
    CHALKER, ADMINISTRATOR DE BONIS NON OF ESTATE OF WRIGHT, ET AL. v. BIRMINGHAM & NORTHWESTERN RAILWAY COMPANY ET AL.
    ERROR TO THE SUPREME COURT OE THE STATE OE TENNESSEE.
    No. 283.
    Argued March 25, 26, 1919.
    Decided April 21, 1919.
    A state law making the amount of annual tax for the privilege of doing railroad construction work depend on whether the person taxed has his chief office in the State, viz., $25.00 if he has and $100.00 if he has not^-diserimlnates against citizens of other States, in violation of Art. IV, § 2, of the Constitution. P. 526.
    And a citizen of another State who would be liable for the larger tax, if valid, may question its validity without first tendering the lower tax. P. 528.
    138 Tennessee, 145, reversed.
    The case is stated in the opinion.
    ' Mr. C. E. Pigford, with whom Mr. Watspn E. Coleman and Mr. W. N. Key were on the brief, for plaintiffs in. error.
    
      Mr. R. F. Spragins, with whom Mr. Joseph W. Cox and Mr. W. H. Biggs were on the briefs, for defendants in error.
    The act applies alike to residents and nonresidents; to. citizens of Tennessee as well as to citizens of other States. To argue that few non-resident persons, firms or corporations have their chief offices in Tennessee, or that few resident in Tennessee have their chief offices elsewhere, does not prove discrimination. It is a fact of common knowledge that many have their chief offices in States other than the States in.which they reside or are domiciled.
    If it is competent for the legislature to exempt from the payment of a privilege tax merchants having their manufacturing plants where goods are offered for sale located within the State, and yet impose .the tax on those merchants who have their places of manufacture in another State {Armour & Co. v. Virginia, 246 U. S. 1,) manifestly it was competent for the legislature, for a stronger reason, to make the distinction made in this statute treating all -alike under the same circumstances. Reymann Brewing Co. v. Brister, 179 U. S. 445. .
    The statute can be sustained as a tax measure, and also under the police power as regulating a business. It is within the legislative power of classification, because the distinction made is based on substantial reasons.
    The business of constructing .railroads and other like public works is peculiar. Ordinarily, such construction concerns have and should have the chief office, or a chief office, at or near the work of construction. Usually such contracts involve large sums, and many laborers and subcontractors are employed on the work. Generally the common labor employed consists of foreigners. The State and the public' have an interest in the proper performance of such work, as the public service is involved, and the right of eminent domain is given. It may be deemed important td the proper performance of such work that the chief office be located at or near it. As indicated in the case at bar, the complainant neglected his work and breached his contract, as found by the jury, and his bill show's that he failed to settle with his sub-contractors. Those undertaking such contracts frequently fail and become -bankrupt. In practically all such cases, the rights and claims of laborers, sub-contractors and material-men are vitally affected, and it is important that they have a remedy by suit and.a personal judgment as well as by attachment and garnishment, which they probably would not have except when the chief office of the principal contractor is within the State.
    The State is further justified in making the distinction for the reason that the concern having a chief office within the State w'ould likely be liable for and pay ad valorem taxes as well as the privilege tax; it would likely have funds, contracts, securities and other property within the State at its chief office subject to state taxation; it would, under the laws of Tennessee, be subject to suit and service.of process and personal judgment in the State, which would not be the case if there were no chief office there; and it would be subject to garnishment'in the State as to sums due to sub-contractors and laborers, and would . have there its books of account and other documents and papers within the jurisdiction of the state courts, and subject to subpoena ducestecum. Furthermore, it is more difficult to collect the privilege tax from those having their chief office out of the State. [Among the cases cited were: E.eim v. McCall, 239 U. S. 175; McPherson v. Blacker, 146 IJ. S. 1; Central Lumber Co. v. South Dakota, 226 U. S. 157; Hayes v. Missouri, 120 U. S. 68; Bell’s Gap R. R. Co. v. Pennsylvannia, 134 U. S. 232; Magoun v. Illinois Trust & Samngs Bank, 170 U. S. 293; Lindsley v. Natural Carbonic Gas Co., 220 U. S. 76; Toyota v. Hawaii, 22617. S. 190; Bradley v. Richmond, 227 U. S. 477; Cargill Co. v. Minnesota, 180 17. S. 452; Southwestern Oil Co. v. Texas, 217 U. S. 114.]
   Mr. Justice McReynolds

delivered the opinion of the court.

The point for determination is the liability of J. W. Wright, Jr., a citizen and resident, of Alabama with his chief office therein, who engaged in the business of constructing a railroad in Tennessee, for the tax prescribed by § 4 of “An Act to provide revenue for the State of Tennessee and the counties and municipalities thereof,” approved May 1, 1909 (Acts of Tenn., 1909, c. 479, pp. 1726, 1727, 1735) which provides:

“Sec. 4. Be it further enacted, That each vocation, occupation, and business hereinafter named in this section is hereby declared to be a privilege, and the fate of taxation on such privilege shall be as hereinafter fixed, which privilege tax shall be paid to the County Court Clerk as provided by law for the collection of revenue. .
*• !|! * * ' * ' * * *
“Each foreign construction company, with its chief -office outside of this State, operating or doing business. in this State, directly or by agent, or by any subletting contract, each, per annum, in each county . . . $100.00
“Each domestic construction company and each foreign construction company,-having its chief office in this State, doing business in this State, each, per annum, in each county .................'. . $25.00..
“The above tax shall be paid by persons, firms, or' corporations engaged in the business of constructing bridges, waterworks, railroads, street-paving construction work, or other structures of a public, nature.”

Replying, to the claim that the statute in effect discriminates against citizens of other States, the Supreme Court of Tennessee, 138 Tennessee, 145, 152, 153, said: “The determining feature in the legislation quoted is the having' of one’s chief office in this State. Any citizen of this State, as well as any. citizen of a foreign State, who has Ms chief office out of the State, must ipay the $100 tax; so of.any domestic corporation, as well as foreign corporation, having its -cMef-office out of the State. Any foreign (Corporation or citizen of' another State, or firm, as well as^ domestic corporations, citizens of tMs State, and firms of this State having its or their chief office in this State, are all alike entitled to carry on a railroad construction business here on the payment of $25. There is no discrimination at all.”

With tMs conclusion vve are unable to agree. Accepting the construction placed upon’it by the Supreme Court, we think the quoted section does discriminate between citizens of Tennessee and those of other States by imposing a Mgher charge on the latter than it does on the former, contrary to § 2, Art. IV of the Federal Constitution— “The citizens of each State shall be entitled to all privileges and immumties of citizens in the several States.”

The power of a State to make reasonable and natural classifications for purposes of taxation is clear, and not questioned; but neither under form Of classification nor otherwise can any State enforce taxing laws which in their practical operation materially abridge or impair the equality of commercial privileges secured hy the Federal Constitution to citizens of the several States.

“Excise taxes, it is everywhere conceded, may be imposed by . the States, if not in any sense discriminating; but it should not be forgotten that the people of the several States live under one common Constitution,, which was ordained to establish justice, and which,' with the laws of Congress, and the treaties made by the proper authority, is the supreme law of the land; arid that that supreme law requires equality of burden, and forbids discrimination' in State taxation when the power is applied to. the citizens of the other States. Inequality of burden, a’s well as the want of uniformity in commercial',regulations, was one of the grievances of the citizens under the Confederation and thé new Constitution was adopted, among other things, to remedy those defects in the prior system.” Ward v. Maryland, 12 Wall. 418, 431; Guy v. Baltimore, 100 U. S. 434, 439; Blake v. McClung, 172 U. S. 239, 254; Darnell & Son Co. v. Memphis, 208 U. S. 113, 121.

As the chief office of an individual is commonly in the State of which he is a citizen, Tennessee citizens engaged in constructing railroads in that State will ordinarily have their chief offices therein, while citizens of other States so engaged will not,. Practically, therefore, the statute under consideration would produce discrimination against citizens of other States by imposing higher charges against them than citizens of Tennessee are required, to pay. /We can find no adequate basis for taxing individuals according to the location of their chief offices — the classification, we. think, is arbitrary and unreasonable. Under the Federal Constitution a citizen of one State is guaran-, teed the right to enjoy in all other States equality of commercial privileges with their citizens; but he cannot have his chief office in ev.ery one of them. .

It is insisted that no tender of any sum for license tax was made in time, and therefore plaintiffs in error cannot question the validity of the enactment because of discrimination. But the Supreme Court expressly declared that the statute fixed the liability of Wright at one hundred dollars. A tender of less would have availed nothing and it was therefore unnecessary.

The judgment of the. court below is reversed and the cause remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.  