United States v. Ill. Cent. R.R. Co., 303 U.S. 239 (1938)

It déclarés that no carrier whose road forms a part of a line over which cattle shall be conveyed from one State to another shall confine the same in cars for longer than 28 consecutive hours without unloading them into properly equipped pens for rest, water and feeding unless p. 241prevented by storm or by other accidentai and unavoidable causes which cannot be anticipated or avoided by the exercise of due diligence and foresight; upon the written request of the owner the time of confinement may be extended to 36 hours., Section 2 requires that animais so unloaded shall be properly fed and watered. Section 3 provides: “Any railroad . .. who knowingly and willfully fails to comply with the provisions of the two preceding sections shall for every such failure be liable for and forfeit and pay a penalty of not less than $100 nor more than $500 .. recoverable by civil action in the name of the United States. § 4.

Mere omission with knowledge of the facts is not enough. The penalty may not be recovered unless the carrier is also shown “willfully” to hâve failed. In statutes denouncing offenses involving turpitude, “willfully” is generally used to mean with evil purpose, criminal intent or the like. But in those denouncing acts not in themselves wrong, the word is often used without any such implication. Our opinion in United States v. Murdock, 290 U. S. 389, 394, shows that it often dénotés that p. 243which is “intentional, or knowing, or voluntary, as distinguished from accidentai,” and that it is employed to characterize “conduct marked by careless disregard whether or not one has the right so to act.” The significance of the word “willfully” as used in § 3 now before us, was carefully considered by the circuit court of appeals for the eighth circuit in St. Louis & S. F. R. Co. v. United States, 169 Fed. 69. Speaking through Circuit Judge Van Devanter, now Mr. Justice Van Devanter, the court said (p. 71) : “ 'Willfully’ means something not expressed by ‘knowingly,’ else both would not be used conjunctively. . . . But it does not mean with intent to injure the cattle or to inflict loss upon their owner because such intent on the part of a carrier is hardly within the pale of actual expérience or reasonable supposition. . . . So, giving effect to these considérations, we are persuaded that it means purposely or obstinately and is designed to describe the attitude of a carrier, who, having a free will or choice, either intentionally disregards the statute or is plainly indifferent to its requirements.” That statement has been found a useful guide to the meaning of the word “willfully” and to its right application in suits for penalties under § 3. United States v. Stockyards Terminal Ry. Co., supra, 23. St. Joseph Stockyards Co. v. United States, supra, 105. Oregon-Washington R. & Nav. Co. v. United States, 205 Fed. 337, 339. St. Louis Merchants’ Bridge T. Ry. Co. v. United States, 209 Fed. 600. See also Chicago, B. & Q. R. Co. v. United States, 194 Fed. 342, 346. United States v. Kansas City Southern Ry. Co., 202 Fed. 828, 833.

Considered as unaffected by the yardmaster’s négligence, respondent’s failure to take the cattle from the car already placed at the yard for unloading, unquestionably discloses disregard of the statute and indifférence to its requirements and compels the conclusion that, within the meaning of § 3, respondent willfully violated its duty p. 244to unload as required by § 1. It is immaterial whether the yardmaster’s négligence or oversight was intentional or excusable. As between the government and respondent, the latter’s breach is precisely the same in kind and degree as it would hâve been if its yardmaster’s failure had been intentional instead of merely négligent. The duty violated did not arise out of the relation of employer and employée but was one that, in virtue of the statute, was owed by respondent to the shippers and the public. As respondent could act only through employées, it is responsible for their failure. To hold carriers not liable for penalties where the violations of §§ 1 and 2 are due to mere indifférence, inadvertence or négligence of employées would defeat the purpose of § 3. Whether respondent knowingly and willfully failed is to be determined by the acts and omissions which characterize its violation of the statute and not upon any breach of duty owed to it by its employées. Respondent’s contention that it is not liable because its failure was due to the négligence or oversight of the yardmaster cannot be sustained. Montana Cent. Ry. Co. v. United States, 164 Fed. 400, 403. United States v. Atlantic Coast Line R. Co., 173 Fed. 764, 769. Cf. Oregon-Washington R. & Nav. Co. v. United States, 205 Fed. 337, 340.

When the bank knowingly received illégal interest, it immediately became liable for, and the borrower became entitled to recover from it, a penalty of twice the amount of the interest thus paid. Farmers’ & Mechanics’ National Bank v. Dearing, 91 U. S. 29. Lake Benton First National Bank N. Watt, 184 U. S. 151. Upon petitioner’s appointment as trustée in bankruptcy, the bankrupt’s right to recover the penalty vested in him. Bankruptcy Act, § 70 (a), 11 U. S. C. § 110 (a). First National Bank v. Lasater, 196 U. S. 115, 118. Reed N. American-Ger-man Nat. Bank, 155 Fed. 233. The penalty is to be enforced according to the terms of the statute. Guilt being established, the law itself fixes the punishment at precisely twice the usurious exaction paid; it may not be enhanced or mitigated because of aggravating circumstances or équitable considérations. As the sum demanded is certain, recovery in an action of debt is authorized, though the claim arises not in contract but in tort. Chaffee & Co. v. United States, 18 Wall. 516, 538. The liability can only be enforced in an action “brought specially and éxclusively for that purpose,—where the sole issue is the guilt or innocence of the accused, without the presence of any extraneoùs facts which might confuse the case.” Barnet v. National Bank, 98 U. S. 555, 559. One paying a national bank usurious interest and entitled to enforce the penalty may not recover it by way of set-off in a suit brought upon his note to the bank. Haseltine v. Central Bank, 183 U. S. 132, 137. Barnet v. National Bank, supra. Dreisbach n. National Bank, 104 U. S. 52. Stephens v. Monongahela Bank, 111 U. S. 197. p. 248See Schuyler National Bank v. Gadsden, 191 U. S. 451, 456.

5. The vice characteristic of such local taxes, measured by gross receipts from interstate commerce, as hâve been held invalid, was that they placed on the commerce burdens of such a nature as p. 251were capable, in point of substance, of being imposed, or added to, with equal right by every State which the commerce touched, merely because Interstate commerce was being done, so that without the protection of the commerce clause it would bear cumulative burdens not imposed on local commerce. The tax here involved is not subject to that objection. P. 255.

Section 201, c. 7, of the New Mexico Spécial Session Laws of 1934, levies a privilège tax upon the gross receipts of those engaged in certain specified businesses.1 p. 252Subdivision I imposes a tax of 2% of amounts received from the sale of advertising space by one engaged in the business of publishing newspapers or magazines. The question for decision is whether the tax laid under this statute on appellants, who sell without the state, to advertisers there, space in a journal which they publish in New Mexico and circulate to subscribers within and without the state, imposes an unconstitutional burden on interstate commerce.

Appellants publish a monthly livestock trade journal which they wholly préparé, edit, and publish within the state of New Mexico, where their only office and place of business is located. The journal has a circulation in New Mexico and other States, being distributed to paid subscribers through the mails or by other means of transportation. It carries advertisements, some of which are p. 253obtained from advertisers in other states through appellants’ solicitation there. Where such contracts are entered into, payment is made by remittances to appellants sent interstate; and the contracts contemplate and provide for the interstate shipment by the advertisers to appellants of advertising cuts, mats, information and copy. Payment is due after the printing of such advertisements in the journal and its ultimate circulation and distribution, which is alleged to be in New Mexico and other states.

That the mere formation of a contract between persons in different states is not within the protection of the commerce clause, at least in the absence of Congressional action, unless the performance is within its protection, is a proposition no longer open to question. Paul v. Virginia, 8 Wall. 168; Hooper v. California, 155 U. S. 648; New York Life Ins. Co. v. Deer Lodge County, 231 U. S. 495; cf. Ware & Léland v. Mobile County, 209 U. S. 405; Engél v. O’Malley, 219 U. S. 128. Hence it is unnecessary to consider the impact of the tax upon the advertising contracts except as it affects their performance, presently to be discussed. Nor is taxation of a local business or occupation which is separate and distinct from the transportation and intercourse which is interstate commerce forbidden merely because in the ordinary course such transportation or intercourse is induced or occasioned by the business. Williams v. Fears, 179 U. S. 270; Ware & Leland N. Mobile County, supra; Browning v. Way cross, p. 254233 U. S. 16; General Railway Signal Co. v. Virginia, 246 U. S. 500, 510; Utah Power & Light Co. v. Pjost, 286 U. S. 165. Here the tax which is laid on the compensation received under the contract is not forbidden either because the contract, apart from its performance, is within the protection of the commerce clause, or because as an incident preliminary to printing and publishing the advertisements the advertisers send cuts, copy and the like to appellants.

It was not 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,” Postal Telegraph-Cable Co. v. Richmond, 249 U. S. 252, 259; Ficklen v. Shelby County Taxing Dist., 145 U. S. 1, 24; Postal Telegraph Cable Co. v. Adams, 155 U. S. 688, 696; Galveston, H. & S. A. Ry. Co. v. Texas, 210 U. S. 217, 225, 227, 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. He is subject to a property tax on p. 255the instruments employed in the commerce. Western Union Teleg. Co. v. Attorney General, 125 U. S. 530; Cleveland, C., C. & St. L. Ry. Co. n. Backus, 154 U. S. 439; Adams Express Co. v. Ohio State Auditor, 165 U. S. 194; Adams Express Co. v. Kentucky, 166 U. S. 171; Western Union Tel. Co. v. Missouri ex rel. Gottlieb, 190 U. S. 412; Old Dominion S. S. Co. v. Virginia, 198 U. S. 299, and if the property devoted to interstate transportation is used both within and without the state a tax fairly apportioned to its use within the state will be sustained. Pullman’s Palace Car Co. v. Pennsylvania, 141 U. S. 18; Cudahy Packing Co. v. Minnesota, 246 U. S. 450. Net earnings from interstate commerce are subject to income tax, United States Glue Co. v. Oak Creek, 247 U. S. 321, and if the commerce is carried on by a corporation a franchise tax may be imposed, measured by the net income from business done within the state, including such portion of the income derived from interstate commerce as may be justly attributable to business done within the state by a fair method of apportionment. Underwood Typewriter Co. v. Chamberlain, 254 U. S. 113; cf. Bass, Ratcliff & Gretton v. State Tax Comm’n, 266 U. S. 271.

Ail 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, hâve often been pronounced unconstitutional. The vice characteristic of those which hâve been held invalid is that they hâve placed on the commerce burdens of such a nature as to be capable, in point of substance, of being imposed (Fargo N. Michigan, 121 U. S. 230; Philadelphia & Sou. S. S. Co. N. Pennsylvania, 122 U. S. 326; Galveston, H. & S. A. R. Co. v. Texas, supra; Meyer v. Wells, Fargo & Co., 223 U. S. 298) or added to (Crew Levick Co. v. Pennsylvania, 245 U. S. 292; Fisher’s Blend Station v. State Tax p. 256Comm’n, 297 U. S. 650) 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. See Philadelphia & Sou. S. S. Co. v. Pennsylvania, supra, 346; Case of State Freight Tax, 15 Wall. 232, 280; Bradley, J., dissenting in Maine v. Grand Trunk Ry. Co., 142 U. S. 217, 235; cf. Pullman’s Palace Car Co. v. Pennsylvania, supra, 26. The multi-plication 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. Baldwin v. G. A. F. Seelig, Inc., 294 U. S. 511, 523.

As we hâve said, the carrying on of a local business may be made the condition of state taxation, if it is distinct from interstate commerce, and the business of preparing, printing and publishing magazine advertising is peculiarly local and distinct from its circulation whether or not that circulation be interstate commerce. Cf. Puget Sound Stevedoring Co. v. State Tax Comm’n, 302 U. S. 90, 94. No one would doubt that the tax on the privilège would be valid if it were measured by the amount of advertising space sold. Utah Power & Light Co. v. Pjost, supra; Fédéral Compress & W. Co. v. McLean, 291 U. S. 17, or by its value. Oliver Iron Mining Co. v. Lord, 262 U. S. 172; Hope Natural Gas Co. v. Hall, 274 U. S. 284. Selling price, taken as a measure of value whose accuracy appellants do not challenge, is for ail practical purposes a convenient means of arriving at an équitable measure of the burden which may be imposed on an admittedly taxable subject matter. Unlike the measure of the tax sustained in American Manujacturing Co. n. St. Louis, supra, it does not embrace p. 259the purchase price (here the magazine subscription price) of the articles shipped in interstate commerce. So far as the advertising rates reflect a value attributable to the maintenance of a circulation of the magazine interstate, we think the burden on the interstate business is too remote and too attenuated to call for a rigidly logical application of the doctrine that gross receipts from interstate commerce may not be made the measure of a tax. Expérience has taught that the opposing demands that the commerce shall bear its share of local taxation, and that it shall not, on the other hand, be subjected to multiple tax burdens merely because it is interstate commerce, are not capable of réconciliation by resort to the syllogism. Practical rather than logical distinctions must be sought. See Galveston, H. & S. A. R. Ço. v. Texas, supra, 227. Recognizing that not every local law that affects commerce is a régulation of it in a constitutional sense, this Court has held that local taxes may be laid on property used in the commerce; that its value for taxation may include the augmentation attributable to the commerce in which it is employed; and, finally, that the équivalent of that value may be computed by a measure related to gross receipts when a tax of the latter is substituted for a tax of the former. See Galveston, H. & S. A. R. Co. v. Texas, supra, 225.

?Great Britain levies an annual license tax on radio receiving apparatus. See Wireless Telegraphy Act of 1904, c. 24, 4 Edw. 7, as explained by c. 67, 15 & 16 Geo. 5, and implemented by régulation printed in Great Britain, Post Office Guide, July, 1936, p. 261250 Syllabus.