Vol. X, p. 335, art. 1, sec. 2.

IV. DIRECT TAXES

Indirect

a. On Income (p. 339)

II. WHAT CONSTITUTES INTERSTATE FOREIGN COMMERCE

3. Particular Transactions

AND

a. Transportation of Persons and Property (1) In General (p. 435)

Transmission of electric current.- The transportation or transmission of electric current from state to state through appropriate instrumentalities is 66 commerce between the states. Moreover, the transportation or transmission of electric current direct from the seller in one state to the consumer in another, for immediate or practically immediate use, subject only to a temporary stop en route for the purpose of reducing the current to a commercial voltage, remains "interstate commerce " until the commodity has reached its goal, unless theretofore sold to independent distributing companies in the latter state for resale to local consumers. Mill Creek Coal, etc., Co. v. Public Service

Commission, (W. Va. 1919) 100 S. E. 557, 7 A. L. R. 1081.

(5) Local Part of Interstate Shipment (p. 436)

In determining when commerce ceases to be interstate and becomes intrastate, the essential character of unity of the movement is decisive. Mill Creek Coal, etc., Co. v. Public Service Commission, (W. Va.) 1919) 100 S. E. 557, 7 A. L. R. 1081.

(10) Accommodations for Passengers of Different Races (p. 438)

A Kentucky street railway may be required by a statute of that state to furnish either separate cars or separate compartments in the same car for white and negro passengers, although its principal business is the carriage of passengers in interstate commerce between Cincinnati, Ohio, and Kentucky cities across the Ohio river. Such a requirement affects interstate commerce only incidentally, and does not subject it to unreasonable demands. South Covington, etc., St. R. Co. v. Kentucky, (1920) 252 U. S. 399, 40 S. Ct. 378, 64 U. S. (L. ed.) (affirming (1918) 181 Ky. 449, 205 S. W. 603), wherein the court said: "There was a distinct operation in Kentucky, an operation authorized and required by the charters of the companies, and it is that operation the act in question regulates, and does no more, and therefore is not a regulation of interstate commerce. This is the effect of the ruling in South Covington & C. Street R. Co. v. Covington, 235 Ü. S. 537, 59 L. ed. 350, L. R. A. 1915F, 792, P. U. R. 1915A, 231, 35 Sup. Ct. Rep. 158. The regulation of the act affects interstate business incidentally, and does not subject it to unreasonable demands.

"The cited case points out the equal necessity, under our system of government, to preserve the power of the states within their Sovereignties as to prevent the power from intrusive exercise within the national sovereignty, and an interurban railroad company deriving its powers from the state, and subject to obligations under the law of the state, should not be permitted to exercise the powers given by the state, and escape its obligations to the state, under the circumstances presented by this record, by running its coaches beyond the state lines. But we need not extend the discussion. The cited case expresses the principle of decision, and marks the limitation upon the power of a state, and when its legislation is or is not an interference with interstate comInerce. And regarding its principle, we think, as we have said, the act in controversy does not transcend that limitation."

Interstate traffic over a Kentucky interurban electric railway may be subjected to the operation of a statute of that state requiring separate coaches, or separate compartments in the same coach, for white and negro passengers, without unlawfully interfering with interstate commerce. Cincinnati. etc., R. Co. v. Kentucky, (1920) 252 U. S.

408, 40 S. Ct. 381, 64 U. S. (L. ed.) -, affirming (1918) 181 Ky. 449, 205 S. W. 603. g. Manufacture and Sale of Goods (1) In General (p. 442)

Where a company maintains its principal office within a state, and most of officers reside there, and the greater proportion of its business is transacted therein, it must be regarded as engaged in intrastate commerce, at least as to the business transacted within the state, and subject to a state tax thereon. Hayes Wheel Co. v. American Distributing Co., (C. C. A. 6th Cir. 1919) 257 Fed. 881, 169 C. C. A. 31. In determining this question the court said:

"We are thus brought to the ultimately controlling question whether, as plaintiff urgently insists is the case, its business was solely interstate commerce, the local busi ness being merely incidental thereto, or whether, on the other hand, plaintiff was engaged locally in both state and interstate commerce. In the former case it would not be subject to the tax; in the latter, it would be.

"Plaintiff's business embraced sales largely by way of orders taken by traveling solicitors from automobile manufacturers in several states lying generally, if not universally, north of the Ohio and east of the Mississippi rivers. Plaintiff seems to have had no office, at least for commercial business, anywhere except at Jackson, Mich. There its books and records of commercial transactions were kept; there a majority at least of its officers resided, and at or from that point all of its business seems to have been directed and conducted, excepting so far as concerns actual solicitation of orders by traveling salesmen. The business of at least one of these salesmen was confined to Michigan. Plaintiff was acting under similar contracts as sales agent for several manufacturers of automobile parts, other than defendant. So far as the record shows, all its tangible property was in Michigan. That state was and is the most prominent of the automobile manufacturing states.

During the five-year contract period plaintiff's sales in Michigan amounted to 61.2 per cent. of its total sales, and for the last 11⁄2 years of that period the Michigan sales were about 75 or 80 per cent. of the aggre gate business. While the proportion of Michigan business increased during the contract period, and the proportion when the contract was made does not definitely appear, the natural inference from the record and the arguments would be, we think, that the Michigan sales were from the first approxi mately at least one-half of the total sales. Plaintiff's declaration, made September 29, 1913, for authority to do business in Michigan, gave the location of its principal office and of its principal place of business as Jackson, Mich., and two of its three officers as residing there, and the third as living at Detroit, Mich. Its authorized capital stock was reported at $4,000 [under the statute in