Where a telegraph company is doing the business of transmitting
messages between different states, and has accepted and is acting
under the telegraph law passed by Congress July 24th, 1866, no
state within which it sees fit to establish an office can impose
upon it a license tax or require it to take out a license for the
transaction of such business.
Telegraphic communications are commerce, as well as in the
nature of postal service, and if carried on between different
states, they are interstate commerce, and within the power of
regulation conferred upon Congress, free from the control of state
regulations except such as are strictly of a police character, and
any state regulations by way of tax on the occupation or business,
or requiring a license to transact such business, are
unconstitutional and void.
Page 127 U. S. 641
A general license tax on a telegraph company affects its entire
business, interstate as well as domestic or internal, and is
unconstitutional.
The property of a telegraph company situated within a state may
be taxed by the state as all other property is taxed, but its
business of an interstate character cannot be thus taxed.
The Western Union Telegraph Company established an office in the
City of Mobile, Alabama, and was required to pay a license tax
under a city ordinance, which imposed an annual license tax of $225
on all telegraph companies, and the agent of the company was fined
for the nonpayment of this tax. In an action to recover the fine,
he pleaded the charter and nature of occupation of the company and
its acceptance of the Act of Congress of July 24, 1866, and the
fact that its business consisted in transmitting messages to all
parts of the United States as well as in Alabama.
Held, a
good defense.
The case is stated in the opinion.
MR. JUSTICE BRADLEY delivered the opinion of the Court.
This was an action brought in the Mobile Circuit Court in the
State of Alabama by the Port of Mobile, a municipal corporation,
against Edward Leloup, agent of the Western Union Telegraph
Company, to recover a penalty imposed upon him for the violation of
an ordinance of said corporation, adopted in pursuance of the
powers given to it by the Legislature of Alabama and in force in
August, 1883. The ordinance was as follows, to-wit:
"Be it ordained by the Mobile Police Board that the license tax
for the year, from the 15th of March, 1883, to the 15th of March,
1884, be, and the same is hereby, fixed as follows: . . ."
"On telegraph companies, $225. . . ."
"Be it further ordained: for each and every violation of the
aforesaid ordinance the person convicted thereof shall be fined by
the recorder not less than one nor more than fifty dollars."
The complaint averred that the defendant, being the managing
agent of the Western Union Telegraph Company, a
Page 127 U. S. 642
corporation having its place of business in the said port of
Mobile, and then and there engaged in the business and occupation
of transmitting telegrams from and to points within the State of
Alabama and between the private individuals of the State of
Alabama, as well as between citizens of said state and citizens of
other states, committed a breach of said ordinance by neglecting
and refusing to pay said license to the said municipal corporation.
The complainant further averred that for this breach, the recorder
of the port of Mobile imposed on the defendant a fine of five
dollars, for which sum the suit was brought.
The defendant pleaded that at the time of the alleged breach of
said ordinance, he was the duly appointed manager at the port of
Mobile of the Western Union Telegraph Company. That said
company
"was, prior to the 5th day of June, 1867, a telegraph company
duly incorporated and organized under the laws of the State of New
York, and by its charter authorized to construct, maintain, and
operate lines of telegraph in and between the various states of the
Union, including the State of Alabama. That on said 5th day of
June, 1867, the said telegraph company duly filed its written
acceptance with the Postmaster General of the United States of the
restrictions and obligations of an act of Congress entitled 'An act
to aid in the construction of telegraph lines, and to secure to the
government the use of the same for postal, military, and other
purposes,' approved July 24, 1866. That in accordance with the
authority of its said charter and the said act of Congress and by
agreement with the railroad companies, the said telegraph company
constructed its lines, and was at the time of the said alleged
breach of said ordinance maintaining and operating said lines of
telegraph on the various public railroads leading into or through
the said port of Mobile, to-wit, the Mobile and Ohio Railroad, a
railroad extending from the said port of Mobile, in Alabama,
through the States of Mississippi, Tennessee, and Kentucky, to
Cairo, in the State of Illinois; the Louisville and Nashville
Railroad, extending from Cincinnati, in the State of Ohio, through
said port of Mobile, to New Orleans, in the State of
Page 127 U. S. 643
Louisiana, with a branch extending from said State of Alabama
over the Pensacola and Louisville Railroad to Pensacola, in the
State of Florida. That the said telegraph lines so running into or
through said port of Mobile connected with and extended beyond the
termini of the said railroads over other railroads, making
continuous lines of telegraph from the office of said company, in
said port of Mobile, to, through, and over all of the principal
railroads, post roads, and military roads in and of the United
States, and having offices for the transaction of telegraph
business in the departments at Washington, in the District of
Columbia, and in all of the principal cities, towns, and villages
in each of the United States, and in the territories thereof. That
all of said railroads so leading into and through the said port of
Mobile and elsewhere in the United States are public highways, and
that the daily mails of the United States are regularly carried
thereon, under authority of law and the direction of the Postmaster
General, and that said railroads and each of them are post roads of
the United States. That said telegraph lines are also constructed
under and across the navigable streams of the United States, in the
State of Alabama and in the other states of the union, but in all
cases said lines are so constructed and maintained as not to
obstruct the navigation of such streams and the ordinary travel on
such military and post roads. That the said telegraph company was,
before and during said year, commencing March 15, 1883, and now is
engaged in the business of sending and receiving telegrams over
said lines for the public between its said office in the port of
Mobile and other places in other states and territories of the
United States and to and from foreign countries; also in sending
telegraphic communications between the several departments of the
government of the United States and their officers and agents,
giving priority to said official telegraphic communications over
all other business. And defendant avers that said official
telegrams have been and are sent at rates which have been fixed by
the Postmaster General annually since the said 5th of June, 1867.
And defendant avers that as the manager of said company, and in its
name and under its direction and
Page 127 U. S. 644
appointment, and in no other manner or capacity, was he engaged
in said telegraph business at the time and the manner as alleged in
said complaint."
To this plea a demurrer was filed and sustained by the court,
and judgment was given for the plaintiff, and on appeal to the
Supreme Court of Alabama, this judgment was affirmed. The present
writ of error is brought to review the judgment of the supreme
court. That court adopted its opinion given on a previous occasion
between the same parties, in which the circuit court had decided in
favor of the defendant and its decision was reversed. In that
opinion, the supreme court said:
"The defense was that the ordinance is an attempt to regulate
commerce, and violative of the clause of the Constitution of the
United States which confers on Congress the 'power to regulate
commerce with foreign nations and among the several states.' The
circuit court held the defense good, and gave judgment against the
port of Mobile. Is the ordinance a violation of the Constitution of
the United States? We will not gainsay that this license tax was
imposed as a revenue measure -- as a means of taxing the business,
and thus compelling it to aid in supporting the city government.
That no revenue for state or municipal purposes can be derived from
the agencies or instrumentalities of commerce no one will contend.
The question generally mooted is how shall this end be attained? In
the light of the many adjudications on the subject, the ablest
jurists will admit that the line which separates the power from its
abuse is sometimes very difficult to trace. No possible good could
come of any attempt to collate, explain, and harmonize them. We
will not attempt it. We confess ourselves unable to draw a
distinction between this case and the principle involved in
Osborne
v. Mobile, 16 Wall. 479. In that case, the license
levy was upheld, and we think it should be in this.
Joseph v.
Randolph, 71 Ala. 499."
In approaching the question thus presented, it is proper to note
that the license tax in question is purely a tax on the privilege
of doing the business in which the telegraph company was engaged.
By the laws of Alabama in force at the time this tax was imposed,
the telegraph company was
Page 127 U. S. 645
required, in addition, to pay taxes to the state, county, and
port of Mobile on its poles, wires, fixtures, and other property at
the same rate and to the same extent as other corporations and
individuals were required to do. Besides the tax on tangible
property, they were also required to pay a tax of three-quarters of
one percent on their gross receipts within the state.
The question is squarely presented to us, therefore, whether a
state, as a condition of doing business within its jurisdiction,
may exact a license tax from a telegraph company, a large part of
whose business is the transmission of messages from one state to
another and between the United States and foreign countries, and
which is invested with the powers and privileges conferred by the
act of Congress passed July 24, 1866, and other acts incorporated
in Title LXV of the Revised Statutes? Can a state prohibit such a
company from doing such a business within its jurisdiction unless
it will pay a tax and procure a license for the privilege? If it
can, it can exclude such companies, and prohibit the transaction of
such business altogether. We are not prepared to say that this can
be done.
Ordinary occupations are taxed in various ways, and in most
cases legitimately taxed. But we fail to see how a state can tax a
business occupation when it cannot tax the business itself. Of
course the exaction of a license tax as a condition of doing any
particular business is a tax on the occupation, and a tax on the
occupation of doing a business is surely a tax on the business.
Now we have decided that communication by telegraph is commerce,
as well as in the nature of postal service, and, if carried on
between different states, it is commerce among the several states,
and directly within the power of regulation conferred upon
Congress, and free from the control of state regulations except
such as are strictly of a police character. In the case of
Pensacola Telegraph Company v. Western Union Telegraph
Company, 96 U. S. 1, we held
that it was not only the right but the duty of Congress to take
care that intercourse among the states and the transmission of
intelligence
Page 127 U. S. 646
between them be not obstructed or unnecessarily encumbered by
state legislation, and that the Act of Congress passed July 24,
1866, above referred to, so far as it declares that the erection of
telegraph lines shall, as against state interference, be free to
all who accept its terms and conditions, and that a telegraph
company of one state shall not, after accepting them, be excluded
by another state from prosecuting its business within her
jurisdiction, is a legitimate regulation of commercial intercourse
among the states, and is also appropriate legislation to execute
the powers of Congress over the postal service. In
Western
Union Telegraph Co. v. Texas, 105 U.
S. 460, we decided that a state cannot lay a tax on the
interstate business of a telegraph company, as it is interstate
commerce, and that, if the company accepts the provisions of the
act of 1866, it becomes an agent of the United States so far as the
business of the government is concerned, and state laws are
unconstitutional which impose a tax on messages sent in the service
of the government or sent by any persons from one state to another.
In the present case it is true, the tax is not laid upon individual
messages, but it is laid on the occupation, or the business of
sending such messages.
It comes plainly within the principle of the decisions lately
made by this Court in
Robbins v. Taxing District of Shelby
County, 120 U. S. 489, and
Philadelphia & Southern Steamship Co. v. Pennsylvania,
122 U. S. 326.
It is parallel with the case of
Brown v.
Maryland, 12 Wheat. 419. That was a tax on an
occupation, and this Court held that it was equivalent to a tax on
the business carried on (the importation of goods from foreign
countries), and even equivalent to a tax on the imports themselves,
and therefore contrary to the clause of the Constitution which
prohibits the states from laying any duty on imports. The Maryland
act which was under consideration in that case declared that "all
importers of foreign articles or commodities," etc., "and all other
persons selling the same by wholesale," etc., "shall, before they
are authorized to sell, take out a license, . . . for which they
shall pay fifty dollars," etc., subject to a penalty for neglect or
refusal. Chief Justice Taney, referring to the
Page 127 U. S. 647
case of
Brown v. Maryland in
Almy v.
California, 24 How. 169,
65 U. S. 173,
in which it was decided that a state stamp tax on bills of lading
was void, said:
"We think this case cannot be distinguished from that of
Brown v. Maryland. That case was decided in 1827, and the
decision has always been regarded and followed as the true
construction of the clause of the Constitution now in question. . .
. The opinion of the court, delivered by Chief Justice Marshall,
shows that [the case] was carefully and fully considered by the
Court. And the Court decided that this state law [the Maryland law
under consideration in
Brown v. Maryland] and the mode of
imposing it, by giving it the form of a tax on the occupation of
the importer, merely varied the form in which the tax was imposed
without varying the substance."
But it is urged that a portion of the telegraph company's
business is internal to the State of Alabama, and therefore taxable
by the state. But that fact does not remove the difficulty. The tax
affects the whole business without discrimination. There are
sufficient modes in which the internal business, if not already
taxed in some other way, may be subjected to taxation, without the
imposition of a tax which covers the entire operations of the
company.
The state court relies upon the case of
Osborne v.
Mobile, 16 Wall. 479, which brought up for
consideration an ordinance of the city requiring every express
company or railroad company doing business in that city and having
a business extending beyond the limits of the state to pay an
annual license of $500; if the business was confined within the
limits of the state, the license fee was only $100; if confined
within the city, it was $50, subject in each case to a penalty for
neglect or refusal to pay the charge. This Court held that the
ordinance was not unconstitutional. This was in December term,
1872. In view of the course of decisions which have been made since
that time, it is very certain that such an ordinance would now be
regarded as repugnant to the power conferred upon Congress to
regulate commerce among the several states.
Page 127 U. S. 648
A great number and variety of cases involving the commercial
power of Congress have been brought to the attention of this Court
during the past fifteen years which have frequently made it
necessary to reexamine the whole subject with care, and the result
has sometimes been that in order to give full and fair effect to
the different clauses of the Constitution, the Court has felt
constrained to recur to the fundamental principles stated and
illustrated with so much clearness and force by Chief Justice
Marshall and other members of the Court in former times, and to
modify in some degree certain
dicta and decisions that
have occasionally been made in the intervening period. This is
always done, however, with great caution and an anxious desire to
place the final conclusion reached upon the fairest and most just
construction of the Constitution in all its parts.
In our opinion, such a construction of the Constitution leads to
the conclusion that no state has the right to lay a tax on
interstate commerce in any form, whether by way of duties laid on
the transportation of the subjects of that commerce or on the
receipts derived from that transportation or on the occupation or
business of carrying it on, and the reason is that such taxation is
a burden on that commerce, and amounts to a regulation of it, which
belongs solely to Congress. This is the result of so many recent
cases that citation is hardly necessary. As a matter of convenient
reference, we give the following list:
Case of
State Freight Tax, 15 Wall. 232;
Pensacola
Telegraph Co. v. Western Union Telegraph Co., 96 U. S.
1;
Mobile v. Kimball, 102 U.
S. 691;
Western Union Telegraph Co. v. Texas,
105 U. S. 460;
Moran v. New Orleans, 112 U. S. 69;
Gloucester Ferry Co. v. Pennsylvania, 114 U.
S. 196;
Brown v. Houston, 114 U.
S. 622;
Walling v. Michigan, 116 U.
S. 446;
Pikard v. Pullman Southern Car Co.,
117 U. S. 34;
Wabash Railway Co. v. Illinois, 118 U.
S. 557;
Robbins v. Shelby County Taxing
District, 120 U. S. 489;
Philadelphia & Southern Steamship Co. v. Pennsylvania,
122 U. S. 326;
Western Union Telegraph Co. v. Pendleton, 122 U.
S. 347;
Ratterman v. Western Union Telegraph Co.,
ante, 127 U. S. 411.
We may here repeat what we have so often said before --
Page 127 U. S. 649
that this exemption of interstate and foreign commerce from
state regulation does not prevent the state from taxing the
property of those engaged in such commerce located within the state
as the property of other citizens is taxed, nor from regulating
matters of local concern which may incidentally affect commerce,
such as wharfage, pilotage, and the like. We have recently had
before us the question of taxing the property of a telegraph
company in the case of
Western Union Telegraph Co. v.
Massachusetts, 125 U. S. 530.
The result of the conclusion which we have reached is that the
judgment of the Supreme Court of Alabama must be
Reversed and the cause remanded with instructions to reverse
the judgment of the Mobile Circuit Court, and it is so
ordered.