Spector Motor Service v. O'Connor/Dissent Clark
Mr. Justice CLARK, with whom Mr. Justice BLACK and Mr. Justice DOUGLAS join, dissenting.

The Court assumes, and I think it has been clearly demonstrated, that the tax under challenge is nondiscriminatory, fairly apportioned and not an undue burden on interstate commerce. Hence, if an appellant had been engaged in an iota of activity which the Court would be willing to call 'intrastate,' Connecticut could have applied its tax to the company's interstate business in the precise form which it now seeks to employ-a tax on the privilege of doing business in Connecticut measured by the entire net income attributable to the State, even though derived from interstate commerce.

But solely because Spector engages in what the Court calls 'exclusively interstate' business, a different standard is applied. The Court does not ask whether the State is merely asking interstate commerce to pay its way, or whether the State in fact provides protection and services for which such commerce may fairly be charged. Nor is the Court concerned whether the tax puts interstate business at a competitive disadvantage or is likely to do so. Instead, the tax is declared invalid simply because the State has verbally characterized it as a levy on the privilege of doing business within its borders. The Court concedes, or at least appears to concede, that if the Connecticut legislature or highest court had described the tax as one for the use of highways or in lieu of an ad valorem property tax, Spector would have had to pay the same amount, calculated in the same way, as is sought to be collected here. In acknowledging this, the Court's own opinion totally refutes its protestation that the standard employed to strike down Connecticut's tax is more than a matter of labels. Spector remains free-as it has since the tax law was adopted in 1935-from paying any share of the State's expenses, and its tax-free status continues until Connecticut renames or reshuffles its tax.

Neither such a standard nor such a result persuades me. I agree with the well-reasoned opinions of the court below that the cases upholding fairly apportioned taxes on mixed intrastate and interstate business, and recognizing the right of states to make interstate commerce pay its way, have enfeebled-and justifiably so-the precedents which today's decision restores to full vigor. In the not too distant past, this seemed to be quite clear. In Memphis Natural Gas Co. v. Beeler, 1942, 315 U.S. 649, 62 S.Ct. 857, 86 L.Ed. 1090, a tax was upheld as being reasonably attributable to intrastate activities. But Chief Justice Stone, speaking for a unanimous Court, went further to state:

'In any case, even if taxpayer's business were wholly interstate commerce, a nondiscriminatory tax by Tennessee upon the net income of a foreign corporation having a commercial domicile there * * * or upon net income derived from within the state * * * is not prohibited by the commerce clause * * *.' 315 U.S. at page 656, 62 S.Ct. at page 862.

In light of the apparent need for clearing up the tangled underbrush of past cases, it appears that this view was delivered advisedly. Nor do I understand it to have been upset by Freeman v. Hewit, 1946, 329 U.S. 249, 67 S.Ct. 274, 91 L.Ed. 265, or Joseph v. Carter & Weekes Co., 1947, 330 U.S. 422, 67 S.Ct. 815, 91 L.Ed. 993. The former involved a gross-receipts tax capable of duplication by another state; the latter involved a gross-receipts tax rather than a net-income tax; and the opinion in each case was written by a member of the Court who joined in the Beeler decision.

But in any event, I would confine those decisions to their 'special facts.' Freeman v. Hewit, supra, 329 U.S. at page 252, 67 S.Ct. 278. The Connecticut tax meets every practical test of fairness and propriety enunciated in cases upholding privilege taxes on corporations doing a mixed intrastate and interstate business. These cases should govern here, for there is no apparent difference between an 'exclusively interstate' business and a 'mixed' business which would warrant different constitutional regard. There is nothing spiritual about interstate commerce. It is rarely devoid of significant contacts with the several states. Hence, this Court has long treated the problems in this field with a flexibility which the competing demands of federal and state governmental spheres have required. In the absence of federal action, this Court has been quick to recognize legitimate local interests and uphold state regulations of activities which admittedly form a part of, or impinge on, interstate commerce. See, e.g., South Carolina State Highway Dept. v. Barnwell Bros., 1938, 303 U.S. 177, 625, 58 S.Ct. 510, 82 L.Ed. 734. The same approach is hardly foreign to the field of state taxes:

'* * * (W)hen accommodation must be made between state and national interests, manufacture within a State, though destined for shipment outside, is not a seamless web so as to prevent a State from giving the manufacturing part detached relevance for purposes of local taxation.' Freeman v. Hewit, supra, 329 U.S. at page 255, 67 S.Ct. at page 278.

A similar recognition of facts is no less suited to this case. Spector qualified to do business in the State on June 11, 1934, by filing the necessary papers with the Secretary of State. It leases and utilizes terminals in Connecticut. It employs twenty-seven full-time workers in Connecticut, the payroll at New Britain amounting to $1,200 per week. It owns pickup trucks which are registered in its name with the State Motor Vehicle Department and which ply the streets of Connecticut cities. It uses heavy trucks which grind over Connecticut highways. As pointed out by the Connecticut Supreme Court of Errors, its leaseholds

'* * * were the means adopted by it for the successful operation of its business in this state, and no doubt they were of material service in producing the large proportion of the plaintiff's business which is attributable to Connecticut.' Spector Motor Service, Inc. v. Walsh, 1948, 135 Conn. 37, 50, 61 A.2d 89, 96.

To be sure, the company does not make intrastate deliveries. But if it did, its activities would differ only in that its trucks might use different streets and highways and make different stops; the protection and services rendered by the State would be the same. The local aspects of Spector's business, even though it might technically be 'exclusively interstate,' are easily as substantial as those which this Court recently found adequate to uphold parts of the Illinois occupation tax, Norton Co. v. Department of Revenue, 1951, 340 U.S. 534, 71 S.Ct. 377. They are at least as extensive as those which validated a 'privilege' tax in Memphis Natural Gas Co. v. Stone, 1948, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832.

It has taken eight years and eight courts to bring this battered litigation to an end. The taxes involved go back thirteen years. It is therefore no answer to Connecticut and some thirty other states who have similar tax measures that they can now collect the same revenues by enacting laws more felicitously drafted. Because of its failure to use the right tag, Connecticut cannot collect from Spector for the years 1937 to date, and it and other states may well have past collections taken away and turned into taxpayer bonanzas by suits for refund not barred by the respective statutes of limitation.

Nor can the states be entirely certain that statutes recast in the light of this decision will be immune from later constitutional attack. It is at least doubtful that this statute is the only kind of measure which the Court might think would impose a tax 'on the privilege of doing interstate business.' But even assuming that the Court has promulgated a sure guide for states to follow in future enactments, the fact remains that there is no reasonable warrant for cloaking a purely verbal standard with constitutional dignity. 'Exclusively interstate commerce' receives adequate protection when state levies are fairly apportioned and nondiscriminatory. See opinion of Justice Rutledge in Interstate Oil Pipe Line Co. v. Stone, 1949, 337 U.S. 662, 69 S.Ct. 1264, 93 L.Ed. 1613. The 'protection' bestowed by today's decision is neither substantial nor deserved.

Objections to the fairness of Connecticut's apportionment formula have been correctly disposed of by the Court of Appeals. I would affirm its judgment. 

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