the agencies of interstate commerce, which have been so numerous during the past twenty-five years, really began after the close of the Civil War period. The first case in the Supreme Court on license taxation of an interstate carrier, that is, on the privilege of maintaining an office and doing business in the State, was that of Osborne v. Mobile, decided in 1872. An ordinance of the city of Mobile required every express or railroad company doing business in that city to pay an annual license. The fee was graded, so that $500 was charged for a first-class · license, where the business extended beyond the limits of the State, $100 for a second-class license for business wholly within the State, and $50 for a third-class license for business wholly within the city. The agent of an interstate express company was convicted of operating his agency without paying his license tax, and this conviction was sustained in the State Supreme Court. The judgment was affirmed by the Supreme Court, Chief Justice Chase delivering the unanimous opinion. He said in part, at page 481: "The difficulty of drawing the line between constitutional and unconstitutional taxation by the State was acknowledged and has always been acknowledged by this court; but that there is such a line is clear, and the court can best discharge its duty by determining in each case on which side the tax complained of is. It is as important to leave the rightful powers of the State in respect to taxation unimpaired as to maintain the powers of the Federal government in their integrity."

The court said that there was no discrimination in the tax, between the express company and the corporations and citizens of Alabama, because the license was the same for whomsoever the business was transacted; and that, as Congress had never undertaken to exercise its power to

1 16 Wallace, 479.

regulate commerce in any manner inconsistent with this municipal ordinance, the right of State taxation was not taken away. The court concluded at page 482:

"The license tax in the present case was upon a business carried on within the city of Mobile. The business licensed included transportation beyond the limits of the State, or rather the making of contracts, within the State, for such transportation beyond it. It was with reference to this feature of the business that the tax was, in part, imposed; but it was no more a tax upon interstate commerce than a general tax on drayage would be because the licensed drayman might sometimes be employed in hauling goods to vessels to be transported beyond the limits of the State.

"We think it would be going too far so to narrow the limits of State taxation."

§ 208. Osborne v. Mobile overruled.

The decision in Osborne v. Mobile was followed by the State courts, which accordingly sustained license taxation, both by the States and municipalities, upon common carriers, for the privilege of conducting their business and maintaining offices within the State or city. They held that there was no interference with interstate commerce where the license was without discrimination as between citizens of the State and non-residents.1

About fifteen years later the question came again before the Supreme Court in reference to a license tax levied by the same city upon telegraph companies. The agent of the

1 Thus, in Virginia, W. U. Tel Co. v. Richmond, 26 Grattan 1; Tennessee, Lightburn v. Taxing District of Shelby County, 4 Lea 219, sustaining a privilege tax on a steamboat engaged in interstate commerce; Memphis & L. R. Co. v. Dolan, 14 Fed. Rep. 532, where the U. S. Circuit Court in Tennessee sustained a privilege tax on an express company engaged in interstate commerce; and in Texas, W. U. Tel. Co. v. State, 55 Tex. 314. All of these cases followed Osborne v. Mobile.

Western Union Telegraph Company was fined for failing to pay an annual license tax of $225, and the conviction was sustained in the State court, which overruled the defense that the license was an interference with interstate commerce.1

But the Supreme Court, in an exhaustive opinion by Justice Bradley, without dissent,2 held that the ordinance was void, as the tax affected the whole of the company's business, interstate as well as local, and that the business of telegraphing is commerce between the States. The telegraph company was moreover invested with the powers and privileges conferred by the Act of Congress of July 24, 1866, which declared that the erection of telegraph lines should, as against State interference, be free to all who accepted the terms of the act, and that a telegraph company of one State should not, after accepting such terms, be excluded by another from prosecuting its business within her jurisdiction. The decision of the court howwas not based upon this act of Congress, but upon

ever

3

1 The State court in its opinion, as quoted at page 644 in the opinion of the Supreme Court, said: —

"We will not gainsay that this license tax was imposed as a revenue measure — as a means of taxing the business, and thus compelling it to aid in supporting the city government. That no revenue for State or municipal purposes can be derived from the agencies or instrumentalities of commerce, no one will contend. The question generally mooted is, how shall this end be attained? In the light of the many adjudications on the subject, the ablest jurists will admit that the line which separates the power from its abuse is sometimes very difficult to trace. No possible good could come from any attempt to collate, explain and harmonize We will not attempt it. We confess ourselves unable to draw & distinction between this case and the principle involved in Osborne v. Mobile, 16 Wall. 479. In that case the license levy was upheld, and we think it should be in this."

them.

2 Leloup

v. Mobile, 127 U. S. 640. Three of the Justices, Bradley, Miller and Field, had concurred in Osborne v. Mobile.

3 As to this Act of Congress see Pensacola Telegraph Co. v. W. U. Tel. Co., 96 U. S. 1.

the broad ground that the State could not tax the privilege of transacting interstate commerce. It was said that as the State could not tax interstate commerce, it could not tax the privilege of conducting that commerce.

case:

With reference to the case of Osborne v. Mobile, upon which the State court had relied, the court said, page 647, after reciting the terms of the ordinance sustained in that "This was in December term, 1872. In view of the course of decisions which have been made since that time, it is very certain that such an ordinance would now be regarded as repugnant to the power conferred upon Congress to regulate commerce among the several States.”

And added, 1. c. p. 648:

"A great number and variety of cases involving the commercial power of Congress have been brought to the attention of this court during the past fifteen years which have frequently made it necessary to re-examine the whole subject with care; and the result has sometimes been that in order to give full and fair effect to the different clauses of the Constitution, the court has felt constrained to refer to the fundamental principles stated and illustrated with so much clearness and force by Chief Justice Marshall and other members of the court in former times, and to modify in some degree certain dicta and decisions which have occasionally been made in the intervening period. This is always done, however, with great caution, and an anxious desire to place the final conclusion reached upon the fairest and most just construction of the Constitution in all its parts."

The conclusion was therefore, 1. c. page 648, "that 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 amounts to a regulation of it, which belongs solely to Congress." It was also said that this exemption of interstate and foreign commerce from State regulation does not prevent the State from taxing the property of those engaged in such commerce located in the State, as it taxes the property of other citizens.

§ 209. License tax on agents of interstate railroads held invalid.

The same principle was applied to license taxes imposed for maintaining offices in which to conduct interstate business. Thus the agent of the New York, Lake Erie & Western Railroad, which extends from Chicago to New York, maintained an office in San Francisco for the purpose of inducing passengers going from that point to New York to take the line of his railroad at Chicago. He was on that account convicted of doing business in San Francisco, in violation of the ordinance of that city requiring the payment of $25 quarterly for a license. The conviction was sustained by the California court, but was reversed by the Supreme Court. It was argued that the soliciting of passengers in California for a railroad running from Chicago to New York, if connected with interstate commerce at all, was so remotely connected with it that the license tax could not be regarded as an interference. But the court said that this distinction was immaterial, for the business was interstate and the tax involved the licensing of the commerce of the road to an extent commensurate with the amount of business done by the agent.

This ruling was followed in the case of the license tax imposed by the State of Pennsylvania upon the Norfolk &

1 McCall v. California, 186 U. S. 104, Chief Justice Fuller and Justices Brewer and Gray dissenting.