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The Green Bag

Supreme Court in Western Union Tel. Co. v. Cal Pub. Co. (181 U. S. 92), which held that the states may apply the principles of the common law to all interstate commercial transactions. Such a rule is illogical, if the power of Con gress under the interstate commerce clause prevents the exercise of state re ation under the authority of state legislation. Numerous decisions have established this exclusive power of Congress so far as statutory regulation is concerned. We submit that the recognition of common law principles as operative, if sound in principle, shows that t e accepted doctrine that no power of regu lation may be exercised under the authority of state legislation is not wholly reasonable. Mr. Cooke, however, is not arguin that Western Union Tel. Co. v. Call Pub. (/80. was wrongly decided. He has no criticism to offer on the doctrine that the states can apply common law principles in dealing with inter state trade. He complains that less than eight years later, when Missouri Paciﬁc Ry. Co. v. Larabee Mills (211 U. S. 612) came to be de cided, the decision in the earlier case was for gotten or ignored. The Supreme Court avoided the point, introducing what he calls an irrele vant distinction between "matters national" and "matters of local interest," holding that the latter, but not the former, are sub'ect to regulation under state authority in t e ab sence of regulation by Con ess. We agree with Mr. Coo e that it would have been “highly appropriate to consider the effect" of the earlier decision. The owers of the states at the present time are arder to deﬁne than they would have been if the Supreme Court had considered the bearings of the rule stated in the earlier case. Such considerations show the law to be still in an unsettled state. It is doubtful if the Supreme Court would ever care to overrule Western Union Tel. Co. v. Call Pub. Co., though such a result would doubtless be higlhly acceptable to Mr‘. Wickersham and ot ers who favor national incorporation as assisting corporations to obtain immunity from state interference. It seems not unlikely, in fact, that the Supreme Court, in its decisions dealing with the taxing ower, will be forced to declare that states ave exclusive power directly to tax intra-state business of corporations

has been allowed to sneak in through the back door, though under a diﬂerent name, so that it continues triumphantly in possession. This result has been reached by the establish ment of the rule allowing taxation of ‘intangible

engaged in interstate commerce,

Monopolies. Interstate Commerce Commission.

and that

the interstate commerce clause will be 'ven a less sweeping construction than has 0 late been the tendency. Such an inference is to be deduced perhaps from a second article by Mr. Cooke :— “The Commerce Clause, and Taxation of Gross Receipts and of ‘Intangible Property.’" By Frederick H. Cooke. 8 Michigan Law Review 25 (Nov.). The rule allowing the im osition by a state of a tax on gross receipts erived from inter state commerce, "having been solemnly ejected by the Supreme Court through the front door,

WWW

.

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“Now the idea of proper: is without sib stantial signiﬁcance, apart rom some use to which the pro erty is—or may be-put. I might conceiva ly own real estate in the moon, or in the immediate vicinity of the North Pole,

but the idea of any property therein would be a barren abstraction, there being no use or pros ct ofnany use to which such property can ut. Mr. (gooke goes on to say that when the capitalized earning power of a corporation is $10,000,000, and its gross receipts are $500,000 a. year, and the state im oses a tax amount

ing to $50,000 a year, " e practical effect is the same, whether such sum be regarded as ten per cent of the gross receipts, or as one half of one per cent of the ‘intangible prop erty.’ . . . Yet, according to the Supreme Court, the tax of $50,000 is invalidly imposed,

if regarded as a percentage of $500,000, the amount of the gross receipts; it is validly imposed, if regarded as a percentage of $10,000,000,

the

value

of the

“intangible

property.’ Is not this a case of tweedle-dum and tweedle-dee? . . . "Now the decision in Galveston,

Harris

burg &c. Ry. Co. v. Texas (210 U. S. 217) seems to me to indicate that at last the Supreme Court has come, or is comin

to, a

realization of the inconsistency that have discussed. . . . Nevertheless the opinion con tains the following attempt at reconciliation: ‘Yet the distinction is not without sense. When a legislature is t 'ng simply to value property, it is less likey to attempt to or effect injurious regulation than when it is aiming directly at the receipts from inter state commeroe. A ractical line can be drawn by taking the w ole scheme of taxation into account. That must be done by this court as best it can.’ I am not sure that I fully understand what is meant here, but there seems involved the idea that, as to the action of state legislatures, it is likely to make a good deal of difference by what name a given scheme of taxation is called. I confess to failure to be entirely satisﬁed with a dis tinction based on such a supposition." See

Interstate

Commerce

Commission,

"The

Force and Effect of the Orders of the Inter

state Commerce Commission." By H. T. New comb. 23 Harvard Law Review 12 (Nov.). The author summarizes his conclusions as follows : (1) As Congress could not confer legislative power upon the Commission, and as merely ministerial methods are incompetent to per form the tasks of rate-regulation, the orders which the re ative agency is empowered to make must epend upon inquiries of judicial quality.