This case comes here on appeal, under section 237 of the Judicial Code (28 USCA § 344), for review of a judgment of the Supreme Court of Mississippi upholding a state excise tax assailed as a forbidden imposition upon a federal instrumentality, and as infringing the commerce clause of the Federal Constitution. 166 Miss. 739, 147 So. 325. Sections 3, 57, 220, 221, 225, 242, of chapter 88, of the General Laws of Mississippi of 1930, exact an annual license tax for the privilege of operating a cotton compress which is graduated according to the number of bales of cotton compressed per annum. Sections 3 and 63 levy a similar additional tax upon each person operating a warehouse, whether in conjunction with a compress or not, which is graduated according to the storage capacity of the warehouse.
Appellant, a Delaware corporation, which maintains and operates a cotton warehouse and compress at Cleveland, Miss., brought the present suit to recover taxes imposed with respect to both classes of business, paid under protest to appellee, the tax collector, in 1932. The case was tried on an agreed statement of facts, from which it appears that the appellant is licensed by the Secretary of Agriculture to conduct a warehouse for the storage of agricultural products under the provisions of the United States Warehouse Act of August 11, 1916, c. 313, 39 Stat. 486, as amended, c. 10, § 241 et seq., tit. 7, USCA. Appellant has given a bond for the faithful performance of the duties which are exacted of a licensed warehouseman by the act and by the rules and regulations of the Secretary of Agriculture, and its business as a warehouseman is subject to his inspection and control as the statutes and regulations provide.
Cleveland is a shipping point for baled cotton in interstate and foreign commerce and is a market in which cotton is purchased by brokers and dealers from those who produce it within the state. The purchases are made for resale or to fulfill contracts for sale of cotton without the state. In the usual course of business the purchased cotton, after it is ginned, is transported to appellant's warehouse for storage and compression, about 25 per cent. arriving by automobile truck or wagon and the remainder by rail over the line of the single railroad serving Cleveland. Upon delivery appellant issues its negotiable warehouse receipts for the cotton, in the form and manner provided by the United States Warehouse Act. The right to demand delivery of the cotton or otherwise control its disposition is reserved to the holders of the receipts. A small part of the stored cotton, from 1 per cent. to 10 per cent., is resold within the state to buyers, who sell it to purchasers without the state, but all except a negligible part of it is ultimately shipped to points outside the state. Upon shipping orders given by the holders of the warehouse receipts, appellant compresses the cotton into bales of standard weight and size, suitable for shipment, and delivers them to the rail carrier for interstate transportation. The movement of the cotton out of the warehouse is directed by the owners of its who hold the warehouse receipts. Its destination is not determined until the owner gives shipping instructions to appellant, and shipment is not made until surrender of the warehouse receipts. The compress charges are paid by the carrier, which it adds to the charge for carriage, and, in the case of cotton brought to the warehouse by rail carriage, the through interstate rail rate is applied from the point of origin to destination instead of the combination rate which is the sum of the intrastate rate to Cleveland and the interstate rate from that point to destinction. The identity of the cotton is not preserved in reshipping it, and substitution is permitted with the understanding that the through rate from point of origin to destinction without the state shall not be affected.
By written agreement with the railroad company appellant is designated as the agent of the railroad to receive the cotton from and deliver it to the railroad and to load and unload cotton upon and from its cars. The agreement also provides for the use of the warehouse by the railroad as a cotton depot.
Upon this state of facts appellant argues that the tax upon the business both of warehousing and of compressing the cotton is a forbidden burden on interstate commerce, and that the warehouse tax is unconstitutional because a direct tax upon a business conducted by appellant as a federal instrumentality, designated as such by its license under the United States Warehouse Act.