Document: 335 U.S. 80 68 S.Ct. 1475 92 L.Ed. 1832 MEMPHIS NATURAL GAS CO.v.STONE. No. 94. Argued Dec. 8, 1947. Decided June 21, 1948. Mr. Edward P. Russell, of Memphis, Tenn., for petitioner. J. H. Sumrall, Jackson, Miss., respondent. Justice REED announced the judgment Court anda n opinion in which DOUGLAS and MURPHY join. 1 The Memphis Natural Gas Company is a Delaware corporation owns operates pipe line transportation natural gas. runs from Monroe Field State Louisiana through states Arkansas Mississippi to other points Tennessee. Approximately 135 miles lie within Mississippi; at two that state there are compressing stations. It stipulated has never engaged any intrastate commerce it only one customer state, Power Light Company, sells gas its interstate wholesale several delivery points; qualified under laws do business state; no agent service process office employees representatives those necessary maintain auxiliary appurtenances. 2 paid all ad valorem taxes assessed against property pursuant law. In addition taxes, imposes 'franchise or excise tax' upon corporations 'doing business' state.1 For purpose Act, defined '(to) mean (to) include each every act, power privilege exercised enjoyed this State, as an incident to, by virtue powers privileges acquired nature such organization.'2 tax 'equal $1.50 $1,000.00 fraction thereof value capital used, invested employed' state. 3 filed peition review Tax Commission franchise years 1942, 1943 1944 Commissioner. petition argued imposition was act prhibited Commerce Clause Federal Constitution. Art. 1, § cl. 3. From order approving action Commissionr , appealed Circuit Hinds County, Mississippi. That court reversed Commission, but itself Supreme said had made 'no attempt such, levy exaction requires recompense protection lawful activities carried on corporation, foreign domestic, incidental possessed organization—here local maintaining, keeping repair, otherwise manning facilities system throughout State.' 201 Miss. 670, 29 So.2d 268, 270. did not bear directly burden imposed remote unsubstantial. concluded unconstitutional ordered question, plus penalties, be Company. A certiorari, 237(b), Judicial Code, 28 U.S.C.A. 344(b), May 17, presented question whether violated requiring undomesticated commerce, pay tax. granted 16, 331 802, 67 1736, 91 1825. 4 suggestion stipulation facts trial court, concedes truth allegation challenged before reading follows: 'To carry right citizen United States entitled exercise constitution States; accession possession mere corporate facilities, matter convenience carrying their business, cannot have effect depriving right, unless congress should see fit interpose some contrary regulation. Your Petitioner obtains acquires activity than afforded your payment used wholly commerce.' 5 because concession exact petitioner 'affords nothing could ask way tax.' pertinent part reads: 'That stated true proof same shall required cause.' No contention us assignment errors brief. Petitioner's levied invalid Clause. failure raise alone would justify refusal here consider contention. See Connecticut R. Co. v. Palmer, 305 493, 496, 59 316, 319, 83 309; Kessler Strecker, 307 22, 34, 694, 700, 1082. answer suggestion, however, seems clear. argument must 'is engaging doing * Clause.' This conclusion reached following analysis. between read if phrase 'in activity' modified words 'powers' 'privileges' word 'protection.' If proper construction stipulation, then parties agreed obtained *.' dissent concludes 'exhausted' state's taxing and, consequently, 'invalid 6 construed 'an lines As we bound statute idle suggest 'the business.' Nor can result changed tha incidents 'because they already been fully taxed.' incidents, spoken Mississippi, were taxable events selected These basis now controversy. reason perceived why different protection. though rate increased. new questioned except interference with commerce. legal remains 7 case present again perennial problem validity on, certain admittedly operate taxpayer. deliveries business. Panhandle Eastern Pipe Line Comm'n, 332 507, 513, 190, 193, cases cited. Notwithstanding Congress regulate taxation so desires,3 body generally left determination courts what affecting permissible impermissible sought collect instrumentalities compensation advantages rendered governments. federal over determine scope light competing interests states, impose reasonable connected Gwin, White & Prince, Inc. Henneford, 434, 441, 325, 328, 272. We continue task, characterized long ago area 'nice distinctions.' Galveston, Harrisburg S.A.R. Texas, 210 217, 225, 638, 639, 52 1031. 8 There Due Process. Company's where occurred. McLeod Dilworth Co., 322 327, 329, 64 1023, 1025, 88 1304. Nippert City Richmond, 327 416, 423, 66 586, 589, 90 760, 162 A.L.R. 844. measure calculate amount challenged. thousand dollars employed Southern Corp. Alabama, 301 148, 156, 57 696, 699, 81 970, Third. attack violates putting itself. 9 covered definition hereinbefore set out, 9312, supra, ote rwise system' 268.4 just cited note show that, viewpoint Clause, sufficiently separate may validly laid, even taxpayer precisely itself.5 But choice tax, without more, enough. always convenient operation. 760. does lend repeated exactions states. Otherwise preferred commerce.6 Again, discriminates disconnected otherwise.7 10 consideration discriminatory. levied, created laws, admitted operating authority supra. operated compressor heretofore held generation electric energy operation stations subject withou violation Coverdale Arkansas-Louisiana 303 604, 58 736, 82 1043. glance activities, named above, listed shows possibility multiple reasonable.8 properly apportioned investment Mississippi.9 11 However, our decisions (1) state,10 (2) event much itself.11 asserts offends. 12 First. drawn distinction field statutes done appropriate incidents. Ozark Monier, 266 555, 45 184, 69 439, Corporation oil Oklahoma, Missouri point Illinois. Oil neither received nor delivered Missouri. transportation. Interstate Ga 682, 689, 1482, 1486, 1742, 12. principal license authorizing engage "exclusively transporting crude petroleum line." Page 561, 185, 439. tax.12 'upon business,' 562, Virginia Imperial Coal 293 15, 20, 55 12, 14, 79 171. Clause.13 13 284 41, 62, 76 ran back Louisiana. Two distributors took respondent law company get desired, is, line.14 entire despite claimed reduction pressure deliver distributors. followed Clause.15 14 On hand, Stone, 308 522, 60 292, 84 442, affirmed per curiam Fifth Stone 103 F.2d 544, 153, 157, 970. exacted here. differs differed case, far material, fact copy charter prerequisite appointed process. page references citation considered "on exercising functions employment (Mississippi)." 698, 155, done. Thus qualifying occurred both Sourthern brought Interstate, U.S., protected. Court, declared secure anything thi enumerated 'maintaining, repair facilities.' 268. Under 9314, quoted note, statute's out meaning give statute. accept court's interpretation.16 therefore conclude involved 15 Second. come second question. aforementioned maintenance, solely taxed. depends these it.17 maintenance line. unapportioned gross receipts measured proportion duplicated Compare Western Live Stock Bureau, 250, 255, 546, 823, 115 944. 565, 186, spoke below.18 intended say in-the-state described taxed, disagree conclusion. inclined view led essential activities. appurtenances essential, yet laid.19 16 taxation, problems raised many regulations alleged impede free flow when nationally uniform. Pacific Arizona, 325 761, 65 1515, 89 115. Regulations Public Service supra; Bob-Lo Excursion Michigan, 333 28, 358. When involved, considerations control. longer actual interruption Kelly Washington, 302 87, Rather prohibited beyond outside boundaries, grant. 10, Is bad itself? sustained fee using courts, licensed handle customs charges. Union Brokerage Jensen, 202, 967, 1227.20 Likewise special automobile use roads approved. Aero Mayflower Transit Board Railroad Comm'rs, 495, 167. 17 more instances recited. giving rise mentioned taxes. think constitutional rights exacting affords borders. Of course, conducted conclusive. r e apart States, gives unreasonable toll 18 Affirmed. 19 BLACK, concurs judgment. 20 RUTLEDGE, concurring. 21 accordance views I expressed,1 enough me sustain clearly lay insofar limitation due 'jurisdiction sense concerned;2 nondiscriminatory, places greater like character;3 duly apportioned, undertake borders;4 state.5 22 substantial respect, purposes clause's prohibitive application, grss New York decision recently Central Greyhound Lines Mealey, 334 653, 1260.6 nonetheless although apportioned. apportionment, guards vice thus also multiplication them.7 my consequence follows here, practical effect, bearing saving validity. 23 pr poses little verbal difference regarding looking 'upon' it, being laid 'incidents commerce' 'taxable events' taking place regarded 'sufficiently from' pportionment otherwise, To extent presently Court's conclusions reasoning. 24 conceivably large, indeed controlling, importance cases. And, true, am unable revert rationalizations make merely formulae reflection differences substantive effects controlling matters. 25 legs journey Jersey Pennsylvania. They lose character them. incidence flatly portion it. So purports terms become conducts either apportionment otherwise. there, States. given placed Nothing clause great forbids exaction. limited single protections afforded, safeguarded aggregate shown contravene purpose. 26 Accordingly, concur 27 FRANKFURTER, whom CHIEF JUSTICE, JACKSON, BURTON concur, dissenting. litigation began revision Franchise Law judicial administrative denial, 'all cause.'1 based undisputed allegations petition. Petitioner, pipeline running fields into intranstate so. income net fairly attributable Mississippi.' pays six counties pipeline—some miles—runs. o unties are: Bolivar, Sunflower, Coahoma, Tunica, Desoto. cities Greenville (Washington), Indianola (Sunflower), Clarksdale (Coahoma). questioned, enactment 1940, state'2 equal Ch. 1940 General Laws 2; Miss.Code, 9314(1942). record barren indication exerted bears fiscal relation protection, opportunities benefits state,' Wisconsin J.C. Penny 311 435, 444, 61 S.Ct 246, 249, 85 267, 130 1229, subordinate authorities, exaction, contrasted Crutcher Kentucky, 141 47, 851, 35 649. makes affirmative showing; denies foundation suggesting something return. 'Your commerce.'3 30 Even assuming while exclusively cast corpus form having earmarks assessment stand. And very simple reason. 31 hardly disagreement, take Alabama constitutionally traverse Alabama—concededly assailed travels Mississippi—but know, instructed, how governmental distributed nine county city authorities approximately $85,000 year supply enjoys seeking enforce aa inst asking (approximately $3,500 year) nothing. cause,' according parties, name. Hackfeld 197 446, 456, 457, 49 826. holding 'exacting borders' flying face record. Alabama. 'local incident' commerce—that goes Mississippi—the necessarily put end charge privilege. 32 suggested barred reaching conclusion, compels deals issue us. Let see. certiorari question: 'Admittedly contributes materially cost government. An paying flows Constitution burdened tax." 33 By statement asserted accorded incidents' exhausted power. bald precluded deciding precise course counsel, opinions deleted Reports. 34 however attempts deal understand opinion, argues petitioner's immaterial interpretation. offers extraordinary behalf conceded disregard fact, force proof, hold first purported thing. contrary, 'Does demanded block services furnished about activities? $3,400 annum, whereas $82,000 year, whence obvious last negative.' 271. 36 valid 'it's one.' thise days, de minimis. 37 susceptible ipse dixit applying i nding Court. court. attributes whereby incidents'—because taxed—makes clear peradventure 38 novel abdication function significance unambiguous agencies, 39 increase Wallace Hines, 253 66, 40 782. increasing rate. number legalize 'as increased.' Because obtain twice revenue gets which, referable accords. abstract objections disregarding treating Practical preclude patent endeavor circumvent restrictions legislature ready State—as legislatures attempted do—and prepared outright 41 treated increased' easy sustaining almost fall ban transmuting assumed merit inventiveness. competition among inventiveness subjects hitherto boon trade across bane multitudinous tariffs. 42 reversed. Miss.Code 9313 (1942): 'There hereby existing hereafter organized, established, thereof, power, organization hereinafter provided. section require exist organization, enjoy, ther powers, rights, immunities derived existence.' 9314: 'For annually thereafter, imposed, association joint stock company, defined, organized territory country, specific statutory authority, now, organizations equivalent, receives benefit government state.' 9312 (1942). Prudential Ins Benjamin, 328 408, 429, 1142, 1154, 1342, 164 476. Such sound example, upheld sales after completion transit, McGoldrick Berwind-White Mining 309 33, 388, 128 876; production electricity Utah L. Pfost, 286 165, 548, 1038, compare Fisher's Blend Station, Inc., 297 650, 655, 56 608, 610, 956; machines drive 1043; rails shipped immediate incorporation system, Gallagher, 306 167, 389, 586. authorized making domicile, Ford Beauchamp, 331, 273, 304; computed element, Hump Hairpin Emmerson, 258 290, 305, 622; Cartridge 281 511, 50 383, 74 1004; manufacturing, added sales, including American Mfg. St. Louis, 250 459, 63 1084, Powell, Harv.L.Rev. 508 727, Freeman Hewit, 329 274, 278, 265; storing goods rest transit privilege, Independent Warehouses, Scheele, 70, 1062, 1346. 254, Best Maxwell, 454, 334, 275; 431, 432, 593, 594, Cf. 501, 502, 170. 295, 307, 622, 514, 385, 1004. Third, cited; International Harvester Evatt, 422, 447, 390; Com'rs, times refuse eminent domain, public ways beds streams, denied enter remain purely franchise. 56, 853, 649; Textbook Pigg, 217 91, 107(3), 481, 484, 54 678, L.R.A.,N.S., Ann.Cas. 1103; Dahnke-Walker Milling Bondurant, 257 282, 106, 239. California 127 1073, 150; Luxton North River Bridge 153 525, 891, 808; Colorado 271 164, 46 452, 70 878; ex rel. Com'rs Stanolind 216 Iowa 436, 445, 249 N.W. 366. 277, 265, 253, 'a direct freedom commercial hundred fifty ward Clause' 256, 265: Joseph Carter 815, 993, 'Stevedoring, conclude, essentially conducting stevedoring receipts, invalid' 330 433, 821, 993; precedents outlawing itself' 224, Adams Storen, 304 312, n. 11, 913, 916, 1365, 117 429; comments 4, Mo.Rev.Stat. 9836 (1919), Mo.R.S.A. 5113: '* Every annual one-tenth cent. par surplus evoked Brandeis pointed that: 'The occupation *'; pages 567, 568, 187, becauses indispensable instrumentality commerce,' 'where moving 569, 189, Atlantic Lumber Comm'r, 298 553, 887, 1328. history Since 288 manner issue, distinguished, sometimes narrowly. Helson 279 245, 279, 280, 73 683, 43, approval proposition Anglo-Chilean Nitrate Sales 218, 53 373, 77 710, relied Cardozo, J., joined Brandeis, dissented ground supported next involving tangible intangible situated distinguished 1328, Massachusetts, time therefore, incidental. found inapposite factual differences. ruled constitutionality Miss.Gen.Laws (1930), ch. 88, 3: 'Every person desiring specified, first, commencing same, apply for, procure officer him specified therein; schedules and/or continuing businesses therein.' Id., 163: 'Upon oil, natural, artificial gas, pipes, conduits, (On mile varying depended diameter pipe).' rationale declare similar corporations, leading supporting (Cheney Brothers 246 147, 62 632, Alpha Portland Cement 268 203, 477, 44 1219) strictly limited. Commissioner, 1328; cf. 229, 237, 376, 379, 710. Cheney Massachusetts percentage (Mass.Acts, 1909, c. 490, Part III, 56) invalidated maintained Boston selling salesman four salesmen who travel England. solicit orders, home Connecticut, ships purchasers. kept office, samples soliciting orders. Copies records orders retained, bookkeeping done, collections. rent expenses small deposit 296, 632. where, assumption circumstances Louis S.W.R. Arkansas, 235 350, 362, 99, 102, First; Skiriotes Florida, 313 69, 79, 924, 930, 1193; Caldarola Eckert, 158, 1569, 1570, 1968. said, 439: actually appellant purchase supplies, labor, telephone telegraph automobiles, appellant's acts furtherance itself, extensive whatever character, likewise devoted end. means constituted, contributed Heyman Hays, 236 178, 403, 404, 527. Cleveland C.C. L.R. Backus, 154 1122, 1124, 1041: rule taxation. earnings makes, property, rests value. results put, varies profitableness use, prospective, anticipated. pecuniary use. profitable determines value, taxed cash uses put.' Northwest Airlines Minnesota, 950, 1283, 245; Express Ohio, 165 194, 683; Tel. 125 530, 961, 790. dealt franchises licenses customhouse broker earning fees "charges itself," 209, 972, 1227. main purpose, 208, 971, 1227: 'Union's localized buys materials people enters relationships, suit former president, illustrates, arrangements importers exporters.' 1304; Trading 335, 1028, 1309; Dept. Treasury, 340, id. 349, 1019, 1313; concurring 259, 265. 352, 353, 1032, 424, 590, (1942), imposing comparable identical amount, companies laws. Intrastate obviously other, depending another statute, §§ 9314 expressly measures limits (Emphasis added.) 4. Apportionment prevents extrastate 'events' portions reflecting sufficient approximation entitled, facts, C.J., dissenting 315, 962, will applied permitted opinion. seem doubt application made, alternative invalid. 266, 283, 265 (concurring opinion) mileage 'used, state' significance, since considerable latitude selection fair methods apportionment. 5. paragraph full, cause. Stipulation defendants not, Stipulation, propositions arguments recognize questions Court.' 'mean existence corporate, associate, common trust.' 9312(1942). Particularly else appears uncontroverted control presumptive inference might favor State's guardian ought indulge casuistic assumptions correspond realities situation.

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