Stockard v. Morgan,
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185 U.S. 27 (1902)
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U.S. Supreme Court
Stockard v. Morgan, 185 U.S. 27 (1902)
Stockard v. Morgan
Submitted March 19, 1902
Decided April 7, 1902
185 U.S. 27
Giving to the statute of Tennessee the same meaning that was given to it by the Supreme Court of that state, which this Court is bound to do, it is held that it violates the interstate commerce clause of the Constitution of the United States.
All the cases cited in the opinion of the court deny the right of a state to tax people representing owners of property outside the state for the privilege of soliciting orders within it, as agents of such owners, for property to be shipped to persons within the state.
Ficklen v. Shelby County Taxing District, 145 U. S. 1, distinguished from this case.
Although a state has general power to tax individuals and property within its jurisdiction, yet it has no power to tax interstate commerce, even in the person of a resident of the state.
This is a writ of error to the Supreme Court of the State of Tennessee, brought to review a judgment of that court reversing a judgment of the Court of Chancery of Hamilton County in favor of complainants, and dismissing their bill.
The complainants sought to enjoin the collection of a tax imposed upon them under a statute of Tennessee upon the ground that they were not liable for the tax because they were agents and brokers exclusively for the sale of the property of nonresident principals, and did no business of any kind for residents of the state. They also averred that the state statute, properly construed, did not include their business, but if it did, it was void as contravening the federal Constitution in its interstate commerce clause.
The defendants by answer averred that they sought to collect the tax under the authority of the statute of the State of Tennessee providing for the collection of a privilege tax on the occupation of the complainants as merchandise brokers, and that such statute was valid.
Other parties similarly situated commenced suits against the
defendants to obtain like relief. By an agreement which was approved by the court, all the cases were consolidated under the style of Stockard & Jones v. Morgan and Others, under which title it was agreed that they should thereafter proceed as one case.
The case came to trial in the chancery court upon the following agreed statement of facts:
"In this consolidated cause, the following agreement is made as to the facts relating to the matters in controversy, viz.:"
"It is agreed that the several complainants in the original bills, to-wit, J. H. McReynolds, Stockard & Jones, W. G. Oehmig, T. M. Carothers, and J. H. Allison are residents of Hamilton County, Tennessee."
"That said J. H. McReynolds has been carrying on business in Chattanooga, said county and state, during the present year, 1900; that said Stockard & Jones, W. G. Oehmig, T. M. Carothers, and J. H. Allison have been carrying on business in said city during the years 1897, 1898, 1899 and 1900."
"That the character of said business so carried on by the respective complainants, or the manner of conducting the business of each, is and has been as follows:"
"The complainant, as the representative of nonresident parties, firms, or corporations, solicits orders for goods from jobbers or wholesale dealers in Chattanooga, Tennessee, and when such orders are obtained sends them to his nonresident principal or principals. If an order is accepted, the goods are shipped by such nonresident principal or principals to the local jobber or wholesale dealer. Up to the time of the sale, the goods in all instances belong to the nonresident principal or principals, and are shipped to the State of Tennessee from another state."
"In making sales or soliciting orders for the goods, the complainant sometimes exhibits samples to the local jobber or wholesale dealer, and sometimes takes the orders without showing a sample."
"Unless complainant has been previously authorized by the principal or principals to sell at a fixed price, the orders are taken subject to acceptance or rejection by such nonresident principal or principals, who own the goods. "
"At the end of each month, or at stated periods, the complainant is paid a commission by such nonresident principal or principals for goods previously sold on accepted orders. No commission is paid on orders taken but rejected. Complainant does not receive for his services any pay or salary from any local jobber or dealer or resident of Tennessee, nor does he assume to represent or represent or hold himself out as representing, any resident of Tennessee, or negotiate any sales of goods for residents of Tennessee. His principals are all residents of other states of the United States, and the goods sold are shipped from such other state to the State of Tennessee for delivery to buyers who reside in Tennessee."
"The complainant has an office or 'headquarters' in Chattanooga, Tennessee, where he keeps samples, stationery, and other articles, but he travels around on foot daily or frequently in drumming or soliciting orders for goods, as before stated. His principals are specific parties, firms, or corporations, all nonresidents of Tennessee and residents of other states in the United States, and he does not represent or hold himself out as representing the public in general, or negotiate or sell for any resident of Tennessee."
"The defendants and solicitors for the State of Tennessee and Hamilton County contend that, under the facts, the complainants are 'merchandise brokers,' and each of them is bound for privilege taxes under the laws of Tennessee."
"That J. H. McReynolds should pay a privilege tax for 1900 to the State of $20.00, and to the County of $20.00."
"That Stockard & Jones should pay to the state $20.00 for each of the years 1897, 1898, 1899, and 1900, and a like sum for each of said years to the County of Hamilton."
"That each of the other complainants owe the same sums as Stockard & Jones."
"That all of the complainants should be held for proper penalties, costs, and attorneys' fees if they are held liable for such taxes."
"The complainants contend that they are engaged exclusively in interstate commerce, and are not bound for such privilege taxes; further, that the revenue laws of Tennessee applicable
to 'merchandise brokers' do not include these complainants so as to make them subject to privilege taxes, but even if such laws do include complainants, yet they are inoperative and void as against complainants, who are engaged solely in interstate commerce."
By agreement of the parties, two questions only were argued in the state court: (1) whether or not complainants were merchandise brokers and subject by statute to tax as such; (2) whether or not their business constituted interstate commerce, and therefore was beyond the reach of the state's taxing power.
The chancellor held that the complainants were not liable for the privilege tax, and enjoined its collection perpetually and adjudged the costs against Hamilton County. From the judgment so entered, the defendants appealed to the supreme court of the state, which, as stated, reversed the judgment and dismissed the bill, holding the complainant's business was covered by the statute, and that it did not violate the Constitution of the United States.