
    Lehigh Valley Railroad Co. v. Commonwealth. Commonwealth v. Lehigh Valley Railroad Co.
    The Act of June 7,1879, l 7, providing for a tax upon gross receipts derived from tolls and transportation, telegraph business and express business, is valid so far as it applies to receipts arising from the transportation of freight and passengers by continuous carriage from one point in the state to another point in the state, which is internal commerce, although such transportation was conducted out of the state and in again in course of transit.
    Receipts arising from the transportation of freight and passengers between points within and points without the state, or inter-state commerce, are not taxable by the state.
    May 31, 1888.
    Errors, Nos. 24, 25, 45 and 46, May T. 1888, to review judgments on appeals from settlements of accounting officers at Sept. T. 1887, No. 114, and Jan. T. 1888, No. 516. Trunkey and Green, JJ., absent.
    Both cases were tried without a jury, under the Act of April 22, 1874. At No. 114, Sept. T. 1887, the court filed the following opinion, by McPherson, J.:
    
      “ We find the facts to be as follows:
    
      “ 1. The defendant is a railroad company, incorporated by this commonwealth, and engaged in the business of transporting freight and passengers. Its railway connects with other lines in other states.
    “ 2. Eor the six months ending Dec. 31,1886, its gross receipts for transportation were $4,798,933.53. Of this amount, $1,353,-441.50 was received for transportation beginning and ending in Penna., without passing out of the state in the course of transit; $207,660.42 was received for transporting, by continuous carriage, freight and passengers from one point in Penna. to another point in Penna., which freight and passengers were carried out of the state, and in again, in course of transit; and $3,237,831.61 was received for transportation beginning in Penna. and ending in other states, or beginning in other states and ending in Penna., or beginning in other states, passing through Penna. and ending in other states,'or beginning and ending in other states without touching Penna. In the last nve classes, the transportation was continuous from the point of beginning to the point of ending, and the freight and passengers were carried for a single sum or charge, and upon a single way-bill or ticket.
    - “3. This settlement taxes of the entire sum of $4,698,-933.53 (that fraction representing the defendant’s mileage within the state) for the six months ending Dec. 31, 1886, and is made under section 7 of the Act of 1879, P. L. 116.”
    “ Conclusions of law:
    [“ The questions raised by this appeal have been discussed in Com. v. D. & H. Canal Co., No. 534, June T. 1887 [the preceding case]', and Com. v. E. E. Co., No. 523, June T. 1887. For reasons there given, we hold that the commonwealth can only recover tax upon the two items of $1,353,441.50 and $207,660.42, being the amount received for transportation between points both of which are within this state.] [1.]
    “ The sum due the Commonwealth is as follows:
    of 1 per cent, upon $1,353,441.50 207,660.42
    ■ ' ‘--$1,561,101.92 $12,488.80
    Int. from June 3, ’87, to April 2, ’88 ....... 1,248.88
    Att’y Cen’l’s eom’n ............. 724.40
    Total...............$14,462.08
    .“For which sum we direct judgment to be entered if exceptions are not filed according to law.”
    Extract from opinion of court in Com. v. E. E. Co., referred to as stating the reasons for the decision in the above case: :
    “It is argued that the sum of $16,450.13 received for transportation by continuous carriage between points both of which are in Pennsylvania, cannot be taxed, because, during the transit, the goods and passengers were carried out of the state and in again.; This, it was urged, makes the whole carriage inter-state commerce, and we were referred to several cases in support of -the argument. None of them goes that length. In Coe v. Errol, 116 U. S. 517, the court remarks, in discussing another question, that New Hampshire could not tax logs which were started in Maine destined for another point in the same state, were floated down the Androscoggin river into New Hampshire, and were there temporarily detained. Treating this as a decision, however — and we do not deny its correctness — it is not in point. If the court had decided that Maine could not tax the logs because they had passed through New Hampshire, the case would be like the one before us. Lord v. S. S. Co., 102 U. S. 541, simply holds that a steamship plying upon the Pacific Ocean between two ports of California was engaged in commerce with foreign nations so as to be subject to the regulating power of Congress ; the reason being, that she was navigating the high seas, on the common highway of nations, where the United States was responsible for her conduct and owed her protection. The question of California’s power to tax the steamship’s receipts was in no way involved or considered.
    [“ In principle, the case before us does not seem to be within the mischief which the commercial clause of the federal constitution was intended to prevent. In reality and substance, the commerce here is purely internal, whatever the mere form of it may be;] [2] the freight and passengers start from a point in Pennsylvania, destined for another point in Pennsylvania, and are carried to their-destination by continuous transit. Does this become inter-state commerce merely because the railroad curves for a few miles into another state, and then curves back into Pennsylvania? If it does, we reach the somewhat surprising conclusion that the state of New York cannot tax the defendant’s receipts for transportation between the cities of New York and Buffalo, simply because the cars are hauled over a few miles of rails within the state of Pennsylvania; and also that merely to cross the Delaware river and then cross -back a mile or two beyond would make any railroad corporation of Pennsylvania or New Jersey an inter-state carrier as to all traffic which passes over the two bridges. S.o, too, the receipts of a steamboat plying between two ports in the state of Ohio along the Ohio river would be free from taxation by that state if the channel carried her for a few moments only into the state of Kentucky. We do not believe this to be the law, and accordingly hold that the defendant is taxable upon the item of $16,450.13 above named, as being receipts from internal commerce only.”
    A.t No. 576, Jan. T. 1888, the court filed an opinion identical with that at No. 114, Sept. T. 1887, except as to amounts.
    The evidence showed that the defendant transported freight and passengers on their cars from Mauch Chunk, Pa., to Phillips-burg, N. J., thence on the Bel. & Del. R. R. Co. to Trenton, N. J.¿ and thence over the Pa. R. R. to Philadelphia. It was from this transportation that the item recited in the opinion was derived; The same cars are used for transportation to points in other states.
    The defendant filed exceptions, in each case, alleging that the court erred, 1, in taxing receipts upon transportation carried out of the state and in again, in course of transit; 2, in deciding as enclosed in brackets in above extract from opinion, indicated by exponent, quoting it; 3, in not deciding that the transportation carried out of the state and in again, in course of transit, was inter-state transportation, and that the taxation of the receipts for such transportation was in violation of that clause of the constitution' of the United States which declares that Congress shall have power “ to regulate commerce with foreign nations and among the several states and with the Indian tribes and, 4, in directing judgment to be entered in favor of the Commonwealth, as above.
    The Commonwealth filed exceptions alleging that the court erred, 1, in the conclusion of the law endorsed in brackets, indicated by exponent, quoting it; 2, in not entering judgment for the full amount of her claim.
    
      The assignments of error, on the part of the Railroad Co., specified in each case, 1-4, the action of the court in overruling the above exceptions, reciting them.
    
      The assignments of error, on the part of the Commonwealth, in each case, specified 1-2, the action of the court in overruling her exceptions, reciting them.
    
      M. E. Olmsted, for Railroad Co.
    Transportation is not merely an aid to commerce, it is itself commerce. Passenger Cases, 7 How. 416; Freight Tax Case, 15 Wall. 275; Tax on Gross Receipts, 15 Wall. 284, 299; Fargo v. Michigan, 121 U. S. 230, 247; Telegraph Co. v. Texas, 105 U. S. 460, 464.
    “Any carriage of goods which crosses a state line is inter-state commerce.” Kohler’s Case, 30 Am. & Eng. Railway Cases, 71, 74. So is transportation through a state. Freight Tax Case, supra. Internal commerce must be confined to the territory of one state. Lord v. S. S. Co., 102 U. S. 541; Fargo v. Michigan, supra; Hall v. De Cuir, 95 U, S. 485. “ The subject transported must be, within the entire voyage, under the exclusive jurisdiction of the state.” Pacific Coast S. S. Co. v. Com’rs, 18 Fed. R. 13, See, also, Coe v. Errol, 116 U. S. 517; Veazie v. Moor, 14 How. 568.
    New Jersey might virtually exclude the transportation by taxation. Embarrassing restrictions might be imposed, bringing the case within the reasoning of Hall v. De Cuir, 95 U. S. 485.
    
      W. S. Kirkpatrick, Attorney General, with him John F. Sanderson, Deputy Attorney General, for Commonwealth.
    The consequences of the doctrine contended for on the other side are well stated in the opinion of the court below. The same might be true of competing telegraph lines, as intercourse by telegraph between states is inter-state commerce. Tel. Co. v. Texas, 105 U. S. 460.
    Coe v. Errol does not apply. Lord v. Steamship Co. was the application of an Act of Congress regulating the liability of owners of vessels while on the high seas.
    Oct. 1, 1888.
   Per Curiam,

We have examined with care the opinion of the learned judge who tried the above stated cases in the court below, and we are satisfied that the conclusions reached by him are correct. Nor do we deem it advisable to attempt to add anything to what he has so well said.

The judgments are severally affirmed. A. B. W.

Note. — -Cf., contra, decision of Inter-State Commerce Commission, filed Nov. 26, 1888, in New Orleans Cotton Exchange v. Cin., N. O. & T. R. R. Co., 2 Inter-St. Com. R. 289, citing the Gloucester Perry Case, 114 U. S. 196.  