[Chap. XXX. jurisdiction of the Federal government." But in Maine v. Grand Trunk Railroad 55 the court went very far in the other direction.

§ 757. Taxation of receipts from interstate commerce.

How far a tax upon the receipts of a corporation from interstate business may be taxed has not been altogether clear on the authorities. In 1873 the Supreme Court in the case of the State Tax on Railway Gross Receipts held that such a tax was valid.56 But in a later case the authority of this case was shaken.57 The case was distinguished from the State Tax on Railway Gross Receipts on two grounds: first, that in the earlier case the corporation taxed was a domestic corporation, but in the case at bar a foreign corporation; second, that in the case at bar the receipts taxed had never come into Michigan and there been mingled with the other property of the company. The tax was held invalid. This decision was followed, and the case of the State Tax on Railway Gross Receipts expressly disapproved, in Philadelphia Steamship Company v. Pennsylvania, 58 where the State which chartered the corporation for interstate carriage attempted to tax the gross receipts, and the tax was held invalid. This case in turn was followed in Ratterman v. Western Union Telegraph Company, in which it was attempted to tax the gross receipts of an interstate telegraph company; and it has been approved in several later cases. 60 It may now be stated as clear that no

59

55 142 U. S. 217, 35 L. ed. 994; acc. People v. Campbell, 74 Hun, 210, 26 N. Y. S. 832.

56 State Tax on Railway Gross Receipts, 15 Wall. 284, 21 L. ed. 164; followed in W. U. Tel. Co. v. Mayer, 28 Oh. St. 521; W. U. Tel. Co. v. Com., 110 Pa. 405.

57 Fargo v. Michigan, 121 U. S. 230, 30 L. ed. 888.

58 122 U. S. 326, 30 L. ed. 1200.

50 127 U. S. 411, 32 L. ed. 229; acc. Ind. v. P. P. Car Co., 11 Biss. 561, 16 Fed. 193.

60 See Norfolk & W. R. R. v. Pa., 136 U. S. 114, 34 L. ed. 394; Crutcher v. Ky., 141 U. S. 47, 35 L. ed. 649. Where a tax is laid upon such part of the receipts of an interstate carrier as are derived solely from business

tax can be laid upon receipts from the transportation of persons or property from one State to another.61

§ 758. Whether valid as franchise tax.

But in Maine v. Grand Trunk Ry 62 the majority of the court reached a conclusion which seems to be opposed to the earlier cases. A statute of Maine required that every corporation, person, or association operating a railroad in the State should pay an annual excise tax for the privilege of exercising its franchises in the State. The amount of the tax was to be ascertained as follows: the gross receipts were to be divided by the number of miles of road operated, and the resulting average, multiplied by the number of miles operated within the State, was to be the basis of taxation. This statute was held not to be opposed to the Constitution of the United States. Field, J., who delivered the opinion of the court, held that the tax was expressly declared to be, and was, an excise tax for the privilege of exercising its franchises within the State of Maine; that it might be enacted, since the State had the right to exclude the corporation if a foreign one or refuse it the franchise if a domestic one; and that it was not a regulation of commerce, because it was not a direct tax on the receipts. He said:

"The privilege of exercising the franchises of a corporation within a State is generally one of value, and often of great value, and the subject of earnest contention. It is natural, therefore, that the corporation should be made to bear some proportion of the burdens of government. As the granting of the privilege rests entirely in the discretion of the State, whether the corporation be of domestic or foreign origin, it may be conferred upon such creditors, pecuniary or otherwise, as the State in its judgment may deem most conducive to its interests or policy. It may require the payment into its treas

within the State, it is of course valid. Pacific Exp. Co. v. Seibert, 142 U. S. 339, 35 L. ed. 1035.

61 People v. Miller, 178 N. Y. 194, 70 N. E. 472.

62 142 U. S 217, 35 L. ed. 994.

ury, each year, of a specific sum, or may apportion the amount exacted according to the value of the business permitted, as disclosed by its gains or receipts of the present or past years. . . . A resort to those receipts was simply to ascertain the value of the business done by the corporation, and thus obtain a guide to a reasonable conclusion as to the amount of the excise tax which should be levied; and we are unable to perceive in that resort any interference with transportation, domestic or foreign, over the road of the railroad company or any regulation of commerce which consists in such transportation. If the amount ascertained were specifically imposed as a tax, no objection to its validity would be pretended. And if the inquiry of the State as to the value of the privilege were limited to receipts of certain past years, instead of the year in which the tax is collected, it is conceded that the validity of the tax would not be affected; and if not, we do not see how a reference to the results of any other year could affect its character. There is no levy by the statute on the receipts themselves, either in form or fact. They constitute, as said above, simply the means of ascertaining the value of the privilege conferred. . . . The case of Steamship Co. v. Pennsylvania in no way conflicts with this decision. That was the case of a tax, in terms, upon the gross receipts of a steamship company incorporated under the laws of the State, derived from the transportation of persons and property between different States and to and from foreign countries. Such tax was held, without any dissent, to be a regulation of interstate and foreign commerce, and therefore invalid. We do not question the correctness of that decision, nor do the views we hold in this case in any way qualify or impair it."

·

Justices Bradley, Harlan, Lamar and Brown dissented. Bradley, J., delivering their opinion, said: "The tax, it is true, is called a tax on a franchise.' It is so-called, but what is it in fact? It is a tax on the receipts of the company derived from international transportation. This court and some

of the State courts have gone a great length in sustaining various forms of taxes upon corporations. The train of reasoning upon which it is founded may be questionable. A corporation, according to this class of decisions may be taxed several times over. It may be taxed for its charter, for its franchises, for the privilege of carrying on its business; it may be taxed on its capital, and it may be taxed on its property. Each of these taxations may be carried to the full amount of the property of the company. I do not know that jealousy of corporate institutions could be carried much further. This court held that the taxation of the capital stock of the Western Union Telegraph Company in Massachusetts, graduated according to the mileage of lines in that State compared with the lines in all the States, was nothing but a taxation upon the property of the company; yet it was in terms a tax upon its capital stock, and might as well have been a tax upon its gross receipts. By the present decision it is held. that taxation may be imposed upon the gross receipts of the company for the exercise of its franchise within the State, if graduated according to the number of miles that the road. runs in the State. Then it comes to this: A State may tax a railroad company upon its gross receipts in proportion to the number of miles run within the State as a tax on its property, and may also lay a tax upon these same gross receipts in proportion to the same number of miles for the privilege of exercising its franchise in the State! I do not know what else it may not tax the gross receipts for. If the interstate commerce of the country is not or will not be handicapped by this course of decision, I do not understand the ordinary principles which govern human conduct."

This case also has been many times cited with approval. Some of the points apparently decided in it, however, can hardly be supported. The ground seemingly taken by the majority, that the tax might be supported as an excise tax for the privilege of coming into the State, is certainly unsound; for later as well as earlier cases agree that a State cannot ex

clude from its territory a corporation or an individual engaged in interstate commerce or in the service of the national government.63

§ 759. Proportionate tax on entire property of corporation.

In spite of its mistaken dicta, the case is authoritative; and some more tenable ground must be found on which to place the decision. It will probably be found in the later case of Postal Telegraph Cable Co. v. Adams.64 A statute of Mississippi laid upon all telegraph companies, domestic as well as foreign, a tax for the privilege of carrying on their business, graduated in each case upon the amount of property in miles and its value; and exempted them from all other taxation. It was found in the case that the burden of this tax was less than the ordinary tax on the same amount of property. The court said that although a franchise tax upon a corporation

63 "Only two exceptions or qualifications have been attached to it [the right of a state to exclude a foreign corporation] in all the numerous adjudications in which the subject has been considered, since the judgment of this court was announced more than half a century ago in Bank v. Earle, 13 Pet. 519, 10 L. ed. 274. One of these qualifications is that the state cannot exclude from its limits a corporation engaged in interstate or foreign commerce, established by the decision in Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U. S. 112, 24 L. ed. 708. The other limitation on the power of the state is where the corporation is in the employ of the general government,- -an obvious exception, first stated, we think, by the late Mr. Justice Bradley in Stockton v. Railroad Co., 32 Fed. 9, 14." Field, J. (who delivered the opinion in Maine v. Grand Trunk Ry.), in Horn Silver Mining Co. v. New York, 143 U. S. 305, 36 L. ed. 164.

"A state cannot exclude from its limits a corporation engaged in interstate or foreign commerce, or a corporation in the employment of the general government, either directly in terms or indirectly by the imposition of inadmissible conditions. Nevertheless the state may subject it to such property taxation as only incidentally affects its occupation, as all business, whether of individuals or corporations, is affected by common governmental burdens." Fuller, C. J., in Postal Tel. Cable Co. v. Adams, 155 U. S. 688, 39 L. ed. 311. For full collection of authorities see Atl. & Pac. Tel. Co. v. Phila., 190 U. S. 160, 47 L. ed. 995.

64 155 U. S. 688, 39 L. ed. 311; followed in Western U. Tel. Co. v. Taggart, 163 U. S. 1, 41 L. ed. 49; Adams Exp. Co. v. Ohio State Auditor, 165 U. S. 194, 41 L. ed. 683.