Court Opinion

ID: 3516297
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:27:36.686037+00
Date Added: 2024-06-11T14:19:10.784800
License: Public Domain

The facts of these cases were not agreed to, but are not in dispute. Appellee offered no evidence at the conclusion of appellants' but agreed that appellants' petition for the refund of the taxes, and the exhibits thereto, should be admitted in evidence. This was done and constituted all the evidence in the case.
The outstanding and controlling facts are that all the *Page 868 
long staple cotton produced in this state ultimately goes into interstate commerce, none of it is manufactured within the borders of the state. The long staple cotton produced in the Greenwood territory is concentrated at three compresses in Greenwood for the purposes of compression, sale, and shipment in interstate commerce. Appellants and other cotton buyers at Greenwood purchase the cotton from the producers and merchants who own it to fill contracts of sale theretofore made by them to mills and other buyers in other states and foreign countries; in doing so, they are forced to purchase something like an average of ten per cent. more cotton than is necessary to fill their contracts. This results from the fact that the owners of the cotton are not willing to split their sales so as to meet the requirements of the purchasers as to number of bales, class, and grade. This overage of ten per cent. is sold by the buyers in the local market at Greenwood; it is generally purchased by other buyers to fill foreign contracts. The result is that ninety per cent. of the cotton purchased by appellants and other cotton buyers at Greenwood is purchased to fill foreign contracts of sale, and the balance of ten per cent is sold by them locally, as above stated. The facts demonstrate that the foreign business cannot be carried on without, at the same time, conducting the local business. That is true because they are so integrated into each other as to be inseparable.
The city of Greenwood, as it was authorized to do by statute, passed an ordinance, the provisions of which are indicated by its title in this language: "An ordinance levying an annual tax on privileges conducted within the limits of the municipality known as the city of Greenwood to an amount equal to fifty per centum of the annual tax imposed on such privileges by the state of Mississippi under chapter 88 of the Laws of Mississippi for 1930, and providing penalties." By section 3 of the ordinance, section 225 of chapter 88 of the Laws of 1930 *Page 869 
was adopted. This action by the municipality was authorized by section 2549, Code 1930, which provides, in substance, that all offenses under the penal laws of the state which are misdemeanors shall, when so provided by general ordinance of the municipality, be offenses against the municipality when committed within its corporate limits, and upon conviction thereof the same punishment shall be imposed by the municipality as is provided by the laws of the state with regard to such offenses against the state, but not in excess of the maximum penalty which may be imposed by municipal corporations.
Section 3 of the ordinance is in this language: "All persons liable for privilege taxes who shall fail to procure the license therefor before beginning the business for which a privilege tax is required by the terms of this ordinance, or who shall fail to renew during the month in which it is due the license on a business for which he has theretofore procured a privilege license, shall in each or either instance, be liable for double the amount of the tax required for such business and it is hereby made the duty of the city tax collector whose duty it is to collect the tax on such business, to collect the said tax penalties, issue a separate license for the tax for the penalty, and to endorse across the face of the license issued as a penalty the words `Collected as Damages,' and the said tax collector shall account for all such penalties as required to account for other privilege licenses, provided, however, that the provisions of this ordinance shall not be construed as infringing upon any statutory power of any state officer to collect due and unpaid licenses as now or may be provided for by the laws of the state of Mississippi. In addition to the hereinabove described penalty the delinquent tax payer shall be guilty of a misdemeanor and may be fined on conviction an amount not exceeding Fifty Dollars ($50.00)."
Before getting down to the exact question involved it *Page 870 
would be very well to have in mind the surrounding principles as declared by the Supreme Court of the United States. A product may be a part of interstate commerce before it begins its actual physical journey therein. Where goods are purchased in one state for transportation to another, the purchase is interstate commerce quite as much as the transportation. Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239. The buying and selling of goods for shipment beyond state lines is interstate commerce, notwithstanding that after the purchase some of the goods may be sold in local markets. Lemke v. Farmers' Grain Co., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458. The carrying of goods from one state to another, as the result of orders previously received from the originating state, is interstate commerce, and is not subject to license fees imposed by the state into which they are shipped. Wagner v. Covington,251 U.S. 95, 40 S.Ct. 93, 64 L.Ed. 157. The buying of grain in one state for shipment to markets in another state, if followed by such shipment, is interstate commerce. Shafer v. Farmers' Grain Co., 268 U.S. 189, 45 S.Ct. 481, 69 L.Ed. 909. The negotiation for the sale of goods which are in another state for the purpose of introducing them into the state into which the negotiation is made is interstate commerce. Crenshaw v. Ark.,227 U.S. 389, 33 S.Ct. 294, 57 L.Ed. 565; Weeks v. U.S.,245 U.S. 618, 38 S.Ct. 219, 62 L.Ed. 513. The sale and delivery of coal f.o.b. cars at the mine for transportation to purchasers in other states is interstate commerce. Pa. R. Co. v. Sonman Shaft Coal Co., 242 U.S. 120, 37 Sup. Ct. 46, 61 L.Ed. 188. The right to solicit or take orders for interstate commerce business is a part of interstate commerce, and not subject to state regulation. Vance v. W.A. Vandercook Co., 170 U.S. 438, 18 S.Ct. 674, 42 L.Ed. 1100. Where a commodity is a part of an actual constant and flowing stream out of a state from which the owner may draw part of it for *Page 871 
use in the state before reaching the state border, a tax on the flow is a burden on interstate commerce which the state cannot impose. Such a flow in interstate commerce is a reasonable class of business. Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229. A tax on flowing commerce does not become valid and constitutional because it applies to domestic commerce as well. Crew-Levick Co. v. Pa., 245 U.S. 292, 38 S.Ct. 126, 62 L.Ed. 295. A person cannot be required to pay a state line tax for the mere privilege of carrying on interstate or foreign commerce. City of Sault Ste. Marie v. International Transit Co., 234 U.S. 333, 34 S.Ct. 826, 58 L.Ed. 1337, 52 L.R.A. (N.S.) 574; Crutcher v. Ky., 141 U.S. 47, 11 S.Ct. 851, 35 L.Ed. 649.
Now coming directly to the question involved, the case of Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 608, 65 L.Ed. 1139, is decisive of the question — it is squarely in point. The principles there laid down govern; there is no escape. The ordinance in question imposes an unconstitutional burden on interstate commerce. A statute of the state of New Mexico imposed an excise tax of two cents for each gallon of gasoline sold or used, and an annual license tax of fifty dollars for each distributing station or place of business. The Continental Oil Company was engaged in both domestic and interstate business; ninety-four and five tenth per cent. of its business was intrastate, and the balance, five and five tenth per cent., was interstate. The Supreme Court held the gallonage tax of two cents valid as to domestic business and invalid as to interstate business, basing its decision, as I understand it, upon the ground that the two classes of business were separable — one could be carried on without the other. However, as to the privilege license of fifty dollars, the court held that the two classes of business could not be separated; that by the terms of the statute and its legal operation and effect this tax was imposed generally upon the entire business conducted, including *Page 872 
interstate commerce as well as domestic; and that the tax was therefore void. The court used this language in deciding the case:
"The act, in its second section, requires every distributor of gasoline to pay an annual license tax of fifty dollars for each distributing station or place of business or agency, requires it to be paid in advance, and renders it unlawful to carry on the business without having paid it. Section 8 declares that any person who shall engage or continue in the business of selling gasoline without a license shall be deemed guilty of a misdemeanor, and, upon conviction, be punished by fine or imprisonment, or both. The subject taxed is not in its nature divisible, as in the case of the excise tax. The imposition falls upon the entire business indiscriminately; and so does the prohibition against the further conduct of business without making the payment. By accepted canons of construction, the provisions of the act in respect of this tax are not capable of separation so as to confine them to domestic trade, leaving interstate commerce exempt. United States v. Reese, 92 U.S. 214, 221, 23 L.Ed. 563, 565; Trade-Mark Cases, 100 U.S. 82, 99, 25 L.Ed. 550, 553; Poindexter v. Greenhow, 114 U.S. 270, 304, 305, 330, 5 S.Ct. 903, 962, 29 L.Ed. 185, 197, 198, 207; Pollock v. Farmers' Loan  T. Co., 158 U.S. 601, 636, 15 S.Ct. 912, 39 L.Ed. 1108, 1125.
"No doubt the state might impose a license tax upon the distribution and sale of gasoline in domestic commerce if it did not make its payment a condition of carrying on interstate or foreign commerce. But the state has not done this by any act of legislation. Its executive and administrative officials have disavowed a purpose to exact payment of the license tax for the privilege of carrying on interstate commerce. But the difficulty is that, since plaintiff, so far as appears, necessarily conducts its interstate and domestic commerce in gasoline indiscriminately at the same stations and by the same agencies, *Page 873 
the license tax cannot be enforced at all without interfering with interstate commerce unless it be enforced otherwise than as prescribed by the statute — that is to say, without authority of law. Hence it cannot be enforced at all."
The ordinance of the city of Greenwood, as did the New Mexico statute, requires the payment of the license tax in advance, renders it unlawful to carry on the business without the payment of the tax, and provides that any person engaging in the business without obtaining the license is guilty of a misdemeanor, and on conviction subject to fine and imprisonment, or both, and in addition provides that he shall pay double the amount of the tax required.
Lemke v. Farmers' Grain Co., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458, also strongly supports the contention of appellants. It was held in that case that the business of buying grain in North Dakota, practically all of which was intended for shipment to and sale at terminal points in other states conformable to the usual and general course of business in the grain trade, was interstate commerce which a state could not regulate by a statute having the effect of burdening such commerce. The court held further that the essential feature of a state statute could not be eliminated by the courts for the purpose of saving the constitutionality of other parts of the statute.
The cases referred to and relied on in the majority opinion to sustain the legality of this tax are not in point, for in each of those cases the domestic and interstate business were separable, and the tax imposed, therefore, could be and was allocated to the domestic business, and left the interstate business untouched. That is not true of the tax here. The two classes of business are inseparable; the foreign commerce could not be carried on without the domestic business; the latter was a concomitant. The tax cannot be laid alone against the domestic business — the overage of ten per cent. — for in taxing that *Page 874 
the interstate business is necessarily taxed, for the simple reason that it cannot be carried on without this overage. In other words, under the facts in this case, the overage is as much a part of the interstate commerce as the ninety per cent. Appellants had the right, and did everything in their power, to carry on interstate commerce exclusively, but under the conditions existing they could not do so without carrying along this overage of ten per cent. This being true, the state could not tax one without taxing the other. If the state could reach down into the stream of interstate commerce and dip out the domestic business for state regulation without hampering the free flow of the stream, its regulation would be valid. On the other hand, if the separation of the domestic business from the foreign would interfere with the free flow of the stream, the action of the state would be illegal.