author: Mb. Justice Brennan Mb. Justice Blackmun, Mr. Justice Stewart,

text:
    COLONIAL PIPELINE CO. v. TRAIGLE, COLLECTOR OF REVENUE OF LOUISIANA
    No. 73-1595.
    Argued January 13, 1975
    Decided April 28, 1975
    Brennan, J., delivered the opinion of the Court, in which Burger, C. J., and White, Marshall, and Powell, JJ., joined. Blackmun, J., filed an opinion concurring in the judgment, in which Rehnquist, J., joined, post, p. 114. Stewart, J., filed a dissenting opinion, post, p. 116. Douglas, J., took no part in the consideration or decision of the case.

      R. Gordon Kean, Jr., argued the cause for appellant. With him on the briefs was John V. Parker.

      Whit M. Cook II argued the cause for appellee pro hoc vice. With him on the brief was Chapman L. Sanford.

   Mb. Justice Brennan

delivered the opinion of the Court.

We have once again a case that presents “the perennial problem of the validity of a state tax for the privilege of carrying on, within a state, certain activities” related to a corporation’s operation of an interstate business. Memphis Gas Co. v. Stone, 335 U. S. 80, 85 (1948). The issue is whether Louisiana, consistent with the Commerce Clause, Art. I, § 8, cl. 3, may impose a fairly apportioned and nondiscriminatory corporation franchise tax on appellant, Colonial Pipeline Co., a corporation engaged exclusively in interstate business, upon the “incident” of its “qualification to carry on or do business in this state or the actual doing of business within this state in a corporate form.” No question is raised as to the reasonableness of the apportionment of appellant’s capital deemed to have been employed in Louisiana, and it is not claimed that the tax is discriminatory. The Supreme Court of Louisiana sustained the validity of the tax. 289 So. 2d 93 (1974). We noted probable jurisdiction, 417 U. S. 966 (1974). We affirm.

I

Appellant is a Delaware corporation with its principal place of business in Atlanta, Ga. It is a common carrier of liquefied petroleum products and owns and operates a pipeline system extending from Houston, Tex., to the New York City area. This 3,400-mile pipeline links the oil refining complexes of Texas and Louisiana with the population centers of the Southeast and Northeast. Appellant daily delivers more than one million gallons of petroleum products to 14 States and the District of Columbia. Approximately 258 miles of the pipeline are located in Louisiana. Over this distance within Louisiana, appellant owns and operates several pumping stations which keep the petroleum products flowing at a sustained rate, and various tank storage facilities used to inject or withdraw petroleum products into or from the line. A work force of 25 to 30 employees — mechanics, electricians, and other workers — inspect and maintain the line within the State. During the tax years in question, 1970 and 1971, appellant maintained no administrative offices or personnel in. Louisiana, although it had once maintained a division office in Baton Rouge. Appellant does no intrastate business in petroleum products in Louisiana.

On May 9, 1962, appellant voluntarily qualified to do business in Louisiana, although it could have carried on its interstate business without doing so. La. Rev. Stat. Ann. § 12:302 H (1969); see n. 8, infra. Thereupon, the Collector of Revenue imposed the Louisiana franchise tax on appellant's activities in the State during 1962. At that time La. Rev. Stat. Ann. §47:601, the Louisiana Franchise Tax Act, expressly provided: “The tax levied herein is due and payable for the privilege of carrying on or doing business, the exercising of its charter or the continuance of its charter within this state, or owning or using any part or all of its capital or plant in this state.” (Emphasis supplied.)

Appellant paid the tax and sued for a refund. The Louisiana Court of Appeal, First Circuit, held that, in that form, § 601 was unconstitutional as applied to appellant because, being imposed directly upon “the privilege of carrying on or doing [interstate] business,” it violated the Commerce Clause, Art. I, § 8, cl. 3. Colonial Pipeline Co. v. Mouton, 228 So. 2d 718 (1969). The Supreme Court of Louisiana refused review. 255 La. 474, 231 So. 2d 393 (1970).

Following this decision, the Louisiana Legislature amended La. Rev. Stat. Ann. § 47:601 by Act 325 of 1970. The amendment excised from § 601 the words: “The tax levied herein is due and payable for the privilege of carrying on or doing business,” and substituted: “The qualification to carry on or do business in this state or the actual doing of business within this state in a corporate form,” as one of three “alternative incidents” upon which the tax might be imposed. The other two “incidents”— the exercise of the corporate charter in the State, and the employment there of its capital, plant, or other property— were carried forward from the earlier version of the statute. See n. 2, supra.

The Collector of Revenue then renewed his efforts to impose a tax on appellant, this time for doing business “in a corporate form” during 1970 and 1971. Again, appellant paid the tax and sued for a refund. The Louisiana District Court and the Court of Appeal, First Circuit, concluded that the 1970 amendment made no substantive change in § 601, which it construed as still imposing the tax directly upon the privilege of carrying on or doing an interstate business, and held that amended § 601 was therefore unconstitutional as applied to appellant. 275 So. 2d 834 (1973).

The Supreme Court of Louisiana reversed. The court recognized that “[t]he pertinent Constitutional question is whether, as applied to a corporation whose exclusive business carried on within the State is interstate, this statute violates the Commerce Clause of the United States Constitution.” 289 So. 2d, at 97. But the court attached controlling significance to the omission from the amended statute of the “primary operating incident [of the former version], i. e., ‘the privilege of carrying on or doing business/ ” id., at 96, and the substitution for that incident of doing business in the corporate form. The court held: “The thrust of the [amended] statute is to tax not the interstate business done in Louisiana by a foreign corporation, but the doing of business in Louisiana in a corporate form, including ‘each and every act, power, right, privilege or immunity exercised or enjoyed in this state, as an incident to or by virtue of the powers and privileges acquired by the nature of such organizations ....”’ Id., at 97. Accordingly, the court concluded that amended § 601 applied the franchise tax to foreign corporations doing only an interstate business in Louisiana not as a tax upon “the general privilege of doing interstate business but simply [as a tax upon] the corporation’s privilege of enjoying in a corporate capacity the ownership or use of its capital, plant or other property in this state, the corporation’s privilege of exercising and continuing its corporate character in the State of Louisiana, and the corporation’s use of its corporate form to do business in the State.” Id., at 100. Upon that premise, the court validated the levy as a constitutional exaction for privileges enjoyed by corporations in Louisiana and for benefits furnished by the State to enterprises carrying on business, interstate or local, in the corporate form, whether as domestic or foreign corporations. The court reasoned:

“The corporation, including the foreign corporation doing only interstate business in Louisiana, enjoys under our laws many privileges separate and apart from simply doing business, such for instance as the legal status to sue and be sued in the Courts of our State, continuity of business without interruption by death or dissolution, transfer of property interests by the disposition of shares of stock, advantages of business controlled and managed by corporate directors, and the general absence of individual liability, among others.
“The fact that the corporate form of doing business is inextricably interwoven in a foreign corporation’s doing interstate business in the State, does not in our view detract from the fact that the local incident taxed is the form' of doing business rather than the business done by that corporation. And it is our view that the local incident is real and sufficiently distinguishable, so that taxation thereof does not, under the controlling decisions of the United States Supreme Court, violate the Commerce Clause.
“The statute does not discriminate between foreign and local corporations, being applicable, as it is, to both. Nor do we believe that the State’s exercise of its power by this taxing statute is out of proportion to Colonial’s activities within the state and their consequent enjoyment of the opportunities and protection which the state has afforded them.
“Furthermore we believe that the State has given something for which it can ask return. The return, tax levy in this case, is an exaction which the State of Louisiana requires as a recompense for its protection of lawful activities carried on in this state by Colonial, activities which are incidental to the powers and privileges possessed by it by the nature of its organization, here, . . . the local activities in maintaining, keeping in repair, and otherwise in manning the facilities of their pipeline system throughout the 258 miles of its pipeline in the State of Louisiana.” Id., at 100-101.

This Court is, of course, not bound by the state court’s determination that the challenged tax is not a tax on interstate commerce. “The State may determine for itself the operating incidence of its tax. But it is for this Court to determine whether the tax, as construed by the highest court of the State, is or is not ‘a tax on interstate commerce.’ ” Memphis Steam Laundry v. Stone, 342 U. S. 389, 392 (1952). We therefore turn to the question whether the tax imposed upon appellant under amended § 601, as construed by the Louisiana Supreme Court, is or is not a tax on interstate commerce.

II

It is a truism that the mere act of carrying on business in interstate commerce does not exempt a corporation from state taxation. “It was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business.” Western Live Stock v. Bureau of Revenue, 303 U. S. 250, 254 (1938). Accordingly, decisions of this Court, particularly during recent decades, have sustained nondiscriminatory, properly apportioned state corporate taxes upon foreign corporations doing an exclusively interstate business when the tax is related to a corporation’s local activities and the State has provided benefits and protections for those activities for which it is justified in asking a fair and reasonable return. General Motors Corp. v. Washington, 377 U. S. 436 (1964); Memphis Gas Co. v. Stone, 335 U. S. 80 (1948). Cf. Spector Motor Service v. O’Connor, 340 U. S. 602 (1951). General Motors Corp., supra, states the controlling test:

“[T]he validity of the tax rests upon whether the State is exacting a constitutionally fair demand for that aspect of interstate commerce to which it bears a special relation. For our purposes the decisive issue turns on the operating incidence of the tax. In other words, the question is whether the State has exerted its power in proper proportion to appellant’s activities within the State and to appellant’s consequent enjoyment of the opportunities and protections which the State has afforded. ... As was said in Wisconsin v. J. C. Penney Co., 311 U. S. 435, 444 (1940), ‘[t]he simple but controlling question is whether the state has given anything for which it can ask return.’ ” 377 U. S., at 440-441.

Amended § 601 as applied to appellant satisfies this test. First, the Supreme Court of Louisiana held that the operating incidences of the franchise tax are the three localized alternative incidences provided in §601: (1) doing business in Louisiana in the corporate form; (2) the exercise of a corporation’s charter or the continuance of its charter within the State; and (3) the owning or using any part of its capital, plant, or other property in Louisiana in a corporate capacity. We necessarily accept this construction of amended § 601 by Louisiana’s highest court. 289 So. 2d, at 97. Second, the court found that the powers, privileges, and benefits Louisiana bestows incident to these activities were sufficient to support a tax on doing business in the corporate form in that State. We perceive no basis upon which we can say that this is not in fact the case. Our pertinent precedents therefore require affirmance of the State Supreme Court’s judgment.

Memphis Gas Co. v. Stone, supra, sustained a similar franchise tax imposed by Mississippi on a foreign pipeline corporation engaged exclusively in an interstate business even though the company had not qualified in Mississippi. Memphis Natural Gas Co., a Delaware corporation, owned and operated a natural gas pipeline extending from Louisiana, through Arkansas and Mississippi, to Memphis and other parts of Tennessee. Approximately 135 miles of the pipeline were located in Mississippi, and two of the corporation’s compressing stations were located in that State. The corporation engaged in no intrastate commerce in Mississippi, and had only one customer there. It had not qualified under the corporation laws of Mississippi. It had neither an agent for the service of process nor an office in that State, and its only employees there were those necessary for the maintenance of the pipeline.

The corporation paid all ad valorem taxes assessed against its property in Mississippi. In addition to these taxes, however, Mississippi imposed a “franchise or excise tax” upon all corporations “doing business” within the State. The statute defined “doing business” in terms that suggest it may have been the model for § 601, that is, “[to] mean and [to] include each and every act, power or privilege exercised or enjoyed in this State, as an incident to, or by virtue of the powers and privileges acquired by the nature of such organization.” 335 U. S., at 82. The Supreme Court of Mississippi held, as did the Supreme Court of Louisiana here, 289 So. 2d, at 101, that the tax was “ 'an exaction ... as a recompense for ... protection of'. . . the local activities in maintaining, keeping in repair, and otherwise manning the facilities of the system throughout the 135 miles of its line in this State.’ ” 335 U. S., at 84. In affirming the judgment of that court, Mr. Justice Reed, in a plurality opinion, said:

“We think that the state is within its constitutional rights in exacting compensation under this statute for the protection it affords the activities within its borders. Of course, the interstate commerce could not be conducted without these local activities. But that fact is not conclusive. These are events apart from the flow of commerce. This is a tax on activities for which the state, not the United States, gives protection and the state is entitled to compensation when its tax cannot be said to be an unreasonable burden or a toll on the interstate business.” Id., at 96.

This conclusion is even more compelled in the instant case since appellant voluntarily qualified under Louisiana law and therefore enjoys the same rights and privileges as a domestic corporation. La. Rev. Stat. Ann. § 12:306 (2) (Supp. 1975). The Louisiana Supreme Court defined appellant’s powers and privileges as including “the legal status to sue and be sued in the Courts of our State, continuity of business without interruption by death or dissolution, transfer of property interests by the disposition of shares of stock,, advantages of business controlled and managed by corporate directors, and the general absence of individual liability . . . 289 So. 2d, at 100. These privileges obviously enhance the value to appellant of its activities within Louisiana. See Southern Gas Corp. v. Alabama, 301 U. S. 148, 153 (1937); Stone v. Interstate Natural Gas Co., 103 F. 2d 544 (CA5), aff’d, 308 U. S. 522 (1939). Cf. Railway Express Agency v. Virginia (Railway Express II), 358 U. S. 434 (1959).

Ill

Nevertheless, appellant contends that Spector Motor Service v. O’Connor, 340 U. S. 602 (1951), and Railway Express Agency v. Virginia (Railway Express I), 347 U. S. 359 (1954), require the conclusion that § 601 is unconstitutional as applied to appellant. The argument is without merit. Spector held invalid under the Commerce Clause a Connecticut tax based expressly “upon [the corporation’s] franchise for the privilege of carrying on or doing business within the state . . . .” Similarly, Railway Express I invalidated Virginia’s “annual license tax” imposed on express companies expressly “for the privilege of doing business” in the State. Thus both taxes, as express imposts upon the privilege of carrying on an exclusively interstate business, contained the same fatal constitutional flaw that led the Louisiana Court of Appeal to strike down the levy against appellant under § 601 before its amendment in 1970. “A tax is [an unconstitutional] direct burden, if laid upon the operation or act of interstate commerce.” Ozark Pipe Line v. Monier, 266 U S 555, 569 (1925 ) ( Brandéis, J.. dissenting). The 1970 amendment however repealed that unconstitutional basis for the tax, and made § 601 constitutional by limiting its application to operating incidences of activities within Louisiana for which the State affords privileges and protections that constitutionally entitle Louisiana to exact a fairly apportioned and nondiscriminatory tax. Spector expressly recognized: "The incidence of the tax provides the answer. . The State is not precluded from imposing taxes upon other activities or aspects of this business which, unlike the privilege of doing interstate business, are subject to the sovereign power of the State.” 340 L S., at 608-609.

Of course, an otherwise unconstitutional tax is not made the less so by masking it in words cloaking its actual thrust. Railway Express II, supra, at 441; Railway Express I, supra, at 363; Galveston, H & S. A. R. Co. v. Texas, 210 U. S. 217, 227 (1908). “Tt is not a matter of labels.” Spector, supra, at 608. Here, however, the Louisiana Legislature amended § 601 purposefully to remove any basis of a levy upon the privilege of carrying on an interstate business and narrowly to confine the impost to one related to appellant’s activities within the State in the corporate form. Since appellant, a foreign corporation qualified to carry on its business in corporate form, and doing business in Louisiana in the corporate form, thereby gained benefits and protections from Louisiana of value and importance to its business, the application of that State’s fairly apportioned and nondiscriminatory levy to appellant does not offend the Commerce Clause. The tax cannot be said to be imposed upon appellant merely or solely for the privilege of doing interstate business in Louisiana. It is, rather, a fairly apportioned and nondiscriminatory means of requiring appellant to pay its just share of the cost of state government upon which appellant necessarily relies and by which it is furnished protection and benefits.

Affirmed.

Mb. Justice Douglas took no part in the consideration or decision of this case.

Mb. Justice Blackmun,

with whom Mb. Justice Rehnquist joins, concurring in the judgment.

I share the misgivings that are suggested by Mb. Justice Stewabt in his dissent, but I join the judgment of the Court.

I am not at all satisfied that this Court’s decisions of the past 30 years, some of them by sharply divided votes, are so plain and so analytically consistent as the Court’s opinion would seem to imply. Thus, I find it difficult to reconcile Spector Motor Service v. O’Connor, 340 U. S. 602 (1951), with today’s holding. And if the present case had gone the other way, I would find it difficult to reconcile the judgment with Memphis Gas Co. v. Stone, 335 U. S. 80 (1948). If, however, the Court’s decisions of the past are consistent — and if there is consistency between what the Louisiana Legislature and that State’s courts have done in Colonial’s 1969 case and in the present one — then, for me, the legal distinctions this Court and the Louisiana courts (under the compulsion of our decisions) have drawn are too finespun and far too gossamer. They fail to provide what taxpayers and the lawyers who advise them have a right to expect, namely, a firm and solid basis of differentiation between that which runs afoul of the Commerce Clause, and that which is consistent with that Clause. It makes little constitutional sense — and certainly no practical sense — to say that a State may not impose a fairly apportioned, nondiscriminatory franchise tax with an adequate nexus upon the conduct of business in interstate commerce, but that it may impose that same tax upon the conduct of business in interstate commerce “in a corporate form” or, for that matter, in partnership or individual form. Tr. of Oral Arg. 28-31. Certainly to the lay mind, or to any mind other than the purely legal, these are distinctions with little substantive difference and this is taxation by semantics.

I therefore feel that the Court should face the issue and make the choice. I would make that choice in favor of Memphis Gas, as buttressed by the philosophy and holding of Northwestern Cement Co. v. Minnesota, 358 U. S. 450 (1959), and against Spector j Spector, it seems to me, is a derelict and an aberration,' and I would discard it. I would hold that in this day, when the realities of “Our Federalism” have become apparent, and when the ability of our States and of the Federal Government to coexist have matured, a state franchise tax that does not threaten interstate commerce by being discriminatory, or unfairly apportioned, or devoid of sufficient nexus, passes constitutional muster under the Commerce Clause and may be imposed in the absence of congressional proscription. On this record, Louisiana's corporation franchise tax meets that standard.

Mr. Justice Stewart,

dissenting.

All agree that the appellant is engaged exclusively in interstate commerce. Yet the Court says that Louisiana can nonetheless impose this franchise tax upon the appellant because it is for the privilege of engaging in interstate commerce “in [the] corporate form.” Under this reasoning, the State could impose a like franchise tax for the privilege of carrying on an exclusively interstate business “in the partnership form” — or, for that matter, in the form of an individual proprietorship. For, whatever its form, the exclusively interstate business would still be “owning or using [a] part of its capital, plant or other property in Louisiana,” ante, at 109, and would still be “furnished” equivalent “protection and benefits” by the State, ante, at 114.

The fact is that Louisiana has imposed a franchise tax upon the appellant for the privilege of carrying on an exclusively interstate business. Under our established precedents, such a tax is constitutionally impermissible. Spector Motor Service v. O’Connor, 340 U. S. 602; Railway Express Agency v. Virginia, 347 U. S. 359. I could understand if the Court today were forthrightly to overrule these precedents and hold that a state franchise tax upon interstate commerce is constitutionally valid, so long as it is not discriminatory. But I cannot understand how the Court can embrace the wholly specious reasoning of the Supreme Court of Louisiana in this case.

       “This Court alone has handed down some three hundred full-dress opinions spread through slightly more than that number of our reports. . . . [T]he decisions have been ‘not always clear . . . consistent or reconcilable.’ ” Northwestern Cement Co. v. Minnesota, 358 U. S. 450, 457-458 (1959).

       Louisiana Rev. Stat. Ann. §47:601 provided in 1963:
      “Every domestic corporation and every foreign corporation, exercising its charter, authorized to do or doing business in this state, or owning or using any part or all of its capital or plant in this state, subject to compliance with all other provisions of law, except as otherwise provided for in this chapter, shall pay a tax at the rate of one dollar and 50/100 ($1.50) for each one thousand dollars ($1,000.00), or major fraction thereof on the amount of its capital stock, surplus, undivided profits, and borrowed capital, determined as hereinafter provided; the minimum tax shall not be less than ten dollars ($10.00) in any case. The tax levied herein is due and payable for the privilege of carrying on or doing business, the exercising of its charter or the continuance of its charter within this state, or owning or using any part or all of its capital or plant in this state,”

       Refusal of review was not tantamount to an affirmance. The Louisiana Supreme Court stated in its opinion in the instant case: “This Court’s refusal in 1969 to grant writs upon application by the State in that earlier case, while normally persuasive, does not carry the same weight as a precedent as it would, had that case been decided by this Court after the granting of a writ. . . . This Court is not bound by its refusal of writs, to adopt law expressed in appellate court opinions.” 289 So. 2d 93, 96 (1974).

         Section 601 (Supp. 1975) provides in pertinent part:
      “§601. Imposition of tax
      “Every domestic corporation and every foreign corporation, exercising its charter, or qualified to do business or actually doing business in this state, or owning or using any part or all of its capital, plant or any other property in this state, subject to compliance with all other provisions of law, except as otherwise provided for in this Chapter shall pay an annual tax at the rate of $1.50 for each $1,000.00, or major fraction thereof on the amount of its capital stock, surplus, undivided profits, and borrowed capital, determined as hereinafter provided; the minimum tax shall not be less than $10.00 per year in any case. The tax levied herein is due and payable on any one or all of the following alternative incidents:
      “(1) The qualification to carry on or do business in this state or the actual doing of business within this state in a corporate form. The term ‘doing business’ as used herein shall mean and include each and every act, power, right, privilege, or immunity exercised or enjoyed in this state, as an incident to or by virtue of the powers and privileges acquired by the nature of such organizations, as well as, the buying, selling or procuring of services or property.
      "(2) The exercising of a corporation’s charter or the continuance of its charter within this state.
      “(3) The owning or using any part or all of its capital, plant or other property in this state in a corporate capacity.
      “It being the purpose of this section to require the payment of this tax to the State of Louisiana by domestic corporations for the right granted by the laws of this state to exist as such an organization, and by both domestic and foreign corporations for the enjoyment, under the protection of the laws of this state, of the powers, rights, privileges and immunities derived by reason of the corporate form of existence and operation. The tax hereby imposed shall be in addition to all other taxes levied by any other statute.”

       The taxes levied against appellant for 1970 were $80,835.02 including interest and for 1971 were $69,884.78 including interest. These amounts were fixed by applying the $1.50 rate to an allocated figure computed according to a general allocation formula provided in La. Rev. Stat. Ann. §47:606 as follows:
      “A. General allocation formula.
      “For the purpose of ascertaining the tax imposed in this Chapter, every corporation subject to the tax is deemed to have employed in this state the proportion of its entire issued and outstanding capital stock, surplus, undivided profits and borrowed capital, computed on the basis of the ratio obtained by taking the arithmetical average of the following ratios:
      “(1)----
      “(2) The ratio that the value of all of the taxpayer’s property and assets situated or used in Louisiana bears to the value of all of its property and assets wherever situated or used. . . .”
      The State Supreme Court found that appellant was liable only for the minimum amount specified in amended § 601 for 1970 and reduced the tax for that year to $10. The levy for 1971 was sustained in the full amount, 289 So. 2d, at 101.
      Appellant also pays ad valorem taxes to Louisiana and 10 of its parishes, as well as state income taxes. For the years 1970 and 1971, ad valorem taxes totaled $743,561.34 and income taxes totaled $196,621.

       “A state is free to pursue its own fiscal policies, unembarrassed by the Constitution, if by the practical operation of a tax the state has exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred by the fact of being an orderly, civilized society.” Wisconsin v. J. C. Penney Co., 311 U. S. 435, 444 (1940).

       Like § 601, the Mississippi statute, Code Ann. § 9313 (1943), provided in part:
      “It being the purpose of this section to require the payment to the state of Mississippi, this tax for the right granted by the laws of this state to exist as such organization, and enjoy, under the protection of the laws of this state, the powers, rights, privileges and immunities derived from the state by the form of such existence.”

       Louisiana does not require foreign corporations to qualify as a condition to carrying on their interstate business. Louisiana Rev. Stat. Ann. § 12:302 (Supp. 1975) expressly exempts foreign corporations that transact “any business in interstate or foreign commerce” from its requirement that foreign corporations obtain a certificate of authority from the Secretary of State before they transact business within the State. Crutcher v. Kentucky, 141 U. S. 47 (1891), therefore, is inapposite. There Kentucky provided that an agent of an express company not incorporated under the laws of Kentucky could not carry on business in that State without first obtaining a license from the State. The Court held that this mandatory license requirement was unconstitutional because to “carry on interstate commerce is not a franchise or a privilege granted by the State .... We have repeatedly decided that a state law. is unconstitutional and void which requires a party to take out a license for carrying on interstate commerce, no matter how specious the pretext may be for imposing it.” Id., at 57-58. See Graham Mfg. Co. v. Holland, 191 La. 757, 186 So. 93 (1939); State v. American Railway Express Co.,
        159 La. 1001, 106 So. 544 (1924). An important consequence of qualification, of course, is the facilitation of the assessment and collection of state franchise taxes. Comment, Foreign Corporations— State Boundaries for National Business, 59 Yale L. J. 737, 746 (1950).

       Nor is this tax on carrying on business in the corporate form a “local obstruction to the flow of interstate commerce that cannot stand under the Commerce Clause.” Memphis Steam Laundry v. Stone, 342 U. S. 389, 395 (1952). Unlike the situation in Memphis Steam Laundry, Louisiana did not “carve out” an “incident from the integral economic process of interstate commerce,” id., at 393, and then proceed to tax that incident. ^There was and is no requirement that appellant assume the corporate form to do interstate business in Louisiana, and indeed state law specifically exempts foreign corporations engaging in interstate commerce from the certificate requirement. See n. 8, supra.

         Younger v. Harris, 401 U. S. 37, 44 (1971).

       The appellant is not, of course, incorporated in Louisiana.


source: Caselaw Access Project

author: Mr. Justice Stewart

license: Public Domain

text:
    KUGLER, ATTORNEY GENERAL OF NEW JERSEY, et al. v. HELFANT
    No. 74-80.
    Argued March 25, 1975
    Decided April 28, 1975

      Stewart, J., delivered the opinion of the Court, in which Burger, C. J., and White, Marshall, Blackmun, Powell, and Rehnquist, JJ., joined. Douglas, J., took no part in the consideration or decision of the cases. Brennan, J., took no-part in the decision of the cases.

      David 8. Baime, Deputy Attorney General of New Jersey, argued the cause for petitioners in Ño. 74^80 and respondents in No. 74-277. With him on the briefs were William F. Hyland, Attorney General, and Glenn E. Kushel, Deputy Attorney General.

      Marvin D. Perskie argued the cause for petitioner in No. 74^-277 and respondent in No. 74r-80. With him on the briefs was Patrick T. McGahn, Jr.

       Together with No. 74-277, Helfant v. Kugler, Attorney General of New Jersey, et al., also on certiorari to the same court.

   Mr. Justice Stewart

delivered the opinion of the Court.

Edwin H. Helfant brought this action in Federal District Court to enjoin the Attorney General of New Jersey and other New Jersey officials from proceeding with the prosecution of an indictment pending against him in that State. His complaint alleged that he had been coerced into testifying before a state grand jury by the concerted action of a State Deputy Attorney General and members of the New Jersey Supreme Court, and that the indictment, charging him with obstruction of justice and false swearing, had grown out of that coerced testimony. His complaint further alleged that the significant role played by the members of the New Jersey Supreme Court in coercing his testimony made it impossible for him to receive a fair trial in the state-court system.

The District Court dismissed the complaint on the ground that the principles of Younger v. Harris, 401 U. S. 37, precluded federal intervention in the state criminal proceeding. A three-judge panel of the Court of Appeals for the Third Circuit reversed that order and remanded the case to the District Court for a hearing on the merits of Helfant’s request for a permanent injunction. 484 F. 2d 1277. Upon petition of the defendant state officials (hereinafter the State), the Court of Appeals then set the case for an en banc rehearing. The full Court of Appeals held that a permanent injunction against the state criminal prosecution would be inappropriate, but, with three judges dissenting, nonetheless reversed the trial court’s order of dismissal. The Court of Appeals remanded the case for the purpose of an evidentiary hearing in the District Court on Helfant’s charge that his grand jury testimony had been coerced, and for the entry of a declaratory judgment, based upon that hearing, on the question whether Helfant’s grand jury testimony should be admitted into evidence at the state criminal trial. The District Court was directed to enjoin further proceedings in the state criminal prosecution pending entry of its declaratory judgment. 500 F. 2d 1188.

The State filed a petition for a writ of certiorari, seeking review of the Court of Appeals’ remand to the District Court for an evidentiary hearing and declaratory judgment on the issue of coercion. Helfant filed a cross-petition for a writ of certiorari, challenging the Court of Appeals’, decision that permanent injunctive relief was not warranted. We granted both petitions to consider the propriety of federal-court intervention in pending state criminal proceedings .in the circumstances of this case. 419 TJ. S. 1019.

I

Helfant was a Municipal Court Judge and a member of the New Jersey bar. He was subpoenaed to appear on October 18, 1972, before a state grand jury. There he was advised that he was a target of the grand jury’s investigation into an episode allegedly involving corruption of the process of state criminal justice. Upon the advice of counsel, he invoked his constitutional privilege against compulsory self-incrimination and refused to testify before the grand jury. He was again subpoenaed to appear before the grand jury on November 8, 1972. On November 6, 1972, he received a telephone call from the Administrative Director of the New Jersey Courts requesting him to come to the conference room of the Justices of the New Jersey Supreme Court on the morning of November 8 just before his scheduled grand jury appearance. He complied with this request.

In his federal complaint, Helfant alleged that at that meeting he was interrogated by the Chief Justice and other members of the Supreme Court concerning the subject matter of the grand jury investigation, including matters not then public, and was also sharply questioned about the propriety of a Municipal Judge’s invoking the privilege against compulsory self-incrimination before a grand jury. The complaint further alleged that the Justices’ questions were based on grand jury minutes that had been provided them by the Deputy Attorney General who was conducting the grand jury investigation, and who had been present in the conference room of the Supreme Court both before and after Helfant’s interview.

The federal complaint went on to allege that as a result of this questioning Helfant, “fearing not only the loss of Judgeship, but for his accreditation as a member of the bar as well,” indicated to the Justices that he would waive his privilege and testify in full before the grand jury. After leaving the conference room, Helfant did testify before the grand jury, denying any improper involvement in the episode under investigation. Some two months later the grand jury returned an indictment charging Helfant with conspiracy to obstruct justice, obstruction of justice, compounding a felony, and with four counts of false swearing.

The federal complaint finally alleged that federal injunctive relief was necessary because it would be impossible for Helfant to receive a fair trial in the New Jersey state courts:

“As a result of the intrusion by the Deputy Attorney General and the disclosure to the Supreme Court of factual matters involved in a Grand Jury investigation during pendency of that investigation, and because of the intrusion of the New Jersey Supreme Court into the Grand Jury investigation and the communication between the Supreme Court of New Jersey and the Deputy Attorney General conducting the Grand Jury investigation, the plaintiff herein is made to suffer great, immediate, substantial and irreparable harm in that he must attempt to defend criminal charges brought in a State in which there has been prejudicial collusion directly affecting plaintiff, whether intentional or inadvertent between the Judicial and Executive branches of the New Jersey State government. Plaintiff is being made to defend criminal charges which have been obtained, inter alia, as a result of that collusion, and the deprivation of plaintiff’s constitutional rights by not too subtle cooperative coercion on the part of the defendants. Furthermore, in the event of his conviction upon any one of the charges presently pending against him, plaintiff’s only recourse would be review by the State Courts and ultimately the New Jersey Supreme Court, which Court he has alleged has been involved in the prosecution of the charges against him. Thus, any defense by plaintiff in other charges in State Court would be totally futile, because he would have to defend charges at the trial level, with the Trial Court fully cognizant of the 'interest’ of the Supreme Court in the charges, and could only seek review of his pretrial motions and trial motions and appeals in the same court that he alleges has unlawfully injected itself into the prosecution of the charges against him and unlawfully deprived him of his constitutional rights. The conclusion must be that the State is engaging in a bad faith prosecution of the plaintiff herein, and for this reason he seeks a permanent injunction against the further prosecution of the State proceedings . . . .”

II

In Younger v. Harris, supra, and its companion cases, the Court re-examined the principles governing federal judicial intervention in pending state criminal cases, and unequivocally reaffirmed “the fundamental policy against federal interference with state criminal prosecutions.” 401 U. S., at 46. This policy of restraint, the Court explained, is founded on the “basic doctrine of equity jurisprudence that courts of equity should not act, and particularly should not act to restrain a criminal prosecution, when the moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable relief.” Id., at 43-44. When a federal court is asked to interfere with a pending state prosecution, established doctrines of equity and comity are reinforced by the demands of federalism, which require that federal rights be protected in a manner that does not unduly interfere with the legitimate functioning of the judicial systems of the. States. Id., at 44. Accordingly, the Court held that in the absence of exceptional circumstances creating a threat of irreparable injury “ ‘both great and immediate,’ ” a federal court must not intervene by way of either injunction or declaratory judgment in a pending state criminal prosecution.

Although the cost, anxiety, and inconvenience of having to defend against a single criminal prosecution alone do not constitute “irreparable injury” in the “special legal sense of that term,” id., at 46, the Court in Younger left room for federal equitable intervention in a state criminal trial where there is a showing of “bad faith” or “harassment” by state officials responsible for the prosecution, id., at 54, where the state law to be applied in the criminal proceeding is “'flagrantly and patently violative of express constitutional prohibitions,’ ” id., at 53, or where there exist other “extraordinary circumstances in which the necessary irreparable injury can be shown even in the absence of the usual prerequisites of bad faith and harassment.” Ibid. In the companion case of Perez v. Ledesma, 401 U. S. 82, the Court explained that “[ojnly in cases of proven harassment or prosecutions undertaken by state officials in bad faith without hope of obtaining a valid conviction and perhaps in other extraordinary circumstances where irreparable injury can be shown is federal injunctive relief against pending state prosecutions appropriate.” Id., at 85. See Mitchum v. Foster, 407 U. S. 225, .230-231.

The policy of equitable restraint expressed in Younger v. Harris, in short, is founded on the premise that ordinarily a pending state prosecution provides the accused a fair and sufficient opportunity for vindication of federal constitutional rights. See Steffel v. Thompson, 415 U. S. 452, 460. Only if “extraordinary circumstances” render the state court incapable of fairly and fully adjudicating the federal issues before it, can there be any relaxation of the deference to be accorded to the state criminal process. The very nature of “extraordinary circumstances,” of course, makes it impossible to anticipate and define every situation that might create a sufficient threat of such great, immediate, and irreparable injury as to warrant intervention in state criminal proceedings. But whatever else is required, such circumstances must be “extraordinary” in the sense of creating an extraordinarily pressing need for immediate federal equitable relief, not merely in the sense of presenting a highly unusual factual situation.

As the Court of Appeals recognized, Helfant’s allegations that members of the New Jersey Supreme Court were involved in coercing his grand jury testimony must, for present purposes, be assumed to be true. It is Helfant’s position that these are such “extraordinary circumstances” as to justify enjoining his criminal trial in view of the formidable supervisory and administrative powers exercised by the New Jersey Supreme Court over the entire state-court system. We cannot agree that these facts bring this litigation within any exception to the basic Younger rule.

The New Jersey Constitution provides that the Chief Justice of the State Supreme Court shall be the “administrative head” of all the courts in the State. Art. VI, § 7, ¶ 1. The State Constitution further provides that “[t]he Chief Justice of the Supreme Court shall assign Judges of the Superior Court to the Divisions and Parts of the Superior Court, and may from time to time transfer Judges from one assignment to another, as need appears.” Id., ¶ 2.

The New Jersey Supreme Court itself has explained that the State Constitution vests it with “plenary responsibility for the administration of all courts in the State.” State v. De Stasio, 49 N. J. 247, 253, 229 A. 2d 636, 639. “Thus this court is charged with responsibility for the overall performance of the judicial branch. Responsibility for a result implies power reasonably necessary to achieve it.” In re Mattera, 34 N. J. 259, 272, 168 A. 2d 38, 45.

It is clear, therefore, that the State Supreme Court, and particularly its Chief Justice, are vested with considerable administrative authority over the. trial court that will initially determine Helfant’s federal constitutional claims if the criminal prosecution is allowed to proceed. And, of course, those claims are predicated in large measure on charges of improper conduct on the part of some Justices of the New Jersey Supreme Court. It is impossible to conclude from these considerations, however, that the objectivity of the entire New Jersey court system has been irretrievably impaired so far as Helfant is concerned.

Helfant does not allege, and it certainly cannot be assumed, that no trial judge in New Jersey will be capable of impartially deciding his case simply because of the alleged previous involvement of members of the New Jersey Supreme Court. To be sure, it is conceivable that there might be a judge in the State who, in an effort to curry favor or to avoid administrative transfer to a less desirable assignment, would decide the case with an eye to the supposed attitudes of his superiors in the judicial hierarchy. But even if such a judge were assigned to hear Helfant’s case, the right to a fair trial would be protected by the New Jersey rule that permits a defendant to disqualify a particular judge from participating in his case. See New Jersey Court Rules 1:12-1 to 1:12-3.

Although appellate review of a conviction at the trial level might ultimately reach the State Supreme Court, New Jersey requires judges personally interested “in the event of the action” to disqualify themselves. Indeed, disqualification is mandatory whenever there is any reason “which might preclude a fair and unbiased hearing and judgment, or which might reasonably lead counsel or the parties to believe so.” Rules 1:12-1 (e) and (f) (emphasis added). If, because of such disqualifications, the Supreme Court were deprived of the requisite five-member quorum, temporary assignment of substitute Justices is authorized by the New Jersey Court Rules. Rule 2:13-2. Thus, the New Jersey judicial system provides procedural safeguards to guarantee that Helfant will not be denied due process of law in the state trial or appellate process.

It is worth noting, furthermore, that four of the six Justices who attended the meeting with Helfant are no longer members of the New Jersey Supreme Court. Of the two remaining members, only one was alleged to have been active in the questioning. The other active interrogator named by Helfant, the then Chief Justice, is among the four former Justices who are no longer members of the court.

Moreover, it is not the New Jersey Supreme Court, or its members, but the Chief Justice, who is the “administrative head” of the New Jersey court system. Thus, it is the present Chief Justice who wields the extensive supervisory and administrative power relied upon by Helfant to support his prayer for federal equitable relief. And the present Chief Justice played no part whatsoever in the allegedly coercive meeting that forms the core of Helfant’s constitutional claim. In sum, even if it could be assumed, arguendo, that the former Chief Justice and the other participants in the meeting with Helfant might have been incapable of impartially reviewing his case, there can be no such assumption of bias with respect to the new Chief Justice and the other new members of the New Jersey Supreme Court.

Accordingly, Helfant’s claim that he cannot receive a fair hearing in the state-court system is without foundation. The Court of Appeals, therefore, properly affirmed the District Court’s dismissal of his prayer for permanent injunctive relief.

m

Although the Court of Appeals held that there was in this case “no reason to depart from the formidable general policy of ‘leaving generally to the state courts the trial of criminal cases arising under state laws 500 F. 2d, at 1196, it nonetheless concluded that federal declaratory relief on the question of the admissibility in evidence of Helfant’s grand jury testimony was in order. It was the court’s view that federal factfinding on this narrow issue would free the New Jersey courts from even the appearance of partiality. By thus assuring the integrity of the state judicial process without ultimately interfering with the State’s right to enforce its own criminal laws, the court reasoned, federal judicial action would advance, rather than offend, “the mutual relationship poignantly described by Justice Black as ‘Our Federalism.’ ” Id., at 1197. The court accordingly required the District Court to enjoin further proceedings in the state criminal trial until an evidentiary hearing could' be held in the federal court to determine whether Helfant’s grand jury testimony should be admitted as evidence in that trial.

This procedure closely resembles the course rejected by this Court in Stefanelli v. Minará, 342 U. S. 117. In Stefanelli the Court affirmed the refusal of a Federal District Court to entertain proceedings to suppress the use in a pending state prosecution of evidence allegedly obtained in an unlawful search. As the Court explained: “If the federal equity power must refrain from staying State prosecutions outright to try the central question of the validity of the statute on which the prosecution is based, how much more reluctant must it be to intervene piecemeal to try collateral issues.” Id., at 123. The Court thus held that “federal courts should refuse to intervene in State criminal proceedings to suppress the use of evidence even when claimed to have been secured by unlawful search and seizure.” Id., at 120. Similarly, in Perez v. Ledesma, supra, the Court held: “[T]he propriety of arrests and the admissibility of evidence in state criminal prosecutions are ordinarily matters to be resolved by state tribunals, . . . subject, of course, to review by certiorari or appeal in this Court or, in a proper case, on federal habeas corpus.” 401 U. S., at 84-85. See also Cleary v. Bolger, 371 U. S. 392.

These precedents clearly establish that at least in the absence of “extraordinary circumstances” federal courts must refuse to intervene in state criminal proceedings to suppress the use of evidence claimed to have been obtained through unlawful means. Even if concern for the appearance of complete impartiality could in some case conceivably justify such disruption of state criminal proceedings, this is not such a case. By providing for mandatory disqualification of a judge of any court whenever one of the parties or his counsel rationally believes there exists any reason that might preclude a fair and unbiased hearing, N. J. Court Rule 1:12-1 (f), New Jersey has preserved the appearance of judicial objectivity. And, as explained in Part II, supra, Helfant’s claim that he cannot in fact obtain a fair hearing in the state-court system is without merit.

In short, the basic policy against federal interference with pending state prosecutions would be .frustrated as much by the declaratory judgment procedure ordered by the Court of Appeals as it would be by the permanent injunction originally sought by Helfant. See Samuels v. Mackell, 401 U. S. 66, 73. Accordingly, the judgment of the Court of Appeals is vacated, and the cases are remanded to that court with directions to enter a judgment affirming the District Court’s dismissal of the complaint.

It is so ordered.

Mr. Justice Douglas took no part in the consideration or decision of these cases. Mr. Justice Brennan took no part in the decision of these cases.

       The complaint relied upon 42 TJ. S. C. § 1983 in seeking injunctive relief against the state court proceedings. Federal jurisdiction was grounded on 28 U. S. C. § 1343 (3).

       The grand jury was then sitting in Trenton, N. J., in the State House Annex on the same floor as the conference room of the Justices of the State Supreme Court. See 500 F. 2d 1188, 1190.

        Samuels v. Mackell, 401 U. S. 66; Boyle v. Landry, 401 U. S. 77; Perez v. Ledesma, 401 U. S. 82; Dyson v. Stein, 401 U. S. 200; Byrne v. Karalexis, 401 U. S. 216.

       The scope of the exception to the general rule of equitable restraint for “other extraordinary circumstances” has been left largely undefined by this Court. In Younger v. Harris, 401 U. S. 37, however, the Court gave one example of the type of circumstances that could justify federal intervention even in the absence of either harassment or bad-faith enforcement of a state criminal statute, by quoting from Watson v. Buck, 313 U. S. 387, 402:
      “ ‘It is of course conceivable that a statute might be flagrantly and patently violative of express' constitutional prohibitions in every clause, sentence and paragraph, and in whatever manner and against whomever an effort might be made to apply it.’ ” 401 U. S., at 53-54. The Court then stated: “Other unusual situations calling for federal intervention might also arise, but there is no point in our attempting now to specify what they might be.” Id., at 54.

        Gibson v. Berryhill, 411 U. S. 564, supplied another example of such “extraordinary circumstances.” In that case the Court found it unnecessary to decide whether the rule of Younger v. Harris applies with the same force when state civil, rather than criminal, proceedings are pending because “the predicate for a Younger v. Harris dismissal was lacking .... [T]he appellees alleged, and the District Court concluded, that the State Board of Optometry was incompetent by reason of bias to adjudicate the issues pending before it. If the District Court's conclusion was correct in this regard, it was also correct that it need not defer to the Board.” 411 U. S, at 577.

       Although the District Court held a limited evidentiary hearing on Helfant’s request for a preliminary injunction, the State’s motion to dismiss was granted pursuant to Fed. Rule Civ. Proc. 12 (b) (6) without either findings of fact or conclusions of law. Accordingly, in determining whether the complaint stated a claim upon which relief could be granted, its factual allegations were to be taken as true. See, e. g., Cruz v. Beto, 405 U. S. 319, 322.

       Although Helfant argues that the collusive actions of members of the State Supreme Court and the Deputy Attorney General demonstrate prosecutorial bad faith warranting federal intervention, “bad faith” in this context generally means that a prosecution has been brought without a reasonable expectation of obtaining a valid conviction. See Perez v. Ledesma, 401 U. S., at 85. Nothing in Helfant’s complaint would support a finding of “bad faith,” as so defined. However he may choose to describe it, the gravamen of Helfant’s complaint is that members of the New Jersey judiciary have become so personally involved in his case that it is impossible for him to receive a fair hearing in the state-court system.

       Similarly, there can be no reason to assume that trial and appellate judges under the supervisory authority of the new Chief Justice will be influenced by the role played by former members of the State Supreme Court in inducing Helfant’s grand jury testimony.

       The internal quotation is from Douglas v. City of Jeannette, 319 U. S. 157, 163.

       In Dombrowski v. Pfister, 380 U. S. 479, 485 n. 3, the Court noted: “It is difficult to think of a case in which an accused could properly bring a state prosecution to a halt while a federal court decides his claim that certain evidence is rendered inadmissible by the Fourteenth Amendment.”