Statement of the Case.

State, "an annual excise tax for the privilege of exercising its franchises" in the State, and it provided that the amount of such tax should be ascertained as follows: "The amount of the gross transportation receipts, as returned to the railroad commissioners for the year ending on the thirtieth of September next preceding the levying of such tax, shall be divided by the number of miles of railroad operated, to ascertain the average gross receipts per mile; when such average receipts per mile shall not exceed twenty-two hundred and fifty dollars, the tax day of July next after the levy is made, and the other half on the first day of October following. If any party fails to pay the tax, as herein required, the state treasurer may proceed to collect the same, with interest, at the rate of the ten per cent per annum, by an action of debt, in the name of the State. Said tax shall be a lien on the railroad operated, and take precedence of all other liens and incumbrances.

SECT. 6. Any corporation, person or association aggrieved by the action of the governor and council in determining the tax, through error or mistake in calculating the same, may apply for an abatement of any such excessive tax within the year for which such tax is assessed, and if, upon rehearing and reëxamination, the tax appears to be excessive through such error or mistake, the governor and council may thereupon abate such excess, and the amount so abated shall be deducted from any tax due, and unpaid, upon the railroad upon which the excessive tax was assessed; or, if there is no such unpaid tax, the governor shall draw his warrant for the abatement, to be paid from any money in the treasury not otherwise appropriated.

SECT. 7. If the returns now required by law, in relation to railroads, shall be found insufficient to furnish the basis upon which the tax is to be levied, it shall be the duty of the railroad commissioners to require such additional facts in the returns as may be found necessary; and, until such returns shall be required, or, in default of such returns when required, the governor and council shall act upon the best information they may be able to obtain. The railroad commissioners shall have access to the books of railroad companies, to ascertain if the required returns are correctly made; and any railroad corporation, association or person operating any railroad in this State, which shall refuse or neglect to make the returns required by law, or to exhibit to the railroad commissioners their books for the purposes aforesaid, or shall make returns which the president, clerk, treasurer or other person certifying to such returns knows to be false, shall forfeit a sum not less than one thousand dollars, nor more than ten thousand dollars, to be recovered by indictment, or by an action of debt in any county into which the railroad operated may extend.

SECT. 8. All acts and parts of acts inconsistent with this act, are hereby repealed, except as to all taxes heretofore assessed, and this act takes effect when approved. Approved March 17, 1881. Laws Maine, 1881, c. 91.

Statement of the Case.

shall be equal to one-quarter of one per centum of the gross transportation receipts; when the average receipts per mile exceed twenty-two hundred and fifty dollars, and do not exceed three thousand dollars, the tax shall be equal to one-half of one per centum of the gross receipts; and so on, increasing the rate of the tax one-quarter of one per centum for each additional seven hundred and fifty dollars of average gross receipts per mile or fractional part thereof, provided, the rate shall in no event exceed three and one-quarter per centum. When a railroad lies partly within and partly without this State, or is operated as a part of a line or system extending beyond this State, the tax shall be equal to the same proportion of the gross receipts in this State, as herein provided, and its amount determined as follows: the gross transportation receipts of such railroad, line or system, as the case may be, over its whole extent, within and without the State, shall be divided by the total number of miles operated, to obtain the average gross receipts per mile, and the gross receipts in this State shall be taken to be the average gross receipts per mile, multiplied by the number of miles operated within this State."

The act also provided that the governor and council, on or before the 1st of April in each year, should determine the amount of such tax and report the same to the state treasurer, who should forthwith give notice thereof to the corporation, person or association upon which the tax was levied; and that such tax should be due and payable, one-half on the 1st of July next after the levy and the other half on the 1st of October following; and it declared that if any party should fail to pay the tax as required, the state treasurer might proceed to collect the same, with interest at the rate of ten per centum per annum, by an action of debt in the name of the State.

The defendant, The Grand Trunk Railway Company, made no returns as a corporation, but it furnished the data and caused the Atlantic and St. Lawrence Railroad Company to make a return of the gross transportation receipts over its road, 1491 miles in length, including the 82 miles in Maine, for the years 1881 and 1882, and upon this return the governor and council, pursuant to the statute, ascertained the proportion of the gross

Argument for Plaintiff in Error.

receipts in the State, and assessed the tax in controversy accordingly. The tax thus assessed for 1881 was $9569.66, and for 1882, $12,095.56, and, to recover these amounts as debts to the State, the present action was brought in the Supreme Judicial Court of the State of Maine, and, on application of the defendant, it was transferred to the Circuit Court of the United States. The defendant pleaded nil debet, accompanied with a statement of special matters of defence. By stipulation of the parties, the case was tried by the court, which held that the imposition of the taxes in question was a regulation of interstate and foreign commerce, in conflict with the exclusive powers of Congress under the Constitution of the United States, and was therefore invalid. It accordingly gave judgment for the defendant, that the plaintiff take nothing by its writ, and that the defendant recover its costs. From that judgment the case is brought to this court on writ of error.

Mr. Charles E. Littlefield, Attorney General of the State of Maine, for plaintiff in error.

The question may be succinctly stated thus: Is a tax upon the gross transportation receipts in the State of Maine of a railroad lying partly within and partly without the State, ascertained by multiplying its average gross receipts per mile for the whole length by the number of miles within this State, in conflict with Art. I, Sec. 8, Part 3, of the Constitution of the United States? Is such a tax a regulation of or an interference with interstate and foreign commerce? We contend that it is not.

We do not deem it profitable to examine all the cases where this question has been before the court in its various phases. We refer only to those upon which we rely as being closely in point, sustaining our contention, and to their present status in this court as authority. The cases of State Tax on Railway Gross Receipts, 15 Wall. 284, and the Delaware Railroad Tax, 18 Wall. 206, are, we think, decisive in support of our proposition, if they are still binding authority upon this court. A chronological examination of these cases will give a clear idea of the law as it is held to-day.

Argument for Plaintiff in Error.

The case of the State Tax on Railway Gross Receipts was one where the State of Pennsylvania assessed a tax upon the Reading Railroad Company, a corporation created by the State of Pennsylvania, under a statute that required railroad companies incorporated under the laws of Pennsylvania to "pay to the Commonwealth a tax of three-fourths of one percentum upon the gross receipts of said company,” and as a basis for said tax the company was required to transmit to the auditor general "a statement, under oath or affirmation, of the amount of the gross receipts of the said company during the preceding six months." Here is to be noticed a very important distinction between the Pennsylvania statute and the Maine statute involved at bar. The Pennsylvania statute does not confine the "gross receipts" to those received within the State; the Maine statute does. The Pennsylvania statutė in terms - no exception appearing in the act and in its practical application applied to all receipts from transportation as well without the State as within it. It covered receipts from freight exported without the State. It could and did operate extra territorially. The Maine statute does not and cannot, and certainly the Maine statute is less open to the imputation that it is a regulation of interstate commerce than the Pennsylvania statute. In that case the court held that the Pennsylvania statute was valid, (1) because it was "a tax upon the fruits of such transportation after they had become intermingled with the general property of the carrier; and (2) upon the ground that it was a tax upon the value of the franchise.

We presume that the cases of Fargo v. Michigan, 121 U. S. 230, and Philadelphia Steamship Co. v. Pennsylvania, 122 U. S. 326, will be relied upon as overruling the case of State Tax upon Railway Gross Receipts, but before discussing those cases it is important to call attention to the respect paid by this court to that case as authority up to the time of the decisions in those two cases. See Osborne v. Mobile, 16 Wall. 479; Erie Rail way Co. v. Pennsylvania, 21 Wall. 492; Murray v. Charleston, 96 U. S. 432; Brown v. Ilouston, 114 U. S. 622; Hall v. De Cuir, 95 U. S. 485; Moran v. New Orleans, 112 U. S. 69.

Argument for Plaintiff in Error.

In a dissenting opinion in the case of Pacific Railway Co. v. Illinois, 118 U. S. 557, 593, Mr. Justice Bradley, with whom the Chief Justice and Mr. Justice Gray concurred, treats the case of State Tax on Railway Gross Receipts, as still authority and binding upon the court, and says upon that point: "We have omitted to cite a number of cases corroborating the views we have expressed. The case of State Tax on Railway Gross Receipts, 15 Wall. 284, is weighted with arguments and considerations in this direction. We would also refer to the cases of Osborne v. Mobile, 16 Wall. 479; Railroad Co. v. Fuller, 17 Wall. 560; Railroad Commission Cases, 116 U. S. 307, 334, 335; thus clearly assuming that the first case referred to was still binding as authority in the United States Supreme Court, and no intimation is made in the dissenting opinion that the doctrine asserted in that case had been in any way at that time questioned, disputed or denied.

Fargo v. Michigan, so, far from overruling State Tax on Railway Gross Receipts, indirectly affirms it. It makes the following distinctions between the two cases: First, the corporation which was the subject of that taxation was a Pennsylvania corporation, having the situs of its business within the State which created it and endowed it with its franchises. Upon these franchises thus conferred by the State it was asserted the State had a right to levy a tax. Second, this tax was levied upon money in the treasury of the corporation, upon money within the limits of the State, which had passed beyond the stage of compensation for freight and had become like any other property or money liable to taxation by the State. The case before us has neither of these qualities. The corporation upon which this tax is levied is not a corporation of the State of Michigan, and has never been organized or acknowledged as a corporation of that State. The money which it received from freight carried within the State probably never was within the State, being paid to the company either at the beginning or the end of its route, and certainly at the time the tax was levied it was neither money nor property of the corporation within the State of Michigan. Neither of these grounds of distinction obtain in the case at bar.