Document: 340 U.S. 602 71 S.Ct. 508 95 L.Ed. 573 SPECTOR MOTOR SERVICE, Inc.,v.O'CONNOR. No. 132. Argued Nov. 29—30, 1950. Reargued Jan. 10, 1951. Decided March 26, Mr. Cyril Coleman, Hartford, Conn., for petitioner. Louis Weinstein, New Haven, respondents. Justice BURTON delivered the opinion of Court. 1 This proceeding attacks, under Commerce Clause Constitution United States, art. 1, § 8, cl. 3, validity a state tax imposed upon franchise foreign corporation privilege doing business within State when (1) consists solely interstate commerce, and (2) is computed at nondiscriminatory rate on that part corporation's net income which reasonably attributable to its activities State. For reasons hereinafter stated, we hold this application invalid. 2 Petitioner, Spector Motor Service, Inc., Missouri engaged exclusively in trucking. It instituted action 1942 States District Court Connecticut against Tax Commissioner sought enjoin collection assessments penalties totaling $7,795.50, had been levied it, various periods between June 1935, December 31, 1940, Corporation Business Act 1935 amendments thereto.1 asked also declaratory judgment as liability, if any, Act. claimed by did not apply it that, did, such violated both Due Process Clauses Constitution, 3; Amend. 14. Finally, alleged no plain, speedy efficient remedy law or equity courts2 taxes means provided statute would cause irreparable injury. The took jurisdiction, held petitioner granted injunction sought. Service v. McLaughlin, 47 F.Supp. 671. Appeals Second Circuit, one judge dissenting, reversed. 139 F.2d 809. was constitutional. We certiorari, 322 720, 64 1155, 88 1560, but, after hearing, remanded with directions retain bill pending determination proceedings be brought court conformity rendered, 323 101, 65 152, 89 101. 3 Petitioner thereupon Superior Hartford County, Connecticut. applicable but invalid Clause. 15 Conn.Supp. 205. Supreme Errors likewise subject declined pass effect Co. Walsh, 135 Conn. 37, 70, 61 A.2d 89, 105. On motion asking dissolve original injunction, do so. 711. reviewed recent decisions applying petitioner, required interpretation courts, Constitution. acting through same majority previous occasion, One dissented stated district who former appeal. 181 150. certiorari because fundamental nature issue apparent conflict below judgments 806, 49. case argued twice term. 4 jurisdiction over first instance uncertainty adequacy lose virtue later clarification procedure courts American Life Ins. Stewart, 300 203, 57 377, 81 605; Dawson Kentucky Distilleries & Warehouse Co., 255 288, 41 272, 638. 5 vital remains whether violates Federal come now benefit statement from final showing exactly what has tax. all-important 'operating incidence' thus made clear.3 After full consideration knowledge basis determining Clause, said: 6 'The then excise corporations carrying state, they domestic foreign. Stanley Works Hackett, 122 547, 551, 190 A. 743. Net earnings are used merely purpose amount paid each corporation, measure which, charged, intended impose share general burden nearly possible equivalent borne other wealth state. As regards without intention was, use rather complicated formula, fairly proportionate done There ground can said rest highways motor trucks * *.' pages 56—57, 98—99. 7 incidence intrastate commerce there none. only transportation. Its principal place Illinois. authorized Interstate Commission certain trucking Public Utilities filed Secretary certificate incorporation Missouri, designated an agent service process fee connection. does engage it. See Terminal Taxicab Kutz, Com'r Columbia, 241 252, 253—254, 36 583, 584, 60 984. 8 Petitioner's transportation freight truck east west. When truckload shipped any customer Connecticut, petitioner's over-the-road go directly customer's business. In less-than-truckload shipments, pickup operated gather customers assembly into truckloads either two terminals maintained act freight.' page 44, 93. 9 discriminate commerce. Neither nor computation need considered us view our disposition case. objection claim places unduly heavy return protection given compensation highways4 collected lieu ad valorem property tax.5 Those bases taxation have disclaimed highest taxing inspection sales use. 'tax excise' placed unequivocally serves suggest were some involved appropriate highways, sum money here might lawfully Even though financial same, question may validly make pay way depends all constitutional channel attempts Freeman Hewit, 329 249, 67 274, 91 265; McLeod J. E. Dilworth 327, 1023, 1304. 10 Taxing power inherent sovereign states, yet states divided their Government themselves. They delegated exclusive gave Congress 'To regulate Nations, among several U.S.Const. Art. I, 3. While reach reserved great, separation federal powers makes essential permitted exercise, authority Congress, those functions Congress. Another example basic inability agencies exercises powers. McCulloch Maryland, Wheat. 316, 425—437, 579; Brown 12 419, 445—449, 678; Mayo 319 441, 63 1137, 87 1504. 11 answer instant clear matter labels. provides answer. before attaches precluded imposing aspects unlike business, although payment out funds derived so will related nondiscriminatory. heretofore struck down, character. infirmity persists how apportioned Alpha Portland Cement Com. Massachusetts, 268 45 477, 69 916 (measured percentages 'corporate excess' income); Ozark Pipe Line Corp. Monier, 266 555, 184, 439 percentage capital stock surplus). Oil Stone, 337 662, 669, et seq., 1264, 1267, 93 1613 (dissenting discusses assumption commerce); Joseph Carter Weekes Stevedoring 330 422, 815, 993; supra.6 13 Our conclusion principle where taxpayer and, reasonable limits,7 compute charge fair proportion taxpayer's including intrastate. supra; International Harvester Evatt, 416, 444, 390; Atlantic Lumber Corporations Taxation, 298 553, 56 887, 80 1328. true activity local nature, passengers points travel, Central Greyhound Lines Mealey, 334 653, 68 1260, 92 1633, publication newspaper, Western Live Stock Bureau Revenue, 303 250, 58 546, 82 823. also, Memphis Natural Gas 335 80, 1475, 1832. 14 field reason long-established precedent keeping free taxation. To gives lateral support cornerstones law—McCulloch supra. Appeals, reversed Court, accordingly 16 Reversed. 17 CLARK, whom BLACK DOUGLAS join, dissenting. 18 assumes, I think clearly demonstrated, challenge nondiscriminatory, undue Hence, appellant iota willing call 'intrastate,' could applied company's precise form seeks employ—a measured entire State, even 19 But engages calls 'exclusively interstate' different standard applied. ask way, fact services charged. Nor concerned puts competitive disadvantage likely Instead, declared simply verbally characterized levy borders. concedes, least appears concede, legislature described tax, amount, calculated here. acknowledging this, Court's own totally refutes protestation employed strike down Connecticut's more than free—as since adopted 1935—from paying State's expenses, tax-free status continues until renames reshuffles 20 result persuades me. agree well-reasoned opinions cases upholding mixed recognizing right enfeebled—and justifiably so—the precedents today's decision restores vigor. too distant past, seemed quite clear. Beeler, 1942, 315 649, 62 857, 86 1090, upheld being activities. Chief speaking unanimous went further state: 21 'In case, wholly Tennessee having commercial domicile prohibited clause 656, 862. 22 light clearing up tangled underbrush past cases, advisedly. understand upset 1946, 265, 1947, 993. gross-receipts capable duplication another state; latter net-income tax; written member joined Beeler decision. 23 event, confine 'special facts.' supra, 278. meets every practical test fairness propriety enunciated These should govern here, difference 'mixed' warrant regard. nothing spiritual about rarely devoid significant contacts states. long treated problems flexibility competing demands governmental spheres required. absence action, quick recognize legitimate interests uphold regulations admittedly of, impinge on, See, e.g., South Carolina Highway Dept. Barnwell Bros., 1938, 177, 625, 510, 734. approach hardly taxes: 24 '* (W)hen accommodation must national interests, manufacture destined shipment outside, seamless web prevent giving manufacturing detached relevance purposes taxation.' 255, 25 A similar recognition facts less suited qualified 11, 1934, filing necessary papers leases utilizes employs twenty-seven full-time workers payroll Britain amounting $1,200 per week. owns registered name Vehicle Department ply streets cities. uses grind highways. pointed Errors, leaseholds 26 successful operation doubt material producing large plaintiff's Connecticut.' Inc. 1948, 50, 96. 27 sure, company deliveries. differ stops; rendered same. Spector's technically interstate,' easily substantial recently found adequate parts Illinois occupation Norton 1951, 534, 377. extensive validated 'privilege' 28 taken eight years bring battered litigation end. back thirteen years. therefore thirty measures collect revenues enacting laws felicitously drafted. Because failure tag, cannot 1937 date, well collections away turned bonanzas suits refund barred respective statutes limitation. 29 entirely recast immune attack. doubtful kind 'on business.' assuming promulgated sure guide follow future enactments, cloaking purely verbal dignity. 'Exclusively commerce' receives levies Rutledge 1949, 1613. 'protection' bestowed neither deserved. 30 Objections apportionment formula correctly disposed Appeals. affirm judgment. 'Sec. 418c. Imposition Every mutual savings bank, loan association building report collector internal revenue assessment, (with exceptions here) shall pay, annually, herein defined received transacted during year assessed cent; (Emphasis supplied.) Conn.Gen.Stat.Cum.Supp.1935. section amended inserting italicized clause, words 'every on,' 'or carry on'. Conn.Gen.Stat.Cum.Supp.1939, 354e. amendment. current revision statute, subsequently amended, Conn.Gen.Stat.1949, §§ 1896—1921. (United States) suit enjoin, suspend, restrain levy, pursuant speedy, State.' 50 Stat. 738, U.S.C. (1940 ed.) 41(1). (1946 ed., Supp. III) 1341, U.S.C.A. 1341. Wisconsin C. Penney 311 435, 246, 85 267. Capitol Brice, 339 542, 70 94 1053; Aero Mayflower Transit Board R.R. Com'rs, 332 495, 167, 99; Busses Blodgett, 276 245, 48 230, 72 551 (Conn. highways). Cf. 1832; McCarroll Dixie Lines, 309 176, 504, 84 683. 679, 1273, 1613; Cudahy Packing Minnesota, 246 450, 38 373, 827; Old Dominion S.S. Virginia, 198 299, 686, 49 1059; Postal Telegraph Cable Adams, 155 688, 268, 39 311. distribution gas joint enterprise Power Light Company. Any suggestion Butler Bros. McColgan, 501, 701, 991; Treasury Wood Preserving Corp., 313 62, 885, 1188; Ford Beauchamp, 308 331, 273, 304; General Johnson, 77, 436, 673; Hans Rees' Sons North Carolina, 283 123, 51 385, 75 879; Underwood Typewriter Chamberlain, 254 113, 45, 165.

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