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because a direct tax upon a business conducted by appellant as a federal instrumentality, designated as such by its license under the United States Warehousing Act.

1. It is clear that by all accepted tests the cotton, while in appellant's warehouse, has not begun to move in interstate commerce and hence is not a subject of interstate commerce immune from local taxation. When it comes to rest there, its intrastate journey, whether by truck or by rail, comes to an end, and although in the ordinary course of business the cotton would ultimately reach points outside the state, its journey interstate does not begin and so it does not become exempt from local tax until its shipment to points of destination outside the state. Before shipping orders are given, it has no ascertainable destination without the state, and in the meantime, until surrender of the warehouse receipts, it is subject to the exclusive control of the owner. Property thus withdrawn from transportation, whether intrastate or interstate, until restored to a transportation movement interstate, has often been held to be subject to local taxation. Coe v. Errol, 116 U.S. 517; Bacon v. Illinois, 227 U.S. 504; General Oil Co. v. Crain, 209 U.S. 211; Susquehanna Coal Co. v. South Amboy, 228 U.S. 665, 669; Minnesota v. Blasius, 290 U.S. 1; cf. Arkadelphia Milling Co. v. St. Louis Southwestern Ry. Co., 249 U.S. 134.

A non-discriminatory tax upon the business of storing and compressing the cotton, which is not itself the subject of a movement in interstate commerce, is not forbidden. Most articles, before their shipment in interstate commerce, have had work done upon them which adapts them to the needs of commerce and prepares them for safe and convenient transportation, but that fact has never been thought to immunize from local taxation either the articles themselves or those who have manufactured or otherwise prepared them for interstate transportation. American

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Manufacturing Co. v. St. Louis, 250 U.S. 459; Crescent Cotton Oil Co. v. Mississippi, 257 U.S. 129; Oliver Iron Mining Co. v. Lord, 262 U.S. 172; Hope Natural Gas Co. v. Hall, 274 U.S. 284; Utah Power & Light Co. v. Pfost, 286 U.S. 165. Here the privilege taxed is exercised before interstate commerce begins, hence the burden of the tax upon the commerce is too indirect and remote to transgress constitutional limitations. See Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249. The case, therefore, stands on a footing different from those in which local regulations of the business of purchasing a commodity within and shipping it without the state have been deemed to impede or embarrass interstate commerce in those commodities. Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282; Lemke v. Farmers Grain Co., 258 U.S. 50.

The fact that appellant's contract with the interstate rail carrier has designated appellant as the carrier's agent and appellant's warehouse as the carrier's depot cannot alter the legal consequences of what is actually done with the cotton by its owners or of their power of control over it, or of the actual course of dealing with it by appellant. It is not within the power of the parties, by the descriptive terms of their contract, to convert a local business into an interstate commerce business protected by the interstate commerce clause. See Merchants Warehouse Co. v. United States, 283 U.S. 501, 507–508; Superior Oil Co. v. Mississippi, 280 U.S. 390; Browning v. Waycross, 233 U.S. 16, 23.

2. Appellant's license under the United States Warehousing Act did not confer upon it immunity from state taxation, for neither the appellant nor its business was, by force of the license, converted into an agency or instrumentality of the federal government. The Warehousing Act confers upon licensees certain privileges and

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secures to the national government, by means of the licensing provisions, a measure of control over those engaged in the business of storing agricultural products who find it advantageous to apply for the license. The government exercises that control in the furtherance of a governmental purpose to secure fair and uniform business practices. But the appellant, in the enjoyment of the privilege, is engaged in its own behalf, not the government's, in the conduct of a private business for profit. It can no longer be thought that the enjoyment of a privilege conferred by either the national or a state government upon the individual, even though to promote some governmental policy, relieves him from the taxation by the other of his property or business used or carried on in the enjoyment of the privilege or of the profits derived from it. Susquehanna Power Co. v. Tax Commission, 283 U.S. 291; Fox Film Corp. v. Doyal, 286 U.S. 123; Broad River Power Co. v. Query, 288 U.S. 178, 180.

The fact that the license is used also as a means of government control of appellant's business does not call for a different conclusion. The national government has not assumed to tax the business or to exercise any control over the taxation of it by the state. The state does not tax the license itself and the tax upon petitioner's business, applied without discrimination to all similar businesses whether licensed or not, does not impair the control which the federal authority has chosen to exert. The mere extension of control over a business by the national government does not withdraw it from a local tax which presents no obstacle to the execution of the national policy. Compare Susquehanna Power Co. v. Tax Commission, supra; Broad River Power Co. v. Query, supra. See Willcuts v. Bunn, 282 U.S. 216, 226, 230.



Statement of the Case.

291 U.S.




No. 84. Argued November 9, 1933.—Decided January 8, 1934.

1. Where the state law permits an action at law for recovery of a tax

paid under protest, the taxpayer may pursue the same remedy in the federal court, if the requisite diversity of citizenship and amount

in controversy are present. P. 28. 2. Existence of a statutory remedy to test the validity of a tax ap

praisal by appeal to a particular state court, in which the party opposed to the taxpayer will be the State itself, will not affect the equity jurisdiction of the federal court to enjoin, since such a proceeding, even if regarded as an action at law, would be confined to the state court and would not be cognizable by the federal court,

either originally or by removal. P. 29. 3. A proceeding in a state court, on appeal from a tax appraisal,

wherein the court has jurisdiction to determine not only the valuation but also the validity of the tax, and which is tried as a case between the taxpayer and the State as adversary parties, and results in a final judgment appealable to a higher court, is to be classi

fied as a judicial, rather than an administrative, proceeding. P. 29. 4. To such a proceeding the principle that administrative remedies

under state laws must be exhausted before an injunction against state officers is sought in the federal courts on constitutional grounds,

does not apply. P. 34. 5. A bill to enjoin the imposition and collection of a state inheritance

tax as beyond the constitutional power of the State, held not premature, although the assessment had not yet been completed, it appearing clearly, by the allegations of the bill, that the defendant state taxing officials believed the tax valid and would proceed to

impose it if not restrained. P. 34. Reversed.

APPEAL from a decree of the District Court, of three judges, dismissing a bill to enjoin the Attorney General and the Secretary of Revenue of the Commonwealth of

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Pennsylvania from imposing and collecting an inheritance tax on personal property left by a New York decedent, which, as the plaintiff executor averred, had no taxable situs in the Commonwealth.

Mr. Henry S. Drinker, Jr., with whom Messrs. Leslie M. Swope, H. Gordon McCouch, and Wolcott P. Robbins were on the brief, for appellant.

Mr. Wm. A. Schnader, Attorney General of Pennsylvania, with whom Mr. Harris C. Arnold, Deputy Attorney General, was on the brief, for appellees.

The District Court properly dismissed the bill for want of jurisdiction. Matthews v. Rodgers, 284 U.S. 521; Keokuk & Hamilton Bridge Co. v. Salm, 258 U.S. 122; Bohler v. Callaway, 267 U.S. 479; Porter v. Investors Syndicate, 286 U.S. 461.

By leave of Court, Mr. Seth T. Cole filed a brief on behalf of the Tax Commission of New York as amicus curiae.

MR. JUSTICE ROBERTS delivered the opinion of the Court.

The appellant, by a bill filed in the District Court for Eastern Pennsylvania, sought to enjoin the appellees, who are officials of the Commonwealth of Pennsylvania, from attempting to impose and collect an inheritance tax. Diversity of citizenship and an amount in controversy exceeding, exclusive of interest, $3,000, were averred. The bill sets forth that Thomas B. Clarke, a citizen and resident of the state of New York, died there in 1931 leaving a will under which appellant qualified as executor; that at and before the time of Clarke's death there was on exhibition in Pennsylvania a collection of paintings owned by him, of the estimated market value at the date of his death of $714,750; that these paintings had been loaned

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