These two cases were separately appealed from the circuit court of Leflore county, and involve the constitutionality of certain provisions of chapter 88, Laws of 1930, and chapter 89, Laws of 1932. Section 55, of chapter 88, Laws of 1930, imposes a privilege tax of twenty-five dollars upon each cotton broker who buys and sells cotton, not licensed as a cotton buyer; section 56 imposes a privilege tax of one hundred dollars upon every person buying and selling cotton for himself; while section 58 imposes a tax of twenty-five dollars on each cotton factor or merchant who receives cotton on consignment for sale.
Section 61, chapter 89, Laws of 1932, imposes a tax of twenty-five dollars on each cotton broker or agent engaged in buying and selling cotton, not licensed as a cotton buyer; section 62 imposes a tax of twenty-five dollars on every person engaged in buying and selling cotton; section 64 imposes a tax of twenty-five dollars on each factor or merchant receiving cotton on consignment for sale on which he charges a commission.
The city of Greenwood, under the statute authorizing it *Page 857 to do so, levied a municipal privilege tax of fifty dollars on persons selling and buying cotton, and each of the appellants paid to the city said tax, Sabin having paid without protest, and Chassanoil paid said tax under protest.
Afterwards, the said parties petitioned the city for refund of the amounts so paid, aggregating above fifty dollars in each case. The application for a refund was made under the provisions of section 2591, Code 1930.
The city of Greenwood denied a refund, and there was an appeal, from the order of the city denying same, to the circuit court, and, after a full hearing, the circuit court also denied the application for refunds to these parties.
By agreement between the city of Greenwood and the appellants, the petition presented to the city authorities was treated as stating the facts. This petition recited that the appellants, Chassanoil and Sabin, were engaged in Greenwood, Mississippi, from September 1, 1931, to September 1, 1932, in the business of cotton buyers and sellers; that on June 3, 1930, the municipality adopted an ordinance levying upon said business an annual privilege tax of fifty dollars in each case, and, under the color of said ordinance, required appellants to pay for the privilege of conducting this business for one year, as evidenced by receipts. In one case, as above stated, payment was made under protest, and, in the other, without protest. On September 1, 1932, the municipality required the appellants to pay said tax. It was further recited that the Mississippi Delta, composed of alluvial soil, comprises about six thousand six hundred fifty square miles, and is peculiarly adaptable to grow what what is known as "Delta-Type, long staple cotton," recognized throughout the world as being of a superior type, strength, and character; that the city of Greenwood is located in the Mississippi Delta, which is exclusively an agricultural community, the principal crop of which is *Page 858 long staple cotton, producing, approximately, seven hundred thousand bales, which is more than forty per cent. of the total cotton crop in Mississippi. That said cotton is sold upon the open market and constitutes the principal revenue of the entire Delta. It is further recited that by the uniform and general custom bales of cotton are transported by rail or otherwise to compresses; that a compress is a combination storage warehouse and compress; and that approximately thirty per cent of the cotton bought and sold upon said market in Greenwood is transported to the compress by automobile, truck, or wagon, and approximately seventy per cent. is transported to said compresses by rail, or common carriers engaged in interstate commerce; that there are three compresses in Greenwood, all of which comply with all of the terms and provisions of the United States Warehouse Act, chapter 10, title 7 U.S.C.A. (section 241 et seq.), and that cotton is stored and handled therein for interstate and foreign commerce. That when cotton is delivered to the compresses it is graded and classed by persons licensed as classers by the United States Department of Agriculture, unless such grading and classing is waived by the owner. That there is an active market for the sale and purchase of cotton at Greenwood between the farmers raising the cotton and those purchasing same with the invariable intention and purpose of selling and transporting same in interstate and foreign commerce, and that this has been the universal custom for more than twenty years. The price upon which said cotton is sold is determined by the value of said cotton at certain exchanges in New Orleans, New York, and Liverpool, England, and there are brokers in Greenwood who receive daily by wire quotations from said exchanges fixing and determining the price of cotton at Greenwood. All of said cotton, however, is bought with the uniform purpose to transport same in interstate and foreign commerce to cotton mills located in Georgia, South and North Carolina, and Tennessee, and the New *Page 859 England states, none of said cotton being spun or utilized within the confines of Mississippi. It is further recited that, when the destination of said cotton is determined, the said carriers load it out on shipping instructions of the owner, and charge the through freight rate from the point of origin to the point of destination, instead of charging the combined rate for carriage in intrastate commerce from the point of origin to Greenwood, plus the charge for carriage in interstate commerce from Greenwood to the point of destination. That some growers ship all of their cotton to the compresses by rail, others transport by truck, automobile, or wagon, while still others ship a portion by rail and the remainder by truck, automobile, or wagon; and that the buyer purchases or handles cotton indiscriminately, however transported, but, in order to buy, they are compelled to buy some cotton transported by truck or wagon for the reason that such purchases are necessary to fill out and complete orders. It is recited that warehouse receipts are issued by compresses to growers or factors, and that in Greenwood there are a number of such factors, and the cotton is sold to the buyers and shippers upon the basis disclosed by the samples of said cotton and by the indorsement and delivery of the warehouse receipts evidencing the ownership of the cotton. It is then recited that the uniform custom among buyers, shippers, and sellers is that the buyer enters into a contract for either the future or immediate delivery of a certain number of bales of cotton of a certain grade, and staple, obligating himself to deliver to a mill in a foreign state or country such cotton at a given price, and that, thereupon, such buyer will go upon said market at Greenwood and purchase cotton of the kind which he is obligated to deliver to his customer, and will cause the delivery of said cotton in interstate or foreign commerce; that a very small proportion of the cotton purchased by shippers (not exceeding ten per cent.), is bought when no contract for sale therefor *Page 860 exists; but, in such cases, it is bought with the sole anticipation and intention to procure a sale thereof to a foreign cotton mill or foreign cotton merchant and to cause the same to be transported in interstate or foreign commerce, for the purpose of filling specific contracts with mills located in foreign states and in foreign countries. That the buyer cannot fill his orders without buying lots of cotton in their entirety because growers will sell no other way, and that, thereby, buyers accumulate small stocks of cotton, not exceeding ten per cent. of the amount they handle, being only a necessary incident to and concomitant of those purchases which are made for the purpose of filling specific contracts.
The constitutionality of the act in question, and of the ordinance of the city of Greenwood, depends upon the construction placed upon the enactment of the statute by the Legislature.
It has long been settled in this state that, in construing a statute, a construction will be placed upon it, if reasonably possible, to render it constitutional and to carry out the purpose of the Legislature. It is well known to experienced lawyers, and to the Legislature, that the state has no power to tax interstate commerce; that is, it has no power to impose a tax on the right to engage in interstate commerce. Statutes must be construed then to reflect the evident and manifest purpose of the Legislature to tax intrastate commerce, and not to levy a tax upon that which they have no constitutional power to tax. Many years ago, this court, in Pullman Co. v. Adams, Rev. Agt.,78 Miss. 814, 30 So. 757, 84 Am. St. Rep. 647, held that the Code of 1892, section 3387, authorizing a privilege tax on each sleeping car of one hundred dollars, and in addition a tax of twenty-five cents a mile for each mile of railroad over which it runs, affected only the business done in the state, and was not unconstitutional as interfering with interstate commerce. That, under this statute, the company could not take out *Page 861 a license or pay a tax for doing interstate business, and that the statute was valid.
This case was a stronger case for holding that interstate business is not taxable than the one we have before us, because section 195 of the Constitution declares that sleeping cars are common carriers. In that case, in the Mississippi report, vol. 78, page 829, 30 So. 757, 84 Am. St. Rep. 647, Judge Whitfield, speaking for the court, said: "The whole purpose of this statute, from its terms, manifestly is to require a privilege tax to be paid for doing business within this state, and for that business alone. It relates exclusively to the local business done by the Pullman Company within this state. It does not require any tax to be paid for the privilege of doing the interstate business of the company. It does not in any manner affect its interstate business. `It can conduct its interstate business without paying the slightest heed to the act, because it does not apply to or in any degree affect the company in regard to that portion of its business which it has the right to conduct without regulation from the state'" — citing Osborne v. Florida, 164 U.S. 650, 17 S.Ct. 214, 41 L.Ed. 586, as decisive of this case. The case of Pullman v. Adams, supra, was appealed to the Supreme Court of the United States, and is reported in 189 U.S. 420, 23 S.Ct. 494, 47 L.Ed. 877.
Our court had occasion later to construe another statute levying a privilege tax upon railroads engaged in intrastate commerce. See N.O., M. C.R.R. Co. v. State, 110 Miss. 290, 70 So. 355, 358. This case involved the imposition, by chapter 102, Laws 1912, of a tax, and the court held that the privilege tax there imposed was for doing purely intrastate business, saying as follows: "The tax for the privilege of doing business in Mississippi is upon the mileage of railroads in Mississippi, and not only is this true, but the Legislature, in an apparent effort to be reasonable, has fixed the maximum rate per mile, and consequently a maximum amount beyond *Page 862 which the tax in no case could run. In this regard, it falls within the principle announced by the Supreme Court of the United States in Baltic Mining Co. v. Massachusetts, 231 U.S. 68, 34 S.Ct. 15, 58 L.Ed. 127, as follows: `So, if the tax is, as we hold it to be, levied upon legitimate subject of such taxation, it is not void because imposed upon property beyond the state's jurisdiction, for the property itself is not taxed. In so far as it is represented in the authorized capital stock, it is used only as a measure of taxation, and, as we have seen, such measure may be found in property or in the receipts from property not in themselves taxable.'" On page 305 of 110 Miss., 70 So. 355, 360, the court said: "We cannot give to general provisions of any statute a meaning that would lead to absurdity or that would convict the Legislature of attempting to deal with a subject clearly beyond its jurisdiction. The spirit and reason of the law certainly prevail over the strict letter. Furthermore, there is room for applying the words `gross earnings' in this statute to the gross earnings derived from the intrastate business, and not to the gross earnings of the entire system of an interstate railroad."
These cases cited were decided by this court many years ago, and the Legislature must have been familiar therewith, and must have relied upon them in the use of the general language it used. This rule of construction is perfectly sound, and we are sure that it was the purpose of the Legislature to limit the tax here imposed upon intrastate commerce.
In passing upon the constitutionality of a statute, we cannot accept as binding agreements that are merely conclusions from facts, nor can we accept the understanding of the parties litigant as to the general course of business dealing. These agreements may suffice to settle the rights of the parties between themselves, but they cannot overturn the statutes. The Legislature has facilities and opportunities for knowing business customs and *Page 863 conditions within the state. There is, in fact, much buying and selling of cotton in this state that is, in no sense, interstate commerce, and the Legislature knew this to be true. Cotton is a great commodity of this state and is bought and sold by people engaged in intrastate business to a considerable degree, at a considerable profit. The state raises a considerable revenue from the privilege taxes. The activities of the state and its subordinate divisions are vastly important, and, in recent years, the state has been forced to schemes of taxation to raise revenue that formerly did not exist. But, through many years, the privilege taxes have constituted an important element of the state's revenue system.
Under the agreed facts, there is a considerable portion of cotton business at Greenwood that is intrastate, rather than interstate, commerce. It is agreed that thirty per cent. of the cotton brought into Greenwood and stored there is brought in by trucks, automobiles, and wagons, and not placed in interstate commerce at the time it is stored in the warehouses, nor, in any sense, consigned to any person for shipment in interstate commerce when sales are made. The Supreme Court of the United States has held as to cotton so stored that it does not become a part of interstate commerce. The beginning of interstate commerce is the time when the goods begin their interstate journey, thus passing beyond the state's authority into domestic or federal control. Lemke v. Farmers' Grain Co., 258 U.S. 50, 42 S.Ct. 244, 60 L.Ed. 458; Schafer v. Farmers' Grain Co., 268 U.S. 189, 45 S.Ct. 481, 69 L.Ed. 909; General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754; McCluskey v. Marysville N.R. Co.,243 U.S. 36, 37 S.Ct. 374, 61 L.Ed. 579; Hammer v. Dagenhart,247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101, 3 A.L.R. 649, Ann. Cas. 1918E, 724.
The essential character of commerce, not the accident of through bills of lading, is its continuity of movement *Page 864 in foreign commerce, and that determines federal or state control over it. And it takes character as interstate or foreign commerce when it is actually started in the course of transportation to another state or to a foreign country. R.R. Commission v. Texas P.R. Co., 229 U.S. 336, 33 S.Ct. 837, 57 L.Ed. 1215. See, also, I.C.R.R. Co. v. DeFuentes, 236 U.S. 157, 35 S.Ct. 275, 59 L.Ed. 517, and R.R. Com. of Ohio v. Worthington, 225 U.S. 101, 32 S.Ct. 653, 56 L.Ed. 1004.
In the case of Superior Oil Co. v. Mississippi, 280 U.S. 390, 50 S.Ct. 169, 74 L.Ed. 504, 507, it was held that the sale of gasoline was not converted into an interstate transaction, so as to render inapplicable a state gasoline sales tax, by the fact that the gasoline is transported on boats operated by the purchaser into another state, for resale there, under a so-called bill of lading, naming the purchaser as consignee and reciting that the gasoline should remain the property of the seller until delivered to consignee or his agent at the point of destination, since it was optional with the purchaser whether he would carry it out of the state or not.
In the case before us, as to the thirty per cent. that is transported by trucks and wagons or other private conveyances and placed in storage in Greenwood, and not consigned to any one outside the state, nor sold to any one outside the state, the property is not in interstate commerce. The owner might withdraw it, or sell it, whenever he pleases.
The transaction is to be determined by its facts, and not by a fantastic and far-fetched consideration.
In the case of Superior Oil Co. v. Mississippi, 280 U.S. 390, 393, 50 S.Ct. 169, 170, 74 L.Ed. 504, 507, in the course of the opinion, the court said: "The document hardly can affect the case, because it is `not within the power of the parties by the form of their contract to convert what was exclusively a local business, subject to state control, into an interstate commerce business, *Page 865 protected by the commerce clause;' Browning v. Waycross,233 U.S. 16, 23, 58 L.Ed. 828, 34 S.Ct. 578, 580; at least when the contract achieves nothing else. The importance of the commerce clause to the Union of course is very great. But it also is important to prevent that clause being used to deprive the states of their lifeblood by a strained interpretation of facts."
In the case of Lawrence v. State Tax Commission, 286 U.S. 276, 52 S.Ct. 556, 76 L.Ed. 1102, the Supreme Court of the United States held that the Federal Constitution, apart from the specific grant to the federal government of the exclusive power to levy certain limited classes of taxes and to regulate interstate and foreign commerce, leaves the states unrestricted in their power to tax those domiciled within them, so long as the tax imposed is upon property within the state, or on privileges enjoyed there, and is not so palpably arbitrary or unreasonable as to infringe the Fourteenth Amendment. It is true that this case did not involve a privilege tax, but an income tax; however, the principle that the state can levy taxes on privileges enjoyed therein is applicable here where the transaction applies, as we hold it does, to intrastate business alone. See State ex rel. Knox v. G.M. N.R. Co., 138 Miss. 70, 104 So. 689; Coe v. Erroll, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715; Carson Petroleum Co. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626; Nashville, C. St. L.R. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. ___.
The appellants rely strongly upon the case of Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 65 L.Ed. 1139, but in that case the general language of the statute had not been interpreted by the state court so as to limit the privilege tax there enacted to intrastate commerce. The court, in the absence of a construction by the state court, held that the general language covered both intrastate and interstate commerce, and that the act was not acceptable. *Page 866
The meaning of a statute is for the determination of a state court, and the federal courts are bound by the construction of the state court. Anglo-Chilean Nitrate Sales Corp. v. State of Ala., 288 U.S. 218, 53 S.Ct. 373, 77 L.Ed. ___. See U.S. Dig. (L. Coop. Co.) "Courts," sec. 789. Our construction accords with former decisions of our own state upon the construction of statutes.
The Lemke and Shafer Cases (the Dakota grain cases), supra, relied upon by the appellants, are easily differentiated from the case before us. In those cases the state law undertook to place certain requirements on grain shipments, and thus imposed stringent regulations calculated to embarrass and impede the shipment of grain from the state.
The cases relied upon by the appellants can all be differentiated from the case before us. It does not matter whether the intrastate business done was nearly equal to the interstate business, the state's control over the intrastate business is full and complete, subject only to the provisions of the Federal Constitution. The powers of the state, not given to the United States government by the Federal Construction, are reserved to the state or the people. The state constitutes an essential unit in the federal scheme, and the state should not be embarrassed in the operation of its functions within its sphere, but should be left to discharge those functions according to its own conception thereof. This nation, as it was founded, cannot exist without the states, fulfilling their proper functions in the scheme. The importance of the powers and rights of the states have not been magnified, and have been frequently overlooked. The power of the state is not restricted except by the Federal Constitution or the state Constitution.
That which is inherent in intrastate commerce does not lose its essential nature when it becomes a part of transactions in interstate commerce. York Mfg. Co. v. *Page 867 Colley, 247 U.S. 21, 38 S.Ct. 430, 62 L.Ed. 963, 11 A.L.R. 611.
The constitutional equality of the states is essential to the harmonious operation of the scheme upon which the republic was organized. This country is an indestructible union of indestructible states. Coyle v. Smith, 221 U.S. 559, 31 S.Ct. 688, 55 L.Ed. 853; White v. Hart et al., 13 Wall. (80 U.S.) 646, 20 L.Ed. 685. In Texas v. White, 7 Wall. 700, 19 L.Ed. 227, it was held that, if a state would exercise its sovereign power, then it must be permitted to exercise its legitimate power in all legitimate ways.
When considered in the light of these authorities, the agreement entered into between the city of Greenwood and the appellants does not, on its facts, make a case which taxes interstate commerce. If the court should make mistakes in applying the state law as to what interstate commerce is, it does not affect the statute before us. The intention of the Legislature was not to tax interstate commerce, and whether administrative officers or judicial bodies err in determining a particular transaction not to be interstate commerce does not affect the statute itself, but only involves a misapplication of the statute.
We find no reversible error, and the judgment will be affirmed.
Affirmed.