Story Case

On April first, the Pittsburg Coal and Mining Company had loaded ten barges of coal in Pennsylvania for shipment on the Ohio River to Cincinnati, Ohio. The barges belonged to the Western Shipping Company, and were awaiting the rise of the river from the spring rains before transit to Cincinnati. The local taxing authorities of Pennsylvania levied a personal property tax upon the coal, to which the Pittsburg Coal and Mining Company objected, on the ground that the coal was a part of interstate commerce, and not subject to state taxation. Is this correct?

Ruling Court Case. Coe Vs. Erral, Volume 116 United States Reports, Page 517

Coe had cut timber in New Hampshire which was hauled down to the town of Erral, on the Androscoggin River, in the same state, for the purpose of transporting it on to Lewiston, Maine. The logs were left in Erral awaiting an opportune time for their transportation. "While here, they were taxed by the authorities of the town. This was an action by Coe to have the tax upon them abated. He contended that they were exports from the state, then engaged in interstate commerce; since such was the case, the state no longer had any control over them. Consequently, it was argued, the tax should be abated.

Mr. Justice Bradley said: "Does the owners' state of mind in relation to the goods - that it is their intent to export them, and their partial preparation to do so - exempt them from taxation?

"This question does not present the predicament of goods in course of transportation through a state, though detained for a time within the state by low water or other causes of delay, as was the case of the logs cut in the state of Maine, the tax on which was abated by the Supreme Court of New Hampshire. Such goods are actually already in the course of transportation, and are clearly under the protection of the Constitution. The goods in question will be interstate commerce when actually started in the course of transportation to another state, or delivered to a carrier for such transportation. There must be a point of time when they cease to be governed exclusively by domestic and begin to be governed and protected by the national law of commercial regulation, and that moment seems to us a legitimate one for this purpose, in which they commence their final movement for transportation from the state of their origin to that of their destination."

Since the logs, in this case, had not started upon their final journey from the state of their origin, it was held that they were taxable by the state of New Hampshire. Judgment was given for the town of Erral.

Ruling Law. Story Case Answer

When an article of commerce has been delivered to a common carrier for the purpose of shipment to another state, or it has been actually started on its passage out of the state, it then becomes a part of interstate commerce; the power of the state to tax, ceases, and the power of Congress becomes operative. The Ruling Court Case shows that preparing them for shipment is not sufficient; there must be delivery to the carrier for the final shipment out of the state, or an actual starting of the journey, if the owner himself is shipping.

In the Story Case, the coal has been delivered to a carrier for interstate shipment, and the local state taxation is void.