47 S.E. 658 | N.C. | 1904
This action was brought to restrain the collection of a license tax and to recover the property levied upon and seized by the sheriff to enforce the payment of it. The case was heard upon the complaint treated as a case agreed, the facts alleged therein being admitted. The complaint is as follows:
The plaintiff complains of the defendant and alleges:
1. That the Wrought Iron Range Company, the plaintiff in this case, is a corporation duly organized and created under the laws of the State of Missouri, with its general offices located in the city of St. Louis, Mo., in which city and State it also has a factory in which are manufactured all the ranges sold by its traveling salesmen throughout the United States, and the plaintiff has been engaged during the year 1903 in selling ranges in Pamlico County, North Carolina, as is hereinafter set out.
2. That the defendant is the duly qualified and acting sheriff (507) of Pamlico County, North Carolina.
3. That the manner in which said company has sold all its ranges and transacted all its business in Pamlico County, North Carolina, during the year 1903, prior to the filing of this suit, and the manner in which it proposes to hereinafter sell its ranges and conduct its business so long as it remains in said county and State, is as follows:
The agents employed by plaintiff in the sale of its ranges and the transaction of its business in said county and State are as follows: S.D. Dew, officially designated by plaintiff as division superintendent; _______, officially designated by plaintiff as traveling salesmen, and _________, officially designated by plaintiff as deliveryman. Plaintiff has other salesmen and deliverymen operating in North Carolina, but the names only of those operating in Pamlico County in 1903 are hereinbefore set out.
4. That each and every one of said agents of said plaintiff in said county of Pamlico, State of North Carolina, is paid by the plaintiff for his services to said plaintiff a stipulated and contractural compensation, together with his necessary expenses, while engaged in the sale or delivery of plaintiff's ranges, or any other services rendered by them for said plaintiff in said county and State. Further than this stipulated compensation no one of said agents has any monetary or financial interest whatever in the sales, proceeds of sales, or business transacted by plaintiff in said county and State.
5. That each of said agents hereinbefore referred to as traveling salesmen was furnished by plaintiff with a wagon, team and sample range, all of which were and are the sole and undivided property of plaintiff, *362 and each of said salesmen was assigned to a certain and determinate territory in said Pamlico County by the agent hereinbefore referred to as division superintendent.
6. That each of said traveling salesmen, in his appropriate (508) territory within the limits of said Pamlico County, exhibited his sample range to prospective purchasers, and solicited their orders for ranges similar in all respects to the samples exhibited, to be delivered to purchasers within thirty days from date of said orders. In no instance in said county and State did said traveling salesmen solicit orders for, sell or deliver to any purchaser the sample ranges entrusted to them by plaintiff, nor did either of said salesmen deliver any ranges to purchasers in said county and State, the orders for which had been obtained either by himself or the other traveling salesmen hereinbefore referred to.
7. That in all cases in said county and State where orders were obtained by said traveling salesmen, purchasers were required to sign, and did sign and deliver to said salesmen, two promissory notes of equal amount, and of the same tenor and date, one of which was made payable in November, 1904, and the other in November, 1905, conditioned for the delivery at the premises of the purchaser within thirty days from date of a No. 1900 range, same as sample exhibited, and to be void only upon the condition that said plaintiff refused to deliver said range as specified in notes, and for no other cause whatever.
8. That all orders obtained by said salesmen for the future delivery of ranges under the terms and conditions aforesaid, were, by the respective salesmen who obtained or secured said orders, turned over to plaintiff's agent hereinbefore referred to as division superintendent.
9. That said division superintendent, after investigating the financial conditions of said purchaser, selected such as he regarded as responsible for their contracts, turned their orders over to the deliverymen hereinbefore mentioned, delivered to said deliverymen the ranges (509) ordered by said purchasers, whereupon said agents proceeded to deliver to said purchasers the ranges according to the terms and conditions specified in the promissory notes hereinbefore mentioned.
10. That for the purpose of making such deliveries, each said deliveryman was furnished with a wagon and team, which were and are the exclusive property of the plaintiff, and said deliverymen, for their services in making said deliveries of ranges, were and are paid a stipulated compensation and their necessary expenses by said plaintiff. Further than the said compensation, said deliverymen have no monetary or financial interest in the sale, proceeds of sales, or business of said plaintiff. *363
11. That all ranges sold by the plaintiff or its agent in said county and State were sold and delivered to its customers in the original form or packages in which they were shipped into the State of North Carolina from plaintiff's factory in St. Louis, Missouri. All of said ranges were shipped in carload lots, each car containing sixty separate and distinct ranges, and consigned to plaintiff at New Bern, in Craven County, North Carolina, in care of its said agent, S. H. Dew.
12. That upon the arrival of said ranges at said New Bern, they were unloaded by plaintiff's agents aforesaid and stored in the warehouse of the Atlantic and North Carolina Railroad Company, the common carrier by which they were delivered at said New Bern, and held subject to plaintiff's order.
13. That no ranges were sold or offered for sale at said warehouse, but were taken therefrom only as hereinbefore mentioned, for the purpose of filling orders obtained by the salesmen aforesaid.
14. That all of said ranges used in the transaction of (510) plaintiff's business in Pamlico County, North Carolina, were unloaded from the cars of the common carrier at said New Bern in the precise form or package in which they were placed in the cars of the common carrier at St. Louis, Missouri, and placed in said warehouse in the same form or packages, and were taken from said warehouse and loaded upon plaintiff's delivery wagons in the same form or packages in which they were shipped from St. Louis, and delivered to plaintiff's customers in Pamlico County in the identical and original form or packages in which they were shipped into the State of North Carolina.
15. That the defendant, claiming the right to do so under section 36, chapter 247, North Carolina Public Laws of 1903, demanded from plaintiff a license tax of one hundred dollars for the business of peddling ranges in said county and State, for one year, ending May 31, 1904, and levied on and seized the property of plaintiff for the purpose of satisfying said tax, and still has the property in his possession sufficient to satisfy said tax, and will sell and dispose of said property to satisfy said tax unless restrained by this Court.
16. That section 36, chapter 247, Public Laws of 1903, in so far as it applies to plaintiff, and the business transacted by it in Pamlico County, North Carolina, is in conflict with Article I, section 8, paragraph 3, of the Constitution of the United States, and therefore, as to the plaintiff and its said business, illegal and unconstitutional, absolutely null, void and invalid.
17. That all ranges sold by its traveling salesmen in said county and State were shipped into said city of New Bern, Craven County, and *364 State, before any of said ranges had been sold, or order for their sale had been solicited, by its salesmen aforesaid. Plaintiff has no (511) place of business in Pamlico County, or elsewhere in the State of North Carolina, except as hereinbefore stated.
18. That the said seizure of plaintiff's property is for the purpose of collecting a tax levied for an illegal and unconstitutional purpose, and said levy and seizure is illegal, void and wrongful, and the defendant is threatening to sell plaintiff's property and will sell it to pay said illegal tax, unless restrained by this Court, and the plaintiff will be irreparably injured and damaged by said illegal and wrongful acts of defendant.
19. That a summons has been issued in this action.
Wherefore, the plaintiff demands judgment that the defendant be restrained and enjoined from collecting said tax; that he be restrained from selling or disposing of the property now in his hands belonging to the plaintiff; that the defendant return to the plaintiff the property now in his hands; for costs and for general relief.
The following entries appear on the record: 1. The parties waive a jury trial and agree that the Court may hear the case out of term, as of the Fall Term, 1903, of the Superior Court of Pamlico County, and render a final judgment herein. 2. The parties agree that the facts alleged in the complaint are true, and also agree that the Court may enter a final judgment on them. Whereupon, argument is heard upon both sides, and it is therefore considered by the Court and adjudged that the restraining order and injunction heretofore issued be and the same is hereby dissolved, and that the defendant go without day and recover his costs of action of the plaintiff and the surety to his prosecution bond. Plaintiff excepted and appealed. This appeal presents for our consideration the question whether the imposition of a license tax required of the plaintiff under section 36 of the Revenue Act (Acts 1903, ch. 247) is a valid exercise of the taxing power of the State with reference to the plaintiff's particular business as described in the case agreed, and the decision of that question depends upon whether the exaction of the license tax, as a prerequisite to the exercise of the right to sell its ranges in this State, is a regulation of interstate trade or an *365 interference with its free and unrestricted enjoyment within the meaning of the commerce clause of the Constitution of the United States.
It will enable us the better to understand the limitations which have been placed by that clause of the Constitution upon the right of one State to impose taxes upon the sale of goods brought from another State, if we first ascertain what principles have been settled by the adjudications of the court of last resort having jurisdiction to pass upon that question.
In Robbins v. Shelby Taxing District,
But in making such internal regulations a state cannot impose taxes upon persons passing through the State or coming into it merely for a temporary purpose, especially if connected with interstate or foreign commerce, nor can it impose such taxes upon property imported into the State from abroad or from another state, and not yet become part of the common mass of property therein; and no regulations can be made directly affecting interstate commerce. Any taxation or regulation of the latter character would be an unauthorized interference with the power given to Congress over the subject.
It seems, therefore, with respect to the importation from other states of goods already sold, no license tax can be levied upon them by the state into which they are brought for delivery to the purchaser until they have been mingled with and form a part of the common mass of the property therein, and, even when they are thus commingled, they are still protected against any discriminating tax laid upon them directly or indirectly as imports or by reason of their having been imported into the State, simply because this would be a regulation of interstate commerce inconsistent with that perfect freedom of trade between the states which Congress, by not legislating otherwise, has clearly indicated *366 should exist. We may concede, for the purpose of this discussion, that there is no discrimination under section 36 of the Revenue Act against goods imported from another state, but that all goods of the classes described in that section, whether imported into the State or originally forming a part of the general mass of property therein, are alike subject to the tax without any distinction whatever, so that persons who sell goods which are brought into the State stand upon a basis of equality with those who sell goods already in the State and forming part of the general mass of its property. Assuming, then, that there has (514) been no discriminating legislation against the sale of imported goods, the question arises as to the time when goods brought into a state for the purpose of sale cease to be articles of interstate commerce so as to become subject to the free and untrammeled exercise of the taxing power of the State.
This question was considered and decided in Brown v. Maryland, 12 Wheat., 419, with reference to a tax imposed upon the right to sell goods imported from foreign countries. But the same principle, saysMarshall, C. J., applies with equal force to commerce between the states. Referring to the extent of the power, he says: "The power is coextensive with the subject on which it acts, and cannot be stopped at the external boundary of a state but must enter its interior. If the power reaches the interior of a state and may be there exercised, it must be capable of authorizing a sale of those articles which it introduced. Commerce is intercourse; one of its most ordinary ingredients is traffic. It is inconceivable that the power to authorize this traffic, when given in the most comprehensive terms with the intent that its efficacy should be complete, should cease at the point when its continuance is indispensable to its value. To what purposes should the power to allow importation be given, unaccompanied with the power to authorize a sale of the thing imported? Sale is the subject of importation, and is an essential ingredient of that intercourse of which importation constitutes a part. It is as essential an ingredient, as indispensable to the existence of the entire thing, then, as importation itself. It must be considered as a component part of the power to regulate commerce. Congress has a right not only to authorize importation but to authorize the importer to sell. We think, then, that if the power to authorize a sale exists in Congress, the conclusion that the right to sell it connected with the law permitting importation, (515) as an inseparable incident, is inevitable. If the principles we have stated be correct, the result to which they conduct us cannot be mistaken. Any penalty inflicted on the importer for selling the *367 article in his character of importer must be in opposition to the act of Congress which authorizes importation. Any charge on the introduction and incorporation of the articles into and with the mass of property in the country must be hostile to the power given to Congress to regulate commerce, since an essential part of that regulation, and principal object of it, is to prescribe the regular means for accomplishing that introduction and incorporation." Discussing the particular question as to the time when the goods become incorporated with the common mass of property in the State, he says: "This indictment is against the importer for selling a package of dry goods, in the form in which it was imported, without a license. This state of things is changed if he sells them, or otherwise mixes them with the general property of the State by breaking up his packages and traveling with them as an itinerant peddler. In the first case the tax intercepts the import, as an import, in its way to become incorporated with the general mass of property, and denies it the privilege of becoming so incorporated until it shall have contributed to the revenue of the State. It denies to the importer the right of using the privilege which he has purchased from the United States until he shall have also purchased it from the State. In the last case the tax finds the articles already incorporated with the mass of property by the act of the importer. He has used the privilege he had purchased, and has himself mixed them up with the common mass, and the law may treat them as it finds them."
We have quoted at some length from this important case, because we understand that the principles therein established have been accepted as authoritative in all subsequent decisions upon this subject. And they have not been in the least changed since they were (516) first announced, except in so far as it was therein intimated that a state could not tax directly and as property imports from another state, as, in this respect, the rule in regard to the taxation of imports from foreign countries and the rule in regard to imports from another state are not the same, as the Constitution expressly prohibits the taxation, in any form, of imports from foreign countries. Woodruff v. Parham, 8 Wall., 138. But in all other respects the decision in the case of Brown v. Maryland has remained intact. This will appear by reference to the very recent case ofR. R. v. Sims,
Questions relating to the interference by state regulations with interstate commerce have frequently been before the Supreme Court of the United States, whose decisions upon them are of course controlling with us. It will suffice to examine only a few of the cases decided by that Court in order to determine whether the law under which the (517) license tax has been imposed upon the plaintiff is in conflict with the commerce clause of the Constitution and therefore invalid.
It requires, we think, only a careful consideration of these cases, and a correct understanding of their distinguishing features, to fix the limit of the State's power of taxing goods imported from other states.
Some general principles have been settled by actual adjudication which enables us to classify the cases arising out of the power asserted by a state to prohibit the importation of goods from other states. This importation may be prohibited, either directly by forbidding the goods to be brought into the State, or indirectly by imposing a tax in such a way as to restrict the enjoyment of the right to import them, such as a license tax, which is required to be paid before the goods are either delivered, under a contract of sale made before the importation began, or sold after the transit is completed and they have reached their destination in the State.
(1) When the goods are imported from a foreign country into one of the states, the State may not levy a tax upon them either directly or indirectly. No tax can be assessed against them as property ad valorem or according to any other principle, nor can any license tax be imposed upon the right to sell them, and this exemption continues so long as they remained in the original packages; and after the packages are broken and they become a part of the common mass of property they are still protected against unfriendly legislation which results in any discrimination against them and in favor of the property which has not been imported into the State. Brown v. Maryland, 12 Wheat., 419; May v. New Orleans,
(2) The Constitution of the United States declares that "No state shall, without the consent of Congress, lay any imposts or duties on imports exports, except what may be absolutely necessary for executing its inspection laws," and that Congress shall have power "to regulate commerce with foreign nations and among the several (518) states and with the Indian tribes." It will be seen, from a slight comparison of the two provisions, that the exception from taxation is more extensive in the case of foreign imports than it is in the case of goods imported from one state into another. In the former case all state taxation on importation is prohibited, while in the latter case it is only forbidden by implication, in so far as it may interfere with the regulation of commerce, over which Congress is given exclusive power and jurisdiction. This is clearly pointed out by Justice Miller in Woodruff v. Parham, supra. If the tax does not fetter commerce, although it may remotely affect it, it may be levied by the State even if the goods have come from another state. A tax laid directly on the imported goods as property, in like manner and by the same rule as upon other property produced in the State, would be valid if the levy is made after the goods have reached their destination and are at rest in the State. In such a case, and for the purpose of direct taxation, or of such taxation as does not restrict the right of interstate traffic, the imported goods are considered as a part of the general mass of property in the State as soon as they have reached their final destination and are at rest within the State. This principle was restated and applied in the case of Brown v. Houston,
(3) We see therefore that the State cannot tax imports from foreign countries at all, and can tax goods from other states only when no discrimination against them and no regulation of commerce results therefrom. In no form of legislation can one state prohibit the importation of goods from another state, provided the commodity the importation of which is forbidden is a legitimate subject of commerce, and this right of importation which is thus protected against hostile state legislation includes the right to sell the goods in the original (519) packages after they have arrived in the State, and not until such a sale is made do they cease to be articles of interstate commerce and become a part of the general mass of the property in the State. This doctrine was announced in Brown v. Maryland, supra, as to foreign imports, and it has been extended by subsequent decisions to imports as between the states, because in this respect both kinds of commerce stand upon the same footing and are protected by the same clause of *370
the Constitution. Leisy v. Hardin,
(4) The doctrine that one state cannot directly prohibit the importation into its territory of goods from another state has been extended, or rather applied, to a case where the prohibition was attempted not directly, but by means of a license tax exacted of the importer. In the cases to which we will presently refer, the goods were sold in one state to a person residing in another state and were to be delivered to the purchaser in the latter state. If the importer cannot sell the goods until he has paid for and received a license, the right of importation is in principle as much restricted, and interstate commerce as much regulated, though perhaps not in the same degree, as in the case of an absolute prohibition. Brown v.Maryland, supra; Robbins v. Shelby Taxing Dist.,
(5) The only question remaining for us to consider. is whether the principle of Brown v. Maryland, Robbins v. Shelby Taxing District (520) and the other cases just cited, applies to a case like the one at bar, where there is no direct prohibition against the importation of goods from another state nor any license tax exacted of the importer, who, by himself or through his agents, solicits orders by sample for goods to be brought into the State and then delivered, but where the goods are brought into the State, and having reached their destination, and being at rest in the State, are sold from a warehouse of the carrier in the original packages, orders for the goods being first obtained by agents of the importer who solicit the same by exhibiting samples of the goods which are carried from place to place in a wagon, the orders being afterwards filled and deliveries made from the warehouse.
A license tax was required of the plaintiff under section 36 of the Revenue Act of 1903, which is as follows: "On every itinerant person or company peddling clocks, stoves or ranges one hundred dollars per annum for each county in which he or they may peddle the same. The license to be issued by the sheriff of the county, who shall collect said tax and pay the same to the State Treasurer." Section 44 provides that "Any person carrying a wagon, cart or buggy, or traveling on foot for *371 the purpose of exhibiting or delivering any wares or merchandise shall be considered a peddler." Sections 36 and 44 are a part of Schedule B, and section 26 of the Revenue Act, which is the first section of Schedule B, reads as follows: "Taxes in this schedule shall be imposed as license taxes for the privilege of carrying on the business or doing the act named, and nothing in this act contained shall be construed to relieve any person or corporation from the payment of tax as required in the preceding schedule. The license issued under this schedule shall be for twelve months, and shall expire on the 31st day of May of each year."
It will be seen therefore that no person or corporation has the (521) right to carry on any business taxed under Schedules B and C until the license tax is paid, and every such person or corporation is required to exhibit the license when demanded by the sheriff of the county in which the business is conducted (sec. 90), and the sheriff is required to demand payment of the license tax from any person or corporation liable for the same, and a failure to pay the same is made a misdemeanor. (Sec. 87.)
It must be admitted that the right to sell is an important and valuable part of the right to import. The right to bring goods into a state for the purpose of selling them there would be of no value if, when they arrive at their destination, the right to sell them is prohibited, and even though there may be no absolute prohibition, any restriction placed upon the right to dispose of the goods is as much an interference with the right to import or interstate commerce, though not perhaps in the same degree, as if the sale of the goods had been altogether forbidden. There is no difference in principle between the two cases. The proposition, as is said in Brennan v. Titusville,
It will be observed that the tax in that case was declared invalid, not only as being an impost or duty laid on imports from a foreign country but as being an interference with the regulation of commerce. The question is discussed in both aspects and the tax declared illegal upon both grounds. The words which we have already quoted from the masterly and unanswerable opinion of the great Chief Justice will be found in that part of it where he is discussing the second objection to the tax urged by the plaintiff in error (Brown), the defendant below, which was based solely upon the ground of its repugnance to that clause of the Constitution committing to Congress the power to regulate commerce with foreign nations and among the several states.
It was also settled by Brown v. Maryland that imported goods (523) preserved their character as imports as long as they remained unsold and in the original packages in which they were imported. "This indictment," it is said in that case, "is against the importer for selling a package of dry goods in the form in which it was imported without a license. This state of things is changed if he sells them, or otherwise mixes them with the general property of the State by breaking up his packages and traveling with them as an itinerant peddler." 12 Wheat., 443. If, therefore, as said in Brown v. Maryland, and reiterated in subsequent cases, a state cannot impose a license tax on the importer, or on his agent who represents him and who would be protected by the same principle, because it is a restriction upon interstate commerce and a regulation thereof, and if the goods continue *373 to be articles of interstate commerce so long as they remain in the original packages and are unsold, it follows that the tax required to be paid by the plaintiff in this case before selling its ranges in the original packages was an unlawful restraint upon its right to import, which included the right to sell in the manner described in the case agreed, and is therefore void.
When we once concede, as we must, that the power of Congress to regulate commerce among the several states does not stop at the external boundary of a state, but must enter its interior and operate there, and that being "coextensive with the subject on which it acts," its full force is not spent until there is a sale of the article which is imported, and not then if there is any discrimination against the goods because of their foreign character, the conclusion we have reached would seem to be inevitable. We do not think the cases holding that the goods may be taxed as property as soon as they have come to the end of the transit and are at rest in the State conflict with our view of the case. Nor do the peddler cases (Machine Co. v. Gage,
We cannot better close this part of the discussion than by referring to the recent case of Steel and Wire Co. v. Speed,
In the case of Comrs. v. Harmel,
If it is urged that no discrimination is made between those who sell imported and those who sell domestic goods it will not meet the difficulty, as said in Robbins v. Taxing District. The law requires of course that there shall be entire commercial equality and this precludes discrimination, but it also provides that interstate commerce cannot be taxed at all, as any tax which is imposed upon it is, in a constitutional sense, a regulation of it and void for that reason, and especially so when it restrains the importer or fetters the right of importation at any stage of this commercial intercourse. In order to fix the period when interstate commerce terminates, it has been said by the highest authority upon the subject that the criterion announced in Brown v. Maryland, *376
namely, a sale in the original packages at the point of destination is applicable and is selected as the one by which to test the validity of the power exerted in the particular case, whether by way of direct prohibition of the introduction of the goods or of their sale after they have arrived in the State, or by way of taxation, not on the goods themselves as property, but on the importer's right to sell them, which we have seen is a part of his right to import. As such taxation necessarily operates as a restriction of his right to import, it is, to that extent, as objectionable as if the sale of the goods had been actually prohibited. Steel and Wire Co. v. Speed,
In Austin v. Tenn.,
In Leisy v. Hardin,
It has been assumed in this case that the clause in section 44 of the Revenue Act defining a peddler applies to the occupations named in section 36, because this Court, in Range Co. v. Carver, held that it did, though we entertain some doubt as to whether that clause does not apply exclusively to persons named in section 44, and, if the question was presented for the first time, we would perhaps so decide. The context of that section, and the provisos immediately annexed to the clause defining a peddler, indicate that to have been the intention. But we have accepted the construction placed upon that clause of section 44 in Range Co. v. Carver, at least for the purpose of this decision, as the correct one.
We have treated the question involved in this case at some length, as it is of great importance to the State that the limit of her power to tax should be definitely known. We are disposed of course to sustain the validity of an act of the Legislature and will indulge every presumption in its favor. It must be clearly incompatible with constitutional provisions before we will pronounce it invalid, but when we conclude that the Legislature has exceeded its power in the particular instance it becomes our plain duty to so declare. As said in Robbins v. Taxing District, the State will in the end derive just as much revenue from the goods as if they had had their origin in the State. If the provision of the Constitution regulating commerce is permitted to have its free and full operation, the goods when they come into the State will, *379 by the sale of them, whether before or after their introduction, become incorporated with the property of the State and will then be the subjects of taxation. 120 U.S. at page 497.
In any view we have been able to take of this case, after the (532) most careful consideration and examination of the facts and the authorities, we are of the opinion that the tax is illegal and that the judgment of the Court below upon the case agreed should have been for the plaintiff.
Cited: S. v. Trotman,