Source: https://supreme.justia.com/cases/federal/us/231/68/
Timestamp: 2019-04-24 17:54:03+00:00

Document:
While a state may not burden interstate commerce or tax the carrying on of such commerce, the mere fact that a corporation is engaged in interstate commerce does not exempt its property from state taxation.
While interstate commerce itself cannot be taxed, the receipts of property or capital employed therein may be taken as a measure of a lawful state tax.
A state may, so long as it does not violate any principle of the federal Constitution, exclude from its border a foreign corporation or prescribe the conditions upon which it may do business therein.
Where a foreign corporation carries on a purely local business separate from its interstate business, the state may impose an excise tax upon it for the privilege of carrying on such business and measure the same by the authorized capital of the corporation.
The excise tax, imposed by Part III of c. 490 of the Statutes of Massachusetts of 1909 on certain classes of foreign corporations, which excise is measured by the authorized capital of such corporations but limited to a specified sum, is not an unconstitutional burden on interstate commerce, nor does it deprive such corporations of their property without due process of law or deny them the equal protection of the law. Western Union Telegraph Co. v. Kansas, 216 U. S. 1; Southern Railway Co. v. Green, 216 U. S. 400, distinguished.
207 Mass. 381, 212 Mass. 35, affirmed.
Massachusetts imposing a tax on foreign corporations within the Commonwealth, are stated in the opinion.
they were argued together and present the same questions, and we shall accordingly dispose of them as one.
for delivery there, but this is out of the usual course of business, not more than five percent of the total sales being made, the larger part being regularly consummated in New York City. The petition was brought to recover an excise tax of $500 imposed by the commonwealth pursuant to § 56 of the act and paid by the company, and was dismissed by the Supreme Judicial Court of Massachusetts. 207 Mass. 381, 93 N.E. 831.
the company uses public carriers in the transportation of the goods, and a large percentage of the total sales require transportation from the New York or Pennsylvania factories into other states. The stock on hand in the Boston store, the fixtures and the current bank deposits, represent the tangible property in Massachusetts, and amount to about $100,000. The company maintains fourteen places of business other than the ones in Pennsylvania and Massachusetts, located in New York and other states. Ten percent of the sales are made in Massachusetts, of which approximately one-half are for delivery in that state. The company complied with the requirement of the laws relating to foreign corporations for ten years, and seeks to recover an excise tax of $200 levied pursuant to the statute and paid by it. The Supreme Judicial Court of Massachusetts held that the act was valid, and dismissed the petition. 212 Mass. 35.
The act provides (§ 54) for the filing of a certificate annually by foreign corporations, showing their authorized capital stock and assets and liabilities, and (§ 55) that such certificate shall be accompanied by an auditor's sworn statement, and shall be submitted to the commissioner of corporations, who shall assess an excise tax upon the corporation, in accordance with the provisions of § 56 of the act, and that the certificate shall not be filed until approved by him and the tax paid.
"Every foreign corporation shall, in each year at the time of filing its annual certificate of condition, pay to the treasurer and receiver general, for the use of the commonwealth, an excise tax, to be assessed by the tax commissioner, of one-fiftieth of one percent of the par value of its authorized capital stock as stated in its annual certificate of condition; but the amount of such excise tax shall not in any one year exceed the sum of two thousand dollars. "
It is further provided (§ 58) for notice to foreign corporations failing to file their proper certificates, and thereafter for the forfeiture and collection of penalties, and for the issuance of injunctions until the payment of such penalties and the filing of such certificates.
The specific objections of the plaintiffs in error to the imposition of this tax under the facts shown in the records are threefold: first, the tax is a regulation of interstate commerce in that it imposes a direct burden upon that portion of the business and capital of the plaintiffs in error which is devoted to interstate commerce; second, the tax is in violation of the due process of law clause because it attempts to impose taxes upon property beyond the jurisdiction of the Commonwealth of Massachusetts, and third, the tax denies to the plaintiffs in error the equal protection of the law.
It is well settled and requires no review of the decisions of this Court to that effect that the power of Congress over interstate commerce is supreme under the federal Constitution, and that the states may not burden such commerce, it being the purpose of the Constitution of the United States to bring commerce of this character under one supreme control, and to vest the exercise of authority over it in the general government. It is equally well settled that forms of regulation prohibited to the state by the Constitution may consist of efforts to tax the carrying on of such commerce, and of attempted levies of taxes upon the receipts of interstate commerce as such. Galveston, Harrisburg &c. Ry. Co. v. Texas, 210 U. S. 217; Western Union Telegraph Co. v. Kansas, 216 U. S. 1; Pullman Co. v. Kansas, 216 U. S. 56; Minnesota Rate Cases, 230 U. S. 352, 230 U. S. 400, and previous cases in this Court therein cited.
interstate commerce does not exempt its property from state taxation. United States Express Co. v. Minnesota, 223 U. S. 335, 223 U. S. 344. It is the commerce itself which must not be burdened by state exactions which interfere with the exclusive federal authority over it. A resort to the receipts of property or capital employed in part, at least, in interstate commerce, when such receipts or capital are not taxed as such, but are taken as a mere measure of a tax of lawful authority within the state, has been sustained. Maine v. Grand Trunk Railway Co., 142 U. S. 217; Provident Institution v. Massachusetts, 6 Wall. 611; Hamilton Co. v. Massachusetts, 6 Wall. 632; Flint v. Stone Tracy Co., 220 U. S. 107, 220 U. S. 162-165; United States Express Co. v. Minnesota, supra.
in mind, we will proceed to a consideration of the statute of Massachusetts directly involved in these cases.
"The required payment is strictly of an excise tax, and not of a tax upon property. . . . This excise tax is for the commodity or privilege of having an establishment for business in Massachusetts, with the protection of our laws and the financial and other advantages of a situation here."
the state, and not upon property therein which is otherwise taxed.
It is said, notwithstanding, that this tax is a direct burden upon interstate commerce, and an attempt to tax property beyond the jurisdiction of the state within the authority of the Kansas cases, Western Union Telegraph Co. v. Kansas, supra; Pullman Co. v. Kansas, supra. These cases have been followed by others similar in character. Ludwig v. Western Union Telegraph Co., 216 U. S. 146; Western Union Telegraph Co. v. Andrews, 216 U. S. 165; Atchison, Topeka & Santa Fe Ry. Co. v. O'Connor, 223 U. S. 280; Oklahoma v. Wells, Fargo & Co., 223 U. S. 298.
character. In the Western Union Telegraph Co. case, the company had a large amount of property permanently located within the state, and between 800 and 900 offices constantly carrying on both state and interstate business. The Pullman Company had been running a large number of cars within the state, in state and interstate business, for many years. There was no attempt to separate the intrastate business from the interstate business by the limitations of state lines in its prosecution.
that used in such commerce, represented by the authorized capital of the corporations, is taxed, and therefore interstate commerce is unlawfully burdened by a state statute. While the tax is imposed by taking a percentage of the authorized capital, the agreed facts show that the authorized capital is only a part of the capital of the corporations, respectively. In the Baltic Mining Company case, the authorized capital is $2,500,000, while the entire property and assets are $10,776,000, and in the White Dental Company case, the authorized capital is $1,000,000, while the assets aggregate $5,711,718.29. Further, the Massachusetts statute limits the tax to a maximum of $2,000. The conclusion, therefore, that the authorized capital is only used as the measure of tax, in itself lawful, without the necessary effect of burdening interstate commerce brings the legislation within the authority of the state. So if the tax is, as we hold it to be, levied upon a legitimate subject of such taxation, it is not void because imposed upon property beyond the state's jurisdiction, for the property itself is not taxed. Insofar as it is represented in the authorized capital stock, it is used only as a measure of taxation, and, as we have seen, such measure may be found in property or in the receipts from property not in themselves taxable.
"We have here a foreign corporation within a state, in compliance with the laws of the state, which has lawfully acquired a large amount of permanent and valuable property therein, and which is taxed by a discriminating method not employed as to domestic corporations of the same kind carrying on a precisely similar business."
The conditions existing in the Southern Railway Co. v. Greene case are not presented here. It is true that the plaintiffs in error paid taxes assessed against foreign corporations before the passage of the law of 1909, and that the White Dental Company had a leasehold for storerooms in the state, but we do not find in this situation an acquisition of permanent property such as was shown in the Greene case. And there is no question of the continued authority of the state to tax a foreign corporation for the privilege of doing business within its borders, which authority the state possesses so long as it does not violate rights secured by the federal Constitution. Even if, as plaintiffs in error contend, under the statute, domestic corporations are favored, the statute is not invalid, for no limitation upon the power of a state to exclude foreign corporations requires identical taxes in all cases upon domestic and foreign corporations.
As this statute has been construed by the Supreme Judicial Court of Massachusetts and applied in these cases, we are unable to find that the tax imposed violates the constitutional rights of the plaintiffs in error.
Dissenting: THE CHIEF JUSTICE, MR. JUSTICE VAN DEVANTER, and MR. JUSTICE PITNEY.

References: v. 
 v. 
 § 56
 § 56
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.