Cudahy Packing Co. v. Hinkle

1929-02-18

Headline: State fees based on a company’s authorized capital are struck down, limiting Washington’s ability to collect large filing and annual license charges from out-of-state corporations doing business there.

Holding: The Court held that Washington’s fees measured on a corporation’s authorized capital stock unlawfully burden interstate commerce and tax property beyond the State, and it reversed the lower court’s dismissal.

Real World Impact:

Prevents enforcement of large capital-based state filing and license fees against out-of-state companies.
Limits Washington’s ability to tax or charge corporations based on nationwide authorized capital.
Protects interstate business from state-imposed capital-based excises without clear limits.

Topics: state taxation, interstate commerce, corporate fees, business regulation

Summary

Background

A Maine meat company with $45,000,000 authorized capital and a Washington branch sued the State after Washington demanded filing fees and an annual license tax calculated on its authorized capital stock (capped at $3,000). The company reported about $1.3 million in Washington sales and property there worth $40,000. A three-judge federal court denied an injunction and dismissed the company’s challenge.

Reasoning

The Court considered whether Washington’s fees, measured on authorized capital stock, unlawfully burden interstate commerce or effectively tax property beyond the State’s borders. Relying on prior decisions about state taxes on foreign corporations, the majority concluded the challenged statutes, unless saved by the $3,000 cap, posed the same constitutional objections found in earlier cases and could not be sustained. The Supreme Court reversed the lower court’s dismissal, preventing enforcement of the fee demands as applied.

Real world impact

Out-of-state corporations that do business in Washington are affected because the ruling restricts the State’s power to impose large capital-based filing and license charges. The decision limits a state’s reach when a fee is measured against a corporation’s nationwide authorized capital. The ruling resolves this dispute in the company’s favor but focuses on the constitutionality of these statutes as applied here.

Dissents or concurrances

Justice Brandeis (joined by Justice Holmes) dissented, arguing the fees were small, non-discriminatory excises for the privilege of doing business and therefore valid under earlier cases.