As a tax upon the seller of goods is a tax upon the goods
themselves, and a tax upon goods sold in one state delivered to a
common carrier and consigned to the purchaser in another state is
an illegal interference with interstate commerce, a state cannot
impose a privilege tax on agents of packing houses as to meats
shipped to him from another state merely for distribution to
purchasers from his principal; but where the supreme court of the
state has held that the tax is void as to interstate shipments and
applies only to the domestic business of the agent in the ordinary
course of trade, and all other such agents, whether of domestic or
foreign packing houses, are subject to the tax, that construction
will be accepted by this Court as in reality a part of the statute
itself, and the tax is within the power of the state and is not, as
to his domestic business, an interference with interstate commerce
even though all of the goods sold by an agent may be shipped to him
from another state.
Nor is such a tax void because it is laid upon the agents
themselves and cannot be apportioned between the interstate and the
domestic business carried on by the same person.
While such a tax might not apply to an agent whose domestic
business was purely nominal and strictly incidental to his
interstate business, it does apply to one whose domestic business
is a definite, although a minor, part of his business in the state,
as the application of the tax does not depend on the greater or
less magnitude of the business.
Page 197 U. S. 61
Where such a tax is imposed alike upon the managing agent both
of domestic and foreign houses, it does not deny to the agent of a
foreign house the equal protection of the laws.
A state has the right to classify occupations and impose
different taxes upon different occupations. The necessity for, and
the amount of, the tax are exclusively within the control of the
state legislature, and, in the absence of discrimination against
citizens of other states, its determination in regard thereto is
not open to criticism in this Court.
Such a tax does not impair the obligation of, or affect, any
contract previously made between the principal and the agent. The
power of taxation overrides any agreement of an employee to serve
for a specific sum.
This was an action by Kehrer against the tax collector of the
County of Fulton to recover back a tax of $200, with interest and
costs, paid to Stewart under protest, such tax having been assessed
against him under the general tax law of the state, of December 21,
1900, which provided that there should be assessed and collected
"upon all agents of packing houses doing business in this state,
$200 in each county where said business is carried on." Petitioner
charged the law to be a violation of the Fourteenth Amendment.
Defendant demurred to the petition, and this demurrer being
overruled, a writ of error was taken from the supreme court, which
reversed the judgment of the court below in overruling the
demurrer. 115 Ga. 184. Plaintiff thereupon amended his petition,
insisting that the tax denied him due process of law as well as the
equal protection of the law, impaired the obligation of his
contract with the firm, and was also in conflict with the commerce
clause of the Constitution of the United States. The defendant
demurred to the amended petition. The court sustained the demurrer,
and the supreme court affirmed its action. 117 Ga. 969.
Page 197 U. S. 64
MR. JUSTICE BROWN delivered the opinion of the Court.
This case arose upon the following state of facts:
Nelson Morris & Co., citizens of Illinois, were engaged, in
the City of Chicago, in the business of packing meats for sale and
consumption, and also had a place of business in Atlanta, Georgia,
where they sold their products at wholesale, having in their employ
several clerks and helpers, one of whom was the petitioner, who was
employed as chief clerk and manager at a salary of $25 per week.
The firm did not have anywhere within the State of Georgia any
packing house for slaughtering, dressing, curing, packing, or
manufacturing the products of any animals for food or commercial
use, but took orders, which were transmitted and filled at Chicago,
the meats sent
Page 197 U. S. 65
to Atlanta, and there distributed in pursuance of such orders.
Certain meats were also shipped from Chicago to Atlanta without a
previous sale or contract to sell. These were stored in the Atlanta
house of the firm in the original packages, and were kept and held
for sale, in the ordinary course of trade, as domestic business.
They were offered for sale to such customers as might require them,
and until sold were stored and preserved and remained the property
of the firm.
1. It was admitted by the Supreme Court of Georgia in its
opinion, and by both parties hereto, that a tax upon the seller of
goods is a tax upon the goods themselves, Brown v.
12 Wheat. 419; Welton v.
Missouri, 91 U. S. 275
that a tax upon goods sold in another state, delivered to a common
carrier, and consigned to the purchaser in the State of Georgia,
was an illegal interference with interstate commerce. Caldwell
v. North Carolina, 187 U. S. 622
Norfolk &c. Ry. Co. v. Sims, 191 U.
; Stone v. State,
117 Ga. 292. It was
therefore held that the tax, so far as applied to meats sold in
Chicago and shipped to the petitioner in Georgia for distribution,
could not be supported, but that, so far as the petitioner was
engaged in the business of selling directly to customers in
Atlanta, he was engaged in carrying on an independent business as a
wholesale dealer, and was liable to the tax.
This decision was correct. In carrying on the domestic business,
petitioner was indistinguishable from the ordinary butcher, who
slaughters cattle and sells their carcasses, and in principle it
made no difference that the cattle were slaughtered in Chicago and
their carcasses sent to Atlanta for sale and consumption in the
ordinary course of trade. Upon arrival there, they became a part of
the taxable property of the state. It made no difference whence
they came and to whom they were ultimately sold, or whether the
domestic and interstate business were carried on in the same or
different buildings. In this particular, the case is covered by
that of Brown v. Houston, 114 U.
, wherein it was held that coal mined
Page 197 U. S. 66
in Pennsylvania and sent by water to New Orleans, to be sold in
open market there on account of the owners in Pennsylvania, became
intermingled with the general property of the state, and liable to
taxation under its laws, although it might have been after arrival
sold from the vessel on which the transportation was made, without
being landed, and for the purpose of being taken out of the country
on a vessel bound to a foreign port. The same principle was applied
in Ement v. Missouri, 156 U. S. 296
which a license tax upon peddlers of goods, which made no
distinction between residents and products of the state and of
those of other states, was sustained. To the same effect is
Machine Company v. Gage, 100 U. S. 676
The case is readily distinguishable from that of Crutcher v.
Kentucky, 141 U. S. 47
wherein a state law requiring a license from agencies of foreign
express companies was held to be a regulation of interstate
commerce so far as applied to a corporation of another state
engaged in interstate business, although as incidental thereto it
did some local business by carrying goods from one point to another
in the State of Kentucky. The Court observed that, while the local
business was probably quite as much for the accommodation of the
people of the state as for the advantage of the company, this did
not obviate the objection to the tax; that the regulations as to
license and capital stock were imposed as conditions on the
companies carrying on the business of interstate commerce, which
was manifestly the principal object of its organization.
"These regulations are clearly a burden and a restriction upon
that commerce. Whether intended as such or not, they operate as
such. But taxes or license fees in good faith imposed exclusively
on express business carried on wholly within the state would be
open to no such objection."
The same doctrine was applied to telegraph companies in
Leloup v. Mobile, 127 U. S. 640
wherein a general license tax upon the telegraph company was held
to affect its entire business, interstate as well as domestic or
internal, and was unconstitutional. This case, however, must be
Page 197 U. S. 67
in connection with the Postal Telegraph Cable Co. v.
Charleston, 153 U. S. 692
wherein we held that a license tax upon a telegraph company on
business done exclusively within the state, and not including any
business done to or from points without the state, and not
including any business done for the government of the United
States, was an exercise of the police power, and not an
interference with interstate commerce. In line with this case is
that of Ratterman v. Western Union Tel. Co., 127 U.
, in which a percentage tax assessed upon receipts
of telegraph companies partly derived from interstate commerce and
partly from commerce within the state, and which were capable of
separation, but were returned and assessed in gross, and without
separation or apportionment, was held invalid in proportion to the
extent that such receipts were derived from interstate commerce,
but valid as applied to receipts from messages within the state. To
the same effect is Western Union Tel. Co. v. Alabama,
132 U. S. 472
So, if the stock of a transportation company be taxed by taking
as a basis of assessment such proportion of its capital stock as
the number of miles of railroad over which its cars are run within
the state bear to the whole number of miles over which its cars are
run throughout the United States, such assessment does not impinge
upon the power of Congress. Pullman's Car Company v.
Pennsylvania, 141 U. S. 18
case is still simpler if the tax be imposed in terms upon the
domestic commerce seeing that the corporation is free to abandon
the business taxed if it sees fit. Pullman Company v.
Adams, 189 U. S. 420
Allen v. Pullman Company, 191 U.
The only difficulty in this case arises from the fact that the
tax is laid not in terms upon the domestic business, nor upon the
gross receipts or profits which might be apportioned between
interstate and domestic business, but is a gross sum imposed upon
the managing agent of packing houses, regardless of the fact that
the greater portion of the business may
Page 197 U. S. 68
be interstate in its character. This contingency, however, is
met by the case of Osborne v. Florida, 164 U.
, wherein a license tax imposed upon express
companies doing business in Florida had been construed by the
Supreme Court of that state as applying solely to business of the
company done within the state, and not to its interstate business.
Accepting this construction of the state statute as in reality part
of the statute itself, we held that it did not in any way violate
the federal Constitution. The statute was sustained notwithstanding
the fact that ninety-five percent of the business was interstate in
its character, and only five percent consisted of carrying goods
and freight between points within the State of Florida.
Crutcher v. Kentucky, 141 U. S. 47
distinguished as one which prohibited the agent of a foreign
express company from carrying on business at all in that state
without first obtaining a license from the state. Said the
"It has never been held, however, that, when the business of the
company which is wholly within the state is but [not] a mere
incident to its interstate business, such fact would furnish any
obstacle to the valid taxation by the state of the business of the
company which is entirely local. So long as the regulation as to
the license or taxation does not refer to, and is not imposed upon,
the business of the company which is interstate, there is no
interference with that commerce by the state statute."
So, in the case under consideration, it was expressly held by
the Supreme Court of Georgia that that part of the Nelson Morris
& Company's business which consisted in shipping goods to
Atlanta to fill orders previously received, the goods being
delivered in accordance with such orders, was interstate commerce,
not subject to taxation within the state, and that, so far as
applied to that business, the tax was void. Accepting this
construction of the supreme court, we think the act, so far as
applied to domestic business, is valid. The record does not show
what proportion of such business is interstate and what proportion
is domestic, although it is conceded
Page 197 U. S. 69
that most of the business is interstate in its character. If the
amount of domestic business were purely nominal, as, for instance,
if the consignee of a shipment made in Chicago, upon an order
filled there, refused the goods shipped, and the only way of
disposing of them was by sales at Atlanta, this might be held to be
strictly incidental to an interstate business, and in reality a
part of it, as we held in Crutcher v. Kentucky,
141 U. S. 47
if the agent carried on a definite, though a minor, part of his
business in the state by the sales of meat there, he would not
escape the payment of the tax, since the greater or less magnitude
of the business cuts no figure in the imposition of the tax. There
could be no doubt whatever that, if the agent carried on his
interstate and domestic business in two distinct establishments,
one would be subject and the other would not be subject to the tax,
and, in our view, it makes no difference that the two branches of
business are carried on in the same establishment. The burden of
proof was clearly upon the plaintiff to show that the domestic
business was a mere incident to the interstate business.
2. The act in question does not deny to the petitioner the equal
protection of the laws, as the tax is imposed alike upon the
managing agent both of domestic and of foreign houses. In its first
opinion in this case, the supreme court held that the tax was a
vocation or occupation tax, and that it was not designed to apply
to every agent or employee of the company, but only to the managing
or superintending agent, who is the alter ego of the principal by
whom he is employed. There is no discrimination in favor of the
agents of domestic houses, and, while we may suspect that the act
was primarily intended to apply to agents of ultra
houses, there is no discrimination upon the face of the act, and
none, so far as the record shows, upon its practical
administration. As we have frequently held, the state has the right
to classify occupations and to impose different taxes upon
different occupations. Such has been constantly the practice of
Congress under the internal revenue laws. Cook v.
Page 197 U. S. 70
261, 196 U. S. 275
What the necessity is for such tax, and upon what occupations it
shall be imposed as well as the amount of the imposition, are
exclusively within the control of the state legislature. So long as
there is no discrimination against citizens of other states, the
amount and necessity of the tax are not open to criticism here.
3. The argument that the tax impairs the obligation of a
contract between the petitioner and Nelson Morris & Company is
hardly worthy of serious consideration. The power of taxation
overrides any agreement of an employee to serve for a specific sum.
His contract remains entirely undisturbed. There was no stipulation
for an employment for a definite period, and if there were, it is
inconceivable that the state should lose this right of taxation by
the fact that the party taxed had entered into an engagement with
his employer for a definite period. The tax is an incident to the
business, and probably might, under the terms of their contract, be
charged up against the employer as one of the necessary expenses of
carrying it on.
The judgment of the Supreme Court of Georgia is