MR. JUSTICE BLATCHFORD delivered the opinion of the court. After stating the Case as above reported, he continued:
The point upon which the final judgment was rendered in the case was the one considered and adjudged in the decision given on the demurrer to the declaration. The tax was not a property tax, because, under the Constitution of Tennessee, all property must be taxed according to its value, and this tax was not measured by value, but was an arbitrary charge. What was done by the plaintiff was taxed as a privilege, it being assumed by the State authorities, that the Legislature had the power, under the Constitution of Tennessee, to enact the 6th section of the Act of 1877, and that the plaintiff had done what that section declared to be a privilege. By the decisions of the Supreme Court of Tennessee, cited in the opinion of the Circuit Court on the demurrer, it is held, that the Legislature may declare the right to carry on any business or occupation to be a privilege, to be purchased from the State on such conditions as the statute law may prescribe, and that it is illegal to carry on such business without complying with those conditions. In this case, the payment of the tax imposed as a condition prescribed, without complying with which what was done by the plaintiff was made illegal. The tax was imposed as a condition precedent to the right of the plaintiff to run and use the thirty-six sleeping cars owned by it, as it ran and used them on railroads in Tennessee. The privilege tax is held by the Supreme Court of Tennessee to be a license tax, for the privilege of doing the thing for which the tax is imposed, it being unlawful to do the thing without paying the tax. What was done by the plaintiff in this case, in connection with the use of the thirty-six cars, if wholly a branch of inter-State commerce, was made by the State of Tennessee unlawful unless the tax should be paid, and, to the extent of the tax, a burden was placed on such commerce; and, upon principle, the tax, if lawful, might equally well have been large enough to practically stop altogether the particular species of commerce.
What was that commerce? The plaintiff, by its contract, furnished sleeping cars to the railroad company, to be used by the latter "for the transportation of passengers," sufficient in numbers to meet the requirements of travel on the road. The plaintiff kept in order and renewed the carpets, upholstery and bedding of the cars, except repairs and renewals made necessary by accident or casualty, but all damages to the cars by accident or casualty were repaired by the railroad company. The plaintiff furnished employés on each car to collect fares for the accommodations furnished by the car, and to wait upon passengers and provide for their comfort. Those employés were governed by the rules adopted by the railroad company to govern its own employés, and the railroad company was liable for personal injury to, or the death of, any such employé of the plaintiff to the same extent only as if such employé was in fact an employé of the railroad company, and the latter was indemnified by the plaintiff for all liability in excess thereof. The railroad company carried free on its line such employés of the plaintiff and its general officers when on duty for it, and the plaintiff carried free in the cars it so furnished the general officers of the railroad company. In consideration of the use of such cars, the railroad company hauled them on the passenger trains on its line, in such manner as best accommodated passengers desiring to use the cars, and furnished, at its own expense, fuel for them and materials for the lights, and washed and cleansed them, and kept them in good order and repair, including renewals of worn-out parts, and all things appertaining to them, necessary to keep them in first-class condition, with the exceptions before specified in regard to carpets, upholstery and bedding, and furnished room and conveniences for airing and storing bedding. The plaintiff collected from every person occupying the car compensation for its accommodations in seats and couches. The railroad company permitted the plaintiff to place its tickets for seats and couches on sale in the ticket offices of the railroad company, the sale to be a part of the general duties of the ticket agents of the latter, and to be without charge to the plaintiff, but the proceeds of sales to be at its risk. The contract was made an exclusive one for fifteen years, and the plaintiff agreed to protect the railroad company against all liability for the infringement of any patent in the construction and use of the cars, and there was a provision for the termination of the contract by either party on a breach of it by the other.
On these facts, the cars in question were cars for the transportation of the passengers who occupied them, in their transit into, or through, or out of Tennessee. They were used by the railroad company for such transportation, and it received the transit fare or compensation. For purposes of transit, it dealt with the cars as it would with cars owned by itself. It hauled them, furnished fuel and materials for lights, washed and cleansed them, kept them in repair, renewed worn-out parts, repaired all damages to them by accident or casualty, and even repaired and renewed carpets, upholstery, and bedding damaged or destroyed by accident or casualty; all at its own expense, and without charge to the plaintiff; leaving to the plaintiff only to make good the ordinary wear and tear of the sitting and sleeping conveniences, and allowing it to have the compensation for such conveniences, and furnishing it free of charge with all facilities for selling seats and couches.
The tax was a unit, for the privilege of the transit of the passenger and all its accessories. No distinction was made in the tax between the right of transit, as a branch of commerce between the States, and the sleeping and other conveniences which appertained to a transit in the car. The tax was really one on the right of transit, though laid wholly on the owner of the car. So, too, the service rendered to the passenger was a unit. The car was equally a vehicle of transit, as if it had been a car owned by the railroad company, and the special conveniencies or comforts furnished to the passenger had been furnished by the railroad company itself. As such vehicle of transit, the car, so far as it was engaged in inter-State commerce, was not taxable by the State of Tennessee; because the plaintiff had no domicil in Tennessee, and was not subject to its jurisdiction for purposes of taxation; and the cars had no situs within the State for purposes of taxation; and the plaintiff carried on no business within the State, in the sense in which the carrying on of business in a State is taxable by way of license or privilege.
The case of Attorney-General v. London & North Western Railway Co., in the Court of Appeal, 6 Q.B. Div. 216, before Lord Chief Justice Coleridge, and Lord Justices Baggallay and Brett, affirming the judgment of the Exchequer Division, 5 Ex. Div. 247, is instructive in the above point of view, as to the subject in hand. There, the railway company attached to its night trains sleeping carriages for the accommodation of such of its first class passengers as might choose to avail themselves of it. For the use of these carriages they were charged an extra sum in addition to the ordinary first-class fare. Besides couches with pillows, sheets and blankets, each carriage contained a lavatory, and other conveniences. Passengers using such carriages were not disturbed during the night by demands for their tickets, and, if they arrived at their destination in the night, the passengers were allowed to remain in their beds until the morning. Under a statute imposing a percentage duty "upon all sums received or charged for the hire, fare or conveyance of passengers" on any railway, the Government claimed and was allowed the duty on the extra sum charged for the use of the sleeping carriage. The Court of Appeal, by Lord Coleridge, said: "We regard the additional accommodation afforded by the sleeping carriages as differing in no essential particular from the superior accommodation afforded by a second-class carriage over a third, or by a first-class carriage over both. If the company issued tickets to all passengers alike, at the price charged to passengers travelling in third-class carriages, and then issued tickets, at corresponding prices, to those desiring to travel in a higher class of carriage, it could hardly be contended that duty would not be payable upon the prices paid for such second ticket. The passenger who is content to travel in a third-class or second-class carriage in the day, might well desire to travel in a carriage of a higher class by night; and, in like manner, a passenger ordinarily travelling by day in a first-class carriage might desire the additional accommodation at night of a sleeping carriage. No separate charge is made in the present case; the charge, though written on a separate ticket, is, in our opinion, part of one charge for the conveyance of the passenger in a particular way, and is, therefore, a part of the charge for the conveyance of a passenger, received and charged for such conveyance." That case is in harmony with the views before taken in regard to the present case. The fare paid by the inter-State passenger to the railroad company, and that paid to the plaintiff, added together, were merely a charge for his conveyance in a particular way, and there was really but one charge for the transit, though the total amount paid was divided among two recipients. The service was a single one, of inter-State transit, with certain accommodations for comfort, and what was paid to the plaintiff was part of a charge for the conveyance of the passenger.
The views above expressed are in harmony with numerous decisions which have been made by this court on the subject to which they relate. In Almy v. The State of California, 24 How. 169, a stamp tax had been imposed by the State on bills of lading for the transportation of gold or silver from any point within the State to any point without it, and was held by this court to be invalid; and in Woodruff v. Parham, 8 Wall. 123, 138, it was said by this court, Mr. Justice Miller delivering its opinion, that that stamp tax "was a regulation of commerce, a tax imposed upon the transportation of goods from one State to another, over the high seas, in conflict with the freedom of transit of goods and persons between one State and another, which is within the rule laid down in Crandall v. Nevada, 6 Wall. 35, and with the authority of Congress to regulate commerce among the States."
In the State Freight Tax Case, 15 Wall. 232, 281, it was said that a State cannot tax persons for passing through or out of it; that inter-State transportation of passengers is beyond the reach of a State legislature; and that a tax upon it amounts to a tax upon the passengers transported.
In Railroad Co. v. Maryland, 21 Wall. 456, 472, Mr. Justice Bradley, in speaking for the court, said, that a State cannot impose a tax or duty on the movements or operations of commerce between the States, because it would be a regulation of such commerce "in a matter which is essential to the rights of all, and, therefore, requiring the exclusive legislation of Congress," being "a tax because of the transportation," and "therefore, virtually, a tax on the transportation."
The decisions in the various cases in this court on the subject of a tax by a State on the bringing in of passengers from foreign countries, and which are collected and commented on by Mr. Justice Miller, in delivering the opinion of this court in the Head Money Cases, 112 U.S. 580, 591, show it to be a settled matter that to tax the transit of passengers from foreign countries or between the States, is to regulate commerce.
The principles which governed the decisions in Welton v. Missouri, 91 U.S. 275, Guy v. Baltimore, 100 U.S. 434, and Moran v. New Orleans, 112 U.S. 69, holding unlawful the State taxes in those cases on inter-State commerce in merchandise, are equally applicable to the tax in this case on the transit of passengers. The rule which governs the subject is accurately and tersely stated by Mr. Justice Field, in delivering the opinion of the court, in Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 211: "While it is conceded that the property in a State, belonging to a foreign corporation engaged in foreign or inter-State commerce, may be taxed equally with like property of a domestic corporation engaged in that business, we are clear that a tax or other burden imposed on the property of either corporation because it is used to carry on that commerce, or upon the transportation of persons or property, or for the navigation of the public waters over which the transportation is made, is invalid and void, as an interference with, and an obstruction of, the power of Congress in the regulation of such commerce." The case of Telegraph Co. v. Texas, 105 U.S. 460, in regard to a State tax on telegraphic messages sent out of a State, is a kindred case. The whole subject, in reference to a State tax imposed for selling goods brought into a State from other States, was recently fully considered by this court in Walling v. Michigan, 116 U.S. 446. And in that case Mr. Justice Bradley, speaking for the court, says: "We have also repeatedly held, that, so long as Congress does not pass any law to regulate commerce among the several States, it thereby indicates its will that such commerce shall be free and untrammeled." See Welton v. Missouri, 91 U.S. 275, 282; Machine Co. v. Gage, 100 U.S. 676, 678; County of Mobile v. Kimball, 102 U.S. 691, 697; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 204; Brown v. Houston, 114 U.S. 622, 631, where the cases on that point are collected.
It is urged that the decison of the Circuit court in this case was inconsistent with the rulings in Osborne v. Mobile, 16 Wall. 479, and in Wiggins Ferry Co. v. East St. Louis, 107 U.S. 365. It becomes necessary, therefore, to examine those cases.
In Osborne v. Mobile, Osborne was an agent, at Mobile, Alabama, of a Georgia corporation, an express company, and, as such, transacted at Mobile a general express business within and extending beyond the limits of Alabama. An ordinance of the city of Mobile required an annual license fee of $500 to be paid by every express company doing business in Mobile, and having a business extending beyond the limits of Alabama, while every express company doing business within the limits of the State was required to pay a license fee of only $100, and every such company doing business within the city was required to pay a license fee of only $50. A fine was prescribed for a violation of the ordinance. Osborne violated it and was fined. The legality of the tax was upheld. Chief Justice Chase, in delivering the opinion of the court, cited the State Freight Tax Case, 15 Wall. 232, decided at the same term, as holding "that the State could not constitutionally impose and collect a tax upon the tonnage of freight taken up within its limits and carried beyond them, or taken up beyond its limits and brought within them; that is to say, in other words, upon inter-State transportation"; "because it was, in effect, a restriction upon inter-State commerce, which by the Constitution was designed to be entirely free." The tax on the Georgia Express Company was upheld as a tax "upon a business carried on within the city of Mobile." Osborne was a local agent, personally subject to the taxing jurisdiction of the State, as representing his principal, and the tax was on the general business he carried on, and the subject of the tax was not, as here, the act of inter-State transportation. In Osborne v. Mobile, the court drew the distinction between the case before it and the State Freight Tax Case. The present case falls within the latter.
In Wiggins Ferry Co. v. East St. Louis, the decision was that the State had power to impose a license fee, upon a ferry-keeper living in the State, for boats which he owned and used in conveying from the State passengers and goods across a navigable river to another State; and that the levying of a tax on such boats, or the exaction of a license fee in respect of them, by the State in which they had their situs, was not a regulation of commerce within the meaning of the Constitution. In the case at bar the plaintiff was not a Tennessee corporation, and had no domicil in Tennessee, and the sleeping cars in question, as before said, had not any situs in Tennessee for the purposes of taxation.
The question involved in this case was before the Court of Chancery of Tennessee in Pullman Southern Car Co. v. Gaines, 3 Tenn. Ch. 587, on the same facts, as to the privilege tax for 1877. That court held (and it is stated that the Supreme Court of Tennessee, on appeal, affirmed its ruling), that this privilege tax, as to such of the cars as passed and repassed through the State, and did not abide in it, was not amenable to the objection that it interfered with inter-State commerce. The view taken was that the property of the foreign corporation, used in Tennessee, could be taxed as property or by an excise on its use; and that the tax in this case was not directly on the object of commerce, or directly aimed at commerce. We have given to the views set forth by the Tennessee Chancery Court the consideration due to the judgments of that tribunal, but are unable to concur in its conclusion.