The doctrine of the case, however, soon cast off these initial limitations. In Looney v. Crane Company[641] a similar tax by the State of Texas was disallowed as to an Illinois corporation, engaged in its home State in the manufacture of hardware, but maintaining in Texas depots and warehouses from which orders were filled and sales made, likewise, in International Paper Company v. Massachusetts,[642] it was clearly stated that "the immunity of interstate commerce from State taxation" is not confined to what is done by carriers in such commerce, but "is universal and covers every class of ... [interstate] commerce, including that conducted by merchants and trading companies." On the same occasion the general proposition was laid down that "the power of a State to regulate the transaction of a local business within its borders by a foreign corporation, ... is not unrestricted or absolute, but must be exerted in subordination to the limitations which the Constitution places on State action."[643]
STATUS OF THE DOCTRINE TODAY
The precise standing of this doctrine is, nevertheless, seriously clouded by certain more recent holdings. In Sprout v. South Bend,[644] decided in 1928, the doctrine was still applied, to disallow a license tax on concerns operating a bus interstate. Pointing to the fact that the ordinance made no distinction between busses engaged exclusively interstate and those engaged intrastate or both interstate and intrastate, the Court said: "In order that the fee or tax shall be valid, it must appear that it is imposed solely on account of the intrastate business; that the amount exacted is not increased because of the interstate business done; that one engaged exclusively in interstate commerce would not be subject to the imposition; and that the person taxed could discontinue the intrastate business without withdrawing also from the interstate business."[645] Likewise, in Cooney v. Mountain States Telephone and Telegraph Co., the Court asserted that to sustain a State occupation tax on one whose business is both interstate and intrastate, "it must appear * * *, and that the one [who is] taxed could discontinue the intrastate business without [also] withdrawing from the interstate business."[646] A year later, nevertheless, Justice Brandeis, speaking for the Court in Pacific Telephone and Telegraph Co. v. Tax Commission,[647] asserted flatly: "No decision of this Court lends support to the proposition that an occupation tax upon local business, otherwise valid, must be held void merely because the local and interstate branches are for some reason inseparable."[648] An occupation tax, like other taxes and expenses, lessens the benefit derived by interstate commerce from the joint operation with it of the intrastate business of the carrier; but it is not an undue burden on interstate commerce where, as in this case, the advantage to the carrier, and to the interstate commerce, of continuing the intrastate business is greatly in excess of the tax. And subsequent holdings in cases involving foreign corporations doing a mixed business, comprising both interstate and intrastate elements, have tended on the whole to restore the rule stated in Paul v. Virginia[649] shortly after the Civil War, that the Constitution does not confer upon a foreign corporation the right to engage in local business in a State without its assent, which it may give on such terms as it chooses.[650]
State Taxation of Property Engaged in, and of the Proceeds From, Interstate Commerce
GENERAL ISSUE
In this area of Constitutional Law the principle asserted in the State Freight Tax Case,[651] that a State may not tax interstate commerce, is confronted with the principle that a State may tax all purely domestic business within its borders and all property "within its jurisdiction." Inasmuch as most large concerns prosecute both an interstate and a domestic business, while the instrumentalities of interstate commerce and the pecuniary returns from such commerce are ordinarily property within the jurisdiction of some State or other, the task before the Court in drawing the line between the immunity claimed by interstate business on the one hand and the prerogatives claimed by local power on the other has at times involved it in self-contradiction, as successive developments have brought into prominence novel aspects of its complex problem or have altered the perspective in which the interests competing for its protection have appeared. In this field words of the late Justice Rutledge, spoken in 1946, are especially applicable: "For cleanly as the commerce clause has worked affirmatively on the whole, its implied negative operation on State power has been uneven, at times highly variable. * * * Into what is thus left open for inference to fill, divergent ideas of meaning may be read much more readily than into what has been made explicit by affirmation. That possibility is broadened immeasurably when not logic alone, but large choices of policy, affected in this instance by evolving experience of federalism, control in giving content to the implied negation."[652]
DEVELOPMENT OF THE APPORTIONMENT RULE
At the outset the Court appears to have thought that it could solve all difficulties by the simple device of falling back on Marshall's opinion in Brown v. Maryland;[653] and on the same day that it set aside Pennsylvania's freight tax by appeal to that transcendent precedent, it sustained, by reference to the same authority, a Pennsylvania tax on the gross receipts of all railroads chartered by it, the theory being that such receipts had, by tax time, become "part of the mass of property of the State."[654] This precedent stood fourteen years, being at last superseded by a ruling in which substantially the same tax was held void as to a Pennsylvania chartered steamship company.[655] A year later the Court sustained Massachusetts in levying a tax on Western Union, a New York corporation, on account of property owned and used by it in the State, taking as the basis of the assessment such proportion of the value of its capital stock as the length of its lines within the State bore to their entire length throughout the country.[656] The tax was characterized by the Court as an attempt by Massachusetts "to ascertain the just amount which any corporation engaged in business within its limits shall pay as a contribution to the support of its government upon the amount and value of the capital so employed by it therein."[657] And drawing on certain decisions in which it had sought to limit the principle of tax exemption as applied in the case of railroads chartered by the United States, it expressed concern that "the necessary powers of the States" should not be destroyed or "their efficient exercise" be prevented.[658] Three years later Pennsylvania, still in quest of revenue, was sustained in applying the Massachusetts idea to Pullman's Palace Car Company, a "foreign" corporation.[659] Pointing to the fact that the company had at all times substantially the same number of cars within the State and continuously and constantly used there a portion of its property, the Court commended the State for taking "as a basis of assessment such proportion of the capital stock of the company as the number of miles over which it ran cars within the State bore to the whole number of miles, in that and other States, * * *" This, said the Court, was "a just and equitable method of assessment;" one which, "if it were adopted by all the States through which these cars ran, the company would be assessed upon the whole value of its capital stock, and no more."[660]
THE UNIT RULE
And pursuing the same course of thought, the Court, in Adams Express Company v. Ohio,[661] decided in 1897, sustained that State in taxing property worth less than $70,000.00 at a valuation of more than half a million, on the ground that the latter figure did not exceed, in relation to the total capital value of the company, the proportion borne by the railway mileage which the company covered in Ohio to the total mileage which it covered in all States. To the objection that "the intangible values" reached by the tax were derived from interstate commerce, the Court replied with the "cardinal rule * * * that whatever property is worth for purposes of income and sale it is also worth for purposes of taxation,"[662] which obviously does not meet the issue. What the case indubitably establishes is that a State may tax property within its limits "as part of a going concern" and hence "at its value as it is in its organic relations," although those relations constitute interstate commerce.[663] In short, values created by interstate commerce are taxed.