[227 U.S. 504, 505] This is a writ of error to review a judgment of the supreme court of the state of Illinois, which affirmed a judgment for the amount of a tax assessed against the plaintiff in error for personal property in the year 1907. The contention that the assessment was in violation of article I., 8, clause 3, of the Federal Constitution, in that it was laid upon a subject of interstate commerce, was overruled by the state court. 243 Ill. 313, -- L.R.A.(N.S.) --, 90 N. E. 686.
The facts were agreed to, as follows:
Messrs. Walter Bachrach, Moritz Rosenthal, and Joseph W. Moses for plaintiff in error. [227 U.S. 504, 510] Messrs. Louis J. Behan, Gustavus J. Tatge, and Francis S. Wilson for defendants in error.
Statement by Mr. Justice Hughes:
Mr. Justice Hughes, after making the above statement, delivered the opinion of the court: [227 U.S. 504, 511] Did the enforcement of the local tax upon the grain in the elevator of the plaintiff in error amount to an unconstitutional interference with interstate commerce?
The supreme court of Illinois was of the view that if the grain was in transit in interstate commerce it was exempt from local taxation. In its opinion, that court said: 'The sole question presented by this record is, was the grain upon which the tax was levied in transit on April 1, 1907? If it was so in transit, it was not liable to be taxed while passing through the state to its destination. On the other hand, if it was not in transit, but had a situs in this state, it was subject to taxation under state authority.' In this view of the issue, the court sustained the recovery of the amount of the tax.
It is now contended, however, by the defendant in error, that the question thus defined was an immaterial one; that even if the property was in transit, and was the subject of interstate commerce, it was nevertheless liable to assessment, in common with the other personal property of the plaintiff in error, because he was a resident of the state, and the property was within the limits of the county where the assessment was made.
This argument proceeds upon a misconception of the ground upon which the power to tax articles actually moving in interstate transportation is denied to the states. That denial rests upon the supremacy of the Federal power to regulate interstate commerce. Its postulate is the necessary freedom of that commerce from the burden of such local exactions as are inconsistent with the control and protection of that power. The fact that such a burden is sought to be imposed by the state of the domicil of the owner, upon property moving in interstate commerce, creates no exception. That state enjoys no prerogative to make levy upon such property passing through it, because it may belong to its citizens. They, as well as others, are under the shelter of the commerce [227 U.S. 504, 512] clause. The question is determined not by the residence of the owner, but by the nature and effect of the particular state action with respect to a subject which has come under the sway of a paramount authority.
This is clearly shown by the reasoning of the decisions which define the limits of the state taxing power with respect to property about to leave the state of its origin, or while it is on its way to its destination in another state. In Coe v. Errol, 116 U.S. 517 , 29 L. ed. 715, 6 Sup. Ct. Rep. 475, the question was whether the products of a state ( in that case timber cut in the forests of New Hampshire), though intended for exportation to another state, and partially prepared for that purpose by being deposited at a place or port of shipment, was liable to be taxed like other property within the state. The claim of immunity by reason of the fact that it was owned by nonresidents was at once disposed of. 'If not exempt from taxation for other reasons,' said the court (id. p. 524), 'it cannot be exempt by reason of being owned by nonresidents of the state. We take it to be a point settled beyond all contradiction or question, that a state has jurisdiction of all persons and things within its territory which do not belong to some other jurisdiction.' The case was put upon the same basis as though the timber had been owned by residents of New Hampshire, and the question was treated as being one with respect to the point of time at which goods produced within the state, which are the subject of exportation to another state, cease to be liable to state taxation. It was concluded that these articles could be taxed by the state until, but not after, they had been actually started in the course of transportation to another state, or had been committed to a carrier for that purpose.
The court said: 'This question does not present the predicament of goods in course of transportation through a state, though detained for a time within the state by low water or other causes of delay, as was the case of the [227 U.S. 504, 513] logs cut in the state of Maine, the tax on which was abated by the supreme court of New Hampshire. Such goods are already in the course of commercial transportation, and are clearly under the protection of the Constitution. And so, we think, would the goods in question be when actually started in the course of transportation to another state, or delivered to a carrier for such transportation.' (Id. p. 525.)
After pointing out the importance of clearly defining, so as to avoid all question, the time when state jurisdiction over the commodities of commerce begins and ends, and after commenting on the established rule as to the power of taxation with respect to goods which had come to their place of rest within the state, for disposal and use (Woodruff v. Parham, 8 Wall. 123, 19 L. ed. 382; Brown v. Houston, 114 U.S. 622 , 29 L. ed. 257, 5 Sup. Ct. Rep. 1091), the court thus restated its conclusion, in language applicable generally to the products of the state without distinction with respect to ownership by residents or nonresidents: 'But no definite rule has been adopted with regard to the point of time at which the taxing power of the state ceases as to goods exported to a foreign country or to another state. What we have already said, however, in relation to the products of a state intended for exportation to another state will indicate the view which seems to us the sound one on that subject; namely, that such goods do not cease to be part of the general mass of property in the state, subject, as such, to its jurisdiction and to taxation in the usual way, until they have been shipped or entered with a common carrier for transportation to another state, or have been started upon such transportation in a continuous route or journey. We think that this must be the true rule on the subject. It seems to us untenable to hold that a crop or a herd is exempt from taxation merely because it is, by its owner, intended for exportation. If such were the rule in many states there would be nothing but the lands and real [227 U.S. 504, 514] estate to bear the taxes. Some of the Western states produce very little except wheat and corn, most of which is intended for export; and so of cotton in the Southern states. Certainly, as long as these products are on the lands which produce them, they are part of the general property of the state. And so we think they continue to be until they have entered upon their final journey for leaving the state and going into another state.' ( Id. pp. 527, 528.)
In General Oil Co. v. Crain, 209 U.S. 211 , 52 L. ed. 754, 28 Sup. Ct. Rep. 475, the owner of the property, which was sought to be subjected to an inspection tax in Tennessee, was a Tennessee corporation. The property was oil contained in the company's tanks at Memphis. It was contended that the oil in these tanks was in transit from the place of manufacture in Pennsylvania to the place of sale in Arkansas, and that the holding of it in Memphis was merely for the pupose of separation, distribution, and reshipment, and was for no longer time than required by the nature of the business and the exigencies of transportation. The court considered the question from the standpoint of the general power of the state to tax. The oil was held to be taxable, but not upon the ground that its owner was domiciled in Tennessee. It was recognized that if the oil were actually in transit, it would not be taxable. But it was found not to be in movement through the state; it had reached the destination of its first shipment and was held at Memphis for the business purposes and profits of the company. The principle applied was that announced in American Steel & Wire Co. v. Speed, 192 U.S. 500 , 48 L. ed. 538, 24 Sup. Ct. Rep. 365. See Kelley v. Rhoads, 188 U.S. 1, 5 , 7 S., 47 L. ed. 359, 360, 362, 23 Sup. Ct. Rep. 259; Diamond Match Co. v. Ontonagon, 188 U.S. 82 , 93-96, 47 L. ed. 394, 398-400, 23 Sup. Ct. Rep. 266.
We come, then, to the question whether the grain here involved was moving in interstate commerce, so that the imposition of the local tax may be said to be repugnant to the Federal power. [227 U.S. 504, 515] The following facts are shown by the agreed statement:-The grain had been shipped by the original owners, who were residents of southern and western states, under contracts for its transportation to New York, Philadelphia, and other eastern cities, which reserved to the owners the right to remove it from the cars at Chicago 'for the mere temporary purposes of inspecting, weighing, cleaning, clipping, drying, sacking, grading, or mixing, or changing the ownership, consignee, or destination' thereof. While the grain was in transit it was purchased by Bacon, the plaintiff in error, who succeeded to the rights of the vendors under the contracts of shipment. He was represented at the points of destination by agents through whom he disposed of grain and other commodities on the eastern markets, and the grain in question was purchased by him solely for the purpose of being sold in this way, and with the intention to forward it according to the shipping contracts; it was not his intention to dispose of it in Illinois. Upon the arrival of the grain in Chicago, Bacon availed himself of the privilege reserved and removed it from the cars to his private elevator. This removal, it is said in the agreed statement of facts, was for the sole purposes of inspecting, weighing, grading, mixing, etc., and not for the purpose of changing its ownership, consignee, or destination. It is added that the grain remained in the elevator only for such time as was reasonably necessary for the purposes above mentioned, and that immediately after these had been accomplished it was turned over to the railroad companies, and was forwarded by them to the eastern cities, in accordance with the original contracts of transportation. No part of the grain was sold or consumed in Illinois. It was while it was in Bacon's elevator in Chicago that it was included in the assessment as a part of his personal property.
But neither the fact that the grain had come from outside the state, nor the intention of the owner to send it to [227 U.S. 504, 516] another state, and there to dispose of its, can be deemed controlling when the taxing power of the state of Illinois is concerned. The property was held by the plaintiff in error in Chicago for his own purposes and with full power of disposition. It was not being actually transported, and it was not held by carriers for transportation. The plaintiff in error had withdrawn it from the carriers. The purpose of the withdrawal did not alter the fact that it had ceased to be transported and had been placed in his hands. He had the privilege of continuing the transportation under the shipping contracts, but of this he might avail himself or not, as he chose. He might sell the grain in Illinois or forward it, as he saw fit. It was in his possession, with the control of absolute ownership. He intended to forward the grain after it had been inspected, graded, etc., but this intention, while the grain remained in his keeping, and before it had been actually committed to the carriers for transportation, did not make it immune from local taxation. He had established a local facility in Chicago for his own benefit, and while, through its employment, the grain was there at rest, there was no reason why it should not be included with his other property within the state in an assessment for taxation which was made in the usual way, without discrimination. Woodruff v. Parham, 8 Wall. 123, 19 L. ed. 382; Brown v. Houston, 114 U.S. 622 , 29 L. ed. 257, 5 Sup. Ct. Rep. 1091; Coe v. Errol, 116 U.S. 517 , 29 L. ed. 715, 6 Sup. Ct. Rep. 475; Pittsburg & S. Coal Co. v. Bates, 156 U.S. 577 , 39 L. ed. 538, 5 Inters. Com. Rep. 30, 15 Sup. Ct. Rep. 415; Diamond Match Co. v. Ontonagon, 188 U.S. 82 , 93-96, 47 L. ed. 394, 398, 400, 23 Sup. Ct. Rep. 266; American Steel & Wire Co. v. Speed, 192 U.S. 500 , 48 L. ed. 538, 24 Sup. Ct. Rep. 365; General Oil Co. v. Crain, 209 U.S. 211 , 52 L. ed. 754, 28 Sup. Ct. Rep. 475.
The question, it should be observed, is not with respect to the extent of the power of Congress to regulate interstate commerce, but whether a particular exercise of state power, in view of its nature and operation, must be deemed to be in conflict with this paramount authority. American Steel & Wire Co. v. Speed, 192 U. S. pp. 521, 522, 48 L. ed. 546, 547, 24 Sup. Ct. Rep. 365, Thus, goods within the state may be made the subject of a [227 U.S. 504, 517] nondiscriminatory tax, though brought from another state, and held by the consignee for sale in the original packages. Woodruff v. Parham, 8 Wall. 123, 19 L. ed. 382. In Brown v. Houston, 114 U.S. 622 , 29 L. ed. 257, 5 Sup. Ct. Rep. 1091, the coal on which the local tax was sustained had not been unloaded, but was lying in the boats in which it had been brought into the state, and from which it was offered for sale. In Pittsburg & S. Coal Co. v. Bates, 156 U.S. 577 , 39 L. ed. 538, 5 Inters. Com. Rep. 30, 15 Sup. Ct. Rep. 415, coal had been shipped from Pittsburg to Baton Rouge in barges which, to accommodate the owner's business, had been moored about 9 miles above the point of destination. The coal, while remaining on the barges under these conditions, was held subject to taxation. In General Oil Co. v. Crain, 209 U.S. 211 , 52 L. ed. 754, 28 Sup. Ct. Rep. 475, the oil which had been brought from Pennsylvania to Memphis, a distributing point, was held in tanks, one of which was kept for oil for which orders had been received from Arkansas, Louisiana, and Mississippi prior to the shipment from Pennsylvania, and which had been shipped especially to fill such orders. The tank was marked, 'Oil Already Sold in Arkansas, Louisiana, and Mississippi.' The local tax upon this oil, which remained in Tennessee only long enough (a few days) to be properly distributed according to the orders, was sustained.
In the present case the property was held within the state for purposes deemed by the owner to be beneficial; it was not in actual transportation; and there was nothing inconsistent with the Federal authority in compelling the plaintiff in error to bear with respect to it, in common with other property in the state, his share of the expenses of the local government.