208 U.S. 113
I. M. DARNELL & SON COMPANY and H. D. Minor, Plffs. in Err.,
CITY OF MEMPHIS and Thomas J. Taylor, Trustee.
Argued December 16, 1907.
Decided January 20, 1908.
Messrs. Dent Minor, C. H. Trimble, C. W. Metcalf, H. B. Anderson, and Metcalf, Minor, & Metcalf for plaintiffs in error.
[208 U.S. 113, 114] Messrs. Marion G. Evans, William H. Carroll, and Thomas H. Jackson for defendants in error.
Mr. Justice White delivered the opinion of the court:
Article 2 of the Tennessee Constitution of 1870 provides:
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By chapter 258 of the acts of Tennessee for 1903 it was, among other things, provided:
In the recent case of Benedict Bros. v. Davidson County, 110 Tenn. 183, 191, 67 S. W. 806, 808, the supreme court of Tennessee held as follows:
For more than three years prior to January 30, 1905, the I. M. Darnell Son & Company, a corporation of Tennessee, was domiciled in Memphis, in that state, and there owned and operated a lumber mill. Shortly prior to the date just named, pursuant to chapter 366 of the acts of Tennessee for 1903 (Tenn. Acts 1903, pp. 1097-1101), the value of the personalty of the Darnell Company was assessed for taxation by the city of Memphis at $44,000. Of this amount $19,325 was the value of logs cut from the soil of states other than Tennessee, which the company had brought into Tennessee from other states, and were held by the company as the immediate purchaser or vendee, awaiting manufacture into lumber, or consisted of lumber already manufactured by the company from logs which had been acquired and brought into the state from other states, as above mentioned, and all of which lumber was lying in the mill yard of the company, awaiting sale. The Darnell Company protested against this assessment, asserting that it was not liable to be taxed on said sum of $ 19,325, the value of the property owned by it as the immediate purchaser of logs brought from other states, or lumber, the product thereof. The ground of the protest was that the property represented by the valuation in question could not be taxed without discriminating against it, as like property, the product of the soil of Tennessee, was exempt from taxation under the Constitution and laws of that state, and therefore to tax its said property would violate the commerce clause ( 8, article 1) of the Constitution, and the equal protection clause of the 14th Amendment.
The protest was overruled. Thereupon threat of distress and sale was made by the collecting officer, unless the taxes on all the property were paid. On January 30, 1905, the Darnell Company filed in the chancery court of Shelby county its bill against the city of Memphis and the collecting officer to enjoin the enforcement of the tax as to the logs brought in from other [208 U.S. 113, 117] states, and the lumber, the product thereof, as above stated, on the ground of the repugnancy of the tax to the commerce clause and the 14th Amendment, because of the foregoing alleged discrimination. At the same time it paid into court the amount of the taxes which were not in dispute. The sufficiency of the bill was challenged by demurrer, asserting in substance that the assessment complained of did not constitute an unlawful discrimination, and was not repugnant either to the Constitution of Tennessee or of the United States. Subsequently, by leave of court, an additional demurrer was filed, which, in effect, asserted that, as the plaintiff company was a citizen of Tennessee, it could not be heard to complain of the tax, and that the enforcement of the same was not repugnant to the 14th Amendment, and that, as the property sought to be taxed was not in transit or awaiting shipment out of the state, but, on the contrary, had reached its destination and was in the hands of the consignee and owner, who was a citizen of Tennessee, and had become a part of the general property of the state, the assessing of the same for taxation was not an interference with commerce between the states. The chancellor overruled the demurrer and decided the case in favor of the Darnell Company, because the court, as stated in the decree, was of the opinion 'that the tax in controversy is in contravention of the rights of complainant as guaranteed by the Constitution of the United States, and particularly the interstate commerce clause thereof, and the 14th Amendment thereof, as set out in the complainant's original bill.'
On appeal the supreme court of Tennessee, in considering the demurrer, held the disputed tax not to be repugnant to the Constitution of the United States, and reversed the decree of the chancery court. 116 Tenn. 442, 95 S. W. 816. The court entered a decree against the Darnell Company and H. D. Minor, the surety on the appeal bond, for the amount of the disputed tax, penalty, and interest. The company and Minor prosecute this writ of error. [208 U.S. 113, 118] As all the assignments of error relied on for reversal are but the counterpart of the reasons which led the court below to the conclusion that the tax was not repugnant to the Constitution of the United States, we come at once to consider the affirmative conceptions on that subject expressed in the opinion of the court below, as affording the most direct method of disposing of the issues for decision. Those conceptions are of a twofold character,-one relating to the commerce clause and the other to the equal protection clause of the 14th Amendment.
The court, in its opinion, conceded that the property embraced in the assessment complained of was purchased by the complainant in and brought from other states, or consisted of lumber produced from logs so brought into Tennessee, and that property of like character would not be subject to taxation under the state law if it had been produced from the soil of Tennessee. But the levy of the tax was held not to be a direct burden upon interstate commerce, and hence not repugnant to the commerce clause of the Constitution of the United States, as a result of the interpretation which the court affixed to previous decisions of this court concerning the operation of the commerce clause of the Constitution and the right of a state to impose a tax, even if discriminatory in character, upon property coming from other states, after such property had come at rest within a state and been commingled with the mass of property therein. The court, after stating that the provision of the state Constitution which authorized the exemption of property produced from the soil of Tennessee had its inception in the 'first Constitution of this state, adopted on February 6, 1796, and hence formed a part of the fundamental law of the state when it was admitted by the act of Congress, approved June 1, 1796 [ 1 Stat. at L. 491, chap. 47],' proceeded to state its reasons for holding that the discriminatory tax was not repugnant to the commerce clause, as follows:
As we are of opinion that the question for decision is clearly foreclosed by prior decisions of this court, which demonstrate that the court below misconceived the rulings of this court upon which it relied, we do not stop to analyze the reasoning of the court, considered as an original proposition, but come at once to test its correctness by making a brief review of the decided cases relied upon by the court below, and others, not referred to, which relate to the subject, and which are controlling.
As a prelude to a review of the cases referred to, we observe that while it is undoubted that it has been settled that where property which has moved in the channels of interstate com- [208 U.S. 113, 120] merce is at rest within a state and has become commingled with the mass of property therein, it may be taxed by such state without thereby imposing a direct burden upon interstate commerce, that doctrine, as expounded in the decided cases, including those relied upon by the court below, has always expressly excluded the conception that a state could, without directly burdening interstate commerce, discriminate against such property by imposing upon it a burden of taxation greater than that levied upon domestic property of a like nature.
The leading cases announcing the doctrine that a state may tax property which had moved in the channels of interstate commerce, when such property had become at rest therein, even before sale in the original package, are Woodruff v. Parham and Brown v. Houston, supra. But in both those cases it was sedulously pointed out that the power which was thus recognized did not, and could not, include the authority to burden the property brought from another state with a discrimination tax. In American Steel & Wire Co. v. Speed, 192 U.S. 519 , 48 L. ed. 546, 24 Sup Ct. Rep. 365, where the doctrine of Woodruff v. Parham and Brown v. Houston was reviewed and restated, it was pointed out that to prevent the levy of a tax upon property brought from another state, even after it had come at rest within a state, from being a direct burden upon interstate commerce, property so situated must be taxed 'without discrimination, like other property situated within the state.'
The statements just made adequately point out the misconception as to the rulings of this court upon which the court below placed its conclusion, since the court took no heed of the express declaration concerning the nullity of any discriminating tax, made in the cases which the court relied on. The importance of the subject, however, and the statement made by the court below as to the long existence in Tennessee of the tax exemption in favor of the products of the soil of Tennessee, leads us to a brief review of other decided cases in this court which have long since clearly established the want [208 U.S. 113, 121] of power in a state to discriminate by taxation in any form against property brought from other states.
In Guy v. Baltimore, 100 U.S. 434 , 25 L. ed. 743, the invalidity was adjudged of a municipal ordinance of the city of Baltimore which established rates of wharfage to be charged on vessels resorting to or lying at, 'landing, depositing, or transporting goods or articles other than the productions of this state, on any wharf or wharves belonging to said mayor and city council, or any public wharf in the said city, other than the wharves belonging to or rented by the state.' The principle settled by earlier decisions, which were referred to (Woodruff v. Parham, supra; Hinson v. Lott, 8 Wall. 148, 19 L. ed. 387; and Ward v. Maryland, 12 Wall. 418, 20 L. ed. 449), was reaffirmed, the court saying:
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In Webber v. Virginia, 103 U.S. 344 , 26 L. ed. 565, a license statute of the state of Virginia was held to be a regulation of commerce and invalid, because the tax was made to depend upon the foreign character of the articles dealt in; that is, upon their having been manufactured without the state. The court said:
In Walling v. Michigan, 116 U.S. 446 , 29 L. ed. 691, 6 Sup. Ct. Rep. 454, an act of the state of Michigan, which imposed a tax or duty on persons who, not having their principal place of business within the state, engaged in the business of selling, or of soliciting the sale of, certain described liquors, to be shipped into the state, was held to be repugnant to the commerce clause, as being 'a discriminating tax levied against persons for selling goods brought into the state from other states or countries.' The court said:
And, in the course of the opinion, referring to state decisions announcing a want of authority in the several states to prescribe different regulations in relation to the commerce in certain articles, dependent upon the state from which they were brought, the court thus referred to a decision of the supreme court of Missouri:
The principle applied in the foregoing cases was also given effect in Minnesota v. Barber, 136 U.S. 313 , 34 L. ed. 455, 3 Inters. Com. Rep. 185, 10 Sup. Ct. Rep. 862; Brimmer v. Rebman, 138 U.S. 78 , 34 L. ed. 862, 3 Inters. Com. Rep. 485, 11 Sup. Ct. Rep. 213; and Voight v. Wright, 141 U.S. 62 , 35 L. ed. 638, 11 Sup. Ct. Rep. 855; and so-called inspection laws of various states were held to be repugnant to the commerce clause of the Constitution because of their discriminating character. In New York v. Roberts, 171 U.S. 658 , 43 L. ed. 323, 19 Sup. Ct. Rep. 58, while the tax there considered, imposed by New York upon a corporation of another state, was sustained as a valid tax upon the franchise of doing business as a corporation in New York, the court reaffirmed the authority of its former decisions, declaring the invalidity of all taxes of a discriminating character levied by a state upon the products of other states.
In this connection we excerpt from the opinion in Philadelphia & S. Mail S. S. Co. v. Pennsylvania, 122 U.S. 326 , 30 L. ed. 1200, 1 Inters. Com. Rep. 308, 7 Sup. Ct. Rep. 1118, statements which directly relate to the subject in hand and which conclusively demonstrate the unsoundness of the proposition which the court below upheld; that is, that the commerce clause of the Constitution does not protect property brought from another state from being discriminated against after it has arrived and been commingled with the mass of property within the state of its destination. Commenting upon the reasoning of the opinion in State Tax on Railway Gross Receipts, 15 Wall. 284, 21 L. ed. 164, the court said (p. 341):
As there can be no doubt within the principles so clearly settled by the decided cases, to which we have referred, that the disputed tax, which the court below sustained, was a direct burden upon interstate commerce, since the law of Tennessee in terms discriminated against property the product of the soil of other states brought into the state of Tennessee, by exempting like property when produced from the soil of Tennessee, it follows that the court below erred in deciding the tax to be valid, without reference to the reasoning indulged in by it concerning the application of the equal protection clause of the [208 U.S. 113, 126] 14th Amendment. The judgment below must therefore be reversed and the cause remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.