Sidebilder
PDF
ePub

Dissenting Opinion: Harlan, Brown, JJ.

franchise or business measured by the amount of its capital employed in New York. That State may undoubtedly tax capital employed within its limits by corporations or companies of other States, but it cannot impose restrictions that will necessarily prevent such corporations or companies from selling their goods in New York upon terms of equality with corporations or companies wholly engaged there in manufacturing goods of like kind. By this statute New York says to the manufacturing corporations and companies of other States: "Remove your plant to New York, and the capital employed by you in this State shall be exempt from taxation. But if you persist in keeping your plant where it is already established, your franchise or business shall be taxed upon the basis of the capital employed by you in New York, while the capital of similar corporations or companies wholly engaged in manufacturing in New York, shall be exempt from taxation." Observe, that the statute of New York does not apply exclusively to corporations. It applies equally to companies.

In my judgment, this statute cannot be sustained in its application to the plaintiff in error without recognizing the power of New York, so far as the Federal Constitution is concerned, to enact such statutes as will, by their necessary operation, amount to a tariff protecting goods manufactured in that State against competition in the markets there with goods manufactured in other States. And if such legislation as is embodied in the statute in question is held to be consistent with the Federal Constitution, why may not New York, while exempting from taxation the franchise or business of corporations or companies wholly engaged in carrying on their manufacturing in that State, put such taxation upon the franchise or business of corporations or companies doing business in that State, but not wholly engaged in manufacture there, as will amount to an absolute prohibition upon the sale in New York of the goods manufactured in other States? If each State in the Union should enact a statute exempting from taxation the franchise and business of corporations or companies wholly engaged in carrying on manufacture within its limits, but taxing the franchise or business of corporations or companies

Dissenting Opinion: Harlan, Brown, JJ.

whose manufacturing is carried on in other States, it is easy to see that commerce among the States would be as much at the mercy of discriminating state legislation as it was under the Articles of Confederation, when, as Mr. Justice Story well said, the Government established to conserve the interests of the people of all the States was competent to declare everything, but was without power to do anything. While the authority of the National Government to lay duties upon goods brought from foreign countries into this country so as to build up and protect American industries has been recognized, I had not supposed it was competent for any State of the Union to exert its power of taxation so as to build up and protect its local industries by means of injurious discriminations against the industries of other States. I had supposed that the Constitution of the United States had established absolute free trade among the States of the Union, and that freedom from injurious discrimination in the markets of any State, against goods manufactured in this country, was a vital principle of constitutional law.

The opinion of the court in this case says: "If the object of the law in question was to impose a tax upon products of other States, while exempting similar domestic goods from taxation, there might be room to contend that such a distinction was constitutionally objectionable as tending to affect or regulate commerce between the States. But we think that obviously such is not the purpose of this legislation. 'Every corporation, joint stock company or association whatever, now or hereafter incorporated, organized or formed under, by or pursuant to law in this State or in any other State or country and doing business in this State, . . . shall be liable to and shall pay a tax as a tax upon its franchise or business into the state treasury annually, to be computed as follows.' It will be perceived that the tax is prescribed as well for New York corporations as for those of other States. It is true that manufacturing or mining corporations wholly engaged in carrying on manufacture or mining ores within the State of New York are exempted from this tax; but such exemption is not restricted to New York corporations, but includes corporations

Dissenting Opinion: Harlan, Brown, JJ.

of other States as well, when wholly engaged in manufacture within the State."

I submit that the validity of state legislation, as affected by the Constitution of the United States, is not to be determined altogether by what is supposed to be the "object" or "purpose" of such legislation, if by object or purpose is meant the motive which controlled members of the state legislature when they enacted such legislation. In a legal sense the object or purpose of legislation is to be determined by its natural and reasonable effect, whatever may have been the motives upon which legislators acted. Henderson v. Mayor of New York, 92 U. S. 259. This has often been adjudged by this court. "There may be no purpose," this court has said, "upon the part of a legislature to violate the provisions of that instrument, and yet a statute enacted by it, under the forms of law, may, by its necessary operation, be destructive of rights granted or secured by the Constitution;" in which case, "the courts must sustain the supreme law of the land by declaring the statute unconstitutional and void." Minnesota v. Barber, 136 U. S. 313, 319, and authorities there cited. Can it be doubted that, whatever may have been the ostensible object for which the New York statute was passed, the natural and reasonable effect of the statute is to withhold from goods not manufactured in New York-and because they were not there manufactured that equality in the markets of New York which, we have often said, is secured by the National Constitution to the like products of other States? If the plaintiff, corporation can be taxed on its capital employed in New York in the business of selling its goods, manufactured in Michigan, while capital employed in New York by a like manufacturing corporation is exempted from taxation because, and only because, it is wholly engaged in manufacture in that State, is it possible to deny that such legislation injuriously discriminates against the manufactures of Michigan in favor of the like manufactures of New York?

[ocr errors]

My brethren refer to the general rule that it is competent for a State to prescribe the conditions upon which corporations of other States may do business within its limits. But I sub

Dissenting Opinion: Harlan, Brown, JJ.

mit that that rule, however broadly stated, has no application here. The New York statute has not assumed to prescribe any rule applicable alike to all manufacturing corporations or companies of other States. It exempts from taxation all corporations or companies, whether of New York or of other States, that wholly carry on their manufacturing business in New York. Thus a distinction is made between manufacturing corporations and companies by exempting from taxation on their capital employed in New York those, and those only, that wholly carry on their manufacturing in that State. Besides, this court has never, in any case, adjudged that the power of a State to prescribe the conditions upon which the corporations of other States may do business within its limits can be exerted by legislation that directly, or by its necessary operation, discriminates injuriously against the products of other States in favor of the products of such State. On the contrary, in the cases above cited, it has directly adjudged that such legislation was unconstitutional. It is not necessary for me now to question the soundness of the general proposition that a State may prescribe the conditions upon which corporations of other States may come within its limits for purposes of business. A good deal may depend upon the nature of the business in which the foreign corporation is engaged. But I do question the power of any State to exact a tax from corporations or companies not wholly engaged in manufacturing within its limits, if it exempts from such taxation corporations and companies wholly engaged, and only because they are wholly engaged, in manufacturing in such State. If this be not a sound view of the Constitution, it follows that local tax laws may be so framed as to destroy the principle, frequently announced and often recognized by this court, that the products of the respective States may go into the markets of the country without being discriminated against because of the place of their origin.

The only case which seems to give any support whatever to the opposite view is Horn Silver Mining Co. v. New York, 143 U. S. 305. But a careful examination of the report of that case and of the opinion shows that counsel did not present, nor did

Dissenting Opinion: Harlan, Brown, JJ.

the court consider or determine, the precise point here presented, as to the authority of the State to exercise the power of taxation so as to place burdens upon goods, the manufacture of other States, solely because they were not produced in the State imposing the taxation.

Some stress seems to be laid upon the fact that the exemption given by the statute to corporations or companies wholly engaged in carrying on manufactures or in mining ores within the State of New York is not limited to corporations or companies of that State; but that the exemption is allowed to such corporations or companies of other States as may carry on their manufacturing or mining business wholly in New York. This view falls far short of meeting the difficulty presented, namely, that the statute, by its necessary operation, injuriously discriminates against goods manufactured in other States, in that such goods are not permitted to go into the markets of New York and compete there upon equal terms with like goods wholly manufactured in that State. This court has often said that the objection that a local statute was invalid, as restraining or binding commerce among the States, was not met by the suggestion that it operated equally upon citizens of the State which enacted it.

I am of opinion that the statute of New York in its application to the plaintiff in error is inconsistent with the power of Congress to regulate commerce among the States, and with that clause of the Fourteenth Amendment, which prohibits any State from denying to any person within its jurisdiction the equal protection of the laws. It is well settled that corporations are persons within the meaning of that clause of the Constitution. Smyth v. Ames, 169 U. S. 466, 522.

For the reasons stated, I dissent from the opinion and judgment of the court.

MR. JUSTICE BROWN authorizes me to say that he concurs in this dissent.

MR. JUSTICE WHITE was not present at the argument, and took no part in the decision of the case.

« ForrigeFortsett »