Court Opinion

ID: 9669207
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:43:05.906159+00
Date Added: 2024-06-11T18:15:53.749929
License: Public Domain

LIVINGSTON, Chief Justice,
dissenting.
The appellant, M. Dorsky, instituted this' proceeding in the Circuit- Court, in Equity,; of Jefferson County, Alabama, against Bradley G. Brown, as License Inspector1 of Jefferson County, Alabama, .the appellee, seeking a declaratory judgment ■as tq'the constitutional validity of the tax imposed on each coin operated radio, by Act 688 of General Acts of the Regular SessioiU'óf the 1947 Legislature of" Alabama/ General Acts 1947, page 522/ Title '51, section-613, Pocket Part, Code óf'1940. ■ The petition or bill of complaint also sought an injunction restraining Brown from collecting the tax provided -for in ■ section 613/ supra. ■' !
The cause was submitted on the bill of complaint as amended and an agreed ‘statement of facts. The. court entered a decree denying generally the relief prayed for, and from that decree this appeal is prosecuted. We take it that the decree sustains the validity of the Act assailed and .will so treat it.
Several grounds are assigned raising the 'question of the constitutionality of section 613, supra. Some of these grounds are without merit. But in our opinion that part of section 613, supra, which attempts to-levy a license tax on “each coin-operated radio,” is violative of the commerce clause of the Constitution of the United States.
It is agreed that the coin operated radios, here involved, have been installed in guest rooms of the Molton, Bankhead and Thomas Jefferson Hotels in the City of Birmingham, Alabama. They are owned, installed and serviced by appellant, Dorsky. By contract, Dorsky received seventy-five per 'cent of the receipts from the machines ‘ánd the hotels twenty-five per cent. It is further stipulated that: “The coin radio 'when in use is plugged into the wall socket in the same manner as a floor lamp or other movable electrical device, and is operatéd by a person inserting a coin in :the coin slot' situated on the. top left hand ■’side of the cabinet, and at the same time by pressing down on the button or small push lever which is situated in close proximity to the coin slot and on the same side of the' cabinet as is shown by the figures designated as ‘T-230’ and ‘T-231’ of ex■hibit- ‘A’ hereto. This operation turns on the electric current in the cabinet as shown by Exhibit ‘B’ hereto; but does not turn on the radio itself, which requires ■ a separate operation, or turning on the control switch of the radio as is-shown by ' ‘L-104’ of Exhibit ‘A-’ hereto/ After the electric current is turned on' by the in-i sertion’ of the coin, and the control switch -■of the radio is also turned on, the radio operates in the similar manner as other radios, except for the fact that it only operates for approximately a period of two hours or until the current is automatically switched off by the time unit which is situated • on the coin device as is shown in Exhibit ‘B’ hereto. After such period of time, and if the radio is to be played again, *243it is necessary to insert another coin in the coin device and to go through the same operations as have been heretofore describ-. ed.”
That communications by radio constitute interstate commerce is of course not open-to question. Gibbons v. Ogden, 9 Wheat 1, 6 L.Ed. 23; Fisher’s Blend Station, Inc., v. Tax Comm., 297 U.S. 650, 56 S.Ct. 608, 610, 80 L.Ed. 956. But whether radio broadcasting involves intrastate activity which may be subjected to local taxation, the decided cases are not in 'harmony. In the Fisher’s Blend Station case, supra, the United States Supreme Court seems to have reserved this point by the following language: “Whether the state could tax the generation of such energy, or other local activity of appellant, as distinguished from the gross income derived from its business, it is unnecessary to decide.” In that connection see the following cases: United States v. American Bond & Mortgage Co., D.C., 31 F.2d 448; City of Atlanta v. Atlanta Journal Co., 186 Ga. 734, 198 S.E. 788; Whitehurst v. Grimes, D.C., 21 F.2d 787; Albuquerque Broadcasting Co. v. Bureau of Revenue, 51 N.M. 332, 184 P.2d 416, 11 A.L.R.2d 966; Beard v. Vinsonhaler, 215 Ark. 389, 221 S.W.2d 3.
The tax here involved is levied on the business of operating instrumentalities of reception rather than the business of broadcasting. No attempt is made in section 613, supra, to apportion the tax or to separate intrastate communications from interstate communications and to- levy the tax on intrastate communications only. So in that respect, we are bound to consider the levy as one on interstate communications, or on the business of operating instrumentalities used in interstate communications.
As we understand the Fisher’s Blend case, supra, it was not held that all broadcasting was interstate commerce, but that as the tax was levied on the gross income, which included that from interstate commerce, it followed that it was an unauthorized tax levied on interstate commerce.
W-e have found only one case determining a state’s right to levy a tax upon radio receiving sets. In that case, reported in D. C., 46 F.2d 671, and styled Station WBT v. Poulnot, it was held that radio receiving sets in South Carolina were absolutely es-' sential instrumentalities of interstate commerce, and that the state of South Carolina had no right to lay an annual license tax on the privilege of owning and operating a radio receiving set in that state. The opinion in that case was rendered January 7„ 1931. It was cited with apparent approval in the case of Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 551, 82 L.Ed. 823, 115 A.L.R. 944, decided by the United States Supreme Court on February 28, 1938.
Some general observations made in the Western Live Stock case, supra, regarding the power of the state to tax interstate commerce have caused much comment, and have so divided the Supreme Court .of the United States that subsequent decisions on the subject lack unanimity. For a rather full discussion, see Albuquerque Broadcasting Co. v. Bureau of Revenue, supra. In the Western Live Stock case, supra, the United States Supreme Court said: “In this and other ways the case differs from Fisher’s Blend Station, Inc., v. State Tax Comm’n., supra, on which appellants rely. There the exaction was a privilege tax laid upon the occupation of broadcasting, which the Court held was itself interstate communication comparable to that carried on by the telegraph and the telephone, and was measured by the gross receipts derived from that commerce. If broadcasting could' be taxed, so also could reception. Station WBT, Inc. v. Poulnot, D.C., 46 F.2d 671. In that event a cumulative tax burden would be imposed on interstate communication such as might ensue if gross' receipts, from interstate transportation could be taxed. This was the vice of the tax of a percentage of the gross receipts from- goods sold by a wholesaler in interstate commerce, held invalid in Crew Levick Co. v. Pennsylvania, supra (245 U.S. 292, 38 S.Ct. 126, 62 L.Ed. 295). In form and in substance the tax was thought not to - be one for the privilege of doing a local business separable from interstate commerce. Cf. American Manufacturing Co. v. [City of] St. Louis, supra (250 U.S. 459, 39 S.Ct. 522, *24463 L.Ed. 1084). In none of these respects is the present tax objectionable.”
The holding in the Poulnot case, supra, was that a radio broadcasting station had the right to attack the constitutionality of a state law imposing a tax on radio receiving sets because the result of such a tax was to impair the value of the business of broadcasting stations, and if the amount of the tax should be increased, the business might be destroyed entirely, so that the property rights of the broadcasting station were directly affected by the tax in question. If the reception of interstate radio communications can be taxed in Alabama, the same communications received in other states may be taxed there also. We think that is the cumulative tax burden regarding radio communications envisioned by Mr. Justice Stone in the above quoted excerpt from his opinion in the Western Live Stock case, supra.
In the case of McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 400, 84 L.Ed. 565, 128 A.L.R. 876, Mr. Chief Justice Hughes in a dissenting opinion concurred in by Mr. Justice McReynolds and Mr. Justice Roberts said:
“We have sustained the authority of the State to impose occupation taxes when they were deemed to be so measured or apportioned as to relate appropriately to the privilege of transacting an intrastate business. The application of these principles has led to close distinctions. But that fact would seem to present no good reason for sweeping away the protection of interstate commerce where the State lays a direct tax upon that commerce as in this case.
“We have said in a long line of decisions, that the State cannot tax interstate commerce either by laying the tax upon the business which constitutes such commerce or the privilege of engaging in it, or upon the receipts, as such, derived from it. The same principle has been declared in recent cases. In Fisher’s Blend Station v. Tax Commission, 297 U.S. 650, 655, 56 S.Ct. 608, 610, 80 L.Ed. 956, [959], we said: 'As appellant’s income is derived from interstate commerce, the tax, measured by appellant’s gross income, is of a type which has long been held to be an unconstitutional burden on interstate commerce’. There, a state occupation tax upon the gross receipts of the owner of a radio station from broadcasting programs to listeners within and beyond the State was held invalid.”
See, also, Minnesota rate cases, Simpson v. Shepard, 230 U.S. 352, 400, 57 L.Ed. 1511, 1541, 33 S.Ct. 729, 48 L.R.A., N.S., 1151, Ann.Cas.1916A, 18; State Freight Tax case, 15 Wall. 232, 21 L.Ed. 146; Robbins v. Taxing Dist., 120 U.S. 489, 7 S.Ct. 592, 30 L.Ed. 694, 1 Interst.Com.R. 45; Philadelphia & S. Mail S. S. Co. v. Pennsylvania, 122 U.S. 326, 7 S.Ct. 1118, 30 L.Ed. 1200, 1 Interst.Com.R. 308; Leloup v. Mobile, 127 U.S. 640, 8 S.Ct. 1380, 32 L.Ed. 311, 2 Interst.Com.R. 134; McCall v. California, 136 U.S. 104, 10 S.Ct. 881, 34 L.Ed. 391, 3 Interst.Com.R. 181; Brennan v. City of Titusville, 153 U.S. 289, 14 S.Ct. 829, 38 L.Ed. 719, 4 Interst.Com.R. 658; Galveston, H. & S. A. R. Co. v. Texas, 210 U.S. 217, 28 S.Ct. 638, 52 L.Ed. 1031; Western Union Tel. Co. v. State of Kansas ex rel. Attorney General, 216 U.S. 1, 30 S.Ct. 190, 54 L.Ed. 355; Pullman Co. v. Kansas, 216 U.S. 56, 30 S.Ct. 232, 54 L.Ed. 378; Meyer v. Wells Fargo & Co., 223 U.S. 298, 32 S.Ct. 218, 56 L.Ed. 445; Crenshaw v. Arkansas, 227 U.S. 389, 33 S.Ct. 294, 57 L.Ed. 565; Crew Levick Co. v. Pennsylvania, 245 U.S. 292, 38 S.Ct. 126, 62 L.Ed. 295; Sonneborn Bros. v. Cureton (Sonneborn Bros. v. Keeling), 262 U.S. 506, 515, 43 S.Ct. 643, 67 L.Ed. 1095, 1100; Fisher’s Blend Station, Inc., v. Tax Commission, 297 U.S. 650, 655, 56 S.Ct. 608, 80 L.Ed. 956, 959; Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68; J. D. Adams Mfg. Co. v. Storen, 304 U.S. 307, 311, 58 S.Ct. 913, 82 L.Ed. 1365, 1369, 117 A.L.R. 429; Gwin, White & Prince v. Henneford, 305 U.S. 434, 439, 59 S.Ct. 325, 83 L.Ed. 272, 276.
The foregoing principles enunciated by Mr. Chief Justice Hughes might have been somewhat impaired by the majority opinion in that case and the case of Western Live Stock v. Bureau of Revenue, supra, and other cases; but, if so, it was apparently resuscitated in Freeman v. Hewit, 329 U.S. 249, 67 S.Ct. 274, 276, 91 L.Ed. 265, and *245restored to its former standing as a bar to state taxation. In that case it was said:
“Our starting point is clear. In two recent cases we applied the principle that the Commerce Clause was not merely an authorization to Congress to enact laws for the protection and encouragement of commerce among the States, but by its own force created an area of trade free from interference by the States. In short, the Commerce Clause even without implementing -legislation by Congress is a limitation upon the power of the States. (Citation.) In so deciding we reaffirmed, upon fullest consideration, the course of adjudication unbroken through the Nation’s history.
“State taxation falling on interstate commerce, on the other hand, can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys. But revenue serves as well no matter what its source. To deny to a State a particular source of income because it taxes the very process of interstate commerce does not impose a crippling limitation on a State’s ability to carry on its local function. Moreover, the burden on interstate commerce involved in a direct tax upon it is inherently greater, certainly less uncertain in its consequences, than results from the usual police regulations. * * *
“It cannot justify what amounts to a levy upon the very process of commerce across State lines by pointing to a similar hobble on its local trade. * * *
“To extract a fair tithe from interstate commerce for the local protection afforded to it a seller State need not impose the kind of tax which Indiana here levied. As a practical matter, it can make such commerce pay its way, as the phrase runs, apart from taxing the very sale. * * * ”
There follow many illustrations of indirect taxes on interstate commerce, which may be constitutionally levied by the states; then follows:
“These illustrative instances show that a seller State has various means of obtaining legitimate contribution to the cost of its government, without imposing a direct tax on interstate sales. While these permitted taxes may in ail ultimate sense, come out of interstate commerce, they are not, as would be a tax on gross receipts, a direct imposition on that very freedom of commercial flow which for more than a hundred and fifty years has been the ward of the Commerce Clause. * * *
“Nor is there any warrant in the constitutional principles heretofore applied by this Court to support the notion that a State may be allowed one single tax-worth of direct interference with the free flow of commerce. An exaction by a State from interstate commerce falls not because of a proven increase in the cost of the product. What makes the tax invalid is the fact that there is interference by a State with the freedom of interstate commerce. * * *
“Taxes which have the same effect as consumption taxes are properly differentiated from a direct imposition on interstate commerce, such as was before the Court in the Adams case (J. D. Adams Mfg. Co. v. Storen, 304 U.S. 307, 58 S.Ct. 913, 82 L.Ed. 1365, 117 A.L.R. 429) and is now before us. The tax on the sale itself cannot be differentiated from a direct unapportioned tax on gross receipts which has been definitely held beyond the State taxing power ever since Fargo v. Michigan, 121 U.S. 230, 7 S.Ct. 857, 30 L.Ed. 888”.
The court reaffirmed “upon fullest consideration, the course of adjudication unbroken through the Nation’s history * * ”, supra, that is, the dogma that interstate commerce cannot be taxed directly. See, also, Joseph, Comptroller v. Carter & Weekes Stevedoring Co., 330 U.S. 422, 67 S.Ct. 815, 819, 91 L.Ed. 993.
As I understand the decisions of the Supreme Court of the United States, they of course being controlling, the attempt by the State of Alabama to impose an occupation tax on coin operated radios is abortive, and section 613, supra, to that extent is unconstitutional and void.
The majority of the Court entertain the view the statute is constitutional and that the decree of the lower court should be affirmed.
I therefore dissent.