Document: 329 U.S. 249 67 S.Ct. 274 91 L.Ed. 265 FREEMANv.HEWIT, Director of Gross Income Tax Division, Department Treasury, State Indiana. No. 3. Reargued Oct. 14, 1946. Decided Dec. 16, Rehearing Denied Jan. 13, 1947. See 832, 497. Appeal from the Supreme Court Mr. Harry T. Ice, Indianapolis, Ind., for appellant. John J. McShane, appellee. Justice FRANKFURTER delivered opinion Court. 1 This case presents another phase Indiana Act 1933, which has been before this in a series cases beginning with Adams Mfg. Co. v. Storen, 304 307, 58 913, 82 1365, 117 A.L.R. 429. The imposes tax upon 'the receipt entire gross income' residents and domiciliaries but excepts its scope 'Such income as is derived business conducted commerce between state other states United States * to extent prohibited taxing such by Constitution States.' Laws pp. 388, 392, amended, 1937, p. 615, Burns' Ind.Stat.Anno. § 64-2601 et seq. 2 Appellant's predecessor domiciled Indiana, was trustee an estate created will decedent at time his death. During 1940, instructed broker arrange sale stated prices securities forming part trust estate. Through broker's New York correspondents were offered on Stock Exchange. When purchaser found, brokers notified who turn informed trustee, latter brought mailing York. Upon their delivery purchasers, received purchase price, which, after deducting expenses commission, they transmitted broker. proceeds less commission trustee. On receipts these sales, amounting $65,214.20, under imposed 1%. Having paid protest, suit recovery. reversing court first instance, sus ained ground that situs 221 Ind. 675, 51 N.E.2d 6. here appeal 237(a) Judicial Code, 28 U.S.C. 344(a), U.S.C.A. had consideration two arguments afford. 3 power limitations Commerce Clause have necessitated long, continuous process judicial adjustment. need adjustment inherent federal government like ours, where same transaction aspects may concern interests involve authority both central constituent States.1 4 history problem spread over hundreds volumes our Reports. To attempt harmonize all said past would neither clarify what gone not guide future. Suffice it say especially field opinions must be read setting particular product preoccupation special facts. 5 Our starting point clear. In recent we applied principle merely authorization Congress enact laws protection encouragement among States, own force area trade free interference States. short, even without implementing legislation limitation Southern Pacific Arizona, 325 761, 65 1515, 89 1915; Morgan Virginia, 328 373, 66 1050. so deciding reaffirmed, fullest consideration, course adjudication unbroken through Nation's history. power, well illustrates, does forbid single out interstate hostile action. A also precluded taking any action fairly deemed effect impeding flow It immaterial local subjected similar encumbrance. commend itself encourage pastoral instead industrial society. That privilege. But compare State's treatment exertion against national domain incomparables. 6 These principles apply policy no matter interest gives rise legislation. burden none lighter objectionable because rather than manifestations police conventional sense. But, necessary accommodation needs overriding requirement freedom commerce, incidence type throw balance support remote or unsubstantial. regulation often essential safeguarding vital interests. At least until chooses nation-wide rule, denied State. T e Minnesota Rate Cases (Simpson Shepard), 230 352, 402 seq., 33 729, 741, 57 511, 48 L.R.A.,N.S., 1151, Ann.Cas.1916A, 18; South Carolina Hwy. Dept. Barnwell Bros., 303 177, 625, 510, 734; Union Brokerage Jensen, 322 202, 209—212, 64 967, 972—973, 88 1227, 152 1072. taxation falling hand, can only justified designed make bear fair share cost whose enjoys. revenue serves source. deny source taxes very impose crippling ability carry function. Moreover, involved direct inherently greater, certainly uncertain consequences, results usual regulations. dominant commerce. Because greater more threatening coupled lesser revenue, attempts always carefully scrutinized consistently resisted regulations task scrutinizing drawing lines. historic duty long undertake specific arrangements regard revenues July 3, 1944, Stat. 723, 49 425 note; H.Doc. 141, 79th Cong., 1st Sess., 'Multiple Taxation Air Commerce'; 54 1059, 13 (permission extend Federal areas). Considerations proximity degree are here, law, decisive. 7 suggested valid when placed trade, specious appearance fairness sought imparted argument should favored expense trade. So argue disregard life Clause. Of required give active advantage cannot aim control though desires own. justify amounts levy across lines pointing hobble true existence detracts deterrent removes temptation sell goods locally. fact tax, event, puts impediments currents line, while precisely prevent exacting toll those engaged exercise logic empty categories. operates within framework scheme due experience reflected decisions Court, terms cast varied. Language alters, there fashion writing things. 8 case, supra, involves seller sales. extract tithe afforded it, kind levied. As practical matter, pay way, phrase runs, apart sale. Thus, manufacture if products destined For some purposes, shipment beyond look d integral transaction. made interests, State, outside, seamless web giving manufacturing detached relevance purposes taxation. American City St. Louis, 250 459, 39 522, 63 1084; Utah Power & L. Pfost, 286 165, 52 548, 76 1038. license domestic foreign corporations do Cheney Brothers Commonwealth Massachusetts, 246 147, 38 295, 62 632; Louis Southwestern Ry. Arkansas, 235 350, 364, 35 99, 103, 59 265, cannot, guise excises, 'hamper' Western Tel. Kansas, 216 1, 30 190, 355; Pullman 56, 232, 378 (particularly White, concurring 63); Henderson, Position Foreign Corporations Constitutional Law (1918) 118—23, 128—31. privilege residence measure net income, including Glue Oak Creek, 247 321, 499, 1135, Ann.Cas.1918E, 748; cf. Atlantic Coast Line Doughton, 262 413, 43 620, 1051. And where, commodities subsequently sold securities, reached property domicil owner. Virginia Imperial Sales Co., 293 15, 19, 55 12, 79 171; see Citizens National Bank Cincinnati Durr, 257 42 149. 9 illustrative instances show various means obtaining legitimate contribution costs government, imposing While permitted ultimate sense, come not, receipts, imposition commercial hundred fifty years ward 10 suggested, however, validity sales depend whether transactions. If taxed transaction, burdensome consequences undeniable. that, being, one irrelevant generated. immunities implicit potential hardly depend, world affairs, shifting varying moment. Courts possessed instruments determination delicate enable them weigh factors complicated economic isolated application might mitigate obvious generally Nor warrant constitutional heretofore notion allowed tax-worth An exaction falls proven increase product. What makes invalid Such alone judged context circumstances takes effect. Trade being sensitive plant, deters calculable. Many taxe consumption sustained regardless extra-State origin goods, consumer factor superimposed tax. 11 urged decision sapped McGoldrick Berwind-White Coal Mining 309 33, 60 398, 84 565, 128 876. found impinge rationale Manufacturing case,' 'conditioned activity consumption.' page 58, Compare McLeod E. Dilworth 327, 1023, 1304. Taxes properly differentiated now us. unapportioned definitely held ever since Fargo Michigan, 121 230, 857, 888, Philadelphia S. M. Steamship Pennsylvania, 122 326, 1118, 1200. also, e.g., Galveston, Harrisburg S.A.R. Texas, 210 217, 638, 1031; Kansas City, Ft. Ry., Botkin, 240 227, 231, 36 261, 262, 617; Puget Sound Stevedoring Commission, 302 90, 94, 72, 74, 68; Wallace Hines, 253 66, 40 435, 782. 'internal regulation' directly affects Robbins Taxing District Shelby 120 489, 494, 592, 594, 694. 12 1084, International Harvester 340, 1019, 1030, 1313, justification present fee conduct city. settled occupation graduated according volume manufacture. lighten manufacturer's burden, contingent actual locally manufactured. elsewhere taken into account measuring fee. then, unlike this, receipts. Cf. Cornell Coyne, 192 418, 24 383, 504. And, words correspond things, 'a transfer property' basis sustaining Dept 348, 1313. There remains claim intangibles differs tangibles respects material issue case. distinction escape supra. Latin tags mobilia sequuntur personam service legal analysis, ought confound issues. Holmes about relevant here. 'It fiction, historical familiar scholars, fiction whatever meaning saying personam. obscure facts, facts become important.' Blackstone Miller, 18 189, 204, 23 277, 278, 47 439. constitutionally different subject pieces paper worth machines. 14 Reversed. 15 BLACK dissents. 16 RUTLEDGE, concurring. 17 grounding important itself. Whether intends simply qualify repudiate entirely, except result, 429, I am unable determine opinion. consequence intended seems refusal rest squarely together wholly foundation relies. either calls discussion. applied, apportionment, manufacturers shipped purchasers states. 'The vice statute' thus held, 'that includes measure, activities commerce; character lawful substance laid Interstate risk double intrastate exposed, clause forbids.' (Emphasis added.) 311, 916, 429.1 19 Today's refuses although completely controlling change law intended. No distinguishing questions stated. identical.2 Yet places emphasis absence crucial. side most stressed, namely, danger multiple taxation, is, states, upheld attempted application. 20 Those matters essence decision. They vice' statute applied. reason believing elements vitiating absent. contrary, fair, indeed necessary, inference language reasons given voided apportioned eliminate risk. Moreover groundings strictly accord previous rendered here,3 int nded conform preserve unimpaired. 21 put side, therefore presumably insufficient,4 favor rationalization ignores completely. Shortly, reiterated forms, 'directly on' 'on sale' process' solely thereby 'burden' consequently forbids. outlaws comparative disadvantage nor probable clogging fact.5 'direct' bearing 'incidence' alone. Stripped discriminatory element tendency block impede fact, 'direct incidence' enough invalidate general singling separate distinct invidious treatment. 22 many years. sense reversion ideas once prevalent, repudiated6 'exclusiveness' Congress' resurrected application, strike down great variety forms late. Not Cooley Board Wardens, How. 299, 996, prevailed mere regulate excludes powers taxation.7 applying alike, outlawed, bears 'directly' reason, resurrection Marshall's 'exclusive' idea, never prevailing knock types landmark decision.8 follow presently asserted fit used. We assume t used otherwise, arbitrary formula dispose having situation. relied broad include situation restricted logically narrow discrimination real risk, clog equally others, unless sheer based inconsequential controlling. disregards adequate disposing others involving pains factors, unnecessarily seem. appropriate turning further pertinent decisions, note grounds ruling void. because, opinion, 'by Although established conclusion quite obviously outlawed it. II. 25 agree 'of force' restrictions regulate, extending back Gibbons Ogden, Wheat. 23, unbroken.9 construction consonant purpose maintain distinctively barriers adopted prevent. rate meant could secure vast 'interference,' regulation, states.10 immediate it.11 True, frequently appears cases, earlier ones, forbidden. inconsistency cases,12 appeared invalidating treatment, discrimination, failure apportion result sustained.13 26 presence factor, discarded sufficient outlaw 'Local' regulations, formula, itself.14 reason. Calling 'incidental,' done, 'indirect,' perspective. Police indirectly remotely observe incidence. 27 Again, immediately invalid. Decisions repeatedly, bearing, provided apportionment present, above mentioned.15 question, mind saved ban question concerning Indiana's ones presented now.16 III purporting perhaps relation taxes, considered 'indirect' itself' 'local incident.' recently effects forbidden incident.'17 then said, place achieved legally device hooking selected chosen determining validity. validate produces tax' produce direct. 'directness' 'immediacy' per se, 'upon incident,' outlawing incidence, clause. 29 difficulty rule approach disclosed clearly contrasting one, efforts made, unsuccessfully my distinguish manufacture, state. 'measured by' manufactured, interstate.18 measured trade19 seem have, effect, blocking likewise find pegging tax.20 'in lieu of' taxes21 afford levies Storen vicious application.22 31 Unless return formalism day, manipulated incident' criterion or, times, importance affecting fulfill function judgment brings results. dissenting Stone Di Santo 273 34, 44, 267, 271, 71 524, quoted 11. done outlaw, called create them. IV 32 Judgments magnitude labels formulae. require much word. increasingly effects, threatened, questioned trade.23 Formulae adjectives retained times intermixture effective considerations. proportionately stress greatly reduced, decision; trend sustain formerly regarded large fact. Its design exclude being. effects. related 'incidence,' 34 selection hanging save avoid interferences w th Selection incident functions One plain factual connections comply requirements.24 act safeguard, extent, repetition state.25 interrelated, Telegraph 355, situations entirely separate. difference minimal order objections 'want jurisdiction tax';26 necessity showing sustained, load former sort. transactions closely connected state.27 type, despite connections, close state, York; therefore, declared, incurred, such, crucial words, possibility applications valid.28 far incidents market years.29 Perhaps view marketing end origin,30 debate. shown them, rate, appreciably less, assumed forwarding incident, recognized market. 37 other, as, than, nevertheless, compared forbid.31 connection highly material.32 validiating Nippert Richmond, 327 416, 586, 162 844. clear Indiana's, now, determined reference produced, threat resulting uncertainties producing consequences.33 doubtful actually commerce.34 impediment assumption borne danger, apportioned, fall. basic universally consequence, reasons. necessarily did so, combined commerce.35 follows, likewise. 41 take difference, regards probably incurred involved. disregarded differences, burden' actually, probably, doubtfully state.36 resulted assumed, unexercised, concerned covered ruling. motivating fear general. legislation, widely door opened and, bringing nature. Rather incur anticipated consequent widespread creation levies, forestalled prophylactic prophylaxis absolute. By relieving liability was, relieve exemption bear.37 Local amount became refuge exemption, unequal undue Certainly object specially privileged p sition. 44 alternatives themselves difficulty, shortly. preliminarily, accept declared38 runs afoul singles otherwise discriminates treats invidiously. things equal, nondiscriminatory applicability, compel heavier cumulative discriminatory, exact total trade,39 alone, 45 too accept. ordinarily toward doing so. lessened cumulation burdens consequence. allow 'to extent' sort barrier stop. bare unexercised opens way produced. fanciful real, new sources constantly sought. Accordingly, opened. 46 go went, goes, deluge. haven albeit safeguard evils designedly protective. Less absolute available creating exemption. alternative methods avoiding are: (1) ruling, stopping source, eliminating burdens;40 (2) market, both, exaction; (3) factually each incurring uncertainty made. solution unobjectionable, already set forth. deprive lay permitting allowing denying affected deprivation equal substantial open objections. exercised, exercise, power. lie litigation incite difficulties, least, making determination. VI absent prohibition, choosing evils. ideal solution. leave Congress, intervenes, run counter long-established rules requiring likely, forbidding consent Prudential Life Ins. Benjamin, 408, 1142, prohibition invite costly litigation, many, conclusions, enactment consequences. creates 50 possibilities, think nearly clause, consistent bring difficulties administration, vest credit full destination. allowed, Dilworth, 361, 1036, 1304, forth leading conclusion.41 added altogether undesirable features case; intervene; reduce half, original notwithstanding destination.42 think, taxes. 53 doubt others.43 decisions. Indeed, 876, appellee asserts, essentially purported consumption' shown, obstructs numerous repeatedly commerce.' comes pegged delivery. Apart regarding controlling, flatly repudiated 844, features. leaving unimpaired, differentiate broader 56 substance, decision, together, permit provision apportionment. Powell, Light Receipts (1940) Harv.L.Rev. 909, 939. formalism, considered.44 acknowledgment reconsideration credit, state,45 qualifying justifies reach reached. formal reversal trend. moreover, unnecessary followed logical stricken everything verbalism. justified, seriously threaten validly elsewhere. it,46 concur result. dissent going reiterate recall shall arise; retreat DOUGLAS, whom MURPHY concurs, dissenting. 61 confuses customer. Gwin, White Prince, Inc. Henneford, 305 434, 325, 83 272, hold unapportioned, taxpayer agent fruit growers Washington. deliveries countries, collected prices, remitted proceeds, charges, customers. why followed. place, 437, compensation aid merchandise' services clause'. second 439, 328, 'If Washington xtends may, right, similarly conducting respective territorial limits contribute service. nominally local, operation exposed.' Under commissions customer immunity Prince Concededly almost could, integrated subsequent transactions, treated parts whole. survival difficult. manufacturer value manufactured thereafter Live Bureau Revenue, 250, 546, 823, 115 944, journal published Mexico out-of-state advertisements included distribution transportation intercourse employed business. easily untangled Any involves, course, use agencies communication. People rel. Cohn Graves, 300 308, 466, 81 666, 108 721. there, taxable event. induced occasioned Revenue 253, 547, 944. management investment portfolio publication revenues, growing markets, All affect cost, pointed 48, 393, obstacle. different. factory orders approval home office. thought taxpayer's activities. comparable freight revenues. aimed discriminate agains journey. selling. brokerage different, farm mails authorize transmit deed, receive proceeds. 68 adhere philosophy cases1 affirm below. Report (Australian) Royal Commission (1929) 260, 322—24, (Canadian) Dominion-Provincial Relations (1940), bk. II, pp 62—67, 111—21, 150—62, 216—19. Australia, 1946, repealing 20, 1942, 43, 1942; Australia Commonwealth, C.L.R. 373; Proposals Government Canada, Conference Reconstruction 49; Proceedings (1945) passim, particularly statement Prime Minister Mackenzie King, discussion following. Maxwell, Fiscal Impact Federalism (1946) cc. XIII, XIV. added: 'We upon, article section 8, Constitution. stresses generality 312, notes 16. goods. asserting originally gave domiciliary disappeared, oral argument, identically See, e.g. Pullman's Palace Car 141 18, 613; Cudahy Packing Minnesota, 450, 827; Express 223 335, 211, 459. 255—257, 549, Frankfurter Northwest Airlines 292, 950, 1283, 153 245. says, 'An 'interference' Ribble, Over (1937) 204; Dowling, Va.L.Rev. 3—10. Frankfurter, 53: 'Had theory 'dormant' prevailed, resources confined. implications theory, pursued, profoundly altered relations government.' Wechsler, Col.L.Rev. 764, 785, infra. text infra 21, authorities cited. County, 694; Real Silk Hosiery Mills Portland, 268 525, 69 982; 72 ff.; 24, 56; 785: summarize conception issues framed debate position Wardens closest thought.' 'Experience taught opposing demands comm rce, capable reconciliation resort syllogism. Practical distinctions sought.' 259, 550, 524 (overruled California Thompson, 313 109, 930, 85 1219), 'In expressions, 'indirect interference' little using describe trustworthy reached.' 876; 272; fall following groups: (a) apportioned. Illinois Cent. R. 157, 419, 670; Wisconsin Michigan Powers, 191 379, 107, 229; 459; Ficklen District, 145 810, 601. (b) theory. Fisher's Blend Station Comm., 297 650, 608, 80 956; 1084. cited 21. Maine Grand Trunk 142 163, 994; York, Erie U. Railroad 158 431, 896, 1043; supra; Meyer Wells 298, 218, 445. So. S.S. 1200; Ratterman 127 411, 1127, Alabama, 132 472, 161, 409; 429; 272. explained 256, (c) directed exclusively 'at communication,' Lockhart, Transportation (1943) 40, 65—66. H. S.A. 1031, Jersey Bell Board, 280 338, 111, 74 463. Nashville, C. Browning, 310 362, 968, 1254. Galveston Telephone Company events occurred nevertheless present. ( ) possible burden. pages 551, (e) 68. noted, rested exports. Richfield Oil Corp. Equalization, 69, 156. 1219; 1072; Robertson California, 440, 1160. sometimes heavily therein. answer Court's 'generality character' levy, 'but vastly significance, statement, apropos effort it: reaches indiscriminately fail entirety interstate.' 314, 917, simply, face threatened thing discover is' 423, 589, ignore returns excepted mean (which decide exemption) transactions; manufacturing. engaging price produced date manufacture.' addition Oliver Iron Lord, 172, 526, 929; Hope Natural Gas Hall, 284, 639, 1049; 640, Morrison, (1942) Ill.L.Rev. 727, 738. Postal Telegraph-Cable Adams, 155 688, 360, 311; Richardson, 261 330, 366, 682. 226, 1031. true, concededly work higher Communication 40. 844; Best 311 454, 334, 275. 1142. 785—787. 356, 357, 1034, Penney 444, 445, 246, 249, 250. McNamara, Jurisdictional Problems Imposition Excises (1941) Contemp.Prob. 482, 491. proposed buyer's right Proc. 27th Ann.Conf.Nat.Tax Assn. (1934) 136—160. Perkins, Transactions N.C.L.Rev. 99. 25. created. trust's administration. kept prior accordance Curry McCanless, 307 900, 1339, 123 162. directions there. forwarded corpus trust. state's trust, sale, satisfy relating disposition largely borders aside Treasury Wood Preserving Corporation, 62, 885, 1188; Ingram-Richardson 252, 866, 1313; Ford Motor 323 347, 389. ee General Trading 1028, 1309; Northwestern Nelson Sears, Roebuck 312 359, 475; 944; Coverdale Arkansas-Louisiana Pile 604, 736, 909. Part VI. requirements. 27. impending constitute, clog. cent record indicates, too, Transfer three cents twenty dollars, four dollars. §§ 270, 270a; O'Kane 283 N.Y. 905. bonds. Op.Atty.Gen.N.Y.1939, 208. 31. likelihood another, Frequently be, nil small. discloses suggestion likely destination, incident. inquiry inconsistent thesis. applicability 275; Hale Bimco 306 375, 771; Buy Baltimore, 100 743; Webber 103 344, 565; Welton Missouri, 275, 347; Voight Wright, 855, 638; Brimmer Rebman, 138 78, 213, 862. reasons, larger capacity absorb volume, loss profit, 34. premise levied ut meeting barrier, origin, encountered. choose exclusive allowance choice origin. competition classes possibilities traffic compete, directly, consuming loc l character.' Credit elsewhere, Henneford Silas Mason 577, 814; 1309, form one. conjunction he reduced 44. 'use cases: Felt Tarrant Gallagher, 376, 488; Montgomery Ward 593, 897. Jagels Taylor, 619, 469, 983, discussed 25, 487. illustrative.

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