McGoldrick v. Berwind-White Coal Mining Co.

309 U.S. 33, 60 S. Ct. 388, 84 L. Ed. 565, 22 Ohio Op. 84, 128 A.L.R. 876, 1940 U.S. LEXIS 1061

Opinions

Mr. Justice Stone

delivered the opinion of the Court.

The question for decision is whether the .New York City tax laid upon sales of goods for consumption, as.applied to respondent, infringes the commerce clause of the Federal Constitution.

Upon certiorari to review a determination by the Comptroller of the City of New York that respondent was subject to New York City sales tax in the sum of $176,703, the Appellate Division of the New York Supreme Court held that the taxing statute as applied to respondent does so infringe, 255 App. Div. 961; 8 N. Y. S. 2d 668, on the authority of Matter of National Cash Register Co. v. Taylor, 276 N. Y. 208; 11 N. E. 2d 881, cert. den., 303 U. S. 656; Matter of Compagnie Generale Transatlantique v. McGoldrick, 279 N. Y. 192; 18 N. E. 2d 28. The New York Court of Appeals affirmed without opinion, 281 N. Y. 610, but its amended remittitur declared that the affirmance was upon the sole ground that the taxing statute as applied violated the commerce clause, id. 670. We granted certiorari, 308 U. S. 546, the question presented being of public importance, upon a petition which challenged the decision of- the state court as not in accord with applicable decisions of this Court in Banker Brothers v. Pennsylvania, 222 U. S. 210; Wiloil Corporation v. Pennsylvania, 294 U. S. 169.

Chapter 815 of the New York Laws of 1933, as amended by Chapter 873 of the New York Laws of 1934, authorized the City of New York, for a limited period within which the present tax was laid, “to adopt and amend local laws imposing in . . . [the] city any tax . . . which the legislature has or would have power and authority to impose.” It directed that “a tax imposed hereunder shall have application only within the territorial limits” of the city; and that “this Act shall not authorize the imposition of a tax on any transaction originating and/or consummated outside of tlie territorial limits of . . . [the] city, notwithstanding that some act be necessarily performed with respect to such transaction within such limits.” It required the revenues from the tax to be used exclusively for unemployment relief.

Pursuant to this authority the municipal assembly of the City of New York adopted Local Law No. 24 of 1934 (published as Local Law No. 25), since annually renewed, which laid a tax upon purchasers for consumption of tangible personal property generally (except foods and drugs furnished.on prescription), of utility services in supplying gas, electricity, telephone service, etc., and of meals consumed in restaurants. By § 2 the tax was fixed at “two percentum.upon the amount of the receipts from every sale in the city of New York/’ “sale” being defined by § 1(e) as “any transfer of title or possession, or both . . . in any manner or by any means whatsoever for a consideration or any • agreement • therefor.” Another clause of § 2¹ commands that the tax “shall be paid by the purchaser to the vendor, for and on account of the City of New York.” By the same clause the vendor, who is authorized to collect the tax, is required to charge it to the purchaser, separately from the sales price; and is made liable, as an insurer, for its payment to the city. By §§ 4 and 5 the vendor is required to keep records and file returns showing, the amount of the receipts from sales and the amount of the tax. In event of its nonpayment to the seller the buyer is required, within fifteen days after his purchase, to file a tax return and to pay the tax to the Comptroller, who is authorized by § 2 to set up a procedure for the collection of the tax from the purchaser. Purchases for resale are exempt from the tax, and a purchaser who pays the tax and later resells is entitled to a refund.

The ultimate burden of the tax, both in form and in substance, is thus laid upon the buyer, for consumption, of tangible personal property, and measured by the sales price. Only in event that the seller fails to pay oyer to the city the tax collected or to charge and collect it as the statute requires, is the burden cast op him. It is conditioned upon events occurring withiii the state, either transfer of title or possession'of the purchased property, or an agreement within the state, “consummated” there, for the transfer of title, or possession. The duty of collecting the tax and paying it over to the Comptroller is imposed on the seller in addition to the duty imposed upon the buyer to pay the tax to the Comptroller when not so collected. Such; in substance, has been the construction' of the statute by the state courts. Matter of Atlas Television Co., 273 N. Y. 51; 6 N. E. 2d 94; Matter of Merchants Refrigerating Co. v. Taylor, 275 N. Y. 113; 9 N. E. 2d 799; Matter of Kesbec, Inc. v. McGoldrick, 278 N. Y. 293; 16 N. E. 2d 288.

Respondent, a Pennsylvania corporation, is engaged in the production of coal of specified grades, said to possess unique qualities, from, its mines within that state and in selling it to consumers and dealers. It maintains a sales office- in New York City and sells annually to its customers 1,500,000 tons of its product, of which approximately 1,300,000 tons are delivered by respondent to some twenty public utility and steamship companies. The coal moves by rail from mine to dock in Jersey City, thence in most instances by barge to the point of delivery. All the sales contracts with the New York customers in question were entered into in New York City, and with two exceptions, presently to be considered separately, call for delivery of the coal by respondent by barge, alongside the purchasers’ plants or steamships. In many instances the price of the coal was stated to be subject to any increase or decrease of mining costs including wages, and of railroad rates between the mines and the Jersey City terminal to which the coal was to be shipped. All the deliveries, with the exceptions already noted, were made within New York City, and all such are concededly subject to the tax except insofar as it infringes the commerce clause.

Section 8 of the Constitution declares that “Congress shall have power ... to regulate commerce with foreign Nations, and among the several States. . . .” In imposing' taxes for state purposes a state is not exercising any power which the Constitution has conferred upon Congress. It is only when the tax operates to regulate commerce between the states or with foreign nations to an extent which infringes the authority conferred upon Congress, that the tax can be said to exceed constitutional limitations. See Gibbons v. Ogden, 9 Wheat. 1, 187; South Carolina Highway Dept. v. Barnwell Bros., 303 U. S. 177, 185. Forms of state taxation whose tendency is to prohibit the commerce or place it at a disadvantage as compared or in competition with intrastate commerce, and any state tax which discriminates against the commerce, are familiar examples of the exercise of state taxing power in an unconstitutional manner, because of its obvious regulatory effect upon commerce between the states.²

But it was not the purpose of the commerce clause to relieve those engaged in interstate commerce of their just share of state tax burdens, merely because an incidental or consequential effect of the tax is an increase in the cost of doing the business, Western Live Stock v. Bureau, 303 U. S. 250, 254. Not all state taxation is to be condemned because, in some manner, it has an effect upon commerce between the states, and there are many forms of tax whose burdens, when distributed through the play of economic forces, affect interstate commerce, which nevertheless fall short of the regulation of the commerce which the Constitution leaves to Congress. A tax may be levied on net. income wholly derived from interstate commerce.³ Non-discriminatory taxation of the instrumentalities of interstate commerce is not prohibited.⁴ The like taxation of property, shipped interstate, before its movement begins,⁵ or after it ends,⁶ is not a forbidden regulation. An excise for the warehousing of merchandise preparatory to its interstate shipment or upon its use,⁷ or withdrawal for use,⁸ by the consignee after the interstate journey has ended is not precluded. Nor is taxation of a local business or occupation which is separate and distinct from the transportation or intercourse which is interstate commerce, forbidden merely because in the ordinary course such transportation or intercourse is induced or occasioned by such business, or is, prerequisite to it. Western Live Stock v. Bureau, supra, 253, and cases cited.

In few of these eases could it be said with assurance that the local tax does not in some measure affect the commerce or increase the cost of doing it. But in them as in other instances of constitutional interpretation so as to insure the harmonious operation of powers reserved to the states with those conferred upon the national government, courts are called upon to reconcile competing' constitutional demands, that commerce between the states shall not be unduly impeded by state action, and that the power to lay taxes for the support of state government shall not be unduly curtailed. See Woodruff v. Parham, 8 Wall. 123, 131; Brown v. Houston, 114 U. S. 622; Galveston, H. & S. A. R. Co. v. Texas, 210 U. S. 217, 225, 227; South Carolina Highway Dept. v. Barnwell Bros., supra; Ford Motor Co. v. Beauchamp, 308 U. S. 331; cf. Metcalf & Eddy v. Mitchell, 269 U. S. 514, 523, et seq.; Board of County Comm’rs of Jackson County v. United States, 308 U. S. 343.

Certain types of tax may, if permitted at all, so readily be made the instrument of impeding or destroying interstate commerce as plainly to call for their condemnation as forbidden regulations. Such are the taxes already noted which are aimed at or discriminate against the commerce or impose a levy for the privilege of doing it, or tax interstate transportation or communication or their gross earnings, or levy an exaction on merchandise in the course of its interstate journey. Each imposes a burden which intrastate commerce does not bear, and merely because interstate commerce is being done places it at a disadvantage in comparison with intrastate business or property in circumstances such that if the asserted power to tax were sustained, the states would be left free to exert it to the detriment of the national commerce.

The present tax as applied to respondent is without the possibility of such consequences. Equality is its theme, cf. Henneford v. Silas Mason Co., 300 U. S. 577, 583. It does not aim at or discriminate against interstate commerce. It is laid upon every purchaser, within the state, of goods for consumption, regardless of whether they have been transported in interstate commerce. Its only relation to the commerce arises from the fact that immediately preceding transfer of possession to the purchaser within the state, which is the taxable event regardless of the time and place of passing title, the merchandise has been transported in ' interstate commerce and brought to . its journey’s end. Such a tax has no different effect upon interstate commerce than á tax on the “use” of property which has just been moved in interstate commerce, sustained in Monamotor Oil Co. v. Johnson, 292 U. S. 86; Henneford v. Silas Mason Co., supra; Felt & Tarrant Mfg. Co. v. Gallagher, 306 U. S. 62; Southern Pacific Co. v. Gallagher, 306 U. S. 167, or the tax- on storage or withdrawal for use by the consignee of gasoline, similarly sustained in Gregg Dyeing Co. v. Query, 286 U. S. 472; Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U. S. 249; Edelman v. Boeing Air Transport, 289 U. S. 249, or the familiar property tax on goods by the state of destination at the conclusion of their interstate journey. Brown v. Houston, supra; American Steel & Wire Co. v. Speed, 192 U. S. 500.

If, as guides to decision, we look to the purpose of the commerce clause to protect interstate commerce from discriminatory or destructive state action, and at the same time to the purpose of the state taxing power under which interstate.commerce admittedly must bear its fair share of state tax burdens, and to the necessity of judicial reconciliation of these competing demands, we can find no adequate ground for saying that the present tax is a regulation'which, in the absence of Congressional action, the commerce clause forbids.⁹ This Court has uniformly sustained a tax imposed by the state of the buyer upon a sale of goods, in several instances in the “original package,” effected by delivery to the purchaser upon arrival at destination after an interstate journey, both when the local seller has purchased the goods extra-state for the purpose of resale, Woodruff v. Parham, supra; Hinson v. Lott, 8 Wall. 148; Banker Bros. v. Pennsylvania, supra; Wiloil Corp. v. Pennsylvania, supra; Graybar Electric Co. v. Curry, 308 U. S. 513; 238 Ala. 116; 189 So. 186, and when the extra-state seller has shipped them into the taxing state for sale there. Hinson v. Lott, supra; Sonneborn Bros. v. Cureton, 262 U. S. 506. It has likewise sustained a fixed-sum license tax imposed on the agent of the interstate seller for the privilege of selling merchandise brought into the taxing state for the purpose of sale. Howe Machine Co. v. Gage, 100 U. S. 676; Emert v. Missouri, 156 U. S. 296; Kehrer v. Stewart, 197 U. S. 60; Baccus v. Louisiana, 232 U. S. 334; Wagner v. Covington, 251 U. S. 95.

The only challenge made to these controlling authorities is by reference to unconstitutional “burdens” on interstate .commerce made in general statements which are inapplicable here because they are tom from their setting in judicial opinions and speak of state regulations or taxes of a different kind laid in different circumstances from those with which we are now concerned. See for example, Galveston, H. & S. A. R. Co. v. Texas, supra; Cooney v. Mountain States Telephone Co., 294 U. S. 384 Fisher’s Blend Station v. Tax Commission, 297 U. S. 650. Others will presently be discüssed. But unless we are now to reject the plain teaching of this line of sales tax decisions, extending back for more than seventy years from Graybar Electric Co. v. Curry, supra, decided this term, to Woodruff v. Parham, supra, the present tax must be upheld. As we have seen, the ruling of these decisions does not rest on precedent alone. It has the support of reason and of a due regard for the just balance between national and state power. In sustaining these taxes on sales emphasis was placed on the circumstances that they were not so laid, measured or conditioned as to afford a means of obstruction to the commerce or of discrimination against it, and that the extension of the immunity of the commerce clause contended for would be at the expense of state taxing power by withholding from taxation property and transactions within the state without the gain of any needed protection to interstate commerce. Woodruff v. Parham, supra, 137, 140; Hinson v. Lott, supra, 152; Sonneborn Bros. v. Cureton, supra, 513, 514, 521; Wiloil Corp. v. Pennsylvania, supra, 174; cf. Brown v. Houston, supra; Henneford v. Silas Mason Co., supra, 583.¹⁰

Apart from these more fundamental considerations which we think are of controlling force in the application of the commerce clause, we can find no adequate basis for distinguishing the present tax laid on the sale or purchase of goods upon their arrival at destination at the end of an interstate journey from the tax which may be laid in like fashion on the property itself. That the latter is a permissible tax has long been established by an unwavering line of authority. Brown v. Houston, supra; Coe v. Errol, 116 U. S. 517; Pittsburgh & Southern Coal Co. v. Bates, 156 U. S. 577; American Steel & Wire Co. v. Speed, supra, 520; General Oil Co. v. Crain,, 209 U. S. 211; Bacon v. Illinois, 227 U. S. 504. As we have often pointed out, there is no distinction in this relationship between a tax on property, the sum of all the rights and powers incident to ownership, and the taxation of the exercise of some of its constituent elements. Nashville, C. & St. L. Ry. Co. v. Wallace, supra, 267, 268; Henneford v. Silas Mason Co., supra, 582; cf. Bromley v. McCaughn, 280 U. S. 124, 136-138. If coal situated as that in the present case was, before its delivery, subject to a state property tax, see Brown v. Houston, supra; Pittsburgh & Southern Coal Co. v. Bates, supra, transfer of possession of the coal upon a sale is equally taxable, see Wiloil Corp. v. Pennsylvania, supra, 175, just as was the storage or use of the property in similar circumstances held taxable in Nashville, C. & St. L. Ry. Co. v. Wallace, supra; Henneford v. Silas Mason Co., supra.

Respondent, pointing to the course of its business and to its contracts which contemplate the shipment of the coal interstate upon orders of the New York customers, insists that a distinction is to be taken between a tax laid on sales made, without previous, contract, after the merchandise has crossed the state boundary, and sales, the contracts for which when made contemplate or require the transportation of merchandise interstate to the taxing state. Only the sales in the state of destination in the latter class of cases, it is said, are protected from taxation by the commerce clause, a qualification which respondent concedes is a salutary limitation upon the reach of .the clause since its use is thus precluded as a means of avoiding state taxation of merchandise transported to the state in advance of the purchase order or contract of sale.

But we think this distinction is without the support of reason or authority. A very large part, if not most of the merchandise sold in New York City, is shipped interstate to that market. In the case of products like cotton, citrus fruits and coal, not to mention" many others which are consumed there in vast quantities, all have crossed the state line to seek a market, whether in fulfillment of a contract or not. That is equally the case with other goods sent from without the state to the New York market, ■whether they are brought into competition with like goods produced within the state or not. We are unable to say that the present tax, laid generally upon all sales to consumers within the state, subjects the commerce involved where the.goods, sold are brought from other states, to any greater burden or affects it more, in any economic or practical way, whether the purchase order or contract precedes or follows the interstate shipment. Since the tax applies only if a sale is made, and in either case the object of interstate shipment is a sale at destination, the deterrent effect of the tax would seem to be. the same on both. Restriction of the scope of the commerce clause so as to prevent recourse to it as a, means of curtailing state taxing power seems as salutary in the one case as in the other.

True, the distinction has the support of a statement obiter in Sonneborn Bros. v. Cureton, supra, 515, and seems to have been tacitly recognized in Ware & Leland v. Mobile County, 209 U. S. 405, 412, and Banker Bros. Co. v. Pennsylvania, supra, although in each case a tax on the sale of goods brought into the state for sale was upheld. But we have sustained the tax where the course of business and the agreement for sale, plainly contemplated the shipment interstate in fulfilment of the contract. Wiloil Corporation v. Pennsylvania, supra, 173; Graybar Electric Co. v. Curry, supra. In the same circumstances the Court has upheld a property tax on the merchandise transported, American Steel & Wire Co. v. Speed, supra; General Oil Co. v. Crain, supra; see Bacon v. Illinois, supra, 515, 516; upon its use, Monamotor Oil Co. v. Johnson, supra; Felt & Tarrant Co. v. Gallagher, supra, and upon its storage; cf. Gregg Dyeing Co. v. Query, supra; Nashville, C.& St. L. Ry. Co. v. Wallace, supra. Taxation of property or the exercise of a power over it immediately preceding its previously contemplated shipment interstate has been similarly sustained. Coe v. Errol, supra; Bacon v. Illinois, supra; Federal Compress Warehouse Co. v. McLean, 291 U. S. 17. For reasons already indicated all such taxes upon property or the exercise of the powers of ownership stand in no different relation to interstate commerce and have no different effect upon it than has the present sales tax upon goods whose shipment interstate into the taxing state was contemplated when the contract was entered into.

It is also urged that the conclusion which we reach is inconsistent with the long line of decisions of this Court following Robbins v. Shelby County Taxing District, 120 U. S. 489, which have held invalid, license taxes to the extent that they have sought to tax the occupation of soliciting orders for the purchase of goods to be shipped into the taxing state. In some instances the tax appeared to be aimed at suppression or placing at a disadvantage this type of business when brought into competition with competing intrastate sales. See Robbins v. Shelby County Taxing District, supra, 498; Caldwell v. North Carolina, 187 U. S. 622, 632.¹¹ In all, the statute, in its practical operation, was capable of use, through increase in the tax, and in fact operated to some extent to place the merchant thus doing business interstate at a disadvantage in competition with untaxed sales at retail stores within the state. While a state, in some circumstances, may by taxation suppress or curtail' one type of intrastate business to the advantage of another type of competing business which is left untaxed, see Puget Sound Power & Light Co. v. Seattle, 291 U. S. 619, 625, and cases cited, it does not follow that intérstate commerce may be similarly affected by the practical operation of a. state taxing statute. Compare. Hammond Packing Co. v. Montana, 233 U. S. 331, Magnano Co. v. Hamilton, 292 U. S. 40, with Schollenberger v. Pennsylvania, 171 U. S. 1; Robbins v. Shelby County Taxing District, supra; Sprout v. South Bend, 277 U. S. 163. It is enough for present purposes that the rule of Robbins v. Shelby County Taxing District, supra, has been, narrowly limited to fixed-sum license taxes imposed on the business of soliciting orders for the purchase of goods to be shipped interstate, compare Robbins v. Shelby County Taxing District, supra, with Ficklen v. Shelby County Taxing District, 145 U. S. 1; see Howe Machine Co. v. Gage, supra; Wagner v. Covington, supra; and that the actual and potential effect on the commerce of such a tax is wholly wanting in the present case.

Finally, it is said that the vice of the present tax is that it is measured by the gross receipts from interstate commerce and thus in effect' reaches for taxation the commerce carried on both within and without the taxing state. Adams Manufacturing Co. v. Storen, 304 U. S. 307; Gwin, White & Prince v. Henneford, supra; cf. Western Live Stock v. Bureau, supra, 260. It is true that a state tax upon the operations of interstate commerce measured either by its volume or the gross receipts derived from it has been held to infringe the commerce clause, because the tax if sustained would exact, tribute for the commerce carried on beyond the boundaries of the taxing state, and would leave each state through which the commerce passes free to subject it to a like burden not borne by intrastate commerce. See Western Live Stock v. Bureau, supra, 255; Gwin, White & Prince v. Henneford, supra, 439.

In Adams Manufacturing Co. v. Storen, supra, 311, 312, a tax on gross receipts, so far as laid by the state of the seller upon the receipts from sales of goods manufactured in the taxing state and sold in othér states, was held invalid because there the court found the receipts derived from activities in interstate commerce, as distinguished from the receipts from activities wholly intrastate, were included in the measure of the tax, the sales price, without segregation or apportionment. It was pointed out, pages 310, 311 and 312, that had the tax been conditioned upon the exercise of the taxpayer’s franchise or its privilege of manufacturing in the taxing state, it would have been sustained, despite its incidental effect on interstate commerce, since the taxpayer’s local activities or privileges were sufficient to support such a tax, and that it could fairly be measured by the sales price of the goods. Compare American Manufacturing Co. v. St. Louis, 250 U. S. 459, with Crew Levick Co. v. Pennsylvania, 245 U. S. 292. See Western Live Stock v. Bureau, supra, 257—259; cf. Bass, Ratcliff & Gretton v. State Tax Commission, 266 U. S. 271, 280; Educational Films Corp. v. Ward, 282 U. S. 379, 387-8; Pacific Co. v. Johnson, 285 U. S. 480.

The rationale of the Adams Manufacturing Co. case does not call for condemnation of the present tax.- Here the tax is conditioned upon a local activity, delivery of goods within the state upon their purchase for consumption. It is an activity which, apart from its effect on the commerce, is subject to the state taxing power. The effect of the tax, even though measured by the sales price, as has been shown, neither discriminates against nor obstructs interstate commerce more than numerous other state taxes which have repeatedly been sustained as involving no prohibited regulation of interstate commerce.

In two instances already noted, respondent’s' contracts with Austin, Nichols & Co. and with the New England Steamship Company call for delivery of the coal at points outside of New York, in the one case f. o. b. at the mines in Pennsylvania, and in the other at the pier in Jersey City, New Jersey, and deliveries were made accordingly.

Respondent asked the state courts to rule that the taxing act did not apply to these transactions, particularly because the enabling statute expressly prohibits the city from imposing a tax upon “any transaction originating and/or consummated outside the territorial limits of the City.” See Matter of Gunther’s Sons v. McGoldrick, 279 N. Y. 148; 18 N. E. 2d 12. This question the state courts left unanswered, the Court of Appeals resting its decision wholly on the constitutional ground.

Upon the remand of this cause for further proceedings not inconsistent with this decision, the state court will be free to decide the state question, and the remand will be without prejudice to the further presentation to this Court of any federal question remaining undecided here, if the state court shall determine that the taxing statute is applicable.

Reversed.

2 Despite mechanical or artificial distinctions sometimes taken between the taxes deemed permissible and those condemned, the decisions appear to be predicated on a practical judgment as to the likelihood of the tax being used to place interstate commerce at a competitive disadvantage. See Galveston, H. & S. A. R. Co. v. Texas, 210 U. S. 217, 227. License taxes requiring a corporation engaged in interstate commerce to pay a fee of a certain percentage of its capital stock have been rejected because of the danger that each state in which the corporation does business may impose a similar tax, measured by its interstate business in all, Western Union v. Kansas, 216 U. S. 1; Atchison, T. & S. F. Ry. Co. v. O’Connor, 223 U. S. 280; Looney v. Crane Co., 245 U. S. 178; International Paper Co. v. Massachusetts, 246 U. S. 135, and have only been sustained when apportioned to that part of the capital thought to be attributable to an intrastate activity. National Leather Co. v. Massachusetts, 277 U. S. 413; International Shoe Co. v. Shartel, 279 U. S. 429; Ford Motor Co. v. Beauchamp, 308 U. S. 331. Privilege taxes requiring a percentage of the gross receipts from interstate transportation or from other activities in carrying on the movement of that commerce, which if sustained could be imposed wherever the interstate activity occurs, have been struck down for similar reasons. Fargo v. Michigan, 121 U. S. 230; Philadelphia & S. Steamship Co. v. Pennsylvania, 122 U. S. 326; Leloup v. Mobile, 127 U. S. 640; Galveston, H. & S. A. R. Co. v. Texas, 210 U. S. 217, cf. Gwin, White & Prince v. Henneford, 305 U. S. 434. Fixed-sum license fees, regardless of the amount, for the privilege of carrying on the commerce, have been thought likely to be used to overburden the interstate commerce, McCall v. California, 136 U. S. 104; Crutcher v. Kentucky, 141 U. S. 47; Barrett v. New York, 232 U. S. 14; Texas Transportation & Terminal Co. v. New Orleans, 264 U. S. 150. Taxation of articles in course of their movement in interstate commerce is similarly foreclosed. Case of State Freight Tax, 13 Wall. 232; Champlain Realty Co. v. Brattleboro, 260 U. S. 366; Hughes Bros. Co. v. Minnesota, 272 U. S. 469; Carson Petroleum Co. v. Vial, 279 U. S. 95. See Henderson, The Position of Foreign Corporations in American Constitutional Law, 117; Powell, Indirect Encroachment on Federal Authority by the Taxing Power of the States, 31 Harv. L. Rev. 321, 572, 721, 932; 32 Harv. L. Rev. 234, 374, 634, 902. Lying back of these decisions is the recognized danger that, to the extent that the burden falls on economic interests without the state, it is not likely to be alleviated by those political restraints which are normally exerted on legislation where it affects adversely interests within the state. See Robbins v. Shelby County Taxing District, 120 U. S. 489, 499; South Carolina Highway Dept. v. Barnwell Bros., 303 U. S. 177, 185, Note 2; cf. McCulloch v. Maryland, 4 Wheat. 316; Helvering v. Gerhardt, 304 U. S. 405, 412.

3 United States Glue Co. v. Oak Creek, 247 U. S. 321; Underwood Typewriter Co. v. Chamberlain, 254 U. S. 113; Atlantic Coast Line R. Co. v. Daughton, 262 U. S. 413; Matson Navigation Co. v. State Board, 297 U. S. 441.

4 Adams Express Co. v. Ohio, 165 U. S. 194; Wells Fargo & Co. v. Nevada, 248 U. S. 165; St. Louis & E. St. L. Ry. Co. v. Missouri, 256 U. S. 314; Southern Ry. Co. v. Watts, 260 U. S. 519.

5 Coe v. Errol, 116 U. S. 517; Bacon v. Illinois, 227 U. S. 504; Heisler v. Thomas Colliery Co., 260 U. S. 245; Minnesota v. Blasius, 290 U. S. 1. Cf. Hope Natural Gas Co. v. Hall, 274 U. S. 284.

6 Brown v. Houston, 114 U. S. 622; Pittsburgh & Southern Coal Co. v. Bates, 156 U. S. 577; American Steel & Wire Co. v. Speed, 192 U. S. 500; General Oil Co. v. Crain, 209 U. S. 211.

7 Federal Compress & Warehouse Co. v. McLean, 291 U. S. 17; Chassaniol v. Greenwood, 291 U. S. 584.

8 Eastern Air Transport v. South Carolina, 285 U. S. 147; Gregg Dyeing Co. v. Query, 286 U. S. 472; Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U. S. 249; Edelman v. Boeing Air Transport, 289 U. S. 249.

9 The imposition on the seller of the duty to insure collection of the tax from the purchaser does not violate the commerce clause. See Monamotor Oil Co. v. Johnson, supra; Felt & Tarrant Mfg. Co. v. Gallagher, supra.

10 In all of-these cases, except Henneford v. Silas Mason Co., supra, the taxed sale was of merchandise in the “original package,” although the original package doctrine had been thought to be a “positive and absolute” limitation on the exercise of state power. American Steel & Wire Co. v. Speed, 192 U. S. 500, 521. The doctrine originated in Brown v. Maryland, 12 Wheat. 419, where a discriminatory tax on imports was involved. It was overthrown as to interstate commerce when the court found that it would be unjust to permit the merchant who engaged in interstate commerce to escape a tax which the state had levied on the sale of goods after their interstate shipment, but with equal justice on all merchants. Woodruff y. Parham, 8 Wall. 123; Hinson v. Lott, 8 Wall. 148. After its supposed recrudescence in Leisy v. Hardin, 135 U. S. 100, the opinions of Justice Miller in Woodruff v. Parham, supra, and of Justice Bradley in Brown v. Houston, 114 U. S. 622, were explained by Chief Justice (then Justice) White in American Steel & Wire Co. v. Speed, supra, at 521, as the recognition by’ the court that the question was not whether “interstate commerce was to be considered as having completely terminated,” but whether a particular exertion of taxing power by a state “so operated upon interstate commerce as to amount to a regulation thereof, in conflict with the paramount authority conferred upon Congress.” He pointed out that the Court in these cases “conceded that the goods which were taxed had not completely lost their character as interstate commerce since they had not been sold in the original package. As, however, they had arrived at their destination, were at rest in the State, were enjoying the protection which the laws of the State afforded, and were taxed without discrimination like all other property, it was held that the tax did not amount to a regulation in the sense of the Constitution, although its levy might remotely and indirectly affect interstate commerce.” Cf. Cardozo, J., in Baldwin v. Seelig, 294 U. S. 511, 526.

“The test of the 'original package/ which came into our law with Brown v. Maryland, 12 Wheat. 419, is not inflexible and final for the transactions of interstate commerce, whatever may be its validity for commerce with other countries. Cf. Woodruff v. Parham, supra; Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288 U. S. 218, 226. There are purposes for which merchandise, transported from another state, will be treated as a part of the general mass of property at the state of destination though still in the original containers. This is so, for illustration, where merchandise so contained is subjected to a non-discriminatory property tax which it bears equally with other merchandise produced within the state. Sonneborn Bros. v. Cureton, 262 U. S. 506; Texas Co. v. Brown, 258 U. S. 466, 475; American Steel & Wire Co. v. Speed, 192 U. S. 500. ... ‘A state tax upon merchandise brought in from another State, or upon its sales, whether in original packages or not, after it has' reached its destination and is in a state of rest, is lawful only when the tax is not discriminating in its incidence against the merchandise because of its origin in another State.’ Sonneborn Bros. v. Cureton, supra, at p. 516. Cf. Bowman v. Chicago & N. W. Ry. Co., 125 U. S. 465, 491; ... In brief, the test of the original package is not an ultimate principle.- It is an illustration of a principle. Pennsylvania Gas Co. v. Public Service Comm’n, 225 N. Y. 397, 403; 122 N. E. 260. It marks a convenient boundary and one sufficiently precise save in exceptional conditions. What is ultimate is the principle that one state in its dealings with another may not place itself in a position of economic isolation. Formulas and' catchwords are subordinate to this overmastering requirement.”

11 When the Bobbins case was decided, sixteen states' required the payment of license taxes by some kinds of drummers. For citations of the statutes, see, Lockhart, Sales Tax in Interstate Commerce, 52 Harv. L. Rev. 617, 621. More recently it has been estimated that almost 800 municipal ordinances directed at drummers were adopted for the purpose of embarrassing this competition with local merchants. Hemphill, the House to House Canvasser in Interstate Commerce, 60 Am. L. Rev. 641. The court was cognizant of this trend, see Robbins v. Shelby County Taxing District, 120 U. S. 489, 498. Following this decision 19 such taxes were declared invalid. Carson v. Maryland, 120 U. S. 502; Asher v. Texas, 128 U. S. 129; Stoutenburgh v. Hennick, 129 U. S. 141; Brennan v. Titusville, 153 U. S. 289; Stockard v. Morgan, 185 U. S. 27; Caldwell v. North Carolina, 187 U. S. 622; Crenshaw v. Arkansas, 227 U. S. 389; Rogers v. Arkansas, 227 U. S. 401; Stewart v. Michigan, 232 U. S. 665; Davis v. Virginia, 236 U. S. 697; Real Silk Hosiery Mills v. Portland, 268 U. S. 325. Read in their proper historical setting these cases may be said to support the view that this kind of a tax is likely to be used “as an instrument of discrimination against interstate or foreign commerce,” see DiSanto v. Pennsylvania, 273 U. S. 34, 39.