A municipal ordinance of an Alabama City imposes a flat sum
annual privilege tax on all firms engaged in the wholesale grocery
business which deliver groceries at wholesale in the City from
points outside the City but does not impose the same tax on local
wholesale merchants.
Held: as applied to a Georgia corporation which
solicits orders in the Alabama City, transmits them to Georgia,
where they are accepted, and delivers groceries to customers in the
Alabama City, the tax is invalid under the Commerce Clause.
Nippert v. City of Richmond, 327 U.
S. 416;
Memphis Steam Laundry v. Stone,
342 U. S. 389. Pp.
354 U. S.
390-392.
38 Ala.App. 444, 87 So. 2d 661, reversed and remanded.
MR. JUSTICE HARLAN delivered the opinion of the Court.
This is a suit to recover taxes paid by the appellant to the
City of Opelika, Alabama, on the ground that the taxes in question
imposed a discriminatory burden on interstate commerce. The state
court sustained a demurrer to the complaint, 38 Ala.App. 444, 87
So. 2d 661, rejecting the appellant's federal contention, and we
noted probable jurisdiction. 352 U.S. 924.
Section 130(a), of Ordinance No. 101-53 of the City of Opelika,
as amended by Ordinance No. 103-53, provides that an annual
privilege tax of $250 must be paid by any firm engaged in the
wholesale grocery business which
Page 354 U. S. 391
delivers at wholesale, groceries in the City from points without
the city. [
Footnote 1]
Appellant is a Georgia corporation engaged in the wholesale grocery
business in West Point, Georgia. It solicits business in the City
of Opelika through salesmen; orders are transmitted to appellant's
place of business in Georgia, where they are accepted and the
groceries thereupon loaded on trucks and delivered to the City.
Appellant has no place of business, office, or inventory in
Opelika, its only contact with that City being the solicitation of
orders and the delivery of goods. [
Footnote 2]
We held in
Nippert v. City of Richmond, 327 U.
S. 416, and in
Memphis Steam Laundry Cleaner, Inc.
v. Stone, 342 U. S. 389,
that a municipality may not impose a flat sum privilege tax on an
interstate enterprise whose only contact with the municipality is
the solicitation of orders and the subsequent delivery of goods at
the end of an uninterrupted movement in interstate commerce, such a
tax having a substantial exclusory effect on interstate commerce.
In our opinion, the tax here in question falls squarely within the
ban of those cases. This is particularly so in that Opelika places
no comparable flat sum tax on local merchants. Wholesale grocers
whose deliveries originate in Opelika, instead of paying $250
annually, are taxed a sum graduated according to their gross
receipts. Such an Opelika wholesaler would have to gross the sum of
$280,000 in sales in one year before
Page 354 U. S. 392
his tax would reach the flat $250 amount imposed on all foreign
grocers before they may set foot in the City. [
Footnote 3] The Commerce Clause forbids any such
discrimination against the free flow of trade over state
boundaries.
Since the present tax cannot constitutionally be applied to the
appellant, the judgment must be reversed and the case remanded for
proceedings not inconsistent with this opinion.
Reversed.
MR. JUSTICE BLACK dissents.
[
Footnote 1]
The ordinance provides for the following
"schedule of rates for license or privilege taxes for the
conduct of any trade, vocation, profession or other business
conducted within the City of Opelika:"
"Each person, firm or corporation engaged in the wholesale
grocery business who unloads, delivers, distributes or disposes of
groceries at wholesale in the City of Opelika, Alabama which are
transported from a point without the City of Opelika, Alabama to a
point within the City of Opelika, Alabama, Annual only . . .
$250.00."
[
Footnote 2]
The facts, which are admitted for purposes of the demurrer, are
taken from the complaint.
[
Footnote 3]
Section 82 of the Ordinance provides for the following rates of
tax on local wholesale merchants:
Where a gross annual business is:
$100,000.00 and less . . . . . . . . . . . . . . . $ 35.00
Over $100,000.00 and less than $200,000.00 . . . . $ 50.00
$200,000.00 and less than $500,000.00. . . . . . . $ 75.00
$500,000.00 and less than $1,000,000.00. . . . . . $100.00
$1,000,000.00 and less than $2,000,000.00. . . . . $200.00
$2,000,000.00 and over . . . . . . . . . . . . . . $250.00
And in addition thereto, one-sixteenth (1/16) of one percent
(1%) on the first $500,000.00 gross receipts, plus one-twentieth
(1/20) of one percent (1%) on the next $500,000.00 gross receipts
plus one-fortieth (1/40) of one percent (1%) on all gross receipts
over one million dollars ($1,000,000.00).
Thus a local wholesale grocer grossing $280,000 in one year
would pay a sum of $75.00, plus 1/16 of one percent of his sales,
that is, $175.00 -- a total of $250.00.