Texas Transport Terminal Company v. New Orleans/Dissent Brandeis

by George Sutherland

United States Supreme Court

264 U.S. 150

Texas Transport Terminal Company  v.  New Orleans

 Argued: Jan. 4-7, 1924. --- Decided: Feb 18, 1924

Mr. Justice BRANDEIS dissenting, with whom Mr. Justice HOLMES concurs.

From the multitude of cases, this general rule may be educed. ^[1] The validity of a state tax under the commerce clause does not depend upon its character or classification. It is not void merely because it affects or burdens interstate commerce. The tax is void only if it directly burdens such commerce, or (where the burden is indirect) if the tax discriminates against or obstructs interstate commerce. In this case there is no claim that interstate commerce is discriminated against or obstructed. The contention is that the tax imposes a direct burden. Whether the burden should be deemed direct depends upon the character of plaintiff's occupation and its relation to interstate transactions.

The occupation tax laid by New Orleans is fixed in amount; business being classified into several grades according to the amount of business done. The Texas Transport & Terminal Company falls within the highest grade-those whose receipts exceed $100,000 a year-and thus it is taxed $400 a year. The business is what is called a steamship agency. The main office is in New York City. It has branches in New Orleans and in five other ports of the United States. It is a wholly independent concern. No shipowner has an interest in it; and it has no interest in any ship which it serves. Some of these are regular ocean liners; others are casual tramp ships. The services rendered include, among other things, arranging with independent stevedore concerns for discharging and loading cargoes; arranging with independent dealers for bunkering, that is, buying fuel and oil; making provision for fitting ships for any special or peculiar cargo; making provision for compliance with the immigration and customs laws; and paying the ship's disbursements. For these, and the other services of soliciting cargoes, arranging for their delivery, and collecting payment for freight, the company is compensated. Usually the compensation is measured by a percentage on the gross freight charges collected. Sometimes it is a lump sum for each ship served. These comprehensive services require, for their efficient performance, the employment of a steamship agency, or its equivalent, whatever the home port of the ship or the principal place of its owner's business.

It is settled law that interstate commerce is not directly burdened by a tax imposed upon property used exclusively in interstate commerce, Transportation Co. v. Wheeling, 99 U.S. 273, 284, 25 L. Ed. 412; Dominion Steamship Co. v. Virginia, 198 U.S. 299, 306, 25 Sup. Ct. 686, 49 L. Ed. 1059, 3 Ann. Cas. 1100; or by a tax upon net income derived exclusively from interstate commerce, United States Glue Co. v. Oak Creek, 247 U.S. 321, 38 Sup. Ct. 499, 62 L. Ed. 1135, Ann. Cas. 1918E. 748; Shaffer v. Carter, 252 U.S. 37, 57, 40 Sup. Ct. 221, 64 L. Ed. 445 (compare Peck & Co. v. Lowe, 247 U.S. 165, 38 Sup. Ct. 432, 62 L. Ed. 1049); or by an occupation tax, fixed in amount, although the business consists exclusively of selling goods brought from another state, Wagner v. City of Covington, 251 U.S. 95, 40 Sup. Ct. 93, 64 L. Ed. 157. On the other hand, the burden is deemed direct, where the tax is upon property moving in interstate commerce, Champlain Realty Co. v. Brattelboro, 260 U.S. 366, 43 Sup. Ct. 146, 67 L. Ed. 309, 25 A. L. R. 1195; or where it lays, like a gross receipts tax, a burden upon every transaction in such commerce 'by withholding for the use of the state part of every dollar received in such transactions,' Crew-Levick Co. v. Pennsylvania, 245 U.S. 292, 297, 38 Sup. Ct. 126, 62 L. Ed. 295; or where an occupation tax is laid upon one who, like a drummer or delivery agent, is engaged exclusively in inaugurating or completing his own or his employer's transaction in interstate commerce, Robbins v. Shelby County Taxing District, 120 U.S. 489, 7 Sup. Ct. 592, 30 L. Ed. 694; Davis v. Virginia, 236 U.S. 697, 35 Sup. Ct. 479, 59 L. Ed. 795.

The New Orleans tax is obviously not laid upon property moving in interstate commerce. Nor does it, like a gross receipts tax, lay a burden upon every transaction. It is simply a tax upon one of the instrumentalities of interstate commerce. It is no more a direct burden than is the tax on the other indispensable instrumentalities; upon the ship; upon the pilot boat, which she must employ; upon the wharf at which she must load and unload; upon the office which the owner would have to hire for his employees, if, instead of engaging the services of an independent contractor, he had preferred to perform those duties himself. The fact that, in this case, the services are performed by an independent contractor having his own established business, and the fact that the services rendered are not limited to soliciting, differentiate this case from McCall v. California, 136 U.S. 104, 10 Sup. Ct. 881, 34 L. Ed. 391. If these differences are deemed insufficient to distinguish that case from the one at bar, it should be frankly overruled, as inconsistent with the general trend of later decisions.

Notes

1. Compare Thomas Reed Powell, 'Indirect Encroachment on Federal Authority by the Taxing Powers of the States,' 31 Harv. Law Rev. 321, 572, 721, 932; 32 Harv. Law Rev. 234, 374, 634, 902.