33

Argument for Petitioner.

A state taxing statute can be invalidated under the commerce clause only if it subjects interstate commerce to such a burden as is tantamount to an interference with the power of Congress to regulate commerce among the several States. Gibbons v. Ogden, 9 Wheat. 1. Whether it does interfere with interstate commerce is a question of fact. Hump Hairpin Co. v. Emmerson, 258 U. S. 290, 295; Kansas City Ry. Co. v. Kansas, 240 U. S. 227, 233.

The goods brought in by the "stranger from afar" stand upon exactly the same footing, so far as this tax is concerned, as those of the local merchant. True, he may have been taxed by his home State or even by the various States which he traversed on his way to the market. But, under the rulings of this Court he can have been subjected only to such taxes as were either imposed upon local events in the other States, or apportioned according to the proportion of his business done in such States.

What difference does it make whether the merchant brings the actual goods to the market place with him, or whether he sells from samples? The purchaser will not be influenced by the question of where the warehouse, factory or mine may be located. Even though he may insist upon the product of a particular named factory or mine, it is immaterial whether that factory or mine is located in upstate New York or in Pennsylvania. His sole concern is to get the particular product which he wants, at the lowest price.

On the other hand, if the tax at bar is held void, the effect upon commerce becomes immediately apparent. No local merchant will make any sales at all if similar goods are offered by his competitors from other States; for every purchaser will pass him by to seek the vendor whose goods are free from tax.

Such a result is repugnant to every principle of equality between the citizens of the several States inherent in our federal system.

Argument for Petitioner.

309 U.S.

The present tax is indistinguishable from the "use tax," recently sustained by this Court. Felt & Tarrant Mfg. Co. v. Gallagher, 306 U. S. 62; Southern Pacific Co. v. Gallagher, 306 U. S. 167; Pacific Tel. & Tel. Co. v. Gallagher, 306 U. S. 182.

A tax imposed upon a local activity, or imposed on an interstate transaction before the interstate movement has commenced or after it has come to rest, is valid because it can not be imposed in more than one State. American Mfg. Co. v. St. Louis, 250 U. S. 459; Western Live Stock v. Bureau, 303 U. S. 250; Coverdale v. Pipe Line Co., 303 U. S. 604; Gregg Dyeing Co. v. Query, 286 U. S. 472.

The tax here is upon the transfer of possession for use or consumption, a local event which can take place in only a single State. It is imposed not upon the seller but upon local buyers, who can not be taxed in any other State. Wiloil Corp. v. Pennsylvania, 294 U. S. 169; Utah Power Co. v. Pfost, 286 U. S. 165; Coverdale case, supra.

The imposition by another State of a tax on the seller upon the same transaction would not impose a burden of multiple taxation merely because the commerce is being done, since such a tax could also be imposed upon local sellers. American Mfg. Co. v. St. Louis, supra; Gregg Dyeing Co. v. Query, supra; Nashville, C. & St. L. Ry. v. Wallace, 288 U. S. 249; Adams Mfg. Co. v. Storen, 304 U. S. 307; Gwin, White & Prince v. Henneford, 305 U. S. 434.

Practical, social and economic considerations require that the tax at bar be sustained.

It may be noted that no taxes have been imposed by other States in connection with the transactions involved in this case. Cf. Southern Pacific Co. v. Gallagher, 306 U. S. 167, 172.

The burden of the imaginary taxes suggested by respondent, if they are valid in their own right, would exist independently of the New York tax and would be

equally borne by similar transactions of local origin. If not valid in their own right, a decision sustaining the present tax would not open the door to their imposition.

Mr. John W. Davis, with whom Messrs. Montgomery B. Angell and Marvin Lyons were on the brief, for respondent.

A tax directed in terms or in its practical operation against interstate commerce as such, thereby discriminating in favor of local commerce, is invalid. Walling v. Michigan, 116 U. S. 446; Webber v. Virginia, 103 U. S. 344; Welton v. Missouri, 91 U. S. 275; Cook v. Pennsylvania, 97 U. S. 566; Brown v. Maryland, 12 Wheat. 419.

A tax upon interstate sales, even though laid equally upon local sales, violates the commerce clause if it is measured by the entire gross receipts without apportionment to the activities carried on within the State; for if the tax were upheld, each State involved in the interstate movement could with equal right impose a tax similarly measured upon the same transactions. Gwin, White & Prince, Inc. v. Henneford, 305 U. S. 434; Adams Mfg. Co. v. Storen, 304 U. S. 307; Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 255-6; Fisher's Blend Station v. State Tax Commission, 297 U. S. 650; Philadelphia & Southern S. S. Co. v. Pennsylvania, 122 U. S. 326; Case of the State Freight Tax, 15 Wall. 232.

On the other hand, a nondiscriminatory local tax laid upon the ownership or the use of property purchased in interstate commerce is valid even though measured by the purchase price of the property, since the events or activities upon which the tax is imposed are purely local, occurring after interstate commerce has come to an end. Southern Pacific Co. v. Gallagher, 306 U. S. 167; Felt & Tarrant Mfg. Co. v. Gallagher, 306 U. S. 62; Pacific Telephone & Telegraph Co. v. Gallagher, 306 U. S. 182; Henneford v. Silas Mason Co., 300 U. S. 577; Monamotor Oil

Argument for Respondent.

309 U.S.

Co. v. Johnson, 292 U. S. 86. Similarly, a local tax laid upon an event or activity, such as manufacturing or storage and withdrawal, completed within the taxing State before the interstate commerce begins, is valid though measured by the sale price of the property. American Mfg. Co. v. St. Louis, 250 U. S. 459; Edelman v. Boeing Air Transport, Inc., 289 U. S. 249; Eastern Air Transport, Inc. v. South Carolina Tax Comm'n, 285 U.S. 147.

The protection of the commerce clause extends to transactions in which interstate shipment of goods is contemplated and required. Ware & Leland v. Mobile County, 209 U. S. 405; Banker Bros. Co. v. Pennsylvania, 294 U. S. 169; Graybar Electric Co. v. Curry, 308 U. S. 513, affirming, 189 So. 186.

The sales tax here was held invalid as applied to interstate sales by the New York Court of Appeals. Matter of National Cash Register Co. v. Taylor, 276 N. Y. 208; cert. den. 303 U. S. 656; Matter of West Publishing Co. v. Taylor, 276 N. Y. 535; cert. den. 303 U. S. 656. The highest court of Michigan has followed the same principles. Montgomery Ward & Co. v. Fry, 277 Mich. 260; 269 N. W. 166.

In the case at bar direct shipment from seller to buyer was contemplated and required. Each sale was an integrated whole and may not be broken down into a succession of local events in an effort to divorce each component event (here the transfer of title and possession, or the making of the contract of sale) from the interstate transaction and to treat it as something purely local and so outside the scope of the commerce clause.

The measure of the tax is the entire gross receipts from the sales, without apportionment to activities or events occurring within the State or City of New York. If, as we maintain, these sales (including as their integral parts the negotiation and execution of the contracts, the trans

333

Argument for Respondent.

portation of the goods and the transfer of title) are interstate sales and fully within the protection of the commerce clause, then the final question is whether the measure of the tax is such that without the protection of the commerce clause the transactions would be subject to the risk of multiple tax burdens, the aggregate of which would work a discrimination against such transactions, and might even destroy them entirely. Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 255. The transactions here involved constitute a steady stream of bituminous coal flowing daily in large quantities from the natural source of the coal at the seller's mines in Pennsylvania, through New Jersey to the ships and plants of the buyers at New York tidewater. The interstate character of these transactions, carried on in the same manner without variation for over forty years, was required by the practical necessities of the business, from the standpoint of both the buyer and the seller, and was as far from a device for the avoidance of taxes as anything could be.

The present case is one in which the purchaser requires a special brand of coal, in large quantities, the only source of which is the producer's own mines in Pennsylvania. The producer sells directly to the consumers in circumstances which, as a matter of practical necessity both from the standpoint of the producing seller and the purchaser, require the shipment of the coal from the seller's mines directly to the purchaser. Here there is only one transaction, namely, the interstate sale; this is not a case of a dealer who buys outside the State and sells locally. Here there is nothing artificial in the interstate character of the transaction; the interstate character of the transaction is the essence of it. Cf. Superior Oil Co. v. Mississippi, 280 U. S. 390.

The delivery and transfer of title to the purchaser at the terminus can not be divorced from the transportation and