merce, provided there is no exemption of intra-state receipts and provided further that the tax is in substitution for and not in addition to other taxes. This would have been a more direct and realistic solution of the issue. It is of course but another way of stating the solution actually reached. Whichever way the doctrine is stated, there still remains the question whether a gross-receipts tax, where there is no property to exempt, would be constitutional provided it can be called something else than a tax on receipts from interstate commerce "as such." Ficklen v. Shelby County Taxing District 45 may be thought to answer the question in the affirmative, provided the gross-earnings tax may be called a tax on a local "occupation." But the tax sustained in that case, though not in lieu of a property tax, was in default of one. We shall consider later whether this makes a difference.

Though the Dakota cases did not definitely pass on the constitutional question, its final settlement was not long delayed. Wisconsin imposed a gross-receipts tax in lieu of other taxes on railroads and its demand was sustained in Wisconsin & M. Ry. Co. v. Powers,46 decided in 1903. The opinion of the court by Mr. Justice Holmes was devoted almost entirely to denying the contention that the tax violated contract rights of the complainant. The commerce question was given this terse answer:

"We need say but a word in answer to the suggestion that the tax is an unconstitutional interference with interstate commerce. In form the tax is a tax on 'the property and business of such railroad corporation operated within the State,' computed upon certain percentages of gross income. The prima facie measure of the plaintiff's gross income is substantially that which was approved in Maine v. Grand Trunk Railway Co., 142 U. S. 217, 228. See also Western Union Telegraph Co. v. Taggart, 163 U. S. 1." 47

The Taggart case was one sustaining a tax measured by the value of total capital stock. The Maine case proceeded on a theory of absolute power over privileges enjoyed by foreign corporations. Neither case is so direct an authority in support of the Wisconsin tax as is the decision in the Ficklen case and the strong dictum in McHenry v. Alford.48

Reference has already been made 49 to the difference of opinion among the judges as to the Texas gross-receipts tax on railroads that came before the court in Galveston, H. & S. A. Ry. Co. v. Texas 50 in 1907. The tax was imposed on all railroads whose lines lay wholly within the state, and the amount demanded by the law was a sum "equal to one per cent of their gross receipts." This included receipts from interstate commerce, since roads whose termini were both within the state nevertheless carried passengers and goods destined for extra-state points over connecting lines. Mr. Justice Harlan for the minority took a position which is in substance in flat contradiction to the one he elaborated in his solitary dissent in the Ficklen case. In seeking to distinguish the Pennsylvania gross-receipts tax declared unconstitutional in Philadelphia & Southern Mail S. S. Co. v. Pennsylvania 51 from the Texas gross-receipts tax before the court, he says:

"Here there is no levying upon receipts as such from interstate commerce. The State only measures the occupation tax by looking at the entire amount of the business done within its limits without reference to the source from which the business comes. It does not tax any part of the business because of its being interstate. It has reference equally to all kinds of business done by the corporation in the State. Suppose the State as, under its Constitution it might do, should impose an income tax upon railroad corporations of its own creation, doing business within the State, equal to a given per cent of all income received by the corporation from its business, would the corporation be entitled to have excluded from computation such of its income as was derived from interstate. commerce? Such would be its right under the principles announced in the present case. In the case supposed the income tax would, under the principles or rules now announced, be regarded as a direct burden upon interstate commerce. I cannot assent to this view." 52

The learned dissentient cites no authority for his contention. He argues that the operation of the tax "on interstate commerce is only incidental, not direct," 53 and points out that the state constitution authorizes the imposition of occupation taxes on corporations and natural persons, and that "the plaintiff in error is a Texas

corporation.' "54 Then follows the indisputable assertion that “it cannot be doubted that the State may impose an occupation tax on one of its own corporations, provided such tax does not interfere with the exercise of some power belonging to the United States." The absence of such interference is predicated on the analysis that the receipts were not taxed as such, but were merely the measure of the tax.

With Mr. Justice Harlan agreed Chief Justice Fuller and Justices White and McKenna.55 The majority, who held the tax unconstitutional, consisted of Mr. Justice Holmes, who wrote the opinion, and Justices Brewer, Peckham, Day and Moody. At first glance this seems a strange alignment, for Mr. Justice Brewer had been foremost in sustaining property taxes measured more or less by income in part from interstate commerce; and Justices Harlan and White had most strenuously opposed such a measure. Occupation taxes measured by gross receipts seem to bear much more directly on interstate commerce than does a property tax which merely takes account of the value contributed by net earnings. The mystery may be thought to deepen when we compare the division in the Galveston case with that in the Western Union case 56 decided two years later. Here Justices Harlan and White return to their stand against allowing a state to do indirectly what it is forbidden to do directly. Justices Brewer, Day and Moody join them, although in the Galveston case they were in the opposite camp. Justices Holmes and Peckham favor an excise tax measured by total capital stock, but oppose an occupation tax measured by gross receipts. Only Chief Justice Fuller and Mr. Justice McKenna seem to be consistent throughout. They supported the state taxes in all the cases in which they sat.

A closer analysis may resolve some of the perplexity. The opposition of Justices Harlan and White to Ohio's application of the unit rule to express companies and to the Kansas tax on total capital stock is based largely on the conviction that in each case the state was reaching after values not attributable to business or property within its borders.57. This opposition is not inconsistent

64 210 U. S. 228, 28 Sup. Ct. Rep. 638 (1908). 55 Ibid., 228-29.

56 Note 21, supra.

57 See 32 HARV. L. REV. 254. Chief Justice Fuller and Justices Brewer and Day dissented in Fargo v. Hart, 193 U. S. 490, 24 Sup. Ct. Rep. 498 (1904), which upset an

with approval of the Texas tax on gross receipts from business within the state, where the evil of extraterritoriality is absent. Justices Holmes and Peckham based their approval of the Kansas tax on the theory of the absolute and unlimited power of a state over the local business of a foreign corporation,58 which precludes inquiry into the effect on interstate commerce of an exercise of that absolute power. They are at liberty to question the Texas tax, since it does not purport to be an excise tax on a privilege completely within the power of the state.

The remaining apparent shifts of opinion demand further explanation. It may be frankly recognized that the only conceivable consistency between Mr. Justice Harlan's disapproval of the Maine excise tax and the Shelby County occupation tax, both of which were measured by gross receipts, and his approval of the Texas occupation tax, similarly measured, is the consistency of dissent. Since Mr. Justice Brewer opposed him in all three cases, these two jurists may appear to be exemplars of the famous political leader who was said to have caught his opponents in bathing and run off with their clothes. We hasten to add that the parallel is at most an intellectual, and not a moral, one; for such change of habiliments as was effected by the wearers of the ermine was not a theft but a swap which appears to have given mutual satisfaction. Mr. Justice Brewer's approval of the Maine excise on gross receipts and his disapproval of the Texas occupation tax on such receipts may be reconciled on the ground that the former had the ostensible justification of a tax on a privilege within complete state control. But this justification the learned justice withheld from the Kansas excise on total capital stock, so that he invites us to seek further for his line of thought. This quest leads us to the arguments of counsel against the Texas occupation tax and to the acceptance of those arguments in the majority opinion in the Galveston case.

Counsel for the railroad apparently make no effort to distinguish the Ficklen case from that before the court. This case is naturally relied on by the state, but it is not mentioned in the available abstract of the brief for the road. To the Maine case, however, application of the unit rule on the ground that the total capital stock taken as a base included the value of a large amount of personal property in other states not used in the express business and therefore not contributing to any values located in the state. See 31 HARV. L. Rev. 772.

58 See Ibid., 585-88.

Messrs. Garwood and Everts devote considerable attention. They insist that the excise there sustained was like that considered in Postal Telegraph Cable Co. v. Adams 59 and McHenry v. Alford; 60 "that is to say, it was what this court calls a commutation tax levied in lieu of all other taxes; and therefore, in its essential nature, a property tax, or a means resorted to by the state for ascertaining the entire value of the property situated in the state and not otherwise taxed." 61 As distinguished from such a tax,

"in the case at bar the state has already assessed and equalized for purposes of taxation the properties of the plaintiff in error, and at the time of the levy of this tax, and for long years prior thereto, they had paid taxes, and were paying taxes, to the state upon the full value thus ascertained." 11 62

Counsel later seek to restrict the Maine case on grounds which apply also to the Ficklen case, though that inconvenient decision is not mentioned. They argue as follows:

"It never was the intention of the justices who concurred in the decision in Maine v. Grand Trunk R. Co. . . . to hold that a state could levy an occupation tax on a corporation engaged in the transportation of interstate commerce, or could levy a so-called occupation tax on such corporation, and ascertain the amount thereof by a percentage on the gross receipts of the interstate and foreign commerce; but in fact the tax was there sustained as a property or commutation tax in lieu of all other taxation." 63

It is clear that the Maine case did not sanction an occupation tax where the element of an exercise of arbitrary power over the enjoyment of corporate privileges was lacking or not relied on. But the Ficklen case appeared to do exactly this. In the Ficklen case, the opinion was flavored slightly with the thought that the tax was sort of a substitute for a property tax; but in the Maine case the

59 Note 2, supra. In February, 1904, Professor Joseph H. Beale, in criticising the ground on which the Maine case was placed by the court, suggested that a more tenable ground.. will probably be found in the later case of Postal Telegraph Cable Co. v. Adams." See his article on "The Taxation of Foreign Corporations," 17 Harv. L. Rev. 248, 263.

.

63 Ibid., 1033. These excerpts from the briefs are not contained in the abstract printed in the official edition of the reports.