Sprout v. South Bend
Headline: City’s flat annual bus license fee struck down, blocking local governments from imposing uniform fees that burden buses carrying passengers across state lines and protecting interstate bus operators from such charges.
Holding: The Court held the city’s license fee invalid because it imposed a flat, substantial charge not shown to fund local regulation or highway costs, and thus could not be applied to a bus engaged in interstate transportation.
- Blocks cities from imposing flat annual license fees on interstate buses.
- Allows cities to require safety rules and reasonable, limited insurance.
- Protects bus operators from occupation taxes that burden interstate trips.
Summary
Background
A city ordinance required any motor bus for hire to have a city license and liability insurance to run on city streets. A bus operator who ran regular trips between South Bend, Indiana, and Niles, Michigan, did not apply for the city license. He paid the state registration fee, served some suburban passengers inside Indiana, and was fined $50 under the ordinance. He argued the rule conflicted with national power over trade between states and with equal protection of the law. The Indiana courts upheld the conviction and the case came to the high Court.
Reasoning
The main question was whether the city could impose a flat license fee and other terms on a bus that carried passengers across state lines. The Court said cities and states can adopt safety rules, require reasonable insurance, and charge fair fees tied to inspecting vehicles or maintaining roads. But a flat, substantial annual fee that did not appear linked to regulation costs or to street maintenance could not be justified. The Court found the ordinance made no showing that the fee paid for regulation or highway costs and applied even to buses doing interstate trips, so it improperly burdened interstate transportation. The Court rejected the equal protection objection about requiring in-state-authorized insurers.
Real world impact
The conviction was reversed and the license fee provision held void. The decision prevents cities from enforcing general flat license taxes that effectively tax interstate bus service, while leaving cities free to adopt safety rules, reasonable highway-use charges, and insurance requirements properly limited and justified.
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