715; Pittsburg Coal Co. v. Bates, 156 U. S. 577, 15 Sup. Ct. 415, 39 L. Ed. 538; Diamond Match Co. v. Ontonagon, 188 U. S. 82, 23 Sup. Ct. 266, 47 L. Ed. 394; American Steel & Wire Co. v. Speed, 192 U. S. 500, 520, 24 Sup. Ct. 365, 48 L. Ed. 538; General Oil Co. v. Crain, 209 U. S. 211, 28 Sup. Ct. 475, 52 L. Ed. 754; Bacon v. Illinois, 227 U. S. 504, 33 Sup. Ct. 299, 57 L. Ed. 615.
The holding was that the sale was part of the importation. It is the article itself to which the immunity attaches and whether it is in transit or is at rest, so long as it is in the form and package in which imported and in the custody and ownership of the importer, the state may not tax it. This immunity has been enforced as against a license or occupation tax on the importer in Brown v. Maryland, 12 Wheat. 419, 6 L. Ed. 678, as against a personal property tax on a stock of wines of a wine dealer to the extent to which the stock included imported wines in the original packages. Low v. Austin, 13 Wall. 29, 20 L. Ed. 517, and as against an occupation tax on an auctioneer measured by his commissions on the sales of such imports, Cook v. Pennsylvania, 97 U. S. 566, 24 L. Ed. 1015. When, however, the article imported is sold or is taken from the original package and exposed for sale, the immunity is gone. Waring v. Mobile, 8 Wall. 110, 19 L. Ed. 342; May v. New Orleans, 178 U. S. 496, 20 Sup. Ct. 976, 44 L. Ed. 1165.
Woodruff v. Parham was affirmed and applied in Brown v. Houston, 114 U. S. 622, 5 Sup. Ct. 1091, 29 L. Ed. 257, where coal mined in Pennsylvania and sent in barges to New Orleans, to be sold after arrival from those barges, without being landed, to a vessel bound to a foreign port, was held while awaiting sale to be subject to taxation by the state as property in Lousiana.
Support for the contention that a state tax on sales of merchandise in original packages brought in from another state is to be distinguished from ad valorem taxes on the merchandise itself is supposed to be found in the cases of Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681, 34 L. Ed. 128; and Lyng v. Michigan, 135 U. S. 161, 10 Sup. Ct. 725, 34 L. Ed. 150. In those cases it was held that a law of a state which forbade sales or merchandise brought in to the state from another state and subjected it to forfeiture, was invalid because freedom to sell was part of interstate commerce and interference with such freedom was an obstruction and would be so regarded as long as the merchandise was unsold and in an original package. The reasoning in Brown v. Maryland as to the necessity of sale to complete importation was resorted to by the Court in Leisy v. Hardin to sustain the view that a sale was a part of interstate commerce and any state action which intercepted the merchandise brought in before sale in the original package was void. In drawing the proper line between the valid operation of state prohibition laws and lawful interstate commerce, Chief Justice Marhall's conception of that to be drawn between importation from abroad under the Constitution and state taxation was adopted. Without questioning the reasoning used to reach the conclusion in Leisy v. Hardin, it is enough to point out the radical difference between state legislation preventing any sale at all accompanied by forfeiture of the merchandise, and a provision for an occupation tax applicable to all sales of such merchandise whether domestic or brought from another state. The one plainly interferes with or destroys the commerce, the other merely puts the merchandise on an equality with all other merchandise in the state and constitutes no real hindrance to introducing the merchandise into the state for sale upon the basis of equal competition. Mr. Justice White in his opinion in the American Steel & Wire Co. v. Speed, thus distinguished Leisy v. Hardin from the case then before the Court. The obstruction to interstate commerce in Leisy v. Hardin was like that in Schollenberger v. Pennsylvania, 171 U. S. 1, 12, 18 Sup. Ct. 757, 43 L. Ed. 49, in Railroad Co. v. Husen, 95 U. S. 465, 469, 24 L. Ed. 527, in Minnesota v. Barber, 136 U. S. 313, 10 Sup. Ct. 862, 34 L. Ed. 455, in Brimmer v. Rebman, 138 U. S. 78, 11 Sup. Ct. 213, 34 L. Ed. 862, in Scott v. Donald, 165 U. S. 58, 97, 17 Sup. Ct. 265, 41 L. Ed. 632, in Vance v. Vandercook, No. 1, 170 U. S. 438, 18 Sup. Ct. 674, 42 L. Ed. 1100, and in Amer can Express Co. v. Iowa, 196 U. S. 133, 25 Sup. Ct. 182, 49 L. Ed. 417.
Many of the sales by the appellants were made by them before the oil to fulfill the sales was sent to Texas. These were properly treated by the state authorities as exempt from state taxation. They were in effect contracts for the sale and delivery of the oil across state lines. The soliciting of orders for such sales is equally exempt. Such transactions are interstate commerce in its essence and any state tax upon it is a regulation of it and a burden upon it. Robbins v. Shelby County Taxing District, 120 U. S. 489, 7 Sup. Ct. 592, 30 L. Ed. 694; Asher v. Texas, 128 U. S. 129, 9 Sup. Ct. 1, 32 L. Ed. 368; Stoutenburgh v. Hennick, 129 U. S. 141, 147, 9 Sup. Ct. 256, 32 L. Ed. 637; Caldwell v. North Carolina, 187 U. S. 622, 23 Sup. Ct. 229, 47 L. Ed. 336; Rearick v. Pennsylvania, 203 U. S. 507, 27 Sup. Ct. 159, 51 L. Ed. 295; Brennan v. Titusville, 153 U. S. 289, 14 Sup. Ct. 829, 38 L. Ed. 719; Dozier v. Alabama, 218 U. S. 124, 30 Sup. Ct. 649, 54 L. Ed. 965, 28 %.l. r. a. (n. s.) 264; c/renshaw v. Arkansas, 227 U. S. 389, 33 Sup. Ct. 294, 57 L. Ed. 565; Stewart v. Michigan, 232 U. S. 665, 34 Sup. Ct. 476, 58 L. Ed. 786; Western Oil Co. v. Lipscomb, 244 U. S. 346, 37 Sup. Ct. 623, 61 L. Ed. 1181.
So too a tax upon the gross receipts from interstate transportation or transmission whether receipts from intrastate transportation or transmission are equally taxed or not, is an unlawful tax because a direct burden upon interstate commerce. Case of the State Weight Tax, 15 Wall. 232, 276, 277, 21 L. Ed. 146; Fargo v. Michigan, 121 U. S. 230, 244, 7 Sup. Ct. 857, 30 L. Ed. 888; Philadelphia & So. Steamship Co. v. Pennsylvania, 122 U. S. 326, 336, 7 Sup. Ct. 1118, 30 L. Ed. 1200; Leloup v. Port of Mobile, 127 U. S. 640, 648, 8 Sup. Ct. 1380, 32 L. Ed. 311; McCall v. California, 136 U. S. 104, 109, 10 Sup. Ct. 881, 34 L. Ed. 391; Galveston, Harrisburg & San Antonio Ry. Co. v. Texas, 210 U. S. 217, 227, 28 Sup. Ct. 638, 52 L. Ed. 1031; Crew Levick Co. v. Pennsylvania, 245 U. S. 292, 38 Sup. Ct. 126, 62 L. Ed. 295.
A state tax upon merchandise brought in from another state or upon its sales, whether in original packages or not, after it has reached its destination and is in a state of rest, is lawful only when the tax is not discriminating in its incidence against the merchandise because of its origin in another state. This distinction is illustrated in the difference between those cases which uphold the validity of a tax upon peddlers engaged in selling merchandise from out of the state which they carry with them, like those of Machine Co. v. Gage, 100 U. S. 676, 25 L. Ed. 754; Emert v. Missouri, 156 U. S. 296, 15 Sup. Ct. 367, 39 L. Ed. 430; Baccus v. Louisiana, 232 U. S. 334, 34 Sup. Ct. 439, 58 L. Ed. 627; and Wagner v. Covington, 251 U. S. 95, 40 Sup. Ct. 93, 64 L. Ed. 157, on the one hand, and that of Welton v. Missouri, 91 U. S. 275, 23 L. Ed. 347, in which a peddler's tax was held bad because it was levied only on goods from other states, on the other. Ward v. Maryland, 12 Wall. 418, 429, 20 L. Ed. 449; Guy v. Baltimore, 100 U. S. 434, 442-443, 25 L. Ed. 743; Tierman v. Rinker, 102 U. S. 123, 26 L. Ed. 103; Webber v. Virginia, 103 U. S. 344, 350, 26 L. Ed. 565, and Walling v. Michigan, 116 U. S. 446, 6 Sup. Ct. 454, 29 L. Ed. 691, are other instances showing the invalidity of state tax laws discriminating against merchandise brought in from other states.
Appellants' chief argument to sustain their contention that a sale of merchandise in the original package made after it is brought into the state from another state is exempt from state taxation is based upon the language of the opinions in certain recent cases in this court. They are Standard Oil Co. v. Graves, 249 U. S. 389, 39 Sup. Ct. 320, 63 L. Ed. 662; Askren v. Continental Oil Co., 252 U. S. 444, 40 Sup. Ct. 355, 64 L. Ed. 654, Bowman v. Continental Oil Co., 256 U. S. 642, 41 Sup. Ct. 606, 65 L. Ed. 1139, and Texas Co. v. Brown, 258 U. S. 466, 42 Sup. Ct. 375, 66 L. Ed. 721.
The case of Askren v. Continental Oil Co. involved the validity of a law called an inspection law, imposing a license tax upon those selling gasoline in the state, and an excise tax of 2 cents a gallon on the sale or use of it. The inspectors' duties were to see to the execution of the act and the excess of receipts after payment of their salaries and expenses went into the road fund of the state. The case was decided on the averments of the bill which described complainant's business of two kinds: First, that of selling oil to customers in tanks, and also in barrels and packages containing not less than two 5-gallon cans, without breaking them; and, second, of selling gasoline from such tanks and cans in quantities desired by the purchaser. There was nothing to show whether the first kind of business was done on orders lodged before importation or after.
If the orders for such sales in original packages were given before importation, the conclusion reached by the court that they were protected against an excise or license tax is in accord with all of the cases already cited, though the fact that they were delivered in the original packages would not give them any additional immunity. It should be noted that in this opinion, the case of Wagner v. Covington, 251 U. S. 95, 40 Sup. Ct. 93, 64 L. Ed. 157, is quoted approvingly and followed although in that case a tax was upheld on merchandise brought in from Ohio by the seller and sold there in the original packages. In the absence of specification as to when ordered, we can not be sure that the case was wrongly decided, but only that the language used contained implications which can not be sustained.
The case of Bowman v. Continental Oil Co. was the same case as the Askren Case, the representatives of the state having changed. The Askren Case had come here on an appeal from an interlocutory injunction and was decided on the averments of the bill. When the case went back, an answer was filed and the case was heard and it turned out that only 5 per cent. of the business was in tank cars and unbroken packages sold, and that 95 per cent. was in sales of gasoline in quantities desired. The main point decided in the Bowman Case was that a license tax law which imposed a lump tax as a condition of doing business, part of which it was unlawful under the federal Constitution to tax, must be declared void, though the other part of the business might have been properly the subject of such a tax. As to the excise tax, the court directed the injunction to issue with respect to the imposition 'upon sales of gasoline brought from without the state into the state of New Mexico and there sold and delivered to customers in the original packages, whether tank cars, barrels, or other packages, and in the same form and condition as when received by the plaintiff in that state.' If this covered gasoline that was ordered by the purchaser before importation, it was right. If it covered gasoline, whether in original packages or not, which was sold after it reached its destination, then it is not in accord with the law as we understand it to be under the authorities we have cited. There is nothing in the case as disclosed either in the statements of facts in the Askren or the Bowman Case to show what the fact was in this regard.
Apparently no great harm, and possibly some good, will follow a flat declaration that irrespective of analogies and for purposes of taxation we will hold interstate commerce ends when an original package reaches the consignee and comes to rest within a state, although intended for sale there in unbroken form. It may be said that th effect on interstate commerce is not substantial and too remote, notwithstanding the rather clear logic of Brown v. Maryland, 12 Wheat. 419, 6 L. Ed. 678, to the contrary and the much discussed theory respecting freedom of interstate commerce from interference by the states, announced and developed long after Woodruff v. Parham (1868) 8 Wall. 123, 19 L. Ed. 382. Logic and taxation are not always the best of friends.

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