The states have no power to tax directly, or by license upon the
importer, goods imported from foreign countries or other states
while in their original packages, or before they have become
commingled with the general property of the state and lost their
distinctive character as imports.
In cases not arising under the police power, where an article is
made in one state and shipped in its original package in pursuance
of an order to a person in another state, to be there delivered on
payment of the agreed price, the sale is actually made in the
former state and the seller cannot by reason of the delivery of the
article and passing of the title of the property in the latter
state be subjected to a license tax imposed by it on persons
engaged in the sale of similar articles within that state.
This was a controversy between the sheriff of Person County,
North Carolina, on the one part, and the railway company and Mrs.
O. L. Satterfield, on the other, which might have been the subject
of a civil action, and which the parties agreed to submit, under
the Code of North Carolina, to the judge of the superior court upon
the following facts, and upon the question of the liability of the
defendants for a license tax under section 52 of "An Act to Raise
Revenue," ratified March 15, 1901.
Page 191 U. S. 442
Laws of 1901, p. 116. The material part of the section reads as
follows:
"Every manufacturer of sewing machines, and every person or
persons or corporation engaged in the business of selling the same
in this state, shall, before selling or offering for sale any such
machine, pay to the state treasurer, a tax of $350, and obtain a
license, which shall operate for one year from the date of the
issue."
The Norfolk & Western Railway Company, a Virginia
corporation, operates a railroad from its main line at Lynchburg,
Virginia, via Roxboro in Person County, North Carolina, to Durham
in the same state. This company had itself complied with the
revenue act of 1901, and paid a license tax for the privilege of
carrying on its business as a common carrier within the State of
North Carolina.
Sears, Roebuck & Company (incorporated), of the City of
Chicago, are manufacturers and dealers in sewing machines at
Chicago, Illinois.
The defendant, Mrs. Satterfield, a resident of Person County,
N.C. about November 1, 1901, sent an order by mail to Sears,
Roebuck & Co. for a sewing machine, which was shipped by them
as railroad freight from Chicago to Mrs. Satterfield at Roxboro,
the railway company at Chicago issuing, on behalf of itself and its
connecting railroad lines, a through bill of lading therefor under
which the sewing machine was to be delivered to Mrs. Satterfield on
surrender of the bill of lading, and payment of freight charges to
the delivering carrier, the Norfolk & Western Railway Co.
The bill of lading was sent by Sears, Roebuck & Co. by
express, C.O.D., to the express agent at Roxboro, who received from
Mrs. Satterfield the price of the sewing machine and delivered the
bill of lading to her. The express agent and the railway station
agent were one and the same person. Mrs. Satterfield, having paid
the purchase price, presented the bill of lading to the station
agent, tendered the freight charges, and demanded the delivery of
the sewing machine.
Page 191 U. S. 443
The railway company was willing, and would have delivered the
same had not the plaintiff, the sheriff and
ex officio tax
collector of Person County, insisted that Sears, Roebuck & Co.
could not sell the machine to Mrs. Satterfield without paying the
license tax of $350, and forbade the delivery of the machine until
the tax was paid, and thereupon levied upon the machine for such
tax. He also insisted that the railway company would, by delivering
the machine, be acting as the agent of Sears, Roebuck & Co.,
and would be liable to prosecution for misdemeanor in aiding and
abetting them in an unlawful sale of the sewing machine.
It also appears in the agreed statement of facts that other
machines were sent by the same consignors to various purchasers in
North Carolina, upon the lines of other interstate railroads, and
were delivered upon the presentation of other bills of lading under
the same conditions as above described.
The court found that Sears, Roebuck & Co. were indebted to
the state for $350 license tax; that the levy upon the machine was
lawful and valid, and plaintiff was ordered to sell the machine and
apply the proceeds to the payment of the tax. The judgment was
affirmed by the supreme court of the state. 130 N.C. 556.
Page 191 U. S. 446
MR. JUSTICE BROWN delivered the opinion of the Court.
To the ordinary mind, it seems a somewhat startling proposition
that a manufacturing corporation, located and doing its main
business in a distant city, having no manufactory in North
Carolina, no stock in trade, no place for the sale of its goods
there, and no agent authorized to sell them, can be compelled to
take out a license required of all those "engaged in the business
of selling," from the mere fact that it had done what hundreds of
others were doing daily -- sent a single machine there upon a
written order of a customer, and under an ordinary C.O.D.
consignment. If this may be done, the revenues of every state may
be largely increased by adopting a similar system, since a large
part of the business of retail shops in the principal cities is
done by orders received, filled, and the goods delivered in the
same way. Of course, it is impossible to estimate the number of
business houses in other states which are accustomed to collect
their accounts in this manner.
If this were the law, it would also follow that the consignor of
every cargo of wheat sent to New York for export under a bill of
lading, accompanied by a draft for the payment of the money in the
usual method, might be compelled to take out a license in the State
of New York as a dealer in produce, notwithstanding that all the
real business was done in Chicago or North Dakota.
So too, what the state may do directly it may authorize its
municipalities to do, and if, under legislative sanction, each of
the large towns in the State of North Carolina saw fit to adopt
Page 191 U. S. 447
a similar license tax, the consequence would be not a simple
interference with interstate commerce, but a practical destruction
of one important branch of it.
While it may be entirely true that the property in the thing
sold does not pass under a C.O.D. consignment until delivery of the
goods and payment to the carrier, and hence it may be said that the
sale is not completed until then, yet, as matter of fact, the
bargain is made, and the contract of sale completed as such, when
the order is received in Chicago and the machine shipped in
pursuance thereof.
A sale really consists of two separate and distinct elements:
first, a contract of sale, which is completed when the offer is
made and accepted; and, second, a delivery of the property which
may precede, be accompanied by, or follow, the payment of the
price, as may have been agreed upon between the parties. The
substance of the sale is the agreement to sell and its acceptance.
That possession shall be retained until payment of the price may or
may not have been a part of the original bargain, but in substance
it is a mere method of collection, and we have never understood
that a license could be imposed upon this transaction except in
connection with the prior agreement to sell, although, in certain
cases arising under the police power, it has been held that the
sale is not complete until delivery, and sometimes not until
payment. Were it not for the opinion of the Supreme Court of North
Carolina, we should have said that the words "engaged in the
business of selling the same within the state" had reference to the
word "selling" in its popular and ordinary sense of selling from a
stock on hand or upon a special order to a manufacturer, and not to
a mere method of collecting the money; but, however this may be, it
is evident the state courts could not give it a construction which
would operate as an interference with interstate commerce, and
that, upon this question, the opinion of this Court is
controlling.
The cases relied upon by the state do not support its
contention. In
Machine Co. v. Gage, 100 U.
S. 676, a Connecticut
Page 191 U. S. 448
corporation, manufacturing sewing machines at Bridgeport, had an
agency at Nashville, Tennessee, from which an agent was sent out to
sell machines. It was held that he was subject to a license tax
upon "all peddlers of sewing machines, without regard to the place
of growth or produce of material or manufacture." As it appeared
that the sale was made, and wholly made, in the State of Tennessee,
and apparently from a stock kept in that state through an agent of
the company, the case is not in point. This case was followed, upon
a similar state of facts in
Ement v. Missouri,
156 U. S. 296.
The case most earnestly pressed upon attention, however, is that
of
O'Neil v. Vermont, 144 U. S. 323.
This was a prosecution before a justice of the peace for selling,
furnishing, and giving away intoxicating liquors. The defendant was
a dealer in liquors at Whitehall, New York, and was in the habit of
receiving at his store orders for liquors from Vermont, accompanied
by a jug to contain the liquor, and the liquors, as in this case,
were sent under a C.O.D. consignment.
It was held by this Court that, as the only question considered
by the Supreme Court in its opinion was whether the liquor was sold
by O'Neil at Rutland or at Whitehall, and the court arrived at the
conclusion that the completed sale was in Vermont, that this
conclusion did not involve any federal question, and the writ of
error was dismissed. Mr. Justice Blatchford took express pains to
say that
"no point on the commerce clause of the Constitution of the
United States was taken in the county court, . . . or considered by
the Supreme Court of Vermont."
The case was put by the supreme court of the state solely upon
its police power. "If," said that court,
"an express company or any other carrier or person, natural or
corporate, has in possession within this state an article, in
itself, dangerous to the community, or an article intended for
unlawful or criminal use within the state, it is a necessary
incident of the police powers of the state that such article should
be subject to seizure for the protection of the community. "
Page 191 U. S. 449
It will thus be seen that the Supreme Court of Vermont
disclaimed the decision of the very question involved in this case
as to the power of the states to interfere with interstate commerce
by taxation of the thing imported, and the writ of error was
dismissed upon the ground that no federal question was presented
for its decision, and none was necessary to the determination of
the case. Mr. Justice Field, in his dissenting opinion, thought the
commerce clause of the Constitution was involved, and that the
transaction was a clear interference with commerce between the
states.
Upon the other hand, for the past seventy-five years, and ever
since the original case of
Brown v.
Maryland, 12 Wheat. 419, we have uniformly held
that states have no power to tax directly, or by license upon the
importer, goods imported from foreign countries or other states
while in their original packages or before they have become
commingled with the general property of the state and lost their
distinctive character as imports. In that case, a law of Maryland
required importers to take out a license before they could be
permitted to sell their imported goods. That was declared to be
void not only as a tax upon imports, but as an infringement upon
the power of Congress to regulate commerce. The case is one of the
most important ever decided by this Court, and has been adhered to
by a uniform series of decisions since that time.
In
Robbins v. Shelby Taxing District, 120 U.
S. 489, it was declared that a tax upon commercial
agents not having a business house in the state was
unconstitutional as a regulation of commerce when applied to
soliciting the sale of goods on behalf of individuals or firms
doing business in another state, Mr. Justice Bradley remarking,
apropos of what was subsequently decided in
O'Neil v.
Vermont,
"that the only way in which commerce between the states can be
legitimately affected by state laws is when, by virtue of its
police power and its jurisdiction over persons and property within
its limits, a state provides for the security of the lives, limbs,
health, and comfort of persons and the protection of property, or,
when it does those
Page 191 U. S. 450
things which may otherwise incidentally affect commerce, such as
. . . the imposition of taxes upon all property within the state,
mingled with and forming part of the great mass of property
therein. But, in making such internal regulations, a state cannot
impose taxes . . . upon property imported into the state from
abroad, or from another state, and not yet become part of the
common mass of property therein, . . . and no regulations can be
made directly affecting interstate commerce."
This case was affirmed in
Asher v. Texas, 128 U.
S. 129.
The same rule was applied in
Welton v. Missouri,
91 U. S. 275, and
Walling v. Michigan, 116 U. S. 446, to
a statute requiring the payment of a license from persons dealing
in merchandise not the growth, produce, or manufacture of the
state, and requiring no such license from persons selling goods
grown, produced, or manufactured within the state. In
McCall v.
California, 136 U. S. 104, a
license tax imposed upon the agent of a railroad between Chicago
and New York, soliciting business in San Francisco, was held to be
void. To the same effect are
Crutcher v. Kentucky,
141 U. S. 47;
Brennan v. Titusville, 153 U. S. 289, and
Stockard v. Morgan, 185 U. S. 27.
Finally, in
Caldwell v. North Carolina, 187 U.
S. 622, another of the same line of cases, it was held
that a city ordinance imposing a license upon every person engaged
in the business of selling or delivering picture frames, etc., was
an interference with interstate commerce so far as applied to
picture frames made in other states and shipped to an agent in the
State of North Carolina, and that the transaction was not taken out
of the protection of the commerce clause by the fact that the agent
placed the pictures in their proper frames, and delivered them to
the persons ordering them. Most of the prior cases are noticed in
this opinion.
Indeed, the cases upon this subject are almost too numerous for
citation, and the one under consideration is clearly controlled by
them. The sewing machine was made and sold in another state,
shipped to North Carolina in its original package
Page 191 U. S. 451
for delivery to the consignee upon payment of its price. It had
never become commingled with the general mass of property within
the state. While technically the title of the machine may not have
passed until the price was paid, the sale was actually made in
Chicago, and the fact that the price was to be collected in North
Carolina is too slender a thread upon which to hang an exemption of
the transaction from a rule which would otherwise declare the tax
to be an interference with interstate commerce.
The judgment of the Supreme Court of North Carolina is
therefore reversed and the case remanded to that court for further
proceeding not inconsistent with this opinion.
MR. JUSTICE HOLMES did not participate in the decision of this
case.
