
    HOUSTON BELT & TERMINAL RY. CO. v. STATE.
    (No. 2802.)
    (Supreme Court of Texas.
    March 14, 1917.)
    1. Cottkts &wkey;97(3) — Rules of Decision — Decision of United States Couet — Taxation of Interstate Commerce.
    The question whether a tax upon ari interstate carrier measured by its gross earnings, including interstate earnings, is one upon interstate commerce so as to be beyond the power of the state to impose, is controlled by the decisions of the United States Supreme Court.
    [Ed. Note. — For other cases, see Courts, Cent. Dig. § 331.]
    2. Commerce <&wkey;>70 — Regulation — Taxation — Validity.
    The occupation tax levied by Rev. St. 1911, art. 7384, upon railways measured by their gross receipts, a substantial part of which are derived from interstate commerce, which tax is additional to the ad valorem _ tax assessed against its property and its franchise tax, cannot be sustained as an attempt to tax the railway’s value as a going concern in addition to the value of its separate properties, but is a burden of interstate commerce, and therefore invalid.
    [Ed. Note. — For other cases, see Commerce, Cent. Dig. § 114.]
    Error to Court of Civil Appeals of Third Supreme Judicial District.
    Action by the State against the Houston Belt & Terminal Railway Company to recover- unpaid taxes. A judgment for defendant was reversed by the Court of Appeals, and judgment there rendered for the plaintiff (166 S. W. 83), and defendant brings error.
    Judgment of the Circuit Court of Appeals reversed, and that of the District Court affirmed.
    Andrews, Streetman, Burns & Logue, Frank Andrews and Robert H. I-Celley, all of Houston, for plaintiff in error. B. F. Looney, Atty. Gen., and Luther Nickels, Asst. Atty. Gen., for the State.
   PHILLIPS, C. J.

The suit was by the State to recover of the Houston Belt & Terminal Railway Company taxes measured by its gross receipts from April 1, 1908, to April 1, 1913, under section 16 of the Act of 1907 (General Laws of 1907, Chapter 18, pages 479-89), Article 7384, Revised Statutes of 1911. The receipts of the defendant were in substantial measure derived from the carriage of interstate and foreign commerce. It had paid for the same period all of the State, County and City ad valorem taxes assessed against its property, and also its franchise tax.

In the District Court, it was held that the tax levied by the Act of 1907 and so sought to be recovered was unconstitutional and void as a burden upon interstate and foreign commerce. Judgment was there rendered for the defendant. In the Court of Civil Appeals, 166 S. W. 83, this judgment was reversed, and judgment was rendered for the State.

Whether the tax in question is one upon interstate and foreign commerce and hence beyond the power of the State to impose, or is a tax which the State may lawfully exact, is a question controlled by the decisions of the Supreme Court of the United States. The present inquiry resolves itself, therefore, simply into the ascertainment of that court’s rule of decision upon the subject.

The Act of 1905 (Acts 29th Leg. c. 146), levying a tax upon the gross receipts of railroad corporations, which this court had occasion to review in State v. Galveston, Harrisburg & San Antonio Railway Company, 100 Tex. 153, 97 S. W. 71, and was later passed upon by the United States Supreme Court, (210 U. S. 217, 28 Sup. Ct. 638, 52 L. Ed. 1031), levied the same per centum upon the gross receipts of such corporations, and in substantially the identical terms, as does the Act of 1907. It is provided in the Act of 1907, as it was in the Act of 1905, that the tax shall be in addition to all other taxes levied by law. It is also declared in the Act of 1907, as it was, in effect, in the Act of 1905, that those to whom the tax applies shall be exempted from the payment of the intangible assets tax imposed by other laws. As to the subject of the tax, its measurement, and the operation of the law in respect to relieving against the payment of other taxes, there is no difference between the two acts. The only dissimilarity whatever between them is that the Act of 1905 did not designate the character of the tax, whereas the Act of 1907 defines it as an occupation tax.

While the nature of the tax levied by the Act of 1905 was thus undefined in terms, this court held it to be an occupation tax; and, relying upon the decision of the United States Supreme Court in Maine v. Grand Trunk Railway Company, 142 U. S. 217, 12 Sup. Ct. 121, 163, 35 L. Ed. 994, — wherein it was affirmed that a State could lawfully lay an excise tax upon railroad corporations exercising their franchises within its borders, consisting of a stated per centum upon their gross receipts derived in part from interstate commerce, — sustained the Act. Maine v. Grand Trunk Railway Company is apparently the authority upon which the Court of Civil Appeals rested its decision in the present case.

The Supreme Court of the United States, however, in its determination of State v. Galveston, Harrisburg & San Antonio Railway Company refused to apply the doctrine broadly announced in Maine v. Grand Trunk Railway Company. It there held that the tax levied by the Act of 1905, whatever its name or form, amounted to a tax upon the interstate business of the corporations subject to it, and declared the Act invalid.

The holding in the Main Case that a State could adopt a given per centum of the gross receipts of the corporation arising in part from interstate commerce as the measure of a state excise tax, was without qualification, and without regard, therefore, to whether the property of the corporation was, under other laws of the State, fully taxed. The opinion does not intimate that the ruling was to any extent influenced by the possibility that the property of the corporation was not so taxed. In refusing to apply the ruling made in the Maine Case, the court therefore necessarily held that a State cannot, unqualifiedly, levy an occupation tax measured by a given per centum of gross receipts derived in part from interstate commerce. This is conclusively shown by the manner in which the holding in the Main Case was explained and distinguished in the opinion delivered in the Galveston Case, which was as follows: Affirming the full power of a State to tax the property of a corporation situated within its borders, though used in interstate commerce, and to tax it at its full value as a going concern, it was stated that the buildings of the railroad company before the court in the Maine Case, and its lands and fixtures outside of its right of way, were, by the laws of Maine, taxed locally. But, it was added, “the local tax was not expected to include the additional value gained hy the property hemg part of a going concern." It was then explained that the excise tax imposed by the Maine statute “was an attempt to reach that additional value,” and for this reason it was in that case sustained. In other words, the explanation given by the court for its previous decision affirming that a state excise tax, measured by a given per centum of gross receipts derived in part from interstate commerce, could be lawfully imposed, was that the particular tax applied to a value of the property which was not otherwise taxed under the laws of the State, namely, its value as a going concern.

Emphasizing this distinction the court then announced that the tax levied by the Act of 1905, though held by this court to be an occupation tax, not differing in character from an excise tax, and though measured in the same manner as was the excise tax under the Maine statute, could not be sustained upon the ground which, according to the court’s explanation, supported the holding in the Maine Case, that is, as reaching a value possessed by the railroad company’s property not by the State otherwise taxed, since it appeared that the property, under other laws of the State, was fully taxed as of a going concern.

This is equally true of the taxation of the property of the plaintiff in error. It. had paid all ad valorem taxes assessed against its property for the period for which it was sought to recover the tax upon its gross receipts, and its franchise taxes, in addition. The assessment of its property for ad va-lorem taxation under the general laws included the value which it had as property of a going concern. Article 7504, Revised Statutes; State v. G., H. & S. A. Ry. Co., 100 Tex. 153, 97 S. W. 71. This being the condition in respect to other taxation of the plaintiff in error’s property, the decision of the United States Supreme Court in State v. Galveston, Harrisburg & San Antonio Railway Company, which is still adhered to by that court, is conclusive of the case.

The correctness of our interpretation of that decision is established by the application made of it in Oklahoma v. Wells Fargo & Company, 223 U. S. 298, 32 Sup. Ct. 218, 56 L. Ed. 445, and its re-statement in United States Express Company v. Minnesota, 223 U. S. 335, 32 Sup. Ct. 211, 56 L. Ed. 459. In the former, there was under review an act of the State of Oklahoma (Laws 1910, e. 44, § 2) levying a tax upon certain corporations measured by a stated per centum of their gross receipts, including receipts arising from interstate commerce, which tax, it was provided by the act, should be “in addition to the taxes levied and collected upon an ad valorem basis.” Directing attention to the fact that the property of the corporations to which the act applied was thus subject to ad valorem taxation under other laws of the State, in holding that its decision in the Galveston Case controlled the question before it, the court said this of the tax levied by the act: |

“Therefore this tax cannot be an attempt to reach the value of what is by the law to be' valued and taxed in a different way. It would be difficult to apply to a> tax levied in these days the explanation of Maine v. Grand Trunk Ry. Co., 142 U. S. 217 [12 Sup. Ct. 121, 163, 35 L. Ed. 994], given in Galveston, Harrisburg & San Antonio Ry. Co. v. Texas, 210 U. S. 217, 226 [28 Sup. Ct. 638, 52 L. Ed. 1031]; Flint v. Stone Tracy Co., 220 U. S. 107, 162-165 [31 Sup. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312], and to suppose it intended to reach only the additional value given by its being part of a going concern to property already taxed in its separate items. There is nothing sufficient to indicate such a limitation, and for the reasons given above on the authority of Fargo v. Hart, 193 U. S. 490 [24 Sup. Ct. 498, 48 L. Ed. 761], it is plain that the gross receipts from all sources could not have been used as a means for estimating the going value of the property in the State.”

United States Express Company v. Minnesota, supra, also involved a State statute levying a tax measured by gross receipts, which, it was provided, should be in lieu of all taxes upon the property of the corporations subject to it. Though it applied to receipts from interstate commerce, the tax was held valid because of its being levied in lieu of all other taxes. For this reason the tax was distinguished from that condemned by the court in the Galveston Case. In speaking of the decision in that case this was said:

“In that case the statute of Texas was condemned, because it appeared to the court to be an attempt to reach the receipts from interstate commerce by a tax of one per cent., or what was equal to the same thing, on gross receipts arising from such commerce, when it appeared from the judgment of the state court and the argument on 'behalf of the State that another tax on the property had already been levied, covering its full value as a going concern.”

Tested, by the decisions of the United States Supreme Court the tax here sought to be recovered was invalid. The judgment of the Court of Civil Appeals is therefore reversed and that of the District Court is affirmed. 
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