West Point Wholesale Grocery Co. v. City of Opelika

Background

A Georgia wholesale grocery company in West Point sold goods into Opelika, Alabama. It had no office, inventory, or place of business in Opelika. Salesmen solicited orders in the city, orders were sent back to Georgia, goods were loaded there and driven into Opelika for delivery. Opelika’s ordinance required any wholesaler who delivers groceries into the city from outside to pay a flat $250 annual privilege tax. Local wholesalers were taxed instead by a schedule tied to gross receipts, often paying much less than $250 unless they had very large sales. The company sued in state court saying the tax unlawfully burdened interstate commerce, but the state court dismissed that claim and the case reached the Supreme Court.

Reasoning

The core question was whether the city could impose a flat fee on an out-of-town wholesaler whose only contacts were taking orders and delivering goods that began outside the city. The Court relied on earlier decisions that forbid flat-sum local taxes when an interstate enterprise’s only contact is solicitation and the final delivery of goods in the city. The Court found Opelika’s $250 rule singled out out-of-town wholesalers and treated local sellers more favorably. Because the tax discriminates against the free flow of trade across state lines, it cannot be applied to the Georgia wholesaler. The Supreme Court reversed the state court’s dismissal.

Real world impact

This ruling protects businesses that sell and deliver goods across state lines from local flat taxes that target outsiders. Cities may not impose higher flat fees on out-of-town sellers while giving local sellers lower, receipt-based taxes. Opelika must not enforce this specific tax against the company, and local tax schemes that produce similar discrimination will be vulnerable to legal challenge.