Ficklen v. Taxing District of Shelby County/Opinion of the Court

by Melville Fuller

United States Supreme Court

145 U.S. 1

Ficklen  v.  Taxing District of Shelby County

In Robbins v. Taxing Dist., 120 U.S. 489, 7 Sup. Ct. Rep. 592, it was held that section 16 of chapter 96 of the laws of Tennessee of 1881, enacting that 'all drummers and all persons not having a regular licensed house of business in the taxing district of 'Shelby county,' offering for sale or selling goods, wares, or merchandise therein by sample, shall be required to pay to the county trustee the sum of $10 per week, or $25 per monty, for such privilege,' so far as it applied to persons soliciting the sale of goods on behalf of individuals or firms doing business in another state, was a regulation of commerce among the states, and violated the provision of the constitution of the United States which grants to congress the power to make such regulations. The question involved was stated by Mr. Justice BRADLEY, who delivered the opinion of the court, to be 'whether it is competent for a state to levy a tax or impose any other restriction upon the citizens or inhabitants of other states for selling or seeking to sell their goods in said state before they are introduced therein;' and it was decided that it was not. At the same time it was conceded that commerce among the states might be legitimately incidentally affected by state laws, when they, among other things, provided for 'the imposition of taxes upon persons residing within the state, or belonging to its population, and upon avocations and employments pursued therein, not directly connected with foreign or interstate commerce, or with some other employment or business exercised under authority of the constitution and laws of the United States.' And it was further stated: 'To say that the tax, if invalid as against drummers from other states, operates as a discrimination against the drummers of Tennessee, against whom it is conceded to be valid, is no argument, because the state is not bound to tax its own drummers; and if it does so whilst having no power to tax those of other states, it acts of its own free will, and is itself the author of such discrimination. As before said, the state may tax its own internal commerce; but that does not give it any right to tax interstate commerce.'

In the case at bar the complainants were established and did business in the taxing district as general merchandise brokers, and were taxed as such under section 9 of chapter 96 of the Tennessee Laws of 1881, which embraced a different subject-matter from section 16 of that chapter. For the year 1887 they paid the $50 tax charged, gave bond to report their gross commissions at the end of the year, and thereupon received, and throughout the entire year held, a general unrestricted license to do business as such brokers. They were thereby authorized to do any and all kinds of commission business, and bucame liable to pay the privilege tax in question, which was fixed in part and in part graduated according to the amount of capital invested in the business, or, if no capital were invested, by the amount of commissions received. Although their principals happened during 1887, as to the one party, to be wholly nonresident, and as to the other, largely such, this fact might have been otherwise then and afterwards, as their business was not confined to transactions for nonresidents.

In the Case of Robbins the tax was held, in effect, not to be a tax on Robbins, but on his principals, while here the tax was clearly levied upon complainants in respect of the general commission business they conducted, and their property engaged therein, or their profits realized therefrom.

No doubt can be entertained of the right of a state legislature to tax trades, professions, and occupations, in the absence of inhibition in the state constitution in that regard, and where a resident citizen engages in general business subject to a particular tax the fact that the business done chances to consist, for the time being, wholly or partially in negotiating sales between resident and nonresident merchants of goods situated in another state does not necessarily involve the taxation of interstate commerce, forbidden by the constitution.

The language of the court in Lyng v. State of Michigan, 135 U.S. 161, 166, 10 Sup. Ct. Rep. 725, was: 'We have repeatedly held that no state has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, for the reason that such taxation is a burden on that commerce, and amounts to a regulation of it, which belongs solely to congress.' But here the tax was not laid on the occupation or business of carryig on interstate commerce, or exacted as a condition of doing any particular commission business, and complainants voluntarily subjected themselves thereto in order to do a general business.

In McCall v. California, 136 U.S. 104, 10 Sup. Ct. Rep. 881, it was held that 'an agency of a line of railroad between Chicago and New York, established in San Francisco for the purpose of inducing passengers going from San Francisco to New York to take that line at Chicago, but not engaged in selling tickets for the route, or receiving or paying out money on account of it, is an agency engaged in interstate commerce; and a license tax imposed upon the agent for the privilege of doing business in San Francisco is a tax upon interstate commerce, and is unconstitutional.' This was because the business of the agency was carried on with the purpose to assist in increasing the amount of passenger traffic over the road, and was therefore a part of the commerce of the road, and hence of interstate commerce.

In Philadelphia & Southern S. S.C.o. v. Pennsylvania, 122 U.S. 326, 345, 7 Sup. Ct. Rep. 1118, 1124, Mr. Justice BRADLEY, speaking for the court, said: 'The corporate franchises, the property, the business, the income of corporations created by a state, may undoubtedly be taxed by the state; but in imposing such taxes care should be taken not to interfere with or hamper, directly or by indirection, interstate or foreign commerce, or any other matter exclusively within the jurisdiction of the federal government.' And this, of course, in equally true of the property, the business, and the income of individual citizens of a state. It is well settled that a state has power to tax all property having a situs within its limits, whether employed in interstate commerce or not. It is not taxed because it is so employed, but because it is within the territory and jurisdiction of the state. Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18, 11 Sup. Ct. Rep. 876; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 5 Sup. Ct. Rep. 826.

And it has been often laid down that the property of corporations holding their franchises from the government of the United States is not exempt from taxation by the states of its situs. Railroad Co. v. Peniston, 18 Wall. 5; Thomson v. Railroad, 9 Wall. 579; Telegraph Co. v. Attorney General, 125 U.S. 530, 8 Sup. Ct. Rep. 961.

So in Wiggins Ferry Co. v. City of East St. Louis, 107 U.S. 365, 374, 2 Sup. Ct. Rep. 257, where an annual license fee was imposed on the ferry company by the city of East St. Louis, the company having been chartered by the state of Illinois, and being domiciled in East St. Louis, its boats plying between that place and St. Louis, Mo., the court said: 'The exaction of a license fee is an ordinary exercise of the police power by municipal corporations. When, therefore, a state expressly grants to an incorporated city, as in this case, the power 'to license, tax, and regulate ferries,' the latter may impose a license tax on the keepers of ferries, although their boats ply between landings lying in two different states, and the act by which this exaction is authorized will not be held to be a regulation of commerce.'

Again, in Maine v. Railway Co., 142 U.S. 217, 12 Sup. Ct. Rep. 121, 163, we decided that a state statute which required every corporation, person, or association operating a railroad within the state to pay an annual tax for the privilege of exercising its franchise therein, to be determined by the amount of its gross transportation receipts, and further provided that, when applied to a railroad lying partly within and partly without a state, or to one operated as a part of a line or system extending beyond the state, the tax should be equal to the proportion of the gross receipts in the state, to be ascertained in the manner provided by the statute, did not conflict with the constitution of the United States. It was held that the reference by the statute to the transportation receipts, and to a certain percentage of the same, in determining the amount of the excise tax, 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. In this respect the tax was unlike that levied in Philadelphia & Southern S. S.C.o. v. Rennsylvania, supra, where the specific gross receipts for transportation were taxed as such,-taxed 'not only because they are money, or its value, but because they were received for transportation.' Since a railroad company engaged in interstate commerce is liable to pay an excise tax according to the value of the business done in the state, ascertained as above stated, it is defficult to see why a citizen doing a general business at the place of his domicile should escape payment of his share of the burdens of municipal government because the amount of his tax is arrived at by reference to his profits. This tax is not on the goods, nor on the proceeds of the goods, nor is it a tax on nonresident merchants; and, if it can be said to affect interstate commerce in any way, it is incidentally, and so remotely as not to amount to a regulation of such commerce.

We presume it would not be doubted that if the complainants had been taxed on capital invested in the business, such taxation would not have been obnoxious to constitutional objection, but because they had no capital invested the tax was ascertained by reference to the amount of their commissions, which, when received, were no less their property than their capital would have been. We agree with the supreme court of the state that the complainants, having taken out licenses under the law in question to do a general commission business, and having given bond to report their commissions during the year, and to pay the required percentage thereon, could not, when they applied for similar licenses for the ensuing year, resort to the courts because the municipal authorities refused to issue such licenses without the payment of the stipulated tax. What position they would have occupied if they had not undertaken to do a general commission business, and had taken out no licenses therefor, but had simply transacted business for nonresident principals, is an entirely different question, which does not arise upon this record.

The judgment of the supreme court is affirmed.

Notes