MR. JUSTICE STONE delivered the opinion of the Court.
Section 201, c. 7, of the New Mexico Special Session Laws of 1934, levies a privilege tax upon the gross receipts of those engaged in certain specified businesses.
Appellants brought the present suit in the state district court to recover the tax, which they had paid under protest, as exacted in violation of the commerce clause of the Federal Constitution. The trial court overruled a demurrer to the complaint and gave judgment for appellants, which the Supreme Court reversed. 41 N.M. 141; 65 P.2d 863. Appellants refusing to plead further, the district court gave judgment for the appellees, which the Supreme Court affirmed. 41 N.M. 288; 67 P.2d 505. The case comes here on appeal from the second judgment under § 237 of the Judicial Code.
Appellants publish a monthly livestock trade journal which they wholly prepare, edit, and publish within the state of New Mexico, where their only office and place of business is located. The journal has a circulation in New Mexico and other states, being distributed to paid subscribers through the mails or by other means of transportation. It carries advertisements, some of which are
Appellants insist here, as they did in the state courts, that the sums earned under the advertising contracts are immune from the tax because the contracts are entered into by transactions across state lines and result in the like transmission of advertising materials by advertisers to appellants, and also because performance involves the mailing or other distribution of appellants' magazines to points without the state.
That the mere formation of a contract between persons in different states is not within the protection of the commerce clause, at least in the absence of Congressional action, unless the performance is within its protection, is a proposition no longer open to question. Paul v. Virginia, 8 Wall. 168; Hooper v. California, 155 U.S. 648; New York Life Ins. Co. v. Deer Lodge County, 231 U.S. 495; cf. Ware & Leland v. Mobile County, 209 U.S. 405; Engel v. O'Malley, 219 U.S. 128. Hence it is unnecessary to consider the impact of the tax upon the advertising contracts except as it affects their performance, presently to be discussed. Nor is taxation of a local business or occupation which is separate and distinct from the transportation and intercourse which is interstate commerce forbidden merely because in the ordinary course such transportation or intercourse is induced or occasioned by the business. Williams v. Fears, 179 U.S. 270; Ware & Leland v. Mobile County, supra; Browning v. Waycross,
We turn to the other and more vexed question, whether the tax is invalid because the performance of the contract, for which the compensation is paid, involves to some extent the distribution, interstate, of some copies of the magazine containing the advertisements. We lay to one side the fact that appellants do not allege specifically that the contract stipulates that the advertisements shall be sent to subscribers out of the state, or is so framed that the compensation would not be earned if subscribers outside the state should cancel their subscriptions. We assume the point in appellants' favor and address ourselves to their argument that the present tax infringes the commerce clause because it is measured by gross receipts which are to some extent augmented by appellants' maintenance of an interstate circulation of their magazine.
It was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business. "Even interstate business must pay its way," Postal Telegraph-Cable Co. v. Richmond, 249 U.S. 252, 259; Ficklen v. Shelby County Taxing Dist., 145 U.S. 1, 24; Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 696; Galveston, H. & S.A. Ry. Co. v. Texas, 210 U.S. 217, 225, 227, and the bare fact that one is carrying on interstate commerce does not relieve him from many forms of state taxation which add to the cost of his business. He is subject to a property tax on
All of these taxes in one way or another add to the expense of carrying on interstate commerce, and in that sense burden it; but they are not for that reason prohibited. On the other hand, local taxes, measured by gross receipts from interstate commerce, have often been pronounced unconstitutional. The vice characteristic of those which have been held invalid is that they have placed on the commerce burdens of such a nature as to be capable, in point of substance, of being imposed (Fargo v. Michigan, 121 U.S. 230; Philadelphia & Sou. S.S. Co. v. Pennsylvania, 122 U.S. 326; Galveston, H. & S.A.R. Co. v. Texas, supra; Meyer v. Wells, Fargo & Co., 223 U.S. 298) or added to (Crew Levick Co. v. Pennsylvania, 245 U.S. 292; Fisher's Blend Station v. State Tax
It is for these reasons that a state may not lay a tax measured by the amount of merchandise carried in interstate commerce, Case of State Freight Tax, supra, or upon the freight earned by its carriage. Fargo v. Michigan, supra; Philadelphia & Sou. S.S. Co. v. Pennsylvania, supra, restricting the effect of State Tax on Railway Gross Receipts, 15 Wall. 284, with which compare Miller, J., dissenting in that case at p. 297. Taxation measured by gross receipts from interstate commerce has been sustained when fairly apportioned to the commerce carried on within the taxing state, Wisconsin & M. Ry. Co. v. Powers, 191 U.S. 379; Maine v. Grand Trunk Ry. Co., supra; Cudahy Packing Co. v. Minnesota, supra; United States Express Co. v. Minnesota, 223 U.S. 335, and in other cases has been rejected only because the apportionment was found to be inadequate or unfair. Fargo v. Michigan, supra; Galveston, H. & S.A.R. Co. v. Texas, supra; Meyer v. Wells, Fargo & Co., supra, with which compare Wisconsin & M. Ry. Co. v. Powers, supra. Whether the tax was sustained as a fair means of measuring a local privilege or franchise, as in Maine v. Grand Trunk Ry. Co., supra; Ficklen v. Shelby County Taxing
In the present case the tax is, in form and substance, an excise conditioned on the carrying on of a local business, that of providing and selling advertising space in a published journal, which is sold to and paid for by subscribers, some of whom receive it in interstate commerce. The price at which the advertising is sold is made the measure of the tax. This Court has sustained a similar tax said to be on the privilege of manufacturing, measured by the total gross receipts from sales of the manufactured goods both intrastate and interstate. American Manufacturing Co. v. St. Louis, supra, 462. The actual sales prices which
Viewed only as authority, American Manufacturing Co. v. St. Louis, supra, would seem decisive of the present case. But we think the tax assailed here finds support in reason, and in the practical needs of a taxing system which, under constitutional limitations, must accommodate itself to the double demand that interstate business shall pay its way, and that at the same time it shall not be burdened with cumulative exactions which are not similarly laid on local business.
As we have said, the carrying on of a local business may be made the condition of state taxation, if it is distinct from interstate commerce, and the business of preparing, printing and publishing magazine advertising is peculiarly local and distinct from its circulation whether or not that circulation be interstate commerce. Cf. Puget Sound Stevedoring Co. v. State Tax Comm'n, 302 U.S. 90, 94. No one would doubt that the tax on the privilege would be valid if it were measured by the amount of advertising space sold. Utah Power & Light Co. v. Pfost, supra; Federal Compress & W. Co. v. McLean, 291 U.S. 17, or by its value. Oliver Iron Mining Co. v. Lord, 262 U.S. 172; Hope Natural Gas Co. v. Hall, 274 U.S. 284. Selling price, taken as a measure of value whose accuracy appellants do not challenge, is for all practical purposes a convenient means of arriving at an equitable measure of the burden which may be imposed on an admittedly taxable subject matter. Unlike the measure of the tax sustained in American Manufacturing Co. v. St. Louis, supra, it does not embrace
Here it is perhaps enough that the privilege taxed is of a type which has been regarded as so separate and distinct from interstate transportation as to admit of different treatment for purposes of taxation, Utah Light & Power Co. v. Pfost, supra; Federal Compress & W. Co. v. McLean, supra; Chassaniol v. Greenwood, 291 U.S. 584, and that the value of the privilege is fairly measured by the receipts. The tax is not invalid because the value is enhanced by appellant's circulation of their journal interstate any more than property taxes on railroads are invalid because property value is increased by the circumstance that the railroads do an interstate business.
In this and other ways the case differs from Fisher's Blend Station v. State Tax Comm'n, supra, on which appellants rely. There the exaction was a privilege tax laid upon the occupation of broadcasting, which the Court held was itself interstate communication, comparable to that carried on by the telegraph and the telephone, and was measured by the gross receipts derived from that commerce. If broadcasting could be taxed, so also could reception. Station WBT, Inc. v. Poulnot, 46 F.2d 671.
MR. JUSTICE McREYNOLDS and MR. JUSTICE BUTLER are of opinion that the judgment should be reversed.
MR. JUSTICE CARDOZO took no part in the consideration or decision of this case.
"I — At an amount equal to two percent of the gross receipts of any person engaging or continuing in any of the following businesses: . . . publication of newspapers and magazines (but the gross receipts of the business of publishing newspapers or magazines shall include only the amounts received for the sale of advertising space) . . ."