A railroad which is a link in a through line of road by which
passengers and freight are carried into a state from other states
and from that state to other states is engaged in the business of
interstate commerce, and a tax imposed by such state upon the
corporation owning such road for the privilege of keeping an office
in the state for the use of its officers, stockholders, agents and
employs (it being a corporation created by another state) is a tax
upon commerce among the states, and as such is repugnant to the
Constitution of the United States.
The case is stated in the opinion.
Page 136 U. S. 115
MR. CHIEF JUSTICE LAMAR delivered the opinion of the Court.
The sixteenth section of an act of the Legislature of the
Commonwealth of Pennsylvania, approved June 7, 1879, provides as
follows:
"That from and after the first day of July, Anno Domini one
thousand eight hundred and seventy-nine, no foreign corporation,
except foreign insurance companies, which does not invest and use
its capital in this commonwealth, shall have an office or offices
in this commonwealth for the use of its offices, stockholders,
agents, or employees unless it shall have first obtained from the
auditor general an annual license so to do, and for said license
every such corporation shall pay into the state treasury, for the
use of the commonwealth, annually, one-fourth of a mill on each
dollar of capital stock which said company is authorized to have,
and the auditor general shall not issue a license to any
corporation until said license fee shall have been paid. The
auditor general and state treasurer are hereby authorized to settle
and have collected an account against any company violating the
provisions of this section, for the amount of such license fee,
together with a penalty of fifty percentum for failure to pay the
same,
provided that no license fee shall be necessary for
any corporation paying a tax under any previous section of this
act, or whose capital stock, or a majority thereof, is owned or
controlled by a corporation of this state which does pay a tax
under any previous section of this act."
Under the authority vested in him by that statute, the auditor
general of the state assessed a license tax against the Norfolk and
Western Railroad Company, a corporation existing under the laws of
Virginia and West Virginia, for each of the two years ending July
1, 1885, on its capital stock of $25,000,000 at the rate prescribed
in the act, amounting to
Page 136 U. S. 116
$6,250 a year, on account of its having an office for the use of
its officers, stockholders, agents and employees in the City of
Philadelphia. The case now before this Court involves the claim of
the state for the year ending July 1, 1884, only. As permitted by
the laws of Pennsylvania, the company appealed from the auditor
general's settlement to the Court of Common Pleas of Dauphin County
in that state. The case was tried in that court without the
intervention of a jury, under an act of the state legislature
approved April 22, 1874, and the court made the following findings
of fact:
"1. The defendant is a railroad corporation existing under the
laws of the States of Virginia and West Virginia, and its main line
and branches lie wholly within these states."
"2. Its line of railroad connects at several points with the
railroads of other corporations, and by virtue of these
connections, and certain traffic contracts and agreements, it has
become a link in a through line of road, over which, as part of the
business thereof, freight and passengers are carried into and out
of this commonwealth."
"3. Its authorized capital stock is twenty-five millions of
dollars."
"4. From July 1, 1883, to July 1, 1885, it had an office in this
commonwealth for the use its officers, stockholders, agents, and
employees. Its main office is at Roanoke, Virginia."
"5. During this period it expended a considerable amount of
money in Pennsylvania in the purchase of materials and supplies for
the use of its road; but, with trifling exceptions, it owns no
property, and has no capital invested for corporate purposes within
this commonwealth."
"6. It has paid no office license fee for the years named, as
required by ยง sixteen of the act of 1879 (P.L. 120). Upon this
section these settlements are based."
Judgment was rendered against the company on that finding,
sustaining the settlement made by the auditor general of the state,
for the sum of $7,503.12. That judgment having been affirmed by the
supreme court of the state, this writ of error was sued out. The
assignment of errors is to the effect that the court below erred in
refusing to sustain the following
Page 136 U. S. 117
points, urged by the company both in the trial court and in the
supreme court of the state,
viz.:
"(1) Inasmuch as the sixteenth section of the Act of June 7,
1879, denies to foreign corporations, and to the officers, agents,
and employees of foreign corporations, the right to have an office
or place of meeting in the State of Pennsylvania, the said section
is in conflict with clause one of Section two of Article IV of the
Constitution of the United States, which provides that 'the
citizens of each state shall be entitled to all privileges . . . of
citizens in the several states.'"
"(2) The sixteenth section of the Act of June 7, 1879, is an
abridgment of the privileges and immunities of the citizens of the
United States; it discriminates between corporations of the State
of Pennsylvania and corporations of other states; it discriminates
between corporations and natural persons having offices in
Pennsylvania; it discriminates between foreign corporations; it
denies to foreign corporations, and to natural persons connected
with such corporations, particularly this defendant and its
officers, agents, and employees, who were in the state maintaining
an office and doing business at and before the passage of the said
act, the equal protection of the laws, and is for these reasons
void because in conflict with Article XIV of the amendments to the
Constitution of the United States, and also because in conflict
with the act of Congress -- Revised Statutes, section 1977."
"(3) Inasmuch as the Norfolk and Western Railroad Company
engaged in the business of transporting freight and passengers to
or from other states out of or into the State of Pennsylvania, or
from other states to other states, passing through the State of
Pennsylvania, and for the successful carrying on of said interstate
business it is necessary for the said company to maintain one or
more offices in the State of Pennsylvania, therefore the sixteenth
section of the Act of June 7, 1879, if it requires that the said
company cannot lawfully maintain an office in said state without
first obtaining from the auditor general thereof a license so to do
and paying the fee prescribed by said section for said license,
then the said section is unconstitutional and void because in
conflict with
Page 136 U. S. 118
clause three of Section eight of Article I of the Constitution
of the United States, which provides that 'Congress shall have
power to regulate commerce with foreign nations and among the
several states.'"
The first two points are disposed of adversely to the company by
the decision of this Court in
Pembina Mining Co. v.
Pennsylvania, 125 U. S. 181. In
that case we held, following
Paul v.
Virginia, 8 Wall. 168, that corporations are not
citizens, within the meaning of clause 1, Section 2, Art. IV, of
the Constitution of the United States, declaring that "the citizens
of each state shall be entitled to all privileges and immunities of
citizens in the several states." And we also held that section 1 of
the Fourteenth Amendment to the Constitution, declaring that no
state shall "deny to any person within its jurisdiction the equal
protection of the laws," does not prohibit a state from imposing
such conditions upon foreign corporations as it may choose as a
condition of their admission within its limits.
See also
Philadelphia Fire Association v. New York, 119 U.
S. 110. The only question for consideration, therefore,
arises under the third assignment of error, above set forth. It is
well settled by numerous decisions of this Court that a state
cannot, under the guise of a license tax, exclude from its
jurisdiction a foreign corporation engaged in interstate commerce,
or impose any burdens upon such commerce within its limits. Some of
the cases sustaining this proposition are collected in
McCall
v. California, just decided,
ante, 136 U. S. 104, and
need not be repeated here.
The question before us is thus narrowed to the two following
inquires: (1) Was the business of this company in the State of
Pennsylvania interstate commerce? (2) If so, was the tax assessed
against it for keeping an office in Philadelphia for the use of its
officers, stockholders, agents, and employees a tax upon such
business? We have no difficulty in answering the first of these
inquires in the affirmative. Although the findings of fact are
somewhat meager on this question -- much more so, indeed, than the
undisputed evidence in the case warranted -- enough is stated in
the second paragraph of the
Page 136 U. S. 119
aforesaid finding to show that the company is engaged in
interstate commerce in the state. It is there said, in substance,
by virtue of its connections and certain traffic contracts with
other railroads, the Norfolk and Western Railroad Company
"has become a link in a through line of road, over which, as
part of the business thereof, freight and passengers are carried
into and out of this commonwealth."
That is to say, the business of the through line of railroad, of
which the plaintiff in error forms a part, or in which it is a
link, consists, in a measure, of carrying passengers and freight
into Pennsylvania from other states, and out of that state into
other states. It certainly requires no citation of authorities to
demonstrate that such business -- that is, the business of this
through line of railroad -- is interstate commerce. That being
true, it logically follows that any one of the roads forming a part
of or constituting a link in that through line is engaged in
interstate commerce, since the business of each one of those roads
serves to increase the volume of business done by that through
line.
On this point,
The Daniel
Ball, 10 Wall. 557,
77 U. S. 565,
is an authority. In that case, the steamer
Daniel Ball was
engaged in transporting goods on Grand River, wholly within the
State of Michigan, destined for other states, and goods brought
from other states destined for places in the State of Michigan, but
did not run in connection with, or in continuation of, any line of
vessels or railway leading to other states, and the contention was
that she was not engaged in interstate commerce. But this Court
held otherwise, and said:
"So far as she was employed in transporting goods destined for
other states, or goods brought from without the limits of Michigan
and destined to places within that state, she was engaged in
commerce between the states, and however limited that commerce may
have been, she was, so far as it went, subject to the legislation
of Congress. She was employed as an instrument of that commerce,
for whenever a commodity has begun to move as an article of trade
from one state to another, commerce in that commodity between the
states has commenced. The fact that several different and
independent agencies are employed
Page 136 U. S. 120
in transporting the commodity, some acting entirely in one state
and some acting through two or more states, does in no respect
affect the character of the transaction. To the extent in which
each agency acts in that transportation, it is subject to the
regulation of Congress."
See also Wabash &c. Railway Co. v. Illinois,
118 U. S. 557, and
cases cited.
We pass to the second inquiry above stated,
viz., was
the tax assessed against the company for keeping an office in
Philadelphia, for the use of its officers, stockholders, agents,
and employees, a tax upon the business of the company? In other
words, was such tax a tax upon any of the
means or
instruments by which the company was enabled to carry on
its business of interstate commerce? We have no hesitancy in
answering that question in the affirmative. What was the purpose of
the company in establishing an office in the City of Philadelphia?
Manifestly for the furtherance of its business interests in the
matter of its commercial relations. One of the terms of the
contract by which the plaintiff in error became a link in the
through line of road referred to in the findings of fact provided
that
"it shall be the duty of each initial road member of the line to
solicit and procure traffic for the Great Southern Despatch [the
name of said through line] at its own proper cost and expense."
Again, the plaintiff in error does not exercise or seek to
exercise in Pennsylvania any privilege or franchise not immediately
connected with interstate commerce and required for the purposes
thereof. Before establishing its office in Philadelphia, it
obtained from the secretary of the commonwealth the certificate
required by the act of the state legislature of 1874 enabling it to
maintain an office in the state. That office was maintained because
of the necessities of the interstate business of the company, and
for no other purpose. A tax upon it was therefore a tax upon one of
the means or instrumentalities of the company's interstate
commerce, and as such was in violation of the commercial clause of
the Constitution of the United States.
Gloucester Ferry Co. v.
Pennsylvania, 114 U. S. 196;
Philadelphia Steamship Co. v. Pennsylvania, 122 U.
S. 326, and cases cited;
McCall v. California,
just decided
ante, 136 U. S. 104.
Page 136 U. S. 121
For the foregoing reasons, the judgment of the court below
is reversed, and the case is remanded to that court for further
proceedings in conformity with this opinion.
MR. CHIEF JUSTICE FULLER, MR. JUSTICE GRAY, and MR. JUSTICE
BREWER dissented.