Story Case

"We Knock The Spots" was the name of a company doing a clothes cleaning business in St. Louis, Missouri, with its cleaning shop in East St. Louis, Illinois. The company owned ten delivery automobiles which delivered the clothes to and from St. Louis, crossing the Mississippi River on a private ferry. In 1910, the city of St. Louis, Missouri, imposed an added vehicle tax upon all concerns whose plants were not within the state of Missouri. The "We Knock The Spots" Company objected to this tax, on the ground that it was doing an interstate business, not subject to this law. Is this correct?

Ruling Court Case. Smith Vs. Jackson, Volume 103 Tennessee Reports, Page 673; Volume 47 Lawyers' Reports Annotated, Page 416

Tennessee levied a tax upon the agents for laundries located outside of the state, which was assessed against Smith. He protested against the payment of it, on the ground that he was engaged in interstate commerce so that the state had no authority to tax his business. He showed that he would collect laundry from the town in Tennessee and send it by express to the plant in Kentucky, where it would be washed and sent back to him for distribution. In spite of his protest, he was required to pay the special tax. This suit was brought by him against the county clerk, to recover the money he had paid. It was admitted that the state had no power to burden interstate commerce with a tax, and this transaction was obviously interstate. The only question remaining was whether this course of dealing constituted commerce.

It was decided that it was not commerce to apply labor to goods, even though the goods were first transported for the purpose. Mr. Justice Beard, delivering the opinion of the court, said: "The word 'commerce' cannot be held to embrace a transaction such as is here presented. In a case like the present, nothing, in the true commercial sense, is sold or exchanged. There is no commodity created of which the ownership is changed. It is simply a personal contract, based on a valuable consideration, having no element of a commercial transaction."

Since this was not commerce, its interstate character did not bring it within the Federal Constitution, and the state retained full power over it. The law imposing the tax was therefore valid, the money had been legally collected, and judgment was given for the defendant, Jackson, the county clerk.

Ruling Law. Story Case Answer

Transportation excepted, almost all the cases involving the interstate commerce clause arise out of sales. Unless transportation is involved, there must be the exchange or sale of a commodity. Therefore, transactions involving merely the bestowal of labor upon articles and returning them is not commerce. The company, in the Story Case, cannot, therefore, come within the protection of the interstate commerce clause.