Court Opinion

ID: 9418167
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:11:13.665816+00
Date Added: 2024-06-11T17:21:56.601696
License: Public Domain

Mr. Justice Holmes,
with whom concurred The Chief Justice and Mr. Justice McKenna,
dissenting.
I think that the. judgment of the Supreme Court of Kansas was right, and it will not take me long to give my reasons. I assume that a State cannot tax a corporation on commerce carried on by it with another State, or on property outside the jurisdiction of the taxing State, and I assume further that for that reason a tax on or measured by the value of the total stock of a corporation' like the Western Union Telegraph Company is void. But I also assume that it is not intended to deny or overrule what has been regarded as unquestionable since Bank of Augusta v. Earle, 13 Pet. 519, that as to foreign corporations seeking to do business wholly within a State, that State is the master, and may prohibit or tax such' business at will. Security Mutual Life Ins. Co. v. Prewitt, 202 U. S. 246, 249. Waters-Pierce Oil Co. v. Texas, 177 U. S. 28. Paul v. Virginia, 8 Wall. 168. I make the same assumption as to what has been decided twice ¿t least since I.have sat on this Bench, that the right to prohibit, regulate or tax foreign corporations in respect of business done wholly within a State is not taken away by the fact that they also arc engaged thorp in commerce among the States. Pullman Co. v. Adams, 189 U. S. 420. Allen v. Pullman’s Palace Car Co., 191 U. S. 171.
If it should be said that the corporation had a right to enter -the State for commerce with other States, and being there had the same right to use its property as others, I reply that this begs the question, if the premises be granted. If the corporation has the right to enter for one purpose and the State has *53a right to exclude its entry for another, the two rights can coexist. To say that the disappearance of the latter is an incident of the ownership of property there is to declare that what is allowed only for a limited purpose must have general results. I think it more logical and more true to the scheme of the Union to recognize that what comes in only for a special pul-póse can claim constitutional protection only in its use for that purpose and for nothing else. That, at all events, has been decided in the cases to which I have referred.
Now what has Kansas done? She has not undertaken to tax the Western Union. She has not attempted to impose an absolute liability for a single dollar. She simply has said to the company that if it wants to do local business it must pay a certain sum of money, just as Mississippi said to the Pullman. Company that if it wanted to carry on local traffic it must pay a certain sum. It does not matter if the sum is extravagant-. Even in the law the whole generally includes its parts. If the State may prohibit, it may prohibit with the privilege of avoiding the prohibition in a certain way. I hardly can suppose that the provision is made any the worse by giving a bad reason for it or by calling it by a bad name. I quite agree that we must look through form to substance. The whole matter is left in the Western Union’s hands. If the license fee is more than the local business will bear it can stop that business and avoid the fee. Whether economically wise or not, I am far from thinking that the charge is inherently vicious or bad.— If the imposition were absolute, or if the attempt were to oust the corporation from the State if it did not pay, the arguments that prevail would be apposite. But the State seeks only to oust the corporation from that part of its-business that the corporation has no right to do unless the State gives leave.
Of course the suggestion on the other side is that this is an attempt by indirection to break the taboo on the Telegraph Company’s business with other States. The local and the interstate business may be necess’ary each to the other to make the whole pay, Or the Telegraph Company might carry on the *54local business at a loss, for the sake of popularity or other indirect sources of gain. In the. last case the fee would come out of earnings that the State has no right to touch. But these' considerations do not reach their aim. To deny the right of Kansas to do as it chooses with the local business is to require the local business to help to sustain that between the. States. If the latter does not pay alone that is no reason for cutting down powers that up to this time the States always have possessed. If the Telegraph Company chooses to pay the. fee out of its other earnings that is its affair. It is master of the situation and can stop if it sees fit. 'Exactly this argument was pressed in Pullman Co. v. Adams, 189 U. S. 420, 421, and was rejected without dissent. See Ashley v. Ryan, 153 U. 8. 436, 444.
What I have said shows, I think, the fallacy involved in talking about unconstitutional conditions. Of course, if the condition was the making of a contract contrary to the policy of the Constitution of the United States, the contract would be void. That was all that was decided in Southern Pacific Co. v. Denton, 146 U. S. 202. But it does not follow that, if keeping the, .contract was made a condition of staying in the State, the condition would be void. I confess my inability to understand how a condition can be unconstitutional when attached to a matter over which a State has absolute arbitrary power. This court was equally unable to understand ¡bin Horn Silver Mining Co. v. New York, 143 U. 8. 305, 315. In that case it was said: “ Having the, absolute power of excluding the foreign corporation the State may, of course, impose such conditions upon permitting the. corporation to do business within its limits as it may judge expedient; and it may make the grant or privilege dependent upon the. payment of a specific license, tax, or a sum proportioned to the amount of its capital.”
The, consequence is the measure of the condition. When the only consequence, of a breach is a result that (.he State may bring about directly in the first place, the. condition cannot be unconstitutional. If after this decision the State of Kansas, *55without giving any reason,/sees fit simply to prohibit the Western Union Telegraph Company from doing any more local business there or from doing local business until it has paid $20,100, I shall bo curious to see upon what ground that legislation will be assailed. I am aware that the battle has raged with varying fortunes over this matter of unconstitutional conditions, but it appears to me ground for regret that the court so soon should abandon its latest decision, Security Mut. Life Ins. Co. v. Prewitt, 202 U. S. 246.
Finally, in the absence of contract, the power of the State is not affected by the fact that the corporation concerned already is in the State or even has been there for some time. Waters-Pierce Oil Co. v. Texas, 177 U. S. 28. National Council of the Junior Order of United American Mechanics v. State Council of Virginia, 203 U. S. 151, 163. Whatever the corporation may do or acquire there is'infected with the original weakness of dependence upon the will of the State. This is a general principle illustrated by many cases. . Thus a water company cannot take away the power of a city to establish rates by making contracts with its customers. Knoxville Water Co. v. Knoxville, 189 U. S. 434, 438. Private individuals cannot cut down the police power by-their" arrangements together. Manigault v. Springs, 199 U. S. 473, 480. A. city cannot limit the power of the legislature over property by. making a lease. Browne v. Turner, 176 Massachusetts, 9, 15. Or, to pass at once to the .most recent and most conspicuous example, the power of Congress to regulate a commerce among the States cannot be affected by the acquisition of property or growth of values dependent upon the continuance of its^ assent. United States v. Delaware & Hudson Co., 213 U. S. 366, 405, 406. In that case an enormous amount of property had been built up under direct encouragement from the States in which it was situated, and was saved from destruction’only by the restricted meaning given to the act. of Congress. The unrestricted power of Congress was affirmed in ptrong terms. See Also Union Bridge Co. v. United States, *56204 U. S. 364, 394. In Horn Silver Mining Co. v. New York, 143 U. S. 305, the corporation showed by its answer that it had employed part of its capital in manufacturing in New York. It. had got into the State and was at work .there, yet it was held liable to pay a percentage of its entire capital, although the greater part was outside the State. — But furthermore it is a short answer to this part of the argument that in the present case, according to decisions relied upon by the majority, the State could not have prevented the entry of the corporation, because it entered for the purpose of commerce with other States.
The Chief Justice and Mr. Justice McKenna concur in this dissent.
The late; Mr. Justice Pbokham took part in the consideration of the case and agreed with the. minority.