A bill in equity which alleges (1) that a statute of a state
imposes a tax upon interstate commerce, and is therefore void as
forbidden by the Constitution of the United States, and which sets
out the provision complained of from which it appears that the tax
was imposed only on business done within the state, (2) that the
act denies to the complainant the equal protection of the laws of
the state, and is therefore void by reason of violating the
Fourteenth Amendment, and (3) that the act is not uniform and equal
in its operation, and is void by reason of repugnance to the
constitution of the state, and which seeks on these grounds an
injunction against the collection of the tax, presents no ground
justifying the interposition of a court of equity to enjoin the
collection of the tax.
The Act of the Legislature of Missouri of May 16, 1889, "to
define express companies and to prescribe the mode of taxing the
same, and to fix the rate of taxation thereon," imposes a tax only
on business done within the state, and does not violate the
requirements of uniformity and equality of taxation prescribed by
the Constitution of the Missouri.
Diversity of taxation, both with respect to the amount imposed
and the various species of property selected, either for bearing
its burdens or for being exempt from them, is not inconsistent with
a perfect uniformity and equality in taxation, and of a just
adaptation of property to its burdens.
A system of taxation which imposes the same tax upon every
species of property, irrespective of its nature or condition or
class, will be destructive of the principle of uniformity and
equality in taxation and of a just adaptation of property to its
burdens.
A state statute which defines an express company to be persons
and corporations who carry on the business of transportation on
contracts for hire with railroad or steamboat companies does not
invidiously discriminate against the express companies defined by
it and in favor of other companies or persons carrying express
matter on other conditions or under different circumstances.
The Court stated the case as follows:
This was a suit in equity by the Pacific Express Company, a
Nebraska corporation, against John M. Seibert, State Auditor,
Page 142 U. S. 340
and John M. Wood, Attorney General, of the State of Missouri, to
restrain and enjoin the collection of certain alleged illegal taxes
assessed against the company under the provisions of an act of the
Missouri Legislature which was claimed to be in conflict with the
Constitution of Missouri and the Constitution of the United
States.
The act in question, approved May 16, 1889, is as follows:
"SEC. 1. Any person, persons, joint-stock association, company,
or corporation incorporated under the laws of any state, territory,
or county, conveying to, from, or through this state, or any part
thereof, money, packages, gold, silver, plate, articles, goods,
merchandise, or effects of any kind by express on contract with any
railroad or steamboat company, or the managers, lessees, agents, or
receivers thereof, not including railroad companies or steamboats
engaged in the ordinary transportation of merchandise and property
in this state, shall be deemed to be an express company."
"SEC. 2. Every such express company shall annually, between the
first day of April and the first day of May, make and deliver to
the state auditor a statement, verified by the oath of the officer
or agent making such report, showing the entire receipts for
business done within this State of each agent of such company doing
business in this state for the year then next preceding the first
day of April for and on account of such company, including its
proportion of gross receipts for business done by such company in
connection with other companies, provided that the amount which any
express company actually pays to the railroads or steamboats within
this state for the transportation of their freight within this
state may be deducted from the gross receipts of such company as
above ascertained, and provided further that said amount paid to
the various railroad or steamboat companies for transportation
shall be itemized, showing the amount paid to each railroad or
steamboat company, and provided further that nothing herein
contained shall release such express companies from the assessment
and taxation of their tangible property in the manner that other
tangible property is assessed and taxed. Such company making
statement of such receipts shall include as such
Page 142 U. S. 341
all sums earned or charged for the business done within this
state for such preceding year, whether actually received or not.
Such statement shall contain an abstract of the amount received in
each county, and the total amount received for all the counties. In
case of the failure or refusal of such express company to make such
statement before the first day of May, it shall then be the duty of
each local agent of such express company within this state,
annually, between the first day of May and the first day of June,
to make out and forward to the state auditor a similar verified
statement of the gross receipts of his agency for the year then
next preceding the first day of April. When such statement is made,
such express company shall at the time of making the same pay into
the treasury of the state the sum of two dollars on each one
hundred dollars of such receipts, and any such express company
failing or refusing for more than thirty days after the first day
of June in each year to render an accurate account of its receipts
in the manner above provided, and to pay the required tax thereon,
shall forfeit one hundred dollars for each additional day such
statement and payment shall be delayed, to be recovered in an
action in the name of the State of Missouri on the relation of the
state auditor in any court of competent jurisdiction, and the
Attorney General shall conduct such prosecution, and such company,
corporation, or association so failing or refusing shall be
prohibited from carrying on said business in this state until such
payment is made."
The bill, filed on the 17th of June, 1890, contained
substantially the following material averments: at the date of the
passage of the aforesaid act of the legislature, the complainant
was, and ever since that date has been, engaged in the business of
conveying valuable articles to, from, and through the State of
Missouri and various parts of that state by express, at the same
time providing its own transportation, under contracts with the
Missouri Pacific, and other railroad companies operating lines in
that state, to convey the property bailed to it. In the prosecution
of such business, complainant, under contracts of hire, receives
and has received property at various points in other states and
conveys it to various places in Missouri,
Page 142 U. S. 342
and also property in Missouri which it conveys to points in
other states. At the time and during the period mentioned, there
were other persons and corporations engaged in a like business in
the State of Missouri who either owned their own transportation
facilities or procured the same by hire from persons not a railroad
or steamboat company or anyone connected with such
corporations.
The bill then averred that if the act of the legislature
aforesaid was a valid law, complainant would be required to pay
taxes to the state for the year ending April 1, 1890, in the
estimated sum of over $12,000, and if the act was a valid law only
in respect to the gross receipts upon such business as complainant
had done between points wholly in the State of Missouri, and void
as to gross receipts upon its business done between points within
the state and points in other states, then complainant would be
required to pay taxes for such period in the sum of over $3,000;
that complainant was willing to pay any taxes which might be found
to have been legally assessed against it, but it declared that the
aforesaid act of the Missouri Legislature was not a valid law,
because it sought to impose a tax upon the business of interstate
commerce, in which complainant was engaged, and was therefore
violative of the Constitution of the United States.
The bill then averred that neither the tax of two percent,
mentioned in section 2 of the act of the legislature, nor any other
equivalent tax, was imposed by that act or any other law of the
state upon other common carriers engaged in similar business as
complainant who do not hire transportation by "contract with any
railroad or steamboat company," etc.; that there was no provision
in that act in respect to the equalization of the taxes required to
be levied under it by state and county boards of equalization, as
in the case of other state taxes, and the tax assessed under said
act was not uniform, and it was claimed therefore that the act was
violative of the Fourteenth Amendment of the Constitution of the
United States because it denied to the complainant the equal
protection of the laws, and was also violative of § 3, art.
10, of the Constitution of Missouri, because the taxes levied were
not "uniform upon the
Page 142 U. S. 343
same class of subjects within the territorial limits of the
authority levying the tax."
The bill also averred that the act under consideration was
violative of certain other mentioned provisions of the Constitution
of Missouri, and that the defendants, being the officials charged
with the duty of enforcing the provisions thereof, would proceed to
enforce the same unless restrained by the order or process of the
court by instituting legal proceedings to collect said taxes and
the penalties prescribed, and would thereby prohibit complainant
from carrying on its business in Missouri, whereby complainant
would be subjected to and harassed by a multiplicity of suits, and
would suffer great and irreparable loss and damage for which it had
no adequate remedy at law.
Wherefore an injunction was prayed to restrain the collection of
said taxes, and a decree was asked adjudging the aforesaid act of
the Legislature of Missouri invalid and unconstitutional, together
with a prayer for such other and further relief as might appear
equitable and just.
Upon the filing of the bill, and upon hearing argument of
counsel for both sides of the controversy, the court, on the 23d of
June, 1890, granted a temporary injunction, as prayed.
The defendants then demurred to the bill upon three grounds: (1)
that it did not state facts sufficient to entitle complainant to
the relief prayed, (2) that there was no equity in it, and (3) that
it appeared from the bill that complainant had an adequate remedy
at law. The demurrer was sustained, and a decree was entered
dissolving the temporary injunction and dismissing the bill for
want of equity. 44 F. 810. From that decree the complainant
appealed, and the case is now here for consideration.
Page 142 U. S. 348
MR. JUSTICE LAMAR, after stating the facts in the foregoing
language, delivered the opinion of the Court.
According to the view we take of the case, it is not necessary
to inquire into the special equities set forth in the bill and
relied upon in the argument for complainant to show that this
record presents a case for the interposition of a federal court for
the purpose of restraining the assessment or collection of a state
tax. The primary and fundamental ground on which the maintenance of
such a suit rests is the unlawfulness of the tax against which
relief is sought, or, in other words, the invalidity or
unconstitutionality of the legislative act under the authority of
which the tax is imposed. It is true that this ground is not in
itself sufficient. But when the illegality of the tax or the
invalidity or unconstitutionality of the legislative act under
which it is imposed is established, it becomes necessary to go
further and make out a case that can be brought under some
recognized head of equity jurisdiction, such as that the collection
of the tax sought to be restrained may entail a multiplicity of
suits, or cause some other irreparable injury, as, for instance,
the ruin of complainant's business, or, where the property is real
estate, throw a cloud upon the title of the complainant.
Shelton v. Platt, 139 U. S. 591,
139 U. S. 594;
Allen v. Pullman's Palace Car Co., 139 U.
S. 658,
139 U. S.
661.
It is contended in behalf of the complainant (1) that the
statute of Missouri under the provisions of which the tax sought to
be restrained is levied imposes a tax upon interstate
Page 142 U. S. 349
commerce, and to that extent is forbidden by the Constitution of
the United States, and is therefore void; (2) that the act denies
to the complainant the equal protection of the laws of the State of
Missouri, and is therefore void by reason of its being violative of
the Fourteenth Amendment of the Constitution of the United States,
and (3) that the act is not uniform and equal in its operation, and
is void by reason of its repugnance to section three of article ten
of the Constitution of the State of Missouri.
We do not think that these propositions, taken in connection
with the averments of the bill, present any ground justifying the
interposition of a court of equity to enjoin the collection of the
tax imposed by the statute in question. The first proposition --
that the statute imposes a tax upon interstate commerce and is
therefore violative of what is known as the commercial clause of
the Constitution -- is unsound. It is well settled that a state
cannot lay a tax upon interstate commerce in any form, whether by
way of duties laid on the transportation of the subjects of that
commerce, or 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 to Congress.
Lyng v.
Michigan, 135 U. S. 161;
Leloup v. Port of Mobile, 127 U.
S. 640;
Western Union Tel. Co. v. Alabama,
132 U. S. 472;
McCall v. California, 136 U. S. 104;
Norfolk & Western Railroad v. Pennsylvania,
136 U. S. 114. The
question on this branch of the case therefore is was the business
of this express company in the State of Missouri, on the receipts
from which the tax in question was assessed under this act
interstate commerce? The allegation of the bill is very positive
that in the prosecution of its business as an express company, the
complainant is engaged, in part, in the transportation of goods and
other property between the States of Nebraska, Kansas, Texas, and
other states of the union and the State of Missouri, and also in
the business of carrying goods between different points within the
limits of the State of Missouri. The question of this point
therefore is narrowed down to the single inquiry whether the tax
complained
Page 142 U. S. 350
of in any way bears upon or touches the interstate traffic of
the company, or whether, on the other hand, it is confined to its
intrastate business. We think a proper construction of the statute
confines the tax which it creates to the intrastate business, and
in no way relates to the interstate business of the company. The
act in question, after defining in its first section what shall
constitute an express company or what shall be deemed to be such in
the sense of the act, requires such express company to file with
the state auditor an annual report "showing the entire receipts for
business done within this State of each agent of such company doing
business in this state," etc., and further provides that the amount
which any express company pays "to the railroads or steamboats
within this state for the transportation of their freight within
this state" may be deducted from the gross receipts of the company
on such business, and the act also requires the company making a
statement of its receipts to include, as such, all sums earned or
charged "for the business done within this state," etc. It is
manifest that these provisions of the statute, so far from imposing
a tax upon the receipts derived from the transportation of goods
between other states and the State of Missouri, expressly limit the
tax to receipts for the sums earned and charged for the business
done within the state. This positive and oft-repeated limitation to
business done within the state -- that is, business begun and ended
within the state -- evidently intended to exclude, and the language
employed certainly does exclude, the idea that the tax is to be
imposed upon the interstate business of the company. "Business done
within this state" cannot be made to mean business done between
that state and other states. We therefore concur in the view of the
court below that it was not the legislative intention, in the
enactment of this statute, to impinge upon interstate commerce or
to interfere with it in any way whatever, and that the statute,
when fairly construed, does not in any manner interfere with
interstate commerce.
The second and third propositions stated above are reducible to
the single contention that the act in question violates the
requirements of uniformity and equality of taxation prescribed
Page 142 U. S. 351
by the Constitution of Missouri, and thereby denies to the
complainant the equal protection of the laws of the state which the
Fourteenth Amendment to the Constitution guaranty shall not be
abridged by state action.
This Court has repeatedly laid down the doctrine that diversity
of taxation, both with respect to the amount imposed and the
various species of property selected either for bearing its burdens
or for being exempt from them, is not inconsistent with a perfect
uniformity and equality of taxation in the proper sense of those
terms, and that a system which imposes the same tax upon every
species of property, irrespective of its nature or condition or
class, will be destructive of the principle of uniformity and
equality in taxation, and of a just adaptation of property to its
burdens.
The rules of taxation in this respect were well stated in the
opinion of the Court, delivered by Mr. Justice Bradley, in
Bell's Gap Railroad v. Pennsylvania, 134 U.
S. 232,
134 U. S. 237,
as follows:
"The provision in the Fourteenth Amendment that no state shall
deny to any person within its jurisdiction the equal protection of
the laws was not intended to prevent a state from adjusting its
system of taxation in all proper and reasonable ways. It may, if it
chooses, exempt certain classes of property from any taxation at
all, such as churches, libraries, and the property of charitable
institutions. It may impose different specific taxes upon different
trades and professions, and may vary the rates of excise upon
various products. It may tax real estate and personal property in a
different manner. It may tax visible property only, and not tax
securities for payment of money. It may allow deductions for
indebtedness, or not allow them. . . . It would, however, be
impracticable and unwise to attempt to lay down any general rule or
definition on the subject that would include all cases. They must
be decided as they arise. We think that we are safe in saying that
the Fourteenth Amendment was not intended to compel the state to
adopt an iron rule of equal taxation. If that were its proper
construction, it would not only supersede all those constitutional
provisions and laws of some of the states whose object is to secure
equality of taxation,
Page 142 U. S. 352
and which are usually accompanied with qualifications deemed
material, but it would render nugatory those discriminations which
the best interests of society require, which are necessary for the
encouragement of needed and useful industries, and the
discouragement of intemperance and vice, and which every state, in
one form or another, deems it expedient to adopt."
In the case of
Home Ins. Co. v. New York, 134 U.
S. 594,
134 U. S.
606-607, the Court, speaking through MR. JUSTICE FIELD,
said:
"But the Amendment [the Fourteenth] does not prevent the
classification of property for taxation -- subjecting one kind of
property to one rate of taxation, and another kind of property to a
different rate -- distinguishing between franchises, licenses, and
privileges, and visible and tangible property, and between real and
personal property. Nor does the amendment prohibit special
legislation. Indeed, the greater part of all legislation is
special, either in the extent to which it operates or the objects
sought to be obtained by it, and when such legislation applies to
artificial bodies, it is not open to objection if all such bodies
are treated alike under similar circumstances and conditions in
respect to the privileges conferred upon them and the liabilities
to which they are subjected. Under the statute of New York, all
corporations, joint-stock companies, and associations of the same
kind are subjected to the same tax. There is the same rule
applicable to all, under the same conditions, in determining the
rate of taxation. There is no discrimination in favor of one
against another of the same class,"
citing a long list of authorities.
The contention of the complainant, however, in this connection
is that the rule of uniformity and equality of taxation is
destroyed by the arbitrary discrimination involved in the
definition of what shall be taxed under the act, imposing upon
certain persons or associations taxes from which other persons or
companies of precisely the same kind, doing exactly the same kind
of business, under exactly the same conditions, are exempt. In
other words, the contention is that the act of the legislature
arbitrarily defines what shall constitute an express company and
then lays a tax upon its business, while at the same
Page 142 U. S. 353
time it permits the same kind of business to be done by any
person or company not embraced within the class thus defined,
without being subject to any tax at all. It is said that the act,
by the very terms of its definition, restricts the tax to persons
or corporations who carry on the business of transportation on
contracts for hire with railroad or steamboat companies doing
business within the state, and that it permits any person or
company that may be so fortunate as to own its own means of
transportation to go free from any such tax -- that is to say, an
express company that engages for hire a railroad or steamboat
company to transport its merchandise must pay a tax for the
privilege of doing business, while the railroad or steamboat
company, owning its own means of transportation, might, in
connection with the business for which it was primarily chartered,
engage in the express business without paying any tax whatever on
the privilege of carrying on such express business. It is
strenuously argued, therefore, that this is an unjust
discrimination against the express companies defined by the act and
in favor of other companies or persons that may, in connection with
their primary or original business, engage in the express business,
or that may carry on a separate express business, owning their own
means of transportation.
The fallacy of this argument lies in the assumption that the
definition of what shall constitute an express company excludes
from the classification companies which are as much engaged in the
business, or as much under the same conditions, as are those which,
under the definition, are subject to the tax.
The legislation in question cannot be considered as invidiously
discriminating against the express companies defined by it, and in
favor of other companies or persons that may carry express matter
on certain other conditions or under different circumstances. There
is an essential difference between express companies defined by
this act and railroad or steamboat companies or other companies
that own their own means of transportation. The vital distinction
is this: railroad companies pay taxes on their roadbeds, rolling
stock, and other
Page 142 U. S. 354
tangible property as well as, generally, upon their franchise,
and steamboat companies likewise pay a tax upon their tangible
property. This tax is not necessarily an
ad valorem tax at
the same rate as is paid on other private property in the state
belonging to individuals. Generally, indeed, it is not, but is
often determined by other means and at different rates, according
to the will of the state legislature.
Kentucky Railroad Tax
Cases, 115 U. S. 321,
115 U. S. 337.
On the other hand, express companies such as are defined by this
act have no tangible property of any consequence subject to
taxation under the general laws. There is therefore no way by which
they can be taxed at all unless by a tax upon their receipts for
business transacted. This distinction clearly places express
companies defined by this act in a separate class from companies
owning their own means of transportation. They do not do business
under the same conditions or under similar circumstances. In the
nature of things, and irrespective of the definitive legislation in
question, they belong to different classes. There can be no
objection, therefore, to the discrimination made as between express
companies defined by this act and other companies or persons
incidentally doing a similar business by different means and
methods in the manner in which they are taxed. Their different
nature, character, and means of doing business justify the
discrimination in this respect which the legislature has seen fit
to impose. The legislation in question does not discriminate
between companies brought within the class defined in the first
section, and such companies being so entirely dissimilar, in vital
respects, as regards the purposes and policy of taxation, from
railroad companies and the like owning a large amount of tangible
and other property subject to taxation under other and different
laws, and upon other and different principles, we do not see how,
under the principles of the many decisions of this Court upon the
subject, it can be held violative either of the Fourteenth
Amendment of the Constitution of the United States or of the
provision in the Constitution of Missouri relating to equality and
uniformity of taxation.
See Barbier v. Connolly,
113 U. S. 27;
Soon Hing v. Crowley, 113 U. S. 703;
Dent v. West
Virginia, 129 U.S.
Page 142 U. S. 355
114;
Missouri Pacific Railway v. Humes, 115 U.
S. 512;
St. Louis v. Weber, 44 Mo. 547;
Germania Life Ins. Co. v. Commonwealth, 85 Penn.St. 513;
State v. Welton, 55 Mo. 288.
The opinion of the court below on this branch of the case is
elaborately argued, and is conclusive. We concur in the reasoning
of it, as well as in the language employed, and refer to it as a
correct expression of the law upon the subject.
Decree affirmed.
