§ 747. Discriminating tax on foreign products.

A discriminating tax operating to the disadvantage of the products of other States when introduced for sale into the taxing State is evidently unconstitutional as a regulation of interstate commerce.17

§ 748. Vehicles of interstate commerce.

The constitutionality of taxation of vehicles of interstate commerce is not always easy to determine. There are two objections to such taxation: first, that such a tax interferes with interstate commerce; second, that ordinarily such vehicles go from State to State, and have no permanent situs in either State. To be legal, the taxation must be laid upon these vehicles merely as property, and it must be laid upon them in some jurisdiction where they may be said to have a situs. Such vehicles may legally be taxed as property in any State where they have a permanent situs.

To tax steamboats carrying on an interstate business which merely enter the State for the purpose of such business, like coasting steamers and ferry boats, is unconstitutional as a regulation of interstate commerce, since they merely touch at a port of the taxing State, and they are only within the jurisdiction of the State while engaged in the act of interstate commerce.18 The real difficulty here would seem to be that the steamboats are within the State only during transit and are therefore not as property within the taxing power; 19 so that if the tax could be imposed, it must be as an excise on the right to enter the State. Such a tax would obviously be unconstitutional as an interference with interstate commerce.

§ 749. Proportionate tax on vehicles as property.

The distinction is brought out by a series of cases involving

17 Walling v. Michigan, 116 U. S. 446, 25 L. ed. 691, and cases cited. 18 Hays v. S. S. Co., 17 How. 596, 15 L. ed. 254; St. Louis v. Ferry Co., 11 Wall. 423, 20 L. ed. 192; Morgan v. Parham, 16 Wall. 471, 21 L. ed. 303; Transportation Co. v. Wheeling, 99 U. S. 273, 25 L. ed. 412.

19 Ante, § 490.

the legality of the taxation of railroad cars, which not only come to a State but enter it and remain within it for a considerable time. Whether such cars, used upon a railroad in more than one State, may constitutionally be taxed has been much argued. It was held in Pickard v. Car Co.20 that a tax of fifty dollars on each car so used could not be imposed for the privilege of running the car through the State; but this was a tax on the business of commerce, not on the property. In Marye v. Railroad 21 there was a strong dictum to the effect that a State might probably tax such cars by proper legislation. Finally in Pullman's Palace Car Co. v. Pennsylvania the question was decided. The car company, an Illinois corporation, had been taxed, according to a statute of Pennsylvania, upon such proportion of its capital stock as the miles of road upon which its cars were run in Pennsylvania bore to the whole number of miles of road upon which its cars were run. It was held by a majority of the court that cars run upon roads in Pennsylvania were situated in that State for the purpose of taxation, and that this was a proper way in which to tax the property of the company in such cars.

22

Mr. Justice Gray said: "The cars were continuously and permanently employed in going to and fro upon certain routes of travel. If they had never passed beyond the limits of Pennsylvania, it could not be doubted that the State could tax them, like other property, within its borders, notwithstanding they were employed in interstate commerce. The fact that, instead of stopping at the State boundary, they cross that boundary in going out and coming back, cannot affect the power of the State to levy a tax upon them. The State, having the right, for the purposes of taxation, to tax any personal property found within its jurisdiction, without regard to

20 117 U. S. 34, 29 L. ed. 785.

21 127 U. S. 117, 123, 32 L. ed. 94.

22 141 U. S. 18, 35 L. ed. 619. Acc. American Ref. Transit Co. v. Hall, 174 U. S. 70, 43 L. ed. 899; Union Ref. Transit Co. v. Lynch, 177 U. S. 149, 44 L. ed. 708; State v. Canada C. C. Co., 85 Minn. 457, 89 N. W. 66. Contra, Central R. R. v. State Board of Assessors, 49 N. J. L 1, 7 Atl. 306.

the place of the owner's domicil, could tax the specific cars which at a given moment were within its borders. The route over which the cars travel extending beyond the limits of the State, particular cars may not remain within the State; but the company has at all times substantially the same number of cars within the State, and continuously and constantly uses there a portion of its property; and it is distinctly found, as matter of fact, that the company continuously, throughout the periods for which these taxes were levied, carried on business in Pennsylvania, and had about one hundred cars within the State.

"The mode which the State of Pennsylvania adopted, to ascertain the proportion of the company's property upon which it should be taxed in that State, was by taking as a basis of assessment such proportion of the capital stock of the company as the number of miles over which it ran cars within the State bore to the whole number of miles, in that and other States, over which its cars were run. This was a just and equitable method of assessment; and, if it were adopted by all the States through which these cars ran, the company would be assessed upon the whole value of its capital stock, and no more."

There was a vigorous dissent, which rather tends to emphasize the point made above, that the question is merely one of the situs of the property within the jurisdiction of the taxing power.

The dissenting justices took the ground that no single car was permanently in Pennsylvania, and the situs of the cars was therefore no more in Pennsylvania than the situs of a ferry boat or other vessel is in the State at the shore of which it may touch.

In accordance with this case, taxation of corporations engaged in interstate commerce has been upheld in the case of a car company upon a fair proportion of the value of its cars;23 a telegraph company upon a fair proportion of its capital

23 Pullman's Palace Car Co. v. Pennsylvania, 141 U. S. 18, 35 L. ed. 613

stock; 24 and an express company upon a fair proportion of its capital stock.25

§ 750. Tax on the business of interstate commerce.

A tax laid not on the property of a corporation doing interstate business but upon the doing of that business itself is obviously a regulation of interstate commerce and therefore unconstitutional. Thus a tax proportioned to the number of passengers transported or freight carried is clearly a tax on commerce, and is bad; 26 and so is a tax on messages sent or received beyond the limits of the State.27 If the effect of the State statute is to impose such a tax, the exact form of it is immaterial. A New York statute provided that the master of every vessel entering New York should either pay a small fee or enter into a bond for each passenger brought into the State. This was held to be unconstitutional. 28

§ 751. License fee for interstate business.

A license fee for the privilege of transacting a merely interstate business seems clearly unconstitutional. It was, to be sure, held in the time of Chief Justice Chase that a license fee laid equally upon all express companies and railroad companies doing business beyond the State was not an unconstitutional regulation of commerce.29 But this case was overruled later; and it is now established that no State can compel a corporation by taxation to pay for the privilege of

24 Western Union Tel. Co. v. Massachusetts, 125 U. S. 530, 31 L. ed. 790. 25 Adams Express Co. v. Ohio, 165 U. S. 194, 166 U. S. 185, 41 L. ed. 683, 956.

28 The Passenger Cases, 7 How. 283, 12 L. ed. 702; Crandall v. Nevada, 6 Wall. 35, 18 L. ed. 745; Case of State Freight Tax, 15 Wall. 232, 21 L. ed. 146; Erie Ry. v. New Jersey, 31 N. J. L. 531.

27 Telegraph Co. v. Texas, 105 U. S. 460, 26 L. ed. 1067.

28 Henderson v. Mayor of New York, 92 U. S. 259, 23 L. ed. 543. Miller, J., said: "To require a heavy and almost impossible condition to the exercise of this right [of landing passengers], with the alternative of payment of a small sum of money, is, in effect, to demand payment of that sum."

29 Osborne v. Mobile, 16 Wall. 479, 21 L. ed. 470. This was followed in State courts, e. g. W. U. Tel. Co. v. Richmond, 26 Gratt. (Va.) 1.

engaging in interstate commerce.30 Thus it has been decided that a tax of fifty dollars on each car run by a foreign corporation through a State for the privilege of so running them is an unconstitutional regulation of commerce; 31 that a license tax on the establishment of an agency of a foreign corporation which is engaged in interstate commerce is an unconstitutional tax; 32 and that a statute requiring a foreign express company engaged in interstate commerce to pay a license fee and deposit a statement showing that it had a certain amount of capital, as a condition precedent to doing business within the State, was unconstitutional.33

In a later case the majority of the court said that a State might enforce an excise tax as a condition of allowing a foreign railway company to run its trains into the State.34 The case is to be sustained on another ground; but the dictum is unsound.35

§ 752. License fee solely for intrastate business.

A license fee may however be exacted of a corporation engaged in interstate commerce for the privilege of engaging in business entirely within the State. Thus there is no objection to a license tax applied solely to business carried on by railroads exclusively within the borders of a State.36 And it has

30 Leloup v. Mobile, 127 U. S. 640, 32 L. ed. 311; Lyng v. Michigan, 135 U. S. 161, 34 L. ed. 150; Atlantic & P. Tel. Co. v. Philadelphia, 190 U. S. 160, 47 L. ed. 995, and cases cited.

31 Pickard v. Car Co., 117 U. S. 34, 29 L. ed. 785. But a tax of seventyfive cents on every telephone instrument in use has been held valid in a State court as to instruments used in intrastate business. State v. Rocky Mt. Bell Tel. Co., 27 Mont. 394, 71 Pac. 311. To like effect Postal Tel. Cable Co. v. Norfolk, 99 Va. 102, 43 S. E. 207.

32 McCall v. Cal., 136 U. S. 104, 34 L. ed. 391; Norfolk & W. R. R. v. Pa., 136 U. S. 114, 34 L. ed. 394; contra, People v. Wemple, 131 N. Y. 64, 29 N. E. 1002.

33 Crutcher v. Ky., 141 U. S. 47, 35 L. ed. 649; State v. North. Pac. Exp. Co., 27 Mont. 419, 71 Pac. 404.

34 Maine v. Grand Trunk Ry., 142 U. S. 217, 35 L. ed. 994.

35 Horn Silver Mining Co. v. New York, 143 U. S. 305, 36 L. ed. 164; Postal Tel. C. Co. v. Adams, 155 U. S. 688; 39 L. ed. 311.

36 Nashville, C. & St. L. Ry. v. Ala. City, 134 Ala. 414, 32 So. 731.