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Subject Area: Law
Topic: The American Revolution and Constitution

§ 218.: License tax upon drummers and peddlers.— - Christopher G. Tiedeman, A Treatise on State and Federal Control of Persons and Property in the United States considered from both a Civil and Criminal Standpoint, vol. 2 [1900]

Edition used:

A Treatise on State and Federal Control of Persons and Property in the United States considered from both a Civil and Criminal Standpoint (St. Louis: The F.H. Thomas Law Book Co., 1900). Vol. 2.

Part of: A Treatise on State and Federal Control of Persons and Property in the United States considered from both a Civil and Criminal Standpoint, 2 vols.

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§ 218.

License tax upon drummers and peddlers.—

A very common police regulation, and one that is the source of much litigation, is the imposition by municipal government, and sometimes by State governments, of a license tax upon itinerant vendors, peddlers and traveling salesmen or drummers. As has been very fully explained in a preceding section of this book1 a license tax is a police regulation or a tax in the proper sense of the term, according to the motive or purpose of its imposition. If the right to pursue a particular trade or business is made to depend upon the procurement of a license, which is granted only to those who give proof of their qualification to ply the calling without injury or damage to the public,—the exaction of the license being only a police provision for the regulation of the business in the interests of the public or of the persons having dealings with the licensees; and the tax levied upon them is measured by and limited to the expense of maintaining the police regulation—the license tax is strictly a police regulation; and, except from its conflict with interstate commerce, is rarely subjected to constitutional criticism, unless the exaction of a license, as a condition precedent to the prosecution of the business, is itself open to constitutional objection. But where the purpose of imposing a license tax is not merely to cover the expense of maintaining a justifiable police supervision of the business, but to add to the revenue of the city or State, the license tax is not a police regulation, but a tax; and it is valid or invalid, according as the constitutional requirements of uniformity and equality have been observed in its imposition. It may be fair to say that, in the levy of a license tax upon peddlers, the tax assumes the dual character of a police regulation, in that it tends to safeguard the confiding public from the frauds and misrepresentations of dishonest peddlers, and of a tax, in that the amount exacted from such peddlers is in excess of the expense of maintaining the police supervision. But, generally, the license tax is imposed for the exclusive purpose of increasing the public revenue; and it is, therefore, more properly treated as a tax. And this is unquestionably true of the license tax, which States and municipalities have attempted to impose upon the traveling salesmen or drummers of non-resident merchants. If the license tax, in any particular case, be properly described as a police regulation, to protect the public against fraud and other dangers, and the tax is only sufficient to cover the expense of the necessary and justifiable police supervision of the business, I take it to be reasonably well established that the tax is constitutional, and not a burden upon interstate commerce, whether the business which the licensee pursues is properly described as interstate or domestic commerce. The question in such a case, is whether the police supervision thus established is or is not a reasonable exercise by the State of its police power.1 But in order that such a police regulation may be constitutional, it must be enforced indiscriminately against all who pursue the same calling. It cannot be enforced against non-residents or the residents of other States, if the law does not apply to residents of the State. Such a discrimination would violate the guaranty of the United States constitution of equal privileges and immunities to the citizens of the different States.2 It has been held in Pennsylvania that there is no violation of the interstate commerce clause of the constitution, if a State law prohibits peddling without license in a certain county, even though the peddler brings his goods from another State.1

But where the license tax is, and can be properly construed only as a tax; it is necessarily invalid, in violation of the Federal constitution, if it is laid upon interstate commerce. When, therefore, a State or city imposes a license tax, as a tax, upon peddlers and traveling salesmen, the validity of the tax depends upon the nature of the business of the person so taxed. If he is engaged in interstate commerce, the tax is void; and if he engaged in domestic commerce, the tax is valid. In what constitutes the difference between peddlers and traveling salesmen or drummers? The Standard Dictionary defines the peddler to be “one who travels from house to house with an assortment of goods for retail;” and drummer “a traveling salesman who solicits custom.” The peddler carries his stock of goods with him, and from that stock he sells to those who will buy; while the traveling salesman carries no stock, only a sample case, if anything; and solicits orders for goods, which his principal will supply from a stock which is kept elsewhere. In the case of the peddler, the contract of sale is made on the spot, and the goods delivered by him immediately, so that the entire transaction is begun and completed within the same State. His tradings cannot be anything but domestic commerce, whether he is the principal or he is only acting as the agent of a non-resident principal. But when the traveling salesman receives an order for goods, the executory contract of sale is made by him on the spot, to be performed, however, subsequently by the transportation of the goods to, and their delivery at, the place of sale. And if the principal and the goods are outside of the State, in which the sale was made, the transaction is interstate commerce. The levy of a license tax upon such a transaction would necessarily be a tax upon interstate commerce, which is prohibited, not only by the interstate commerce clause of the United States constitution, but also by Art. I., § 10, of the same constitution, which prohibits the imposition of a State tax upon imports and exports.

In conformity with this distinction between the peddlers and traveling salesmen, we find an uniform declaration of the courts that a license tax may constitutionally be imposed upon peddlers, for they are not engaged in interstate commerce.1 But the imposition of a license tax upon a traveling salesman, who solicits and receives orders for goods for future delivery, is void, because he is engaged in interstate commerce, in every case in which the performance of the contract of sale involves the transportation of goods from one State to another, or the transfer of title to goods which are located in some other State than that in which the sale was made.2 Even in the sale of intoxicating liquors, notwithstanding the wide scope and effect of the Wilson Bill, it is not within the police power of the State to exact a license fee or tax of a liquor drummer, who solicits orders for liquors, to be shipped into the State from some point outside.1 A tax that was laid upon all solicitors of pictures, to be enlarged outside of the State, was held to be a tax upon interstate commerce, and for that reason void.2 So, likewise, in regard to the exaction of a license fee from all persons within the State, who dealt in goods which were made by convicts in other States.3 But it was held in Missouri that where a traveling salesman sold goods partly by sample, but also sold from a stock of goods, which he carried along with him, the imposition of a license tax upon him was not void because it was a burden upon interstate commerce.4 So, likewise, it has been held that, where one agent of a foreign principal takes an order for goods to be shipped from another State, and another agent receives the goods so ordered and delivers them to the purchaser, this is a domestic sale, and not interstate commerce; and the local or State regulations control it.5

In South Dakota, a license tax was exacted of agents of commercial agencies; and the law was upheld, although it was enforced against a special agent of a foreign agency, who had been sent into the State for the purpose of making a special investigation into the financial standing of a local firm of merchants.6 But it would seem, from the analogies to be drawn from the well-settled distinctions between peddlers and traveling salesmen, that this cannot be taken as a reliable precedent, so far as it sustains a license tax, which is imposed upon a non-resident and visiting agent of the commercial agency. This agent’s legal position would seem to be analogous to, if not identical with, that of the traveling salesman; whereas, the resident representatives of the agency would, like the peddlers, fall within the taxing power of the State and municipality.

The cases, which have just been fully elucidated, in which a license tax or fee is exacted of importers or exporters, and of persons who are in any way engaged in interstate commerce or trade, are not the only cases of imposition of a license tax upon interstate commerce. The same rule obtains, in regard to railroads, the telegraph companies, express companies, and other mediums of transportation and communication, which have both an interstate and an intra-state business. If the license tax is exacted for the transaction of domestic or intra-state business, it is valid, although the same company may likewise be engaged in an interstate business.1 But if it is imposed upon those which are engaged only in interstate business, the license tax is void, because it is an unconstitutional burden upon interstate commerce. But where the license fee is exacted in such a case only in an amount sufficient to cover the expenses of maintaining an inspection, which is allowable under the constitutional limitations, this is not held to be a tax upon interstate commerce, but a part of the process of exercising the lawful police power of the State.2

The reports contain a few cases of the attempt of State governments, by the exaction of license fees, to restrict certain exports to other States. In Pennsylvania, the requirement of a license fee is applied to the cases of purchase of certain enumerated articles in two counties of the State, for sale outside of those counties. The statute was sustained as a constitutional exercise of police power, and not a burden upon interstate commerce, on the ground that it was a tax upon the articles before they assumed the character of articles of interstate commerce. And it was, furthermore, declared by the court that the interstate commerce clause of the Federal constitution could not in any event invalidate the law, in its application to the unauthorized sale of such articles within the State.1 Doubtless, this latter proposition is sound; but this would seem as objectionable a burden upon interstate commerce, as would the license tax of drummers. Furthermore, as a tax upon exports, it would offend the constitutional prohibition of the levy by States of all taxes upon exports.2 A law, which imposed a license tax upon all packers and canners of oysters “for sale or transportation,” was sustained by the Supreme Court of Maryland.3

On the other hand, the Supreme Court of North Carolina declared a State statute to be unconstitutional, which exacted of emigrant agents, who were hiring laborers for work outside of the State, a license fee that was so large as to amount to a restriction of the business. No facts were proven in support of any possible contention, that the business justified and required, in the interest of the public or of the laborers, the police supervision of the State.4

[1]See ante, § 119.

[1]See Ward v. State, 31 Md. 279; s. c. 12 Wall. 418; Brown v. Maryland, 12 Wheat. 419; Speer v. Commonwealth, 23 Gratt. 935 (14 Am. Rep. 164); State v. North, 27 Mo. 464; Ex parte Robinson, 12 Nev. 263 (28 Am. Rep. 794).

[2]Walling v. Michigan, 116 U. S. 446; In re Watson, 15 Fed. 511; State v. McGinniss, 37 Ark. 362; Van Buren v. Downing, 41 Wis. 122; Marshalltown v. Blum, 58 Iowa, 184 (43 Am. Rep. 116).

[1]Commonwealth v. Dunham, 191 Pa. St. 73.

[1]Emert v. State of Missouri, 156 U. S. 296; s. c. 103 Mo. 241; Commonwealth v. Harmel, 166 Pa. St. 89; Commonwealth v. Dunham, 191 Pa. St. 73; Rash v. Farley, 91 Ky. 344; State v. Gauss, 85 Iowa, 21; State v. Agee, 83 Ala. 110; Hall v. State, 39 Fla. 637; State v. Gorham, 115 N. C. 121. In Commonwealth v. Harmel, 166 Pa. St. 89, the regulation, which was sustained, was strictly a police regulation, in that it required the peddlers to furnish proof before the Court of Quarter Sessions of their good moral character, before they can obtain the required license.

[2]Ex parte Stockton, 33 Fed. 95; In re White, 43 Fed. 913; In re Flinn, 57 Fed. 496; Webster v. Bell, 68 Fed. 183; 15 C. C. App. 360; Robbins v. Taxing District, 120 U. S. 489; Carson v. Maryland, 120 U. S. 502; Leloup v. Port of Mobile, 127 U. S. 640; Asher v. State of Texas, 128 U. S. 129; McCall v. California, 136 U. S. 104; Ficklen v. Taxing District, 145 U. S. 1; Brennan v. City of Titusville, 153 U. S. 289; McLaughlin v. City of South Bend, 126 Ind. 471; City of Bloomington v. Bourland, 137 Ill. 534; Fecheimer v. City of Louisville, 84 Ky. 306; McGraw v. Town of Marion (Ky.), 34 S. W. 18; State v. Bracco, 103 N. C. 349; State v. Agee, 83 Ala. 110; Ex parte Murray, 93 Ala. 78; Talbutt v. State (Tex. Cr. App.), 44 S. W. 1091; Hurford v. State, 91 Tenn. 669; Pegues v. Ray (La.), 23 So. 904; Overton v. City of Vicksburg, 70 Miss. 558; Richardson v. State (Miss.), 11 So. 934; City of Fort Scott v. Pelton, 39 Kans. 764.

[1]State v. Lichtenstein, 44 W. Va. 99.

[2]State v. Scott, 98 Tenn. 254.

[3]In re Yanders, 1 Ohio N. P. 190; 2 Ohio Dec. 126; See Arnold v. Yanders, 56 Ohio St. 417.

[4]State v. Snoddy, 128 Mo. 523.

[5]Stevens v. Ohio, 93 Fed. 793; Chrystal v. City of Macon (Ga. ’99), 33 S. E. 810.

[6]State v. Morgan, 2 S. D. 32; 48 N. W. 314.

[1]Crutchen v. Com., 141 U. S. 47; Postal Tel. Cable Co. v. City Council of Charleston, 153 U. S. 692; s. c. 56 Fed. 419; United States Express Co. v. Allen, 39 Fed. 712; United States Express Co. v. Hemmingway, 39 Fed. 60; City of St. Louis v. W. U. Tel. Co., 39 Fed. 59; Webster v. Bell, 15 C. C. A. 360; 68 F. 183; Osborne v. State of Florida, 164 U. S. 650; s. c. 33 Fla. 162; Western Un. Tel. Co. v. City of Fremont, 39 Neb. 692; Moore v. City of Eufaula, 97 Ala. 670; Alabama G. S. Ry. Co. v. City of Bessemer, 113 Ala. 668. But a city, as distinguished from the State, cannot impose a license tax upon the business of one of these companies, which is not conducted within the city. City of San Bernardino v. Southern Pac. Ry., 107 Cal. 524.

[2]Patapoco Guano Co. v. Board of Agriculture of North Carolina, 171 U. S. 345. See ante, § 119.

[1]Rothermel v. Meyerle, 136 Pa. St. 250.

[2]U. S. Const. I., § 10.

[3]State v. Applegarth, 81 Md. 293.

[4]State v. Moore, 113 N. C. 697.