New Castle v. Cutler

Opinion by

W. D. Pouter, J.,

In passing upon the questions presented by this record we are confined to the facts presented by the case stated. This cannot be treated as an appeal from the judgment of the court of quarter sessions in a case of summary conviction, for the case as stated does not set forth that the defendant was fined by the mayor, nor that he appealed from that judgment, nor that his appeal was, upon application to the court of quarter sessions, allowed by that court. The agreement of the parties was that “if the court should be of opinion upon the facts stated that the defendant, F. W. Cutler, was liable to take out a license and pay the license fee or tax prescribed by said ordinance,” then judgment to be entered for the plaintiff in the amount for which judgment was entered by the court below. The 15th section of the ordinance in question, in addition to imposing a fine for the violation of its terms, provided that such prosecution for the penalty should not affect the right of the city to collect said license tax by an action of debt, or otherwise. We must dispose of this case as a civil action by the city to recover the amount of the license tax for which the defendant is alleged to be liable. If the facts as stated required the defendant to pay a tax and take out a license under any of the sections of the ordinance, then the judgment of the court below must be affirmed, for the sole question presented by the case stated is: Did the character of business carried on by the defendant fall within any of the classes which were by the ordinance required to take out a license ?

The ordinance appears upon its face to be an exercise of the powers of taxation, and the warrant of the city to impose the tax is to be found in the Act of May 23,1889, P. L. 274: City of Williamsport v. Wenner, 172 Pa. 173. The act, article 5, section 4, authorized cities to levy and collect for general revenue purposes a license tax, not exceeding $100 each, annually, on all auctioneers, hawkers, peddlers, produce or merchandise venders, etc.; including most of the business avocations which make up the traffic of a city. In the exercise of the powers conferred by this act of assembly, the city of New Castle enacted the ordinance in question, which in its 11th section provides: “ All peddlers, hucksters and persons traveling from house to house with goods, wares, merchandise or produce of any kind *623for sale shall be classified and pay as follows: Class 1. Having goods, wares, merchandise or produce of the value of ten dollars or over shall pay twenty dollars. Class 2. Having goods, wares, merchandise or produce of the value of seven dollars and under ten dollars shall pay fifteen dollars. Class 8. Having goods, wares, merchandise or produce of the value of four dollars and under seven dollars shall pay ten dollars. Class 4. Having goods, wares, merchandise or produce of less than four dollars shall pay seven dollars. Provided, however, that any person using a horse and wagon in said business shall pay twenty per cent additional; and provided, further, that this section shall not apply to farmers, gardeners or other persons who raise, market and sell their own produce.” Section 13 ordained, among other things, that “ all persons soliciting orders for goods, wares, merchandise, works of art, or any other Mud of article for sale shall pay twenty dollars; provided, however, that this shall not apply to traveling salesmen selling to dealers.” The terms of the act of assembly are certainly broad enough to cover all the classes of vendors of merchandise taxed by these sections of the ordinanoe. The only objection to these provisions of the ordinance, as applied to domestic commerce, is that the tax imposed by the 11th section offends against the provision of the constitution, of Pennsylvania, which requires that all taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax. The constitution does not withdraw the power of classification from the legislature; indeed, the power is necessarily implied in the constitutional provision to which this ordinance is supposed to be obnoxious. The power to impose taxes belongs to the legislature; the selection of the subjects, their classification and the method, of collection are purely legislative matters. When the action of the legislature with respect to these matters is not repugnant to the constitution, it would certainly be a case of the grossest inequality which would call for the intervention of the courts. All that is required is that the classification shall be made according to some reasonable, practicable rule, drawn from experience, which would prevent gross inequality in the burdens of taxation. Absolute equality of taxation is difficult of attainment, and an approximate equality is all that can reasonably be expected. If there is a substantial *624uniformity there is a compliance with the constitutional provision: Kelly v. City of Pittsburg, 85 Pa. 170; Fox’s Appeal, 112 Pa. 337; Commonwealth v. Delaware Div. Canal Company, 123 Pa. 594. The act of 1889 delegated to councils of cities of the third class a discretion to classify merchants, or others, according to the amount of their gross sales, and to assess a tax according to such sales: Williamsport v. Wenner, supra; Commonwealth v. Clark, 10 Pa. Superior Ct. 507. As to merchants having a fixed place of business, the amount of the gross sales was probably the most equitable classification which the taxing power could have selected as the basis for assessment of the tax. When it came to dealing with itinerant traders, however, a different question was presented. They were here to-day and away to-morrow, and to arrive at any fair estimate of the amount of business done by them would be difficult for the taxing powers to accomplish. Yet it cannot be said that they were not proper subjects of classification, founded upon the amount of capital employed, or the manner in which they carried on their business. The power of classification is inherent in the power of taxation, and it would seem that the only limit upon this power is that such classification shall be in such manner as to produce as much uniformity and equality in taxation as possible. So long as the discretion is not abused, or a classification adopted which is unjust and unreasonable, it is not the province of the court to say that the legislative power might have adopted a more equitable mode .of assessing taxes. The taxing power of the city of New Castle in classifying these itinerant traders made the amount of the tax contingent upon two conditions: first, the amount of goods carried; second, the manner in which they were carried. We cannot say that it is unreasonable to tax an avocation upon the basis of the capital employed therein, as that certainly constitutes one element from which the amount of business done may be estimated. That he who uses a horse and wagon to transport his goods may reasonably be presumed to distribute them more rapidly is equally clear, and to impose an additional tax of twenty per cent upon the peddler who enjoyed that advantage is not such an abuse of the taxing power as would justify the court in striking down the ordinance. The classification of those who were to pay under this section was neither unjust nor inequitable.

*625Nor is the section vitiated because “farmers, gardeners or other persons who raise, market and sell their own produce,” were excepted out of its operation. Those who were excepted were not dealers. They did not buy to sell again, and the selling of the products of their own lands was but an incident of their farming operations. Under the terms of this ordinance the farmer was only exempted so long as his sales were confined to what he himself had raised. Even if the exception had not been embraced in the ordinance, the farmer would not have been required to take out a license, under its terms: Commonwealth v. Gardner, 133 Pa. 284. In a case recently decided by the Supreme Court of the United States, not yet reported, American Sugar Refining Company v. State of Louisiana, it was said: “But from time out of mind it has been the policy of this government not only to classify for purposes of taxation, but to exempt producers from the taxation of the methods employed by them to put their products upon the market.” The ordinance in question was a legitimate exercise of the taxing power as applied to domestic commerce. The exemption of traveling salesmen selling to dealers from the tax imposed by the 13th section of the ordinance is clearly sustainable as a classification, founded upon the difference between those who sell at retail, delivering directly to the consumer, and the representatives of wholesale houses, established in some other city or state, who sell only to traders.

The defendant contends, however, that even if the ordinance is valid, he does not come within its provisions, because he was not a peddler. The leading primary idea of a hawker and peddler is that of an itinerant or traveling trader, who carries goods about, in order to sell them, and who actually sells them to purchasers, in contradistinction to a trader who has goods for sale and sells them in a fixed place of business. But this ordinance goes further, and not only taxes actual hawkers and peddlers whose employment is that of traveling traders, and thus seems to refer to a business or habitual occupation, but it extends to all persons traveling from house to house with goods, wares, merchandise or produce of any kind for sale. Under these general terms this defendant certainly came. It is true that when he first visited houses he did not have his goods with him to deliver at the time, but he went from house to house for *626the purpose of selling goods, and he agreed to deliver them at the several houses. The facts agreed upon make it clear that the original undertaking of the defendant was to deliver at the respective houses of his several purchasers small quantities of goods, of a standard equal to that of a sample produced; the undertaking upon the part of those with whom he dealt was to take and pay for these goods if,, upon inspection at the time of delivery, they found them to be up to the required standard. Until the goods were actually tendered, inspected and accepted, they remained the property of the vendor; When he hauled them from house to house his purpose was to complete the executory contracts of sale, and the sale was never consummated until the goods were actually delivered. The goods were never separated from the other property of the vendor, nor in any manner designated as the property to be delivered to the purchasers until, upon arriving with his wagon in front of the house of some person with whom he had a contract, he selected at random from the load upon his wagon a sufficient number of packages to fill his order, if upon inspection by the proposed purchaser the contents of the packages were found to be satisfactory. He was, therefore, traveling from house to house with goods for sale and did sell them. This was clearly within the broad terms of the 11th section of the ordinance in question. It was, in fact, peddling, by whatever other name it may be called: North Wales Borough v. Brownback, 10 Pa. Superior Ct. 227; Warren Borough v. Geer, 117 Pa. 207. Even if the avocation of the defendant had not been such as to come within the operation of the 11th section, there can be no question that he traveled from house to house soliciting orders for goods, and was, therefore, taxable under the 13th. section of the ordinance.

The final objection of the defendant is that the ordinance is repugnant to the constitution of the United States, because an intrusion upon the exclusive right of congress to regulate commerce with foreign nations and among the several states. The defendant was a resident and citizen of Pennsylvania, but if the business in which he was engaged in the city of New Castle was directly connected with interstate commerce, it was not within the power of the city to impose a tax upon that business. Where a business or occupation consists in the sale of goods, *627the license tax required for its pursuit is in effect a tax upon the goods themselves : Welton v. Missouri, 91 U. S. 275. The exaction of a license tax as a condition of doing any particular business is a tax upon the occupation, and a tax on the occupation of doing a business is a tax on the business: Leloup v. Mobile, 127 U. S. 640; Brennan v. Titusville, 153 U. S. 289. If the business is interstate or foreign commerce, it matters not whether the person therein engaged is or is not a citizen of the state which imposes the tax : Schollenberger v. Pennsylvania, 171 U. S. 1. The mere fact that the principals whom the defendant represented were citizens of Ohio is without weight in determining whether the transactions,-of the defendant involved only domestic commerce, to be controlled by the laws of Pennsylvania, or interstate commerce and within the protection of the powers of the national government. The citizen of Pennsylvania and the citizen of any other state are alike within the protection of the provisions of the constitution of the United States in bringing goods into the state for purposes of sale, or in consequence of a sale. It is within the police power of the state to pass a law requiring peddlers of goods to take out a license, even although those goods may have been brought from another state and are still the property of the importer. This was the unanimous opinion of the Supreme Court of the United States, upon full review and consideration of all the authorities, in the case of Emert v. Missouri, 156 U. S. 296. When goods are sent from one state to another, for sale, or in consequence of a sale, they become a part of its general property and amenable to its laws; provided that no discrimination be made against them as goods from another state, and that they be not'taxed by reason of being brought from another state, but only taxed in the usual way, as other goods are: Brown v. Houston, 114 U. S. 622. A tax on business carried on within the state and without discrimination between its citizens and the citizens of other states may be constitutionally imposed and collected: Osborne v. Mobile, 16 Wallace, 479. Restraint of the higher law of the constitution of the United States only prevents the levy of a tax, or the requirement of a license, for making negotiations in the conduct of interstate commerce. A state may, by virtue of its police power, enact laws for the security of the lives, limbs, health and comfort of persons, and the protection *628of property, or when it does those things which may otherwise incidentally affect commerce, such as the establishment and regulation of highways and other commercial facilities, or to regulate or restrict the sale of articles deemed injurious to the health or morals of a community; under its powers of taxation it may impose taxes upon persons residing within the state, or belonging to its population, and upon avocations and employments pursued therein not directly connected with foreign or interstate commerce : Robbins v. Shelby County Taxing District, 120 U. S. 489. The importer, whether he be a citizen of Pennsylvania or not, may sell the goods hr the original packages, unbroken and unopened, free from state regulation: Schollenberger v. Pennsylvania, supra; Leisy v. Hardin, 135 U. S. 100; Lyng v. Michigan, 135 U. S. 161. Goods delivered to a common carrier at a point without the state, consigned to a purchaser at his residence within the state, are exempt from state regulation during the course of transportation: Rhodes v. Iowa, 170 U. S. 412. It is not within the power of the state to impose a tax on the making of contracts within the state for the sale of goods to be delivered by a manufacturer in another state to a common carrier, consigned to the purchaser within the state where the contract is made: Brennan v. Titusville, supra. The goods imported from a foreign country or a sister state are within the protection of the interstate commerce clause of the constitution not only during the transportation, but must enter the interior of the state, and the importer is authorized to dispose of those articles introduced, so that they may become mingled with the common mass of property within the territory entered. The power of the state over the goods imported commences when the importer has so acted upon the importation that it has become incorporated and mixed with the mass of property in the state, which happens when the original package is no longer such in his hands: Brown v. Maryland, 12 Wheaton, 419; Leisy v. Hardin, supra.

The contracts into which the defendant entered did not necessarily involve interstate commerce. The contract was made in Pennsylvania for the delivery of goods at the residence, of the proposed purchaser in Pennsylvania. The goods were to be up to a certain standard, but there was nothing in the contract to prevent the defendant, or those whom he represented, from mak*629ing a tender of fulfillment of the contract, by bringing goods of the standard required from any city within the state of Pennsylvania. If, therefore, his transactions are to be brought within the protection of the interstate commerce clause of the constitution, it must be because of the manner in which the contracts were executed. These contracts were for the delivery of a few pounds of coffee or prunes, or a small number of brooms, or bars of soap, to each of the prospective purchasers. For the convenience of the defendant and his principals, it was arranged between them that the orders should be taken for such quantities of goods that they could be filled by delivering the coffee in two-pound packages, and the prunes in five-pound packages,- not less than twenty-five bars of soap or three brooms were to be sold to any one purchaser. The defendant, having agreed to make these deliveries, sent the orders to his principals, who resided at Dayton, Ohio, and there did business as grocers. The principals, Harley & Company, then placed in a car a sufficient number of two-pound packages of coffee, five-pound packages of prunes, boxes of soap containing fifty bars each, and brooms tied in bundles to equal the aggregate amount of all the orders. “ The goods were all shipped in one car, the small packages standing together in boxes without lids, and none of the packages were marked or labeled with the name of the purchaser.” The goods were consigned to the shippers themselves at New Castle. A member of the firm of Harley & Company, the shippers, as well as the consignees, came to New Castle and took charge of the car. “F. W. Cutler, the defendant, with a wagon and two horses drove to the car and received such packages of two pounds coffee, five pounds prunes, bunches of brooms, etc., and soap in boxes of fifty bars each, or for small orders bars in manufacturer’s wrappers without boxes, as would fill the orders taken on a selected street or. streets.” “ Having the goods placed on the wagon the defendant then drove to the selected streets on whicli such orders had been taken and where such goods were to be delivered by Harley & Company, and stopped at the house of each purchaser. Here he took from the stock of goods on the wagon such packages of two pounds coffee, five pounds prunes and such number of brooms and boxes or bars of soap, and other articles in like manner, as would fill the respective orders as he arrived at the dwelling houses of the several purchasers: *630e. g. where a purchaser had ordered two pounds coffee, five pounds prunes, five pounds sugar and twenty-five bars of soap, the said Cutler would take from the stock of goods on the wagon a package of two pounds coffee, a package of five pounds prunes, a package of five pounds sugar and twenty-five bars of soap, taking the latter from a box containing fifty bars in certain cases. In making such deliveries the packages of two pounds coffee, five pounds sugar and five pounds prunes were not opened, the bunches of brooms were untied to fill such orders, but the soap was delivered in boxes of fifty bars each, except in cases of orders for twenty-five bars, when the box would be opened and twenty-five bars in the manufacturer’s wrappers would be used to fill such order.” The defendant thus took load after load from the car until all the goods had been distributed. Under the contract between Harley & Company and Cutler, Cutler became responsible to Harley & Company to account for the goods, and if any of the goods were not received at delivery the same were to be returned by Cutler to Harley & Company. Under the orders taken the purchasers were not to pay for the goods ordered until delivered, and Harley & Company retained the custody and control of the goods until actual delivery. The purchase price was paid to Cutler by the respective parties upon delivery, and the money was by him sent to Harley & Company. It thus clearly appears that the importer of these goods was the defendant, or his principals, Harley & Company; that as to at least a part of the goods, the original packages in which they had been imported were broken up and the contents delivered to several different purchasers ; the packages did not, therefore, remain unbroken, original packages, in the lands of the importer, and the commerce in them had become the domestic commerce of Pennsylvania. It is admitted in the case stated, that the boxes of soap were opened and their contents distributed, and a like course was pursued with the bundles of brooms, which fact alone is sufficient to take the business of this defendant out of the protection of the interstate commerce provisions of the Constitution of the United States, and render his avocation liable to taxation by the state of Pennsylvania. Upon the face of the case stated it would appear that the small packages of sugar, prunes and coffee were placed in large open boxes during the process *631of transportation. It is, therefore, manifest that these small packages were not intended by the shippers as packages of commerce, and that they were placed in the large open boxes for the purpose of being imported into the state of Pennsylvania, and that the lids were only left off these boxes as a device to evade the laws of this commonwealth. Such a device as this was resorted to in the transactions out of which grew the case of Austin v. The State of Tennessee, recently decided by the Supreme Court of the United States and not yet reported, and it was there held that the parcels, for the purpose of commercial shipment, having been aggregated, thrown into and carried in an open basket, and thus associated in their shipment, they could not, after their arrival, be segregated so as to cause each to become an original package. This defendant sold no original packages except in those rare instances in which one customer took a whole box of soap. The goods were never separated from the other goods of the defendant until after their arrival in the city of New Castle. The articles were never designated and set apart for the purchasers in the state of Ohio; during the transportation they were the absolute property of the consignees. When the primary agreement was made it was not within the contemplation of the parties that the goods should be delivered by the vendor to a common carrier and consigned to the proposed purchasers. There was in this traffic nothing which can be said to have impressed upon it the character of interstate commerce.

The judgment is affirmed.