Opinion · Supreme Court of the United States

General American Tank Car Corp. v. Day

Gen. Am. Tank Car Corp. v. Day, 270 U.S. 367 (1926)

Type
Opinion
Court
Supreme Court of the United States
Jurisdiction
Federal
Date
1926-03-08
Topic
general

How later courts describe this case

  • quoted at Maj. op. at 189, in Section IV, which begins on page 187 and which details the “standard to be applied for determining whether discrimination [against interstate commerce] exists”
  • state tax on the rolling stock of foreign corporations
  • referring to municipalities and parishes of Louisiana as “political subdivisions”

Citator

UpLaw has not yet analyzed General American Tank Car Corp. v. Day. The absence of a flag is not a finding that it is good law.

Cited by
58 opinions

Headnotes

  1. Constitutional Law — State Taxation — Binding Effect of State Court Decisions Where the highest court of a state has held a state tax to conform to the state constitution's requirement of uniformity in taxation, that determination is binding on the United States Supreme Court. 270 U.S. at 371
  2. Constitutional Law — Commerce Clause A state tax imposed, in lieu of local taxes, on rolling stock owned by non-resident corporations having no domicile in the state and operated over railroads within the state is not objectionable under the Commerce Clause as compelling non-residents doing interstate business to declare a local domicile, where the amount and method of computing the tax are not in question and the tax does not operate to discriminate in some substantial way between the property of such non-residents and that of residents or domiciled non-residents. 270 U.S. at 372
  3. Tax Law — Allocation Between State and Political Subdivisions The method of allocating taxes between the state and its political subdivisions is a matter within the competency of the state legislature. 270 U.S. at 372
  4. Constitutional Law — Equal Protection A state taxing statute that imposes a property tax on non-residents in lieu of the local taxes imposed on residents is not invalid under the Equal Protection Clause merely because equality in its operation, as compared with local taxation, has not been attained with mathematical exactness, where the statute discloses no purpose to discriminate against non-residents and in substance does not do so; the inquiry turns on the fairness and reasonableness of the tax's purposes and practical operation rather than on minute differences between its application and that of the complementary tax statutes. 270 U.S. at 373
  5. Civil Procedure — Burden of Proof — Tax Discrimination Parties challenging a state tax on non-residents on the ground that it discriminates against them by exceeding the average taxes imposed on residents, from which non-residents are exempt, bear the burden of proving such excess. 270 U.S. at 374
GEN. AMER. TANK CAR CORP.v. DAY,270 U.S. 367(1926)
46 S.Ct. 234
GENERAL AMERICAN TANK CAR CORPORATION ET AL.v. DAY, SHERIFF AND
EX-OFFICIO TAX COLLECTOR.
APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT
OF LOUISIANA.
No. 162.
Argued January 21, 1926.
Decided March 1, 1926.
1. A decision by the highest state court holding a state tax conformable to the requirement of the constitution of the State as regards uniformity of taxation, is binding on this Court. P. 371. 2. A state tax imposed, in lieu of local taxes, on rolling stock which is owned by non-resident corporations having no domicile in the State and is operated over railroads within the State (Act 109, La. Ls. 1921), is not objectionable, under the CommercePage 368Clause, as an attempt to compel non-residents doing interstate business in the State to declare a local domicile, if the amount and method of computing the tax are not in question, and if it does not operate to discriminate in some substantial way between property of such non-residents and that of residents or domiciled non-residents. P. 372. 3. The method of allocating taxes between the State and its political subdivisions, is a matter within the competency of the state legislature. P. 372. 4. Where a state taxing statute, which imposes a property tax on non-residents in lieu of local taxes imposed on residents, discloses no purpose to discriminate against non-residents, and in substance does not do so, it is not invalid under the Equal Protection Clause merely because equality in its operation, as compared with local taxation, has not been attained with mathematical exactness. P. 373. 5. Parties challenging a state tax on non-residents, upon the ground that it discriminates against them by exceeding the average taxes imposed on residents from which non-residents are exempt, have the burden of proving such excess. P. 374. Affirmed.
APPEAL from a decree of the District Court dismissing the bill
in a suit brought by several corporations, not domiciled in
Louisiana, to enjoin the appellee, a tax-collector for one of the
Louisiana parishes, from seizing their property in satisfaction
of a tax assessed on their rolling stock, operated over railroads
within the State.
Mr. Sigmund W. David, with whomMessrs. Elias MayerandEdwin T. Merrickwere on the brief, for appellants.

A State has no right to require a non-resident to procure a license or declare a domicile for the privilege of engaging in interstate commerce; and a state tax, which in effect does that, violates the Commerce Clause of the Constitution.Alpha PortlandCement Co. v.Massachusetts,268 U.S. 203;Int. Text BookCo. v.Pigg,217 U.S. 91;Buck Stove Range Co. v.Vickers,226 U.S. 205;Sioux Remedy Co. v.Cope,235 U.S. 197;CrutcherPage 369v.Kentucky,141 U.S. 47;Horn Mining Co. v.New York,143 U.S. 305;Dahnke-Walker Co. v.Bondurant,257 U.S. 282;Barrettv.New York,232 U.S. 14;Looneyv.Crane Co.,245 U.S. 178;Crenshawv.Arkansas,227 U.S. 389;McCallv.California,136 U.S. 104;Pensacola Tel. Co. v.WesternUnion Tel. Co.,96 U.S. 1. A tax which is intended to and does affect the rolling stock of only those engaged in interstate commerce who have failed or refused to declare a domicile in the State is not a property tax within the rule laid down by the decisions of this Court.Looneyv.Crane Co., supra;WesternUnion Tel. Co. v.Kansas ex rel. Coleman,216 U.S. 1;PullmanCo. v.Kansas,216 U.S. 56;Int. Paper Co. v.Massachusetts,246 U.S. 135. Assuming, however, that this is a property tax and not a special license tax, still it burdens interstate commerce by discriminating against the property of the plaintiffs because they are non-resident corporations not domiciled within the State.Darnell Son Co. v.Memphis,208 U.S. 113;Brimmerv.Rebman,138 U.S. 78;Wallingv.Michigan,116 U.S. 446;Guyv.Baltimore,100 U.S. 434;Weltonv.Missouri,91 U.S. 275;Wardv.Maryland, 12 Wall. 418;Cookv.Pennsylvania,97 U.S. 566;Lyngv.Michigan,135 U.S. 161.

The tax also violates § 1 of the 14th Amendment.Southern Ry.Co. v.Greene,216 U.S. 400;Bethlehem Motors Corp. v.Flynt,256 U.S. 421;Wardv.Maryland, supra; Chalkerv.Birmingham N.W. Ry.,249 U.S. 522;Travisv.Yale TowneMfg. Co.,252 U.S. 60;Leecraftv.Texas Co., 281 F. 918. The contention that residents and non-residents who have declared a local domicile must pay local taxes in addition to the 5 1/4 mill state tax, and that the local taxes average approximately 25 mills, is unsound. The purpose of the 25 mill tax was not to equalize the burdens. Even if the average of all local taxes is approximately 25 mills, and the purposePage 370of the tax is to equalize the burdens, the special tax is void because, in principle, the discrimination still exists.

Sections 5, 6, and 7 of Act 109, and the 25-mill tax, violate §1, Art.10of the Louisiana Constitution, 1921, providing: "All taxes shall be uniform throughout the territorial limits of the authority levying the tax."Mr. Harry P. Sneedfor appellee.
MR. JUSTICE STONE delivered the opinion of the Court.
Appellants brought suit in the United States District Court for eastern Louisiana to enjoin the appellee from collecting, by seizure of appellants' property, a tax assessed against them by the State of Louisiana. From a judgment dismissing the bill the case comes here on direct appeal by reason of the constitutional questions involved. Jud. Code § 238, before amendment of 1925;Haysv.Port of Seattle,251 U.S. 233;Arkadelphia MillingCo. v.St. Louis S.W. Ry. Co.,249 U.S. 134.

The tax in question was imposed under § 5 of Act 109 of the Louisiana Laws of 1921. Section 1 of that Act imposes a tax, for state purposes, of five and one-fourth mills on the dollar on all property within the State. Section 5 authorizes the assessment of an additional tax for state purposes of twenty-five mills on the dollar "of the assessed value of all rolling stock of non-resident . . . corporations, having no domicile in the State of Louisiana, operated over any railroad in the State of Louisiana within or during any year for which such tax is levied . . ." ArticleX, §16of the Louisiana constitution exempts from all local taxation non-residents paying the twenty-five mill tax. Appellants do not complain of the five and one-fourth mill tax assessed against them under § 1; nor do they question the amount or method of computation of the twenty-five mill tax assessed under § 5;Page 371but they object to it on the ground that it violates the constitution of Louisiana, which requires that "all taxes shall be uniform upon the same class of subjects" (Art. X, § 1), and on the ground that, as applied to appellants, it violates the federal Constitution by imposing a burden on interstate commerce, and denies to appellants the equal protection of the laws, in that it discriminates unreasonably between residents of Louisiana or non-residents domiciled within the State, and non-residents not so domiciled and engaged in interstate commerce.

All the appellants are corporations organized in States other than Louisiana and are not domiciled or licensed to do business in that State. All own and operate within the State tank cars, for the transportation of oil, which are used in interstate commerce. Taxes on property within the State of Louisiana, other than state taxes, are assessed where the taxpayer is domiciled, by the several parishes and by municipalities in the parishes, both of which are political subdivisions of the State. In some parishes, local taxes exceed twenty-five mills, and in others they are less than that amount; but it is asserted by the appellee that the average of all local property taxes is approximately twenty-five mills.

The tax in question is authorized by Art.X, §16, of the Louisiana constitution, which reads as follows:

"Section 16: Rolling stock operated in this State, the owners of which have no domicile therein, shall be assessed by the Louisiana Tax Commission, and shall be taxed for State purposes only, at a rate not to exceed forty mills on the dollar of assessed value."

The constitutionality of the twenty-five mill tax imposed under this section was upheld by the Supreme Court of Louisiana inUnion Tank Car Co. v.Day,156 La. 1071, and that case disposes of the objections urged here to the validity of the tax under the state constitution.Page 372

It is argued that the twenty-five mill tax, which was imposed on tank cars belonging to the several appellants, is a thinly disguised attempt to compel non-residents doing interstate business in Louisiana to declare a domicile in the State, and that it is therefore an unconstitutional burden on interstate commerce, within the principle of those cases holding that a State may not require a non-resident to procure a license to do business or to declare a domicile within the State as a condition to engaging in commerce across its boundaries.InternationalText Book Co. v.Pigg,217 U.S. 91;Dahnke-Walker MillingCo. v.Bondurant,257 U.S. 282. But it is obvious from an inspection of the statute that the tax in question is imposed on property of non-residents in lieu of the local tax assessed in the several parishes of the State on property of persons or corporations domiciled there, and that the non-resident may either pay the state tax assessed under § 5 or, at his option, by becoming domiciled in a parish, pay instead of it the local taxes assessed within the parish. The effect of § 5 is not to require the non-resident corporation to take out a license to do business within the State, but only to subject its property within the State to state taxation. There being no question as to the amount of the tax or the method of its computation, the taxation of appellants' property within the State can be open to no objection unless it operates to discriminate in some substantial way between the property of the appellants and the property of residents or domiciled non-residents.Cudahy Packing Co. v.Minnesota,246 U.S. 450; and seePullman Palace Car Co. v.Pennsylvania,141 U.S. 18.

We are not concerned with the particular method adopted by Louisiana of allocating the tax between the State and its political subdivisions. That is a matter within the competency of the state legislature.Columbus Southern Ry. Co. v.Wright,151 U.S. 470,475,476.Page 373

The court below found, as did the state Supreme Court inUnion Tank Car Co. v.Day, supra, that all local taxes throughout the State, from which appellants are exempted by the Louisiana constitution, average approximately twenty-five mills, and that, since the tax assessed under § 5 was substantially the equivalent of the local tax in lieu of which it was assessed, there was no unjust discrimination. Such a classification is not necessarily discriminatory.Travellers' Insurance Co. v.Connecticut,185 U.S. 364. Where the statute imposing a tax which is in lieu of a local tax assessed on residents, discloses no purpose to discriminate against non-resident taxpayers, and in substance does not do so, it is not invalid merely because equality in its operation as compared with local taxation has not been attained with mathematical exactness. In determining whether there is a denial of equal protection of the laws by such taxation, we must look to the fairness and reasonableness of its purposes and practical operation, rather than to minute differences between its application in practice and the application of the taxing statute or statutes to which it is complementary.Travellers' Insurance Co. v.Connecticut,supra;and seeState Railroad Tax Cases,92 U.S. 575,612;Shafferv.Carter,252 U.S. 37,56.

But appellants challenge the District Court's finding of fact that local taxation throughout the State will average about twenty-five mills. They insist that the average of local taxation is twenty-one mills, and that this disparity between the rate of tax assessed on appellant and the local tax on the property of residents, is a substantial discrimination establishing the invalidity of the tax. In the absence of a purpose to discriminate, disclosed by the legislation itself, we are not prepared to say that a four mills variation in one year not shown to be a necessary or continuing result of the scheme of taxation adopted, would be an unconstitutional discrimination;Page 374for in such a scheme of complementary tax statutes, however fairly devised, it would be impossible to provide in advance against occasional inequalities as great as that here complained of.

The record, however, does not support appellants' contention. It was stipulated by the parties that the total of all state and local taxes on property in some of the parishes exceeds thirty and one-quarter mills, the sum of the general state tax of five and one-quarter mills and the special twenty-five mills tax on property of non-residents; and that in other parishes, it is less than that amount. The stipulation does not, however, show the amount of the variation in the rate of local taxation nor its average throughout the State. The only evidence on the subject is an extract from the annual report of the Louisiana Tax Commission, purporting to relate to taxes "for the parishes." From the data embodied in this report, appellants make their own calculation that the average rate of all parish and local taxes is twenty-one mills. It is, however, conceded that municipalities within the parishes have independent power of taxation. In some instances they are exempt from taxation by the parish (La. Const., Art.XIV, §12,) and the power of parishes to tax property in incorporated cities and towns for parochial purposes is, in certain instances, limited. (La. Const., Art.XIV, §§7and8.) It is contended by appellee that appellants' computation does not include in local taxes, all the taxes assessed by municipalities within the parishes except in the case of the parish of Orleans, whose limits coincide with those of the city of New Orleans, and that there the rate exceeds thirty-one mills, as is shown by the report of the Tax Commission. It is impossible to say from an inspection of the extract from the report in evidence, which of these contentions is correct. The report is stated to cover taxes for the parishes and includes numerous items of parish taxes, but it doesPage 375not show on its face whether all taxes assessed by cities, towns, and villages within the parish are included in the report, and there is nothing in the record which will enable us to ascertain that fact. The appellant has, therefore, failed to show that the tax is discriminatory either in principle or in its practical operation and has laid no foundation for assailing its constitutionality.

The judgment of the District Court isAffirmed.