American Express Co. v. Michigan
Headline: Court reverses state ruling and allows an express company to pass a one-cent stamp tax to shippers through reasonable rate increases, rejecting a blanket prohibition on shifting the tax.
Holding: The Court held that the federal stamp law does not prohibit an express company from shifting the one-cent stamp tax to shippers by increasing rates, so long as those rates remain just and reasonable.
- Allows express carriers to pass a one-cent stamp tax to shippers via reasonable rate increases.
- Reverses state court’s blanket ban on shifting the tax when rates themselves are reasonable.
- Sends the case back to state court for further proceedings consistent with this opinion.
Summary
Background
An express shipping company (American Express Company) sued in Michigan over a federal one-cent stamp requirement for receipts and bills of lading. The State’s highest court held that the company could not shift the cost of the one-cent stamp to shippers either by demanding the stamp or by increasing its rates. The company brought the case to the United States Supreme Court to review that ruling.
Reasoning
The main question was whether the federal stamp law not only required the company to issue stamped receipts but also forbade the company from shifting the tax to shippers by changing its rates. The majority said the statute contains no clear ban on shifting the burden and that implying such a broad prohibition would have extreme consequences for contracts, prices, and freedom to set reasonable charges. The Court noted that stamp duties are indirect taxes and are commonly shiftable, and that a narrow, explicit rule would have been needed to forbid shifting. On this basis the Court reversed the Michigan decision and held the law does not automatically make a reasonable rate unlawful simply because it includes the tax amount.
Real world impact
The decision means carriers can, in principle, include small stamp costs in their rates so long as the new charges remain just and reasonable. The ruling is not a final, broad endorsement of every rate increase; the case was sent back for further proceedings consistent with the opinion, so states may still test whether particular rates are unreasonable.
Dissents or concurrances
Justices Harlan and McKenna dissented, saying the statute required the company to affix and cancel stamps and that whether the company could raise charges to cover the expense was not a federal question.
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