Ewing v. City of Leavenworth/Opinion of the Court
Plaintiff in error was the agent of the United States Express Company at Leavenworth, Kansas. He was convicted of violating an ordinance of the city imposing a tax on the business of express companies. The conviction was affirmed in 80 Kan. 58, 101 Pac. 664, and the case is brought here.
Under the ordinance a tax was imposed on the business and occupation of express companies as follows:
'The sum of $50 per year on the business and occupation of express company, corporation or agency, in receiving packages in this city from persons in the city, and transmitting the same by express from this city, within this state, to persons and places within this state, and receiving in this city packages by express transmitted within the state from persons and places in this state to persons within this city, and delivering the same to persons in this city, excepting the receipt, transmission, and delivery of any such packages to and from any department, agency, or agent of the United States, and excepting the receipt, transmission, and delivery of any such packages which are interstate commerce; the business and occupation of receiving, transmitting, and delivering of the packages herein excepted is not taxed hereby.'
The United States Express Company receives express packages at Leavenworth and forwards them by railroad to other cities and towns, some without the state and some within the state, and also delivers packages which have been forwarded to Leavenworth from like cities and towns. All such express packages are required to be brought into or sent out of Leavenworth, which lies west of the Missouri river in Kansas, over the Rock Island Railroad, which runs along the Missouri side of the Missouri river, with a branch across the river to Leavenworth. The express company has no other means of transportation of packages in or out of Leavenworth. It therefore follows that every package handled by the express company at Leavenworth is brought from or carried into the state of Missouri over this branch of the Rock Island Railroad. The actual carriage in the state of Kansas over such branch is about 1 mile. The record shows that about 10 per cent of the business done at Leavenworth by the express company is between Leavenworth and other points in Kansas, but all such business is required to be transported in part, at least, within the state of Missouri.
The contention in this case is that the tax thus imposed is a regulation of and burden upon interstate commerce, and therefore in violation of the Federal Constitution, which vests in Congress the sole authority to regulate commerce among the states.
It is to be observed that the ordinance excludes interstate and government business. As the supreme court of Kansas says (80 Kan. 62): 'The license tax was upon so much of the company's business as was carried on in Kansas. It had an office and local conveyances in Leavenworth for the collection of packages in that city, and it made contracts for transporting these packages to places within the state. Likewise it collected packages in other parts of the state and carried them into Leavenworth, where they were delivered to the consignees. Does the fact that in carrying these packages between points in Kansas they pass over the soil of another state for a short distance make the tax on that business invalid?'
We are of opinion that this case is controlled by Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, 36 L. ed. 672, 4 Inters. Com. Rep. 87, 12 Sup. Ct. Rep. 806, in which it was held that a state might tax the receipts of a railroad corporation for the portion of the transportation which was within the state, although the transportation then in question, while between points within the state, passed over the railroad which traversed for a part of the way territory of an adjoining state. It was held that a tax upon such receipts did not tax interstate commerce, and this court said (p. 202):
'It should be remembered that the question does not arise as to the power of any other state than the state of the termini, nor as to taxation upon the property of the company situated elsewhere than in Pennsylvania, nor as to the regulation by Pennsylvania of the operations of this or any other company elsewhere, but it is simply whether, in the carriage of freight and passengers between two points in one state, the mere passage over the soil of another state renders that business foreign which is domestic. We do not think such a view can be reasonably entertained, and are of opinion that this taxation is not open to constitutional objection by reason of the particular way in which Philadelphia was reached from Mauch Chunk.'
The Lehigh Valley Case was cited with approval in United States Exp. Co. v. Minnesota, 223 U.S. 335, 342, 56 L. ed. 459, 463, 32 Sup. Ct. Rep. 211, as determinative of the proposition that the state of Minnesota might tax the receipts of an express company from the transportation of packages from points within the state to other points therein, although the transportation was in part outside of the state.
It is contended, however, that the contrary result must be reached, applying the principles laid down in Hanley v. Kansas City Southern R. Co. 187 U.S. 617, 47 L. ed. 333, 23 Sup. Ct. Rep. 214. In that case this court declared unconstitutional a law of Arkansas undertaking to fix rates upon railway transportation, the transportation in question in that case being a single carriage partly outside of the state of Arkansas from a point within to another point within the state. In the particular instance the transportation covered 116 miles, of which only 52 miles were within Arkansas and the rest without the state. It was held that the right to regulate such commerce was solely in Congress under the Constitution, and that the transportation was a single and entire thing, and as a subject for rate legislation was indivisible. The case of Lehigh Valley R. Co. v. Pennsylvania, supra, was called to the attention of the court, and of that case this court said (p. 621):
'That was the case of a tax, and was distinguished expressly from an attempt by a state directly to regulate the transportation while outside its borders. 145 U.S. 204, 36 L. ed. 676, 4 Inters. Com. Rep. 87, 12 Sup. Ct. Rep. 806. And although it was intimated that, for the purposes before the court, to some extent commerce by transportation might have its character fixed by the relation between the two ends of the transit, the intimation was carefully confined to those purposes. Moreover, the tax 'was determined in respect of receipts for the proportion of the transportation within the state.' 145 U.S. 201. Such a proportioned tax had been sustained in the case of commerce admitted to be interstate. Maine v. Grand Trunk R. Co. 142 U.S. 217, 35 L. ed. 994, 3 Inters. Com. Rep. 807, 12 Sup. Ct. Rep. 121, 163. Whereas it is decided, as we have said, that when a rate is established, it must be established as a whole.'
The distinction is applicable here. There is no attempt to fix a rate by the authority of the state, which, while single and complete in itself, covers for a considerable part interstate transportation. The privilege tax levied in this case expressly excludes commerce of an interstate character or business done for the government, and is levied solely on the business done in the city of Leavenworth in receiving packages from points within the state and in transporting packages to like points. Applying the principles of the Lehigh Valley Case to such a situation, we are of opinion that, for the purpose of a privilege tax for business thus done the municipality, acting under authority of the state, did not exceed its just power.