Ewen v. Am. Fid. Co., 261 U.S. 322 (1923)
Case details
Bluebook Citation
Ewen v. Am. Fid. Co., 261 U.S. 322 (1923)
Full caption
EWEN v. AMERICAN FIDELITY COMPANY.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Decided
Mar. 12, 1923
EWEN v. AMERICAN FIDELITY COMPANY.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.
No. 92. Argued March 1, 1923.—Decided March 12, 1923.
A surety company organized under Illinois Rev. Stats., 1917, c. 32, § 102f, et seq., is thereby expressly made subject to the Act of April 18, 1872, governing corporations for pecuniary profit, and under § 12 of that act, its dissolution does not take away or impair any remedy given against the corporation for liabilities incurred previously to its dissolution. P. 324. Held, therefore, that a New York attachment suit against an Illinois
surety company did not fall by reason of the company’s dissolution in proceedings in Illinois and lapse of time, claimed to have extinguished the corporation for all purposes. 271 Fed. 848, reversed.
Certiorari to a judgment of the Circuit Court of Appeals affirming a judgment for the respondent in an action brought against it as surety on an undertaking in attachment.
Mr. William R. Wilder, with whom Mr. Henry E. Davis and Mr. John Ewen were on the briefs, for petitioner.
Mr. Joseph M. Proskauer, with whom Mr. Abram I. Elkus and Mr. Wesley S. Sawyer were on the brief,’ for respondent.
Mr . Justi ce Holmes delivered the opinion of the Court.
This is an action upon an undertaking to pay the amount of any judgment that might be recovered by one Mackey in a suit against the Illinois Surety Company, not exceeding $7,500 and interest, the contract being made by the present defendant in order to dissolve an attachment in that suit. That suit was begun in May, 1915, in New York. Mackey recovered a judgment for a much larger sum bn June 21, 1919, and assigned the same and this undertaking to the present plaintiff. The defence is that the Illinois Surety Company, an Illinois corporation, had ceased to exist before the judgment was recovered, and that the judgment against it was void. On this ground judgment was given for the defendant in the District Court and the judgment was affirmed by the Circuit Court of Appeals.
On April 19, 1916, a majority of the stockholders of the Surety Company filed a bill in Illinois alleging that the Company was insolvent and praying that it be restrained from further prosecution of its business, that a receiver be appointed and that upon final hearing a decree might be entered dissolving the Company and providing for the distribution of its assets. The answer of the Company was filed with the bill. It admitted the allegations and submitted to the jurisdiction of the Court. On the same day an order was entered “ without bond from the complainants and until the further order of the court” restraining the Company from further prosecution of its business. Later on the same day another decree appointed a receiver to collect the property, with power to institute and to defend suits and to apply to the Court for p. 324further orders concerning the collection and distribution of the assets and the closing of the Company’s concerns for which purposes jurisdiction was retained until final hearing and settlement of all unfinished business of the Company and the receivership. The receiver continued to defend the above mentioned suit in New York until about April 28, 1919, when the counsel for the Company notified the plaintiff that they no longer were authorized to appear for it; the ground of the notice being an order of the Court in Illinois that the receiver should discontinue the defence and notify the plaintiff Mackey to file his claim in that proceeding. (This order imposed no personal obligation on Mackey as he was not within the jurisdiction of the Illinois Court.) Thereafter the defendant failed to appear, and upon a report by a referee the judgment in question was entered on June 21, 1919. This was more than three years after the Company had been restrained from transacting business. The defendant says that by the Illinois statutes the Company became extinct in one year, with a continued liability to creditors of only two years more, and that the last two years had elapsed.
The Illinois Surety Company was organized under a general law of Illinois to be found in Hurd’s Revised Statutes of Illinois, 1917, c. 32, § 102 f and following. By § 14 of the act (Hurd, § 102 s), corporations formed under it “ shall be subject to all laws of this State governing corporations for pecuniary profit, as provided for in an Act . . . approved April 18, 1872 . . . and amendments thereto, in force July 1, 1897, and the duties thereof, and shall have the powers thereof, so far as the same are not inconsistent with the provisions of this act. Such Companies shall also be subject to the provisions and requirements of an Act entitled ‘An Act in regard to the dissolution of Insurance Companies,’ approved February 17, 1874.” The act last, mentioned allows a p. 325majority of the stockholders of any Illinois insurance company to apply by petition to close its concerns and authorizes the Court after due notice to all the parties interested to proceed to hear the matter and for reasonable cause to decree a dissolution, § 2. (Hurd, c. 73, § 12.) It also provides in the next section that the charters of all such companies, which either from neglect, or by vote of their members or officers, or in obedience to the decree of any Court, have ceased for one year to transact the business for which they were organized, shall be deemed extinct, with authority to the Court upon petition to fix the time within which the companies shall close their concerns: “Provided, that this section shall not be construed to relieve any such company from its liabilities to the assured or any of its creditors,” § 3. (Hurd, § 13.) The fourth section (Hurd, § 14) continues the companies for two years more for the purpose of prosecuting and defending suits, &c., but not for that of going on with their business. The facts that we have stated were thought to bring the case within this statute and so to make the New York judgment void.
We should hesitate long before deciding that the cessation of business for a year under the above mentioned decree fell within § 3 of the Insurance Act or that the proviso had no effect upon the following § 4, not to speak of other difficulties.' But it is not necessary to stop at this point. The Company, as has been shown, was subject also to the laws governing corporations for pecuniary profit. By § 10 of the Act of April 18, 1872 (Hurd, c. 32, § 10) these corporations are continued for two years for substantially the same purposes as are insurance companies, but it is explicitly provided by § 12 that the dissolution for any cause shall not take away or impair any remedy given against such corporation, its stockholders or officers, for any liabilities incurred previous to its dissolution. The argument seems to us strong that the
Syllabus. 261 U. S.
section concerning surety companies quoted at the outset takes in this § 12 without qualification and, if necessary, might be said to show that a larger signification should be given to the proviso quoted from § 3 of the Insurance Act, at least as applied to this Company. But we are relieved from an independent consideration of the matter by the opinion of the Supreme Court of Illinois in Evans v. Illinois Surety Co., 298 Ill. 101, 106, 107, April 21, 1921, the very case in which the above mentioned injunction was issued. On p. 106 it quotes § 12 of the Corporation Act, and on p. 107, says, “ there can be no question but that the provisions of the General Incorporation Act heretofore quoted, and all its other applicable provisions, apply to corporations organized under the Surety Act.” This was later than the decision of the Circuit Court of Appeals and appears to us to warrant our taking the same view without discussion at greater length.
Judgment reversed.
FOX FILM CORPORATION v. KNOWLES ET AL.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.
Nos. 310, 311. Argued February 27, 1923.—Decided March 12, 1923.
1. Under § 24 of the Copyright Act of 1909, which allows renewals of copyrights subsisting when it went into effect with the proviso that application shall be made and registered within the period of one year prior to expiration of the existing term, an author’s executor may renew, within that year, although the author died before its commencement, so that the right to file application did not accrue in his lifetime. P. 328. 2. The statute intends that an executor, there being no widow, widower or child, shall have the same right as his testator might have exercised had he continued to survive. P. 329. 3. It is no novelty for an executor to be given rights by statute which his testator could not have exercised while he lived. P. 330. 279 Fed. 1018, reversed.
326 . Argument for Respondents.
Certiora ri to decrees of the Circuit Court of Appeals affirming the District Court in dismissing bills brought by the petitioner, as assignee of copyright privileges, to restrain infringements and for accounting and damages.
Mr. Alfred A. Wheat, with whom Mr. Saul E. Rogers and Mr. Wm. J. Hughes were on the brief, for petitioner.
Mr. Louis R. Bick, with whom Mr. Fred Francis Weiss was on the brief, for respondents.
The copyright statute was enacted to enable an author, or those who may be dependent upon him, to reap the value of his work, but only under certain circumstances. Under the section as it now reads, neither the author nor his assignee possesses any right or power that may be transferred to run beyond a period of 28 years. When the renewal of the copyright is sought, a new property right is created, not in any way dependent upon the previous benefits of the original copyright. This new property right, however, does not come into being until the beginning of the last year of the original copyright. Not until then has the author any estate or right.
Petitioner argues that, if our construction of the statute is correct, Congress would not have inserted the word “ executor ” in this section, unless it was intended that the author should have the right to bequeath the renewal right in advance of its accrual. But Congress, we believe, appreciated that an occasion might arise where the author might die within the last year of the copyright without having applied for a renewal, and where no widow or children survived him. Under these conditions it gives the executor the right to obtain the renewal for the benefit of the estate of the author, as the new property right was in existence at the time of the author’s death. White-Smith Music Pub. Co. v. Goff, 187 Fed. 247; Silverman v. Sunrise Pictures Corporation, 273 Fed. 909.
Mr. J. Joseph Lilly, by leave of court, filed a brief as amicus curice.
Mr . Justi ce Holme s delivered the opinion of the Court.
These are bills in equity brought by the petitioner to restrain dramatic performances based upon two poems, “ Over the Hills to the Poor House ” and “ Over the Hills from the Poor House,” and for an account and damages. The author of the poems, Will Carleton, held a renewed copyright for them which expired on or about February 21,1915. He died on December 18, 1912, testate, leaving all his property to Norman E. Goodrich and appointing him sole executor. On January 21, 1915, the executor applied for and obtained a renewal of the copyright to February 21, 1929. Later the exclusive right to dramatize the poems was assigned to the plaintiff. The only defense relied upon here is that the statutes did not give the executor a right of renewal and that therefore the copyright has expired. The bills were dismissed upon this ground by the District Court, (No. 310) 274 Fed. 731; (No. 311) 275 Fed. 582, and the decrees were affirmed on the authority of Silverman v. Sunrise Pictures Corporation, 273 Fed. 909, by the Circuit Court of Appeals. 279 Fed. 1018.
This copyright was subsisting when the Copyright Act of March 4, 1909, c. 320, 35 Stat. 1075, went into effect. By § 24 of that statute copyrights so subsisting “ may, at the expiration of the term provided for under existing law, be renewed and extended by the author of such work if still living, or the widow, widower, or children of the author, if the author be not living, or if such author, widow, widower, or children be not living, then by the author’s executors, or in the absence of a will, his next of kin, for a further period such that the entire term shall be equal to that secured by this Act, including the p. 329renewal period: . . . Provided, That application for such renewal and extension shall be made to the copyright office and duly registered therein within one year prior to the. expiration of the existing term.” The argument on which the statute was held not to apply to the present case was that the renewal creates a new estate, White-Smith Music Pub. Co. v. Goff, 187 Fed. 247; that the estate is purely statutory, and does not exist until within one year prior to the expiring of the existing term; that therefore Carleton dying more than a year before that moment had nothing to bequeath; and that the statute gave nothing to the executor except when the testator had the right to renew at the moment of his decease. It is argued that the executor is mentioned only to provide for the case of the testator’s dying within the year without having exercised his right to renew, and thus having a right that the statute allowed him to transmit.
All of these propositions may be admitted, (for the purposes of the present argument only,) except the last. But we see no sufficient reason for thus limiting the right of the executor. The section read as a whole would express to the ordinary reader a general intent to secure the continuance of the copyright after the author’s death and none the less so if the actual continuance was effected by creating a new estate, or if the beneficiaries in certain cases are pointed out. No one doubts that if Carleton had died leaving a widow she could have applied as the executor did, and executors a’re mentioned alongside of the widow with no suggestion in the statute that when executors are the proper persons, if anyone, to make the claim, they cannot make it whenever a widow might have made it. The next of kin come after the executors. Surely they again have the same rights that the widow would have had. The limitation is derived from a theory that the statute cannot have intended the executor to take
Syllabus. 261 U.S.
unless he took what the testator already had. We should not have derived that notion from the section, which seems to us to have the broad intent that we have expressed, and the words specially applicable seem to us plainly to import that if there is no widow or child the executor may exercise the power that the testator might have exercised if he had been alive. The executor represents the person of his testator, Littleton, § 237, and it is no novelty for him to be given rights that the testator could not have exercised while he lived. Green n . Ekins, 2 Atk. 473, 476. A familiar illustration is to be found in the Employers’ Liability Act which gives to personal representatives a new cause of action for causing death, although the foundation is the original wrongful injury to the deceased. Michigan Central R. R. Co. v. Vreeland, 227 U. 8. 59, 68, 70.
Decrees reversed.
PULLMAN COMPANY v. RICHARDSON, AS TREASURER OF THE STATE OF CALIFORNIA.
HINES, AS DIRECTOR GENERAL OF RAILROADS, ET AL. v. RICHARDSON, AS TREASURER OF THE STATE OF CALIFORNIA.
ERROR TO THE SUPREME COURT OF THE STATE OF CALIFORNIA.
Nos. 143-148, and 149. Argued December 4, 5, 1922.—Decided March 12, 1923.
1
A State may tax that part of the property of a carrier engaged in interstate and local business which is permanently located or commonly used within the State, according to its fair value as part of a going concern, measured with reference to the gross receipts from both local and interstate business. P. 338.
2
A tax, measured in this way, which is called a property tax, which is imposed in lieu of all other taxes upon the carrier’s property in the State, which is not in excess of what would be a legitimate tax 509470—23—22
330 Argument for Plaintiffs in Error.
on such property, valued as part of a going concern, nor relatively higher than taxes on other classes of property, does not discriminate against interstate commerce. P. 339. 3. A state statutory provision that a foreign corporation failing to pay a tax shall be excluded from doing business in the State would be void as applied to interstate commerce. P. 339. 4. The tax here involved, based on the California Constitution (Art. XIII, § 14, as amended, 1910) and on subsequent statutes, was not intended to reach income from property situated or business done outside of the State. P. 340. 185 Cal. 484, affirmed.
Error to judgments of the Supreme Court of California affirming judgments for the defendant in actions brought against the State Treasurer to recover money paid, under protest, as taxes.
In the first six cases, the taxes were paid and the actions brought by the Pullman Company. In the last of the cases, the taxes were paid while the business of the Company was under federal control, and the action brought by the Company and the Director General of Railroads.
Mr. Cordenio A. Severance, with whom Mr. Gustavus A. Fernald and Mr. Burke Corbet were on the brief, for plaintiffs in error.
There is no doubt that a State is entitled to tax instrumentalities of interstate commerce within the State and that, in so doing, it may take into account “ intangible values ” accruing from their use as part of a unit system of transportation. The so-called unit system of taxation approved in Adams Express Co. v. Ohio, 165 U. S. 227, and other cases, need only be referred to. It is but one method of ascertaining a fair valuation of the property taxed. Gross-receipts or gross-earnings systems of taxation may be used as a method of arriving at the same result; but the State may not tax interstate commerce itself, or the earnings therefrom, or property situated without the State; and if, under the circumstances, the tax may be said to be so directly aimed at interstate
Argument for Plaintiffs in Error. 261 U. S.
earnings as to evidence an intention to levy upon them, as such, the tax will be declared void as an unlawful burden upon interstate commerce. In determining this question, the controlling matter is not the expressed intention of the legislature, nor the manner in which the law is administered, but the effect of the act.
The difficulty has been in applying the foregoing principles to the particular case.
However, the expressed intention of the legislature, as well as the manner in which the law is administered, may be, and should be, considered to such extent as it is or may be an indication that the gross receipts are aimed at and the purpose of such aim, in a particular case.
[The following cases were reviewed: State Tax on Railway Gross Receipts, 15 Wall. 284; State Freight Tax, 15 Wall. 232; Fargo n . Michigan, 121 U, S. 230; Philadelphia & Southern S. S. Co. v. Pennsylvania, 122 U. S. 326; Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196; RattermanN. Western Union Tel. Co., 127 U. S. 411; Western Union Tel. Co. v. Pennsylvania, 128 U. S. 39; Leloup v. Mobile, 127 U. S. 640; Western Union Tel. Co. v. Alabama, 132 U. S. 472; Lyng n . Michigan, 135 U. S. 161; Crutcher n . Kentucky, 141 U. S. 47; Pacific Express Co. n . Seibert, 142 U. S. 339; Maine v. Grand Trunk Ry. Co., 142 U. S. 217; Postal Telegraph Cable Co. v. Adams, 155 U. S. 688; Wisconsin & Michigan Ry. Co. v. Powers, 191 U. S. 379; Fargo n . Hart, 193 U. S. 490; Galveston, etc., Ry. Co. v. Texas, 210 U. S. 217; Western Union Tel. Co. v. Kansas, 216 U. S. 1; Pullman Co. v. Kansas, 216 U. S. 56; Ludwig n . Western Union Tel. Co., 216 U. S. 146; Meyer v. Wells Fargo & Co., 223 U. S. 298; United States Express Co. N. Minnesota, 223 U. S. 335; Lehigh Valley R. R. Co. v. Pennsylvania, 145 U. S. 192; Ewing v. Leavenworth, 226 U. S. 464; Maine v. Grand Trunk Ry. Co., 142 U. S. 217; St. Louis Southwestern Ry. Co. n . Arkansas, 235 U. S. 350; Baltic Mining Co. n . Massachusetts, 231 U. S. 68; Ohio Tax Cases, 232 U. S. 576; Kansas City, etc., Ry. p. 333Co. v. Kansas, 240 U. S. 227; Kansas City, etc., R. R. Co. v. Stiles, 242 U.S. Ill; Cudahy Packing Co. v. Minnesota, 246 U. S. 450;'Union Tank Line Co. v. Wright, 249 U. S. 275; Wallace v. Hines, 253 U. S. 66.]
This tax is aimed so directly at gross receipts as to constitute an unlawful burden on interstate commerce and a tax upon the income of property and business without the State.
No reference was made to the value of the property in ascertaining the tax. The theoretical method alleged to have been adopted by the Tax Commission for determining whether the gross receipts tax is equivalent to an ad valorem tax is fallacious and misleading.
The situation is exactly like that in Fargo v. Michigan, 121 U. S. 230, and similar to that in other kindred cases.
The burden of sustaining the tax rests with the State. Bank of California v. Roberts, 173 Cal. 402; Galveston, etc., Ry. Co. v. Texas, 210 U. S. 217; Foote v. Maryland, 232 U. S. 494.
The forfeiture clause of the tax law renders it invalid. Atchison, Topeka & Santa Fe Ry. Co. v. O’Connor, 223 U. S. 280; Pickard n . Pullman Southern Car Co., 117 U. S. 34; Western Union Tel. Co. v. Massachusetts, 125 U. S. 530; Leloup v. Mobile, 127 U. S? 640; Allen v. Pullman’s Palace Car Co., 191 U. S. 171; Western Union Tel. Co. v. Kansas, 216 U. S. 1; St. Louis Southwestern Ry. Co. v. Arkansas, 235 U. S. 350; Postal Telegraph Cable Co. v. Adams, 155 U. S. 688.
Mr. U. S. Webb, Attorney General of the State of California, and Mr. Raymond Benjamin, for defendant in error, submitted.
Mr . Justice Van Devante r delivered the opinion of the Court.
These were actions by the Pullman Company against the Treasurer of California to recover moneys paid under p. 334protest as state taxes. Each action related to a designated part of the tax for a distinct year and was brought on the theory that the part designated was invalid because imposed under constitutional and statutory provisions repugnant to the Constitution of the United States. The Treasurer prevailed in the court of first instance and in the Supreme Court of the State. 185 Cal. 484. The Pullman Company then brought the cases here on writs of error.
In 1910 California adopted an amendment to her constitution, § 14 of Article XIII, one purpose of which was to effect a separation of state from local taxation by subjecting public service corporations to a designated tax for state purposes and relieving them from taxation for county and municipal purposes. Referring to this feature of the amendment, the Supreme Court of the State said in San Francisco v. Pacific Telephone & Telegraph Co., 166 Cal. 244, 248: “Under the old system, the property and franchises of the corporations above referred to were taxed for both state and local purposes. The amendment creates a new mode of taxing such property and franchises, and appropriates the revenue so raised to state purposes solely. The new method, by which taxes are collected exclusively for the state, is substituted for the former system, under which the same subjects were taxed for both state and local purposes.”
The pertinent parts of the amendment are as follows (Laws 1910-11, p. xliv):
“Sec. 14 (a). . . . all sleeping car, dining car, drawing-room car, and palace car companies, . . . operating upon the railroads in this State; . . . shall annually pay to the State a tax upon their franchises, . . . rolling stock, . . . and other property, or any part thereof used exclusively in the operation of their business in this State, computed as follows: Said tax shall be equal to the percentages hereinafter fixed upon p. 335the gross receipts from operation of such companies and each thereof within this State. When such companies are operating partly within and partly without this State, the gross receipts within this State shall be deemed to be all receipts on business beginning and ending within this State, and a proportion, based upon the proportion of the mileage within this State to the entire mileage over which such business is done, of receipts on all business passing through, into, or out of this State.
“ The percentages above mentioned shall be as follows: . . . on all sleeping car, dining car, drawing-room car, palace car companies, . . . three per cent; . . . Such taxes shall be in lieu of all other taxes and licenses, State, county and municipal, upon the property above enumerated of such companies except as otherwise in this section provided; . . .
“(e) ... In the event that the above named revenues are at any time deemed insufficient to meet the annual expenditures of the State, including the above named expenditures for educational purposes, there may be levied, in the manner to be provided by law, a tax, for State purposes, on all the property in the State, including the classes of property enumerated in this section, sufficient to meet the deficiency. ...
“(f) All the provisions of this section shall be self-executing, and the Legislature shall pass all laws necessary to carry this section into effect, and shall provide for a valuation and assessment of the property enumerated in this section, . . . The rates of taxation fixed in this section shall remain in force until changed by the Legislature, two thirds of all the members elected to each of the two houses voting in favor thereof.”
Several acts to carry the amendment into effect were adopted from time to time, but it suffices here to say of them, first, that the computing percentage applicable to sleeping car, dining car, drawing-room car, and palace car p. 336companies was increased to four per cent, in 1913 (c. 6, Laws 1913) and reduced to three and ninety-five hundredths per cent, in 1915 (c. 2, Laws 1915); secondly, that provision was made for enforcing the tax by either the usual tax sale or a suit in the name of the State (c. 335, §§ 20, 21, 24, Laws 1910-11; c. 6, § 5, Laws 1913), and, thirdly, that there was further provision that if the tax was not paid within a designated period the delinquent company, if a domestic corporation, “will forfeit its charter ” and, if a foreign corporation, “ will forfeit its right to do business in this State,” and that the transaction of any business in the State on behalf of a company incurring any such forfeiture, except to settle its affairs, should be punished by substantial fines. Laws 1911, c. 335, § 24; Laws 1913, c. 6, § 5, and c. 320, § 9.
The taxes in question were levied under the new system in 1911 and six subsequent years. All were alike, save in particulars not material here; so it will be enough to state the facts relating to the tax levied in 1911.
The Pullman Company is an Illinois corporation engaged in operating sleeping and parlor cars on the railroads of the country. Some of its cars are operated between points in California, some between points within and points without that State and some through the State between points outside. In 1910 the company’s gross receipts from all its operations within the State were $1,905,302.97. Of this sum $938,786.80 came from operations which began and ended in the State and $966,516.17 came from that part of the interstate operations which was within the State. The latter amount was arrived at by taking every service performed partly within and partly without the State and determining on a mileage basis what portion of the sum received therefor was attributable to the part of the service within the State. To illustrate: If a passenger was carried in a sleeping car from Oakland to Chicago for $14.00, and one-seventh of p. 337the mileage was in California, $2.00 was deemed the gross receipt for so much of the service as was rendered in that State.
The gross receipts were calculated and reported by the company and the state officers accepted the calculation. The amount of the tax was computed by applying to the gross receipts the percentage rule prescribed by the amendment to the state constitution. In this way a tax of $57,159.08 was levied in 1911. Had the gross receipts from intrastate business alone been considered the tax would have been $28,163.61,—that is, $28,995.47 less than the actual levy.
The company objected to the consideration of the gross receipts from the interstate business, although they came only from service within the State, and objected to a corresponding part of the tax—t^e $28,995.47. That part was paid under protest and the first of these actions was brought to recover it,—an admissible course under the state law. Laws 1910-1911, c. 335, § 23; Laws 1913, c. 320, § 7. The other part was paid voluntarily and is not in controversy.
The company insists that the tax in question and the provisions therefor in the state constitution and statutes are invalid under the commerce clause of the Constitution of the United States, because (a) the tax is laid on gross receipts from interstate commerce, and (b) its payment is made a condition to continuing an interstate business within the State, and are invalid under the due process of law clause of the Fourteenth Amendment, because the tax is intended to reach income from property situated and business done without the State.
The state court holds that the tax is not a tax on gross receipts as such, but is in both name and essence a tax on property within the State, and that it is computed with reference to the gross receipts only as a means of p. 338adjusting it to the real value of the property in the relation in which the same is used.
The principles to be applied in cases of this class repeatedly have been considered by this court and are now settled.
A State can neither tax the act of engaging in interstate commerce nor lay a tax on gross receipts therefrom. In either case the tax would be a restraint or burden on such commerce and its imposition an invasion of the power of regulation confided to Congress by the commerce clause of the Constitution. Fargo n . Michigan, 121 U. S. 230; Philadelphia & Southern S. S. Co. n . Pennsylvania, 122 U. S. 326; Galveston, Harrisburg & San Antonio Ry. Co. v. Texas, 210 U. S. 217; Meyer n . Wells, Fargo & Co., 223 U. S. 298. • The rule is otherwise .with property used in interstate commerce. A State within whose limits such property is permanently located or commonly used may tax it. Cudahy Packing Co. v. Minnesota, 246 U. S. 450, 453; Wells, Fargo & Co. v. Nevada, 248 U. S. 165, 167; Union Tank Line Co. n . Wright, 249 U. S. 275, 282. And, if the property be part of a system and have an augmented value by reason of a connected operation of the whole, it may be taxed according to its value as part of the system, although the other parts be outside the State;—in other words, the tax may be made to cover the enhanced value which comes to the property in the State through its organic relation to the system. Fargo n . Hart, 193 U. S. 490, 499; Galveston, Harrisburg & San Antonio Ry. Cd. v. Texas, supra, p. 225 ; United States Express Co. n . Minnesota, 223 U. S. 335, 337; Union Tank Line Co. v. Wright, supra.
In taxing property so situated and used a State may select and employ any appropriate means» of reaching its actual, or full value as part of a going concern,—such as treating the gross receipts from its use in both intrastate p. 339and interstate commerce as an index or measure of its value,—and if the means do not involve any discrimination against interstate commerce and the tax amounts to no more than what would be legitimate as an ordinary tax upon the property, valued with reference to its use, the tax is not open to attack as restraining or burdening such commerce. Cudahy Packing Co. v. Minnesota, supra; St. Louis Southwestern Ry. Co. v. Arkansas, 235 U. S. 350, 367; United States Express Co. v. Minnesota, supra; Galveston, Harrisburg & San Antonio Ry. Co. v. Texas, supra, p. 227; Union Tank Line Co. v. Wright, supra.
An examination of the tax in question in the light of these principles shows that the chief objection urged against it is not tenable. The provisions under which the tax is imposed call it a property tax, specify the property subjected to it and declare that it is in lieu of all other taxes on such property. The Supreme Court of the State holds it is a tax on the property specified. In no material respect does it differ from the tax which was recognized by this Court as a property tax in United States Express Co. v. Minnesota and Cudahy Packing Co. n . Minnesota, above cited. True, it is computed with special regard to the gross receipts, but this, as is fairly shown, is done merely as a means of getting at the full value of the property, considering its nature and use. The tax is not claimed to be in excess of what would be legitimate as an ordinary tax on the property valued as part of a going concern, nor to be relatively higher than. the taxes on other kinds of property. There is no ground for thinking that it operates as a discrimination against interstate commerce.
The statutory provision that a foreign corporation which fails to pay the tax shall be excluded from doing business in the State requires but brief notice. It is not sought to be enforced here. The Pullman Company has not failed to pay the tax. The provision has not been
Syllabus. 261 U.S.
construed by the state court. If it be construed as covering interstate commerce it is void, for the right to engage in such commerce is not within the State’s control. See Western Union Telegraph Co. v. Massachusetts, 125 U. S. 530, 554; Leloup v. Port of Mobile, 127 U. S. 640, 645; Postal Telegraph Cable Co. v. Adams, 155 U. S. 688, 695-696. The state court may construe it as confined to intrastate business. St. Louis Southwestern Ry. Co. n . Arkansas, 235 U. S. 350, 368-369. In neither event would it affect the validity of the tax before us.
We find nothing in the provisions under which the tax was levied, in the decision of the state court, or in the record, which gives any support to the contention that the tax is intended to reach income from property situated or business done without the State.
Judgment affirmed.
STATE OF OKLAHOMA v. STATE OF TEXAS.
UNITED STATES, INTERVENER.
IN EQUITY.
No. 18, Original.
PARTTAD DECREE RELATING TO STATE BOUNDARY, ENTERED
MARCH 12, 1923.
Decree declaring the general course of and rules for locating the boundary between Oklahoma and Texas on the south bank of Red River; the effects of past and future erosion, accretion and avulsion; the status and ownership of the area known as the Big Bend, and of certain islands; the rights of inhabitants of Texas to access to the stream; limiting the actual survey to be made to places designated or to be designated; appointing commissioners to run, locate and mark those portions of the boundary, and providing for vacancies and specifying the method of marking and report to be made; with other provisions as to the work of the commission, objections, approval and costs.
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This cause having been heard and submitted upon certain questions, and the Court having considered the same and announced its conclusions in an opinion delivered January 15, 1923, [260 U. S. 606]
It is ordered, adjudged, and decreed:
1. The boundary between the States of Oklahoma and Texas, where it follows the course of the Red River from the 100th meridian of west longitude to the eastern boundary of the State of Oklahoma, is part of the international boundary established by the treaty of 1819 between the United States and Spain, and is on and along the south bank of that river as the same existed in 1821, when the treaty became effective, save as hereinafter stated.
2. Where intervening changes in that bank have occurred through the natural and gradual processes known as erosion and accretion the boundary has followed the change; but where the stream has left its former channel and made for itself a new one through adjacent upland by the process known as avulsion the boundary has not followed the change, but has remained on and along what was the south bank before the change occurred.
3. Where, since 1821, the river has cut a secondary or additional channel through adjacent upland on the south side in such a way that land theretofore on that side has become an island, the boundary is along that part of the south bank as theretofore existing which by the change became the northerly bank of the island; and where by accretion or erosion there have been subsequent changes in that bank the boundary has changed with them.
4. The rules stated in the last two paragraphs will be equally applicable to such changes as may occur in the future.
5. The south bank of the river is the water-washed and relatively permanent elevation or acclivity, commonly called a cut bank, along the southerly side of the river
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which separates its bed from the adjacent upland, whether valley or hill, and usually serves to confine the waters within the bed and to preserve the course of the river.
6. The boundary between the two States is on and along that bank at the mean level attained by the waters of the river when they reach and wash the bank without overflowing it.
7. At exceptional places where there is no well defined cut bank, but only a gradual incline from the sand bed of the river to the upland, the boundary is a line over such incline conforming to the mean level of the waters when at other places in that vicinity they reach and wash the cut bank without overflowing it.
8. The area known as the Big Bend, which lies within a northerly bend of the river between a southerly extension of the east line of range thirteen west in Oklahoma and a southerly extension of the west line of range fourteen west in that State, has been since before 1821 fast upland on the southerly side of the river, is within the State of Texas and never was owned by the United States. The northerly border of that area is part of the south bank of the river on and along which the state boundary extends.
9. Burke Bet Island and Goat Island, both of which are in the vicinity of the Big Bend Area, are islands in the river, have been islands since before 1821, are within the State of Oklahoma, and are the property of the United States.
10. The island in front of the line between Hardeman and Wilbarger Counties, in the State of Texas, was part of the fast valley land on the south side of the river in 1821, and was severed from the land on that side by avulsion in 1902. The island is within the State of Texas and the state boundary is along its northerly bank.
11. The treaty of 1819 secures to the inhabitants of the State of Texas a right of reasonable access to the p. 343340 Partial Decree.
waters of the river along the state boundary, such as will enable them to reach the waters at all stages and to use the same for beneficial purposes in common with the inhabitants of the State of Oklahoma and of other parts of the United States.
12. The two States and the United States having joined in a request that they be permitted to withdraw the prayer in their pleadings that the boundary for its full length along the river be run, located and marked upon the ground, and having also joined in a further request that the boundary be run, located and marked only at the places hereinafter named, the requests are granted, and Arthur D. Kidder and Arthur A. Stiles, both cadastral engineers, are designated as commissioners to run, locate and mark upon the ground the following portions of the boundary in accordance with this decree and the principles announced in the opinion delivered January 15, 1923:
(a) Along the Big Bend Area as hereinbefore defined;
(b) From the Big Bend Area westward to a southerly extension of the west line of range sixteen west in Oklahoma;
(c) Along all places where by avulsion since 1821 the river has come to occupy a new channel whereby fast upland theretofore on one side of the river has come to be on the other side,—the line in every such instance to be run, located and marked on and along what was the south bank before the change occurred; and
(d) Along any other places which either State or the United States may designate in a request in writing approved by a member of this court.
13. The mode of marking those portions of the boundary shall be by establishing in the vicinity thereof permanent monuments upon the fast upland on the southerly side of the river at suitable distances apart and carefully taking the distances and courses from such monuments to the boundary as the same exists at the time the work
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is done. A description of the monuments and a statement of such distances and courses shall be included in the report of the commissioners.
14. Before they enter upon their work each commissioner shall take and subscribe an oath to perform his duties faithfully and impartially. They shall prosecute the work with all convenient dispatch, shall have authority to employ such assistants as may be needed therein, and shall include in their final report a statement of the work done and of the time employed and the expenses incurred in its performance.
15. The boundary along the Big Bend Area as hereinbefore defined shall be run, located, monumented and reported to the court before the commissioners take up other portions of the work. In running and locating that part of the boundary the commissioners shall ascertain the exact location of all oil wells which are within three hundred feet of the same and shall include a statement thereof in their report.
16. The work of the commissioners shall be subject in all its parts to the approval of the court. Copies of their reports shall be promptly delivered to tne two States and the United States, and exceptions or objections thereto, if there be such, shall be presented to the court, or, if it be not in session, filed with the Clerk, within forty days after the report is made..
17. If for any reason there be a vacancy in the commission when the court is not in session the same may be filled by the designation of a new commissioner by the Chief Justice.
18. The cost of executing this decree, including the compensation of the commissioners, shall be borne in equal parts by the State of Oklahoma, the State of Texas and the United States.