Where orders are taken in one state for goods to be supplied
from another state, which orders are transmitted to the latter
state for acceptance or rejection, and filled from stock in that
state, the business is interstate commerce and not subject to a
state license tax.
Crenshaw v. Arkansas, 227 U.
S. 389.
The separate license tax imposed by the statutes of Alabama on
the business of selling or delivering sewing machines, either in
person or through agents, for each county and for each wagon and
team used in delivering the same is not, as to a corporation having
regular stores established in the different counties to which it
sends its goods in bulk and from which they are sold on orders to
be approved by it at
Page 233 U. S. 305
its home office, unconstitutional as denying due process of law,
or as interfering with interstate commerce, or as denying equal
protection of the law because it does not apply to merchants
selling such machines at regularly established places of
business.
In determining whether a state tax statute is constitutional,
there is a presumption that the legislature intended to tax only
that which it had the constitutional power to tax, and the statute
will be sustained if full and fair effect can be given to its
provisions as confined wholly to intrastate business.
While a state license statute, if void in part, may be wholly
void where its provisions are not separable, it may be sustained so
far as it relates to business wholly intrastate and held
inapplicable as to interstate commerce, and so
held that
the Alabama sewing machine license tax is constitutional as to
those agencies of a foreign corporation which carry on an
intrastate business and inapplicable as to those agencies of such
corporation which carry on a wholly interstate business.
The classification of merchants selling sewing machines at
regular places of business, as distinguished from a manufacturer
selling them by traveling salesmen, is not so unreasonable and
arbitrary as to render it a denial of equal protection of the law
under the Fourteenth Amendment.
The state has a wide range of discretion in establishing classes
for revenue taxes, and its laws will not be set aside as
discriminatory if there is any rational basis for the
classification.
The court below rightly held that a foreign corporation having
an agency in each county of the state and selling sewing machines
by traveling salesmen as well as at the agencies was subject to the
license intended to be imposed on itinerant sales by the statute of
Alabama, and that it fell without the excepted class of merchants
although the latter made deliveries of machines by wagon.
Appellant, which is a New Jersey corporation carrying on a
mercantile business in many places in the State of Alabama in the
sale and renting of sewing machines, in part from regularly
established places of business and in part by means of delivery
wagons going from place to place in the respective counties in
which its stores are located, filed its bill of complaint against
appellees, who are the agents of the state, charged with the
administration of the tax laws, and therein sought to restrain
by
Page 233 U. S. 306
injunction the enforcement against it of the state tax
prescribed by § 32 of an act for providing revenues, approved March
31, 1911 (Session Acts, p. 180), which reads as follows:
"Sec. 32. Sewing machines. -- Each person, firm, or corporation
selling or delivering sewing machines either in person or through
agents, shall pay $50 annually for each county in which they may
sell or deliver said articles. And for each wagon and team used in
delivering or displaying the same an additional sum in each county
of $25 annually; but this section shall not apply to merchants
selling the above enumerated articles at their regularly
established places of business."
And also to enjoin the enforcement of county taxes, amounting to
fifty percentum of the state tax prescribed by the above section,
which might be imposed in the several counties for county purposes
under § 33F of the same act.
The bill, as amended, besides showing diverse citizenship of the
parties, avers that complainant is qualified under the state laws
to do business within the state as a foreign corporation, and has
established, in thirty counties of the state, thirty-six regular
places of business or stores, which are conducted by it; that
complainant buys sewing machines and parts to supply breakage and
defects therein and a variety of sewing machine accessories without
the state, causes them to be shipped to its places of business
within the state, and keeps them at these places for sale to the
general public.
In each of the counties, except the County of Russell, the
business is conducted as follows: a resident agent is employed for
the purpose of making contracts for the sale and renting of
machines in that county and that county only; machines are
delivered to such agents and placed aboard wagons and taken by the
agents into the
Page 233 U. S. 307
rural districts for the purpose of soliciting customers either
to purchase or to rent machines; when a buyer is found, the machine
is delivered by the agent to the customer, who either pays cash for
it or executes an installment note in which the company retains
title to the machine, or an installment note secured by a mortgage
upon the machine and other property; such sale on credit is made
subject to the approval of the company, and if not approved, the
installment note is returned to the maker and the machine returned
to the company. If the agent makes a contract for the sale of the
machine for cash, this also is subject to the approval or
disapproval of complainant. The final consummation of all sales is
at one of complainant's established places of business. The same
agents are engaged also in renting machines and collecting the rent
arising therefrom, and the greater portion of their time is
consumed in such renting, this constituting at least seventy
percentum of the business done by complainant in the state. Rented
machines are placed aboard wagons and taken by the agents into the
rural districts. Each of these agents is attached to some one of
the stores or places of business operated by complainant, and the
machines handled by the agent are sent to him from the place of
business to which he is attached, or taken from that place of
business by him upon the wagon which he drives. Besides this,
complainant sells and rents machines at its regularly established
places of business, and delivers such machines to the buyers or
renters by the use of wagons and teams, and in those counties where
complainant has established places of business, machines sold or
rented at those places are delivered by the same agents and with
the same wagons that are used in carrying machines into the rural
districts. It is averred that the machines are of the average
weight of 135 pounds. That there are many other merchants in the
state who sell sewing machines of a different manufacture
Page 233 U. S. 308
at their places of business, and the average weight of these
also is about 135 pounds; that, on account of their weight, it is
the custom and practice of complainant, and of the other merchants
also, to make delivery by the use of wagons and teams, whether the
sales are made at their places of business or otherwise, and that
it is impracticable to conduct the business without delivery by
wagon.
With respect to the business conducted in Russell County,
Alabama, it is averred that complainant operates a regularly
established place of business in the City of Columbus, Georgia,
where sewing machines and accessories are kept for sale, and in
connection with this business, agents are employed to deliver
machines and accessories in Russell County, which adjoins the
Georgia state line, and that complainant does not sell or deliver
any sewing machines or accessories in Russell County except in the
following manner, namely, its agents use wagons and teams in going
about and displaying sample machines, and thereby obtain orders for
machines and accessories, which orders are transmitted by the
agents to the complainant at Columbus, Georgia, for acceptance or
rejection, and if accepted, the machines or other articles so
ordered are taken out of stock there, placed upon wagons, and
thereby delivered to the purchasers in Russell County.
The bill is based upon the contention that § 32 of the tax law
violates the Constitution of the United States in that it is a
regulation of interstate commerce, and contravenes the "due
process" and "equal protection" clauses of the Fourteenth
Amendment, and also that it violates the Constitution of Alabama;
and, finally, that appellant is within the exception of the
statute.
To the original bill (prior to the amendments) demurrers were
filed, and were sustained as to the whole bill except paragraph 6,
which set forth the mode of conducting complainant's business in
Russell County. As to this, the court held that the facts showed a
case of interstate
Page 233 U. S. 309
commerce, and that the act had no application to it. 199 F.
654.
The amendments having been made, the amended bill was submitted
upon the same demurrers, which were made to apply to the bill as
amended. Again the court sustained the demurrers except as to
paragraph 6, relating to Russell County, and as to this overruled
them. Defendants then filed an answer admitting the allegations of
paragraph 6, and the cause was submitted upon bill and answer, with
the result that, by final decree, relief was accorded to
complainant as to the license tax sought to be collected in Russell
County, and in other respects relief was denied, and the bill
dismissed. Because of the constitutional questions, a direct appeal
to this Court was taken under Judicial Code, § 238.
Page 233 U. S. 312
MR. JUSTICE PITNEY, after making the foregoing statement,
delivered the opinion of the Court.
With respect to the business conducted in Russell County, the
decree of the district court is not now directly under review, but,
at any rate, it was clearly correct under
Crenshaw v.
Arkansas, 227 U. S. 389.
With respect to the other counties, the correctness of the
decision, so far as the commerce clause is concerned, seems to us
equally clear under
Ement v. Missouri, 156 U.
S. 296.
But it is argued that the courts cannot properly sustain a
statute which in direct terms applies to all commerce by
restricting it to cases of actual interference with interstate
dealings. To quote from the brief:
"All such laws as will necessarily affect interstate commerce
when it arises are void. We do not have to await actual results on
actual commerce to pronounce them void. . . . And, of course, a
statute of this character, which is void as a whole, from its unity
of character, will as readily be so declared in a case in which
only intrastate commerce may be actually involved as otherwise. The
lower court was
Page 233 U. S. 313
thus clearly in error in limiting the invalidity of the statute
to the dealing in Russell County."
This argument, we think, misses the point. The statute under
consideration does not, in direct terms or by necessary inference,
manifest an intent to regulate or burden interstate commerce. Full
and fair effect can be given to its provisions, and an
unconstitutional meaning can be avoided, by indulging the natural
presumption that the legislature was intending to tax only that
which it constitutionally might tax. So construed, it does not
apply to interstate commerce at all. The statute provides for a
license or occupation tax. Normally, as the averments of the bill
sufficiently show, the occupation may be and is conducted wholly
intrastate, and free from any element of interstate commerce. The
fact that, as carried on in Russell County, a like occupation is
conducted with interstate commerce as an essential ingredient is
wholly fortuitous.
Nor has the tax that "unity of character" upon which the
argument necessarily depends. The cases cited in support of the
insistence that the act must be adjudged totally void because, if
applied in Russell County, it would burden interstate commerce are
readily distinguishable. In
United States v. Reese,
92 U. S. 214,
92 U. S. 221,
there was a penal statute couched in general language broad enough
to cover wrongful acts without as well as within the constitutional
inhibition, and it was held that the Court could not reject the
unconstitutional part and retain the remainder, because it was not
possible to separate the one from the other. In
Trade-Mark
Cases, 100 U. S. 82,
100 U. S. 99,
the Court, upon the same principle, declined to sustain in part a
trademark law so framed as to be applicable by its terms to all
commerce by confining it to the interstate commerce that alone was
subject to the control of Congress. In
Leloup v. Port of
Mobile, 127 U. S. 640,
127 U. S. 647,
the Court held a general license tax imposed by the State
Page 233 U. S. 314
of Alabama upon the business of a telegraph company in part
interstate and in part internal to be unconstitutional, and held
that, since the tax affected the whole business without
discrimination, it could not be sustained with respect to that
portion of the business that was internal, and therefore taxable by
the state. To the same effect are
Norfolk &c. R. Co. v.
Pennsylvania, 136 U. S. 114,
136 U. S. 119;
Crutcher v. Kentucky, 141 U. S. 47,
141 U. S. 62;
Galveston &c. Ry. Co. v. Texas, 210 U.
S. 217;
Western Union Telegraph Co. v. Kansas,
216 U. S. 1,
216 U. S. 27. In
Williams v. Talladega, 226 U. S. 404,
226 U. S. 419,
there was a state license tax that operated without exemption or
distinction upon the privilege of carrying on a business, a part of
which was that of an essential governmental agency constituted
under a law of the United States. It was held that the tax
necessarily included within its operation this part of the
business, and, since this was unconstitutional, the whole tax was
rendered void.
The statute now under consideration differs materially, in that
it deals separately with the business as conducted in each county
of the state, and provides for separate taxes to be laid for each
county. And the facts as averred in the bill of complaint show that
with respect to all of the counties in which appellant does
business, excepting only the county of Russell, there is no element
of interstate commerce. In each county there is a store or regular
place of business, from which all of the local agents for the same
county are supplied with sewing machines and appurtenances that are
to be taken into the rural districts for sale or renting, and all
transactions that enter into the sale or renting are completely
carried out within a single county.
It would be going altogether too far to say that appellant,
being properly taxable, and without the least interference with
interstate commerce, in twenty-nine counties of the state, could
obtain immunity from all such taxation
Page 233 U. S. 315
by establishing in one county a system of business that involved
transactions in interstate commerce.
So far as the Fourteenth Amendment is concerned, the argument is
confined to the "equal protection" clause. It is said there is no
sufficient ground for a distinction, with respect to taxing the
occupation, between the business of selling sewing machines from a
regularly established store and the business of selling them from a
delivery wagon. But there is an evident difference, in the mode of
doing business, between the local tradesman and the itinerant
dealer, and we are unable to say that the distinction made between
them for purposes of taxation is arbitrarily made. In such matters,
the states necessarily enjoy a wide range of discretion, and it
would require a clear case to justify the courts in striking down a
law that is uniformly applicable to all persons pursuing a given
occupation on the ground that persons engaged in other occupations
more or less like it ought to be similarly taxed. This is not such
a case.
Connolly v. Union Sewer Pipe Co., 184 U.
S. 540,
184 U. S. 559,
184 U. S. 562;
Cook v. Marshall County, 196 U. S. 261,
196 U. S. 274;
Armour Packing Co. v. Lacy, 200 U.
S. 226,
200 U. S. 235;
Southwestern Oil Co. v. Texas, 217 U.
S. 114,
217 U. S.
121.
In
Quartlebaum v. State, 79 Ala. 1, a previous statute
(subsection 20 of § 14, Act of December 12, 1884; Session Acts
1884-85, p. 17), which imposed an annual license fee of $25
upon
"each sewing machine . . . company selling sewing machines . . .
either themselves or by their agents, and all persons who engage in
the business of selling sewing machines . . . , but when merchants
engaged in a general business keep sewing machines . . . , they
shall not be required to pay the tax herein provided,"
was sustained against the criticism that it discriminated
between two classes of persons engaged in the business of selling
sewing machines, namely, between persons who were "merchants
engaged in a general business" and persons not so engaged,
Page 233 U. S. 316
the court saying as to the former:
"If sewing machines be part of their stock in trade, they are
taxed for them as for other merchandise. Their business is in its
nature stationary, and there is little or no risk in levying taxes
upon their business, on the rule of percentage. That rule may be
wholly unsuited and ineffectual for other pursuits and other lines
of business. Much must be left to the discretion of the
legislature, for exact equality of taxation can never be
reached."
And see Ballou v. State, 87 Ala. 144, 146.
The contention that the statute violates the state constitution
is grounded upon two sections of the Bill of Rights,
viz.,
§ 1,
"That all men are equally free and independent; that they are
endowed by their Creator with certain inalienable rights; that
among these are life, liberty, and the pursuit of happiness,"
and § 37,
"That the sole object and only legitimate end of government is
to protect the citizen in the enjoyment of life, liberty, and
property, and when the government assumes other functions, it is
usurpation and oppression."
The bearing of these provisions upon the case in hand is not
clear. The argument seems to be that, since the tax law in question
is not a police measure, but a revenue measure, the discriminations
are arbitrary. To quote from the brief:
"Selling sewing machines is the business, and it is taxed
highly, and it may be in fact prohibitorily, when it is done by the
use of wagons and teams, and not at all when done at stores."
There are other suggestions of a like import. They seem to be
sufficiently answered by what has been already said respecting the
"equal protection" clause of the Fourteenth Amendment. The state
has a wide range of discretion with respect to establishing classes
for the purpose of imposing revenue taxes, and its laws upon the
subject are not to be set aside as discriminatory unless it clearly
appears that there is no rational basis for the classification.
Page 233 U. S. 317
The cases cited from the state courts lend no support to
appellant's argument.
Mobile v. Craft, 94 Ala. 156;
Tuscaloosa v. Holczstein, 134 Ala. 636, and
Gambill v.
Endrich Bros., 143 Ala. 506, involved the construction of
certain municipal charters and the powers of the respective
municipalities thereunder, and have no direct bearing upon the
present question. In
Montgomery v. Kelly, 142 Ala. 552, a
municipal ordinance requiring each merchant who issued trading
stamps in connection with his business to pay a license tax of
$100, viewed in the light of another ordinance that fixed a license
fee of $1,000 upon trading stamp companies, was held to be "a
palpable attempt under the guise of a license tax to fix a penalty
on the merchant for conducting his business in a certain way," and
therefore unconstitutional.
Mefford v. Sheffield, 148 Ala.
539, sustained a city ordinance that imposed a tax of $200 on
wholesale dealers in illuminating oil, while fixing the license tax
on dealers in goods, wares, or merchandise in general at $10.
Alabama Consolidated Coal Co. v. Herzberg, 177 Ala. 248,
declared unconstitutional § 33A of the Revenue Act of March 31,
1911, p. 181, which undertook to impose upon persons, firms, or
corporations conducting a store at which their employees trade on
checks, orders, or the like, an annual license fee varying
according to the number of persons employed; the court saying:
"The tax is not therefore imposed upon the business, or upon all
engaged in a similar business, but is based solely upon the manner
in which a party may conduct the business, and the foregoing
section is repugnant to the state and federal constitutions under
the authority of
Montgomery v. Kelly, supra."
The other state decisions to which we are referred have been
examined, and we are unable to find in them any basis for declaring
§ 32 of the act to be in contravention of the state
constitution.
Page 233 U. S. 318
Finally, it is said that, since it appears from the averments of
the bill that all sales of sewing machines by appellant's agents in
the field are executory only, and require the approval of appellant
at its regularly established places of business, located in the
various counties of the state, which are headquarters for all
agents with their wagons and teams, it at the same time
sufficiently appears that appellant is a merchant conducting a
regular business at each of said stores, and therefore within the
saving clause of § 32 of the act in question, which declares that
"this section shall not apply to merchants selling the above
enumerated articles at their regularly established places of
business."
It is quite plain, however, from a reading of the entire section
that the business of selling sewing machines by traveling salesmen
is intended to be taxed, and the business of selling them at
established places of business is intended to be left untaxed, so
far as this section is concerned, although the machines sold at
these places be delivered by wagons. Complainant is engaged in
doing business of both kinds, and, with respect to the itinerant
sales, it is subject to the tax under the § referred to.
Decree affirmed.
