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Spector Motor Service, Inc. v. O'Connor, 340 U.S. 602 (1951)

Spector Motor Service, Inc. v. O'Connor

No. 132

Argued November 29-30, 1950

Reargued January 10, 1951

Decided March 26, 1951

340 U.S. 602


1. Connecticut imposes upon the franchises of foreign corporations, for the privilege of doing business within the State, a tax computed at a nondiscriminatory rate on that part of the corporation's net income which is reasonably attributable to its business activities within the State. The tax is not levied as compensation for the use of the highways or collected in lieu of an ad valorem property tax. It is not a fee for inspection or a tax on sales or use.

Held: as applied to a foreign corporation which was engaged exclusively in interstate trucking, the tax was invalid under the Commerce Clause of the Federal Constitution. Pp. 340 U. S. 603-610.

(a) The fact that, if some intrastate commerce were involved or if an appropriate tax were imposed as compensation for the corporation's use of the highways, the same sum of money as is at issue here might be lawfully collected from the corporation cannot sustain the constitutional validity of the tax. Pp. 340 U. S. 607-608.

(b) Whether a state may validly make interstate commerce pay its way depends first of all upon the constitutional channel through which it attempts to do so. P. 340 U. S. 608.

(c) As construed by the state courts, this is a tax solely on the franchise of petitioner to do a business which is exclusively interstate, and such a tax contravenes the Commerce Clause no matter how fairly it is apportioned to business done within the state. Pp. 340 U. S. 608-610.

2. The Federal District Court had jurisdiction of this case in the first instance because of the uncertainty of the adequacy of a remedy in the state courts, and it did not lose that jurisdiction by virtue of the later clarification of the procedure in the courts of the State. P. 340 U. S. 605.

181 F.2d 150, reversed.

The case is stated in the opinion, pp. 340 U. S. 603-605. The judgment of the Court of Appeals is reversed, p. 340 U. S. 610.

Page 340 U. S. 603

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