In Wickard _v._ Filburn[469] a still deeper penetration by Congress into

the field of production was sustained. As amended by the act of 1941,

the Agricultural Adjustment Act of 1938,[470] regulates production even

when not intended for commerce but wholly for consumption on the

producer's farm. Sustaining this extension of the act, the Court pointed

out that the effect of the statute was to support the market. It said:

"It can hardly be denied that a factor of such volume and variability as

home-consumed wheat would have a substantial influence on price and

market conditions. This may arise because being in marketable condition

such wheat overhangs the market and, if induced by rising prices, tends

to flow into the market and check price increases. But if we assume that

it is never marketed, it supplies a need of the man who grew it which

would otherwise be reflected by purchases in the open market. Home-grown

wheat in this sense competes with wheat in commerce. The stimulation of

commerce is a use of the regulatory function quite as definitely as

prohibitions or restrictions thereon. This record leaves us in no doubt

that Congress may properly have considered that wheat consumed on the

farm where grown, if wholly outside the scheme of regulation, would have

a substantial effect in defeating and obstructing its purpose to

stimulate trade therein at increased prices."[471] And it elsewhere

stated: "Questions of the power of Congress are not to be decided by

reference to any formula which would give controlling force to

nomenclature such as 'production' and 'indirect' and foreclose

consideration of the actual effects of the activity in question upon

interstate commerce. * * * The Court's recognition of the relevance of

the economic effects in the application of the Commerce Clause, * * *,

has made the mechanical application of legal formulas no longer

feasible."[472]

Acts of Congress Prohibiting Commerce

FOREIGN COMMERCE; JEFFERSON'S EMBARGO

"Jefferson's Embargo" of 1807-1808, which cut all trade with Europe, was

attacked on the ground that the power to regulate commerce was the power

to preserve it, not the power to destroy it. This argument was rejected

by Judge Davis of the United States District Court for Massachusetts in

the following words: "A national sovereignty is created [by the

Constitution]. Not an unlimited sovereignty, but a sovereignty, as to

the objects surrendered and specified, limited only by the

qualifications and restrictions, expressed in the Constitution. Commerce

is one of those objects. The care, protection, management and control,

of this great national concern, is, in my opinion, vested by the

Constitution, in the Congress of the United States; and their power is

sovereign, relative to commercial intercourse, qualified by the

limitations and restrictions, expressed in that instrument, and by the

treaty making power of the President and Senate. * * * Power to

regulate, it is said, cannot be understood to give a power to

annihilate. To this it may be replied, that the acts under

consideration, though of very ample extent, do not operate as a

prohibition of all foreign commerce. It will be admitted that partial

prohibitions are authorized by the expression; and how shall the degree,

or extent, of the prohibition be adjusted, but by the discretion of the

National Government, to whom the subject appears to be committed? * * *

The term does not necessarily include shipping or navigation; much less

does it include the fisheries. Yet it never has been contended, that

they are not the proper objects of national regulation; and several acts

of Congress have been made respecting them. * * * [Furthermore] if it be

admitted that national regulations relative to commerce, may apply it as

an instrument, and are not necessarily confined to its direct aid and

advancement, the sphere of legislative discretion is, of course, more

widely extended; and, in time of war, or of great impending peril, it

must take a still more expanded range. Congress has power to declare

war. It, of course, has power to prepare for war; and the time, the

manner, and the measure, in the application of constitutional means,

seem to be left to its wisdom and discretion. * * * Under the

Confederation, * * * we find an express reservation to the State

legislatures of the power to pass prohibitory commercial laws, and, as

respects exportations, without any limitations. Some of them exercised

this power. * * * Unless Congress, by the Constitution, possess the

power in question, it still exists in the State legislatures--but this

has never been claimed or pretended, since the adoption of the federal

Constitution; and the exercise of such a power by the States, would be

manifestly inconsistent with the power, vested by the people in

Congress, 'to regulate commerce.' Hence I infer, that the power,

reserved to the States by the articles of Confederation, is surrendered

to Congress, by the Constitution; unless we suppose, that, by some

strange process, it has been merged or extinguished, and now exists no

where."[473]

FOREIGN COMMERCE; PROTECTIVE TARIFFS

Tariff laws have customarily contained prohibitory provisions, and such

provisions have been sustained by the Court under Congress's revenue

powers (_see above_) and under its power to regulate foreign commerce.

Speaking for the Court in University of Illinois _v._ United

States,[474] in 1933, Chief Justice Hughes said: "The Congress may

determine what articles may be imported into this country and the terms

upon which importation is permitted. No one can be said to have a vested

right to carry on foreign commerce with the United States. * * * It is

true that the taxing power is a distinct power; that it is distinct from

the power to regulate commerce. * * * It is also true that the taxing

power embraces the power to lay duties. Art. I, Sec. 8, cl. 1. But

because the taxing power is a distinct power and embraces the power to

lay duties, it does not follow that duties may not be imposed in the

exercise of the power to regulate commerce. The contrary is well

established. Gibbons _v._ Ogden, 9 Wheat. 1, 202. 'Under the power to

regulate foreign commerce Congress impose duties on importations, give

drawbacks, pass embargo and nonintercourse laws, and make all other

regulations necessary to navigation, to the safety of passengers, and

the protection of property.' Groves _v._ Slaughter, 15 Pet. 449, 505.

The laying of duties is 'a common means of executing the power.' 2 Story

on the Constitution, Sec. 1088."[475]

FOREIGN COMMERCE; BANNED ARTICLES

The forerunners of more recent acts excluding objectionable commodities

from interstate commerce are the laws forbidding the importation of like

commodities from abroad. This power Congress has exercised since 1842.

In that year it forbade the importation of obscene literature or

pictures from abroad.[476] Six years later it passed an act "to prevent

the importation of spurious and adulterated drugs" and to provide a

system of inspection to make the prohibition effective.[477] Such

legislation guarding against the importation of noxiously adulterated

foods, drugs, or liquor has been on the statute books ever since. In

1887 the importation by Chinese nationals of smoking opium was

prohibited,[478] and subsequent statutes passed in 1909 and 1914 made it

unlawful for anyone to import it.[479] In 1897 Congress forbade the

importation of any tea "inferior in purity, quality, and fitness for

consumption" as compared with a legal standard.[480] The act was

sustained in 1904, in the leading case of Buttfield _v._ Stranahan.[481]

In "The Abby Dodge" case an act excluding sponges taken by means of

diving or diving apparatus from the waters of the Gulf of Mexico or

Straits of Florida was sustained, but construed as not applying to

sponges taken from the territorial waters of a State.[482] In Weber _v._

Freed[483] an act prohibiting the importation and interstate

transportation of prize-fight films or of pictorial representation of

prize fights was upheld. Speaking for the unanimous Court, Chief Justice

White said: "In view of the complete power of Congress over foreign

commerce and its authority to prohibit the introduction of foreign

articles recognized and enforced by many previous decisions of this

court, the contentions are so devoid of merit as to cause them to be

frivolous."[484] In Brolan _v._ United States[485] the Court again

stressed the absolute nature of Congress's power over foreign commerce,

saying: "In the argument reference is made to decisions of this court

dealing with the subject of the power of Congress to regulate interstate

commerce, but the very postulate upon which the authority of Congress to

absolutely prohibit foreign importations as expounded by the decisions

of this court rests is the broad distinction which exists between the

two powers and therefore the cases cited and many more which might be

cited announcing the principles which they uphold have obviously no

relation to the question in hand."[486]

INTERSTATE COMMERCE; CONFLICT OF DOCTRINE AND OPINION

The question whether Congress's power to regulate commerce "among the

several States" embraced the power to prohibit it furnished the topic of

one of the most protracted debates in the entire history of the

Constitution's interpretation, a debate the final resolution of which in

favor of Congressional power is an event of first importance for the

future of American Federalism. The issue was as early as 1841 brought

forward by Henry Clay, in an argument before the Court in which he

raised the specter of an act of Congress forbidding the interstate slave

trade.[487] The debate was concluded ninety-nine years later by the

decision in United States _v._ Darby, in which the Fair Labor Standards

Act was sustained. The resume of it which is given below is based on

judicial opinions, arguments of counsel, and the writings of jurists and

political scientists. Much of this material was evoked by efforts of

Congress, from about 1905 onward, to stop the shipment interstate of the

products of child labor.

ACTS OF CONGRESS PROHIBITIVE OF INTERSTATE COMMERCE

The earliest such acts were in the nature of quarantine regulations and

usually dealt solely with interstate transportation. In 1884 the

exportation or shipment in interstate commerce of livestock having any

infectious disease was forbidden.[488] In 1903 power was conferred upon

the Secretary of Agriculture to establish regulations to prevent the

spread of such diseases through foreign or interstate commerce.[489] In

1905 the same official was authorized to lay an absolute embargo or

quarantine upon all shipments of cattle from one State to another when

the public necessity might demand it.[490] A statute passed in 1905

forbade the transportation in foreign and interstate commerce and the

mails of certain varieties of moths, plant lice, and other insect pests

injurious to plant crops, trees, and other vegetation.[491] In 1912 a

similar exclusion of diseased nursery stock was decreed,[492] while by

the same act, and again by an act of 1917,[493] the Secretary of

Agriculture was invested with powers of quarantine on interstate

commerce for the protection of plant life from disease similar to those

above described for the prevention of the spread of animal disease.

While the Supreme Court originally held federal quarantine regulations

of this sort to be constitutionally inapplicable to intrastate shipments

of livestock, on the ground that federal authority extends only to

foreign and interstate commerce,[494] this view has today been

abandoned. _See_ pp. 248-249.

THE LOTTERY CASE

The first case to come before the Court in which the issues discussed

above were canvassed at all thoroughly was Champion _v._ Ames,[495]

involving the act of 1895 "for the suppression of lotteries."[496] An

earlier act excluding lottery tickets from the mails had been upheld in

the earlier case of In re Rapier,[497] on the proposition that Congress

clearly had the power to see that the very facilities furnished by it

were not put to bad uses. But in the case of commerce the facilities are

not ordinarily furnished by the National Government, and the right to

engage in foreign and interstate commerce comes from the Constitution

itself, or is anterior to it.

How difficult the Court found the question produced by the act of 1895,

forbidding any person to bring within the United States or to cause to

be "carried from one State to another" any lottery ticket, or an

equivalent thereof, "for the purpose of disposing of the same," is shown

by the fact that the case was thrice argued before the Court, and the

fact that the Court's decision finally sustaining the act was a

five-to-four decision. The opinion of the Court, on the other hand,

prepared by Justice Harlan, marked an almost unqualified triumph at the

time for the view that Congress's power to regulate commerce among the

States includes the power to prohibit it, especially to supplement and

support State legislation enacted under the police power.[498] Early in

the opinion extensive quotation is made from Chief Justice Marshall's

opinion in Gibbons _v._ Ogden,[499] with special stress upon the

definition there given of the phrase "to regulate." Justice Johnson's

assertion on the same occasion is also given: "The power of a sovereign

State over commerce, * * *, amounts to nothing more than, a power to

limit and restrain it at pleasure." Further along is quoted with evident

approval Justice Bradley's statement in Brown _v._ Houston,[500] that

"the power to regulate commerce among the several States is granted to

Congress in terms as absolute as is the power to regulate commerce with

foreign nations."

NATIONAL PROHIBITIONS AND STATE POLICE POWER

Following in the wake of Champion _v._ Ames, Congress has repeatedly

brought its prohibitory powers over interstate commerce and

communications to the support of certain local policies of the States in

the exercise of their reserved powers, thereby aiding them in the

repression of the liquor traffic,[501] of traffic in game taken in

violation of State laws,[502] of commerce in convict-made goods,[503] of

the white slave traffic,[504] of traffic in stolen motor vehicles,[505]

of kidnapping,[506] of traffic in stolen property,[507] of

racketeering,[508] of prize-fight films or other pictorial

representation of encounters of pugilists.[509] The conception of the

Federal System on which the Court based its validation of this

legislation was stated by it in 1913 in sustaining the Mann "White

Slave" Act in the following words: "Our dual form of government has its

perplexities, State and Nation having different spheres of jurisdiction,

* * *, but it must be kept in mind that we are one people; and the

powers reserved to the States and those conferred on the Nation are

adapted to be exercised, whether independently or concurrently, to

promote the general welfare, material, and moral."[510] At the same

time, the Court made it plain that in prohibiting commerce among the

States, Congress was equally free to support State legislative policy or

to devise a policy of its own. "Congress," it said, "may exercise this

authority in aid of the policy of the State, if it sees fit to do so. It

is equally clear that the policy of Congress acting independently of the

States may induce legislation without reference to the particular policy

or law of any given State. Acting within the authority conferred by the

Constitution it is for Congress to determine what legislation will

attain its purposes. The control of Congress over interstate commerce is

not to be limited by State laws."[511]

HAMMER _v._ DAGENHART

However, it is to be noted that none of this legislation operated in the

field of industrial relations. So when the Court was confronted in 1918,

in the case of Hammer _v._ Dagenhart,[512] with an act which forbade

manufacturers and others to offer child-made goods for transportation in

interstate commerce,[513] it held the act, by the narrow vote of five

Justices to four, to be not an act regulative of commerce among the

States, but one which invaded the reserved powers of the States. "The

maintenance of the authority of the States over matters purely local,"

said Justice Day for the Court, "is as essential to the preservation of

our institutions as is the conservation of the supremacy of the federal

power in all matters entrusted to the Nation by the Federal

Constitution."[514] As to earlier decisions sustaining Congress's

prohibitory powers, Justice Day said: "In each of these instances the

use of interstate transportation was necessary to the accomplishment of

harmful results. * * * This element is wanting in the present case.

* * * The goods shipped are in themselves harmless. * * * When offered

for shipment, and before transportation begins, the labor of their

production is over, and the mere fact that they were intended for

interstate commerce transportation does not make their production

subject to federal control under the commerce power. * * * 'When

commerce begins is determined, not by the character of the commodity,

nor by the intention of the owner to transfer it to another State for

sale, * * *, but by its actual delivery to a common carrier for

transportation, * * *' (Mr. Justice Jackson in _In re Greene_, 52 Fed.

Rep. 113). This principle has been recognized often in this court. Coe

_v._ Errol, 116 U.S. 517 * * *."[515]

The decision in Hammer _v._ Dagenhart was, in short, governed by the

same general conception of the interstate commerce process as that which

governed the decision in the Sugar Trust Case. Commerce was envisaged as

beginning only with an act of transportation from one State to another.

And from this it was deduced that the only commerce which Congress may

prohibit is an act of transportation from one State to the other which

is followed in the latter by an act within the normal powers of

government to prohibit. Commerce, however, is primarily _traffic_; and

the theory of the Child Labor Act was that it was designed to discourage

a widespread and pernicious interstate traffic in the products of child

labor--pernicious because it bore "a real and substantial relation" to

the existence of child labor employment in some States and constituted a

direct inducement to its spread to other States. Deprived of the

interstate market which this decision secured to it, child labor could

not exist.

INTERSTATE COMMERCE IN STOLEN GOODS BANNED

In Brooks _v._ United States,[516] decided in 1925, the Court, in

sustaining the National Motor Vehicle Theft Act of 1919,[517] materially

impaired the _ratio decidendi_ of Hammer _v._ Dagenhart. At the outset

of his opinion for the Court, Chief Justice Taft stated the general

proposition that "Congress can certainly regulate interstate commerce to

the extent of forbidding and punishing the use of such commerce as an

agency to promote immorality, dishonesty or the spread of any evil or

harm to the people of other States from the State of origin." This

statement was buttressed by a review of previous cases, including the

explanation that the goods involved in Hammer _v._ Dagenhart were

"harmless" and did not spread harm to persons in other States. Passing

then to the measure before the Court, the Chief Justice noted "the

radical change in transportation" brought about by the automobile, and

the rise of "elaborately organized conspiracies for the theft of

automobiles * * *, and their sale or other disposition" in another

police jurisdiction from the owner's. This, the opinion declared, "is a

gross misuse of interstate commerce. Congress may properly punish such

interstate transportation by anyone with knowledge of the theft, because

of its harmful result and its defeat of the property rights of those

whose machines against their will are taken into other

jurisdictions."[518]

The Motor Vehicle Act was sustained, therefore, mainly as protective of

owners of automobiles, that is to say, of interests in "the State of

origin." It was designed to repress automobile thefts, and that

notwithstanding the obvious fact that such thefts must necessarily occur

before transportation of the thing stolen can take place, that is, under

the formula followed in Hammer _v._ Dagenhart, before Congress's power

over interstate commerce becomes operative. Also, the Court took

cognizance of "elaborately organized conspiracies" for the theft and

disposal of automobiles across State lines--that, to say, of a

widespread traffic in such property.

THE DARBY CASE

The formal overruling of Hammer _v._ Dagenhart, however, did not occur

until 1941 when, in sustaining the Fair Labor Standards Act, a unanimous

Court, speaking by Justice Stone, said: "Hammer _v._ Dagenhart has not

been followed. The distinction on which the decision was rested that

Congressional power to prohibit interstate commerce is limited to

articles which in themselves have some harmful or deleterious

property--a distinction which was novel when made and unsupported by any

provision of the Constitution--has long since been abandoned. * * * The

thesis of the opinion that the motive of the prohibition or its effect

to control in some measure the use or production within the States of

the article thus excluded from the commerce can operate to deprive the

regulation of its constitutional authority has long since ceased to have

force. * * * And finally we have declared 'The authority of the Federal

Government over interstate commerce does not differ in extent or

character from that retained by the States over intrastate commerce.'

United States _v._ Rock Royal Co-operative, 307 U.S. 533, 569. The

conclusion is inescapable that Hammer _v._ Dagenhart, was a departure

from the principles which have prevailed in the interpretation of the

Commerce Clause both before and since the decision and that such

vitality, as a precedent, as it then had has long since been exhausted.

It should be and now is overruled."[519] And commenting in a recent case

on the Fair Labor Standards Act, Justice Burton, speaking for the Court

said: "The primary purpose of the act is not so much to regulate

interstate commerce as such, as it is, through the exercise of

legislative power, to prohibit the shipment of goods in interstate

commerce if they are produced under substandard labor conditions."[520]

CONGRESS AND THE FEDERAL SYSTEM

In view of these developments the following dictum by Justice

Frankfurter, was no doubt, intended to be reassuring as to the future of

the Federal System: "The interpenetrations of modern society have not

wiped out State lines. It is not for us [the Court] to make inroads upon

our federal system either by indifference to its maintenance or

excessive regard for the unifying forces of modern technology.

Scholastic reasoning may prove that no activity is isolated within the

boundaries of a single State, but that cannot justify absorption of

legislative power by the United States over every activity."[521] While

this may be conceded, the unmistakable lesson of recent cases is that

the preservation of our Federal System depends today mainly upon

Congress.

The Commerce Clause as a Restraint on State Powers

DOCTRINAL BACKGROUND

The grant of power to Congress over commerce, unlike that of power to

levy customs duties, the power to raise armies, and some others, is

unaccompanied by correlative restrictions on State power. This

circumstance does not, however, of itself signify that the States were

expected still to participate in the power thus granted Congress,

subject only to the operation of the supremacy clause. As Hamilton

points out in The Federalist, while some of the powers which are vested

in the National Government admit of their "concurrent" exercise by the

States, others are of their very nature "exclusive," and hence render

the notion of a like power in the States "contradictory and

repugnant."[522] As an example of the latter kind of power Hamilton

mentioned the power of Congress to pass a uniform naturalization law.

Was the same principle expected to apply to the power over foreign and

interstate commerce?

Unquestionably one of the great advantages anticipated from the grant to

Congress of power over commerce was that State interferences with trade,

which had become a source of sharp discontent under the Articles of

Confederation, would be thereby brought to an end. As Webster stated in

his argument for appellant in Gibbons _v._ Ogden: "The prevailing motive

was to regulate commerce; to rescue it from the embarrassing and

destructive consequences, resulting from the legislation of so many

different States, and to place it under the protection of a uniform

law." In other words, the constitutional grant was itself a regulation

of commerce in the interest of uniformity. Justice Johnson's testimony

in his concurring opinion in the same case is to like effect: "There was

not a State in the Union, in which there did not, at that time, exist a

variety of commercial regulations; * * * By common consent, those laws

dropped lifeless from their statute books, for want of sustaining power

that had been relinquished to Congress";[523] and Madison's assertion,

late in life, that power had been granted Congress over interstate

commerce mainly as "a negative and preventive provision against

injustice among the States,"[524] carries a like implication.

That, however, the commerce clause, unimplemented by Congressional

legislation, took from the States any and all power over foreign and

interstate commerce was by no means universally conceded; and Ogden's

attorneys directly challenged the idea. Moreover, as was pointed out on

both sides in Gibbons _v._ Ogden, legislation by Congress regulative of

any particular phase of commerce would still leave many other phases

unregulated and consequently raise the question whether the States were

entitled to fill the remaining gaps, if not by virtue of a "concurrent"

power over interstate and foreign commerce, then by virtue of "that

immense mass of legislation," as Marshall termed it, "which embraces

everything within the territory of a State, not surrendered to the

general government,"[525]--in a word, the "police power."

The commerce clause does not, therefore, without more ado, settle the

question of what power is left to the States to adopt legislation

regulating foreign or interstate commerce in greater or less measure. To

be sure, in cases of flat conflict between an act or acts of Congress

regulative of such commerce and a State legislative act or acts, from

whatever State power ensuing, the act of Congress is today recognized,

and was recognized by Marshall, as enjoying an unquestionable

supremacy.[526] But suppose, _first_, that Congress has passed no act;

or _secondly_, that its legislation does not clearly cover the ground

which certain State legislation before the Court attempts to cover--what

rules then apply? Since Gibbons _v._ Ogden both of these situations

have confronted the Court, especially as regards interstate commerce,

hundreds of times, and in meeting them the Court has, first and last,

coined or given currency to numerous formulas, some of which still

guide, even when they do not govern, its judgment.

DOCTRINAL BACKGROUND; WEBSTER'S CONTRIBUTION

The earliest, and the most successful, attempt to set forth a principle

capable of guiding the Court in adjusting the powers of the States to

unexercised power of Congress under the commerce clause was that which

was made by Daniel Webster in his argument in Gibbons _v._ Ogden, in the

following words: "He contended, * * *, that the people intended, in

establishing the Constitution, to transfer from the several States to a

general government, those high and important powers over commerce,

which, in their exercise, were to maintain a uniform and general system.

From the very nature of the case, these powers must be exclusive; that

is, the higher branches of commercial regulation must be exclusively

committed to a single hand. What is it that is to be regulated? Not the

commerce of the several States, respectively, but the commerce of the

United States. Henceforth, the commerce of the States was to be a unit;

and the system by which it was to exist and be governed, must

necessarily be complete, entire and uniform." At the same time Webster

conceded "that the words used in the Constitution, 'to regulate

commerce,' are so very general and extensive, that they might be

construed to cover a vast field of legislation, part of which has always

been occupied by State laws; and therefore, the words must have a

reasonable construction, and the power should be considered as

exclusively vested in Congress, so far, and so far only, as the nature

of the power requires."[527]

Webster also dealt with the problem which arises when Congress has

exercised its power. The results of its act, he contended, must be

treated as a unit, so that when Congress had left subject matter within

its jurisdiction unregulated, it must be deemed to have done so of

design, and its omissions, or silences, accordingly be left undisturbed

by State action. Although Marshall, because he thought the New York act

creating the Livingston-Fulton monopoly to be in direct conflict with

the Enrolling and Licensing Act of 1793, was not compelled to pass on

either of Webster's theories, he indicated his sympathy with them.[528]

COOLEY _v._ BOARD OF PORT WARDENS

Aside from Marshall's opinion in 1827 in Brown _v._ Maryland,[529] in

which the famous "original package" formula made its debut, the most

important utterance of the Court touching interpretation of the commerce

clause as a restriction on State legislative power is that for which

Cooley _v._ Board of Wardens of Port of Philadelphia,[530] decided in

1851, is usually cited. The question at issue was the validity of a

Pennsylvania pilotage act so far as it applied to vessels engaged in

foreign commerce and the coastwise trade. The Court, speaking through

Justice Curtis, sustained the act on the basis of a distinction between

those subjects of commerce which "imperatively demand a single uniform

rule" operating throughout the country and those which "as imperatively"

demand "that diversity which alone can meet the local necessities of

navigation," that is to say, of commerce. As to the former the Court

held Congress's power to be "exclusive"--as to the latter it held that

the States enjoyed a power of "concurrent legislation."

While this formula obviously stems directly from Webster's argument in

Gibbons _v._ Ogden, it covers considerably less ground. Citation,

nevertheless, of the Cooley case throughout the next half century

eliminated the difference and brought the Curtis dictum abreast of

Webster's earlier argument. The doctrine consequently came to be

established, _first_, that Congress's power over interstate commerce is

"exclusive" as to those phases of it which require "uniform regulation";

_second_, that outside this field, as plotted by the Court, the States

enjoyed a "concurrent" power of regulation, subject to Congress's

overriding power.[531]

JUDICIAL FORMULAS

But meantime other formulas had emerged from the judicial smithy,

several of which are brought together into something like a doctrinal

system, in Justice Hughes' comprehensive opinion for the Court in the

Minnesota Rate Cases,[532] decided in 1913. "Direct" regulation of

foreign or interstate commerce by a State is here held to be out of the

question. At the same time, the States have their police and taxing

powers, and may use them as their own views of sound public policy may

dictate even though interstate commerce may be "incidentally" or

"indirectly" regulated, it being understood that such "incidental" or

"indirect" effects are always subject to Congressional disallowance.

"Our system of government," Justice Hughes reflects, "is a practical

adjustment by which the National authority as conferred by the

Constitution is maintained in its fall scope without unnecessary loss of

local efficiency."[533]

In more concrete terms, the varied formulas which characterize this

branch of our Constitutional Law have been devised by the Court from

time to time in an endeavor to effect "a practical adjustment" between

two great interests, the maintenance of freedom of commerce except so

far as Congress may choose to restrain it, and the maintenance in the

States of efficient local governments. Thus, while formulas may serve to

steady and guide its judgment, the Court's real function in this area of

judicial review is essentially that of an arbitral or quasi-legislative

body. So much so is this the case that in 1940 three Justices joined in

an opinion in which they urged that the business of drawing the line

between the immunity of interstate commerce and the taxing power of the

States "should be left to the legislatures of the States and the

Congress," with the final remedy in the hands of the latter.[534]

State Taxing Power and Foreign Commerce

BROWN _v._ MARYLAND; THE ORIGINAL PACKAGE DOCTRINE

The leading case under this heading is Brown _v._ Maryland,[535] decided

in 1827, the issue in which was the validity of a Maryland statute

requiring "all importers of foreign articles or commodities,"

preparatory to selling the same, to take out a license. Holding this act

to be void under both article I, sec. 10, and the commerce clause, the

Court, speaking through Chief Justice Marshall, advanced the following

propositions: (1) that "commerce is intercourse; one of its most

ordinary ingredients is traffic"; (2) that the right to import includes

the right to sell; (3) that a tax on the sale of an article is a tax on

the article itself--a conception of the incidence of taxation which has

at times had important repercussions in other fields of Constitutional

Law; (4) that the taxing power of the State does not extend in any form

to imports from abroad so long as they remain "the property of the

importer, in his warehouse, in the original form or package" in which

they were imported--the famous "original package doctrine"; (5) that

once, however, the importer parts with his importations "or otherwise

mixes them with the general property of the State by breaking up his

packages," the law may treat them as part and parcel of such property;

(6) that even while in the original package imports are subject to the

incidental operation of police measures adopted by the State in good

faith for the protection of the public against apparent dangers. Lastly,

in determining whether a State law amounts to a regulation of commerce

the Court would, Marshall announced, be guided by "substance" and not by

"form"--a proposition which has many times opened the way to extensive

inquiries by the Court into the actualities both of commercial practice

and of State administration.

The decision in Brown _v._ Maryland, but more especially the "original

package doctrine" there laid down, has been sometimes criticised as

going too far. It would have been sufficient, the critics contend, for

the Court to have held the Maryland act void on account of its obviously

discriminatory character; and they urge that original packages receiving

the protection of the State ought to be subject to nondiscriminatory

taxation by it. The criticism was partially anticipated by Marshall

himself in the apprehensions which he voiced that any concession to "the

great importing States" might be turned by them against the rest of the

country. Indeed, he is uncertain whether the original package doctrine

will prove sufficient for its purposes and accordingly offers it not as

a rule "universal in its application," but rather as a stop-gap

principle. History has proved, however, that in this he builded better

than he knew. For in the field of foreign commerce the original package

doctrine has never been disturbed, and it has scarcely been added to;

and so confined, it has never been surpassed by any later piece of

judicial legislation, whether in point of durability or in that of

definiteness and easy comprehensibility.[536]

State Taxation of the Subject Matter of Interstate Commerce

GENERAL CONSIDERATIONS

The task of drawing the line between State power and the commercial

interest has proved a comparatively simple one in the field of foreign

commerce, the two things being in great part territorially distinct.

With "commerce among the States" it is very different. This is conducted

in the interior of the country, by persons and corporations that are

ordinarily engaged also in local business; its usual incidents are acts

which, if unconnected with commerce among the States, would fall within

the State's powers of police and taxation; while the things it deals in

and the instruments by which it is carried on comprise the most ordinary

subject matter of State power. In this field the Court has,

consequently, been unable to rely upon sweeping solutions. To the

contrary, its judgments have often been fluctuating and tentative, even

contradictory; and this is particularly the case as respects the

infringement of the State taxing power on interstate commerce. In the

words of Justice Frankfurter: "The power of the States to tax and the

limitations upon that power imposed by the Commerce Clause have

necessitated a long, continuous process of judicial adjustment. The need

for such adjustment is inherent in a Federal Government like ours, where

the same transaction has aspects that may concern the interests and

involve the authority of both the central government and the constituent

States. The history of this problem is spread over hundreds of volumes

of our Reports. To attempt to harmonize all that has been said in the

past would neither clarify what has gone before nor guide the future.

Suffice it to say that especially in this field opinions must be read in

the setting of the particular cases and as the product of preoccupation

with their special facts."[537]

THE STATE FREIGHT TAX CASE

The great leading case dealing with the relation of the State's taxing

power to interstate commerce is that of the State Freight Tax,[538]

decided in 1873. The question before the Court was the validity of a

Pennsylvania statute, passed eight years earlier, which required every

company transporting freight within the State, with certain exceptions,

to pay a tax at specified rates on each ton of freight carried by it.

Overturning the act, the Court held: "(1) The transportation of freight,

or of the subjects of commerce, is a constituent part of commerce

itself; (2) a tax upon freight, transported from State to State, is a

regulation of commerce among the States; (3) whenever the subjects in

regard to which a power to regulate commerce is asserted are in their

nature National, or admit of one uniform system or plan of regulation,

they are exclusively within the regulating control of Congress; (4)

transportation of passengers or merchandise through a State, or from one

State to another, is of this nature; (5) hence a statute of a State

imposing a tax upon freight, taken up within the State and carried out

of it, or taken up without the State and brought within it, is repugnant

to that provision of the Constitution of the United States, which

ordains that 'Congress shall have power to regulate commerce with

foreign nations and among the several States, and with the Indian

tribes.'"[539]

GOODS IN TRANSIT

States, therefore, may not tax property in transit in interstate

commerce. A nondiscriminatory tax, however, is permitted if the goods

have not yet started in interstate commerce, or have completed the

interstate transit even though still in the original package, unless

they are foreign imports in the original package; and States may also

impose a nondiscriminatory tax when there is a break in an interstate

transit, and the goods have not been restored to the current of

interstate commerce. Such is the law in brief. Two questions arise,

first, when do goods originating in a State pass from under its power to

tax; and, second, when do goods arriving from another State lose their

immunity?

The leading case dealing with the first of these questions is Coe _v._

Errol,[540] in which the matter at issue was the right of the town of

Errol, New Hampshire, to tax certain logs on their way to points in

Maine, while they lay in the river before the town or along its shore

awaiting the spring freshets and consequent rise of the river. As to the

logs in the river, which had come from Maine on their way to Lewiston in

the same State, but had been detained at Errol by low water, the Supreme

Court of New Hampshire itself ruled that the local tax did not apply,

the logs being still in transit. As to the logs which had been cut in

New Hampshire and lay on the shore or in tributaries of the river, both

courts were again in agreement that they were still subject to local

taxation, notwithstanding the intention of their owners to send them out

of the State. Said Justice Bradley: "* * * goods do not cease to be part

of the general mass of property in the State, subject, as such, to its

jurisdiction, and to taxation in the usual way, until they have been

shipped, or entered with a common carrier for transportation to another

State, or have been started upon such transportation in a continuous

route or journey."[541]

STATE TAXATION OF MANUFACTURING AND MINING

Under the above rule, obviously, production is not interstate commerce

even though the thing produced is intended for the interstate market.

Thus a Pennsylvania _ad valorem_ tax on anthracite coal when prepared

and ready for shipment was held not to be an interference with

interstate commerce although applied to coal destined for a market in

other States;[542] and in Oliver Iron Company _v._ Lord[543] an

occupation tax on the mining of iron ore was upheld, although

substantially all of the ore was immediately and continuously loaded on

cars and shipped into other States. Said the Court: "Mining is not

interstate commerce, but, * * * subject to local regulation and

taxation. Its character in this regard is intrinsic, is not affected by

the intended use or disposal of the product, is not controlled by

contractual engagements, and persists even though the business be

conducted in close connection with interstate commerce."[544] Likewise

an annual privilege tax on the business of producing natural gas in the

State, computed on the value of the gas produced "as shown by the gross

proceeds derived from the sale thereof by the producer," was held

constitutional even though most of the gas passed into interstate

commerce in continuous movement from the wells.[545] And in Utah Power

and Light Co. _v._ Pfost[546] the generation of electricity in a State

was held to be distinguishable from its transmission over wires to

consumers in another State, and hence taxable by the former State.

Likewise, a State statute imposing a privilege tax on the production of

mechanical power for sale or use did not contravene the interstate

commerce clause although applied to an engine operating a compressor to

increase the pressure of natural gas and thereby permit it to be

transported to purchasers in other States.[547] Similarly, a tax so much

per pound on shrimp taken within the three-mile belt of the coast of the

taxing State was valid, since the taxable event, the taking of the

shrimp, occurred before they could be said to have entered the

interstate commerce stream.[548]

PRODUCTION FOR AN ESTABLISHED MARKET

But while the production of goods intended for the interstate market is

taxable by the State where it takes place, their purchase for an

established market in another State is interstate commerce and as such

is neither regulatable nor taxable by the State of origin, provided at

any rate their trans-shipment is not unduly delayed.[549] Thus, oil

gathered into the pipe lines of a distributing company and intended for

the most part for customers outside the State, is in interstate commerce

from the moment it leaves the wells;[550] and a like result has been

reached as to natural gas.[551] "The typical and actual course of

events," says the Court, "marks the carriage of the greater part as

commerce among the States and theoretical possibilities may be left out

of account."[552]

REJECTION OF THE ORIGINAL PACKAGE CONCEPT IN INTERSTATE COMMERCE

But the question also arises as to when goods entering a State from

another State become part of the mass of property of the former and

hence taxable by it? In Brown _v._ Maryland,[553] Chief Justice

Marshall, had remarked at the close of his opinion, "We suppose the

principles laid down in this case, apply equally to importations from a

sister State."[554] Forty-two years later, in Woodruff _v._ Parham,[555]

an effort was made to induce the Court, in reliance on this dictum, to

apply the original package doctrine against a Mobile, Alabama tax on

sales at auction, so far as it reached "imports" from sister States.

The Court refused the invitation; first on the ground that Marshall's

statement was _obiter_, the point not having been involved in Brown _v._

Maryland; second, because usage contemporary with the Constitution and

of the Constitution itself confined the term "imports" as employed in

article I, section 10 to imports from abroad; third, because the tax in

question was nondiscriminatory. At the same time, nevertheless,

reference was made to the power of Congress to interpose at any time in

exercise of its power over commerce, "in such a manner as to prevent the

States from any oppressive interference with the free interchange of

commodities by the citizens of one State with those of another."[556]

The same result was reached a few years later in Brown _v._

Houston,[557] where it was held that coal transported down the

Mississippi from Pennsylvania had been validly subjected by Louisiana to

a general _ad valorem_ property tax, having "come to its place of rest,

for final disposal or use," and hence become "a part of the general mass

of property in the State."[558] Again, however, a caveat was entered in

behalf of the power of Congress to impose a different rule affording "a

temporary exemption" of property transported from one State to another

from taxation by the latter.[559]

INSPECTION CHARGES

Woodruff _v._ Parham and Brown _v._ Houston are still good law for the

most part.[560] Nevertheless, there is one respect in which imports from

sister States are treated as "imports" in the sense of the Constitution,

and that is in being exempt from "unreasonable" inspection charges.[561]

It is true, also, that in a series of cases involving sales of oil about

1920 the Court appeared to be contemplating reviving the original

package doctrine,[562] but these holdings were presently "qualified" in

a sweeping opinion by Chief Justice Taft, reviewing the cases.[563] But

taxation is one thing, prohibition another. In the field of the police

power, where its applicability was not so much as suggested in Brown

_v._ Maryland, the original package doctrine has been frequently invoked

by the Court against State legislation, and even today, perhaps retains

a spark of life.[564]

LOCAL SALES: PEDDLERS

By the same token, local sales of goods brought into a State from

another State are subject to a nondiscriminatory exercise of its taxing

power. Such a tax, the Court has said, "has never been regarded as

imposing a direct burden upon interstate commerce and has no greater or

different effect upon that commerce than a general property tax to which

all those enjoying the protection of the State may be subjected"; and

this is true, even of goods immediately to be used in interstate

commerce.[565] The commerce clause, therefore, does not prohibit a State

from imposing special license taxes on merchants using profit sharing

coupons and trading stamps although the coupons may have been inserted

in retail packages by the manufacturer or shipper outside the State and

are redeemable outside the State, either by such manufacturer or

shipper, or by some other agency outside the State;[566] nor yet a

nondiscriminatory tax upon local peddling of goods and sales thereof by

peddlers even though the goods are foreign or interstate imports, since

the sale occurs after foreign or interstate commerce thereof has

ended.[567] And in Kehrer _v._ Stewart[568] it was held that a State tax

upon resident managing agents of nonresident meatpacking houses did not

conflict with the commerce clause, regardless of the fact that the

greater portion of the business was interstate in character, the tax

having been construed by the highest court of the State as applying only

to the business of selling to local customers from the stock of

"original packages" shipped into the State without a previous sale or

contract to sell, and kept and held for sale in the ordinary course of

trade. Contrariwise, a tax on sales discriminatory in its incidence

against merchandise because of its origin in another State is _ipso

facto_ unconstitutional. The leading case is Welton _v._ Missouri,[569]

decided in 1876, in which a peddler's license tax confined to the sale

of goods manufactured outside the State was set aside. The doctrine of

Welton _v._ Missouri has been reiterated many times.[570]

STOPPAGE IN TRANSIT

It also follows logically from Coe _v._ Errol,[571] and the cases

deriving from it, that a State may impose a nondiscriminatory tax when

there is a break in interstate transit, and the goods have not been

restored to the current of interstate commerce. The effect of an

interruption upon the continuity of an interstate movement depends upon

its causes and purposes. If the delay is due to the necessities of the

journey, as in the Coe case, where the logs were detained for a time

within the State by low water, they are deemed "in the course of

commercial transportation, and * * * clearly under the protection of the

Constitution."[572] Intention thus often enters into the determination

of the question whether goods from another State have come to rest

sufficiently to subject them to the local taxing power. In a typical

case the Court held that oil shipped from Pennsylvania and held in tanks

in Memphis, Tennessee for separation, distribution and reshipment, was

subject to the taxing power of the latter State.[573] The delay in

transportation resulting from these proceedings on the part of the

owners, the Court pointed out, was clearly designed for their own profit

and convenience and was not a necessary incident to the method of

transportation adopted, as had been the delay of the logs coming from

Maine in Coe _v._ Errol. The distinction is fundamental.[574]

Applying this rule in more recent cases, the Court has upheld State

taxation: on the use and storage of gasoline brought into the State by a

railroad company and unloaded and stored there, to be used for its

interstate trains;[575] on gasoline imported and stored by an airplane

company and withdrawn to fill airplanes that use it in their interstate

travel;[576] on supplies brought into the State by an interstate

railroad company to be used in replacements, repairs and extensions,

and installed immediately upon arrival in the taxing State;[577] on

equipment brought into the State by a telephone and telegraph company

for operation, maintenance, and repair of its interstate system.[578] In

all these cases the Court applied the principle that "use and storage"

are subject to local taxation when "there is an interval after the

articles have reached the end of their interstate movement and before

their consumption in interstate operation has begun."[579] On the other

hand, in the absence of such an "interval," the Court declared invalid

State gasoline taxes imposed per gallon of gasoline imported by

interstate carriers as fuel for use in such vehicles, and used within

the State as well as in their interstate travel.[580]

THE DRUMMER CASES; ROBBINS _v._ SHELBY COUNTY TAXING DISTRICT

But there is one situation in which goods introduced into one State from

another have until recent years enjoyed a special immunity from taxation

by the former, and that is when they were introduced in consequence of a

contract of sale. The leading case is Robbins _v._ Shelby County Taxing

District,[581] in which the Court, after a penetrating survey of

commercial practices, ruled that "the negotiation of sales of goods"--in

this instance by sample--"which are in another State, for the purpose of

introducing them into the State in which the negotiation is made, is

interstate commerce." In short, whereas in foreign commerce, importation

is succeeded by the right to sell in the original package, in interstate

commerce sale was succeeded by the right of importation, which continued

until the goods reached the hands of the purchaser. The benefits of this

holding were extended in a series of rulings in which it was held to

apply whether solicitation of orders was or was not made with

sample,[582] and to sales which were not, accurately speaking,

consummated until the actual delivery of the goods, which was attended

by local incidents. So, where a North Carolina agent of a Chicago firm

took orders for framed pictures, which were then sent to him packed

separately from the frames and then framed by him before delivery, the

rule laid down in the Robbins case was held to apply throughout, with

the result that North Carolina could tax or license no part of the

transaction described;[583] so also as to a sewing machine ordered by a

customer in North Carolina and sent to her C.O.D.;[584] so also as to

brooms sent in quantity for the fulfillment of a number of orders, and

subject to rejection by the purchaser if deemed by him not up to

sample.[585] Said Justice Holmes in the case last referred to:

"'Commerce among the States' is a practical conception not drawn from

the 'witty diversities' * * * of the law of sales. * * * The brooms were

specifically appropriated to specific contracts, in a practical, if not

in a technical, sense. Under such circumstances it is plain that,

wherever might have been the title, the transport of the brooms for the

purpose of fulfilling the contracts was protected commerce."[586] Nor

did it make any difference that the solicitor received his compensation

in form of down payment by the purchaser.[587] Moreover, sales under a

mail order business, with delivery taking place within the State to a

carrier for through shipment to another State to fill orders, was held

to be beyond the taxing power of the first State.[588] The fact that a

concern doing a strictly interstate business had goods on hand within

the State which were capable of being used in intrastate commerce, did

not, the Court declared, take the business out of the protection of the

commerce clause and allow the State to impose a privilege tax on such

concern.

LIMITATION OF THE ROBBINS CASE

On the other hand, it was early held that the rule laid down in the

Robbins case did not prevent a State from taxing a resident citizen who

engaged in a general commission business, on the profits thereof,

although the business consisted "for the time being, wholly or partially

in negotiating sales between resident and nonresident merchants, of

goods situated in another State."[589] Also, it has been held that a

stamp tax on transfers of corporate stock, as applied to a sale between

two nonresidents, of the stock of foreign railway corporations, was not

an interference with interstate commerce.[590] Likewise, the business of

taking orders on commission for the purchase and sale of grain and

cotton for future delivery not necessitating interstate shipment was

ruled not to be interstate commerce, and as such exempt from taxation,

although deliveries were sometimes made by interstate shipment.[591] And

in Banker Bros. Co. _v._ Pennsylvania[592] it was held that a tax upon a

domestic corporation selling automobiles built by a foreign corporation

under an arrangement by which the latter agreed to build for and sell to

the former, for cash, at a specified price less than list price, was not

a tax on interstate transactions, there being nothing which connected

the ultimate buyer with the manufacturer but a warranty and the buyer's

agreement to pay the list price f.o.b. factory. Similarly, in Browning

_v._ Waycross[593] it was held that the business of erecting lightning

rods within the limits of a town by the agent of a nonresident

manufacturer on whose behalf such agent had solicited orders for the

sale of the rods, and from whom he had received them when shipped into

the State, was validly subjected to a municipal license tax. "It was

not," said the Court, "within the power of the parties by the form of

their contract to convert what was exclusively a local business, * * *,

into an interstate commerce business * * *"[594] Also, a municipal

license tax upon persons engaged in the business of buying or selling

cotton for themselves was found not to impose a forbidden burden upon

interstate commerce even though the cotton was purchased with a view to

ultimate shipment in some other State or country.[595] Nor was a

gallonage tax imposed by a State upon a distributor of liquid fuel

rendered repugnant to the commerce clause by the fact that the

distributor caused fuel sold to customers in the State to be shipped

from another State for delivery in tank cars--"deemed original

packages"--on purchaser's siding, as agreed. Said the Court: "The

contracts were executory and related to unascertained goods. * * * It

does not appear that when they were made appellant had any fuels of the

kinds covered, or that those to be delivered were then in existence.

There was no selection of goods by purchasers. Appellant was not

required by the contracts to obtain the fuels at Wilmington but was free

to effect performance by shipping from, any place within or without

Pennsylvania."[596]

THE ROBBINS CASE TODAY

In the cases reviewed in the preceding paragraph protestants against

local taxation appealed, but unavailingly, to the Robbins case. So it

would seem that the generative powers of that prolific precedent had

begun to wane somewhat even before the Depression, an event which

rendered judicial reaction against it still more pronounced. Indeed, by

the Court's decision in McGoldrick _v._ Berwind-White Co.,[597] in 1940,

the authority of the entire line of cases descending from Robbins _v._

Shelby County Taxing District was seriously impaired, for the time

being, while a second holding the same year seemed to reduce the

significance of the Robbins case itself to that of a reassertion of the

elementary rule against discrimination. "The commerce clause," Justice

Reed remarked sententiously, "forbids discrimination, whether forthright

or ingenious."[598]

DEPRESSION CASES: USE TAXES

With a majority of the States on the verge of bankruptcy, extensive

recourse was had to sales taxes and, as an offset to these in favor of

the local economy, "use" taxes on competing products coming from sister

States. The basic decision sustaining the use tax, in this novel

employment of it, was Henneford _v._ Silas Mason Co.,[599] in which was

involved a State of Washington two per cent tax on the privilege of

using products coming from sister States. Excepted from the tax, on the

other hand, was any property the sole use of which had already been

subjected to an equal or greater tax, whether under the laws of

Washington or any other State. Stressing this provision in its opinion,

the Court said: "Equality is the theme that runs through all the

sections of the statute. * * * When the account is made up, the stranger

from afar is subject to no greater burdens as a consequence of ownership

than the dweller within the gates."[600] There being no actual

discrimination in favor of Washington products, the tax was valid.

DEPRESSION CASES: SALES TAXES

A companion piece of the Henneford case in motivation, although it

occurred three years later, was McGoldrick _v._ Berwind-White Coal

Mining Company,[601] in which it was held that in the absence of

Congressional action, a New York City general sales tax was applicable

to sales of coal under contracts entered into within the municipality

and calling for delivery therein. Speaking for the majority, Justice

Stone declared any "distinction * * * between a tax laid on sales made,

without previous contract, after the merchandise had crossed the State

boundary, and sales, the contracts for which when made contemplate or

require the transportation of merchandise interstate to the taxing

State," to be "without the support of reason or authority";[602] and the

Robbins case was held to be "narrowly limited to fixed-sum license taxes

imposed on the business of soliciting order for the purchase of goods to

be shipped interstate, * * *"[603] Three Justices, speaking by Chief

Justice Hughes, dissented. Three companion cases decided the same day

were found to follow the Berwind-White pattern,[604] while a fourth was

held not to, on the ground that foreign commerce was involved.[605] For

the time being Robbins and family looked to be on the way out.

END OF THE DEPRESSION CASES

Two cases, decided respectively in 1944 and 1946, signalized the end of

the Depression. In McLeod _v._ Dilworth Co.,[606] a divided Court ruled

that a sales tax could not be validly imposed by a State on sales to its

residents which were consummated by acceptance of orders in, and

shipment of goods from another State, in which title passed upon

delivery to the carrier. Said Justice Frankfurter for the majority: "A

sales tax and a use tax in many instances may bring about the same

result. But they are different in conception, are assessments upon

different transactions, * * * A sales tax is a tax on the freedom of

purchase * * * A use tax is a tax on the enjoyment of that which was

purchased. In view of the differences in the basis of these two taxes

and the differences in the relation of the taxing State to them, a tax

on an interstate sale like the one before us and unlike the tax on the

enjoyment of the goods sold, involves an assumption of power by a State

which the Commerce Clause was meant to end."[607] He also

"distinguished" the Berwind-White case--just as it had "distinguished"

the Robbins case--but not to the satisfaction of three of his brethren,

who found the decision to mark a retreat from the Berwind-White

case.[608]

The second case, Nippert _v._ Richmond,[609] involved a municipal

ordinance imposing upon solicitors of orders for goods a license tax of

fifty dollars and one-half of one per cent of the gross earnings,

commissions, etc., for the preceding year in excess of $1,000. Speaking

for the same majority that had decided McLeod _v._ Dilworth Co., Justice

Rutledge found that "as the case has been made, the issue is

substantially whether the long line of so-called 'drummer cases'

beginning with Robbins _v._ Shelby County Taxing District, 120 U.S. 489,

shall be adhered to in result or shall now be overruled in the light of

what attorneys for the city say are recent trends requiring that

outcome."[610] The tax was held void, Berwind-White being not only

"distinguished" this time, but also "explained." "The drummer," said

Justice Rutledge, "is a figure representative of a by-gone day," citing

Wright, Hawkers and Walkers in Early America (1927). "But his modern

prototype persists under more euphonious appellations. So endure the

basic reasons which brought about his protection from the kind of local

favoritism the facts of this case typify."[611]

A year later a Mississippi "privilege tax" laid upon each person

soliciting business for a laundry not licensed in the State, was set

aside directly on the authority of the Robbins case.[612] It would

appear that Robbins and his numerous progeny can once more claim full

constitutional status.[613]

TAXATION OF CARRIAGE OF PERSONS

Whether the carriage of persons from one State to another was a branch

of interstate commerce was a question which the Court was able to

side-step in Gibbons _v._ Ogden.[614] A quarter of a century later,

however, an affirmative answer was suggested in the Passenger

Cases,[615] in which a State tax on each passenger arriving on a vessel

from a foreign country was set aside, though chiefly in reliance on

existing treaties and acts of Congress. But similar cases arising after

the Civil War were disposed of by direct recourse to the commerce

clause.[616] Meantime, in 1865, the newly admitted State of Nevada, in

an endeavor to prevent a threatened dissipation of its population,

levied a special tax on railroad and stage companies for every passenger

they carried out of the State, and in Crandall _v._ Nevada[617] this act

was held void on the general ground that the National Government had at

all times the right to require the services of its citizens at the seat

of government and they the correlative right to visit the seat of

government, rights which, if the Nevada tax was valid, were at the mercy

of any State, the power to tax being without limit. Reference was also

made to the right of the government to transport troops at all times by

the most expeditious method. Two of the Justices, however, rejected this

line of reasoning and held the act to be void under the commerce

clause.[618] But it was not until 1885 that the Court, in deciding

Gloucester Ferry Company _v._ Pennsylvania,[619] stated flatly that

"Commerce among the States * * * includes the transportation of

persons,"[620] and hence was not taxable by the States, a proposition

which is still good law.[621] Four years earlier it had been held that

the transmission of telegraph messages from one State to another, being

interstate commerce, was something that the State of origin could not

tax.[622]

State Taxation of the Interstate Commerce Privilege: Foreign

Corporations

DOCTRINAL HISTORY

In the famous case of Paul _v._ Virginia,[623] decided in 1869, it was

held that a corporation chartered by one State could enter other States

only with their assent, which might "be granted upon such terms and

conditions as those States may think proper to impose";[624] but along

with this holding went the statement that "the power conferred upon

Congress to regulate commerce includes as well commerce carried on by

corporations as commerce carried on by individuals."[625] And in the

State Freight Tax Case it is implied that no State can regulate or

restrict the right of a "foreign" corporation--one chartered by another

State--to carry on interstate commerce within its borders,[626] an

implication which soon became explicit. In Leloup _v._ Port of

Mobile,[627] decided in 1888, the Court had before it a license tax on a

telegraph company which was engaged in both domestic and interstate

business. The general nature of the exaction did not suffice to save it.

Said the Court: "The question is squarely presented to us, * * *,

whether a State, as a condition of doing business within its

jurisdiction, may exact a license tax from a telegraph company, a large

part of whose business is the transmission of messages from one State to

another and between the United States and foreign countries, and which

is invested with the powers and privileges conferred by the act of

Congress passed July 24, 1866, and other acts incorporated in Title LXV

of the Revised Statutes? Can a State prohibit such a company from doing

such a business within its jurisdiction, unless it will pay a tax and

procure a license for the privilege? If it can, it can exclude such

companies, and prohibit the transaction of such business altogether. We

are not prepared to say that this can be done."[628]

In Crutcher _v._ Kentucky[629] a like result was reached, without

assistance from an act of Congress, with respect to a Kentucky statute

which provided that the agent of an express company not incorporated by

the laws of that State should not carry on business there without first

obtaining a license from the State, and that, preliminary thereto, he

must satisfy the auditor of the State that the company he represented

was possessed of an actual capital of at least $150,000. The act was

held to be a regulation of interstate commerce so far as applied to a

corporation of another State in that business. "To carry on interstate

commerce," said the Court, "is not a franchise or a privilege granted by

the State; it is a right which every citizen of the United States is

entitled to exercise under the Constitution and laws of the United

States; and the accession of mere corporate facilities, as a matter of

convenience in carrying on their business, cannot have the effect of

depriving them of such right, unless Congress should see fit to

interpose some contrary regulation on the subject."[630]

LICENSE TAXES

The demand for what in effect is a license is, of course, capable of

assuming various guises. In Ozark Pipe Line _v._ Monier[631] an annual

franchise tax on foreign corporations equal to one-tenth of one per cent

of the par value of their capital stock and surplus employed in business

in the State was found to be a privilege tax, and hence one which could

not be exacted of a foreign corporation whose business in the taxing

State consisted exclusively of the operation of a pipe line for

transporting petroleum through the State in interstate commerce, and of

activities the sole purpose of which was the furtherance of its

interstate business. Likewise a Massachusetts tax based on "the

corporate surplus" of a foreign corporation having only an office in the

State for the transaction of interstate business was held in Alpha

Portland Cement Co. _v._ Massachusetts to be virtually an attempt to

license interstate commerce.[632] In the same category of

unconstitutional taxation of the interstate commerce privilege, the

Court has also included the following: a State "franchise" tax on a

foreign corporation, whose sole business in the State consisted in

landing, storing and selling in the original package goods imported by

it from abroad, the tax being imposed annually on the doing of such

business and measured by the value of the goods on hand;[633] a State

privilege or occupation tax on every corporation engaged in the business

of operating and maintaining telephone lines and furnishing telephone

service in the State, of so much for each telephonic instrument

controlled and operated by it, as applied to a company furnishing both

interstate and intrastate service, and employing the same telephones,

wires, etc., in both as integrated parts of its system;[634] a State

occupation tax measured by the entire gross receipts of the business of

a radio broadcasting station, licensed by the Federal Communications

Commission, and engaged in broadcasting advertising "programs" for

customers for hire to listeners within and beyond the State, since it

did not "appear that any of the taxed income ... [was] allocable to

interstate commerce";[635] a State occupation tax on the business of

loading and unloading vessels engaged in interstate and foreign

commerce;[636] an Indiana income tax imposed on the gross receipts from

commerce inasmuch as the tax reached indiscriminately and without

apportionment the gross income from both interstate commerce and

intrastate activities;[637] an Arkansas statute making entry into the

State of motor vehicles carrying more than twenty gallons of gasoline

conditional on the payment of an excise on the excess.[638]

DOCTRINE OF WESTERN UNION TELEGRAPH _v._ KANSAS EX REL. COLEMAN

One of the most striking concessions ever made by the Court to the

interstate commercial interest at the expense of the State's taxing

power was that which appeared originally in 1910, in Western Union

Telegraph. Co. _v._ Kansas ex rel. Coleman,[639] which involved a

percentage tax upon the total capitalization of all foreign corporations

doing or seeking to do a local business in the State. The Court

pronounced the tax, as to the Western Union, a burden upon the company's

interstate business and upon its property located and used outside the

State, and hence void under both the commerce clause and the due process

of law clause of the Fourteenth Amendment. The decision was

substantially aided by the fact that the company had been doing a

general telegraphic business within the State for more than fifty years

without having been subjected to such an exaction.[640]

SPREAD OF THE DOCTRINE

The doctrine of the case, however, soon cast off these initial

limitations. In Looney _v._ Crane Company[641] a similar tax by the

State of Texas was disallowed as to an Illinois corporation, engaged in

its home State in the manufacture of hardware, but maintaining in Texas

depots and warehouses from which orders were filled and sales made,

likewise, in International Paper Company _v._ Massachusetts,[642] it was

clearly stated that "the immunity of interstate commerce from State

taxation" is not confined to what is done by carriers in such commerce,

but "is universal and covers every class of ... [interstate] commerce,

including that conducted by merchants and trading companies." On the

same occasion the general proposition was laid down that "the power of a

State to regulate the transaction of a local business within its

borders by a foreign corporation, ... is not unrestricted or absolute,

but must be exerted in subordination to the limitations which the

Constitution places on State action."[643]

STATUS OF THE DOCTRINE TODAY

The precise standing of this doctrine is, nevertheless, seriously

clouded by certain more recent holdings. In Sprout _v._ South Bend,[644]

decided in 1928, the doctrine was still applied, to disallow a license

tax on concerns operating a bus interstate. Pointing to the fact that

the ordinance made no distinction between busses engaged exclusively

interstate and those engaged intrastate or both interstate and

intrastate, the Court said: "In order that the fee or tax shall be

valid, it must appear that it is imposed solely on account of the

intrastate business; that the amount exacted is not increased because of

the interstate business done; that one engaged exclusively in interstate

commerce would not be subject to the imposition; and that the person

taxed could discontinue the intrastate business without withdrawing also

from the interstate business."[645] Likewise, in Cooney _v._ Mountain

States Telephone and Telegraph Co., the Court asserted that to sustain a

State occupation tax on one whose business is both interstate and

intrastate, "it must appear * * *, and that the one [who is] taxed could

discontinue the intrastate business without [also] withdrawing from the

interstate business."[646] A year later, nevertheless, Justice Brandeis,

speaking for the Court in Pacific Telephone and Telegraph Co. _v._ Tax

Commission,[647] asserted flatly: "No decision of this Court lends

support to the proposition that an occupation tax upon local business,

otherwise valid, must be held void merely because the local and

interstate branches are for some reason inseparable."[648] An occupation

tax, like other taxes and expenses, lessens the benefit derived by

interstate commerce from the joint operation with it of the intrastate

business of the carrier; but it is not an undue burden on interstate

commerce where, as in this case, the advantage to the carrier, and to

the interstate commerce, of continuing the intrastate business is

greatly in excess of the tax. And subsequent holdings in cases involving

foreign corporations doing a mixed business, comprising both interstate

and intrastate elements, have tended on the whole to restore the rule

stated in Paul _v._ Virginia[649] shortly after the Civil War, that the

Constitution does not confer upon a foreign corporation the right to

engage in local business in a State without its assent, which it may

give on such terms as it chooses.[650]

State Taxation of Property Engaged in, and of the Proceeds From,

Interstate Commerce

GENERAL ISSUE

In this area of Constitutional Law the principle asserted in the State

Freight Tax Case,[651] that a State may not tax interstate commerce, is

confronted with the principle that a State may tax all purely domestic

business within its borders and all property "within its jurisdiction."

Inasmuch as most large concerns prosecute both an interstate and a

domestic business, while the instrumentalities of interstate commerce

and the pecuniary returns from such commerce are ordinarily property

within the jurisdiction of some State or other, the task before the

Court in drawing the line between the immunity claimed by interstate

business on the one hand and the prerogatives claimed by local power on

the other has at times involved it in self-contradiction, as successive

developments have brought into prominence novel aspects of its complex

problem or have altered the perspective in which the interests competing

for its protection have appeared. In this field words of the late

Justice Rutledge, spoken in 1946, are especially applicable: "For

cleanly as the commerce clause has worked affirmatively on the whole,

its implied negative operation on State power has been uneven, at times

highly variable. * * * Into what is thus left open for inference to

fill, divergent ideas of meaning may be read much more readily than into

what has been made explicit by affirmation. That possibility is

broadened immeasurably when not logic alone, but large choices of

policy, affected in this instance by evolving experience of federalism,

control in giving content to the implied negation."[652]

DEVELOPMENT OF THE APPORTIONMENT RULE

At the outset the Court appears to have thought that it could solve all

difficulties by the simple device of falling back on Marshall's opinion

in Brown _v._ Maryland;[653] and on the same day that it set aside

Pennsylvania's freight tax by appeal to that transcendent precedent, it

sustained, by reference to the same authority, a Pennsylvania tax on the

gross receipts of all railroads chartered by it, the theory being that

such receipts had, by tax time, become "part of the mass of property of

the State."[654] This precedent stood fourteen years, being at last

superseded by a ruling in which substantially the same tax was held void

as to a Pennsylvania chartered steamship company.[655] A year later the

Court sustained Massachusetts in levying a tax on Western Union, a New

York corporation, on account of property owned and used by it in the

State, taking as the basis of the assessment such proportion of the

value of its capital stock as the length of its lines within the State

bore to their entire length throughout the country.[656] The tax was

characterized by the Court as an attempt by Massachusetts "to ascertain

the just amount which any corporation engaged in business within its

limits shall pay as a contribution to the support of its government upon

the amount and value of the capital so employed by it therein."[657] And

drawing on certain decisions in which it had sought to limit the

principle of tax exemption as applied in the case of railroads chartered

by the United States, it expressed concern that "the necessary powers of

the States" should not be destroyed or "their efficient exercise" be

prevented.[658] Three years later Pennsylvania, still in quest of

revenue, was sustained in applying the Massachusetts idea to Pullman's

Palace Car Company, a "foreign" corporation.[659] Pointing to the fact

that the company had at all times substantially the same number of cars

within the State and continuously and constantly used there a portion of

its property, the Court commended the State for taking "as a basis of

assessment such proportion of the capital stock of the company as the

number of miles over which it ran cars within the State bore to the

whole number of miles, in that and other States, * * *" This, said the

Court, was "a just and equitable method of assessment;" one which, "if

it were adopted by all the States through which these cars ran, the

company would be assessed upon the whole value of its capital stock, and

no more."[660]

THE UNIT RULE

And pursuing the same course of thought, the Court, in Adams Express

Company _v._ Ohio,[661] decided in 1897, sustained that State in taxing

property worth less than $70,000.00 at a valuation of more than half a

million, on the ground that the latter figure did not exceed, in

relation to the total capital value of the company, the proportion borne

by the railway mileage which the company covered in Ohio to the total

mileage which it covered in all States. To the objection that "the

intangible values" reached by the tax were derived from interstate

commerce, the Court replied with the "cardinal rule * * * that whatever

property is worth for purposes of income and sale it is also worth for

purposes of taxation,"[662] which obviously does not meet the issue.

What the case indubitably establishes is that a State may tax property

within its limits "as part of a going concern" and hence "at its value

as it is in its organic relations," although those relations constitute

interstate commerce.[663] In short, values created by interstate

commerce _are_ taxed.

Thus emerged the concept of an "apportioned" tax, or as it is called

when applied to the problem of property valuation, the "unit rule,"

which till 1938 afforded the Court its chief reliance in the field of

Constitutional Law now under review. The theory underlying the concept

appears to be that it is always possible for a State to devise a formula

whereby it may assign to the property employed in interstate commerce

within its limits, or to the proceeds from such commerce, a value which

it may tax or by which it may "measure" a tax, without

unconstitutionally burdening or interfering with interstate commerce,

while at the same time exacting from it a fair return for the protection

which the State gives it. The question in each case is, of course,

whether the State has guessed right.

APPORTIONED PROPERTY TAXES

In reliance on the apportionment concept the Court has at various times

sustained, in the case of a sleeping car company, as we have seen, a

valuation based on the ratio of the miles of track over which the

company runs within the State to the whole track mileage over which it

runs;[664] in the case of a railroad company, a valuation based on the

ratio of its mileage within the State to its total mileage;[665] in the

case of a telegraph company, a valuation based upon the ratio of its

length of line within the State to its total length;[666] in the case of

an express company, as we have just seen, a valuation based upon the

ratio of miles covered by it in the State to the mileage covered by it

in all States.[667] Also, a tax has been upheld as to a railroad line

whose principal business was hauling ore from mines in the taxing State

to terminal docks outside the State, where the line and the docks were

treated by the railway as a unit, the charge for the dock service being

absorbed in the charge per ton transported; and where the evidence did

not show that the mileage value of the part of the line outside of the

taxing State, with the docks included, was greater than the mileage

value of part within it.[668] Nor does the commerce clause preclude the

assessment of an interstate railway within a State by taking such part

of the value of the railroad's entire system, less the value of its

localized property, such as terminal buildings, shops and nonoperating

real estate, as is represented by the ratio which the railroad's mileage

within the State bears to its total mileage.[669] To the objection that

the mileage formula was inapplicable in this instance because of the

disparity of the revenue-producing capacity between the lines in and out

of the State, the Court answered that mathematical exactitude in making

an apportionment had never been a constitutional requirement.

"Wherever," it explained, "the State's taxing authorities have been held

to have intruded upon the protected domain of interstate commerce in

their use of a mileage formula, the special circumstances of the

particular situation, in the view which this Court took of them,

precluded a defensible utilization of the mileage basis."[670] The

principle of apportionment is, moreover, applicable to the intangible

property of a company engaged in both interstate and local commerce, as

well as to its tangible property.[671]

APPORTIONED GROSS RECEIPTS TAXES

The first State to attempt to employ the apportionment device in order

to tax the gross receipts of companies engaged in interstate commerce

was Maine, in connection with a so-called "franchise tax," which was

levied on such proportion of the revenues of railroads operating in the

State as their mileage there bore to their total mileage. In Maine _v._

Grand Trunk Railway Company,[672] a sharply divided Court upheld the tax

on the basis of its designation, giving scant attention to its

apportionment feature. Said Justice Field for the majority: "The

privilege of exercising the franchises of a corporation within a State

is generally one of value, and often of great value, and the subject of

earnest contention. It is natural, therefore, that the corporation

should be made to bear some proportion of the burdens of government. As

the granting of the privilege rests entirely in the discretion of the

State, whether the corporation be of domestic or foreign origin, it may

be conferred upon such conditions, pecuniary or otherwise, as the State

in its judgment may deem most conducive to its interests or

policy."[673] Four Justices, speaking by Justice Bradley, protested

forcefully that the decision directly contradicted a whole series of

decisions holding that the States are without power to tax interstate

commerce;[674] and seventeen years later another sharply divided Court

endorsed this contention when it overturned a Texas gross receipts tax

drawn on the lines of the earlier Maine statute.[675] The Maine tax,

however, the later Court suggested, had been in the nature of a

commutation tax in lieu of all taxes, which the Texas tax was not.[676]

FRANCHISE TAXES

Today the term, franchise tax, possesses no specific saving quality of

its own. If the tax is merely a "just equivalent" of other taxes it is

valid however calculated.[677] Conversely, when such taxes are in

addition to other taxes then their fate will be determined by the same

rules as would apply had the label been omitted.[678] More precisely,

the rule governing this species of tax is ordinarily the apportionment

concept, and if the basis of apportionment adopted by the taxing State

is deemed by the Court to be a fair and reasonable one, the tax will be

sustained; otherwise, not.

Thus a franchise tax may be measured by such proportion of the company's

net income as its capital invested in the taxing State and its business

carried on there bear to its total capital and business;[679] also by

the net income justly attributable to business done within the State

although a part of this was derived from foreign or interstate

commerce;[680] also by such proportion of the company's outstanding

capital stock, surplus and undivided profits, plus its long-term

obligations, as the gross receipts of its local business bear to its

total gross receipts from its entire business;[681] also by such

proportion of the company's total capital stock as the value of its

property in the taxing State and of the business done there bears to the

total value of its property and of its business.[682] On the other hand,

a "franchise" tax on the unapportioned gross receipts of railroad

companies engaged in interstate commerce, was, as we saw above, held

void;[683] as was also one which was measured by assigning to the

company's property in the State the same proportion of the total value

of its stocks and bonds as its mileage in the State bore to its total

mileage, no account being taken of the greater cost of construction of

the company's lines in other States or of its valuable terminals

elsewhere.[684] Other examples were given earlier.[685]

GROSS RECEIPTS TAXES, CLASSES OF

The late Justice Rutledge classified gross receipts taxes which have

been sustained by the Court as follows: (a) those which were judged to

be fairly apportioned;[686] (b) those which were justified on a "local

incidence" theory, or the burden of which on interstate commerce was

held to be "remote";[687] (c) those which were justified as not inviting

the danger of multiple taxation of interstate commerce.[688] Gross

receipts taxes which, on the other hand, have been invalidated under

the commerce clause he placed in the following groups: (a) those which

were held not to be fairly apportioned;[689] (b) those which were not

apportioned at all and were bound to subject interstate commerce to the

risk of multiple taxation;[690] (c) those in which a discriminatory

element was detected in that they were directed exclusively at

transportation or communication;[691] (d) those in which there was no

discrimination but a possible multiple burden;[692] and, of course, any

tax which it disallows the Court is always free to stigmatize as an

unconstitutional attempt to tax or license the interstate commerce

privilege.[693]

"MULTIPLE TAXATION" TEST

That the Depression--allowing for the customary judicial lag--greatly

altered the Court's conception of Congress's powers under the commerce

clause, was pointed out earlier.[694] To a less, but appreciable degree,

it also affected its views as to the allowable scope under the clause of

the taxing power of the States, a majority of which were on the verge

of bankruptcy. The more evident proofs of this fact occurred in relation

to State taxation of the subject matter of interstate commerce, as is

indicated above.[695] But a certain revision of doctrine, apparently

temporary in nature, however, is to be seen in the connection with State

taxes impinging on property engaged in interstate commerce and the

revenues from such commerce, the principal manifestation of which is to

be seen in the emphasis which was for a time given the "multiple

taxation" test. Thus in his opinion in the Western Live Stock Case,[696]

cited above, Justice Stone seems to be engaged in an endeavor to erect

this into an almost exclusive test of the validity, or invalidity of

State taxation affecting interstate commerce. "It was not," he there

remarks, "the purpose of the commerce clause to relieve those engaged in

interstate commerce from their just share of State tax burden even

though it increases the cost of doing the business. 'Even interstate

business must pay its way,' * * * and the bare fact that one is carrying

on interstate commerce does not relieve him from many forms of State

taxation which add to the cost of his business."[697] Then citing cases,

he continues: "All of these taxes in one way or another add to the

expense of carrying on interstate commerce, and in that sense burden it;

but they are not for that reason prohibited. On the other hand, local

taxes, measured by gross receipts from interstate commerce, have often

been pronounced unconstitutional. The vice characteristic of those which

have been held invalid is that they have placed on the commerce burdens

of such a nature as to be capable, in point of substance, of being

imposed * * * [or added to] with equal right by every State which the

commerce touches, merely because interstate commerce is being done, so

that without the protection of the commerce clause it would bear

cumulative burdens not imposed on local commerce. * * * The

multiplication of State taxes measured by the gross receipts from

interstate transactions would spell the destruction of interstate

commerce and renew the barriers to interstate trade which it was the

object of the commerce clause to remove," citing cases, most of which

have been discussed above.[698] And speaking again for the Court eleven

months later, in Gwin, White and Prince _v._ Henneford,[699] Justice

Stone applied the test to invalidate a State of Washington tax. "Such a

tax," said he, "at least when not apportioned to the activities carried

on within the State, * * * would, if sustained, expose it [interstate

commerce] to multiple tax burdens, each measured by the entire amount of

the commerce, to which local commerce is not subject." The tax thus

discriminated against interstate commerce; and threatened to

"reestablish the barriers to interstate trade which it was the object of

the commerce clause to remove."[700]

The adoption by the Court of the multiple taxation principle as an

exclusive test of State taxing power in relation to interstate commerce

would have enlarged the former; but this was not the sole reason for its

temporary vogue with the Court, or at least a section of it. Discontent

with the difficulties and uncertainties of the apportionment rule also

played a great part. Thus in his concurring opinion in the Gwin case,

Justice Butler, speaking for himself and Justice McReynolds after

showing the instability of decisions in this area of Constitutional Law,

contend that "the problems of conjectured 'multiple taxation' or

'apportionment'" should be left to Congress,[701] a suggestion which

Justice Black, speaking also for Justices Frankfurter and Douglas a year

later, made the basis of a dissenting opinion,[702] from the doctrines

of which, however, Justice Frankfurter appears since to have

recanted.[703]

RECENT CASES

In Freedman _v._ Hewit,[704] decided in 1946, the Court held void as an

"unconstitutional burden on interstate commerce" an Indiana gross income

tax of the proceeds from certain securities sent outside the State to be

sold. Justice Frankfurter spoke for the Court; Justice Rutledge

concurred in an opinion deploring the majority's failure to employ the

multiple taxation test;[705] three Justices dissented.[706] In Joseph

_v._ Carter and Weekes Stevedoring Co.,[707] also decided in 1947, the

Court, reaffirming an earlier ruling, held void the application of a

Washington gross receipts tax to the receipts of a stevedoring company

from loading and unloading vessels employed in interstate and foreign

commerce, or to the privilege of engaging in such business measured by

their receipts. Said Justice Reed for the Court: "Although State laws do

not discriminate against interstate commerce or * * * subject it to the

cumulative burden of multiple levies, those laws may be unconstitutional

because they burden or interfere with [interstate] commerce."[708] This

time Justice Rutledge was among the dissenters so far as interstate

commerce was concerned.[709] In Central Greyhound Lines, Inc. _v._

Mealey,[710] decided in 1948, five members of the Court ruled that a New

York tax on the gross income of public utilities doing business in the

State could not be constitutionally imposed on a carrier's unapportioned

receipts from continuous transportation between termini in the State

over a route a material part of which passes through other States.

Justice Frankfurter, speaking for the Court, held, however, that the

tax was sustainable as to receipts apportioned as to the mileage within

the State.[711] Justice Rutledge concurred without opinion. Justice

Murphy, for himself and Justices Black and Douglas, thought the tax was

on an essentially local activity and that the transportation through

other States was "a mere geographic incident," conceding at the same

time, that this view invited the other States involved to levy similar

taxes and exposed the company to the danger of multiple taxation. In

Memphis Natural Gas Co. _v._ Stone,[712] also of the 1948 grist, a

Mississippi franchise tax, measured by the value of capital invested or

employed in the State, was sustained in the case of a gas pipeline

company a portion of whose line passed through the State but which did

no local business there. Three Justices, speaking by Justice Reed, held

that the tax was on the intrastate activities of the company in

maintaining its facilities there, and was no more burdensome than the

concededly valid _ad valorem_ tax on the company's property in the

State. Justice Rutledge held that the tax was valid because it did not

discriminate against interstate commerce nor invite multiple taxation,

while Justice Black concurred without opinion. Four Justices, speaking

by Justice Frankfurter, contended that the pipeline already paid the _ad

valorem_ tax to which Justice Reed had adverted, and that the franchise

tax must therefore be regarded as being on the interstate commerce

privilege.

This survey of recent cases leaves the impression that the Court is at

loose ends for intermediate guiding principles in this field of

Constitutional Law. The "leave it to Congress" formula is evidently in

the discard, although Justice Black's successive dissents without

opinion may indicate that he still thinks it sound. The multiple tax

test seems to be in an equally bad way, with both Chief Justice Stone

and Justice Rutledge in the grave. The concept of an apportioned tax

still has some vitality however, although just how much is difficult to

assess. Thus in Interstate Oil Pipe Line Co. _v._ Stone,[713] which was

decided in 1949, we find Justice Rutledge, speaking for himself and

Justices Black, Douglas, and Murphy, endorsing the view that Mississippi

was within her rights in imposing on a Delaware corporation, as a

condition of doing a local business, a "privilege" tax equal to two per

cent of its intrastate business even though the exaction amounted to "a

'direct' tax on the 'privilege' of engaging in interstate commerce," an

assertion which was countered by one just as positive, and also endorsed

by four Justices, that no State may "levy privilege, excise or franchise

taxes on a foreign corporation for the privilege of carrying on or the

actual doing of solely interstate business," even though the tax is not

discriminatory and is fairly apportioned between the corporation's

intrastate and interstate business. The tax in controversy was sustained

by the vote of the ninth Justice, who construed it as being levied only

on the privilege of engaging in intrastate commerce, a conclusion which

obviously ignores the question of the tax's actual impact on interstate

commerce, the precise question on which many previous decisions have

turned.[714]

TAXES ON NET INCOME

The leading case under this caption is United States Glue Co. _v._ Oak

Creek[715] where it was held that the State of Wisconsin, in laying a

general income tax upon the gains and profits of a domestic corporation,

was entitled to include in the computation the net income derived from

transportations in interstate commerce. Pointing out the difference

between such a tax and one on gross receipts, the Court said the latter

"affects each transaction in proportion to its magnitude and

irrespective of whether it is profitable or otherwise. Conceivably it

may be sufficient to make the difference between profit and loss, or to

so diminish the profit as to impede or discourage the conduct of the

commerce. A tax upon the net profits has not the same deterrent effect,

since it does not arise at all unless a gain is shown over and above

expenses and losses, and the tax cannot be heavy unless the profits are

large." Such a tax "constitutes one of the ordinary and general burdens

of government, from which persons and corporations otherwise subject to

the jurisdiction of the States are not exempted * * * because they

happen to be engaged in commerce among the States."[716]

Adhering to this precedent, the Court has held that a tax upon the net

income of a nonresident from business carried on by him in the State is

not a burden on interstate commerce merely because the products of the

business are shipped out of the State;[717] also that a tax which is

levied upon the proportion of the net profits of a foreign corporation

earned by operations conducted within the taxing State is valid, if the

method of allocation employed be not arbitrary or unreasonable.[718]

Where, however, the method of allocating the net income of a foreign

corporation attributed to the State an amount of income out of all

proportion to the business there transacted by the corporation, it was

held void.[719]

Also, a State may impose a tax upon the net income of property, as

distinguished from the net income of him who owns or operates it,

although the property is used in interstate commerce;[720] also a

"franchise tax" measured by the net income justly attributable to

business done by corporations within the State, although part of the

income so attributable comes from interstate and foreign commerce;[721]

also a tax on corporate net earnings derived from business done wholly

within the State may be applied to the income of a foreign pipeline

corporation which is commercially domiciled there and which pipes

natural gas into that State for delivery to, and sale by, a local

distributing corporation to local consumers.[722] Indeed it was asserted

that even if the taxpayer's business were wholly interstate commerce,

such a nondiscriminatory tax upon its net income "is not prohibited by

the commerce clause," there being no showing that the income was not on

net earnings partly attributable to the taxing State;[723] but a more

recent holding appears to contradict this position.[724]

MISCELLANEOUS TAXES AFFECTING INTERSTATE COMMERCE

Vessels

In Gloucester Ferry Company _v._ Pennsylvania,[725] decided in 1885, the

Court held inapplicable to a New Jersey corporation which was engaged

solely in transporting passengers across the Delaware River and entered

Pennsylvania only to discharge and receive passengers and freight, a

statute which taxed the capital stock of all corporations doing business

within the State. Such transactions, the Court held, were interstate

commerce; nor were the company's vessels subject to taxation by

Pennsylvania, their taxing _situs_ being in the company's home State.

The only property held by the company in Pennsylvania was the lease

there of a wharf which could be taxed by the State according to its

appraised value; and the State could also levy reasonable charges by way

of tolls for the use of such facilities as it might itself furnish for

the carrying on of commerce. This ruling rested on two earlier ones. In

1855, the Court had held that vessels registered in New York, owned by a

New York corporation, and plying between New York City and San Francisco

had the former city for their home port, and were not taxable by

California where they remained no longer than necessary to discharge

passengers and freight;[726] and in 1877 it had sustained Keokuk, Iowa

in charging tolls for the use by vessels plying the Mississippi of

wharves owned by the municipality, said tolls being reasonable and not

discriminatory as between interstate and intrastate commerce.[727] Today

it is still the general rule as to vessels plying between ports of

different States and engaged in the coastwise trade, that the domicile

of the owner is deemed to be the _situs_ of the vessel for purposes of

taxation,[728] unless the vessel has acquired actual _situs_ in another

State, by continuous employment there, in which event it may be taxed

there.[729] Recently, however, this long standing rule has been amended

by the addition to it of the apportionment rule as developed in the

Pullman case. This occurred in Ott _v._ Mississippi Barge Line Co.,[730]

decided in 1949, in which the Court sustained Louisiana in levying an

_ad valorem_ tax on vessels owned by an interstate carrier and used

within the State, the assessment for the tax being based on the ratio

between the number of miles of the carrier's lines within the State and

its total mileage.

Airplanes

When, however, it was confronted by an attempt on the part of the State

of Minnesota to impose a personal property tax on the entire air fleet

owned and operated by a company in interstate commerce although only a

part of it was in the State on tax day, the Court found itself unable to

recruit a majority for any of the above formulas.[731] Pointing to the

fact that the company was a Minnesota corporation and that its principal

place of business was located in the State, Justice Frankfurter for

himself and three others wished to stress the prerogatives of the State

of domicile.[732] Justice Black, concurring in this view, added the

caveat that the taxing rights of other States should not be foreclosed

and made reference to his "leave it to Congress" notion.[733] Justice

Jackson, after speaking lightly of the apportionment theory,[734] joined

the affirming brethren on the ground that the record seemed "to

establish Minnesota as a 'home port' within the meaning of the old and

somewhat neglected but to me wise authorities cited," to wit, the Hays

case and those decided by analogy to it.[735] Four Justices, speaking by

Chief Justice Stone dissented, urging the Pullman Case[736] as an

applicable model and the fact that "the rationale found necessary to

support the present tax leaves other States free to impose comparable

taxes on the same property."[737] Evidently in this area of

Constitutional Law the Court is still much at sea or better perhaps, "up

in the air."

Motor Vehicles

In the matter of motor vehicle taxation, on the other hand, durable and

consistent results have been achieved. This is because most such

taxation has been readily classifiable as the exaction of a toll for the

use of the State's highways, and the only question was whether the toll

was exorbitant. Moreover, such taxation is apt to be designed not merely

to raise revenue but to promote safety on the highways. In the leading

case, Hendrick _v._ Maryland,[738] decided in 1915, the Court took

cognizance of the fact that "the movement of motor vehicles over the

highways is attended by constant and serious dangers to the public, and

is also abnormally destructive to the ways themselves";[739] and on this

factual basis it has held that registration may be required by a State

for out-of-State vehicles operated therein,[740] or passing through from

one State to another;[741] that a special fee may be exacted for the

privilege of transporting motor vehicles on their own wheels in

caravans,[742] unless excessive;[743] that taxes may also be imposed on

carriers based on capacity[744] or mileage,[745] or as a flat fee;[746]

but that a privilege tax on motor busses operated exclusively in

interstate commerce, cannot be sustained unless it appears affirmatively

in some way, that it is levied only as compensation for use of the

highways in the State or to defray the expense of regulating motor

traffic.[747] Later decisions follow in the same general track,[748] the

most recent one being Capitol Greyhound Lines _v._ Brice,[749] in which

the Court, speaking by Justice Black passed upon a Maryland excise tax

on the fair market value of motor vehicles used in interstate commerce

as a condition to the issuance of certificates of title as prerequisites

to the registration and operation of motor vehicles in the State.

Because the tax was applied to vehicles used in both interstate and

intrastate commerce and the proceeds were used for road purposes and

because the Court considered the tax, though actually separate, to be an

adjunct of Maryland's mileage tax, it was able to find that the total

charge varied substantially with the mileage travelled, and on that

ground sustained it, being constant, it said with "rough approximation

rather than precision," no showing having been made that Maryland's

taxes considered as a whole exceeded "fair compensation for the

privilege of using State roads." Justice Frankfurter, who was joined by

Justice Jackson, dissented, and in so doing contributed as an Appendix

to his opinion a useful analysis of decisions involving State taxation

of motor vehicles engaged in interstate commerce, for highway

purposes.[750]

Public Utilities; Regulatory Charges

"The principles governing decision [in this class of cases] have

repeatedly been announced and were not questioned below.[751] In the

exercise of its police power the State may provide for the supervision

and regulation of public utilities, such as railroads; may delegate the

duty to an officer or commission; and may exact the reasonable cost of

such supervision and regulation from the utilities concerned and

allocate the exaction amongst the members of the affected class without

violating the rule of equality imposed by the Fourteenth Amendment.[752]

The supervision and regulation of the local structures and activities of

a corporation engaged in interstate commerce, and the imposition of the

reasonable expense thereof upon such corporation, is not a burden upon,

or regulation of, interstate commerce in violation of the commerce

clause of the Constitution.[753] A law exhibiting the intent to impose a

compensatory fee for such a legitimate purpose is _prima facie_

reasonable.[754] If the exaction be so unreasonable and disproportionate

to the service as to impugn the good faith of the law[755] it cannot

stand either under the commerce clause or the Fourteenth Amendment.[756]

The State is not bound to adjust the charge after the fact, but may, in

anticipation, fix what the legislature deems to be a fair fee for the

expected service, the presumption being that if, in practice, the sum

charged appears inordinate the legislative body will reduce it in the

light of experience.[757] Such a statute may, in spite of the

presumption of validity, show on its face that some part of the exaction

is to be used for a purpose other than the legitimate one of supervision

and regulation and may, for that reason, be void.[758] And a statute

fair upon its face may be shown to be void and unenforceable on account

of its actual operation.[759] If the exaction be clearly excessive it is

bad _in toto_ and the State cannot collect any part of it."[760]

Dominance of Congress

The Supreme Court has never forgotten the lesson which was administered

it by the act of Congress of August 31, 1852,[761] which pronounced the

Wheeling Bridge "a lawful structure," thereby setting aside the Court's

determination to the contrary earlier the same year.[762] This lesson,

stated in the Court's own language thirty years later, was, "It is

Congress, and not the Judicial Department, to which the Constitution has

given the power to regulate commerce * * *."[763] A parallel to the

Wheeling Bridge episode occurred in 1945.

THE McCARRAN ACT: REGULATION OF INSURANCE

Less than a year after the ruling in United States _v._ South-Eastern

Underwriters Association[764] that insurance transactions across State

lines constituted interstate commerce, thereby logically establishing

their immunity from discriminatory State taxation, Congress passed the

McCarran Act[765] authorizing State regulation and taxation of the

insurance business; and in Prudential Insurance Co. _v._ Benjamin,[766]

a statute of South Carolina which imposed on foreign insurance

companies, as a condition of their doing business in the State, an

annual tax of three per cent of premiums from business done in South

Carolina, while imposing no similar tax on local corporations, was

sustained. "Obviously," said Justice Rutledge for the Court, "Congress'

purpose was broadly to give support to the existing and future State

systems for regulating and taxing the business of insurance. This was

done in two ways. One was by removing obstructions which might be

thought to flow from its own power, whether dormant or exercised,

except as otherwise expressly provided in the Act itself or in future

legislation. The other was by declaring expressly and affirmatively that

continued State regulation and taxation of this business is in the

public interest and that the business and all who engage in it 'shall be

subject to' the laws of the several States in these respects. * * * The

power of Congress over commerce exercised entirely without reference to

coordinated action of the States is not restricted, except as the

Constitution expressly provides, by any limitation which forbids it to

discriminate against interstate commerce and in favor of local trade.

Its plenary scope enables Congress not only to promote but also to

prohibit interstate commerce, as it has done frequently and for a great

variety of reasons. * * * This broad authority Congress may exercise

alone, subject to those limitations, or in conjunction with coordinated

action by the States, in which case limitations imposed for the

preservation of their powers become inoperative and only those designed

to forbid action altogether by any power or combination of powers in our

governmental system remain effective."[767] The generality of this

language enforces again the sweeping nature of Congress's power to

prohibit interstate commerce.[768]

The Police Power and Foreign Commerce

ORIGIN OF POLICE POWER

In Gibbons _v._ Ogden[769] cognizance was taken of the existence in the

States of an "immense mass" of legislative power to be used for the

protection of their welfare and the promotion of local interests.[770]

In Marshall's opinion in Brown _v._ Maryland[771] this power is

christened "the Police Power," a name which has since come to supply one

of the great titles of Constitutional Law. Counsel for Maryland had

argued that if the State was not permitted to _tax_ imports in the

original package before they left the hands of the importer, it would

also be unable to prevent their introduction into its midst although

they might comprise articles dangerous to the public health and safety.

"The power to direct the removal of gunpowder," the Chief Justice

answered, "is a branch of the police power, which unquestionably

remains, and ought to remain, with the States;" and the power to direct

"the removal or destruction of infectious or unsound articles" fell

within the same category.[772]

STATE CURBS ON ENTRY OF FOREIGNERS

In short, the power to tax was one thing, the police power something

quite different. To concede the former would be to concede a power which

could be exercised to any extent and at the will of its possessor;[773]

to concede the latter was to concede a power which was limited of its

own inherent nature to certain necessary objectives. In New York _v._

Miln,[774] however, the Court which came after Marshall inclined toward

the notion of a power of internal police which was also unlimited; and

on this ground upheld a New York statute which required masters of all

vessels arriving at the port of New York to make reports as to

passengers carried, and imposed fines for failure to do so. "We are of

opinion," the Court said, "that the act is not a regulation of commerce,

but of police." But, when New York, venturing a step further, passed an

act to authorize State health commissioners to collect certain fees from

captains arriving in ports of that State, and when Massachusetts enacted

a statute requiring captains of ships to give bonds as to immigrants

landed, both measures were pronounced void, either as conflicting with

treaties and laws of the United States or as invading the "exclusive"

power of Congress to regulate foreign commerce.[775] Following the Civil

War, indeed, New York _v._ Miln was flatly overruled, and a New York

statute similar to the one sustained in 1837 was pronounced void as

intruding upon Congress's powers.[776] Nothing was gained, said the

Court, by invoking "[the police power] * * *, it is clear, from the

nature of our complex form of government, that, whenever the statute of

a State invades the domain of legislation which belongs exclusively to

the Congress of the United States, it is void, no matter under what

class of powers it may fall, or how closely allied to powers conceded to

belong to the States."[777] At the same time a California statute

requiring a bond from shipowners as a condition precedent to their being

permitted to land persons whom a State commissioner of immigration might

choose to consider as coming within certain enumerated classes, e.g.,

"debauched women," was also disallowed. Said the Court: "If the right of

the States to pass statutes to protect themselves in regard to the

criminal, the pauper, and the diseased foreigner, landing within their

borders, exists at all, it is limited to such laws as are absolutely

necessary for that purpose; and this mere police regulation cannot

extend so far as to prevent or obstruct other classes of persons from

the right to hold personal and commercial intercourse with the people of

the United States."[778]

STATE QUARANTINE LAWS

On the other hand, it has been repeatedly held that the States may, in

the absence of legislation by Congress, enact quarantine laws, even

though in effect they thereby regulate foreign commerce; and furthermore

that such legislation may be, in the interest of effective enforcement,

applied beyond the mere exclusion of diseased persons. Thus in the

leading case the State of Louisiana was sustained in authorizing its

Board of Health in its discretion to prohibit the introduction into any

infected portion of the State of "persons acclimated, unacclimated or

said to be immune, when in its judgment the introduction of such persons

would add to or increase the prevalence of the disease."[779] At the

same time it was emphasized that all such legislation was subject to be

supplanted by Congress at any time.

STATE GAME PROTECTION AND FOREIGN COMMERCE

The Court's tolerance of legal provisions which might not standing alone

be constitutional, when they are designed to make legislation within the

police power practically enforceable, is also illustrated in connection

with State game laws. In the case of Silz _v._ Hesterberg[780] the Court

was confronted with a New York statute establishing a closed season for

certain game, during which season it was a penal offense to take or

possess any of the protected animals, fish or birds; and providing

farther that the ban should equally apply "to such fish, game or flesh

coming from without the State as to that taken within the State." This

provision was held to have been validly applied in the case of a dealer

in imported game who had in his possession during the closed season "one

dead body of an imported grouse, ..., and taken in Russia." Again the

absence of conflicting legislation by Congress was adverted to.[781]

The Police Power and Interstate Commerce

GENERAL PRINCIPLES

In Southern Pacific Co. _v._ Arizona,[782] decided in 1945, Chief

Justice Stone made the following systematic statement of principles

which have guided the Court in the exercise of its power of judicial

review of State legislation affecting interstate commerce: "Although the

commerce clause conferred on the national government power to regulate

commerce, its possession of the power does not exclude all state power

of regulation. Ever since Willson _v._ Black-Bird Creek Marsh Co., 2

Pet. 245, and Cooley _v._ Board of Wardens, 12 How. 299, it has been

recognized that, in the absence of conflicting legislation by Congress,

there is a residuum of power in the state to make laws governing matters

of local concern which nevertheless in some measure affect interstate

commerce or even, to some extent, regulate it.[783] Thus the states may

regulate matters which, because of their number and diversity, may never

be adequately dealt with by Congress.[784] When the regulation of

matters of local concern is local in character and effect, and its

impact on the national commerce does not seriously interfere with its

operation, and the consequent incentive to deal with them nationally is

slight, such regulation has been generally held to be within state

authority.[785]

"But ever since Gibbons _v._ Ogden, 9 Wheat. 1, the states have not been

deemed to have authority to impede substantially the free flow of

commerce from state to state, or to regulate those phases of the

national commerce which, because of the need of national uniformity,

demand that their regulation, if any, be prescribed by a single

authority.[786] Whether or not this long-recognized distribution of

power between the national and the state governments is predicated upon

the implications of the commerce clause itself,[787] or upon the

presumed intention of Congress, where Congress has not spoken,[788] the

result is the same.

"In the application of these principles some enactments may be found to

be plainly within and others plainly without state power. But between

these extremes lies the infinite variety of cases, in which regulation

of local matters may also operate as a regulation of commerce, in which

reconciliation of the conflicting claims of state and national power is

to be attained only by some appraisal and accommodation of the competing

demands of the state and national interests involved.[789]

"For a hundred years it has been accepted constitutional doctrine that

the commerce clause, without the aid of Congressional legislation, thus

affords some protection from state legislation inimical to the national

commerce, and that in such cases, where Congress has not acted, this

Court, and not the state legislature, is under the commerce clause the

final arbiter of the competing demands of state and national

interests.[790]

"Congress has undoubted power to redefine the distribution of power over

interstate commerce. It may either permit the states to regulate the

commerce in a manner which would otherwise not be permissible,[791] or

exclude state regulation even of matters of peculiarly local concern

which nevertheless affect interstate commerce.[792]

"But in general Congress has left it to the courts to formulate the

rules thus interpreting the commerce clause in its application,

doubtless because it has appreciated the destructive consequences to the

commerce of the nation if their protection were withdrawn,[793] and has

been aware that in their application state laws will not be invalidated

without the support of relevant factual material which will 'afford a

sure basis' for an informed judgment.[794] Meanwhile, Congress has

accommodated its legislation, as have the states, to these rules as an

established feature of our constitutional system. There has thus been

left to the states wide scope for the regulation of matters of local

state concern, even though it in some measure affects the commerce,

provided it does not materially restrict the free flow of commerce

across state lines, or interfere with it in matters with respect to

which uniformity of regulation is of predominant national concern."

State Regulation of Agencies of Interstate Commerce

RAILWAY RATE REGULATION

In one of the Granger Cases decided in 1877 the Court upheld the power

of the legislature of Wisconsin in the absence of legislation by

Congress, to prescribe by law the maximum charges to be made by a

railway company for fare and freight upon the transportation of persons

and property within the State, or taken up outside the State and brought

within it, or taken up inside and carried without it.[795] Ten years

later, in Wabash, St. Louis and Pacific Railway Co. _v._ Illinois[796]

this decision was reversed as to persons and property taken up within

the State and transported out of it and as to persons and property

brought into the State from outside. As to these, the Court held that

the regulation of rates and charges must be uniform and that, therefore,

the States had no power to deal with the subject even when Congress had

not acted. The following year Congress passed the Interstate Commerce

Act[797] to fill the gap created by the Wabash decision. Today, the

States still exercise the power to regulate railway rates for the

carriage of persons and property taken up and put down within their

borders, but do so subject to the rule, which is enforced by the

Interstate Commerce Commission, that such rates may not discriminate

against interstate commerce.[798]

ADEQUATE SERVICE REGULATIONS

In many other respects the power still remains with the States to

require by statute or administrative order a fair and adequate service

for their inhabitants from railway companies, including interstate

carriers operating within their borders, so long as the burdens thus

imposed upon interstate commerce are, in the judgment of the Court,

"reasonable." In an instructive brace of cases the Court was asked to

say whether a carrier, in the interest of providing proper local

facilities of commerce, could be required to stop its interstate trains.

In one case a State regulation requiring all regular passenger trains

operating wholly within the State to stop at all county seats was held

to have been validly applied to interstate connection trains;[799] while

in the other case a statute requiring _all_ passenger trains to stop at

county seats was held invalid, there being "other and ample

accommodation."[800] Comparing these and other like decisions, the Court

has stated "the applicable general doctrine" to be as follows: (1) It is

competent for a State to require adequate local facilities, even to the

stoppage of interstate trains or the rearrangement of their schedules.

(2) Such facilities existing--that is, the local conditions being

adequately met--the obligation of the railroad is performed, and the

stoppage of interstate trains becomes an improper and illegal

interference with interstate commerce. (3) And this, whether the

interference be directly by the legislature or by its command through

the orders of an administrative body. (4) The fact of local facilities

this court may determine, such fact being necessarily involved in the

determination of the Federal question whether an order concerning an

interstate train does or does not directly regulate interstate commerce,

by imposing an arbitrary requirement.[801] "There is, however," it later

added, "no inevitable test of the instances; the facts in each must be

considered."[802]

In the same way a State regulation requiring intersecting railways to

make track connections was held valid,[803] as was also a regulation

requiring equality of car service between shippers;[804] while a

regulation requiring the delivery of shipments on private sideways[805]

and one requiring cars for local shipments to be furnished on demand,

were held to be invalid.[806] In the first brace of decisions, the

application of the local regulation to interstate commerce was found

not to be "unduly" burdensome; in the second brace the contrary

conclusion was reached.

SAFETY AND OTHER REGULATIONS

A class of regulations as to which the Court has exhibited marked

tolerance although they "incidentally" embrace interstate transportation

within their operation are those which purport to be in furtherance of

"public safety."[807] The leading case is Smith _v._ Alabama,[808] in

which the Court held it to be within the police power of the State to

require locomotive engineers to be examined and licensed, and to enforce

this requirement until Congress should decree otherwise in the case of

an engineer employed exclusively in interstate transportation. Also

upheld as applicable to interstate trains were a statute which forbade

the heating of passenger cars by stoves;[809] a municipal ordinance

restricting the speed of trains within city limits;[810] the order of a

public utility commission requiring the elimination of grade

crossings;[811] a statute requiring electric headlights of a specified

minimum capacity;[812] a statute requiring three brakemen on freight

trains of over twenty-five cars.[813] In the last case the Court

admitted that "under the evidence," there was "some room for

controversy" as to whether the statute was necessary, but thought it

"not so unreasonable as to justify the Court in adjudging it" to be

"merely an arbitrary exercise of power" and "not germane" to objects

which the State was entitled to accomplish.[814] And in 1943 the Court

sustained, though again in somewhat doubtful terms, the order of a State

railroad commission requiring a terminal railroad which served both

interstate and local commerce to provide caboose cars for its

employees.[815] At times, indeed, the Court has made surprising

concession to local views that had nothing to do with safety. Hennington

_v._ Georgia,[816] decided in 1896, where was sustained a Georgia

statute forbidding freight trains to run on Sunday, is perhaps the

supreme example. Whether such an act would pass muster today is

doubtful. And earlier statutes reinforcing the legal liability of

railroads as common carriers and the carriers of passengers were

sustained in the absence of legislation by Congress.[817]

INVALID STATE REGULATIONS

"The principle that, without controlling Congressional action, a State

may not regulate interstate commerce so as substantially to affect its

flow or deprive it of needed uniformity in its regulation is not to be

avoided by 'simply invoking the convenient apologetics of the police

power.'" So remarks Chief Justice Stone in his summarizing opinion cited

above, in Southern Pacific Co. _v._ Arizona.[818] Among others he lists

the following instances in which State legislation was invalidated on

the basis of this rule: "In the Kaw Valley case[819] the Court held that

the State was without constitutional power to order a railroad to remove

a railroad bridge over which its interstate trains passed, as a means of

preventing floods in the district and of improving its drainage, because

it was 'not pretended that local welfare needs the removal of the

defendants' bridges at the expense of the dominant requirements of

commerce with other States, but merely that it would be helped by

raising them.' And in Seaboard Air Line R. Co. _v._ Blackwell,[820] it

was held that the interference with interstate rail transportation

resulting from a State statute requiring as a safety measure that trains

come almost to a stop at grade crossings, outweigh the local interest in

safety, when it appealed that compliance increased the scheduled running

time more than six hours in a distance of one hundred and twenty-three

miles."[821] And "more recently in Kelly _v._ Washington,"[822] the

Chief Justice continued, "we have pointed out that when a State goes

beyond safety measures which are permissible because only local in their

effect upon interstate commerce, and 'attempts to impose particular

standards as to structure, design, equipment and operation [of vessels

plying interstate] which in the judgment of its authorities may be

desirable but pass beyond what is plainly essential to safety and

seaworthiness, the State will encounter the principle that such

requirements, if imposed at all, must be through the action of Congress

which can establish a uniform rule. Whether the State in a particular

matter goes too far must be left to be determined when the precise

question arises.'"

STATE REGULATION OF LENGTH OF TRAINS

Applying the test of these precedents, the Chief Justice concluded that

Arizona, in making it unlawful to operate within the State a railroad

train of more than fourteen passenger or seventy freight cars, had gone

"too far"; and in support of this conclusion he recites the following

facts: "In Arizona, approximately 93% of the freight traffic and 95% of

the passenger traffic is interstate. Because of the Train Limit Law

appellant is required to haul over 30% more trains in Arizona than would

otherwise have been necessary. The record shows a definite relationship

between operating costs and the length of trains, the increase in length

resulting in a reduction of operating costs per car. The additional cost

of operation of trains complying with the Train Limit Law in Arizona

amounts for the two railroads traversing that State to about $1,000,000

a year. The reduction in train lengths also impedes efficient operation.

More locomotives and more manpower are required; the necessary

conversion and reconversion of train lengths at terminals and the delay

caused by breaking up and remaking long trains upon entering and leaving

the state in order to comply with the law, delays the traffic and

diminishes its volume moved in a given time, especially when traffic is

heavy.

"At present the seventy freight car laws are enforced only in Arizona

and Oklahoma, with a fourteen car passenger car limit in Arizona. The

record here shows that the enforcement of the Arizona statute results in

freight trains being broken up and reformed at the California border and

in New Mexico, some distance from the Arizona line. Frequently it is not

feasible to operate a newly assembled train from the New Mexico yard

nearest to Arizona, with the result that the Arizona limitation governs

the flow of traffic as far east as El Paso, Texas. For similar reasons

the Arizona law often controls the length of passenger trains all the

way from Los Angeles to El Paso.

"If one State may regulate train lengths, so may all the others, and

they need not prescribe the same maximum limitation. The practical

effect of such regulation is to control train operations beyond the

boundaries of the State exacting it because of the necessity of breaking

up and reassembling long trains at the nearest terminal points before

entering and after leaving the regulating State. The serious impediment

to the free flow of commerce by the local regulation of train lengths

and the practical necessity that such regulation, if any, must be

prescribed by a single body having a nation-wide authority are apparent.

"The trial court found that the Arizona law had no reasonable relation

to safety, and made train operation more dangerous. Examination of the

evidence and the detailed findings makes it clear that this conclusion

was rested on facts found which indicate that such increased danger of

accident and personal injury as may result from the greater length of

trains is more than offset by the increase in the number of accidents

resulting from the larger number of trains when train lengths are

reduced. In considering the effect of the statute as a safety measure,

therefore, the factor of controlling significance for present purposes

is not whether there is basis for the conclusion of the Arizona Supreme

Court that the increase in length of trains beyond the statutory maximum

has an adverse effect upon safety of operation. The decisive question is

whether in the circumstances the total effect of the law as a safety

measure in reducing accidents and casualties is so slight or

problematical as not to outweigh the national interest in keeping

interstate commerce free from interferences which seriously impede it

and subject it to local regulation which does not have a uniform effect

on the interstate train journey which it interrupts."[823]

THE LESSON OF SOUTHERN PACIFIC CO. _v._ ARIZONA

The lesson to be extracted from Southern Pacific Co. _v._ Arizona is a

threefold one: 1) Where uniformity is judged by the Court to be

"essential for the functioning of commerce, a State may not interpose

its regulation"; 2) in resolving this question the Court will canvass

what it considers to be relevant facts extensively; 3) its task is,

however, in the last analysis, one of weighing competing values, in

brief, arbitral rather than strictly judicial.

The lesson of Southern Pacific is further exemplified by the more recent

holding in Morgan _v._ Virginia,[824] in which the Court was confronted

with a State statute which, in providing for the segregation of white

and colored passengers, required passengers to change seats from time to

time as might become necessary to increase the number of seats available

to the one race or the other. First, reciting the rule of uniformity,

Justice Heed, for the Court, said: "Congress, within the limits of the

Fifth Amendment, has authority to burden [interstate] commerce if that

seems to it a desirable means of accomplishing a permitted end. * * *

As no State law can reach beyond its own border nor bar transportation

of passengers across its boundaries, diverse seating requirements for

the races in interstate journeys result. As there is no federal act

dealing with the separation of races in interstate transportation, we

must decide the validity of this Virginia statute on the challenge that

it interferes with commerce, as a matter of balance between the exercise

of the local police power and the need for national uniformity in the

regulations for interstate travel. It seems clear to us that seating

arrangements for the different races in interstate motor travel require

a single, uniform rule to promote and protect national travel.

Consequently, we hold the Virginia statute in controversy invalid."

STATE REGULATION OF MOTOR VEHICLES; VALID REGULATIONS

Cases arising under this caption further illustrate the competition for

judicial recognition between the interstate commerce interest and local

interests, especially that of public safety. A new element enters the

problem, however, which lends some added weight to the claims of the

police power, the fact, namely, that motor vehicles use highways

furnished and maintained by the State.

A State is entitled to enact a comprehensive scheme for the licensing

and regulation of motor vehicles using its highways with a view to

insuring itself of reasonable compensation for the facilities afforded

and to providing adequate protection of the public safety; and such

scheme may embrace out-of-State vehicles using the State's

highways.[825] Thus legislation limiting the net loads of trucks using

the State's highways is valid;[826] as are also, in the absence of

national legislation on the subject, State regulations limiting the

weight and width of the vehicles themselves, provided such regulations

are applied without discrimination as between vehicles moving in

interstate commerce and those operating only intrastate.[827] Likewise,

a State may deny a certificate of public convenience and necessity to

one desiring to operate a common carrier over a particular highway to an

out-of-State destination in an adjacent State, on the ground that the

specified route is already congested. So it was held in Bradley _v._

Public Utilities Commission of Ohio,[828] in which the Court took

cognizance of the full hearing accorded the appellant, and of his

failure to choose another route, although he was at liberty to do so.

And in Maurer _v._ Hamilton a Pennsylvania[829] statute prohibiting the

operation over its highways of any motor vehicle carrying any other

vehicle over the head of the operator was upheld in the absence of

conflicting Congressional legislation. Similarly, in Welch _v._ New

Hampshire[830] a statute of that State establishing maximum hours for

drivers of motor vehicles was held not to be superseded by the Federal

Motor Carrier Act prior to the effective date of regulations by the

Interstate Commerce Commission dealing with the subject. Nor was

pendency before the Interstate Commerce Commission of an application

under the Motor Carrier Act for a license to operate a motor carrier in

interstate commerce found to supersede as to the applicant the authority

of a State to enforce "reasonable regulations" of traffic upon its

highways. "In the absence of the exercise of federal authority," said

the Court, "and in the light of local exigencies, the State is free to

act in order to protect its legitimate interests even though interstate

commerce is directly affected."[831] And for the same reason New York

City was entitled to apply to trucks engaged in the delivery of goods

from New Jersey a traffic regulation forbidding the operation on the

streets of an advertising vehicle.[832] Said Justice Douglas for the

Court: "Many of these trucks are engaged in delivering goods in

interstate commerce from New Jersey to New York. Where traffic control

and the use of highways are involved and where there is no conflicting

federal regulation, great leeway is allowed local authorities, even

though the local regulation materially interferes with interstate

commerce."[833] Also, the Court has consistently sustained State

regulations requiring motor carriers to provide adequate insurance

protection for injuries caused by the negligent operation of their

vehicles.[834]

INVALID STATE ACTS AFFECTING MOTOR CARRIERS

A State law which imposes upon all persons engaged in transporting for

hire by motor vehicle over the public highways of the State the burdens

and duties of common carriers and requires them to furnish bonds to

secure the payment of claims and liabilities resulting from injury to

property carried, may not be validly applied to a private carrier which

is engaged exclusively in hauling from one State to another State the

goods of particular factories under standing contracts with their

owners, the said carrier enjoying neither a special franchise nor using

the eminent domain power.[835] On the other hand, a State statute which

prohibits common carriers for hire from using the highways of the State

between fixed termini or over regular routes without having first

obtained from a director of public works a certificate of public

convenience, is primarily not a regulation to secure safety on the

highways or to conserve them, but a ban on competition and, as applied

to a common carrier by motor vehicle of passengers and express purely in

interstate commerce, is both violation of the Commerce Clause and

defeats the express purpose of Congressional legislation rendering

federal aid for the construction of interstate highways.[836]

TRANSPORTATION AGENCIES

The special characteristics of motor travel have brought about a

reversal of the Court's attitude toward State control of transportation

agencies. Sustaining in 1941 a California statute requiring that agents

engaged in negotiating for the transportation of passengers in motor

vehicles over the highways of the State take out a license, Justice

(later Chief Justice) Stone, speaking for the Court, said: "In Di Santo

_v._ Pennsylvania,[837] this Court took a different view * * *, it held

that a Pennsylvania statute requiring others than railroad or steamship

companies, who engage in the intrastate sale of steamship tickets or of

orders for transportation to and from foreign countries, to procure a

license by giving proof of good moral character and filing a bond as

security against fraud and misrepresentation to purchasers, was an

infringement of the Commerce Clause. Since the decision in that case

this Court has been repeatedly called upon to examine the

constitutionality of numerous local regulations affecting interstate

motor vehicle traffic. It has uniformly held that in the absence of

pertinent Congressional legislation there is constitutional power in the

States to regulate interstate commerce by motor vehicle wherever it

affects the safety of the public or the safety and convenient use of its

highways, provided only that the regulation does not in any other

respect unnecessarily obstruct interstate commerce."[838]

NAVIGATION; GENERAL DOCTRINE

In Gibbons _v._ Ogden[839] the Court, speaking by Chief Justice

Marshall, held that New York legislation which excluded from the

navigable waters of that State steam vessels enrolled and licensed

under an act of Congress to engage in the coasting trade was in conflict

with the act of Congress and hence void. In Willson _v._ Blackbird Creek

and Marsh Co.[840] the same Court held that in the absence of an act of

Congress, "the object of which was to control State legislation over

those small navigable creeks into which the tide flows," the State of

Delaware was entitled to incorporate a company vested with the right to

erect a dam across such a creek. From these two cases the Court in

Cooley _v._ the Board of Wardens,[841] decided in 1851, extracted the

rule that in the absence of conflicting legislation by Congress States

were entitled to enact legislation adapted to the local needs of

interstate and foreign commerce, that a pilotage law was of this

description, and was, accordingly, constitutionally applicable until

Congress acted to the contrary to vessels engaged in the coasting trade.

In the main, these three holdings have controlled the decision of cases

under the above and the following caption, there being generally no

applicable act of Congress involved. But the power which the rule

attributed to the States, they must use "reasonably," something they

have not always done in the judgment of the Court.

Thus an Alabama statute which required that owners of vessels using the

public waters of the enacting State be enrolled, pay fees, file

statements as to ownership, etc., was held to be inapplicable to vessels

licensed under the act of Congress to engage in the coasting trade;[842]

as was also a Louisiana statute ordering masters and wardens of the port

of Orleans to survey the hatches of all vessels arriving there and to

enact a fee for so doing.[843] "The unreason and the oppressive

character of the act" was held to take it out of the class of local

legislation protected by the rule of the Cooley case.[844] Likewise,

while control by a State of navigable waters wholly within its borders

has been often asserted to be complete in the absence of regulation by

Congress,[845] Congress may assume control at any time;[846] and when

such waters connect with other similar waters "so as to form a waterway

to other States or foreign nations, [they] cannot be obstructed or

impeded so as to impair, defeat, or place any burden upon a right to

their navigation granted by Congress."[847]