Petition for Writ of Certiorari — Teamsters v. United States

Supreme Court brief1934

Ask Donna

What actually matters in this document.

Text

FY,

“>

1.7

‘

res.

* if

. “

» \

; we IN

* way)

;

2 €

, se

. r

;

>.»

a ‘

Petitio

c*, & i>)

af ve o

tee? | . .

. + _ * . bs AY

el oat oD

» aa ty “~ i

aN , '

.* vs >

"ge gh (

- : “

‘

F Viz

Wi ta

SF ek PS

Saker’

ee eras te pe SS

if Seats: Se.

: A vos RE cde TES cr |

eS ANY,

ee %

\, .

‘

oa et

if a

Jd; #7 ‘

-¢.¥ 4 :

vs,

wa f

aS -

~ & 4

¢. Wit j *

oP, or.

Ke “ y -

» 4 we Coe

te . & a7

a +4 u

. + ‘

4 waite f

+ z

~ r 4

TABLE OF CONTENTS.

ee ee a ute Law chakene be ouRcakion

I. Summary statement of matter involved...................

ia. ee SE. s cas hues enh wa ee ee yee cb ek nek ea earicaln

III. Reasons relied on for the allowance of the writ

A. Importance of the question involved

ic EE Oe MEINE. 6 ic se uachuisabascdacrdhabemense

Brief in support of petition for writ of certiorari..................

i, ae ENS OF EG COTE DION knis vivcsccccccaceesssccanss

chy QO AAG GREE AS RRARERNS KSA RARE De ERMA NAS RES AAR AROSE

Fa: eR AEE RIN a ak ok RARER RAAREM AEE MEAS OR ARSE OM

Ly: Sete: Sha MRR. an cacusscaksndacdendamecnssseue s

V5 RK” .c ARs ie knehes Ree ak bets EA DOSS oRCR SER RRS ere

Point A. (Assignments of error 1 and 2):

The tax is a general ad valorem tax on property that

is within the jurisdiction of Virginia.............

Point B. (Assignments of error 1, 2, and 3):

Even though the respondent was engaged solely in in-

terstate commerce and owned no real estate and no

tangible property in Virginia, the tax was valid,

since the burden is so indirect as not to amount to

a regulation of interstate Ccommerce............ _

Point C. (Assignment sof error 1, 2, and 4):

The rule laid down in the cases involving privilege

taxes on those engaged in interstate commerce is

inapplicable to the case at bar, which involves a

PORGTAT GE DORON THRs <6. ck dxadeea cds atacen«ed

PS ir ee seen ewe cece eee e eee e reste eee eee eees

‘TABLE OF CASES.

Adams Express Co. v. Ohio State Auditor, 166 U. S. 185, 218........

Alpha Portland Cement Co. v. Massachusetts, 268 U.S ee ee

Ease -v. Beeenars. Ben 6), Bo Ge, GOks ck cc cccs acces seanas sananee

meougett v: Biperman, 2t7 U. Bi Bes cc sissaspencss errr a te ey re

Commonwealth of Virginia v. Castner, Curran & Bullitt, Inc., 138

WR, Whisvciwnke .ATAGA MATS ENS SAREE ASR OD et Te eT ee eee

Eastern Air Transport, Inc., v. South Carolina Tax Commission, 285

A Fy My BAe ccase Pere Tere rere ree ee eee eer Terre

Express Company Cases, 165 U. S. 194, 220......cccciccccecees

Galveston, Harrisburg, etc., Ry. bal v. Texas, 210 U. S. 217, 295...

Gloucester Ferry Co. v. Commonwealth of Pennsylvania, 114 U. S.

196, 206, 210, 217..... PUT TTT TTT T CTT TCT TCT Tete a ohee neues

Lawrence vy. State Tax Commission of Mississipp!, 286 U. S. 276..

—4756-C

il INDEX

Page

McCulloch v. Maryland, 4 Wheat. 420. ...svecccccccisccccvcccccecs 17

Minor v. Philadelphia, etc., R. Co., 18 Wall. 206........-... Beas leta ee 233

New Jersey Telephone Co. v. Tax Board, 280 U. S. 338, 346......... 15

Ozark Pipe Line Corp. v. Monier, 266 U. 5 CUPL ect ce ies cae ca sewe es 5

People v. Commissioners, 104 U. 8. 466... 2c csc ccccccccccccccces 19

Philadelphia, etc., v. Pennsylvania, 122 U. S. 326, 344, 345.......... 22

Postal Tel., etc., v. Adams, 155 U. S. 688, GO7Z........... ccc cceenes 22

St. Louis & S. W. Ry. Co. v. Nattin, 277 U. S. 157, 159.............. 5,15

State of Minnesota v. Blasius, — U. S. — (decided November 6,

Be) ROC OT, TOs ass banc have ewe ci asewes eewsca he 9

TEXTBOOKS.

’ Commerce Clause of the Federal Coustitution (E. P. Prentice and

4 B.C. TDD, WR Bie nc kvc ce acidascnneveccincasvarsesenadacses 19

: Interstate Commerce (Judson, 2d Edn.), page 35............... 0 22

i STATUTES.

; Constitution of the United States:

; Brie 7, TCG, TECHIE Bina oo cece cc cer ceenseas 4, 20

Mis 0, CRE WA, TONIC Banc nc oc cds cccuwesecesscess 20

4 Acts of Congress :

‘ Judicial Code, Section 237 (b), as amended by Act of February

3 18, 1926 (28 U. S. C. A., Section 344 (b) )......cccseceesees 8

: Virginia Statutes:

: Acts of Assembly, 1928, pp. 35, 63, 69, 738, 739 (quoted in Ap-

BO ac An a sh 4 5c dbb bAs OS hs SO ARASSSAR KOS C456 oes Oo 25

The Tax Code of Virginia (Same as Acts, supra):

RE a nae Sha ce ee NO KAS REWER Rae S eas iS Roa Ue we eueiees 2,42

i ee Per nmr rr sy Te ee eT re Tee Tere 2, 25

Section 81........ pEA SRDAKSKENURR KADEN CHAR CRED bee OEa Obaee ek 13, 27

LEAR LTE EE OS FOR REET KO May en te me ree

a . ss

bal

SUPREME COURT OF THE UNITED sT/?x°

OCTOBER TERM, 1933.

No. 924

COMMONWEALTH OF VIRGINIA,

Petitioner,

vs.

IMPERIAL COAL SALES COMPANY, INCOR-

PORATED.

PETITION FOR A WRIT OF CERTIORARI.

May IT PLEASE THE CouRT:

The petition of the Commonwealth of Virginia respect-

fully shows to this Honorable Court:

Summary Statement of the Matter Involved.

Your petitioner, the Commonwealth of Virginia, respect-

fully states that she is aggrieved by the final judgment of

the Supreme Court of Appeals of Virginia, rendered on

the 11th day of January, 1934, in a suit wherein the re-

spondent was exonerated from the payment of certain

taxes, aggregating $1,579.69, on intangible groperty of the

respondent. The intangible property was the excess of

bills and accounts receivable over bills and accounts pay-

able, and money, belonging to respondent (R. 43-44), which

items constituted taxable “‘capital’’ as defined by the Vir-

ui trea ns mail EA, tame telat aa TS

— Sa

ginia statute (Appendix hereto, p. 25, Section 68 of the

Tax Code of Virginia, Acts of Assembly 1928, pp. 35, 63,

and Section 73, Idem., as amended, Acts of Assembly 1928,

pp. 738, 739). The respondent is a corporation created

under the laws of the State of Virginia, with its princi-

pal office in Lynchburg, Virginia (R. 10, 16), where all

of its records are kept (R. 33); it is engaged only in the

business of selling coal for others on commission by means

of written orders and contracts (R. 16, 17); none of the

coal is in Virginia at the time of sale and only a negligible

amount is sold to purchasers located in Virginia (R. 17-

18); a large part of the coal, possibly as much as 90%

thereof, is sold by contracts that become effective upon

being approved (R. bot. page 29, top p. 30) and which are

approved in Lynchburg, Virginia (R. 33-34). The respond-

ent was actively engaged in Virginia in the conduct of an

interstate business. -

It was stipulated by counsel for the parties in the court

of original jurisdiction that ‘‘the property constituting the

basis of the assessment on capital were (sic) on the dates

in question the property of the Imperial Coal Sales Com-

pany, Inc., and that the income constituting the basis of

the income assessment was income earned by the Imperial

Coal Sales Company, Incorporated, and that the assess-

ments as made are correct if the Imperial Coal Sales Com-

pany, Inc., is subject to any capital or income tax what-

ever during the years in question by the State of Vir-

ginia.’’ (R. 15-16.)

The trial court sustained the contention of the respond-

ent (petitioner there) that the tax on the capital was in-

valid for the reason that it was a burden upon interstate

commerce in violation of the Commerce Clause of the

| United States Constitution (R. 45) and this view was sus-

tained by the Supreme Court of Appeals of Virginia by

Sanpete nai

its opinion rendered at the first hearing (R. 46), Epes, J.,

dissenting (R. 60), and a rehearing was granted in the

Supreme Court of Appeals of Virginia and the first opinion

was adhered to (R. 61), Epes and Hudgins, JJ., dissent-

ing, and final judgment entered on the llth day of Jan-

uary, 1934 (R. 61). .

It is to be noted that a net income tax as well as an ad

valorem tax on capital was involved and while the court

discussed the non-federal question of interpretation of the

State law as to both the income and property tax and held

the income tax void on a non-federal ground, it neverthe-

less said as to the capital tax (R. 52): “We prefer to rest

the decision of the validity of the capital tax here con-

sidered upon the broad proposition that it is invalid be-

cause it is a burden upon interstate commerce forbidden

by the Constitution of the United States.”’

IL.

The Issue.

The issue thus presented by this petition is whether the

State of Virginia has the power to tax the intangible assets

of a Virginia corporation actively engaged in Virginia in

the conduct of an interstate business,

III.

Reasons Relied on for the Allowance of the Writ.

é A.

Importance of the Question Involved.

The question of taxation of intangible property is one of

great importance not only to the State of Virginia, but to

the other States in the United States, for in all of them

there are, no doubt, persons, firms and corporations en-

gaged solely in interstate commerce. Although in the case

at bar there is involved only $1,579.69 of State taxes on in-

tangibles, which is small in comparison with the total reve-

nue of the State of Virginia, it is a tax that would be levied

annually and would increase annually with the growth of

the business of the respondent and others that are engaged

now and that would, no doubt, be attracted by the benefits

of the decision to engage in similar businesses. Virginia

would become an attractive State in which to locate sell-

ing agencies for,the vast businesses of the country and the

items of excess of receivables over payables and money on

deposit—the chief items of taxable ‘‘capital’’ as defined by

Virginia statute—would escape all taxes thereon to Vir-

ginia, because the owners would be engaged in interstate

commerce.

Similar conditions would soon exist, if they are not al-

ready existing, in all of the other States, as well as in Vir-

ginia, if the decision is allowed to stand.

The present holding removes from the tax field all in-

tangible property belonging to those engaged solely in in-

terstate commerce, unless they also own real estate or

tangible property within the taxing jurisdiction. The ex-

emption very materially limits the States’ taxable subjects.

"It is, therefore, highly important that the question be

finally determined by this Court.

Conflict of Decisions.

The Supreme Court of Appeals of Virginia is the high-

est court of the State of Virginia in which a decision could

be had and its decision in the case at bar, in holding that the

capital tax is ‘‘invalid because it contravenes Article I,

Section 8, Subsection 3, of the Constitution of the United

States’’ (R. 50) is contrary to and in conflict with the de-

—__""

cisions of this Court in St. Louis & S. W. Ry. Co. v. Nattin,

277 U. S. 157, 159, and Eastern Air Transport, Inc. v. South

Carolina Tax Commission, 285 U. S. 147, 152, and other

applicable decisions of this Court.

The three cases relied upon by the Supreme Court of Ap-

peals of Virginia, Ozark Pipe Line Corp. v. Monier, 266

U.S. 555 (R. 54-55), Alpha Portland Cement Co. v. Mass.,

268 U.S. 203 (R. 57), Commonwealth of Virginia v. Castner,

Curran & Bullitt, Inc., 138 Va. 81 (R. 58), can be readily

distinguished in that each of them involved a privilege tax,

while the tax in the case at bar is a general ad valorem

property tax. In the Ozark case this Court said (266 U. S.

562): ‘‘The tax is one upon the privilege or right to do

_ business’’, and the statute provided that a failure to make

the report for the purpose of a proper assessment caused

the foreign corporation ‘‘to forfeit its right to engage in

business’? in the taxing State; in the Alpha Portland

Cement case, the tax was in terms and in effect an excise tax

and the statute carried the statutory right of restraint by

injunction if the tax be not paid; and in the Castner case,

the Virginia Court said (138 Va. 97): ‘*The tax sought to

be imposed in the instant case is not an income tax, but a

license tax for the privilege of doing business in this

State * * *” and the Virginia law provided that it was

a misdemeanor to conduct a business without taking out

the license. (Sec. 136, The Tax Code of Virginia, Acts of

Assembly 1928, p. 35, 98.) On the other hand, the tax in

the case at bar is a pure property tax, in name and effect,

and its enforcement is left to the ordinary means devised

for the collection of taxes.

WHEREFORE your petitioner respectfully prays that a

Writ of Certiorari be issued out of and under the seal of

this Honorable Court directed to the Supreme Court of

Appeals of the State of Virginia, commanding that court

to certify and to send to this Court for its review and

determination, on a day certain to be therein named, a full

and complete transcript of the record and all proceedings

in the case numbered and entitled on its docket No. 1234,

Commonwealth of Virginia, Petitioner, vs. Imperial Coal

Sales Co., Inc., Respondent, and that the judgment of the

Supreme Court of Appeals of Virginia may be reversed by

this Honorable Court, and that your petitioner may have

such other and further relief in the premises as to this Hon-

orable Court may seem meet and just, and your petitioner

will ever pray.

CoMMONWEALTH OF VIRGINIA.

W. W. Martin,

Henry R. Muter, Jr.,

Counsel for the State Tax Commissioner,

State Office Building, Richmond, Virginia,

Aitorneys for Petitioner.

March 17th, 1934.

SUPREME COURT OF THE UNITED STATES

| OCTOBEE TERM, 1933

No. 924

COMMONWEALTH OF VIRGINIA,

Petitioner,

vs.

IMPERIAL COAL SALES COMPANY, INC.

BRIEF IN SUPPORT OF PETITION FOR WRIT OF

CERTIORARI.

The Opinions of the Court Below.

The majority opinion of the Supreme Court of Appeals

of Virginia and the dissenting opinion of Justice Epes

upon the original hearing therein will probably appear in

161 Va. and are already printed in 167 S. E. 271. Both

opinions are set forth verbatim in the record beginning on

page 46.

The opinion of the majority of the same court upon the

rehearing, from which opinion Justices Epes and Hudgins

dissented without writing dissenting opinions, has not yet

been printed but will no doubt also appear in 161 Va.

ae ee,

jh i hae ee tai he alot icant wens le ae ea eae

ta toe. wettest. “Oot

II.

Jurisdiction.

1. The appellate and supervisory jurisdiction of the Su-

preme Court of the United States is invoked under Section

237(b), Judicial Code of the United States, as amended

by the Act of Feb. 13, 1925 (28 U.S. C. A. See. 344(b) ), to

correct error of the Supreme Court of Appeals of Virginia

in the case just referred to under I.

2. Final judgment of the Supreme Court of Appeals of

Virginia—which is the highest court of the State of Vir-

ginia in which a decision could be had—was entered on the

11th day of January, 1934 (R. 61).

3. The case at bar comes within the appellate jurisdic-

tion of this Court under Section 237(b) of the Judicial

Code by reason of the respondent’s claim that it was en-

gaged exclusively in interstate commerce (R. 14) and

that its property was therefore exempt from State taxa-

tion, thus setting up and claiming on behalf of the re-

spondent a right, privilege and immunity under the Con-

stitution of the United States.

The trial court held that, inasmuch as the respondent did

exclusively an interstate business, the taxes imposed were

a burden upon interstate commerce and, therefore, invalid

(R. 48-49), and this view was sustained by the Supreme

Court of Appeals of Virginia on the first hearing, Epes, J.,

dissenting, and again on the rehearing, Epes and Hudgins,

JJ., dissenting (R. 61).

The language of the section of the Judicial Code seems

to clearly support the right of this court to review the de-

cision and the jurisdiction is supported also by decisions

of this Court, namely:

Blodgett v. Silberman, 277 U.S. 1 (Case No. 190, Octo-

ber Term, 1927). [The companion case, No. 191, in-

volved a writ of error.]

| __ mmm a A AR a a ia

State of Minnesota v. Blasius (decided November 6,

1933), — U. S. —, 54 Sup. Ct. Rep. 34 (No. 7, Oct.

Term, 1933).

Adopting the forceful language and reasoning contained

in the brief of the distinguished counsel for the petitioner

for the writ of certiorari in the Blodgett case, supra, it is

submitted that there can be no limit upon the power of the

Commonwealth of Virginia to impose a tax upon the in-

tangibles belonging to a Virginia corporation, with its

principal place of businss in Virginia, and actively engaged

in Virginia in the conduct of an interstate business, unless

that limitation is imposed by the Constitution of the United

States, and there is but one final judge of the meaning of

that Constitution. We, therefore, respectfully submit that

the Commonwealth of Virginia is entitled to have the limits

of her power adjudicated by the only court competent

finally to determine the issue.

ITI.

Statement of Case.

This case arises upon a petition of the respondent here

(petitioner in trial court) to be exonerated from the pay-

ment of certain State taxes on intangible property belong-

ing to it. The property was the ‘‘capital’’, as defined by

Virginig law, that belonged to the respondent on January 1,

1928, 1929 and 1930, and consisted of its money and the

excess of its bills and accounts receivable over its bills and

accounts payable (R. 43, 44).

The respondent is a corporation created under the laws

of the State of Virginia, with its principal office in Lynch-

burg, Virginia (R. 10, 16), where all of its records are

kept (R. 33); it is engaged only in the business of selling

coal for others on commission by means of written orders

and contracts (R. 16, 17); none of the coal is in Virginia

at the time of sale and only a negligible amount is sold to

purchasers located in Virginia (R. 17-18); a large part of

the coal, possibly as much as 90% thereof, is sold by con-

tracts that become effective upon being approved (R. bot.

29, top 30) and which are approved in Lynchburg, Virginia

(R. 33-34). The respondent was actively engaged in

Virginia in the conduct of an interstate business.

It was stipulated by counsel for the parties in the court

of eriginal jurisdiction that ‘‘the property constituting the

basis of the assessment on capital were (sic) on the dates

in question the property of the Imperial Coal Sales Com-

pany, Inc., and that the income constituting the basis of the

income assessment was income earned by the Imperial Coal

Sales Company, Inc., and that the assessments as made are

correct if the Imperial Coal Sales Company, Inc., is subject

to any capital or income tax whatever during the years in

question by the State of Virginia.’’ (R. 15-16.)

The trial court sustained the contention of the respond-

ent (petitioner there), that the tax on the capital was in-

valid for the reason that it was a burden upon interstate

commerce in violation of the Commerce Clause of the

United States Constitution (R. 45), and this view was sus-

tained by the Supreme Court of Appeals of Virginia by

its opinion rendered at the first hearing (R. 46), Epes, J.,

dissenting (R. 60), and a rehearing was granted in the Su-

preme Court of Appeals of Virginia and the first opinion

was adhered to (R. 61), Epes and Hudgins, JJ., dissenting,

and final judgment entered on the 11th day of January,

1934 (R. 61).

It is to be noted that a net income tax as well as an ad

valorem tax on capital was involved, and while the court

discussed the non-Federal question of interpretation of the

State law as to both the income and property tax and held

the income tax void on a non-Federal ground, it neverthe-

—

less said as to the capital tax (R. 02): ‘*We prefer to rest

the decision of the validity of the capital tax here consid-

ered upon the broad proposition that it is invalid because

it is a burden upon interstate commerce forbidden by the

Constitution of the United States.”’

One of the grounds of defense filed in the ecurt of orig-

inal jurisdiction (R. 15) is as follows:

**All of the assets used in making up the capital as-

sessed against petitioner were the gross proceeds of

interstate commerce and as such not taxable by the

State of Virginia.”’

This was absolutely unsupported by the evidence and a

reading of the statute (Appendix A) shows clearly that the

law does not impose any such tax. The tax was upon money

and the excess of receivables over payables, which is en-

tirely different from a tax on gross proceeds. The distinc-

tion is mentioned here simply to avoid the appearance of

the unchallenged defense. The point was made but ap-

parently abandoned.

IV.

Specifications of Error.

1. The Supreme Court of Appeals of Virginia erred in

holding that the assessment of the State tax upon ‘‘capital’’

was invalid. ~X

2. The Supreme Court of Appeals of Virginia erred in

exonerating the respondent from the payment of the tax in

question.

3. The Supreme Court of Appeals of Virginia erred in

holding that, because the respondent was engaged solely in

interstate commerce and had no real estate in Virginia and

no tangible property in Virginia, the respondent’s intan-

gible property was exempt from all State taxation.

4. The Supreme Court of Appeals of Virginia erred in

applying the rule laid down in the cases involving State

taxes upon the privilege of engaging in interstate com-

merce to the case at bar, which involves an ordinary ad

valorem property tax.

ARGUMENT.

Your petitioner contends that the tax involved in the case

at bar was valid, and that the final judgment of the Supreme

Court of Appeals of Virginia, sustaining respondent’s

claim of immunity and exemption, is erroneous for the fol-

lowing reasons:

A. The tax is a general ad valorem tax imposed upon

property that is within the jurisdiction of Virginia.

B. Even though the respondent was engaged solely in

interstate commerce and owned no real estate and no tan-

gible property in Virginia, the tax was valid, since the

burden is so indirect as not to amount to a regulation of

interstate commerce.

C. The rule laid down in the cases involving privilege

taxes on those engaged in interstate commerce is inap-

plicable to the case at bar, which involves a general ad

valorem tax.

Point A.

(Assignments of Error, 1 and 2.)

The tax is a general ad valorem tax on property that is

within the jurisdiction of Virginia.

Section 68 of the Tax Code of Virginia (Appendix A,

post) imposes an annual State tax of 75¢ per $100 of actual

value of ‘‘capital’’ as defined therein, including such capi-

tal as belongs to corporations chartered under the laws of

ky id

;

Virginia (Section 81 of the Tax Code of Virginia, Appendix

A, post).

The respondent stipulated that it was the owner of the

property constituting the basis of the assessment and that

if any tax was assessable against it, the tax that was as-

sessed was correct (R. 15-16). :

The respondent is a corporation organized under the

laws of Virginia, with its principal office in Lynchburg, Vir-

ginia (R. 10,16). The bank account and books and records

of the corporation are kept in Lynchburg, Virginia, and in-

voices are paid and payable there and checks are drawn in

that office (R. 33).

The legal title of the capital, its business situs, actual

situs and beneficial ownership are all within the jurisdic-

tion of Virginia and there is not the slightest basis for a

jurisdictional claim by any other State. Money and

credits, such as constitute the basis of the capital tax

herein, are taxable at the domicil of the owner and nowhere

else,

Baldwin v. Missouri, 281 U. 8.586, 591.

See also:

Lawrence v. State Tax Commission of Mississippi,

286 U.S. 276.

Point B.

(Assignments of Error, 1, 2, and 3.)

Even though the respondent was engaged solely in in-

terstate commerce and owned no real estate and no tangible

property in Virginia, the tax was valid, since the burden

is so indirect as not to amount to a regulation of inter-

state commerce.

The issue under this point is clearly defined by a con-

sideration of the argument of opposing counsel in the

lower court and the lower court’s opinion.

14 | -

From page 7 of the original brief of counsel for the re-

spondent in the lower court, we quote as follows:

‘‘It has not been contended and will not be con-

tended that the State has not a right to assess its or-

dinary taxes on all tangible property in the State.

‘*Tt is universally held that such taxes are proper and

that the effect on interstate commerce is only indi-

rect.’’

Then counsel for respondent argued that taxes upon in-

tangible assets have a direct effect upon interstate com-

merce and the lower court concurred in this argument as

appears from the opinion (R. 59) where the court said:

; ‘‘From the principles gathered from the cases it

: seems clear that a corporation engaged in interstate

: commerce may be taxed by a state on (1) its real es-

| tate and tangible personal property situated in the

taxing state, and (2) upon its intangible personal

' property, if in the taxing state it does intrastate busi-

ness or has any appreciable real or tangible property.

But if it has no real or tangible property and does no

intrastate business in the taxing state, it cannot be .

taxed by that state.”’’

The ownership and taxation of Virginia realty and tan-

gible property would, according to the holding and express

opinion of the lower court, lift from the interstate com-

merce of the respondent the. burden otherwise resting

thereon by reason of Virginia’s tax upon the intangibles.

If ther@is piled upon the respondent’s interstate com-

merce z. additional burden of real estate and tangible

property taxes, the burden upon interstate commerce is

lightened—by increasing the tax burden, the commerce

burden is decreased, holds the lower court. It is respect-

fully submitted that this is unsound and in direct conflict

with the decisions of this Court.

See St. Louis & S. W. Ry. Co. v. Nattin, 277 U.S. 157,

in which case the railway company owned a line of railroad

in Bossier parish, Louisiana, and the tax assessing au-

thorities of that parish undertook to lay an ad valorem tax

upon all property within the parish, including the railroad.

‘The railway company sought an injunction against the

enforcement of the tax upon several grounds, one being

that.it was engaged in interstate commerce and that, there-

fore, the tax was invalid. See report of case below (27

F, (2d) 766), where the court said that one of the grounds

for injunction against the collection of the tax was

that the portion of the taxpayer’s line within the par-

ish of Bossier forms a part of an interstate railroad, and

said assessment levies an unjust burden upon interstate

commerce in violation of Section 8, Article 1 of the United

States Constitution. The lower court dismissed the bill

and this Court affirmed that decision, saying through Mr.

Justice McReynolds:

‘‘Without doubt a local legislative body, when

properly authorized, may lay general ad valorem taxes

upon all property within its jurisdiction, including that

of common carriers engaged in interstate commerce,

without violating the Federal Constitution. That such

taxation does not amount to regulation of interstate

commerce is settled doctrine.”’

No authority was cited for that view as ‘‘without doubt”’

it was ‘‘settled doctrine.’’

See also the most recent statement on the subject, East-

ern Air Transport, Inc., vy, South Carolina Tax Commis.

ston, 285 U. S. 147, where Chief Justice Hughes said at

page 152:

‘<*Tt is elementary’, said the court in New Jersey

Telephone Co. v. Tax Board, 280 U. §S. 338, 346, .50

7 eRe ade Am riggs 8

" meee i

S. Ct. 111, 113, ‘that a State may tax property used to

carry on interstate commerce.’ ”’

The decisions make no distinction between tangible and

intangible property. The only limitations are those which

relate to the effect of the tax, rather than the nature of the

property.

The limits of the rights of Virginia in imposing such a

tax are prescribed in the Express Company Cases, 165

U. S. 194, 220, where this Court said:

‘‘Although the transportation of the subjects of in-

terstate commerce, or the receipts received therefrom,

or the occupation or business of carrying it on, cannot

be directly subjected to state taxation, yet property

belonging to corporations or companies engaged in

such commerce may be; and whatever the particular

form of the exaction, if it is essentially only property

taxation, it will not be considered as falling within the

inhibition of the Constitution. Corporations and com-

panies engaged in interstate commerce should bear

their proper proportion of the burdens of the govern-

ments under whose protection they conduct their

operations, and taxation on property, collectible by the

ordinary means, does not affect interstate commerce

otherwise than incidentally as all business is affected

by the necessity of contributing to the support of gov-

ernment. Postal Teleg. Cable Co. v. Adams, 155 U. S.

688.’’

The same Court upon a rehearing said, through Mr. Jus-

tice Brewer (Adams Express Co. v. Ohio State Auditor,

166 U. S. 185, 218):

‘*Again and again has this court affirmed the propo-

sition that no state can interfere with interstate com-

merce through the imposition of a tax, by whatever

name called, which is in effect a tax for the privilege

of transacting such commerce. And it has as often

affirmed that such restriction upon the power of a State

| —————

to interfere with interstate commerce does not in the

least degree abridge the right of a state to tax at their

full value all the instrumentalities used for such

commerce.’’

In Gloucester Ferry Co. v. Commonwealth of Pennsyl-

vania, 114 U. S. 196, the facts are stated by the Court and

may be summarized as follows: The Gloucester Ferry

Company, a New Jersey corporation, operated a ferry

from Gloucester, in the State of New Jersey, to Philadel-

phia, in the. State of Pennsylvania. It owned or leased

ferry boats which it operated, and leased the slip in Phila-

delphia and owned the one in Gloucester. It was engaged

solely in interstate commerce, its entire business consisting

of ferrying passengers and freight across the Delaware

River. The only property it owned in Pennsylvania was

the lease upon the Philadelphia slip or wharf. Its boats

were registered:in New Jersey. Pennsylvania assessed a

tax on its capital stock.

In holding the tax invalid, the Couri said this (114 U.S.

206):

‘It is true that the property of corporations en-

gaged in foreign or interstate commerce, as well-as the

property of corporations engaged in other business,

is subject to state taxation, provided always it be

within the jurisdiction of the State. As said by Chief

Justice Marshall in McCulloch v. Maryland, 4 Wheat.

429, ‘All subjects over which the sovereign power of a

' State extends are objects of taxation; but those over

which it does not extend are, upon the soundest prin-

ciples, exempt from taxation. This proposition may

also be pronounced self-evident.’ ”’

In the Ferry case the tax was based upon the appraised

value of the entire capital stock of the corporation, while

only a negligible portion of the capital stock was repre-

sented by property subject to Pennsylvania’s jurisdiction.

A A eal

u Aepareidg. cll tis 2 0b te nn em Pe

The court then holding that there was no property, tangible

or intangible, of appreciable value within Pennsylvania,

the tax must necessarily have been upon the business of

interstate commerce and was on that account void.

However, this Court recognized the validity of an ad

valorem property tax upon intangibles, as is seen from the

following quotations from the same opinion (114 U. S.

210):

“‘Under this decision there ts no property held by

the Gloucester Ferry Company which can be the sub-

ject of taxation in Pennsylvania except the lease of

the wharf in that State. Whether that wharf is taxed to

the owner or to the lessee it matters not, for no ques-

tion here is involved in such taxation. It is admitted

that it could be taxed by the State according to its

appraised value.’’ (Italics supplied.)

And again, in 114 U. S. 217:

‘‘That freedom [the freedom of transportation be-

tween the States secured under the commercial power

of Congress] implies exemption from charges other

than such as are imposed by way of compensation for

the use of the property employed, or for facilities

afforded for itS use, or as ordinary taxes upon the

value of the property.’’ (Italics supplied.)

It is resp lly asserted that. this Court has in the

above case indicated its approval of a State ad valorem

tax upon intangible property (the lease of the wharf) be-

longing to a foreign corporation, engaged solely in inter-

state commerce and doing no intrastate business and hav-

ing no real estate or tangible personal property within the

taxing jurisdiction. This being permitted with respect to

a foreign corporation, a fortior: it should be permitted

with respect to a domestie corporation and the capital tax

on the Sales Company should on this account be upheld.

‘“‘A State may tax capital used in the business of

selling imported goods where it doés not appear to be

invested in original packages; and capital which was

in money on the date to which the assessment related,

though on the date it was actually made the capital

was invested in goods which were in interstate or for-

eign transit; * * *.° Commerce Clause of the Fed-

eral Constitution, by E-P. Prentice and J. C. Egan,

page 229.

One of the cases cited as authority for a portion.of the

above is People v. Commissioners, 104 U. S. 466. In this

case, Hanenfann, a resident of New York City, ‘‘was as-

sessed for taxation as of January 1, 1876, upon his per-

sonal estate, exclusive of bank stock, to the amount of

$60,000.00.” He applied for relief on these grounds:

‘“‘That the value and amount of all his personal estate, on

the first day of January, 1876, and during the period

covered by the assessment, did not exceed $125,000, of

which $4,500 was invested in railroad bonds, and $1,000

in household furniture; that the remainder was ‘continu-

ously employed in the business of exporting cotton from

the United States of America to foreign countries, through

the Customs Department of the United States aforesaid,

and that said employment consists in purchasing and pay-

ing for the cotton in different States of the United States,

and actually exported by deponent in said business, and

for the payment of all the expenses of shipping the same

as such exports,’ and that the only portion of his estate

upon which he is liable to be assessed and taxed is the

sum of $5,500. In his examination before the tax commis-

sioners, upon the occasion of his application for reduc-

tion or remission, he further stated that ‘his said capital

is invested uniformly and continuously in cotton, the prod-

uct of, and having a situs in, various States outside of

New York, and in transit to the port of New York, and

an MONE A eet LE te OPORTO oe

en eee Sree mee

coe ey a toes

other Atlantic ports, for the sole purpose of exportation,

and no portion of such cotton is intended to be, or is, sold

in New York, or any other United States market: that de-

ponent purchases cotton largely upon credit, and that of

his capital as much as $115,000 is continuously invested

in cotton of the growth of the United States, which has

been cleared at a custom-house, and is on shipboard in

> 99

course of exportation to some foreign State or country’.

The reduction and remission were both denied. The rest

of the opinion is short and important, as follows: ‘‘The as-

sessment in excess of $5,500, it is claimed by plaintiff in er-

ror, was in violation as well of Art. 1, Sect. 10, and clause 2,

as of Art. 1, Sect. 8, clause 3, of the National Constitution.

The main propositions advanced by his counsel are that

products ofethe United States which have passed the Cus-

toms Department, and are on shipboard in the course of

exportation to a foreign market, have become exports, and

are no longer within the taxing power of the State; that to

tax money invested in such products is, in effect, laying an

umpost or duty on exports; that a tax on capital invested in

the products of the United States, in transit from one State

to another for purposes of exportation, or on money used

and employed in exporting such products, is an unauthor-

ized interference by the State with the regulation of

commerce.

‘¢ Although these propositions are deemed by counsel to

be very easy of solution, we do not feel obliged to determine

them in this case. The plaintiff in error was assessed, upon*

his personal property, as of January 1, 1876. If the capital,

which he claims was uniformly and continuously employed

in the business of purchasing cotton for exportation from

the United States to foreign countries, through the Customs

Department, was, in fact, in money on the first day of

January, 1876 he could not escape a subsequent assess-

ment of that money upon the ground that, at the time the

assessment was made, it was invested in cotton for exporta-

tion to foreign countries. Neither in his affidavit nor in his

examination before the tax commissioners does he distinetly

claim (and, perhaps, could not) that the capital which he

thus employed in the business of purchasing cotton for

exportation was, in fact, so invested on the first day of

January, 1876. His capital may have been, in a business or

mercantile sense, continuously so employed, and yet it may

not have been, in fact, so invested at the date to which the

assessment, whenever made, relates. We have no occasion,

therefore, in the present case, to consider or determine the

questions of constitutional law discussed by counsel. It will

be time enough to consider them when they come before us

in such form as to require their determination.’’

This Honorable Court affirmed the tax, basing its hold-

ing upon the fact that, at the date of incidence of the tax,

the taxable subject was money—intangible property—not

goods in transit to or from a foreign country. Being a tax

on intangibles, the Court considered that there was no con-

stitutional question presented, although it was positively

shown that the money was used, ‘‘in a business or mercan-

tile sense,’’ in foreign commerce. The tax was in name and

effect a tax on the intangible property of one engaged in

interstate or foreign commerce. This is the exact situation

here and it is, therefore, respectfully but urgently sub-

mitted that the above case is in support of the tax in the

case at bar.

pee aad

Dinh Bienitnting estima MD te TARR PbS te

ee ee ae oe ee” ee

Point C.

(Assignments of Error, 1, 2 and 4.)

The rule laid down in the cases involving privilege taxes

on those engaged in interstate commerce is inapplicable to

the case at bar, which involves a general ad valorem tax.

There is a recognized distinction between a privilege tax

and a property tax, with regard to their effect upon inter-

state commerce. See Galveston v. Harrisburg, &c., Ry. Co.,

Texas, 210 U.S. 217, where it is said at page 225:

‘‘Tt being once admitted, as of course it must be, that

not every law that affects commerce among the States

is a regulation of it in a constitutional sense, nice dis-

tinctions are to be expected.”’

In the same case, at page 227, the Court quoted from

Postal Tel. etc. v. Adams, 155 U. S. 688, 697, as follows:

‘*By whatever name the exaction may be called, if it

amounts to no more than the ordinary tax upon prop-

erty or a just equivalent therefor, ascertained by refer-

ence thereto, it is not open to attack as inconsistent

with the Constitution.’’

See also Judson, on Interstate Commerce (2nd Ed.), p.

35, where it is said:

‘‘While a state cannot tax interstate commerce, that

is, the privilege of carrying on such commerce, it can

tax the property in its jurisdiction employed in carry-

ing on such commerce.’’

In Philadelphia, etc. v. Pennsylvamia, 122 U. S. 326, 344,

the Court said:

‘‘The decision in this case and the reasoning on

which it is founded so far as they relate to the taxation

of interstate commerce carried on by corporations ap-

ply equally to domestic and foreign corporations. No

doubt the capital stock of the former, regarded as in-

habitants of the State, or their property, may be taxed

as other corporations and inhabitants are, provided no

discrimination be made against them as corporations

carrying on foreign and interstate commerce, so as to

make the tax, in effect, a tax on such commerce. ”’

A taxation that affects interstate commerce only by mak-

ing it more expensive, is not an unlawful regulation of it.

Minor v. Philadelphia, etc., R. Co., 18 Wall. 206.

There is no discrimination against the respondent here

by reason of its interstate commerce. This appears from a

reading of the statute and the fact that if the respondent

had withdrawn from interstate commerce and had during

the years in question engaged solely in intrastate com-

merce, the tax would have been, nevertheless, the same.

In Philadelphia, etc. v. Pennsylvania, supra, the Court

also said (122 U. S. 345):

‘‘The corporate franchises, the property, the busi-

ness, the income of corporations created by a State

may undoubtedly be taxed by the State; * * *,”

A comparison of the facts and statutes in the cases relied

upon by the lower court (Ozark Pipe Line and Alpha Port-

land Cement, and Castner, Curran & Bullitt cases, supra)

with the facts and statutes in the instant case shows that

each of the former cases involves a privilege tax while the

instant case involves a pure property tax in both name and

effect. (See Petition for Writ of Certiorari, page 5.)

The lower court, however, said in its opinion (R. 59):

‘While we are aware of the material difference be-

tween a privilege tax and a capital and income tax, yet,

we will apply the reasoning and principles there dis-

cussed to the case at bar because we think the business

done by the Sales Company is not subject to State

taxation.’’

Prise asst Mids bon

Kid Des itt tS A Bt LD ADE Re pri fd ee KO

or sisaiied

While the lower court recognized and discussed the well

established doctrines of this Honorable Court to the con-

trary, it nevertheless illogically held that the tax was

invalid ‘‘because’’ it thought that ‘‘the business is not sub-

ject to State taxation.’’

Conclusion.

It is, therefore, respectfully submitted that the case at

bar is one calling for the exercise, by this Court, of its super-

visory powers to correct error of the Supreme Court of Ap-

peals of Virginia in deciding a Federal question of sub-

stance in a way not in accord with applicable decisions of

this Court. To such end it is respectfully submitted that a

Writ of Certiorari should be granted and this Court should

review the decision of the Supreme Court of Appeals of

the State of Virginia and reverse it.

Respectfully submitted,

W. W. Martin,

Henry R. Miter, Jr.,

Counsel for the State Tax

Commissioner, State Office Building,

Richmond, Virginia,

Attorneys for Petitioner.

APPENDIX A.

Acts of Assembly of Virginia, 1928, Pages 35, 63.

(The Tax Code of Virginia.)

Sec. 68. Intangible personal property segregated for

State taxation only.—Intangible personal property having

been segregated for State taxation only, the subjects of

taxation classified by this chapter are hereby defined as

intangible personal property, and shall be taxed as herein-

after provided, that is to Say: .

Section 69. [Classifying taxable bonds, notes, ete. ]

Section 70. [Classifying taxable money on deposit, ex-

pressly excepting ‘‘money which is otherwise taxed,’’ such

as money included in ‘‘capital.’’]

Section 71. [Classifying taxable shares of stock. ]

Section 72. [Classifying taxable municipal and State

bonds. ]

Section 73. [As amended by Acts of Assembly of Vir-

ginia, 1928, pages 738, 739.]

Capital of any trade or business of any person, firm, or

corporation, -except the capital of any trade or business

which capital is otherwise specifically taxed or specifically

exempt from taxation.—All capital of any trade or business

of any person, firm or corporation, except the capital of

any trade or business which is otherwise specifically taxed

or specifically exempt from taxation.

Capital as used herein is defined as follows:

First. The inventory of stock on hand, which shall in-

clude all materials for use in the business, whether at the

place of business, in storage or elsewhere in the State.

Second. The excess of all bills and accounts receivable

over bills and accounts payable.

Third. All money on hand and on deposit.

Fourth. All other taxable personal property of any kind

whatever, including all choses in action, equities, demands

SN i tle cept SL.

gaia? men ed cath Bs BOL

a See tt ee ot

and claims, but excluding the property hereinafter specifi-

cally mentioned in this section.

Real estate shall not be held to be capital under this sec-

tion, but shall be listed and taxed as other real estate.

Machinery and tools used in a manufacturing or mining

business taxable on capital under this section shall not be

held to be capital under this section, nor shall such ma-

chinery and tools be hereafter assesssed as real estate.

All such machinery and tools used in a manufacturing or

mining business taxable on capital under this section shall

be listed for local taxation exclusively, and each city, town

and county is hereby authorized to make a separate classi-

fication for all such machinery and tools and to fix the rate

of levy thereon, but such rate shall not be higher than the

rate imposed upon tangible personal property in such city,

town, county or district. :

The shares of stock mentioned in section seventy-one of

the Tax Code of Virginia, as amended, and bonds of the

political sub-divisions of this State mentioned in section

seventy-two of the Tax Code of Virginia, as amended,

shall not be held to be capital under this section.

Personal property, tangible in fact, used or employed in

the trades and businesses hereinafter specifically men-

tioned in this section shall not be held to be capital under

this section, but shall be listed for local taxation exclu-

sively and taxed as tangible personal property, that is to

say:

Amusement business, including theatres of every kind

and class; auctioneers; barbers, including beauty shops;

bowling; billiard and pool rooms; collection agencies; con-

tractors, plumbers and steamfitters; educational institu-

tions whose property is taxable under the Constitution and

laws of this State; garage business; hospitals; hotels;

laundries, including cleaning, pressing and dyeing estab-

lishments; lodging and boarding houses; motor vehicle

carriers; photographers; restaurants, including eating

houses and cafeterias; shoeshining business; taxi-cab busi-

ness, including the business of motor vehiele hiring; trans-

fer business; and undertakers and funeral directors.

——

This section shall not be construed to apply to any pro-

fession which the State regulates by law, nor shall it be

construed to include the business of farming. Property

used or employed in such professions, and in the business

of farming, shall be taxable in the actual form in which it

may be, and not as capital,

On all capital defined by this section there is hereby an-

nually levied a tax of seventy-five cents on every one hun-

dred dollars of the actual value thereof.

This section, as hereby amended, shall be in force on

and after the first day of January, nineteen hundred and

twenty-nine.

Nore: The amendment effective as to the 1929 capital

tax in the case at bar, is the one referred to on pages 19

and 20 of the Record herein, but in view of the stipulation

(R. 15) the difference between the old and new law is not

material to the issues now presented.

Acts of Assembly, 1928, pp. 35, 69.

(The Tax Code of Virginia.)

Section 81. Who must file returns of intangible per-

sonal property, and where.—Every owner of any taxable

intangible personal property and every fiduciary shall an-

nually file under oath a return of intangible personal prop-

erty on such form or forms as may be prescribed by the

department of taxation. Such form or forms may or may

not be combined or connected with the form or forms for

reporting incomes, as the department of taxation may or-

der from time to time; but if they be so combined or con-

nected all such returns shall be kept under lock and key at

all times when they are not in the personal possession of

the commissioner of the revenue, department of taxation,

or some other person authorized to inspect the same.

* * +

Every corporation chartered under the laws of Virginia

and owning any taxable intangible personal property, shall

file a return thereof with the commissioner of the revenue

oh! hd CO en ee

for the county or city in which the principal office of the

corporation is located by the terms of its certificate of

incorporation,

Every corporation chartered under the laws of a State

or county other than Virginia, and owning any intangible

personal property, taxable in this State, shall file a return

thereof with the commissioner of the revenue for the

county or city in which is located the place designated by

the corporation as the office in Virginia at which all claims

against the corporation may be audited, settled and paid.

2 o .

(4756-C)

AA ARON DA AS Or a SEVERE NES a kl

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.