U.S. Supreme Court
Sprout v. City of South Bend, 277 U.S. 163 (1928)
Sprout v. City of South Bend
Submitted January 20, 1928
Decided May 14, 1928
277 U.S. 163
Plaintiff in error operated a motor bus for passengers between a city in Indiana and points in Michigan. He required all passengers from the city to pay fare to Michigan, but habitually allowed those desiring to do so to alight in the suburbs short of the state line. He objected to an ordinance of the city which forbade operation of motor buses in the city streets unless licensed by the city, and which conditioned the issuance of licenses upon payment of a fee adjusted to the seating capacity of the bus -- in his case $50 -- and upon the filing of a contract of liability insurance, to be furnished by a corporation authorized to do business in the state, covering damages to property or persons from negligent operation of the bus within the city.
1. The requirement that the insurance must be by a company authorized to do business in Indiana did not violate the rights of the plaintiff in error under the Fourteenth Amendment, because it was reasonable as applied to his case. P. 277 U. S. 167.
2. Objection that this requirement discriminates against insurance companies not authorized to do business in Indiana is not open to plaintiff in error. Id.
3. The suburban traffic was not interstate commerce, since the destination intended by the passenger when he begins his journey, and known to the carrier, determines the character of the commerce. P. 277 U. S. 168.
4. As respects the interstate commerce, the license fee cannot be sustained as one exacted to defray expenses of regulating traffic for the public safety and convenience, it not appearing that such fees were imposed or applied for that purpose or that the amount collected was no more than was reasonably required for it. P. 277 U. S. 169. chanroblesvirtualawlibrary
5. The license fee cannot be sustained as a charge imposed on motor vehicles as their fair contribution to the cost of constructing and maintaining highways, it being a flat tax, substantial in amount, the same for buses plying the streets continually as for those making only a single trip daily, and there being no suggestion in the language of the ordinance or its construction by the state court that the proceeds are in any part to be applied to such construction or maintenance. P. 277 U. S. 170.
6. The license fee cannot be sustained as an occupation tax, because not shown to be imposed solely on account of the intrastate business. P. 277 U. S. 171.
7. Semble that the requirement of liability insurance, so far as it concerns damage suffered by persons other than passengers, is not an unreasonable burden on interstate commerce. Id.
198 Ind. 563 reversed.
Error to a judgment of the Supreme Court of Indiana which affirmed a judgment for a penalty inflicted on Sprout for violating an ordinance of the city which forbade operation of motor buses without a license. chanroblesvirtualawlibrary