Source: https://supreme.justia.com/cases/federal/us/288/249/
Timestamp: 2019-04-19 11:08:43+00:00

Document:
1. Whether an appeal to this Court from a judgment of a state court in a proceeding under a state "declaratory judgments" law, presents a "case or controversy" within the jurisdiction of this Court depends not upon the name or the form, but upon the nature and substance, of the proceeding and the effect of the judgment upon the rights asserted by the appellant. P. 288 U. S. 260.
the complainant, and about to be enforced by defendant state officers, was invalid under the Federal Constitution, which, in substance, differed from the ordinary injunction suit only in the absence of a prayer for an injunction and of an allegation of irreparable injury -- Held that a judgment upholding the tax and affirming dismissal of the bill on the merits was reviewable by this Court. Pp. 288 U. S. 260-264.
3. While the ordinary course of judicial procedure results in a judgment requiring an award of process or execution to carry it into effect, such relief is not an indispensable adjunct to the exercise of the judicial function. P. 288 U. S. 263.
4. The Constitution does not require that the case or controversy should be presented by traditional forms of procedure, invoking only traditional remedies; the judiciary clause defined and limited judicial power, not the particular method by which that power might be invoked. P. 288 U. S. 264.
5. When the judicial power is invoked to review judgments of state courts, the ultimate constitutional purpose is protection of rights arising under the Constitution and laws of the United States; changes by the States in the form or method by which federal rights are brought to final adjudication in their courts do not preclude review by this Court so long as the case retains the essentials of an adversary proceeding, involving a real, not a hypothetical, controversy which is finally determined by the judgment below. P. 288 U. S. 264.
6. As the prayer for relief by injunction is not a necessary prerequisite to the exercise of judicial power, allegations of threatened irreparable injury, which are material only if an injunction is asked, may likewise be dispensed with if, in other respects, the controversy is real and substantial. P. 288 U. S. 264.
(1) That, upon being unloaded and stored, the gasoline ceases to be a subject of interstate commerce, and loses its immunity as such from state taxation. P. 288 U. S. 265.
of interstate commerce too indirectly and remotely to transgress constitutional limitations. P. 288 U. S. 267.
8. The power to tax property -- the sum of all the rights and powers incident to ownership -- necessarily includes the power to tax its constituent parts. As the gasoline in storage could be taxed by the State as property notwithstanding its prospective use as an instrument of interstate commerce, the State can likewise tax the successive exercise of two of the powers incident to it ownership, storage and withdrawal from storage, both completed before interstate commerce begins. P. 288 U. S. 268.
9. The constitutional power to levy taxes doe not depend upon the enjoyment by the taxpayer of any special benefit from the use of the funds raised by taxation. P. 288 U. S. 268.
10. The allegations of the bill showing a heavier state tax burden upon railroads than upon common carriers by motor bus fall short of alleging a discrimination forbidden by the commerce clause or by the Fourteenth Amendment. P. 288 U. S. 268.
APPEAL from the affirmance of a decree dismissing a bill challenging a Tennessee excise tax.
Appellant brought suit in the Chancery Court of Davidson County, Tennessee, under the Uniform Declaratory Judgments Act of that state, * c. 29, Tennessee Public Acts, 1923, to secure a judicial declaration that a state excise tax levied on the storage of gasoline, c. 5, Tennessee Public Acts, 1923, as amended by c. 67, Tennessee Public Acts, 1925, is, as applied to appellant, invalid under the commerce clause and the Fourteenth Amendment of the Federal Constitution. A decree for appellees was affirmed by the Supreme Court of the State, and the case comes here on appeal under § 237(a) of the Judicial Code.
After the jurisdictional statement required by Rule 12 was submitted, this Court, in ordering the cause set down for argument, invited the attention of counsel to the question "whether a case or controversy is presented in view of the nature of the proceedings in the state court." This preliminary question, which has been elaborately briefed and argued, must first be considered, for the judicial power with which this Court is invested by Art. 3, § 1 of the Constitution, extends by Art. 3, § 2, only to "cases" and "controversies"; if no "case" or "controversy" is presented for decision, we are without power to review the decree of the court below. Muskrat v. United States, 219 U. S. 346.
In determining whether this litigation presents a case within the appellate jurisdiction of this Court, we are concerned not with form, but with substance. See Fidelity National Bank v. Swope, 274 U. S. 123; compare Gasoline Products Co. v. Champlin Refining Co., 283 U. S. 494, 283 U. S. 498. Hence, we look not to the label which the legislature has attached to the procedure followed in the state courts, or to the description of the judgment which is brought here for review, in popular parlance, as "declaratory," but to the nature of the proceeding which the statute authorizes, and the effect of the judgment rendered upon the rights which the appellant asserts.
"no action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect, and such declaration shall have the force and effect of a final judgment or decree."
construction or validity arising under the . . . statute . . . and obtain a declaration of rights . . . thereunder."
"when declaratory relief is sought, all persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding."
joining as defendants the appellees, the Attorney General and the state officials charged with the duty of collecting the gasoline privilege tax imposed by the Tennessee statute. The complaint alleged that appellant is engaged in purchasing gasoline outside the state, which it stores within the state pending its use within and without the state in the conduct of appellant's business as an interstate rail carrier; that appellees assert that the statute taxes the privilege of storing gasoline within the state and is applicable to appellant; that they have demanded payment of the tax in a specified amount and have determined to enforce their demand and that, under the circumstances alleged, the statute, as applied to appellant, is invalid under the commerce clause and the Fourteenth Amendment. The relief prayed was that the taxing act be declared unconstitutional as applied to appellant. The Chancery Court sustained the appellees' demurrer to the sufficiency in law of the allegations relied on to establish the unconstitutionality of the tax. Its final decree dismissing the bill on the merits has been affirmed by the highest court of the state.
That the issues thus raised and judicially determined would constitute a case or controversy if raised and decided in a suit brought by the taxpayer to enjoin collection of the tax cannot be questioned. See Risty v. Chicago, R.I. & P. Ry. Co., 270 U. S. 378; compare Terrace v. Thompson, 263 U. S. 197; Pierce v. Society of Sisters, 268 U. S. 510; Euclid v. Ambler Realty Co., 272 U. S. 365. The proceeding terminating in the decree below, unlike that in South Spring Hill Gold Mining Co. v. Amador Medean Gold Mining Co., 145 U. S. 300; Muskrat v. United States, 219 U. S. 346, was between adverse parties seeking a determination of their legal rights upon the facts alleged in the bill and admitted by the demurrer. Unlike Fairchild v. Hughes, 258 U. S. 126; Texas v. Interstate Commerce Commission, 258 U. S. 158; Massachusetts v.
or alleging that irreparable injury will result from the collection of the tax.
"Naturalization proceedings, Tutun v. United States, 270 U. S. 568; suits to determine a matrimonial or other status; suits for instructions to a trustee or for the construction of a will; Traphagen v. Levy, 45 N.J.Eq. 448, 18 Atl. 222; bills of interpleader so far as the stakeholder is concerned, Wakeman v. Kingsland, 46 N.J.Eq. 113, 18 Atl. 680; bills to quiet title where the plaintiff rests his claim on adverse possession, Sharon v. Tucker, 144 U. S. 533, are familiar examples of judicial proceedings which result in an adjudication of the rights of litigants, although execution is not necessary to carry the judgment into effect, in the sense that damages are required to be paid or acts to be performed by the parties."
See also Old Colony Trust Co. v. Commissioner, supra, 279 U. S. 725; La Abra Silver Mining Co. v. United States, 175 U. S. 423.
within the appellate jurisdiction of this Court. Accordingly, we must consider the constitutional questions raised by the appeal.
"The tax imposed by this Act shall apply to persons, firms or corporations, dealers or distributors storing any of the products mentioned in this Act and distributing the same or allowing the same to be withdrawn from storage whether such withdrawal be for sale or other use. . . ."
the use of the gasoline in appellant's business as an interstate carrier, and is thus an unconstitutional burden on interstate commerce.
The gasoline, upon being unloaded and stored, ceased to be a subject of transportation in interstate commerce, and lost its immunity as such from state taxation. General Oil Co. v. Crain, 209 U. S. 211; Bacon v. Illinois, 227 U. S. 504; Susquehanna Coal Co. v. South Amboy, 228 U. S. 665, 228 U. S. 669; Hart Refineries v. Harmon, 278 U. S. 499; Greg Dyeing Co. v. Query, 286 U. S. 472. The fact that the oil was, in the ordinary course of appellant's business, later withdrawn from storage for use, some within and some without the state, part of it thus becoming again the subject of interstate transportation, did not affect the power of the state to tax it all before that transportation commenced. Neither the appellant, the shippers, nor the carrier, at the time of the shipment of the gasoline from points of origin, arranged a destination for any part of the oil other than the appellant's storage tanks in Tennessee. Although, in the usual course of business, a variable and undefined part of it, when segregated for that purpose, would again be transported across state boundaries, appellant was free to distribute the oil either within or without the state for use in its business or for any other purpose. As nothing in the transaction before the withdrawal from storage in Tennessee can be said to have given any ascertainable part of the gasoline a destination to points beyond the state, the case is distinguishable from Carson Petroleum Co. v. Vial, 279 U. S. 95, and Texas & New Orleans R. Co. v. Sabine Tram Co., 227 U. S. 111. The oil in storage was not a subject of interstate commerce, and so was a part of the common mass of goods within the state, subject to local taxation. General Oil Co. v. Crain, supra; Susquehanna Coal Co. v. South Amboy, supra; Bacon v. Illinois, supra; compare Atlantic Coast Line R. Co. v. Standard Oil Co., 275 U. S. 257.
We cannot say that the tax is a forbidden burden on interstate commerce because appellant uses the gasoline, subsequent to the incidence of the tax, as an instrument of interstate commerce. Taxes said to burden interstate commerce directly when levied upon or measured by the operation of interstate commerce or gross receipts derived from it are beyond the state taxing power, East Ohio Gas Co. v. Tax Commission, 283 U. S. 465, 283 U. S. 470; Sprout v. South Bend, 277 U. S. 163, 277 U. S. 170, 277 U. S. 171; Crew Levick Co. v. Pennsylvania, 245 U. S. 292, 245 U. S. 297, and a tax levied upon the use of gasoline in generating motive power for a ferry boat used exclusively in interstate commerce has been held to be so direct and immediate a burden on the commerce itself as to be invalid. Helson v. Kentucky, 279 U. S. 245.
tax property, the sum of all the rights and powers incident to ownership, necessarily includes the power to tax its constituent elements. See Bromley v. McCaughn, 280 U. S. 124, 280 U. S. 136-138. Hence, there can be no valid objection to the taxation of the exercise of any right or power incident to appellant's ownership of the gasoline which falls short of a tax directly imposed on its use in interstate commerce, deemed forbidden in Nelson v. Kentucky, supra. Here, the tax is imposed on the successive exercise of two of those powers, the storage and withdrawal from storage of the gasoline. Both powers are completely exercised before use of the gasoline in interstate commerce begins. The tax imposed upon their exercise is therefore not one imposed on the use of the gasoline as an instrument of commerce, and the burden of it is too indirect and remote from the function of interstate commerce itself to transgress constitutional limitations. See Eastern Air Transport v. Tax Commission, 285 U. S. 147.
Appellant objects that the tax violates the Fourteenth Amendment in that it is levied as a charge for the use of the highways, which appellant does not use. But the levy is a tax, not a toll or charge for use of the highways, see Carley & Hamilton v. Snook, 281 U. S. 66, and the constitutional power to levy taxes does not depend upon the enjoyment by the taxpayer of any special benefit from the use of the funds raised by taxation. Carley & Hamilton v. Snook, supra; St. Louis & Southwestern Ry. Co. v. Nattin, 277 U. S. 157, 277 U. S. 159. The allegations of the bill showing that a heavier burden of taxation is imposed upon railroads than upon common carriers by motor bus, examined in the light of the applicable statutes of the State, fall short of alleging a discrimination forbidden by either the commerce clause or the Fourteenth Amendment.

References: § 237
 Art. 3
 § 1
 Art. 3
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