Fargo v. Michigan

after stating the case as above reported, delivered the opinion of the court.

The conténtion of the plaintiff in error is, that the statute of Michigan, the material parts of 'which are recited in the bill, is void as a regulation of commerce among the states, which, by the Constitution of the United States, is confided exclusively to Congress. Art. 1, § 8, clause 3. It will be observed that the bill shows that the tax finally assessed by7 the auditor of state against the transportation company was for the $28,890.01 of the gross receipts which the company had returned to the commissioner as money received for the transportation of freight from points without to points within the state .of Michigan, and from points within to points without that state, and that no tax was assessed on the $95,714.50 received for transportation, passing entirely through the state to and from other states.

The statute of the state of Michigan of 1883, under which this tax.is imposed, is entitled “ An act to provide for the taxr ation of persons, copartnerships, associations, car-loaning companies, corporations, and fast freight lines engaged in the business of running cars over'any of the railroads of this state, and hot being exclusively the property of any railroad company paying taxes on their gross receipts.” Sections 1 and 2 require "reports to be made to the Commissioner of Railroads of the gross amount of their receipts for freight earned within the limits of the state from all persons and corporations run

It will thus be seen that the act imposed a tax upon all the. gross receipts of the Merchants’ Dispatch Transportation Company, a corporation under the laws of the state ol New York, and with its principal place of business in that state, on account of -goods transported by it in the state of Michigan;. and th.e bill states that the "company carried no freight the transportation of which was between points exclusively within that state.

The subject of the attempts by the states to impose burdens upon what has come to be known as interstate commerce or traffic,- and which is called in the Constitution of the United ^States “commerce among1 the states,” by statutes which endeavor to regulate the exercise of that commerce, as to the mode bywhich.it shall be conducted, or by .the imposition of taxes upon the articles of commerce, or upon the transportation of those articles, fias been very" much agitated of late years. It has received .the attentive consideration of this court in many cases, and especially within the last five years, and has occupied Congress for á time quite as long. The recent act, approved February' 4, 1887, entitled “ An act to regulate commerce,” passed after many years of effort in that body, is evidence that Congress has at last undertaken a duty imposed upon it by the Constitution of the United States, in the declaration that it shall have power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” Congress has freely exercised this power so far as relates to commerce With foreign nations and with the Indian tribes but in regard to commerce among the several states it has, until this act, refrained from the passage'

"With reference to the utterances of this court until within a very short time past, as to what constitutes commerce among tbe several states, and also as to what enactments by the state legislatures are in violation of the constitutional provision on that subject, it may be admitted that the court has not always employed the same language, and that all of the judges of the court who have written opinions for it may not have meant precisely the same thing. Still we think the more recent opinions of the court have pretty clearly established principles upon that subject which can be readily applied to most cases requiring the construction of the constitutional provision, and that these recent decisions leave no room to doubt that the statute of Michigan, as interpreted by its Supreme Court in the present case, is forbidden as a regulation of commerce among the states, the power to make which is withheld from the state.

The whole question has been so fully considered in these decisions, and the cases themselves so carefully reviewed, that it would be doing little more than repeating the language of the arguments used in them to go over the ground again. The cases of the State Freight Tax and State Tax on Railway Gross Receipts, which were considered together and decided at the December term, 1812, and reported in 15 Wallace, pp. 232-328, present the points in the case now before us perhaps as clearly as any which have' been before this court. A statute of the state of Pennsylvania imposed upon all the railroad corporations doing business within that state, as well as steamboat companies and others engaged in the carrying trade, a specific tax on each two thousand pounds of freight carried, graduated according to' the articles transported. These were arranged into three classes, on the first of which a tax of two cents per ton was laid, upon the second three cents, and upon • the third five cents. The Beading Bailroad Company, a party to the suit, in making its report under this statute, divided its freight on which the tax was to be levied into two classes,

In the other case of State Tax on Railway Gross Receipts, 15 Wall. 284 , which was also a suit between the Reading Railway Company and the state of Pennsylvania, an act of the legislature of that state was relied on which declared that “ In addition to the taxes now provided by law, every railroad, canal, ahd transportation company incorporated under the laws of this Commonwealth, and not liable to the tax upon income under existing laws, shall pay to the Commonwealth a tax of three-fourths of one per centum upon the gross receipts of said company; the said tax shall be paid semiannually upon the first days’ of July and January,, commencing on the first day of July, 1866.”

This tax was held to be valid. The grounds upon which it was distinguished from the one in the preceding case upon freight' were, that the corporation, being a creation of the legislature of Pennsylvania and holding and enjoying all its franchises under the authority of that state, this was a tax upon the franchises which it derived from the state, and was for that reason within the power of the-state, and that, in determining the mode in which the state could tax the franchises which it had conferred, it was not limited to a fixed sum upon the value of them, but it could be graduated by and proportioned to either the value of the privileges granted, on the extent or results of their exercise. “Yery manifestly,” said the court, “ it is a tax upon the railroad company, measured in amount by the extent of its business, or the degree to which its franchise is exercised,” p. 234. Another reason given for the distinction is that “ the tax is not levied, and, indeed, such a tax cannot be, until the expiration of each half-year, and until the money received for. freights, and .from other sources of income, has actually come into the company’s hands.

The-distinction between that case, which is -mainly relied upon by the Supreme Court of Michigan in support of its decree, and the one which we now have before us, is very obvious, and is twofold: First. The corporation which was the subject of. that taxation was a Pennsylvania corporation, having the situs of -its business within the state which created it and endowed it with its franchises. IJpon these franchises thus conferred by the state, it was asserted, the' state had a right to levy a .tax. Second. This tax was levied upon money in the treasury of the corporation, upon property within the limits of the state, which-had passed beyond the stage of compensation for freight and had become like any other property or money hable tó taxation by the state. The case before us has neither of these qualities. The corporation upon which this tax is levied is not a corporation of the state of Michigan, and has never been organized ór acknowledged as a corporation of that state. The money which it received for freight carried within the state probably never was within the state, being paid to the company either at the beginning or the end of its route, and certainly at the time the tax was levied it was neither money nor property of the corporation within the state of Michigan.

The proposition that the states can, by way of a-tax upon business transacted within their limits, or upon the franchises of corporations which they have chartered, regulate such business or the affairs of such corporations, has often been set up

This is illustrated in the case of Cook v. Pennsylvania, 97 U. S. 566 . The state of Pennsylvania, by her laws, had laid a tax upon the amount of sales of goods made by auctioneers, and had so modified and amended this class of taxes that in the end it remained a. discriminating tax upon goods so sold imported from abroad. This court held that the tax Avhich the auctioneer Avas required to pay into the treasury was a tax upon the goods sold, and as this tax Avas three-quarters.of one per cent, upon foreign drugs, glass, earthenAvare, hides, marble Avork and dyeAAroods, that it Avas a tax upon the goods so described for the privilege of selling them at auction. The. argument Avas made that this Avás a tax exclusively upon the business of the auctioneer Avhich the state had a right to levy. In that case, as in others, it was claimed that the privilege of being an auctioneer derived from the state by license, Avas subject to such taxation as the state chose to impose, but the proposition'Avas overruled; and this court held that the tax Avas a regulation of commerce Avith foreign nations, and" that the fact that it Avas a tax upon the business of an auctioneer did. not relieve it from the objection arising from the constitutional provision.

The same question arose in the case of The Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196 . That company was ft corporation chartered by the state Of New -Jersey to run a .ferry carrying passengers and freight between the toAATi of Q-loucester, in that state, and the city of Philadelphia, in the state of Pennsylvania. - It had no property within the state of Pennsylvania, but it leased a landing-place or wharf

In the case of Pickard v. Pullman Southern Car Co., 117 U. S. 84 , decided at the last term of the court, it was shown that the legislature of Tennessee had imposed what it called a privilege tax under the constitution of that state of fifty dollars per annum upon every sleeping-car or coach run or used upon a railroad in that state, not owned, by the rail-. road company so running or rising it. This, it will be perceived, is very much like the tax in the case, before us, except that it is a specific tax of fifty dollars per annum upon the car instead of a tax upon the gross receipts arising from the use of the car by its owner. In that case, after an exhaustive review of the previous decisions in this class of cases by Mr. Justice Blatchford, who delivered the opinion of the court, it

Two cases have been decided at the present term of the court in which these. questions- have been considered, .one of them at least.involving the subject now under consideration, namely,- that of Robbins v. Taxing District of Shelby County, 120 U. S. 489 , A statute of that state, declared that “all drummers, and all persons not having ar regular licensed house of business .in the taxing district, offering for -sale or selling goods, wares, or merchandise, therein by sample, shall be required to pay to the county trustee .the sum of ten dollars per week, or twenty-five dollars per month, for such privilege.” Robbins was prosecuted for a violation of this law, and on the. trial it appeared that he was a resident and ■ a citizen of Cincinnati, Ohio,, who transacted the business of drumming in. the taxing district .of Shelby County, that is, soliciting .trade %. the use of samples, for the firm by which he was employed, whose place of business was in Cincinnati, and all the members of which were residents and citizens of that city. It was argued in that case, as in the others we have just considered, that the state had a right to. tax the-business of selling by samples goods to be afterwards delivered, and to impose a tax upon the persons called drummers engaged in that business. It was further insisted that, since, the license tax applied.to persons residing within -the state as well as to those who might come from other states to engage in that business, that it was not a tax discriminating against other states, or the products of other states, and was valid as a tax upon- that class of business done within the state. The whole subject is reconsidered again in this case by Mr. Justice Bradley, who delivered the opinion of the court, in which it is held that the business in .which Bobbins, was engaged, namely, that of, selling goods by sample, which were in the state of Ohio at the timé and were to be delivered in the city of Memphis, Tennessee, constituted interstate commerce, and that, so far as this tax was to.be imposed upon Bobbins for doing.that kind of

In the case of Wabash Railway Co. v. Illinois, 118 U. S. 557 , the question presented related to a statutory regulation of that state as to compensation for carrying freight., it was held by the Supreme Court of Illinois to embrace all contracts for transportation by railroad which came into or went out of the state, as well as that which was wholly within its limits, and although the controversy did not arise in regard to a tdx upon interstate commerce, yet the general question was fully considered as to what was interstate commerce and what was commerce exclusively within the' state, and how far the former could be thus regulated by a statute of a state. This court held in that case that no statute of a state in regard to the transportation of goods over railroads within its borders, which was a part of a continuous voyage to or from points outside of that state, and thus properly interstate commerce, could regulate the compensation to be paid for such transportation; that the carriage of passengers or freight between different points is commerce, and except where that is wholly and exclusively within the limits of a state it is not subject in its material features to be regulated by the state legislature.

In many other cases, indeed, in the three last cases- mentioned, the whole subject has been fully examined and considered with all the authorities, and especially decisions of this court relating thereto. -The result is so clearly against the statute of Michigan, as applied by its Supreme Court, that we think the judgment of that court cannot stand.

The decree of the Supreme Court of 'Michigam, is reversed, with directions for further proceedings in' accordance with this opinion.