Spector Motor Service v. O'Connor, 340 U.S. 602 (1951)

From the U.S. Government Printing Office via GPO Access
 
Case:   SPECTOR MOTOR SERVICE V. O'CONNOR

Case #: 340US602


NO. 132.  ARGUED NOVEMBER 29-30, 1950.  - REARGUED JANUARY 10, 1951.  -
DECIDED MARCH 26, 1951.  - 181 F.2D 150, REVERSED. 


1.  CONNECTICUT IMPOSES UPON THE FRANCHISES OF FOREIGN CORPORATIONS,
FOR THE PRIVILEGE OF DOING BUSINESS WITHIN THE STATE, A TAX COMPUTED AT
A NONDISCRIMINATORY RATE ON THAT PART OF THE CORPORATION'S NET INCOME
WHICH IS REASONABLY ATTRIBUTABLE TO ITS BUSINESS ACTIVITIES WITHIN THE
STATE.  THE TAX IS NOT LEVIED AS COMPENSATION FOR THE USE OF THE
HIGHWAYS OR COLLECTED IN LIEU OF AN AD VALOREM PROPERTY TAX.  IT IS NOT
A FEE FOR INSPECTION OR A TAX ON SALES OR USE.  HELD:  AS APPLIED TO A
FOREIGN CORPORATION WHICH WAS ENGAGED EXCLUSIVELY IN INTERSTATE
TRUCKING, THE TAX WAS INVALID UNDER THE COMMERCE CLAUSE OF THE FEDERAL
CONSTITUTION.  PP. 603-610. 

(A)  THE FACT THAT, IF SOME INTRASTATE COMMERCE WERE INVOLVED OR IF
AN APPROPRIATE TAX WERE IMPOSED AS COMPENSATION FOR THE CORPORATION'S
USE OF THE HIGHWAYS, THE SAME SUM OF MONEY AS IS AT ISSUE HERE MIGHT BE
LAWFULLY COLLECTED FROM THE CORPORATION, CANNOT SUSTAIN THE
CONSTITUTIONAL VALIDITY OF THE TAX.  PP. 607-608. 

(B)  WHETHER A STATE MAY VALIDLY MAKE INTERSTATE COMMERCE PAY ITS WAY
DEPENDS FIRST OF ALL UPON THE CONSTITUTIONAL CHANNEL THROUGH WHICH IT
ATTEMPTS TO DO SO.  P. 608. 

(C)  AS CONSTRUED BY THE STATE COURTS, THIS IS A TAX SOLELY ON THE
FRANCHISE OF PETITIONER TO DO A BUSINESS WHICH IS EXCLUSIVELY
INTERSTATE; AND SUCH A TAX CONTRAVENES THE COMMERCE CLAUSE, NO MATTER
HOW FAIRLY IT IS APPORTIONED TO BUSINESS DONE WITHIN THE STATE.  PP.
608-610. 

2.  THE FEDERAL DISTRICT COURT HAD JURISDICTION OF THIS CASE IN THE
FIRST INSTANCE BECAUSE OF THE UNCERTAINTY OF THE ADEQUACY OF A REMEDY
IN THE STATE COURTS, AND IT DID NOT LOSE THAT JURISDICTION BY VIRTUE OF
THE LATER CLARIFICATION OF THE PROCEDURE IN THE COURTS OF THE STATE. 
P. 605. 

SPECTOR MOTOR SERVICE, INC. V. O'CONNOR, TAX COMMISSIONER. 

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND
CIRCUIT. 

THE CASE IS STATED IN THE OPINION, PP. 603-605.  THE JUDGMENT OF THE
COURT OF APPEALS IS REVERSED, P. 610. 

MR. JUSTICE BURTON DELIVERED THE OPINION OF THE COURT. 

THIS PROCEEDING ATTACKS, UNDER THE COMMERCE CLAUSE OF THE
CONSTITUTION OF THE UNITED STATES, THE VALIDITY OF A STATE TAX IMPOSED
UPON THE FRANCHISE OF A FOREIGN CORPORATION FOR THE PRIVILEGE OF DOING
BUSINESS WITHIN THE STATE WHEN (1) THE BUSINESS CONSISTS SOLELY OF
INTERSTATE COMMERCE, AND (2) THE TAX IS COMPUTED AT A NONDISCRIMINATORY
RATE ON THAT PART OF THE CORPORATION'S NET INCOME WHICH IS REASONABLY
ATTRIBUTABLE TO ITS BUSINESS ACTIVITIES WITHIN THE STATE.  FOR THE
REASONS HEREINAFTER STATED, WE HOLD THIS APPLICATION OF THE TAX
INVALID. 

PETITIONER, SPECTOR MOTOR SERVICE, INC., IS A MISSOURI CORPORATION
ENGAGED EXCLUSIVELY IN INTERSTATE TRUCKING.  IT INSTITUTED THIS ACTION
IN 1942 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
CONNECTICUT AGAINST THE TAX COMMISSIONER OF THAT STATE.  IT SOUGHT TO
ENJOIN COLLECTION OF ASSESSMENTS AND PENALTIES TOTALING $7,795.50,
WHICH HAD BEEN LEVIED AGAINST IT, FOR VARIOUS PERIODS BETWEEN JUNE 1,
1935, AND DECEMBER 31, 1940, UNDER THE CONNECTICUT CORPORATION BUSINESS
TAX ACT OF 1935 AND AMENDMENTS THERETO.  FN1  IT ASKED ALSO FOR A
DECLARATORY JUDGMENT AS TO ITS LIABILITY, IF ANY, UNDER THAT ACT.  IT
CLAIMED THAT THE TAX IMPOSED BY THE ACT DID NOT APPLY TO IT AND THAT,
IF IT DID, SUCH APPLICATION VIOLATED BOTH THE CONNECTICUT CONSTITUTION
AND THE COMMERCE AND DUE PROCESS CLAUSES OF THE UNITED STATES
CONSTITUTION.  FINALLY, IT ALLEGED THAT IT HAD NO PLAIN, SPEEDY AND
EFFICIENT REMEDY AT LAW OR IN EQUITY IN THE STATE COURTS  FN2  AND THAT
THE COLLECTION OF THE TAXES AND PENALTIES BY THE MEANS PROVIDED IN THE
STATUTE WOULD CAUSE IT IRREPARABLE INJURY.  THE DISTRICT COURT TOOK
JURISDICTION, HELD THAT THE ACT DID NOT APPLY TO PETITIONER AND GRANTED
THE INJUNCTION SOUGHT.  47 F.SUPP.  671.  THE COURT OF APPEALS FOR THE
SECOND CIRCUIT, ONE JUDGE DISSENTING, REVERSED.  139 F.2D 809.  IT HELD
THAT THE TAX DID APPLY TO PETITIONER AND WAS CONSTITUTIONAL.  WE
GRANTED CERTIORARI, 322 U.S. 720, BUT, AFTER HEARING, REMANDED THE
CAUSE TO THE DISTRICT COURT WITH DIRECTIONS TO RETAIN THE BILL PENDING
THE DETERMINATION OF PROCEEDINGS TO BE BROUGHT IN THE STATE COURT IN
CONFORMITY WITH THE OPINION RENDERED, 323 U.S. 101. 

PETITIONER THEREUPON SOUGHT A DECLARATORY JUDGMENT IN THE SUPERIOR
COURT FOR HARTFORD COUNTY, CONNECTICUT.  THE SUPERIOR COURT HELD THAT
THE TAX WAS APPLICABLE TO PETITIONER BUT INVALID UNDER THE COMMERCE
CLAUSE.  15 CONN. SUPP. 205.  THE SUPREME COURT OF ERRORS OF THE STATE
OF CONNECTICUT LIKEWISE HELD THAT PETITIONER WAS SUBJECT TO THE TAX BUT
IT DECLINED TO PASS ON THE EFFECT OF THE COMMERCE CLAUSE.  135 CONN.
37, 70, 61 A.2D 89, 105.  ON A MOTION ASKING IT TO DISSOLVE ITS
ORIGINAL INJUNCTION, THE UNITED STATES DISTRICT COURT DECLINED TO DO
SO.  88 F.SUPP.  711.  IT REVIEWED THE RECENT DECISIONS AND HELD THAT,
APPLYING THE ACT TO PETITIONER, AS REQUIRED BY THE INTERPRETATION OF IT
BY THE STATE COURTS, SUCH APPLICATION VIOLATED THE COMMERCE CLAUSE OF
THE UNITED STATES CONSTITUTION.  THE COURT OF APPEALS FOR THE SECOND
CIRCUIT, ACTING THROUGH THE SAME MAJORITY AS ON THE PREVIOUS OCCASION,
REVERSED.  ONE JUDGE DISSENTED FOR THE REASONS STATED BY THE DISTRICT
JUDGE AND BY THE JUDGE WHO HAD DISSENTED ON THE FORMER APPEAL.  181
F.2D 150.  WE GRANTED CERTIORARI BECAUSE OF THE FUNDAMENTAL NATURE OF
THE ISSUE AND THE APPARENT CONFLICT BETWEEN THE JUDGMENT BELOW AND
PREVIOUS JUDGMENTS OF THIS COURT.  340 U.S. 806.  THE CASE WAS ARGUED
TWICE AT THIS TERM. 

THE UNITED STATES DISTRICT COURT HAD JURISDICTION OVER THIS CASE IN
THE FIRST INSTANCE BECAUSE OF THE UNCERTAINTY OF THE ADEQUACY OF A
REMEDY IN THE STATE COURTS, AND IT DID NOT LOSE THAT JURISDICTION BY
VIRTUE OF THE LATER CLARIFICATION OF THE PROCEDURE IN THE COURTS OF
CONNECTICUT.  AMERICAN LIFE INS. CO. V. STEWART, 300 U.S. 203; DAWSON
V. KENTUCKY DISTILLERIES CO., 255 U.S. 288. 

THE VITAL ISSUE WHICH REMAINS IS WHETHER THE APPLICATION OF THE TAX
TO PETITIONER VIOLATES THE COMMERCE CLAUSE OF THE FEDERAL
CONSTITUTION.  WE COME TO THAT ISSUE NOW WITH THE BENEFIT OF A
STATEMENT FROM THE STATE COURT OF FINAL JURISDICTION SHOWING EXACTLY
WHAT IT IS THAT THE STATE HAS SOUGHT TO TAX.  THE ALL-IMPORTANT
"OPERATING INCIDENCE" OF THE TAX IS THUS MADE CLEAR.  FN3  AFTER FULL
CONSIDERATION AND WITH KNOWLEDGE THAT ITS STATEMENT WOULD BE MADE THE
BASIS OF DETERMINING THE VALIDITY OF THE APPLICATION OF THE TAX UNDER
THE COMMERCE CLAUSE, THAT COURT SAID: 

"THE TAX IS THEN A TAX OR EXCISE UPON THE FRANCHISE OF CORPORATIONS
FOR THE PRIVILEGE OF CARRYING ON OR DOING BUSINESS IN THE STATE,
WHETHER THEY BE DOMESTIC OR FOREIGN.  STANLEY WORKS V. HACKETT, 122
CONN. 547, 551, 190 A. 743.  NET EARNINGS ARE USED MERELY FOR THE
PURPOSE OF DETERMINING THE AMOUNT TO BE PAID BY EACH CORPORATION, A
MEASURE WHICH, BY THE APPLICATION OF THE RATE CHARGED, WAS INTENDED TO
IMPOSE UPON EACH CORPORATION A SHARE OF THE GENERAL TAX BURDEN AS
NEARLY AS POSSIBLE EQUIVALENT TO THAT BORNE BY OTHER WEALTH IN THE
STATE.  AS REGARDS A CORPORATION DOING BUSINESS BOTH WITHIN AND WITHOUT
THE STATE, THE INTENTION WAS, BY THE USE OF A RATHER COMPLICATED
FORMULA, TO MEASURE THE TAX BY DETERMINING AS FAIRLY AS POSSIBLE THE
PROPORTIONATE AMOUNT OF ITS BUSINESS DONE IN THIS STATE.  THERE IS NO
GROUND UPON WHICH THE TAX CAN BE SAID TO REST UPON THE USE OF HIGHWAYS
BY MOTOR TRUCKS  ..  "   135 CONN. AT 56-57, 61 A.2D AT 98-99. 

THE INCIDENCE OF THE TAX IS UPON NO INTRASTATE COMMERCE ACTIVITIES
BECAUSE THERE ARE NONE.  PETITIONER IS ENGAGED ONLY IN INTERSTATE
TRANSPORTATION.  ITS PRINCIPAL PLACE OF BUSINESS IS IN ILLINOIS.  IT IS
AUTHORIZED BY THE INTERSTATE COMMERCE COMMISSION TO DO CERTAIN
INTERSTATE TRUCKING AND BY THE CONNECTICUT PUBLIC UTILITIES COMMISSION
TO DO PART OF SUCH INTERSTATE TRUCKING IN CONNECTICUT.  PETITIONER HAS
FILED WITH THE SECRETARY OF STATE OF CONNECTICUT A CERTIFICATE OF ITS
INCORPORATION IN MISSOURI, HAS DESIGNATED AN AGENT IN CONNECTICUT FOR
SERVICE OF PROCESS AND HAS PAID THE STATE FEE REQUIRED IN THAT
CONNECTION.  IT HAS NOT BEEN AUTHORIZED BY THE STATE OF CONNECTICUT TO
DO INTRASTATE TRUCKING AND DOES NOT ENGAGE IN IT.  SEE TERMINAL TAXICAB
CO. V. DISTRICT OF COLUMBIA, 241 U.S. 252, 253-254. 

PETITIONER'S BUSINESS IS THE INTERSTATE TRANSPORTATION OF FREIGHT BY
MOTOR TRUCK BETWEEN EAST AND WEST.  WHEN A FULL TRUCKLOAD IS TO BE
SHIPPED TO OR FROM ANY CUSTOMER IN CONNECTICUT, PETITIONER'S OVER-THE
ROAD TRUCKS GO DIRECTLY TO THE CUSTOMER'S PLACE OF BUSINESS.  IN THE
CASE OF LESS-THAN-TRUCKLOAD SHIPMENTS, PICKUP TRUCKS OPERATED BY
PETITIONER GATHER THE FREIGHT FROM CUSTOMERS FOR ASSEMBLY INTO FULL
TRUCKLOADS AT EITHER OF TWO TERMINALS MAINTAINED WITHIN THE STATE. 
"THE PICKUP TRUCKS MERELY ACT AS A PART OF THE INTERSTATE
TRANSPORTATION OF THE FREIGHT."  135 CONN. AT 44, 61 A.2D AT 93. 

THE TAX DOES NOT DISCRIMINATE BETWEEN INTERSTATE AND INTRASTATE
COMMERCE.  NEITHER THE AMOUNT OF THE TAX NOR ITS COMPUTATION NEED BE
CONSIDERED BY US IN VIEW OF OUR DISPOSITION OF THE CASE.  THE OBJECTION
TO ITS VALIDITY DOES NOT REST ON A CLAIM THAT IT PLACES AN UNDULY HEAVY
BURDEN ON INTERSTATE COMMERCE IN RETURN FOR PROTECTION GIVEN BY THE
STATE.  THE TAX IS NOT LEVIED AS COMPENSATION FOR THE USE OF HIGHWAYS
FN4  OR COLLECTED IN LIEU OF AN AD VALOREM PROPERTY TAX.  FN5  THOSE
BASES OF TAXATION HAVE BEEN DISCLAIMED BY THE HIGHEST COURT OF THE
TAXING STATE.  IT IS NOT A FEE FOR AN INSPECTION OR A TAX ON SALES OR
USE.  IT IS A "TAX OR EXCISE" PLACED UNEQUIVOCALLY UPON THE
CORPORATION'S FRANCHISE FOR THE PRIVILEGE OF CARRYING ON EXCLUSIVELY
INTERSTATE TRANSPORTATION IN THE STATE.  IT SERVES NO PURPOSE FOR THE
STATE TAX COMMISSIONER TO SUGGEST THAT, IF THERE WERE SOME INTRASTATE
COMMERCE INVOLVED OR IF AN APPROPRIATE TAX WERE IMPOSED AS COMPENSATION
FOR PETITIONER'S USE OF THE HIGHWAYS, THE SAME SUM OF MONEY AS IS AT
ISSUE HERE MIGHT BE COLLECTED LAWFULLY FROM PETITIONER.  EVEN THOUGH
THE FINANCIAL BURDEN ON INTERSTATE COMMERCE MIGHT BE THE SAME, THE
QUESTION WHETHER A STATE MAY VALIDLY MAKE INTERSTATE COMMERCE PAY ITS
WAY DEPENDS FIRST OF ALL UPON THE CONSTITUTIONAL CHANNEL THROUGH WHICH
IT ATTEMPTS TO DO SO. FREEMAN V. HEWIT, 329 U.S. 249; MCLEOD V.
DILWORTH CO., 322 U.S. 327. 

TAXING POWER IS INHERENT IN SOVEREIGN STATES, YET THE STATES OF THE
UNITED STATES HAVE DIVIDED THEIR TAXING POWER BETWEEN THE FEDERAL
GOVERNMENT AND THEMSELVES.  THEY DELEGATED TO THE UNITED STATES THE
EXCLUSIVE POWER TO TAX THE PRIVILEGE TO ENGAGE IN INTERSTATE COMMERCE
WHEN THEY GAVE CONGRESS THE POWER "TO REGULATE COMMERCE WITH FOREIGN
NATIONS, AND AMONG THE SEVERAL STATES  .. "   U.S. CONST., ART. I, SEC.
8, CL. 3.  WHILE THE REACH OF THE RESERVED TAXING POWER OF A STATE IS
GREAT, THE CONSTITUTIONAL SEPARATION OF THE FEDERAL AND STATE POWERS
MAKES IT ESSENTIAL THAT NO STATE BE PERMITTED TO EXERCISE, WITHOUT
AUTHORITY FROM CONGRESS, THOSE FUNCTIONS WHICH IT HAS DELEGATED
EXCLUSIVELY TO CONGRESS.  ANOTHER EXAMPLE OF THIS BASIC SEPARATION OF
POWERS IS THE INABILITY OF THE STATES TO TAX THE AGENCIES THROUGH WHICH
THE UNITED STATES EXERCISES ITS SOVEREIGN POWERS.  SEE M'CULLOCH V.
MARYLAND, 4 WHEAT.  316, 425-437; BROWN V. MARYLAND, 12 WHEAT.  419,
445-449; MAYO V. UNITED STATES, 319 U.S. 441. 

THE ANSWER IN THE INSTANT CASE HAS BEEN MADE CLEAR BY THE COURTS OF
CONNECTICUT.  IT IS NOT A MATTER OF LABELS.  THE INCIDENCE OF THE TAX
PROVIDES THE ANSWER.  THE COURTS OF CONNECTICUT HAVE HELD THAT THE TAX
BEFORE US ATTACHES SOLELY TO THE FRANCHISE OF PETITIONER TO DO
INTERSTATE BUSINESS.  THE STATE IS NOT PRECLUDED FROM IMPOSING TAXES
UPON OTHER ACTIVITIES OR ASPECTS OF THIS BUSINESS WHICH, UNLIKE THE
PRIVILEGE OF DOING INTERSTATE BUSINESS, ARE SUBJECT TO THE SOVEREIGN
POWER OF THE STATE.  THOSE TAXES MAY BE IMPOSED ALTHOUGH THEIR PAYMENT
MAY COME OUT OF THE FUNDS DERIVED FROM PETITIONER'S INTERSTATE
BUSINESS, PROVIDED THE TAXES ARE SO IMPOSED THAT THEIR BURDEN WILL BE
REASONABLY RELATED TO THE POWERS OF THE STATE AND NONDISCRIMINATORY. 

THIS COURT HERETOFORE HAS STRUCK DOWN, UNDER THE COMMERCE CLAUSE,
STATE TAXES UPON THE PRIVILEGE OF CARRYING ON A BUSINESS THAT WAS
EXCLUSIVELY INTERSTATE IN CHARACTER.  THE CONSTITUTIONAL INFIRMITY OF
SUCH A TAX PERSISTS NO MATTER HOW FAIRLY IT IS APPORTIONED TO BUSINESS
DONE WITHIN THE STATE.  ALPHA PORTLAND CEMENT CO. V. MASSACHUSETTS, 268
U.S. 203(MEASURED BY PERCENTAGES OF "CORPORATE EXCESS" AND NET INCOME);
OZARK PIPE LINE CORP. V. MONIER, 266 U.S. 555(MEASURED BY PERCENTAGE OF
CAPITAL STOCK AND SURPLUS).  SEE INTERSTATE PIPE LINE CO. V. STONE, 337
U.S. 662, 669, ET SEQ. (DISSENTING OPINION WHICH DISCUSSES THE ISSUE ON
THE ASSUMPTION THAT THE ACTIVITIES WERE IN INTERSTATE COMMERCE); JOSEPH
V. CARTER & WEEKES CO., 330 U.S. 422; FREEMAN V. HEWIT, SUPRA.  FN6 

OUR CONCLUSION IS NOT IN CONFLICT WITH THE PRINCIPLE THAT, WHERE A
TAXPAYER IS ENGAGED BOTH IN INTRASTATE AND INTERSTATE COMMERCE, A STATE
MAY TAX THE PRIVILEGE OF CARRYING ON INTRASTATE BUSINESS AND, WITHIN
REASONABLE LIMITS,  FN7  MAY COMPUTE THE AMOUNT OF THE CHARGE BY
APPLYING THE TAX RATE TO A FAIR PROPORTION OF THE TAXPAYER'S BUSINESS
DONE WITHIN THE STATE, INCLUDING BOTH INTERSTATE AND INTRASTATE. 
INTERSTATE PIPE LINE CO. V. STONE, SUPRA; INTERNATIONAL HARVESTER CO.
V. EVATT, 329 U.S. 416; ATLANTIC LUMBER CO. V. COMM'R OF CORPORATIONS
AND TAXATION, 298 U.S. 553.  THE SAME IS TRUE WHERE THE TAXPAYER'S
BUSINESS ACTIVITY IS LOCAL IN NATURE, SUCH AS THE TRANSPORTATION OF
PASSENGERS BETWEEN POINTS WITHIN THE SAME STATE, ALTHOUGH INCLUDING
INTERSTATE TRAVEL, CENTRAL GREYHOUND LINES V. MEALEY, 334 U.S. 653, OR
THE PUBLICATION OF A NEWSPAPER, WESTERN LIVE STOCK V. BUREAU OF
REVENUE, 303 U.S. 250.  SEE ALSO, MEMPHIS GAS CO. V. STONE, 335 U.S.
80. 

IN THIS FIELD THERE IS NOT ONLY REASON BUT LONG-ESTABLISHED PRECEDENT
FOR KEEPING THE FEDERAL PRIVILEGE OF CARRYING ON EXCLUSIVELY INTERSTATE
COMMERCE FREE FROM STATE TAXATION.  TO DO SO GIVES LATERAL SUPPORT TO
ONE OF THE CORNERSTONES OF OUR CONSTITUTIONAL LAW - M'CULLOCH V.
MARYLAND, SUPRA. 

THE JUDGMENT OF THE COURT OF APPEALS, WHICH REVERSED THAT OF THE
DISTRICT COURT, IS ACCORDINGLY REVERSED. 

FN1  "SEC.  418C.  IMPOSITION OF TAX.  EVERY MUTUAL SAVINGS BANK,
SAVINGS AND LOAN ASSOCIATION AND BUILDING AND LOAN ASSOCIATION DOING
BUSINESS IN THIS STATE, AND EVERY OTHER CORPORATION OR ASSOCIATION
CARRYING ON BUSINESS IN THIS STATE WHICH IS REQUIRED TO REPORT TO THE
COLLECTOR OF INTERNAL REVENUE FOR THE DISTRICT IN WHICH SUCH
CORPORATION OR ASSOCIATION HAS ITS PRINCIPAL PLACE OF BUSINESS FOR THE
PURPOSE OF ASSESSMENT, COLLECTION AND PAYMENT OF AN INCOME TAX (WITH
EXCEPTIONS NOT MATERIAL HERE)  ..  SHHALL PAY, ANNUALLY, A TAX OR
EXCISE UPON ITS FRANCHISE FOR THE PRIVILEGE OF CARRYING ON OR DOING
BUSINESS WITHIN THE STATE, SUCH TAX TO BE MEASURED BY THE ENTIRE NET
INCOME AS HEREIN DEFINED RECEIVED BY SUCH CORPORATION OR ASSOCIATION
FROM BUSINESS TRANSACTED WITHIN THE STATE DURING THE INCOME YEAR AND TO
BE ASSESSED AT THE RATE OF TWO PER CENT; ..."   CONN. GEN. STAT. CUM.
SUPP. 1935.    THIS SECTION WAS AMENDED IN 1937 BY INSERTING IN THE
FIRST ITALICIZED CLAUSE, AFTER THE WORDS "EVERY OTHER CORPORATION OR
ASSOCIATION CARRYING ON," THE WORDS "OR HAVING THE RIGHT TO CARRY ON." 
CONN. GEN. STAT. CUM. SUPP. 1939, SEC. 354E.  OUR CONCLUSION IS THE
SAME AS TO THE ASSESSMENTS LEVIED BEFORE AND THOSE LEVIED AFTER THE
AMENDMENT. 

THE CURRENT REVISION OF THE STATUTE, AS SUBSEQUENTLY AMENDED, APPEARS
IN CONN. GEN. STAT., 1949, SECS. 1896-1921. 

FN2  "  ..  NOO (UNITED STATES) DISTRICT COURT SHALL HAVE
JURISDICTION OF ANY SUIT TO ENJOIN, SUSPEND, OR RESTRAIN THE
ASSESSMENT, LEVY, OR COLLECTION OF ANY TAX IMPOSED BY OR PURSUANT TO
THE LAWS OF ANY STATE WHERE A PLAIN, SPEEDY, AND EFFICIENT REMEDY MAY
BE HAD AT LAW OR IN EQUITY IN THE COURTS OF SUCH STATE."  50 STAT. 738,
28 U.S.C. (1940 ED.)  SEC.  41(1).  SEE 28 U.S.C. (1946 ED., SUPP. III)
SEC. 1341. 

FN3  WISCONSIN V. PENNEY CO., 311 U.S. 435, 444. 

FN4  SEE CAPITOL GREYHOUND LINES V. BRICE, 339 U.S. 542; AERO TRANSIT
CO. V. BOARD OF COMM'RS, 332 U.S. 495; INTERSTATE BUSSES CORP. V.
BLODGETT, 276 U.S. 245(CONN.  EXCISE TAX ON THE USE OF THE HIGHWAYS). 
CF. MEMPHIS GAS CO. V. STONE, 335 U.S. 80; MCCARROLL V. DIXIE LINES,
309 U.S. 176. 

FN5  SEE INTERSTATE PIPE LINE CO. V. STONE, 337 U.S. 662, 679; CUDAHY
PACKING CO. V. MINNESOTA, 246 U.S. 450; OLD DOMINION S.S. CO. V.
VIRGINIA, 198 U.S. 299; POSTAL TELEGRAPH CABLE CO. V. ADAMS, 155 U.S.
688. 

FN6  THE DECISION IN MEMPHIS GAS CO. V. BEELER, 315 U.S. 649, UPHELD
A TENNESSEE TAX ON EARNINGS OF THE TAXPAYER WITHIN THAT STATE WHERE THE
EARNINGS WERE DERIVED FROM THE INTRASTATE DISTRIBUTION OF GAS BY THE
TAXPAYER IN A JOINT ENTERPRISE WITH THE MEMPHIS POWER & LIGHT COMPANY. 
ANY SUGGESTION IN THAT OPINION AS TO THE POSSIBLE VALIDITY OF SUCH A
TAX IF APPLIED TO EARNINGS DERIVED WHOLLY FROM INTERSTATE COMMERCE IS
NOT ESSENTIAL TO THE DECISION IN THE CASE. 

FN7  SEE INTERNATIONAL HARVESTER CO. V. EVATT, 329 U.S. 416; BUTLER
BROS. V. MCCOLGAN, 315 U.S. 501; DEPARTMENT OF TREASURY V. WOOD
PRESERVING CORP., 313 U.S. 62; FORD MOTOR CO. V. BEAUCHAMP, 308 U.S.
331; CONNECTICUT GENERAL LIFE INS. CO. V. JOHNSON, 303 U.S. 77; HANS
REES' SONS V. NORTH CAROLINA, 283 U.S. 123; UNDERWOOD TYPEWRITER CO. V.
CHAMBERLAIN, 254 U.S. 113. 

MR. JUSTICE CLARK, WITH WHOM MR. JUSTICE BLACK AND MR. JUSTICE
DOUGLAS JOIN, DISSENTING. 

THE COURT ASSUMES, AND I THINK IT HAS BEEN CLEARLY DEMONSTRATED, THAT
THE TAX UNDER CHALLENGE IS NONDISCRIMINATORY, FAIRLY APPORTIONED AND
NOT AN UNDUE BURDEN ON INTERSTATE COMMERCE.  HENCE, IF APPELLANT HAD
BEEN ENGAGED IN AN IOTA OF ACTIVITY WHICH THE COURT WOULD BE WILLING TO
CALL "INTRASTATE," CONNECTICUT COULD HAVE APPLIED ITS TAX TO THE
COMPANY'S INTERSTATE BUSINESS IN THE PRECISE FORM WHICH IT NOW SEEKS TO
EMPLOY - A TAX ON THE PRIVILEGE OF DOING BUSINESS IN CONNECTICUT
MEASURED BY THE ENTIRE NET INCOME ATTRIBUTABLE TO THE STATE, EVEN
THOUGH DERIVED FROM INTERSTATE COMMERCE. 

BUT SOLELY BECAUSE SPECTOR ENGAGES IN WHAT THE COURT CALLS
"EXCLUSIVELY INTERSTATE" BUSINESS, A DIFFERENT STANDARD IS APPLIED. 
THE COURT DOES NOT ASK WHETHER THE STATE IS MERELY ASKING INTERSTATE
COMMERCE TO PAY ITS WAY, OR WHETHER THE STATE IN FACT PROVIDES
PROTECTION AND SERVICES FOR WHICH SUCH COMMERCE MAY FAIRLY BE CHARGED. 
NOR IS THE COURT CONCERNED WHETHER THE TAX PUTS INTERSTATE BUSINESS AT
A COMPETITIVE DISADVANTAGE OR IS LIKELY TO DO SO.  INSTEAD, THE TAX IS
DECLARED INVALID SIMPLY BECAUSE THE STATE HAS VERBALLY CHARACTERIZED IT
AS A LEVY ON THE PRIVILEGE OF DOING BUSINESS WITHIN ITS BORDERS.  THE
COURT CONCEDES, OR AT LEAST APPEARS TO CONCEDE, THAT IF THE CONNECTICUT
LEGISLATURE OR HIGHEST COURT HAD DESCRIBED THE TAX AS ONE FOR THE USE
OF HIGHWAYS OR IN LIEU OF AN AD VALOREM PROPERTY TAX, SPECTOR WOULD
HAVE HAD TO PAY THE SAME AMOUNT, CALCULATED IN THE SAME WAY, AS IS
SOUGHT TO BE COLLECTED HERE.  IN ACKNOWLEDGING THIS, THE COURT'S OWN
OPINION TOTALLY REFUTES ITS PROTESTATION THAT THE STANDARD EMPLOYED TO
STRIKE DOWN CONNECTICUT'S TAX IS MORE THAN A MATTER OF LABELS.  SPECTOR
REMAINS FREE - AS IT HAS SINCE THE TAX LAW WAS ADOPTED IN 1935 - FROM
PAYING ANY SHARE OF THE STATE'S EXPENSES, AND ITS TAX-FREE STATUS
CONTINUES UNTIL CONNECTICUT RENAMES OR RESHUFFLES ITS TAX. 

NEITHER SUCH A STANDARD NOR SUCH A RESULT PERSUADES ME.  I AGREE WITH
THE WELL-REASONED OPINIONS OF THE COURT BELOW THAT THE CASES UPHOLDING
FAIRLY APPORTIONED TAXES ON MIXED INTRASTATE AND INTERSTATE BUSINESS,
AND RECOGNIZING THE RIGHT OF STATES TO MAKE INTERSTATE COMMERCE PAY ITS
WAY, HAVE ENFEEBLED - AND JUSTIFIABLY SO - THE PRECEDENTS WHICH TODAY'S
DECISION RESTORES TO FULL VIGOR.  IN THE NOT TOO DISTANT PAST, THIS
SEEMED TO BE QUITE CLEAR.  IN MEMPHIS NATURAL GAS CO. V. BEELER, 315
U.S. 649(1942), A TAX WAS UPHELD AS BEING REASONABLY ATTRIBUTABLE TO
INTRASTATE ACTIVITIES.  BUT CHIEF JUSTICE STONE, SPEAKING FOR A
UNANIMOUS COURT, WENT FURTHER TO STATE: 

"IN ANY CASE, EVEN IF TAXPAYER'S BUSINESS WERE WHOLLY INTERSTATE
COMMERCE, A NONDISCRIMINATORY TAX BY TENNESSEE UPON THE NET INCOME OF A
FOREIGN CORPORATION HAVING A COMMERCIAL DOMICILE THERE ..  ORR UPON NET
INCOME DERIVED FROM WITHIN THE STATE  ..  ISS NOT PROHIBITED BY THE
COMMERCE CLAUSE  ..  "   ID. AT 656. 

IN LIGHT OF THE APPARENT NEED FOR CLEARING UP THE TANGLED UNDERBRUSH
OF PAST CASES, IT APPEARS THAT THIS VIEW WAS DELIVERED ADVISEDLY.  NOR
DO I UNDERSTAND IT TO HAVE BEEN UPSET BY FREEMAN V. HEWIT, 329 U.S.
249(1946), OR JOSEPH V. CARTER & WEEKES CO., 330 U.S. 422(1947).  THE
FORMER INVOLVED A GROSS-RECEIPTS TAX CAPABLE OF DUPLICATION BY ANOTHER
STATE; THE LATTER INVOLVED A GROSSRECEIPTS TAX RATHER THAN A NET-INCOME
TAX; AND THE OPINION IN EACH CASE WAS WRITTEN BY A MEMBER OF THE COURT
WHO JOINED IN THE BEELER DECISION. 

BUT IN ANY EVENT, I WOULD CONFINE THOSE DECISIONS TO THEIR "SPECIAL
FACTS."  FREEMAN V. HEWIT, SUPRA, AT 252.  THE CONNECTICUT TAX MEETS
EVERY PRACTICAL TEST OF FAIRNESS AND PROPRIETY ENUNCIATED IN CASES
UPHOLDING PRIVILEGE TAXES ON CORPORATIONS DOING A MIXED INTRASTATE AND
INTERSTATE BUSINESS.  THESE CASES SHOULD GOVERN HERE, FOR THERE IS NO
APPARENT DIFFERENCE BETWEEN AN "EXCLUSIVELY INTERSTATE" BUSINESS AND A
"MIXED" BUSINESS WHICH WOULD WARRANT DIFFERENT CONSTITUTIONAL REGARD. 
THERE IS NOTHING SPIRITUAL ABOUT INTERSTATE COMMERCE.  IT IS RARELY
DEVOID OF SIGNIFICANT CONTACTS WITH THE SEVERAL STATES.  HENCE, THIS
COURT HAS LONG TREATED THE PROBLEMS IN THIS FIELD WITH A FLEXIBILITY
WHICH THE COMPETING DEMANDS OF FEDERAL AND STATE GOVERNMENTAL SPHERES
HAVE REQUIRED.  IN THE ABSENCE OF FEDERAL ACTION, THIS COURT HAS BEEN
QUICK TO RECOGNIZE LEGITIMATE LOCAL INTERESTS AND UPHOLD STATE
REGULATIONS OF ACTIVITIES WHICH ADMITTEDLY FORM A PART OF, OR IMPINGE
ON, INTERSTATE COMMERCE.  SEE, E.G., SOUTH CAROLINA HIGHWAY DEPT. V.
BARNWELL BROS., 303 U.S. 177(1938).  THE SAME APPROACH IS HARDLY
FOREIGN TO THE FIELD OF STATE TAXES: 

"  ..  (WWHEN) ACCOMMODATION MUST BE MADE BETWEEN STATE AND NATIONAL
INTERESTS, MANUFACTURE WITHIN A STATE, THOUGH DESTINED FOR SHIPMENT
OUTSIDE, IS NOT A SEAMLESS WEB SO AS TO PREVENT A STATE FROM GIVING THE
MANUFACTURING PART DETACHED RELEVANCE FOR PURPOSES OF LOCAL TAXATION." 
FREEMAN V. HEWIT, SUPRA, AT 255. 

A SIMILAR RECOGNITION OF FACTS IS NO LESS SUITED TO THIS CASE. 
SPECTOR QUALIFIED TO DO BUSINESS IN THE STATE ON JUNE 11, 1934, BY
FILING THE NECESSARY PAPERS WITH THE SECRETARY OF STATE.  IT LEASES AND
UTILIZES TERMINALS IN CONNECTICUT.  IT EMPLOYS TWENTY-SEVEN FULL-TIME
WORKERS IN CONNECTICUT, THE PAYROLL AT NEW BRITAIN AMOUNTING TO $1,200
PER WEEK.  IT OWNS PICKUP TRUCKS WHICH ARE REGISTERED IN ITS NAME WITH
THE STATE MOTOR VEHICLE DEPARTMENT AND WHICH PLY THE STREETS OF
CONNECTICUT CITIES.  IT USES HEAVY TRUCKS WHICH GRIND OVER CONNECTICUT
HIGHWAYS.  AS POINTED OUT BY THE CONNECTICUT SUPREME COURT OF ERRORS,
ITS LEASEHOLDS 

"  ..  WEERE THE MEANS ADOPTED BY IT FOR THE SUCCESSFUL OPERATION OF
ITS BUSINESS IN THIS STATE, AND NO DOUBT THEY WERE OF MATERIAL SERVICE
IN PRODUCING THE LARGE PROPORTION OF THE PLAINTIFF'S BUSINESS WHICH IS
ATTRIBUTABLE TO CONNECTICUT."  SPECTOR MOTOR SERVICE, INC. V. WALSH,
135 CONN. 37, 50, 61 A.2D 89, 96(1948).  TO BE SURE, THE COMPANY DOES
NOT MAKE INTRASTATE DELIVERIES.  BUT IF IT DID, ITS ACTIVITIES WOULD
DIFFER ONLY IN THAT ITS TRUCKS MIGHT USE DIFFERENT STREETS AND HIGHWAYS
AND MAKE DIFFERENT STOPS; THE PROTECTION AND SERVICES RENDERED BY THE
STATE WOULD BE THE SAME.  THE LOCAL ASPECTS OF SPECTOR'S BUSINESS, EVEN
THOUGH IT MIGHT TECHNICALLY BE "EXCLUSIVELY INTERSTATE," ARE EASILY AS
SUBSTANTIAL AS THOSE WHICH THIS COURT RECENTLY FOUND ADEQUATE TO UPHOLD
PARTS OF THE ILLINOIS OCCUPATION TAX, NORTON CO. V. DEPARTMENT OF
REVENUE, 340 U.S. 534(1951).  THEY ARE AT LEAST AS EXTENSIVE AS THOSE
WHICH VALIDATED A "PRIVILEGE" TAX IN MEMPHIS NATURAL GAS CO. V. STONE,
335 U.S. 80(1948). 

IT HAS TAKEN EIGHT YEARS AND EIGHT COURTS TO BRING THIS BATTERED
LITIGATION TO AN END.  THE TAXES INVOLVED GO BACK THIRTEEN YEARS.  IT
IS THEREFORE NO ANSWER TO CONNECTICUT AND SOME THIRTY OTHER STATES WHO
HAVE SIMILAR TAX MEASURES THAT THEY CAN NOW COLLECT THE SAME REVENUES
BY ENACTING LAWS MORE FELICITOUSLY DRAFTED.  BECAUSE OF ITS FAILURE TO
USE THE RIGHT TAG, CONNECTICUT CANNOT COLLECT FROM SPECTOR FOR THE
YEARS 1937 TO DATE, AND IT AND OTHER STATES MAY WELL HAVE PAST
COLLECTIONS TAKEN AWAY AND TURNED INTO TAXPAYER BONANZAS BY SUITS FOR
REFUND NOT BARRED BY THE RESPECTIVE STATUTES OF LIMITATION. 

NOR CAN THE STATES BE ENTIRELY CERTAIN THAT STATUTES RECAST IN THE
LIGHT OF THIS DECISION WILL BE IMMUNE FROM LATER CONSTITUTIONAL
ATTACK.  IT IS AT LEAST DOUBTFUL THAT THIS STATUTE IS THE ONLY KIND OF
MEASURE WHICH THE COURT MIGHT THINK WOULD IMPOSE A TAX "ON THE
PRIVILEGE OF DOING INTERSTATE BUSINESS."  BUT EVEN ASSUMING THAT THE
COURT HAS PROMULGATED A SURE GUIDE FOR STATES TO FOLLOW IN FUTURE
ENACTMENTS, THE FACT REMAINS THAT THERE IS NO REASONABLE WARRANT FOR
CLOAKING A PURELY VERBAL STANDARD WITH CONSTITUTIONAL DIGNITY. 
"EXCLUSIVELY INTERSTATE COMMERCE" RECEIVES ADEQUATE PROTECTION WHEN
STATE LEVIES ARE FAIRLY APPORTIONED AND NONDISCRIMINATORY.  SEE OPINION
OF JUSTICE RUTLEDGE IN INTERSTATE OIL PIPE LINE CO. V. STONE, 337 U.S.
662(1949).  THE "PROTECTION" BESTOWED BY TODAY'S DECISION IS NEITHER
SUBSTANTIAL NOR DESERVED. 

OBJECTIONS TO THE FAIRNESS OF CONNECTICUT'S APPORTIONMENT FORMULA
HAVE BEEN CORRECTLY DISPOSED OF BY THE COURT OF APPEALS.  I WOULD
AFFIRM ITS JUDGMENT.