opinions in both these cases emphasize the fact that there is no discrimination between foreign and domestic goods to the expense of the facts that the goods had come to rest in the state and that the agent having the power to pass title to the goods, the occupation of the seller or the sale itself was intra-state in character. However, the necessity of the existence of all three of these facts is shown in the opinion of the intermediate case of Robbins v. Shelby Taxing District," as follows:

"But to tax the sale of such goods or the offer to sell them before they are brought into the state is a very different thing and seems to us clearly a tax on interstate commerce. It is strongly urged, as if it were a material point in the case, that no discrimination is made between domestic and foreign drummers.* * * But that does not meet the difficulty. Interstate cominerce cannot be taxed at all, even though the same amount of tax should be laid on domestic commerce."

To the same effect is the latter case of Brennan v. Titusville.18 The last case along this line is Kehrer v. Stewart1 and the facts are: That Nelson, Morris & Co., citizens of Illinois, were engaged in the business of packing meats for sale in the City of Chicago, with an agency in Georgia. This agency took orders to be filled in Chicago, and also had a warehouse where goods were shipped and stored until sold by this agent. The state levied a tax in the form of a fee (not based on the per cent of the business done) on all agents of the packing business. As to the business of selling the stock stored in the state, the agent was considered as being engaged in intra-state commerce and as to that of taking orders to be filled in Chicago, in interstate commerce. The opinion then holds that as a tax upon goods sold in another state, delivered to a common carrier and consigned to the purchaser in the state of Georgia is an illegal interference with

(17) 120 U. S. 489. (18) 153 U. S. 289. (19) 197 U. S. 60.

interstate commerce" as applied to the interstate part of the business the tax was void; but as applied to the intra-state part was valid. The tax was upheld as applying simply to the intra-state business, being a lump sum and not based on the percentage of business done." This case of Kehrer v. Stewart has been approved and followed in Armour Packing Co. v. Lacy. There is a dissenting opinion, but the dissent is on a question of definition. The majority holding that the evident meaning of the legislature was to tax the agency "doing business in this state" and not to lay a tax upon interstate commerce, while the minority held that the intent of the act was to tax the packing business direct.

It may be stated generally then that when goods have come to rest in the state, though still a part of interstate commerce as being unsold and in the original package, they enjoy the protection of the state laws and are subject to any general tax that falls alike on domestic and foreign goods. Here the inter- or intra-state character of the business does not govern the validity of the tax, so long as there is no discrimination. But no tax is valid if it falls on

goods before they have come to rest in the state or if its effect either directly or indirectly is to fall upon foreign goods and discriminate against them in favor of domestic products. In the cases of all special taxes, whether in the form of a tax on the goods themselves, a tax on sales, or on the business of selling, however, the inter- or intra-state character of the goods governs the result. A foreign corporation engaged in selling its products stored in the state upon contracts approved at the home office, therefore, would be liable for a general personal property tax, but not for any of the so-called special taxes.23

Taxation of Foreign Corporations.Coming now to the taxation of the foreign corporation itself as distinct from the agent or its products, the tax can be divided into a tax on the property of the corporation used in the state for the prosecution of its business and a tax on the right to do business. These two are governed and limited in amount by the same principles and the separation is an attempt to reconcile the opinion of The Horn Silver Mining Company case with others of the same character. The cases will be taken in the order of their decision. Society for Savings v. Coite2 was a case of a tax based on the deposits in banks at a certain fixed date. It was held that this was not a tax on the property of the corporation, but a tax on its franchise (this was not a foreign corporation) and to the same effect is Provident Institution v. Massachusetts.25 Pembina Mining Company v. Pennsylvania2 was a case of a license tax assessed upon a foreign corporation, which had an office in the state, and was upheld as not a regulation of commerce on the facts as shown by the evidence. This case seems to be an extreme extension of the rule that the state can regulate commerce by the police power and to be the border line case between the police power cases and the franchise or license tax cases. It was also based on Paul v. Virginia, which was decided on the ground that as insurance was not the subject of interstate commerce the state could regulate foreign insurance companies. Two classes of corporations were excepted from the rules laid down, i. e., agents of the government and corporations engaged in interstate commerce as defined in Pensacola Telegraph Co. v. Western Union.26a. This latter case was concerning a law granting an exclusive franchise to a telegraph company in Florida by the State

Legislature, and the opinion distinguishes the case and Paul v. Virginia, as follows:

"We are aware that in Paul v. Virginia, 8 Wall. 168, this court decided that a state might exclude corporations of another state from its jurisdiction, and that corporations are not within the clause of the Constitution which declares that 'The citizens of each state shall be entitled to all the privileges and immunities of the citizens of the several states. Art. IV, Sec. 2.' That was not, however, the case of a corporation engaged in interstate commerce and enough was said by the court to show that if it had been, very different question would have been presented."

Western Union v. Massachusetts held that a franchise tax based on the amount of property used in the state was not against the commerce clause in the case of a foreign corporation doing an interstate business. The principle is clearly set forth in Pullman Car Co. v. Pennsylvania :28

"The tax now in question is not a license tax or a privilege tax, it is not a tax on business or occupation, it is not a tax on or because of the transportation or the right of transit of persons or property through the state to other states or countries. The tax is imposed equally on corporations doing business within the state, whether engaged in interstate commerce or not. The tax on the capital of the corporation on account of its property within the state is in substance and effect a tax on that property."

And to the same effect is Express Co. v. Ohio. Horn Silver Mining Company v. New York30 was a case of a tax based upon a certain per cent of the capital stock of all corporations in the state. The tax was contested by a foreign mining company and upheld upon the ground that it was a franchise tax. The exceptions as stated in the Telegraph Case31 were recognized and the holding was based upon Paul v. Virginia. In New York State v. Rob

32

erts the New York Statute provided that every corporation should be taxed a certain per cent of the capital employed within the state. A Michigan drug manufacturing company had an agent in New York City and there stored great quantities of drugs, which were sold by the agent. The agent also imported large quantities of crude drugs and shipped them to the factory in Detroit. The tax was upheld as a franchise tax and not a regulation of commerce and it was declared that the corporation did not fall within the exception of the Telegraph Case. The case upheld the Silver Mining Company case in the face of a strong dissenting opinion by Justice Harlan. The only difference between the facts of this case and the Western Union case is that here the corporation was engaged in the state in intra-state commerce and this is borne out by the fact that the opinion is based on Paul v. Virginia. It seems therefore that there are two different kinds of taxes. The franchise tax, as set forth in the Coite case, and the tax on property employed within the state, as set forth in the case of Telegraph Company v. Massachusetts. The latter tax is valid even though the property be used in interstate commerce. It is the property situated within the state and enjoying state protection. This is in accord with Brown v. Maryland, Woodruff v. Parham and the cases cited in the first part of the memorandum. As to the franchise tax, the foreign corporation cannot be taxed except by a tax based on the amount of property employed within the state and this must also be a general tax on all corporations. Quoting from New York v. Roberts:

"So that it is apparent that there is no purpose disclosed in the statute either to distinguish between New York corporations and those of other states, to the detriment of the latter or to subject property

out of the state to taxation."

Were it not for the Horn Silver Mining Company case the principles laid down

(32) 171 U. S. 658.

would be the same as in the general property tax and there would be a distinction without a difference. But the Silver Mining Company case seems to broaden the doctrine and allow a franchise tax on foreign corporations in any amount. The case was decided upon Paul, v. Virginia, and if the objects of the corporation were not the subject of interstate commerce, as insurance, the case differs from the Franchise cases here considered and is not in point. The opinion is also materially weakened by the following:

"Since the tax was levied the law of the state has been altered and now the tax upon foreign corporations doing business in the state is estimated by the consideration only of the capital employed within the state. It is said that against nearly all other foreign corporations except this one, the taxes upon their franchises have been computed upon the basis of the capital employed within the state; but as to that we can only repeat what was said in the Court of Appeals of the State, that if this be true the defendant may have reason to complain of unjust discrimination and may properly appeal for relief to the legislature of the state."

And it is bad that the case has been subsequently cited, as there seems no difference between the Franchise and the property tax as above stated, both being based on the property employed in the state. In this connection note the opinion of Justice Hughes in Barrett v. New York. This was a case dealing with a license issued to express companies by the City of New York; but the rules laid down apply generally to interstate commerce corporations.

Therefore, it may be said that all foreign corporations are subject to a general tax based upon the property used in the state, though this take the form of a license or franchise tax. However, a foreign corporation engaged in intra-state commerce is of course subject to a special Franchise tax, the same as such corporation would be subject to a special tax on the goods sold;

Requiring Foreign Corporations to Make Reports, Etc.-Now to take up the right of the state to require the making of reports, taking out of certificates, etc., before allowing foreign corporations the use of the state courts. The State of Kansas passed a law requiring all foreign corporations to file a statement to a state charter board, setting forth the amount of the paid up capital stock, market value of the same, assets of the corporation, list of stockholders, liabilities, and requiring such corporations to procure a certificate from the Secretary of State that it had filed such statement before doing business within the state. The law forbade such corporation the use of the courts until compliance with its provisions. The Supreme Court of the United States in International Text Book Co. v. Pigg held this unconstitutional in that the requirements of a statement and certificate in the case of corporations doing an interstate business was a regulation of interstate commerce. The court approves the holding in Crutcher v. Kentucky (the forerunner of the Barrett case quoted above) and then distinguishes them as fol

lows:

case it imposes a condition upon a corporation of another state seeking to do business in Kansas, which in the case of interstate business is a regulation of commerce. The state cannot thus burden interstate commerce."

This distinction is too clear to require a reference to the cases previously considered. The Text Book case is approved in Stove & Range Company v. Vickers:37

"To carry on interstate commerce is not a franchise or a privilege granted by the state; it is a right which every citizen of the United States is entitled to exercise under the Constitution and the laws of the United States; and that the accession of mere corporation facilities, as a matter of convenience in carrying on their business cannot have the effect of depriving them of such right, unless Congress should see fit to interpose some contrary regulation on the subject."

And in Sioux Remedy Co. v. Cope." This latter is the last case before the supreme court and holds unconstitutional the statute of South Dakota requiring all foreign corporations to: 1. File authenticated copies of their charters; 2. Appoint a resident agent upon whom process may be served; 3. Pay an application fee of $25.00 when applied to corporations engaged in

interstate commerce. These laws therefore are governed by the same rules and principles as the special taxation of goods and products of foreign corporations, and the conclusions arrived at in the forepart of this memorandum apply to them, i. e., that the intra- or inter-state character of the business determines the validity of the law.

Summary of Rules.-Summarizing now, goods coming at rest in a state, though they become subject to general personal property taxes, do not lose their character as interstate until sale in the original package." Such goods are not subject to special taxes. Foreign corporations engaged in interstate business are subject to a tax based on such

(37) 226 U. S. 504, 57 L. Ed. 189. (38) 235 U. S. 195, 59 L. Ed. 193. (39) American Steel Wire Co. v. Speed, 192 U. S. 552.