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I taxation laws of Tennessee. The Supreme Court of the United States sustained the tax upon the authority inter alia of Brown v. Houston, supra. quote the following from the language of Mr. Justice White at page 519 et seq:

*

"We are of opinion that the court below was right in deciding that the goods were not in transit, but *** had reached their destination at The Memphis, and were there held in store *** to be sold and delivered as contracts for that purpose were completely consummated other propositions pressed upon our attention require consideration. They relate to two subjects: First, the asserted want of power of the state of Tennessee to tax because the goods were imported from another state, and were yet, it is contended, in the original packages;"

(It will not be necessary to state the second point discussed by Mr. Justice White in his opinion).

On the first point considered by the court it was held that cases like Brown v. Houston, supra, were not overruled by cases like Leisy v. Hardin, 135 U. S. 100, in which the "original package" doctrine had been applied to the exercise of the police power of the state. The distinction was pointed out and it was held that while the state may not prohibit, regulate or otherwise interfere with the sale of goods imported from another state while they remain in the original package of transportation and are offered for sale by the importer, yet the state may tax goods while in the original package as property in the state. In other words, while the courts do not express it in this fashion, commerce possesses at least two aspects, viz: transportation and sale. The question as to the right to tax goods as property depends upon whether or not transportation has begun or ceased; but the question as to the right to prohibit sale or possibly the right to tax sales as such or the business of selling depends upon whether or not the sale, which is the incident of the interstate commerce involved, has been consummated.

The court did not in the case last discussed comment upon a fact as found by the lower court, that in most cases at least the contracts for sale of the goods therein involved were not completed until the goods had arrived at the distributing point in Tennessee. We are, therefore, left in doubt by this decision as to whether the result on the main question in which we are interested, respecting the end of the interstate transit, would have been different if some of the goods held in the warehouses had been sold prior to their delivery at the warehouse under complete contracts specifying quality as well as kind and quantity of goods to be delivered.

In General Oil Company v. Crain, supra, the facts were as follows:

The plaintiff, a Pennsylvania corporation with its principal place of business at Memphis, Tenn., was engaged in the manufacture and sale of illuminating oils. Its wells and refining and manufacturing plants were located in Pennsylvania and Ohio. Memphis was a distributing point from which sales were made and at which large receptacles for oil of various kinds were kept. It was customary for the plaintiff to ship oils from its refineries to Memphis by rail in tank cars and there to unload the contents of the cars into the other receptacles mentioned. It was shown that for each kind of oil dealt in by the plaintiff it maintained at Memphis two tanks, one plainly and conspicuously marked "oil already sold in Arkansas, Louisiana and Mississippi," and the other marked "oil to be sold in Arkansas, Louisiana and Mississippi." The contents of the first remained in Tennessee only long enough (a few days) to be properly distributed, placed in smaller tanks, barrels and other receptacles and shipped according to the orders therefor. The oil in the other tanks re

mained in Tennessee until required to supply orders from customers and was never sold except upon rceipt of such orders. In short, then, oil already sold and oil yet to be sold would come down to the point of distribution indiscriminately and of course of necessity commingled in a single fluid mass in the tank cars and would be distributed and otherwise subsequently dealt with upon its receipt in Memphis. Plaintiff sold no oil at all in Tennessee from either of the two kinds of tanks mentioned.

The defendant was an inspector of oils, and the object of the suit was to restrain him from inspecting the oil in either of the two kinds of tanks above described. The court cited Coe v. Errol, Brown v. Houston, Coal Company v. Bates, Diamond Match Company v. Ontonagon and Kelley v. Rhoads, supra, as well as certain state cases which were followed and approved, among them State v. Engle, 34 N. J. L. 425, in affirming the lower court's decision denying the injunction. The New Jersey case cited having held that coal mined in Pennsylvania and sent by rail to a point in New Jersey, where it was deposited on a wharf for separation and assortment, for the purpose of further transportation and not for sale was not subject to taxation in New Jersey, was relied on for the purpose of establishing a principle approved by the Supreme Court of the United States and quoted from the decision of the state court as follows:

"Delay within the state, which is no longer than is necessary for the convenience of transshipment for its transportation to its destination, will not make it property within the state for the purpose of taxation."

This principle, while recognized, was held not applicable to the facts in the case then at bar for the following reasons (per Mr. Justice McKenna, at page 229 et seq.):

"Its oil was not in movement through the state. It had reached the destination of its first shipment, and it was held there, not in necessary delay or accommodation to the means of transportation, as in State v. Engle, supra, but for the business purposes and profit of the company. It was only there for distribution, it is said, to fulfil orders already received. But to do this required that the property be given a locality in the state beyond a mere halting in its transportation. It required storage there, the maintenance of the means of storage; of putting it in and taking it from storage. The bill takes pains to allege this. (Here was quoted an excerpt from the bill of complaint showing that for its own purpose the oil company found it convenient to store and re-load the oil at Memphis).

This certainly describes a business,-describes a purpose for which the oil is taken from transportation, brought to rest in the state, and for which the protection of the state is necessary, a purpose outside of the mere transportation of the oil. The case, therefore, comes under the principle announced in American Steel Company v. Speed, (supra)."

Mr. Justice Moody, with whom concurred Mr. Justice Holmes, dissented on the ground that the doctrine of the American Steel & Wire Company v. Speed should not be carried forward, as it had been by the majority of the court, and applied to a case where the goods had been completely sold prior to their receipt at the distributing point. It is clear, therefore, that the question left unsettled by the decision in American Steel & Wire Company v. Speed was necessarily involved in General Oil Company v. Crain, and that it was decided in favor of the state.

In Bacon v. Illinois, supra, the facts were as follows:

The original defendant, Bacon, was sued for the recovery of a tax on grain owned by him and stored in an elevator belonging to him in the city of Chicago. An agreed statement of facts disclosed that all of the grain had been shipped by its original owners, who were residents of western and southern states, under contracts for its transportation, to New York, Pennsylvania and other eastern states, which reserved the right to the owners of the grain to remove said grain from the cars of the railroad companies "for the mere temporary purposes of inspecting, weighing, cleaning, clipping, drying, sacking, grading and mixing, or changing the ownership, consignee or destination" thereof. While the grain was in transit it was purchased by Bacon, who was represented at the points of destination by agents through whom he disposed of grain and other commodities in eastern markets. He had purchased the grain in question solely for the purpose of selling it in the eastern markets and with the intention of forwarding it according to the shipping contracts. In removing the grain to his private elevator he was merely exercising the reserved right of the owner of the grain under the shipping contract, and it was agreed that the grain remained in the elevator only for such time as was reasonably necessary for the purposes above mentioned, and that immediately after these had been accomplished it was turned over to the railroad companies and was forwarded by them to the eastern cities in accordance with the original contracts of transportation which had been made with the railroad companies themselves. In other words, while the grain was stored in the elevator it was, so to speak, subject to contract for further interstate transportation. Supreme Court of the United States, per Mr. Justice Hughes, sustained the imposition of the local tax. The following language appears in the opinion:

The

"Neither the fact that the grain had come from outside the state nor the intention of the owner to send it to another state and there to dispose of it can be deemed controlling when the taxing power of the state of Illinois is concerned. The property was held by the plaintiff in error in Chicago for his own purposes and with full power of disposition. It was not being actually transported and it was not held by carriers for transportation. The plaintiff in error had withdrawn it from the carriers. The purpose of the withdrawal did not alter the fact that it had ceased to be transported and had been placed in his hands. He had the privilege of continuing the transportation under the shipping contracts, but of this he might avail himself or not as he chose. He might sell the grain in Illinois or forward it as he saw fit. It was in his possession with the control of absolute ownership. * * *. He had established a local facility in Chicago for his own benefit and while, through its employment, the grain was there at rest, there was no reason why it should not be included with his other property within the state in an assessment for taxation which was made in the usual way without discrimination."

It will be observed that thus far Bacon v. Illinois is the culmination of the line of cases involving (with the exception of General Oil Company v. Crain, supra), the right of the state to impose a property tax upon goods which are in some manner or other impressed with the character of subjects of interstate commerce. The rule to be gathered from all of these decisions, then, may be stated as follows:

Property is subject to local or state taxation though it has been in interstate commerce and is in the state by reason of interstate commercial dealings when its interstate transit is ended and it has come to rest in the state. Property has come to rest in the state when it has reached its final destination and is there held for purposes of sale, or when, though it has not yet

reached its final destination, it is detained in the possession of its owner at a place of distribution or transshipment and there commingled with other property of like kind or otherwise held for a purpose beneficial to the owner and beyond the mere necessities of transportation itself. But unless the interstate journey as originally contemplated is ended, the mere accumulation or delay at the place of transshipment, when such transshipment and such accumulation and such delay all result from the mere necessities of transportation and it appears that nothing is detained or allowed to accumulate but what is to go forward as rapidly as the facilities of transportation permit, and when the accumulation or detention serves no purpose useful to the owner of the goods, but merely accommodates the convenience and necessities of the transporting agencies, the goods are not at rest, but are regarded as in transit until the end of their originally contemplated journey.

If these cases furnish the rule for the determination of the question as to what constitutes the business of transporting interstate commerce for the purpose of privilege taxes, an answer to your first three questions may, upon certain assumptions which must be made, be approximated. As I have stated, I believe that these cases do furnish such a rule. I base my conclusion upon this point on the fact that these property tax cases have been cited in the rate and regulation cases, where the sole question involved was the character of the act of the transporting agency. Thus, in Gulf, etc., Railroad Company v. Texas, supra, Coe v. Errol, supra, was cited as embodying a rule applicable to the determination of the question then before the court. The same is true of Southern Pacific Terminal Railway Co. v. Interstate Commerce Commission, supra, Railroad Company v. Worthington, supra, Texas, etc., Railroad Company v. Sabine Tram Company. Indeed, while the question is as to the nature of the act of transportation, it seems to me that if the interstate transportation has ceased for one purpose, it must necessarily be held to have ceased for all other purposes. To hold the test applicable throughout the whole field does not conflict with decisions like Leisy v. Hardin, or any other application of the so-called "original package" doctrine; for those cases deal with the right of the state to burden the selling aspect of interstate commerce, while your questions require consideration only of the transportation side, so to speak, of that commerce. The rule, then, may be applied in the solution of our questions, as follows:

You first inquire whether the transportation by the railroad company is intra-state or interstate under the following conditions:

1. "The owner of the ore transports same in his own vessels to the terminals of certain railroads on lake points within this state. It is then delivered to the railroad company for transportation to some point within the state."

If the delivery to the railroad company from the vessels of the owner of the ore is direct, and there is no accumulation of the ore in the possession of the owner thereof, this transaction constitutes interstate commerce transportation on the part of the railroad company. The owner's ownership of the vessels and the transshipment of the ore at the lower lake port and the journey itself for the first time on a commercial bill of lading are alike immaterial. The journey would appear to be a continuous interstate journey upon the facts as you state them. However, it is a matter of common knowledge and one, too, which has been the subject of investigation by this department, that the

case as I have put it is one which very seldom, if ever, occurs. I understand that ore from the Minnesota and Michigan mines is transported during the period of open navigation to lower lake ports and there laid on docks in piles. These docks, in many instances, belong to the railroad companies, but it is possible that some of them may belong to dealers in ore. The piles are graded with respect to the kind and quality of ore. The railroad company theoretically takes away from the pile in twelve months what is brought to it in six months, but in fact it is often true that the amount brought down by the boats during the period of navigation is greater than the amount required to supply the mills during the year of their operation, as in Diamond Match Company v. Ontonagon, supra. It may be that all ore of a certain quality received on a certain dock is put into a given pile whether a given boat load of ore, which is there placed, has been sold or not, and whether the ore is supposed to be destined for Ohio points or for points outside of Ohio. In other words, the ore docks are like the oil tanks in General Oil Company v. Crain, supra, and like the elevator in Bacon v. Illinois, supra, excepting possibly that the railroad companies are the owners of the ore docks. This fact would not, however, in my opinion, be material. If it should appear that there was no separation of ore for various destinations on the docks, and that the amount of ore received by the railroad company during the period of navigation and held for further shipment does not correspond to the needs of the mills during the year of ordinary railroad transportation, I should think that under those circumstances the railroad companies, though the owners of the docks, would occupy a position corresponding to that of the transfer company in American Steel & Wire Company v. Speed, supra.

If the Commission then should find the fact to be that all ore belonging to a given owner is piled indiscriminately on docks at the lower lake ports in Ohio with other ore of like quality, and that the amount thereof, so piled in a given year, is in excess of the amount destined ab initio for specific points below the lower lake ports, then it would appear that such storage or accumulation of ore on the dock, though accounted for in a large part, indeed perhaps almost entirely by the necessities of transportation, is also due in some part to the requirements of the owner's convenience. If it should appear that the owner of the ore actually exercises dominion and control over the same while it is on docks, so that he is at liberty to take from the common mass any quantity of ore which he may desire and sell it after it reaches the docks, then I would be of the opinion that the ore is at rest in Ohio, and that any subsequent movement of it is an independent transit as related to the water transportation; so that if such subsequent movement is wholly within the state of Ohio it would constitute intra-state commerce.

The conditions as described in your second question are as follows: ·

2. "The owner of the ore charters a vessel and transports the ore in the same manner as above set out in paragraph 1."

This question must be answered in the same manner as your first question has been answered, namely, upon the facts stated without any other circumstances in the case and assuming an immediate transshipment of the ore at the lower lake ports and its delivery to the railroads, or rather the transshipment and delivery as immediate as the necessities of the transportation, and such necessities alone, dictate, the carriage by rail is interstate in character; otherwise, and especially if the ore is placed upon a dock in a pile with other ore