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Keywords

corporationdue process

statuteobjection

Related Cases

Pullman Co. v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682

Facts

The Pullman Company, an Illinois corporation, operated sleeping and parlor cars on railroads, including routes within California. In 1910, California amended its Constitution to impose a designated tax on public service corporations, including the Pullman Company. The company paid taxes for several years, including a disputed amount related to gross receipts from interstate operations. The company contended that the tax was unconstitutional, as it was based on gross receipts from interstate commerce and violated the due process clause.

In 1910 the company's gross receipts from all its operations within the state were $1,905,302.97.

Issue

Whether the tax imposed on the Pullman Company by California was unconstitutional under the commerce clause and the due process clause of the Fourteenth Amendment.

The company insists that the tax in question and the provisions therefor in the state Constitution and statutes are invalid under the commerce clause of the Constitution of the United States.

Rule

A state can tax property used in interstate commerce if the property is permanently located or commonly used within the state, and the tax does not discriminate against interstate commerce.

A state can neither tax the act of engaging in interstate commerce nor lay a tax on gross receipts therefrom.

Analysis

The court determined that the tax in question was not a tax on gross receipts but rather a property tax, computed based on gross receipts as a means to ascertain the property's value. The court emphasized that the tax was in lieu of all other taxes on the specified property and did not discriminate against interstate commerce, thus upholding its validity.

An examination of the tax in question in the light of these principles shows that the chief objection urged against it is not tenable.

Conclusion

The Supreme Court affirmed the judgment of the lower court, ruling that the tax was a valid property tax and did not violate the U.S. Constitution.

Judgment affirmed.

Who won?

The Treasurer of California prevailed in the case because the court found that the tax was a legitimate property tax and not a burden on interstate commerce.

The Treasurer prevailed in the court of first instance and in the Supreme Court of the state.

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