Hart Refineries v. Harmon, 278 U.S. 499 (1929)

But the contention is that the statute discriminates against the Montana refiner because it is not extended p. 501to include gasoline or distillate shipped from other states and consumed or used after it has come to rest in Montana and its status in interstate commerce has ended. Upon this ground the statute is challenged as constituting a denial of the equal protection of the laws, in contravention of the Fourteenth Amendment to the federal Constitution. The Supreme Court of Montana upheld the statute as valid, 81 Mont. 423, following its earlier decision in State n . Silver Bow Refining Co., 78 Mont. 1, 19, where it was held that, while a tax upon the sale of imported oil after it had come to rest in the state or upon such oil as property would be valid, any attempt to lay a tax upon products shipped into the state for consumption only would be a burden upon interstate commerce.

This holding, as it was applied to the contention in the present case, seems to have been the result of a too literal reading of Sonneborn Bros. v. Cureton, 262 U. S. 506, which was cited as authority. In that case, this Court, upon a full review of the earlier cases, held that when a commodity shipped from another state had come to rest as a part of the stock in trade of the dealer, the interstate transportation was at an end, and, whether in the original packages or not, a state tax upon the commodity, either as property or upon its sale in the state, if laid on the commodity generally without regard to its origin, would not constitute a burden upon or be a regulation of interstate commerce of which the commodity had been the subject. But there is nothing in the opinion to suggest that the taxing power of the state is limited to the two kinds of taxes mentioned. Interstate transportation having ended, the taxing power of the state in respect of the commodity which was the subject of such transportation, may, so far as the commerce clause of the federal Constitution is concerned, be exerted in any way which the state’s constitution and laws permit, provided, of p. 502course, it does not discriminate against the commodity because of its origin in another state. That under such circumstances a tax may be imposed upon the use as well as upon the sale of the commodity in domestic trade, without coming into conflict with the commerce clause, was specifically determined in Bowman v. Continental Oil Co., 256 U. S. 642, 648.

But because the state legislature could have laid a tax upon the use of the commodity as well as upon its sale, it by no means follows that a failure to do so constituted a discrimination forbidden by the equal protection clause of the Fourteenth Amendment. That clause does not prohibit classification; and the power of the state to classify for purposes of taxation is of wide range and flexibility, provided that the classification rest upon a substantial difference so that all persons similarly circumstanced will be treated alike. Statutes which tax one class of property while exempting another class necessarily result in imposing a greater burden upon the property taxed than would be the case if the omitted property were included. But such statutes do not create an inequality in the constitutional sense. Nor is the imposition of an excise tax upon one occupation or one activity from which other and different occupations or activities are exempt, a denial of equal protection. It is enough if all in the same class are included and treated alike. These propositions are so firmly established by repeated decisions of this Court that further discussion is unnecessary. Bell’s Gap R. R. Co. v. Pennsylvania, 134 U. S. 232, 237; Home Ins. Co. v. New York, 134 U. S. 594, 606; Keeney n . New York, 222 U. S. 525, 536; Citizens’ Telephone Co. v. Fuller, 229 U. S. 322, 329-331; Merchants’ Bank v. Pennsylvania, 167 U. S. 461, 463; American Sugar Refining Co. v. Louisiana, 179 U. S. 89, 92; Pacific Express Company v. Seibert, 142 U. S. 339, 350; Southwestern Oil Co. v. Texas, p. 503499 Syllabus.

Even if the Dock Company be regarded as an agency of the Railway Company, the statute, if construed as applying a mileage prorate to the entire earnings from ore service, is unconstitutional; first, because the dock property in Wisconsin, which contributes to the earnings, is approximately fifty times as valuable per mile as the average mile of track in Minnesota; second, because the services performed in and about the dock and yards in Wisconsin are many times more elaborate and costly per mile than the service performed on an average mile of track in Minnesota; third, because the portion of the charge applied by the defendant to the single mile of dock service in Wisconsin was approximately fifty times as great per mile as the charge for an average mile of rail service in Minnesota; and fourth, because a portion of the earnings is fairly attributable to an ore-treating and storage process in Wisconsin, which was not a part of, nor incident to, transportation and not related to track p. 505mileage, and, therefore, not subject either to mileage prorate or to any other apportionment to Minnesota.

The ore line is in effect a separate railroad. Its revenue constitutes 25% of the Great Northern interstate revenue taxable by Minnesota. Its earnings are in part attributable to a treating process which is not an incident of transportation. For these reasons, we are entitled to relief in this case, notwithstanding the fact that our attack upon the mileage prorate is confined to the ore line alone. Citing: Pittsburgh, etc. Ry. v. Backus, 154 U. S. 421; Fargo v. Hart, 193 U. S. 490; Wallace v. Hines, 253 U. S. 66; Southern Ry. v. Kentucky, 274 U. S. 76; Philadelphia, etc: Co. v. Pennsylvania, 122 U. S. 326; Galveston, etc. Ry. v. Texas, 210 U. S. 217; Maine v. Grand Trunk p. 506Ry. Co., 142 U. S. 217; U. S. Express Co. v. Minnesota, 223 U. S. 335; Cudahy Packing Co. v. Minnesota, 246 U. S. 450; Pullman Co. v. Richardson, 261 U. S. 330; Oklahoma v. Wells Fargo, 223 U. S. 298.

In Minnesota, by statute amended from time to time but substantially in effect since 1871 (see 1 Mason’s Minnesota Statutes, 1927, 2246, 2247), a tax, measured by gross earnings, is laid upon all railway companies, in lieu of all taxes upon all of their property within the state. As a basis for computing the tax, each railway company is required to report annually its gross earnings upon business done upon its lines wholly within the state and upon p. 507interstate business in the proportion which the mileage within the state bears to the entire mileage of the railway over which such interstate business is done. The tax thus levied is a property tax based on the gross earnings fairly attributable to the property of the railway company within the state. The state supreme court has so held. And to the same effect see Cudahy Packing Co. v. Minnesota, 246 U. S. 450, 452.

The evidence does not show the actual use value of either the Minnesota or the Wisconsin part of the road, or their relative values. If all the facts bearing upon the matter were revealed, they well might demonstrate not only that cost, even if proved, would not be a fair measure of the use value, but that the Minnesota part of the line, mile for mile, was equal in value to that of the Wisconsin portion with the docks included. Such evidence as the record contains tends to that conclusion rather than the contrary. The road, including the docks, is a unit. The charge for transportation of ore, including dock services, is a single charge. The entire ore traffic originates and p. 509503 Syllabus.