province of the state legislature to exact conditions on which they should carry on their business, nor require them to take out a license therefor. To carry on interstate commerce is not a franchise or privilege granted by the State; it is a right which every citizen of the United States is entitled to exercise under the Constitution and laws of the United States, and the accession of mere corporate 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." 38 In Pensacola Telegraph Co. v. Western Union Telegraph Co.39 it is established that a company chartered by the United States to do an interstate commerce business cannot be prevented by a State from carrying on that business within its borders. With reference to the case of Paul v. Virginia the court observed that the corporation there involved was not engaged in interstate commerce and "enough was said by the court to show that if it had been, a very different question would have been presented." 40 A State, though not able to exclude from its borders a federally chartered corporation engaged in interstate commerce, is not compelled to aid that corporation by granting to it any special privileges, as, for example, the right of eminent domain. Congress may, however, endow such a corporation with the right of eminent. domain, which right it may exercise within the States without their consent or against their will.41 38 In these respects the court go on to say, the States have no more authority than they have over corporations chartered in foreign countries, and engaged in landing goods or passengers in American ports, or soliciting business here. 39 96 U. S. 1; 24 L. ed. 708. 40 It may be said, generally, that a State cannot exclude a corporation in the employ of, or performing services for the Federal Government. Pembina Co. v. Penn, 125 U. S. 181; 8 Sup. Ct. Rep. 737; 31 L. ed. 650; Postal Tel. Co. v. Adams, 155 U. S. 688; 15 Sup. Ct. Rep. 268; 39 L. ed. 311. 41 This right may not, however, be exercised with reference to land owned or already devoted to a public use by the State. Chapter XXVI. § 324. Foreign Corporations "Doing Business" Within the States. Though, as we have seen, a State may not prevent foreign corporations from carrying on interstate commerce business within its borders, it may prevent them from doing business generally as a corporation within the State; or it may attach such conditions as it sees fit to the doing of such business, other than interstate commerce, as a corporation. But permission to continue to do an interstate business may not be founded upon conditions which, in effect, interfere with interstate business.42 In Paul v. Virginia13 the court say: "Having no absolute right of recognition in the States, but depending for such recognition and enforcement of its contracts upon their assent, it follows, as a matter of course, that such assent may be granted upon such terms and conditions as those States may think proper to impose. They may exclude the foreign corporation entirely, they may restrict its business to particular localities, or they may exact such security for the performance of its contracts with their citizens as in their judgment will best promote the public interest. The whole matter rests on their discretion." 44 In Western Union Telegraph Co. v. Kansas,45 however, the exactions that may be made by a State of a foreign corporation doing an interstate commerce business as a condition for doing a domestic business within the State are carefully considered and prior adjudications examined, and, by a divided court, the doctrine declared that a charter fee of a certain per cent. of the entire capital stock might not be exacted of a foreign telegraph company as a condition to being permitted to continue to do an intrastate business within the State. This exaction the majority of the court declared to be in essence a burden and tax on the company's inter 42 Whether or not the refusal of the privilege, or the withdrawal of a consent once given may be predicated upon an agreement of the corporation not to exercise a federal right, as, for example, to resort to the federal courts, see Section 74. 43 8 Wall. 168; 19 L. ed. 357. 44 Quoted with approval in Waters Pierce Oil Co. v. Texas, 177 U. S. 28; 20 Sup. Ct. Rep. 518; 44 L. ed. 657. 45 216 U. S. 1; 30 Sup. Ct. Rep. 190. state business and on its property located and used outside of the State. The fact that there is difficulty in harmonizing this decision with that of Security Mutual Ins. Co. v. Prewitt is elsewhere adverted to.47 § 325. What Constitutes "Doing Business" in the State. It is often a very difficult matter to determine when a foreign corporation may be said to be "doing business" within the State, as a corporation, or simply engaged in individual interstate commercial transactions in the State. The courts have not been able to lay down any general rule for determining this question, but have been compelled to decide each case upon its own merits or facts. The more important of these specific adjudications will be discussed in the next sections, in which will be considered the taxing powers of the States with reference to interstate commerce. § 326. State Taxation and Interstate and Foreign Commerce. It has already been shown that the States are permitted, in the exercise of the powers reserved to them, substantially to affect interstate and foreign commerce, so long as this interference is an indirect, incidental one, the legislation in question a legitimate and bona fide exercise of a reserved power, and not in contravention to any existing federal statute or regulation. This principle holds true with reference to the taxing powers of the States. A direct taxation of interstate or foreign commerce, that is of the goods carried as exports or imports, of the agencies and instrumentalities of such commerce as such, or of the act of carrying on, or the right to engage in or to carry on, interstate and foreign commerce, is always construed as a regulation of such commerce, and, as such, beyond the power of the States. A State cannot even enforce the collection of a valid tax by an injunction restraining a person or corporation from doing interstate commercial business.48 46 202 U. S. 246; 26 Sup. Ct. Rep. 619; 50 L. ed. 1013. 47 Section 74. 48 Western Union Telegraph Co. v. Masachusetts, 125 U. S. 530; 8 Sup. Ct. Rep. 961; 31 L. ed. 790. In Osborne v. Mobile9 the court sustained a state tax which bore directly upon interstate commerce companies as such. The law in question in this case required every express or railroad company doing business in the city of Mobile and having a business extending beyond the limits of the State to pay a certain annual license fee. The court sustained the provision on the ground that there was no discrimination between the citizens of the State and the citizens of other States. In Moran v. New Orleans50 this position was practically departed from, and in Leloup v. Mobile the doctrine absolutely and explicitly repudiated that any state tax however undiscriminative, or whatever its other features, can be valid which imposes a burden upon persons or corporations engaged in interstate commerce, because of their being so engaged. The doctrine is in this case squarely laid down that no tax may be levied by a State which is imposed upon interstate commerce as such or operates as a direct burden thereupon. The court, after a review of authorities, say: No State has the right to lay a tax on interstate commerce in any form, whether by way of duties laid on the transportation of the subjects of that commerce, or on the receipts derived from that transportation, or on the occupation or business of carrying it on, and the reason is that such taxation is a burden on that commerce, and demands a regulation of it, which belongs solely to Congress." This doctrine, as thus stated, has now for many years been so well established that States no longer attempt to tax interstate commerce directly. Many state tax laws, however, though not expressly made applicable to interstate commerce transactions; have so substantially burdened commerce among the States as to raise the question whether they are not thus brought within the operation of the prohibition. It will be necessary, therefore, to consider the special cases in which the constitutionality of state tax laws have been tested by the Commerce Clause. 49 16 Wall. 479; 21 L. ed. 470 50 112 U. S. 69; 5 Sup. Ct. Rep. 38; 28 L. ed. 653. § 327. License Taxes. A license tax on an importer, or on the business of importing goods from another State, is a taxation of, and therefore an unconstitutional regulation of interstate commerce. This was early determined in the case of Brown v. Maryland. This principle was somewhat disturbed in the License Cases,53 but was later fully reestablished. 52 In Leloup v. Mobile the court declared invalid a general license tax on a telegraph company, on the ground that it affected its entire business, interstate as well as domestic. "The tax affects the whole business without discrimination," the court declared. "There are sufficient modes in which the internal business, if not already taxed in some other way, may be subjected to taxation, without the imposition of a tax which covers the entire operations of the company." Where, however, a company is doing both interstate and intrastate commerce business, a license tax may be levied upon the latter if it be separable from the former and if the company be left free, should it desire to do so, to give up its domestic business and continue undisturbed its interstate transactions. In Pullman Co. v. Adams55 the court say: "If the Pullman Company, whether called a common carrier or not, had the right to choose between what points it would carry, and therefore to give up the carriage of passengers from one point to another within the State, the case is governed by Osborne v. Florida, 164 U. S. 650, 17 Sup. Ct. Rep. 214; 41 L. ed. 586. The company cannot complain of being taxed for the privilege of doing a local business which it is free to renounce.' 956 It must clearly appear, however, that the license tax is exclusively upon the local business, and that its payment is not a 52 12 Wh 419; 6 L. ed. 678. 535 How. 504; 12 L. ed. 256. 54 127 U. S. 640; 8 Sup. Ct. Rep. 1383; 32 L. ed. 311. 55 189 U. S. 420; 23 Sup. Ct. Rep. 494; 47 L. ed. 477. 56 But see, in modification of this, Pullman Co. v. Kansas, 216 U. S. 54; 30 Sup. Ct. Rep. 232. |