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185 U.S. 27
B. A. STOCKARD and R. C. Jones, Composing the Firm of Stockard & Jones, et al., Plffs. in Err.,
CLINT MORGAN and J. N. McCutcheon.
Submitted March 19, 1902.
Decided April 7, 1902.
This is a writ of error to the supreme court of the state of Tennessee, brought to review a judgment of that court reversing a judgment of the court of chancery of Hamilton county in favor of complainants, and dismissing their bill.
The complainants sought to enjoin the collection of a tax imposed upon them under a statute of Tennessee, upon the ground that they were not liable for the tax because they were agents and brokers exclusively for the sale of the property of nonresident principals, and did no business of any kind for residents of the state. They also averred that the state statute, properly construed, did not include their business, but if it did, it was void as contravening the Federal Constitution in its interstate commerce clause.
The defendants by answer averred that they sought to collect the tax under the authority of the statute of the state of Tennessee, providing for the collection of a privilege tax on the occupation of the complainants as merchandise brokers, and that such statute was valid.
Other parties similarly situated commenced suits against the [185 U.S. 27, 28] defendants to obtain like relief. By an agreement, which was approved by the court, all the cases were consolidated under the style of Stockard & Jones v. Morgan and others, under which title it was agreed that they should thereafter proceed as one case.
The case came to trial in the chancery court upon the following agreed statement of facts:
By agreement of the parties two questions only were argued in the state court: (1) Whether or not complainants were merchandise brokers and subject by statute to tax as such; (2) whether or not their business constituted interstate commerce, and therefore was beyond the reach of the state's taxing power.
The chancellor held that the complainants were not liable for the privilege tax and enjoined its collection perpetually, and adjudged the costs against Hamilton county. From the judgment so entered the defendants appealed to the supreme court of the state, which, as stated, reversed the judgment and dismissed the bill, holding the complainant's business was covered by the statute, and that it did not violate the Constitution of the United States.
Messrs. Robert Pritchard, J. B. Sizer, and R. P. Woodard for plaintiffs in error.
Mr. George W. Pickle for defendants in error.
Mr. Justice Peckham, after making the foregoing statement of facts, delivered the opinion of the court:
In this case we are bound to give the same meaning to the state statute that was given to it by the supreme court of the state, and the question which remains for us to decide is whether, as so construed, the statute violates any provision of the Federal Constitution.
We think it violates the interstate commerce clause of the Constitution of the United States, and that this court has in several cases decided the principle which invalidates the statute so far as it affects the business of the complainants. The principle is contained in the cases of Brown v. Maryland, 12 Wheat. [185 U.S. 27, 31] 419, 6 L. ed. 678, and Welton v. Missouri, 91 U.S. 275 , 23 L. ed. 347. Subsequently the case of Robbins v. Shelby County Taxing Dist. 120 U.S. 489 , 30 L. ed. 694, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592, was decided, which is one of the leading cases upon the subject now in hand, and we think that it is decisive of the case before us. That case was tried upon an agreed statement of facts as follows:
The court held upon these facts that the statute 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 month, for such privilege,' was void as against Robbins.
The opinion of the court was delivered by Mr. Justice Bradley, in the course of which be said (p. 494, L. ed. p. 696, Inters. Com. Rep. p. 47, Sup. Ct. Rep. p. 594):
And again at p. 496, L. ed. p. 697, Inters. Com. Rep. p. 47, Sup. Ct. Rep. p. 595:
Other cases followed the Robbins Case, among them, Philadelphia & S. Mail S. S. Co. v. Pennsylvania, 122 U. S. [185 U.S. 27, 34] 326, 30 L. ed. 1200, 7 Sup. Ct. Rep. 1118; Leloup v. Port of Mobile, 127 U.S. 640 , 32 L. ed. 311, 8 Sup. Ct. Rep. 1380; Asher v. Texas, 128 U.S. 129 , 32 L. ed. 368, 2 Inters. Com. Rep. 241, 9 Sup. Ct. Rep. 1; Stoutenburgh v. Hennick, 129 U.S. 141 , 32 L. ed. 637, 9 Sup. Ct. Rep. 256; McCall v. California, 136 U.S. 104 , 34 L. ed. 391, 3 Inters. Com. Rep. 181, 10 Sup. Ct. Rep. 881; Norfolk & W. R. Co. v. Pennsylvania, 136 U.S. 114 , 34 L. ed. 394, 3 Inters. Com. Rep. 178, 10 Sup. Ct. Rep. 958; Crutcher v. Kentucky, 141 U.S. 47 , 35 L. ed. 649, 11 Sup. Ct. Rep. 851. These cases exhibit different phases of the same general principle, but all follow that principle as announced in the Robbins Case, and deny the right of the state to tax people representing the owners of property outside of the state, for the privilege of soliciting orders within it as agents of such owners for property to be shipped to persons within the state. We think they cover the facts of the case at bar, and render the statute as construed by the state court invalid so far as it affects the business of the complainants described in the agreed statement of facts above set forth.
The defendants in error, admitting the finality of the decisions above referred to in regard to the questions therein decided, claim that they do not in truth cover the case before us, and they urge that it is controlled by Ficklen v. Shelby County Taxing Dist. 145 U.S. 1 , 36 L. ed. 601, 4 Inters. Com. Rep. 79, 12 Sup. Ct. Rep. 810. A reference to that case shows important and material distinctions of fact which render it unlike the one now before us. The opinion of the court was delivered by the present chief justice, who, while recognizing and approving the Robbins and other similar cases, distinguished them from the one then under review. In the course of his opinion he said (p. 20, L. ed. p. 606, Inters. Com. Rep. p. 84, Sup. Ct. Rep. p. 811):
And again, at p. 24, L. ed. p. 607, Inters. Com. Rep. p. 86, Sup. Ct. Rep. p. 813, it was said:
From these extracts from the opinion it is seen that a material fact in the case was that Ficklen had taken out a general and unrestricted license to do business as a broker, and he was thereby authorized to do any and all kinds of commission business, and therefore became liable to pay the privilege tax exacted. Although Ficklen's principals happened in the year 1887 to be wholly nonresidents, the fact might have been otherwise, as was stated by the Chief Justice, because his business was not confined to transactions for nonresidents.
In this case the complainants did not represent or assume to represent any residents of the state of Tennessee, and each of the complainants represented only certain specific parties, firms, or corporation, all of whom were nonresidents of Tennessee. They did no business for a general public. We attach no importance to the fact that in the Robbins Case the individual [185 U.S. 27, 36] taxed resided outside of the state. He was taxed by reason of his business or occupation while within it, and the tax was held to be a tax upon interstate commerce. Nor dose the fact that the complainants acted for more than one person residing outside of the state affect the question. If while so acting and soliciting orders within the state for the sale of property for one nonresident of the state, the person so soliciting was exempt from taxation on account of that business, because the tax would be upon interstate commerce, we do not see how he could become liable for such tax because he did business for more than one individual, firm, or corporation, all being nonresidents of the state of Tennessee. The fact that the state or the court may call the business of an individual, when employed by more than one person outside of the state, to sell their merchandise upon commission, a 'brokerage business,' gives no authority to the state to tax such a business as complainants'. The name does not alter the character of the transaction, nor prevent the tax thus laid from being a tax upon interstate commerce. As was said by Mr. Justice Bradley, in the Robbins Case, 120 U.S. 489 , 30 L. ed. 694, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592: 'The mere calling the business of a drummer a privilege cannot make it so. Can the state legislature make it a Tennessee privilege to carry on the business of importing goods from foreign countries? If not, has it any better right to make it a state privilege to carry on interstate commerce?' It is still a carrying on of interstate commerce, whether the party is acting for one or more principals residing outside of the state and selling their goods through his procurement, acting for them as their agent.
We cannot see that the Ficklen Case rules the one before us. Although it is plain from the opinion of the Chief Justice that there was not the slightest intention of casting any doubt upon the correctness of the decisions in the Robbins and other cases above cited, it is subsequently stated in Brennan v. Titusville, 153 U.S. 289 , 38 L. ed. 719, 4 Inters. Com. Rep. 658, 14 Sup. Ct. Rep. 829, that the Case of Ficklen 'is no departure from the rule of decision so firmly established by the prior cases.' In speaking of the distinguishing features of the Ficklen Case, Mr. Justice Brewer, in delivering the opinion of the court in Brennan v. Titusville, said, at p. 307, L. ed. p. 725, Inters. Com. Rep. p. 664, Sup. Ct. Rep. p. 834: 'In other words, the [185 U.S. 27, 37] tax imposed was for the privilege of doing a general commission business within the state, and whatever were the results pecuniarily to the licensees, or the manner in which they carried on business, the fact remained unchanged that the state had, for a stipulated price, granted them this privilege. It was thought by a majority of the court that to release them from the obligations of their bonds on account of the accidental results of the year's business was refining too much, and that the plaintiffs who had sought the privilege of engaging in a general business should be bound by the contracts which they had made with the state therefor.'
Although it is said in the opinion of the state court herein that the thing taxed is the occupation of merchandise brokerage, and not the business of those employing the brokers, yet we have seen from the cases already cited that when the tax is applied to an individual within the state selling the goods of his principal who is a nonresident of the state, it is in effect a tax upon interstate commerce, and that fact is not in anywise altered by calling the tax one upon the occupation of the individual residing within the state while acting as the agent of a nonresident principal. The tax remains on upon interstate commerce, under whatever name it may be designated.
That such a tax amounts to an invasion of the commerce clause of the Constitution of the United States is held in Stratford v. Montgomery, 110 Ala. 619, 20 So. 127, in a most satisfactory opinion by Chief Justice Brickell. In speaking of the tax under the Alabama statute, he said (p. 628, So. p. 129): 'While, as we have shown, the business of the defendant was general, so as to constitute him a broker, it by no means follows that it required he should also take local business. He might, as he did, confine himself to interstate business and still be a 'broker,' without becoming liable to the tax.' The statute of Alabama is similar to the one in Tennessee, and the facts in the above case are almost identical with those agreed upon herein.
Although the state has general power to tax individuals and property within its jurisdiction, yet it has no power to tax interstate commerce, even in the person of a resident of the state. [185 U.S. 27, 38] We regard this case as within the Robbins and other similar cases above referred to, and it follows that the judgment of the Supreme Court of Tennessee, holding the complainants liable to pay the tax demanded, was erroneous. The judgment of that court is therefore reversed, and the case remanded for further proceedings not inconsistent with the opinion of this court.
It is so ordered.
Mr. Justice Gray took no part in the decision of this case.