203 Miss. 715, 35 So. 2d 73, affirmed.
A state tax levied against a pipeline company was sustained by
the State Supreme Court against a claim of invalidity under the
Federal Constitution. 203 Miss. 715, 35 So. 2d 73. On appeal to
this Court,
affirmed, p.
337 U. S.
668.
Page 337 U. S. 663
MR. JUSTICE RUTLEDGE announced the judgment of the Court and the
following opinion, in which MR. JUSTICE BLACK, MR. JUSTICE DOUGLAS
and MR. JUSTICE MURPHY join.
This appeal questions the power of Mississippi, as affected by
the commerce clause, to impose a tax measured by gross receipts
from the operation of a pipeline wholly within the state.
Appellant is a Delaware corporation which has qualified to do
business in Mississippi as a foreign corporation. It owns and
operates pipelines which are used to transport oil from lease tanks
in various oil fields in Mississippi to loading racks adjacent to
railroads elsewhere in the state. [
Footnote 1] From these racks, the oil is pumped into
railroad tank cars for shipment outside the state. If there are no
tank cars available, the oil is stored in tanks near the racks. But
such delays in loading are usually of short duration, and never
exceed a week according to appellant's uncontradicted statement.
When delivered to appellant, the oil is accompanied by shipping
orders from the producer or owner directing that the oil be
transported to out-of-state destinations. There are no refineries
in Mississippi. There is no through bill of lading from the point
of origin at the fields to the destination outside the state.
Appellant ships the oil by rail as agent of the owner on bills of
lading showing the owner as shipper,
Page 337 U. S. 664
the appellant as agent of the shipper, and indicating the
destination specified in the shipping orders issue to appellant.
Appellant is paid by the producer at the rate per barrel specific
in its tariff [
Footnote 2] from
the gathering point to the rack, and is paid an additional charge
for loading the oil in the tank cars.
The chairman of the Mississippi State Tax Commission, appellee,
levied a tax against appellant for the years 1944, 1945, and the
first half of 1946, in the sum of $20,296.36, measured by
appellant's receipts for transporting oil from the lease tanks to
the railroad loading platforms, pursuant to the following sections
of the Mississippi Code, Miss.Code, 1942, Ann., tit. 40, c. 3, §§
10105, 10109 (Supp. 1948), which provide:
"10105. . . . There is hereby levied and shall be collected
annual privilege taxes, measured by the amount or volume of
business done, against the persons, on account of the business
activities, and in the amounts to be determined by the application
of rates against values, or gross income, or gross proceeds of
sales, as the case may be, as follows [see sections
following]:"
"10109. . . . Upon every person engaging or continuing within
this state in the business of operating a pipeline for transporting
for compensation or hire from one point to another in this state
oil or natural gas or artificial gas through pipes or conduits in
this state, there is likewise hereby levied and shall be collected
a tax, on account of the business engaged in, equal to two percent
of the gross income of the business. . . ."
"
* * * *
Page 337 U. S.
665
"
"There shall be excepted from the gross income used in
determining the measure of the tax imposed in this section so much
thereof as is derived from the business conducted in commerce
between this state and other states of the United States, or
between this state and foreign countries which the state of
Mississippi is prohibited from taxing under the constitution of the
United States of America. . . . [
Footnote 3]"
The State Tax Commission sustained the assessment. The trial
court dismissed a declaration seeking review of the Commission's
action. The Supreme Court of Mississippi affirmed that judgment,
overruling appellant's contention that, because the tax was levied
on the privilege of conducting an interstate business and measured
by gross receipts therefrom, the tax could not be imposed without
offending the commerce clause of the Federal Constitution. 203
Miss. 715, 35 So. 2d 73.
The state supreme Court held that the operation of these
pipelines between points within the state was intrastate, rather
than interstate, commerce, and that the tax was therefore
"merely on the privilege of operating a pipeline wholly within
this State as a local activity . . . a tax on the privilege of
doing an intrastate business, and measured by a percent of gross
income as a matter of convenience."
203 Miss. at 715, 35 So. 2d at 81.
Appellant contends that operation of the pipelines between
points in Mississippi was, in fact, interstate commerce, and that
the tax was construed by the Supreme Court of Mississippi to be a
tax on the privilege of operating
Page 337 U. S. 666
the pipelines. From these premises, together with the major
premise that no state can tax the privilege of engaging in
interstate commerce, appellant concludes that the tax may not
constitutionally be imposed.
We do not pause to consider whether the business of operating
the intrastate pipelines is interstate commerce, for, even if we
assume that it is, Mississippi has power to impose the tax involved
in this case. Further, we do not find it necessary to dispute that
the Supreme Court of Mississippi construed the statute as imposing
a tax on the privilege of operating a pipeline wholly within the
state, and not a tax solely upon the "local activities of
maintaining, keeping in repair, and otherwise in manning the
facilities'" situated in Mississippi, Memphis Gas Co. v.
Stone, 335 U. S. 80,
335 U. S. 92-93,
or upon the gross receipts themselves, Central Greyhound Lines
v. Mealey, 334 U. S. 653.
While we are, of course, bound by the construction given a state
statute by the highest court of the State, [Footnote 4] we are concerned with the practical
operation of challenged state tax statutes, not with their
descriptive labels. [Footnote
5]
The statute is not invalidated by the commerce clause of the
Federal Constitution merely because, unlike the statute attacked in
Memphis Gas Co. v. Stone, supra, it imposes a "direct" tax
on the "privilege" of engaging in interstate commerce. [
Footnote 6] Any notions to the contrary
should not have survived
Maine v. Grand Trunk R. Co.,
142 U. S. 217,
which flatly rules the case at bar. That case sustained a state
statute which imposed upon an interstate railroad corporation "an
annual excise tax
Page 337 U. S. 667
[measured by apportioned gross receipts], for the privilege of
exercising its franchises in this State." [
Footnote 7] The
Grand Trunk decision has been
approved by this Court as recently as the other controlling case of
Central Greyhound Lines v. Mealey, supra, at
334 U. S. 658,
334 U. S. 663,
in which the Court permitted New York to impose a tax on the gross
receipts from the operation of an interstate bus line, provided
that tax was apportioned according to mileage traveled within the
state. The
Mealey case is not distinguished by saying that
it involved only a tax on gross receipts, and not a tax on
interstate commerce itself, for gross receipts taxes have long been
regarded as "direct" in cases which are supposed to support the
proposition that "direct" taxes on interstate commerce are invalid
under the commerce clause. [
Footnote 8]
Since all the activities upon which the tax is imposed are
carried on in Mississippi, there is no due process objection
Page 337 U. S. 668
to the tax. [
Footnote 9] The
tax does not discriminate against interstate commerce in favor of
competing intrastate commerce of like character. [
Footnote 10] The nature of the subject of
taxation makes apportionment unnecessary; there is no attempt to
tax interstate activity carried on outside Mississippi's borders.
No other state can repeat the tax. [
Footnote 11] For these reasons, the commerce clause does
not invalidate this tax.
The judgment is
Affirmed.
[
Footnote 1]
Appellant also gathers oil which is transported through the
Mississippi pipelines directly into interstate trunk lines, through
which the oil is carried outside the state. Mississippi has not
attempted to tax the receipts attributable to shipments of this
kind.
[
Footnote 2]
All appellant's transportation of oil in Mississippi is covered
by tariffs which are published and filed with the Interstate
Commerce Commission as required by the Interstate Commerce Act as
amended, 49 U.S.C. §§ 1(1), 1(3), and 6.
[
Footnote 3]
Other provisions of the Mississippi Code not here involved
impose franchise, net income, and
ad valorem property
taxes, all of which appellant paid for the years involved. This
fact does not, of course, preclude Mississippi from exacting a
different tax for the protection upon which one or more of these
taxes is based.
E.g., Memphis Natural Gas Co. v. Stone,
335 U. S. 80,
335 U. S.
85.
[
Footnote 4]
Minnesota ex rel. Pearson v. Probate Court,
309 U. S. 270,
309 U. S. 273;
Guaranty Trust Co. v. Blodgett, 287 U.
S. 509,
287 U. S. 513.
[
Footnote 5]
International Harvester Co. v. Dept. of Treasury,
322 U. S. 340,
322 U. S.
346-347;
Nelson v. Sears, Roebuck & Co.,
312 U. S. 359,
312 U. S.
363.
[
Footnote 6]
See concurring opinion in
Freeman v. Hewit,
329 U. S. 249,
329 U. S.
259.
[
Footnote 7]
Nothing in the
Grand Trunk opinion suggests the
explanation hazarded by Mr. Justice Holmes in
Galveston, H.
& S.A. R. Co. v. Texas, 210 U. S. 217,
210 U. S. 226,
that the tax in the
Grand Trunk case was sustained on the
ground that it was imposed in lieu of
ad valorem taxes. A
copy of the statute reprinted in the margin of the Reports
discloses that the tax was "in lieu of all taxes upon such
railroad, its property and stock," except that cities and towns
were permitted to tax not only all buildings owned by the railroad,
but also railroad-owned "lands and fixtures" outside the right of
way. 142 U.S.
142 U. S. 217-218,
n. 1.
[
Footnote 8]
See the cases discussed in
Western Live Stock v.
Bureau of Revenue, 303 U. S. 250,
303 U. S.
255-257; concurring opinion in
Freeman v.
Hewit, 329 U. S. 249,
329 U. S.
264-266. As the cited discussions point out, most of the
cases invalidating "direct" taxes on interstate commerce are
explicable on the ground that the taxes were not fairly
apportioned.
But cf. the following cases, which involve
apportioned franchise or privilege taxes measured by a standard
other than gross receipts:
Ozark Pipe Line Corp. v.
Monier, 266 U. S. 555;
Alpha Portland Cement Co. v. Massachusetts, 268 U.
S. 203;
cf. Anglo-Chilean Nitrate Sales Corp. v.
Alabama, 288 U. S. 218.
[
Footnote 9]
Nippert v. Richmond, 327 U. S. 416,
327 U. S.
423-424;
Wisconsin v. J. C. Penney Co.,
311 U. S. 435,
311 U. S.
444-445; separate opinion in
International Harvester
Co. v. Dept. of Treasury, 322 U. S. 340,
322 U.S. 352-353;
concurring opinion in
Freeman v. Hewit, 329 U.
S. 249,
329 U. S. 271;
concurring opinion in
Memphis Natural Gas Co. v. Stone,
335 U. S. 80,
335 U. S.
96.
[
Footnote 10]
Best & Co. v. Maxwell, 311 U.
S. 454;
Hale v. Bimco Trading Co., 306 U.
S. 375;
Guy v. Baltimore, 100 U.
S. 434.
[
Footnote 11]
Cf. Gwin, White & Prince v. Henneford, 305 U.
S. 434,
305 U. S.
439-440;
Adams Mfg. Co. v. Storen, 304 U.
S. 307,
304 U. S.
311-312;
Western Live Stock v. Bureau of
Revenue, 303 U. S. 250,
303 U. S.
255-257.
MR. JUSTICE BURTON, concurring.
I join in the judgment of affirmance announced by the Court but
do not join in the opinion rendered in support of it.
I concur in the judgment solely on the ground that the tax
imposed by the Mississippi was a tax on the privilege of operating
a pipeline for transporting oil in Mississippi in intrastate
commerce and that, as such, it was a valid tax. The Supreme Court
of Mississippi, in the case below, 203 Miss. 715, 35 So. 2d 73,
held that this tax had been authorized by a statute of that State,
Miss.Code Ann. §§ 10105, 10109 (1942), and, for the reasons stated
by that court, I believe that neither the statute nor the
application of the tax in the present instance violated the
Constitution of the United States.
Page 337 U. S. 669
On that basis, there is no issue here as to the validity of a
tax upon the privilege of transporting oil in Mississippi in
interstate commerce.
MR. JUSTICE REED, with whom THE CHIEF JUSTICE, MR. JUSTICE
FRANKFURTER, and MR. JUSTICE JACKSON joint dissenting.
Mississippi's effort to collect a privilege tax from this
appellant for "operating a pipeline" is upheld by this Court
through two separately expressed theories. One, that the activities
taxed are wholly intrastate, and the other that, even though the
privilege taxed is for the carrying on of wholly interstate
operations, such a privilege tax is permissible. As each theory may
have effect far beyond this particular case, we think it advisable
to state the reasons for our disagreement with both.
The tax which Mississippi demanded, and which appellant is now
trying to recover, was computed only upon appellant's receipts as a
common carrier for transporting oil from the lease tanks to the
railroad loading platforms within the state. The Supreme Court of
Mississippi upheld this tax on the ground that the activity
producing the receipts was intra-, rather than interstate commerce.
At one point in its opinion, the Supreme Court of Mississippi said
that the tax
"had been collected for the privilege of operating the pumping
machinery and other pipeline equipment in the transportation of oil
in the manner hereinbefore set forth. . . ."
Interstate Oil Pipeline Co. v. Stone, 203 Miss. 715, 35
So. 2d 73, 75.
See an opinion of three members of this
Court in
Memphis Natural Gas Co. v. Stone, 335 U. S.
80. The section here in question gives no indication of
such a purpose. It thus differs widely from the statute under
consideration in the
Memphis case, with its definition of
"doing business."
See Stone v. Memphis Natural Gas Co.,
201 Miss. 670, 29 So. 2d 268, 270. Since this statute did
Page 337 U. S. 670
not apply to pipelines reaching across the state line, we
conclude that the Supreme Court did not mean by these words to
indicate that the privilege tax of § 10109 for "operating a
pipeline" was for the privilege of operating pumping machinery or
other equipment as incidents apart from the flow of the interstate
commerce.
Cf. Coverdale v. Pipe Line Co., 303 U.
S. 604. Such an interpretation would be inconsistent
with the nonliability for the tax of pipelines, admittedly doing an
interstate business. The tax, it said, was
"merely on the privilege of operating a pipeline wholly within
this State as a local activity . . . a tax on the privilege of
doing an intrastate business, and measured by a percent of gross
income as a matter of convenience."
35 So. 2d at 81. The opinion emphasizes that, in the view of the
state court, it is the intrastate character of the transportation
that makes it permissible to charge the appellant a tax for the
privilege of "engaging . . . in the business of operating a
pipeline." § 10109. [
Footnote 2/1]
It considered taxability of the transportation in the light of
Coe v. Errol, 116 U. S. 517, and
Champlain Realty Co. v. Brattleboro, 260 U.
S. 366.
First. From the facts, §§ 10105 and 10109 of the
statute, and the opinion of the Supreme Court of Mississippi, we
believe that this statute was determined by the state to impose a
privilege tax for carrying on the intrastate business of common
carrier of oil in Mississippi, and that
Page 337 U. S. 671
the amount of that privilege tax was to be determined by a
measure -- two percent of the gross income -- of that intrastate
business. Mississippi's interpretation of the meaning of its
statute is binding on this Court. [
Footnote 2/2] A federal question at once emerges --
whether the shipment of the oil from the gathering point to the
railroad loading racks, both points being in Mississippi, is intra-
or interstate transportation. This we decide for ourselves from the
undisputed facts in this record. [
Footnote 2/3] Our first inquiry, then, must be as to
whether the transportation of this oil, wholly within Mississippi
from origin to railroad loading racks, is in interstate or
intrastate commerce. [
Footnote
2/4]
In the absence of a rule written into the Constitution or
enacted by Congress to determine what transportation is interstate
and what intrastate, the courts have been required to determine the
character of the transportation case by case, as it became
necessary to reach a judicial conclusion. It was decided years ago
in
The Daniel
Ball, 10 Wall. 557, as to navigation on a waterway
within a single state, disconnected from any other transportation
system leading to or from other states, that the carriage of
freight destined for or received from places outside the state of
navigation was interstate commerce, and made
Page 337 U. S. 672
the boat subject to regulation by Congress. [
Footnote 2/5] The wording of a judicial declaration
of the precise line that marks the change from intrastate movement
to interstate movement has been difficult. In
Coe v.
Errol, 116 U. S. 517, a
case that dealt with the taxability by New Hampshire of logs moved
from her forests to a place of shipment in readiness for
out-of-state transportation at the convenience of the owner, this
Court held the logs taxable. The theory was that the first movement
was preliminary to the interstate transportation, [
Footnote 2/6] because of the deliberate
Page 337 U. S. 673
detention to await a suitable time for shipment across a state
line.
Kelley v. Rhoads, 188 U. S. 1,
188 U. S. 6. But,
where there was no intentional delay, only the use of a "harbor of
refuge," the interstate transportation by floatage began when the
logs were put into the water.
Champlain Realty Co. v. Town of
Brattleboro, 260 U. S. 366.
[
Footnote 2/7] Incidental dealings
with the moving commodity do not break the interstate journey.
[
Footnote 2/8] Recently we have
considered the effect of "split" means of transportation as to
whether the transportation was interstate.
United States v.
Capital Transit Co., 325 U. S. 357,
325 U. S. 363.
There, a traveler went from the District
Page 337 U. S. 674
of Columbia via streetcar or bus to a bus terminal, and from
there by a different bus to nearby Virginia. We held this to be
interstate transportation. [
Footnote
2/9]
Comment should be made as to several precedents that might be
thought contrary to the rather definite line marking the beginning
of interstate commerce that appears in the above cases. These are
the so-called casual or incidental movements of transportation
wholly within a single state immediately preceding or following
recognized interstate transportation. They were referred to in
Coe v. Errol, supra, as haulage preliminary to consignment
to interstate carriers. This involves the vehicles that carry
passengers or freight to or from terminals in their interstate
movement. [
Footnote 2/10] An
interstate journey
Page 337 U. S. 675
must have a beginning and an end. Common sense rejects an
extension of the journey to the traveler's front door or the
producer's farm or factory when no through order for carriage is in
effect. The exact limits of interstate commerce in such fringe
situations are uncertain. [
Footnote
2/11]
We are of the view, however, that the reach of interstate
commerce goes to the delivery to Interstate, a common carrier, of
the oil by the producer with his tender of shipment. That offer,
when accepted, by its form, is an order covering the amount of oil,
origin and out-of-state destination, and the route and tariff under
which shipment is made. The commodity has been placed in the stream
of commerce, and will cross state lines in the regular course of
business. We have held that shipping instructions, given to a
freight conductor on a common carrier prior to any movement, put a
car into interstate commerce [
Footnote 2/12] when the instructions were for shipment
to an out-of-state destination after a preliminary transit between
points in the state of loading. When a shipper delivers his
commodity to a common carrier with instructions for billing by such
carrier without purposeful delay via another or other common
carriers to an out-of-state destination, we think interstate
commerce has begun. Such an application of the commerce clause to
transportation
Page 337 U. S. 676
accords with that given to regulation of other phases of
interstate commerce. [
Footnote
2/13] The absence of a through bill of lading is not
significant. It is true that the shipment might be diverted to an
intrastate destination without crossing a state line, but that
cannot change the character of the commerce until such diversion
order is given. The movement in commerce has begun by the order and
the delivery, and continues until the commodity is restored to the
mass of property within a state by the termination of the
transportation.
See Joy Oil Co. v. State Tax Commission,
337 U. S. 286.
Second. Mississippi determined that this tax was a
privilege tax for carrying on the intrastate business of common
carrier of oil in Mississippi, measured by a percentage of the
income from that business. The preceding subdivision of this
opinion expounds the arguments for our conclusion that all the
business of appellant in operating a pipeline for transporting oil
committed to move out-of-state from one point to another in
Mississippi is interstate transportation. The statute in question
was interpreted by Mississippi as laying a tax solely upon that
business of transporting oil, not upon the "local activities of
maintaining, keeping in repair, and otherwise in manning the
facilities'" such as are discussed in the opinions in the
undecisive case of Memphis Natural Gas Co. v. Stone,
335 U. S. 80, at
335 U. S.
92-93.
An opinion has been filed in this case asserting that the
Mississippi tax could be collected from the petitioner
notwithstanding that its entire business is interstate commerce.
With that conclusion, we disagree.
Since appellant does only an interstate transportation business,
the privilege tax exacted by Mississippi is actually a privilege
tax for carrying on the interstate business
Page 337 U. S. 677
of common carrier of oil, measured by a percentage of the gross
income from that business, apportioned so as to include only income
derived from that portion of the interstate commerce carried on
wholly in Mississippi. The gross receipts from interstate commerce
are the costs of carriage from point of origin -- the field tanks
-- to the point of destination -- the out-of-state refinery. As
only that portion of the costs covering the carriage from origin to
pipeline loading racks, both points in Mississippi, is used to
measure the privilege tax, it is clear that the interstate gross
receipts are apportioned to carriage wholly within the state. Our
issue at this point is whether a privilege tax for carrying on a
wholly interstate transportation business measured by a fairly
apportioned part of gross receipts for carriage in interstate
commerce is constitutionally permissible.
Phrased in terms of a privilege for carrying on an interstate
business, such a tax historically has been deemed unconstitutional.
The cases abound in statements to the effect that the privilege of
carrying on interstate commerce itself is immune from state
taxation. This is because it is a privilege beyond the power of a
state to grant.
". . . it is a right which every citizen of the United States
[and every corporation] is entitled to exercise under the
constitution and laws of the United States. . . ."
Crutcher v. Kentucky, 141 U. S. 47,
141 U. S. 57;
International Textbook Co. v. Pigg, 217 U. S.
91. The cases hold not only that a state may not exact a
tax as a condition precedent to the doing of interstate business,
but also that it may not levy privilege, excise, or franchise taxes
on a foreign corporation for the privilege of carrying on or the
actual doing of solely interstate business after its admission to
the state. [
Footnote 2/14]
Ozark Pipe Line Corp.
v.
Page 337 U. S. 678
Monier, 266 U. S. 555;
Alpha Portland Cement Co. v. Massachusetts, 268 U.
S. 203;
cf. Anglo-Chilean Nitrate Sales Corp. v.
Alabama, 288 U. S. 218, in
the light of
Southern Natural Gas Corp. v. Alabama,
301 U. S. 148,
301 U. S. 153.
[
Footnote 2/15] The decisions in
these cases were reached in spite of the fact that, in each of
them, the tax sought to be levied was fairly measured according to
the connections of the corporate taxpayer with the state. Thus, in
Ozark, the tax was measured by a percentage of the capital
stock and surplus of the corporation employed in business in the
state, that proportion being deemed employed within the state "that
its property and assets in this state bears to all its property and
assets wherever located"; in
Alpha, by a percentage of the
value of the "corporate excess" employed within the commonwealth
(determined as in
Ozark) and a percentage of "that part of
its net income . . . which is derived from business carried on
within the commonwealth" (also determined as in
Ozark); in
Anglo-Chilean by a percentage of capital employed in the
state.
A recent pronouncement of this Court has recognized this
limitation on state power. In
Aero Mayflower Transit Co. v.
Comm'rs, 332 U. S. 495, we
upheld a tax on motor carriers only after stressing the fact that
the tax was "affirmatively laid for the privilege of using the
state's highways" and was not imposed upon "the privilege of doing
the interstate business." P.
332 U. S. 504.
See Memphis Natural Gas Co.
Page 337 U. S. 679
v. Stone, 335 U. S. 80,
335 U. S. 88,
note 10. Where the corporate taxpayer conducts intrastate as well
as interstate business, a franchise privilege or excise tax on the
former is, of course, permissible. [
Footnote 2/16] We have frequently upheld such a tax
although it was measured by property or receipts which were used in
or attributable to interstate business. [
Footnote 2/17]
The growth of commerce that is carried on in more than one state
has brought responsibilities to states other than the one in which
the commerce may be said to have originated. Producers, either
directly or through middlemen and independent dealers, distribute
natural resources, agricultural and manufactured products on a
nationwide scale. Transportation runs across state lines. All
states are called upon to give governmental services for this
commerce -- service that costs and should be paid for by those who
profit from its maintenance. In the absence of congressional
direction as to the taxation of interstate commerce, this Court has
interpreted the commerce clause to permit state nondiscriminatory
taxation for the use of state facilities, upon the property used in
interstate commerce, upon production for commerce, and upon net
proceeds therefrom. Through such taxes, the states may exact
payment for their protection and encouragement of commerce.
Joseph v. Carter & Weekes Stevedoring Co.,
330 U. S. 422,
330 U. S. 429,
and cases cited. We have upheld a tax on gross receipts from
interstate transportation
Page 337 U. S. 680
when "apportioned as to the mileage within the State."
Central Greyhound Lines v. Mealey, 334 U.
S. 653,
334 U. S. 663.
[
Footnote 2/18]
Notwithstanding the wide latitude for taxation of incidents
connected with interstate commerce,
see Memphis Natural Gas Co.
v. Stone, 335 U. S. 80, this
Court has never interpreted the commerce clause to allow a state
tax for the privilege of carrying on interstate commerce or one
upon that commerce itself.
Joseph v. Carter & Weekes
Stevedoring Co., 330 U. S. 422.
This is not because of the financial burden. Other taxes may
equally burden the commerce. It is not because, in transportation,
the same result cannot be obtained by levying a tax for intrastate
activities measured by gross receipts appropriately apportioned to
the activities in the state. It is because the commerce clause of
the Constitution does not leave to the states any power to permit
or refuse the carrying on of interstate commerce. It likewise bars
a state from taxing the privilege of doing interstate commerce or
the doing of interstate commerce, with or without fair
apportionment even if not discriminatory.
Maine v. Grand Trunk R. Co., commented upon in
337
U.S. 662fn2/18|>note 18, is inapposite to the taxation here
attempted by Mississippi. Interstate did a wholly interstate
business.
Grand Trunk, concerning a tax on the privilege
of exercising
Page 337 U. S. 681
a franchise in Maine, can only be reconciled with the later
cases commented upon at
337
U.S. 662fn2/15|>note 15 if Grand Trunk did an intrastate as
well as an interstate business. A state franchise tax for this is
permissible.
See notes
337
U.S. 662fn2/16|>16 and
337
U.S. 662fn2/17|>17,
supra. The method of
apportionment employed in the
Grand Trunk case has had
approval as recently as the
Greyhound case, 334 U.S. at
334 U. S. 663.
There was no approval of
Grand Trunk in
Greyhound
as a precedent for a tax on the privilege of doing an interstate
business.
See p.
334 U. S.
658.
Control of interstate commerce passed into the hands of
Congress, and thus welded the Federation into a Nation. So long as
states are forbidden to impose taxes upon interstate commerce or
for the privilege of carrying it on, a toll cannot be exacted from
interstate commerce even if a similar tax is borne by local
commerce. So interstate commerce is not susceptible to taxation as
such, and thus has been protected against exactions aimed at it, no
matter how nondiscriminatory. It may be taxed only under enactments
which likewise tax intrastate commerce for like intrastate
activities. It gets no advantage over intrastate commerce from
anything furnished by the state, and pays the state nothing for
what the state doesn't possess, that is, the power to allow
interstate business within its borders.
All interstate commerce thus has free access to local markets
subject only to nondiscriminatory taxes such as the tax on
apportioned gross receipts from intrastate mileage as in
Central Greyhound Lines v. Mealey, supra, or the tax on
disconnected local incidents as discussed in the opinions in
Memphis Natural Gas Co. v. Stone, supra, or in
International Harvester Co. v. Evatt, supra, or
American Manufacturing Co. v. St. Louis, 250 U.
S. 459. So long as a tax on the privilege of doing
interstate business or a tax on the doing of that business is
prohibited, interstate commerce remains free from state exactions
levied
Page 337 U. S. 682
on that commerce. Yet that commerce must bear like intrastate
commerce the cost of those facilities or protections apart from the
interstate commerce itself which the state furnishes or allows
within its borders. Such has been and is the freedom that the
commerce clause grants to those engaged in commerce between the
states.
The judgment should be reversed.
[
Footnote 2/1]
"Hence, the statute was designed only for the purpose of taxing
the privilege of operating a pipeline for transporting the oil from
one point to another in the State where it is then delivered to an
interstate carrier prior to the beginning of its ultimate passage
to a foreign state in interstate commerce. Most assuredly, no
pipeline company would be deemed justified in installing an oil
gathering system to transport oil other than that destined for
ultimate interstate shipment, there being no oil refineries
here."
35 So. 2d at 77.
[
Footnote 2/2]
Southern Natural Gas Corp. v. Alabama, 301 U.
S. 148,
301 U. S. 153;
cf. Aero Transit Co. v. Railroad Comm'rs, 332 U.
S. 495,
332 U. S. 499.
Such determination may be rejected only if a palpable evasion for
avoiding a contrary ruling under federal law.
Union Pac. R. Co.
v. Public Service Comm'n, 248 U. S. 67;
Appleby v. New York, 271 U. S. 364,
271 U. S. 379;
Milk Wagon Drivers Union v. Meadowmoor Co., 312 U.
S. 287,
312 U. S.
294.
[
Footnote 2/3]
Southern Natural Gas Corp. v. Alabama, supra, at
301 U. S. 154;
Hooven & Allison Co. v. Evatt, 324 U.
S. 652,
324 U. S. 658.
See Caldarola v. Eckert, 332 U. S. 155,
332 U. S. 158;
Standard Oil Co. of California v. Johnson, 316 U.
S. 481,
316 U. S.
483.
[
Footnote 2/4]
There is no problem as to any differentiation between "in"
commerce or "affecting" commerce. Mississippi has decided that the
statute applies only to transportation "in" intrastate commerce. 35
So. 2d 73.
Cf. Schechter Poultry Corp. v. United States,
295 U. S. 495,
295 U. S. 542;
McLeod v. Threlkeld, 319 U. S. 491.
[
Footnote 2/5]
"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 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."
10 Wall. at
77 U. S.
565.
[
Footnote 2/6]
"What we have already said, however, in relation to the products
of a state intended for exportation to another state will indicate
the view which seems to us the sound one on that subject, namely,
that such goods do not cease to be part of the general mass of
property in the state, subject, as such, to its jurisdiction, and
to taxation in the usual way, until they have been shipped, or
entered with a common carrier for transportation, to another state,
or have been started upon such transportation in a continuous route
or journey. . . . But this movement does not begin until the
articles have been shipped or started for transportation from the
one state to the other. The carrying of them in carts or other
vehicles, or even floating them, to the depot where the journey is
to commence, is no part of that journey. That is all preliminary
work, performed for the purpose of putting the property in a state
of preparation and readiness for transportation. Until actually
launched on its way to another state or committed to a common
carrier for transportation to such state, its destination is not
fixed and certain. It may be sold or otherwise disposed of within
the state, and never put in course of transportation out of the
state. Carrying it from the farm, or the forest to the depot, is
only an interior movement of the property, entirely within the
state, for the purpose, it is true, but only for the purpose, of
putting it into a course of exportation. It is no part of the
exportation itself. Until shipped or started on its final journey
out of the state, its exportation is a matter altogether
in
fieri, and not at all a fixed and certain thing."
116 U.S. at
116 U. S.
527-528.
[
Footnote 2/7]
"The interstate commerce clause of the Constitution does not
give immunity to movable property from local taxation which is not
discriminative unless it is in actual continuous transit in
interstate commerce. When it is shipped by a common carrier from
one state to another in the course of such an uninterrupted
journey, it is clearly immune. The doubt arises when there are
interruptions in the journey, and when the property in its
transportation is under the complete control of the owner during
the passage. If the interruptions are only to promote the safe or
convenient transit, then the continuity of the interstate trip is
not broken. . . . In other words, in such cases, interstate
continuity of transit is to be determined by a consideration of the
various factors of the situation. Chief among these are the
intention of the owner, the control he retains to change
destination, the agency by which the transit is effected, the
actual continuity of the transportation, and the occasion or
purpose of the interruption during which the tax is sought to be
levied."
260 U.S. at
260 U. S.
376-377.
[
Footnote 2/8]
State Tax Comm'n of Mississippi v. Interstate Natural Gas
Co., 284 U. S. 41,
284 U. S. 43
(reduction of pressure and metering gas).
[
Footnote 2/9]
"As previously pointed out, twice a day, more than 15,000
government employees traveled between the Virginia agencies and
their homes via one of the four bus systems. Most of them either
went to or from these bus terminals from or the their homes over
any of Transit's then available buses or streetcars. Their travel
was at certain hours each day at which special rush hour buses and
cars were made available for their carriage. Their interstate
journey to work actually began at the time they boarded a Transit
bus or streetcar near their home, and actually ended when they
alighted from the Virginia-going bus at their place of work. On
returning from work, their interstate journey actually began when
they boarded a bus near their work and actually ended when they
alighted from a Transit streetcar or bus near their home. True,
their interstate trip was broken at the District termini of the
Virginia buses when they stepped from one vehicle to another. But,
in the commonly accepted sense of the transportation concept, their
entire trip was interstate. . . . And the fact that, except as to
Transit, they paid a combination of two rates, one for travel
wholly within the District and the other for travel between the
District and Virginia, and the journey from their residences to
Virginia and back again was taken in two segments, does not mean
that the total interstate trip was not on a 'through route.'"
325 U.S. at
325 U. S.
363.
[
Footnote 2/10]
Interstate Commerce Comm'n v. Detroit, Grand Haven &
Milwaukee R. Co., 167 U. S. 633;
Pennsylvania R. Co. v. Knight, 192 U. S.
21;
United States v. Yellow Cab Co.,
332 U. S. 218.
[
Footnote 2/11]
United States v. Yellow Cab Co., supra, at
332 U. S.
232-233;
Interstate Commerce Comm'n v. Parker,
326 U. S. 60,
326 U. S. 71,
note 6.
[
Footnote 2/12]
Philadelphia & Reading R. Co. v. Hancock,
253 U. S. 284,
253 U. S.
285:
"The duties of the deceased never took him out of Pennsylvania;
they related solely to transporting coal from the mines. When
injured, he belonged to a crew operating a train of loaded cars
from Locust Gap Colliery to Locust Summit Yard, two miles away. The
ultimate destination of some of these cars was outside of
Pennsylvania. This appeared from instruction cards or memoranda
delivered to the conductor by the shipping clerk at the mine. Each
of these referred to a particular car by number, and contained
certain code letters indicating that such car, with its load, would
move beyond the state."
[
Footnote 2/13]
Dahnke-Walker Co. v. Bondurant, 257 U.
S. 282;
Lemke v. Farmers Grain Co.,
258 U. S. 50;
Walling v. Jacksonville Paper Co., 317 U.
S. 564,
317 U. S.
567.
[
Footnote 2/14]
Since we perceive no difference for the purposes of this case
between franchise, privilege, and excise taxes insofar as they are
exacted for the privilege of doing or the doing of interstate
business, we have treated the as identical as far as their validity
under the commerce clause is concerned. In
Ozark and
Anglo-Chilean Nitrate, the taxes were called franchise
taxes; in
Alpha, it was labeled an excise tax.
[
Footnote 2/15]
See the discussion of these cases in the opinion of
Reed, J., in
Memphis Natural Gas Co. v. Stone,
335 U. S. 80.
See also New York ex rel. Pennsylvania R. Co. v. Knight,
192 U. S. 21,
192 U. S. 26;
State Tax Comm'n v. Interstate Natural Gas Co.,
284 U. S. 41,
284 U. S.
43.
[
Footnote 2/16]
Memphis Natural Gas Co. v. Beeler, 315 U.
S. 649;
Ford Motor Co. v. Beauchamp,
308 U. S. 331;
Atlantic Refining Co. v. Virginia, 302 U. S.
22;
Southern Natural Gas Corp. v. Alabama,
301 U. S. 148;
Pacific Tel. & Telegraph Co. v. Tax Comm'n,
297 U. S. 403;
see collection of cases 105 A.L.R. 11, 36-56.
[
Footnote 2/17]
International Harvester Co. v. Evatt, 329 U.
S. 416;
Atlantic Lumber Co. v. Comm'r,
298 U. S. 553;
Matson Nav. Co. v. State Bd. of Equalization, 297 U.
S. 441.
[
Footnote 2/18]
This decision followed a prolonged controversy over the
taxability of the proceeds of interstate commerce.
Maine v.
Grand Trunk R. Co., 142 U. S. 217, has
been cited for the same proposition,
see e.g., Adams Mfg. Co.
v. Storen, 304 U. S. 307,
304 U. S. 329,
although there is in the report of the case, 142 U.S. at
142 U. S. 218,
§ 2 of the Act there in question, support for Mr. Justice Holmes'
treatment of it in
Galveston, H. & S.A. R. Co. v.
Texas, 210 U. S. 217,
210 U. S. 226,
as a tax in lieu of
ad valorem taxes.
See Joseph v.
Carter & Weekes, 330 U. S. 422, at
330 U. S. 427,
notes 5, 6 and 7, and cases cited.
Western Live Stock v. Bureau
of Revenue, 303 U. S. 250,
303 U. S. 255.
Powell, More Ado about Gross Receipts Taxes, 60 Harv.L.Rev. 501,
710, 747,
et seq.; Dunham, Gross Receipts Taxes on
Interstate Transactions, 47 Col.L.Rev. 211, 220
et
seq.