337 U.S.

662
69 S.Ct. 1264
93 L.Ed. 1613

INTERSTATE OIL PIPE LINE CO.

v.
STONE, Chairman State Tax Commission.
No. 287.
Argued Jan. 13, 1949.
Decided June 20, 1949.
Rehearing Denied Oct. 10, 1949.

See 70 S.Ct. 32.

Appeal from the Supreme Court of the State of Mississippi.
Mr. Phelan H. Hunter, Tulsa, Okl., for appellant.
Mr. J. H. Sumrall, Jackson, Miss., for appellee.
Mr. Justice RUTLEDGE announced the judgment of the Court and the
following opinion, in which Mr. Justice BLACK, Mr. Justice DOUGLAS
and Mr. Justice MURPHY join.

This appeal questions the power of Mississippi, as affected by the commerce

clause, to impose a tax measured by gross receipts from the operation of a pipe
line wholly within the state.

Appellant is a Delaware corporation which has qualified to do business in

Mississippi as a foreign corporation. It owns and operates pipe lines which are
used to transport oil from lease tanks in various oil fields in Mississippi to
loading racks adjacent to railroads elsewhere in the state.1 From these racks the
oil is pumped into railroad tank cars for shipment outside the state. If there are
no tank cars available the oil is stored in tanks near the racks. But such delays
in loading are usually of short duration and never exceed a week, according to
appellant's uncontradicted statement. When delivered to appellant the oil is
accompanied by shipping orders from the producer or owner directing that the

oil be transported to out-of-state destinations. There are no refineries in

Mississippi. There is no through bill of lading from the point of origin at the
fields to the destination outside the state. Appellant ships the oil by rail as agent
of the owner on bills of lading showing the owner as shipper, the appellant as
agent of the shipper and indicating the destination specified in the shipping
orders issue to appellant. Appellant is paid by the producer at the rate per barrel
specific in its tariff2 from the gathering point to the rack and is paid an
additional charge for loading the oil in the tank cars.
3

The chairman of the Mississippi State Tax Commission, appellee, levied a tax
against appellant for the years 1944, 1945 and the first half of 1946, in the sum
of $20,296.36, measured by appellant's receipts for transporti g oil from the
lease tanks to the railroad loading platforms, pursuant to the following sections
of the Mississippi Code, Miss. Code, 1942, Ann., tit. 40, c. 3, 10105, 10109
(Supp. 1948), which provide:

'10105. There is hereby levied and shall be collected annual privilege taxes,
measured by the amount or volume of business done, against the persons, on
account of the business activities, and in the amounts to be determined by the
application of rates against values, or gross income, or gross proceeds of sales,
as the case may be, as follows (see sections following):'

'10109. * * * Upon every person engaging or continuing within this state in the
business of operating a pipe line for transporting for compensation or hire from
one point to another in this state oil or natural gas or artificial gas through pipes
or conduits in this state, there is likewise hereby levied and shall be collected a
tax, on account of the business engaged in, equal to two per cent of the gross
income of the business. * * * 'There shall be excepted from the gross income
used in determining the measure of the tax imposed in this section so much
thereof as is derived from the business conducted in commerce between this
state and other states of the United States, or between this state and foreign
countries which the state of Mississippi is prohibited from taxing under the
constitution of the United States of America. * * *'3

The State Tax Commission sustained the assessment. The trial court dismissed
a declaration seeking review of the Commission's action. The Supreme Court of
Mississippi affirmed that judgment, overruling appellant's contention that
because the tax was levied on the privilege of conducting an interstate business
and measured by gross receipts therefrom the tax could not be imposed without
offending the commerce clause of the Federal Constitution. 203 Miss. 715, 35
So.2d 73.

The state supreme Court held that the operation of these pipe lines between
points within the state was intrastate rather than interstate commerce, and that
the tax was therefore 'merely on the privilege of operating a pipe line wholly
within this State as a local activity. * * * a tax on the privilege of doing an
intrastate business, and measured by a percent of gross income as a matter of
convenience.' 203 Miss. at 715, 35 So.2d at page 81.

Appellant contends that operation of the pipe lines between points in

Mississippi was in fact interstate commerce, and that the tax was construed by
the Supreme Court of Mississippi to be a tax on the privilege of operating the
pipe lines. From these premises, together with the major premise that no state
can tax the privilege of engaging in interstate commerce, appellant concludes
that the tax may not constitutionally be imposed.

We do not pause to consider whether the business of operating the intrastate

pipe lines is interstate commerce for, even if we assume that it is, Mississippi
has power to impose the tax involved in this case. Further, we do not find it
necessary to dispute that the Supreme Court of Mississippi construed the statute
as imposing a tax on the privilege of operating a pipe line wholly within the
state, and not a tax solely upon the 'local activities of 'maintaining, keeping in
repair, and otherwise in manning the facilities" situated in Mississippi,
Memphis Gas Co. v. Stone, 335 U.S. 80, 9293, 68 S.Ct. 1475, 1481, 92 L.Ed.
1832, or upon the gross receipts themselves, Central Greybound Lines v.
Mealey, 334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633. While we are of course
bound by the constructio given a state statute by the highest court of the State,4
we are concerned with the practical operation of challenged state tax statutes,
not with their descriptive labels.5

10

The statute is not invalidated by the commerce clause of the Federal

Constitution merely because, unlike the statute attacked in Memphis Gas Co. v.
Stone, supra, it imposes a 'direct' tax on the 'privilege' of engaging in interstate
commerce.6 Any notions to the contrary should not have survived Maine v.
Grand Trunk R. Co., 142 U.S. 217, 12 S.Ct. 121, 163, 35 L.Ed. 994, which
flatly rules the case at bar. That case sustained a state statute which imposed
upon an interstate railroad corporation 'an annual excise tax (measured by
apportioned gross receipts), for the privilege of exercising its franchises in this
State.'7 The Grand Trunk decision has been approved by this Court as recently
as the other controlling case of Central Greyhound Lines v. Mealey, supra, 334
U.S. at page 658, 663, 68 S.Ct. at pages 1263, 1266, 92 L.Ed. 1633, in which
the Court permitted New York to impose a tax on the gross receipts from the
operation of an interstate bus line, provided that tax was apportioned according
to mileage traveled within the state. The Mealey case is not distinguished by

saying that it involved only a tax on gross receipts and not a tax on interstate
commerce itself, for gross receipts taxes have long been regarded as 'direct' in
cases which are supposed to support the proposition that 'direct' taxes on
interstate commerce are invalid under the commerce clause. 8
11

Since all the activities upon which the tax is imposed are carried on in
Mississippi, there is no due process objection to the tax. 9 The tax does not
discriminate against interstate commerce in favor of competing intrastate
commerce of like character.10 The nature of the subject of taxation makes
apportionment unnecessary; there is no attempt to tax interstate activity carried
on outside Missi sippi's borders. No other state can repeat the tax.11 For these
reasons the commerce clause does not invalidate this tax.

12

The judgment is affirmed.

13

Affirmed.

14

Mr. Justice BURTON, concurring.

15

I join in the judgment of affirmance announced by the Court but do not join in
the opinion rendered in support of it.

16

I concur in the judgment solely on the ground that the tax imposed by the State
of Mississippi was a tax on the privilege of operating a pipe line for
transporting oil in Mississippi in intrastate commerce and that, as such, it was a
valid tax. The Supreme Court of Mississippi, in the case below, 203 Miss. 715,
35 So.2d 73, held that this tax had been authorized by a statute of that State,
Miss. Code Ann. 10105, 10109 (1942), and, for the reasons stated by that
court, I believe that neither the statute nor the application of the tax in the
present instance violated the Constitution of the United States. On that basis,
there is no issue here as to the validity of a tax upon the privilege of
transporting oil in Mississippi in interstate commerce.

17

Mr. Justice REED, with whom The CHIEF JUSTICE, Mr. Justice
FRANKFURTER and Mr. Justice JACKSON joint dissenting.

18

Mississippi's effort to collect a privilege tax from this appellant for 'operating a
pipe line' is upheld by this Court through two separately expressed theories.
One, that the activities taxed are wholly intrastate and the other that even
though the privilege taxed is for the carrying on of wholly intertate operations,

such a privilege tax is permissible. As each theory may have effect far beyond
this particular case, we think it advisable to state the reasons for our
disagreement with both.
19

The tax which Mississippi demanded, and which appellant is now trying to
recover, was computed only upon appellant's receipts as a common carrier for
transporting oil from the lease tanks to the railroad loading platforms within the
state. The Supreme Court of Mississippi upheld this tax on the ground that the
activity producing the receipts was intra- rather than interstate commerce. At
one point in its opinion, the Supreme Court of Mississippi said that the tax 'had
been collected for the privilege of operating the pumping machinery and other
pipe line equipment in the transportation of oil in the manner hereinbefore set
forth * * *.' Interstate Oil Pipeline Co. v. Stone, 203 Miss. 715, 35 So.2d 73, 75.
See an opinion of three members of this Court in Memphis Natural Gas Co. v.
Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832. The section here in question
gives no indication of such a purpose. It thus differs widely from the statute
under consideration in the Memphis case with its definition of 'doing business.'
See Stone v. Memphis Natural Gas Co., 201 Miss. 670, 29 So.2d 268, 270.
Since this statute did not apply to pipe lines reaching across the state line, we
conclude that the Supreme Court did not mean by these words to indicate that
the privilege tax of 10109 for 'operating a pipe line' was for the privilege of
operating pumping machinery or other equipment as incidents apart from the
flow of the interstate commerce. Cf. Coverdale v. Pipe Line Co., 303 U.S. 604,
58 S.Ct. 736, 82 L.Ed. 1043. Such an interpretation would be inconsistent with
the nonliability for the tax of pipe lines, admittedly doing an interstate business.
The tax, it said, was 'merely on the privilege of operating a pipe line wholly
within this State as a local activity. * * * a tax on the privilege of doing an
intrastate business, and measured by a percent of gross income as a matter of
convenience.' 35 So.2d at page 81. The opinion emphasizes that in the view of
the state court it is the intrastate character of the transportation that makes it
permissible to charge the appellant a tax for the privilege of 'engaging * * * in
the business of operating a pipe line.' 10109.1 It considered taxability of the
transportation in the light of Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475,
29 L.Ed. 715, and Champlain Realty Co. v. Town of Brattleboro, 260 U.S. 366,
43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195.

20

First. From the facts, 10105 and 10109 of the statute, and the opinion of the
Supreme Court of Mississippi, we believe that this statute was determined by
the state to impose a privilege tax for carrying on the intrastate business of
common carrier of oil in Mississippi and that the amount of that privilege tax
was to be determined by a measure two percent of the gross incomeof that
intrastate business. Mississippi's interpretation of the meaning of its statute is

binding on this Court.2 A federal question at once emergeswhether the

shipment of the oil from the gathering point to the railroad loading racks, both
points being in Mississippi, is intra- or interstate transportation. This we decide
for ourselves from the undisputed facts in this record.3 Our first inquiry then
must be as to whether the transportation of this oil, wholly within Mississippi
from origin to railroad loading racks, is in interstate or intrastate commerce.4
21

In the absence of a rule written into the Constitution or enacted by Congress to

determine what transportation is interstate and what intrastate, the courts have
been required to determine the character of the transportation, case by case, as
it became necessary to reach a judicial conclusion. It was decided years ago in
The Daniel Ball, 10 Wall. 557, 19 L.Ed. 999, as to navigation on a waterway
within a single state, disconnected from any other transportation system leading
to or from other states, that the carriage of freight destined for or received from
places outside the state of navigation was interstate commerce and made the
boat subject to regulation by Congress.5 The wording of a judicial declaration
of the precise line that marks the change from intrastate movement to interstate
movement has been difficult. In Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct.
475, 29 L.Ed. 715, a case that dealt with the taxability by New Hampshire of
logs moved from her forests to a place of shipment in readiness for out-of-state
transportation at the convenience of the owner, this Court held the logs taxable.
The theory was that the first movement was preliminary to the interstate
transportation,6 because of the deliberate detention to await a suitable time for
shipment across a state line. Kelley v. Rhoads, 188 U.S. 1, 6, 23 S.Ct. 259, 261,
47 L.Ed. 359. But where there was no intentional delay, only they use of a
'harbor of refuge,' the interstate transportation by floatage began when the logs
were put into the water. Champlain Realty Co. v. Town of Brattleboro, 260
U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A.L.R. 1195.7 Incidental dealings with
the moving commodity do not break the interstate journey.8 Recently we have
considered the effect of 'split' means of transportation as to whether the
transportation was interstate. United States v. Capital Transit Co., 325 U.S.
357, 363, 65 S.Ct. 1176, 1179, 89 L.Ed. 1663. There a traveler went from the
District of Columbia via streetcar or bus to a bus terminal and from there by a
different bus to nearby Virginia. We held this to be interstate transportation.9

22

Comment should be made as to several precedents that might be thought

contrary to the rather definite line marking the beginning of interstate
commerce that appears in the above cases. These are the so-called casual or
incidental movements of transportation wholly within a single state
immediately preceding or following recognized interstate transportation. They
were referred to in Coe v. Errol, supra, as haulage preliminary to consignment
to interstate carriers. This involves the vehicles that carry passengers or freight

to or from terminals in their interstate movement.10 An int rstate journey must

have a beginning and an end. Common sense rejects an extension of the
journey to the traveler's front door or the producer's farm or factory when no
through order for carriage is in effect. The exact limits of interstate commerce
in such fringe situations are uncertain.11
23

We are of the view, however, that the reach of interstate commerce goes to the
delivery to Interstate, a common carrier, of the oil by the producer with his
tender of shipment. That offer, when accepted, by its form is an order covering
the amount of oil, origin and out-of-state destination, and the route and tariff
under which shipment is made. The commodity has been placed in the stream
of commerce and will cross state lines in the regular course of business. We
have held that shipping instructions, given to a freight conductor on a common
carrier prior to any movement, put a car into interstate commerce12 when the
instructions were for shipment to an out-of-state destination after a preliminary
transit between points in the state of loading. When a shipper delivers his
commodity to a common carrier with instructions for billing by such carrier
without purposeful delay via another or other common carriers to an out-ofstate destination, we think interstate commerce has begun. Such an application
of the commerce clause to transportation accords with that given to regulation
of other phases of interstate commerce.13 The absence of a through bill of
lading is not significant. It is true that the shipment might be diverted to an
intrastate destination without crossing a state line but that cannot change the
character of the commerce until such diversion order is given. The movement
in commerce has begun by the order and the delivery and continues until the
commodity is restored to the mass of property whithin a state by the
termination of the transportation. See Joy Oil Co. v. State Tax Commission,
337 U.S. 286, 69 S.Ct. 1075.

24

Second. Mississippi determined that this tax was a privilege tax for carrying on
the intrastate business of common carrier of oil in Mississippi, measured by a
percentage of the income from that business. The preceding subdivision of this
opinion expounds the arguments for our conclusion that all the business of
appellant in operating a pipe line for transporting oil committed to move out-ofstate from one point to another in Mississippi is interstate transportation. The
statute in question was interpreted by Mississippi as laying a tax solely upon
that business of transporting oil, not upon the 'local activities of 'maintaining,
eeping in repair and otherwise in manning the facilities" such as are discussed
in the opinions in the undecisive case of Memphis Natural Gas Co. v. Stone,
335 U.S. 80, at page 9293, 68 S.Ct. 1475, 1482, 92 L.Ed. 1832.

25

An opinion has been filed in this case, asserting that the Mississippi tax could

be collected from the petitioner notwithstanding that its entire business is

interstate of 'maintaining, keeping in repair and otherwise in manning the
facilities" transportation business, the privilege tax exacted by Mississippi is
actually a privilege tax for carrying on the interstate business of common
carrier of oil, measured by a percentage of the gross income from that business,
apportioned so as to include only income derived from that portion of the
interstate commerce carried on wholly in Mississippi. The gross receipts from
interstate commerce are the costs of carriage from point of origin the field tanks
to the point of destinationthe out-of-state refinery. As only that portion of
the costs covering the carriage from origin to pipe-line loading racks, both
points in Mississippi, is used to measure the privilege tax, it is clear that the
interstate gross receipts are apportioned to carriage wholly within the state. Our
issue at this point is whether a privilege tax for carrying on a wholly interstate
transportation business measured by a fairly apportioned part of gross receipts
for carriage in interstate commerce is constitutionally permissible.
26

Phrased in terms of a privilege for carrying on an interstate business, such a tax

historically has been deemed unconstitutional. The cases abound in statements
to the effect that the privilege of carrying on interstate commerce itself is
immune from state taxation. This is because it is a privilege beyond the power
of a state to grant. '* * * it is a right which every citizen of the United States
(and every corporation) is entitled to exercise under the constitution and laws of
the United States; * * *'. Crutcher v. Kentucky, 141 U.S. 47, 57, 11 S.Ct. 851,
853, 35 L.Ed. 649; International Textbook Co. v. Pigg, 217 U.S. 91, 30 S.Ct.
481, 54 L.Ed. 678, 27 L.R.A.,N.S., 493, 18 Ann.Cas. 1103. The cases hold not
only that a state may not exact a tax as a condition precedent to the doing of
interstate business, but also that it may not levy privilege, excise or franchise
taxes on a foreign corporation for the privilege of carrying on or the actual
doing of solely interstate business after its admission to the state.14 Ozark Pipe
Line Corp. v. Monier, 266 U.S. 555, 45 S.Ct. 184, 69 L.Ed. 439; Alpha
Portland Cement Co. v. Massachusetts, 268 U.S. 203, 45 S.Ct. 477, 69 L.Ed.
916, 44 A.L.R. 1219; Cf. Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288
U.S. 218, 53 S.Ct. 373, 77 L.Ed. 710, in the light of Southern Natural Gas
Corp. v. Alabama, 301 U.S. 148, 153, 57 S.Ct. 696, 698, 81 L.Ed. 970.15 The
decisions in these cases were reached in spite of the fact that in each of them
the tax sought to be levied was fairly measured according to the connections of
the corporate taxpayer with the state. Thus in Ozark the tax was measured by a
percentage of the capital stock and surplus of the corporation employed in
business in the state, that proportion being deemed employed within the state
'that its property and assets in this state bears to all its property and assets
wherever located' (266 U.S. 555, 45 S.Ct. 185); in Alpha by a percentage of the
value of the 'corporate excess' employed within the commonwealth (determined

as in Ozark) and a percentage of 'that part of its net income * * * which is

derived from business carried on within the commonwealth' (268 U.S. 203, 45
S.Ct. 477) (also determined as in Ozark); in Anglo-Chilean by a percentage of
capital employed in the state.
27

A recent pronouncement of this Court has recognized this limitation on state

power. In Aero Mayflower Transit Co. v. Com'rs, 332 U.S. 495, 68 S.Ct. 167,
92 L.Ed. 99, we upheld a tax on motor carriers only after stressing the fact that
the tax was 'affirmatively laid for the privilege of using the state's highways'
and was not imposed upon 'the privilege of doing the interstate business.' 332
U.S. at p. 504, 68 S.Ct. at page 172, 92 L.Ed. 99. See Memphis Natural Gas
Co. v. Stone, 335 U.S. 80, 88, note 10, 68 S.Ct. 1475, 1479, 92 L.Ed. 1832.
Where the corporate taxpayer conducts intrastate as well as interstate business,
a franchise privilege or excise tax on the former is of course permissible.16 We
have frequently upheld such a tax although it was measured by property or
receipts which were used in or attributable to interstate business.17

28

The growth of commerce that is carried on in more than one state has brought
responsibilities to states other than the one in which the commerce may be said
to have originated. Producers either directly or through middlemen and
independent dealers distribute natural resources, agricultural and manufactured
products on a nation-wide scale. Transportation runs across state lines. All
states are called upon to give governmental services for this commerce
service that costs and should be paid for by those who profit from its
maintenance. In the absence of congressional direction as to the taxation of
interstate commerce, this Court has interpreted the commerce clause to permit
state nondiscriminatory taxation for the use of state facilities, upon the property
used in interstate commerce, upon production for commerce and upon net
proceeds therefrom. Through such taxes, the states may exact payment for their
protection and encouragement of commerce. Joseph v. Carter & Weekes
Stevedoring Co., 330 U.S. 422, 429, 67 S.Ct. 815, 819, 91 L.Ed. 993, and cases
cited. We have upheld a tax on gross receipts from interstate transportation
when 'apportioned as to the mileage within the State.' Central Greyhound Lines
v. Mealey, 334 U.S. 653, 663, 68 S.Ct. 1260, 1266, 92 L.Ed. 1633.18

29

Notwithstanding the wide latitude for taxation of incidents connected with

interstate commerce, see Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68
S.Ct. 1475, 92 L.Ed. 1832, this Court has never interpreted the commerce
clause to allow a state tax for the privilege of carrying on interstate commerce
or one upon that commerce itself. Joseph v. Carter & Weekes Stevedoring Co.,
330 U.S. 422, 67 S.Ct. 815, 91 L.Ed. 993. This is not because of the financial
burden. Other taxes may equally burden the commerce. It is not because in

transportation the same result cannot be obtained by levying a tax for intrastate
activities measured by gross receipts appropriately apportioned to the activities
in the state. It is because the commerce clause of the Constitution does not
leave to the states any power to permit or refuse the carrying on of interstate
commerce. It likewise bars a state from taxing the privilege of doing interstate
commerce or the doing of interstate commerce, with or without fair
apportionment even if not discriminatory.
30

Maine v. Grand Trunk R. Co., commented upon in note 18, is inapposite to the
taxation here attempted by Mississippi. Interstate did a wholly interstate
business. Grand Trunk, concerning a tax on the privilege of exercising a
franchise in Maine, can only be reconciled with the later cases commented
upon at note 15 if Grand Trunk did an intrastate as well as an interstate
business. A state franchise tax for this is permissible. See notes 16 and 17,
supra. The method of apportionment employed in the Grand Trunk case has had
approval as recently as the Greyhound case, 334 U.S. at page 663, 68 S.Ct.
1260, 1266, 92 L.Ed. 1633. There was no approval of Grand Trunk in
Greyhound as a precedent for a tax on the privilege of doing an interstate
business. See 334 U.S. at p. 658, 68 S.Ct. at page 1263, 92 L.Ed. 1633.

31

Control of interstate commerce passed into the hands of Congress and thus
welded the Federation into a Nation So long as states are forbidden to impose
taxes upon interstate commerce or for the privilege of carrying it on, a toll
cannot be exacted from interstate commerce even if a similar tax is borne by
local commerce. So, interstate commerce is not susceptible to taxation, as such,
and thus has been protected against exactions aimed at it, no matter how
nondiscriminatory. It may be taxed only under enactments which likewise tax
intrastate commerce for like intrastate activities. It gets no advantage over
intrastate commerce from anything furnished by the state and pays the state
nothing for what the state doesn't possess, that is, the power to allow interstate
business within its borders.

32

All interstate commerce thus has free access to local markets subject only to
nondiscriminatory taxes such as the tax on apportioned gross receipts from
intrastate mileage as in Central Greyhound Lines v. Mealey, supra, or the tax
on disconnected local incidents as discussed in the opinions in Memphis
Natural Gas Co. v. Stone, supra, or in International Harvester Co. v. Evatt,
supra, or American Manufacturing Co. v. City of St. Louis, 250 U.S. 459, 39
S.Ct. 522, 63 L.Ed. 1084. So long as a tax on the privilege of doing interstate
business or a tax on the doing of that business is prohibited, interstate
commerce remains free from state exactions levied on that commerce. Yet that
commerce must bear like intrastate commerce the cost of those facilities or

protections apart from the interstate commerce itself which the state furnishes
or allows within its borders. Such as been and is the freedom that the commerce
clause grants to those engaged in commerce between the states.
33

The judgment should be reversed.

Appellant also gathers oil which is transported through the Mississippi pipe
lines directly into interstate trunk lines, through which the oil is carried outside
the state. Mississippi has not attempted to tax the receipts attributable to
shipments of this kind.

All appellant's transportation of oil in Mississippi is covered by tariffs which

are published and filed with the Interstate Commerce Commission as required
by the Interstate Commerce Act as amended, 49 U.S.C. 1(1), 1(3), and 6, 49
U.S.C.A. 1(1, 3), 6.

Other provisions of the Mississippi Code not here involved impose franchise,
net income and ad valorem property taxes, all of which appellant paid for the
years involved. This fact does not of course preclude Mississippi from exacting
a different tax for the protection upon which one or more of these taxes is
based. E.g., Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 85, 68 S.Ct. 1475,
1477, 92 L.Ed. 1832.

State of Minnesota ex rel. Pearson v. Probate Court. 309 U.S. 270, 273, 60
S.Ct. 523, 525, 84 L.Ed. 744, 126 A.L.R. 530; Guaranty Trust Co. v. Blodgett,
287 U.S. 509, 513, 53 S.Ct. 244, 245, 77 L.Ed. 463.

International Harvester Co. v. Dept. of Treasury, 322 U.S. 340, 346, 347, 64
S.Ct. 1019, 1022, 88 L.Ed. 1313; Nelson v. Sears, Roebuck & Co., 312 U.S.
359, 363, 61 S.Ct. 586, 588, 85 L.Ed. 888, 132 A.L.R. 475.

See concurring opinion in Freeman v. Hewit, 329 U.S. 249, 259, 67 S.Ct. 274,
280, 91 L.Ed. 265.

Nothing in the Grand Trunk opinion suggests the explanation hazarded by Mr.
Justice Holmes in Galveston, H. & S.A.R. Co. v. Texas, 210 U.S. 217, 226, 28
S.Ct. 638, 639, 52 L.Ed. 1031, that the tax in the Grand Trunk case was
sustained on the ground that it was imposed in lieu of ad valorem taxes. A copy
of the statute reprinted in the margin of the Reports discloses that the tax was
'in lieu of all taxes upon such railroad, its property and stock,' except that cities
and towns were permitted to tax not only all buildings owned by the railroad
but also railroad-owned 'lands and fixtures' outside the right of way. 142 U.S.

217218, n. 1, 12 S.Ct. 163, 35 L.Ed. 994.

8

See the cases discussed in Western Live Stock v. Bureau of Revenue, 303 U.S.
250, 255257, 58 S.Ct. 546, 548, 549, 82 L.Ed. 823, 115 A.L.R. 944;
Concurring opinion in Freeman v. Hewit, 329 U.S. 249, 264266, 67 S.Ct.
274, 282, 283, 91 L.Ed. 265. As the cited discussions point out, most of the
cases invalidating 'direct' taxes on interstate commerce are explicable on the
ground that the taxes were not fairly apportioned. But cf. the following cases,
which involve apportioned franchise or privilege taxes measured by a standard
other than gross receipts: Ozark Pipe Line Corp. v. Monier, 266 U.S. 555, 45
S.Ct. 184, 69 L.Ed. 439; Alpha Portland Cement Co. v. Massachusetts, 268
U.S. 203, 45 S.Ct. 477, 69 L.Ed. 916, 44 A.L.R. 1219; cf. Anglo-Chilean
Nitrate Sales Corp. v. Alabama, 288 U.S. 218, 53 S.Ct. 373, 77 L.Ed. 710.

Nippert v. City of Richmond, 327 U.S. 416, 423424, 66 S.Ct. 586, 589, 590,
90 L.Ed. 760, 162 A.L.R. 844; Wisconsin v. J. C. Penney Co., 311 U.S. 435,
444445, 61 S.Ct. 246, 249, 250, 85 L.Ed. 267, 130 A.L.R. 1229, separate
opinion in International Harvester Co. v. Dept. of Treasury, 322 U.S. 340, 352
353, 64 S.Ct. 1019, 1032, 88 L.Ed. 1313, concurring opinion in Freeman v.
Hewit. 329 U.S. 249, 271, 67 S.Ct. 274, 286, 91 L.Ed. 265; concurring opinion
in Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 96, 68 S.Ct. 1475, 1483, 92
L.Ed. 1832.

10

Best & Co. v. Maxwell, 311 U.S. 454, 61 S.Ct. 334, 85 L.Ed. 275; Hale v.
Bimco Trading Co., 306 U.S. 375, 59 S.Ct. 526, 83 L.Ed. 771; Guy v. City of
Baltimore, 100 U.S. 434, 25 L.Ed. 743.

11

Cf. Gwin, White & Prince v. Henneford, 305 U.S. 434, 439 440, 59 S.Ct. 325,
327, 328, 83 L.Ed. 272; Adams Mfg. Co. v. Storen, 304 U.S. 307, 311312,
58 S.Ct. 913, 915, 916, 82 L.Ed. 1365, 117 A.L.R. 429; Western Live Stock v.
Bureau of Revenue, 303 U.S. 250, 255257, 58 S.Ct. 546, 548, 549, 82 L.Ed.
823, 115 A.L.R. 944.

'Hence, the statute was designed only for the purpose of taxing the privilege of
operating a pipe line for transporting the oil from one point to another in the
State where it is then delivered to an interstate carrier prior to the beginning of
its ultimate passage to a foreign state in interstate commerce. Most assuredly,
no pipe line company would be deemed justified in installing an oil gathering
system to transport oil other than that destined for ultimate interstate shipment,
there being no oil refineries here.' 35 So.2d at page 77.

Southern Natural Gas Corp. v. Alabama, 301 U.S. 148, 153, 57 S.Ct. 696, 698,
81 L.Ed. 970; cf. Aero Transit Co. v. Railroad Comm'rs, 332 U.S. 495, 499, 68
S.Ct. 167, 169, 92 L.Ed. 99. Such determination may be rejected only if a

palpable evasion for avoiding a contrary ruling under federal law. Union Pac.
R. Co. v. Public Service Comm'n, 248 U.S. 67, 39 S.Ct. 24, 63 L.Ed. 131;
Appleby v. City of New York, 271 U.S. 364, 379, 46 S.Ct. 569, 573, 70 L.Ed.
992; Milk Wagon Drivers Union v. Meadowmoor Co., 312 U.S. 287, 294, 61
S.Ct. 552, 555, 85 L.Ed. 836, 132 A.L.R. 1200.
3

Southern Natural Gas Corp. v. Alabama, supra, 301 U.S. at page 154, 57 S.Ct.
at page 698, 81 L.Ed. 970; Hooven & Allison Co. v. Evatt, 324 U.S. 652, 658,
65 S.Ct. 870, 873, 89 L.Ed. 1252. See Caldarola v. Eckert, 332 U.S. 155, 158,
67 S.Ct. 1569, 1570, 91 L.Ed. 1968; Standard Oil Co. of California v. Johnson,
316 U.S. 481, 483, 62 S.Ct. 1168, 1169, 86 L.Ed. 1611.

There is no problem as to any differentiation between 'in' commerce or

'affecting' commerce. Mississippi has decided that the statute applies only to
transportation 'in' intrastate commerce. 35 So.2d 73. Cf. Schechter Poultry
Corp. v. United States, 295 U.S. 495, 542, 55 S.Ct. 837, 848, 79 L.Ed. 1570, 97
A.L.R. 947; McLeod v. Threlkeld, 319 U.S. 491, 63 S.Ct. 1248, 87 L.Ed. 1538.

'So far as she was employed in transporting goods destined for other States, or
goods brought from without the limits of Michigan and destined to places
within that State, she was engaged in commerce between the States, and
however limited that commerce may have been, she was, so far as it went,
subject to the legislation of Congress. She was employed as an instrument of
that commerce; for whenever a commodity has begun to move as an article of
trade from one State to another, commerce in that commodity between the
States has commenced. The fact that several different and independent agencies
are employed in transporting the commodity, some acting entirely in one State,
and some acting through two or more States, does in no respect affect the
character of the transaction.' 10 Wall. at page 565, 19 L.Ed. 999.

'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. * * * But this
movement does not begin until the articles have been shipped or started for
transportation from the one state to the other. The carrying of them in carts or
other vehicles, or even floating them, to the depot where the journey is to
commence, is no part of that journey. That is all preliminary work, performed
for the purpose of putting the property in a state of preparation and readiness
for transportation. Until actually launched on its way to another state, or

committed to a common carrier for transportation to such state, its destination is

not fixed and certain. It may be sold or otherwise disposed of within the state,
and never put in course of transportation out of the state. Carrying it from the
farm, or the forest to the depot is only an interior movement of the property,
entirely within the state, for the purpose, it is true, but only for the purpose, of
putting it into a course of exportation. It is no part of the exportation itself.
Until shipped or started on its final journey out of the state its exportation is a
matter altogether in fieri, and not at all a fixed and certain thing.' 116 U.S. at
pages 527, 528, 6 S.Ct. at pages 478, 479, 29 L.Ed. 715.
7

'The interstate commerce clause of the Constitution does not give immunity to
movable property from local taxation which is not discriminative unless it is in
actual continuous transit in interstate commerce. When it is shipped by a
common carrier from one state to another, in the course of such an
uninterrupted journey it is clearly immune. The doubt arises when there are
interruptions in the journey, and when the property in its transportation is under
the complete control of the owner during the passage. It the interruptions are
only to promote the safe or convendient transit, then the continuity of the
interstate trip is not broken. * * * In other words, in such cases interstate
continuity of transit is to be determined by a consideration of the various
factors of the situation. Chief among these are the intention of the owner, the
control he retains to change destination, the agency by which the transit is
effected, the actual continuity of the transportation, and the occasion or purpose
of the interruption during which the tax is sought to be levied.' 260 U.S. at
pages 376, 377, 43 S.Ct. at pages 148, 149, 67 L.Ed. 309, 25 A.L.R. 1195.

State Tax Comm'n of Mississippi v. Interstate Natural Gas Co., 284 U.S. 41, 43,
52 S.Ct. 62, 76 L.Ed. 156 (reduction of pressure and metering gas).

'As previously pointed out, twice a day more than 15,000 government
employees traveled between the Virginia agencies and their homes via one of
the four bus systems. Most of them either went to or from these bus terminals
from or the their homes over any of Transit's then available buses or streetcars.
Their travel was at certain hours each day, at which special rush hour buses and
cars were made available for their carriage. Their interstate journey to work
actually began at the time they boarded a Transit bus or streetcar near their
home, and actually ended when they alighted from the Virginia going bus at
their place of work. On returning from work their interstate journey actually
began when they boarded a bus near their work and actually ended when they
alighted from a Transit streetcar or bus near their home. True, their interstate
trip was broken at the District termini of the Virginia buses, when they stepped
from one vehicle to another. But in the commonly accepted sense of the
transportation concept, their entire trip was interstate. * * * And the fact that

except as to Transit, they paid a combination of two rates, one for travel wholly
within the District, and the other for travel between the District and Virginia,
and the journey from their residences to Virginia and back again was taken in
two segments, does not mean that the total interstate trip was not on a 'through
route." 325 U.S. at page 363, 65 S.Ct. at page 1179, 89 L.Ed. 1663.
10

Interstate Commerce Comm'n v. Detroit, Grand Haven & Milwaukee R. Co.,

167 U.S. 633, 17 S.Ct. 986, 42 L.Ed. 306; Pennsylvania R. Co. v. Knight, 192
U.S. 21, 24 S.Ct. 202, 48 L.Ed. 325; United States v. Yellow Cab Co., 332 U.S.
218, 67 S.Ct. 1560, 91 L.Ed. 2010.

11

United States v. Yellow Cab Co., supra, 332 U.S. at pages 232233, 67 S.Ct.
at pages 1567, 1568, 91 L.Ed. 2010; Interstate Commerce Comm'n v. Parker,
326 U.S. 60, 71, 65 S.Ct. 1490, 1495, 89 L.Ed. 2051, note 6.

12

Philadelphia & Reading R. Co. v. Hancock, 253 U.S. 284, 285, 40 S.Ct. 512,
513, 64 L.Ed. 907:
'The duties of the deceased never took him out of Pennsylvania; they related
solely to transporting coal from the mines. When injured he belonged to a crew
operating a train of loaded cars from Locust Gap Colliery to Locust Summit
Yard, two miles away. The ultimate destination of some of these cars was
outside of Pennsylvania. This appeared from instruction cards or memoranda
delivered to the conductor by the shipping clerk at the mine. Each of these
referred to a particular car by number and contained certain code letters
indicating that such car with its load would move beyond the state.'

13

Dahnke-Walker Co. v. Bondurant, 257 U.S. 282, 42 S.Ct. 106, 66 L.Ed. 239;
Lemke v. Farmers Grain Co., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458; Walling
v. Jacksonville Paper Co., 317 U.S. 564, 567, 63 S.Ct. 332, 335, 87 L.Ed. 460.

14

Since we perceive no difference for the purposes of this case between

franchise, privilege, and excise taxes, insofar as they are exacted for the
privilege of doing or the doing of interstate business, we have treated the as
identical as far as their validity under the commerce clause is concerned. In
Ozark and Anglo-Chilean Nitrate the taxes were called franchise taxes; in
Alpha it was labeled an excise tax.

15

See the discussion of these cases in the opinion of Reed, J., in Memphis Natural
Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832. See also People
of State of New York ex rel. Pennsylvania R. Co. v. Knight, 192 U.S. 21, 26, 24
S.Ct. 202, 203, 48 L.Ed. 325; State Tax Com'n v. Interstate Natural Gas Co.,
284 U.S. 41, 43, 52 S.Ct. 62, 76 L.Ed. 156.

16

Memphis Natural Gas Co. v. Beeler, 315 U.S. 649, 62 S.Ct. 857, 86 L.Ed.
1090; Ford Motor Co. v. Beauchamp, 308 U.S. 331, 60 S.Ct. 273, 84 L.Ed. 304;
Atlantic Refining Co. v. Virginia, 302 U.S. 22, 58 S.Ct. 75, 82 L.Ed. 24;
Southern Natural Gas Corp. v. Alabama, 301 U.S. 148, 57 S.Ct. 696, 81 L.Ed.
970; Pacific Tel. & Telegraph Co. v. Tax Comm'n, 297 U.S. 403, 56 S.Ct. 522,
80 L.Ed. 760, 105 A.L.R. 1; see collection of cases 105 A.L.R. 11, 3656.

17

International Harvester Co. v. Evatt, 329 U.S. 416, 67 S.Ct. 444, 91 L.Ed. 390;
Atlantic Lumber Co. v. Com'r of Corp. and Tax'n, 298 U.S. 533, 56 S.Ct. 887,
80 L.Ed. 1328; Matson Nav. Co. v. State Bd. of Equalization, 297 U.S. 441, 56
S.Ct. 553, 80 L.Ed. 791.

18

This decision followed a prolonged controversy over the taxability of the

proceeds of interstate commerce. Maine v. Grand Trunk R. Co., 142 U.S. 217,
12 S.Ct. 121, 163, 35 L.Ed. 994, has been cited for the same proposition, see
e.g., Adams Mfg. Co. v. Storen, 304 U.S. 307, 329, 58 S.Ct. 913, 924, 82 L.Ed.
1365, 117 A.L.R. 429, although there is in the report of the case, 142 U.S. at
page 218, 12 S.Ct. at page 121, 35 L.Ed. 994, 2 of the Act there in question,
support for Mr. Justice Holmes' treatment of it in Galveston, H. & S.A.R. Co.
v. Texas, 210 U.S. 217, 226, 28 S.Ct. 38, 639, 52 L.Ed. 1031, as a tax in lieu of
ad valorem taxes. See Joseph v. Carter & Weekes, 330 U.S. 422, at page 427,
notes 5, 6 and 7, 67 S.Ct. 815, 818, 91 L.Ed. 993, and cases cited. Western Live
Stock v. Bureau of Revenue, 303 U.S. 250, 255, 58 S.Ct. 546, 548, 82 L.Ed.
823, 115 A.L.R. 944. Powell, More Ado about Gross Receipts Taxes, 60
Harv.L.Rev. 501, 710, 747, et seq.; Dunham, Gross Receipts Taxes on
Interstate Transactions, 47 Col.L.Rev. 211, 220 et seq.