US SUPREME COURT DECISIONS

Where orders are taken in one state for goods to be supplied from another state, which orders are transmitted to the latter state for acceptance or rejection, and filled from stock in that state, the business is interstate commerce and not subject to a state license tax. Crenshaw v. Arkansas, 227 U. S. 389.

The separate license tax imposed by the statutes of Alabama on the business of selling or delivering sewing machines, either in person or through agents, for each county and for each wagon and team used in delivering the same is not, as to a corporation having regular stores established in the different counties to which it sends its goods in bulk and from which they are sold on orders to be approved by it at chanrobles.com-red

Page 233 U. S. 305

its home office, unconstitutional as denying due process of law, or as interfering with interstate commerce, or as denying equal protection of the law because it does not apply to merchants selling such machines at regularly established places of business.

In determining whether a state tax statute is constitutional, there is a presumption that the legislature intended to tax only that which it had the constitutional power to tax, and the statute will be sustained if full and fair effect can be given to its provisions as confined wholly to intrastate business.

While a state license statute, if void in part, may be wholly void where its provisions are not separable, it may be sustained so far as it relates to business wholly intrastate and held inapplicable as to interstate commerce, and so held that the Alabama sewing machine license tax is constitutional as to those agencies of a foreign corporation which carry on an intrastate business and inapplicable as to those agencies of such corporation which carry on a wholly interstate business.

The classification of merchants selling sewing machines at regular places of business, as distinguished from a manufacturer selling them by traveling salesmen, is not so unreasonable and arbitrary as to render it a denial of equal protection of the law under the Fourteenth Amendment.

The state has a wide range of discretion in establishing classes for revenue taxes, and its laws will not be set aside as discriminatory if there is any rational basis for the classification.

The court below rightly held that a foreign corporation having an agency in each county of the state and selling sewing machines by traveling salesmen as well as at the agencies was subject to the license intended to be imposed on itinerant sales by the statute of Alabama, and that it fell without the excepted class of merchants although the latter made deliveries of machines by wagon.

Appellant, which is a New Jersey corporation carrying on a mercantile business in many places in the State of Alabama in the sale and renting of sewing machines, in part from regularly established places of business and in part by means of delivery wagons going from place to place in the respective counties in which its stores are located, filed its bill of complaint against appellees, who are the agents of the state, charged with the administration of the tax laws, and therein sought to restrain by chanrobles.com-red

Page 233 U. S. 306

injunction the enforcement against it of the state tax prescribed by § 32 of an act for providing revenues, approved March 31, 1911 (Session Acts, p. 180), which reads as follows:

"Sec. 32. Sewing machines. -- Each person, firm, or corporation selling or delivering sewing machines either in person or through agents, shall pay $50 annually for each county in which they may sell or deliver said articles. And for each wagon and team used in delivering or displaying the same an additional sum in each county of $25 annually; but this section shall not apply to merchants selling the above enumerated articles at their regularly established places of business."

And also to enjoin the enforcement of county taxes, amounting to fifty percentum of the state tax prescribed by the above section, which might be imposed in the several counties for county purposes under § 33F of the same act.

The bill, as amended, besides showing diverse citizenship of the parties, avers that complainant is qualified under the state laws to do business within the state as a foreign corporation, and has established, in thirty counties of the state, thirty-six regular places of business or stores, which are conducted by it; that complainant buys sewing machines and parts to supply breakage and defects therein and a variety of sewing machine accessories without the state, causes them to be shipped to its places of business within the state, and keeps them at these places for sale to the general public.

In each of the counties, except the County of Russell, the business is conducted as follows: a resident agent is employed for the purpose of making contracts for the sale and renting of machines in that county and that county only; machines are delivered to such agents and placed aboard wagons and taken by the agents into the chanrobles.com-red

Page 233 U. S. 307

rural districts for the purpose of soliciting customers either to purchase or to rent machines; when a buyer is found, the machine is delivered by the agent to the customer, who either pays cash for it or executes an installment note in which the company retains title to the machine, or an installment note secured by a mortgage upon the machine and other property; such sale on credit is made subject to the approval of the company, and if not approved, the installment note is returned to the maker and the machine returned to the company. If the agent makes a contract for the sale of the machine for cash, this also is subject to the approval or disapproval of complainant. The final consummation of all sales is at one of complainant's established places of business. The same agents are engaged also in renting machines and collecting the rent arising therefrom, and the greater portion of their time is consumed in such renting, this constituting at least seventy percentum of the business done by complainant in the state. Rented machines are placed aboard wagons and taken by the agents into the rural districts. Each of these agents is attached to some one of the stores or places of business operated by complainant, and the machines handled by the agent are sent to him from the place of business to which he is attached, or taken from that place of business by him upon the wagon which he drives. Besides this, complainant sells and rents machines at its regularly established places of business, and delivers such machines to the buyers or renters by the use of wagons and teams, and in those counties where complainant has established places of business, machines sold or rented at those places are delivered by the same agents and with the same wagons that are used in carrying machines into the rural districts. It is averred that the machines are of the average weight of 135 pounds. That there are many other merchants in the state who sell sewing machines of a different manufacture chanrobles.com-red

Page 233 U. S. 308

at their places of business, and the average weight of these also is about 135 pounds; that, on account of their weight, it is the custom and practice of complainant, and of the other merchants also, to make delivery by the use of wagons and teams, whether the sales are made at their places of business or otherwise, and that it is impracticable to conduct the business without delivery by wagon.

With respect to the business conducted in Russell County, Alabama, it is averred that complainant operates a regularly established place of business in the City of Columbus, Georgia, where sewing machines and accessories are kept for sale, and in connection with this business, agents are employed to deliver machines and accessories in Russell County, which adjoins the Georgia state line, and that complainant does not sell or deliver any sewing machines or accessories in Russell County except in the following manner, namely, its agents use wagons and teams in going about and displaying sample machines, and thereby obtain orders for machines and accessories, which orders are transmitted by the agents to the complainant at Columbus, Georgia, for acceptance or rejection, and if accepted, the machines or other articles so ordered are taken out of stock there, placed upon wagons, and thereby delivered to the purchasers in Russell County.

The bill is based upon the contention that § 32 of the tax law violates the Constitution of the United States in that it is a regulation of interstate commerce, and contravenes the "due process" and "equal protection" clauses of the Fourteenth Amendment, and also that it violates the Constitution of Alabama; and, finally, that appellant is within the exception of the statute.

To the original bill (prior to the amendments) demurrers were filed, and were sustained as to the whole bill except paragraph 6, which set forth the mode of conducting complainant's business in Russell County. As to this, the court held that the facts showed a case of interstate chanrobles.com-red

Page 233 U. S. 309

commerce, and that the act had no application to it. 199 F.6d 4.

The amendments having been made, the amended bill was submitted upon the same demurrers, which were made to apply to the bill as amended. Again the court sustained the demurrers except as to paragraph 6, relating to Russell County, and as to this overruled them. Defendants then filed an answer admitting the allegations of paragraph 6, and the cause was submitted upon bill and answer, with the result that, by final decree, relief was accorded to complainant as to the license tax sought to be collected in Russell County, and in other respects relief was denied, and the bill dismissed. Because of the constitutional questions, a direct appeal to this Court was taken under Judicial Code, § 238. chanrobles.com-red

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