May v. New Orleans

Background

A commercial firm in New Orleans imported dry goods from Europe, paid U.S. customs duties, and commonly sold items in the original packages sent from the manufacturer. The city assessed $2,500 for merchandise and $1,000 for credits and bills receivable. A lower court found the tax unconstitutional and enjoined collection, but the state supreme court reversed and the case reached this Court to decide whether those assessments violated the Constitution.

Reasoning

The central question was what counts as the “original package” and when imported items stop being protected imports. The Court concluded the original package is the shipping box, case, or bale used to transport the goods. When those shipping containers are opened and the separate parcels are exposed or offered for sale, the goods lose their character as imports and become part of the general mass of property in the State. The opinion relied on Brown v. Maryland reasoning: paying duties gives a right to sell, but it does not give immunity from state taxation once the importer has acted so the goods are incorporated into the local market. The Court also pointed to practical concerns about letting manufacturers’ packaging choices defeat local taxation.

Real world impact

The ruling allows cities and parishes to tax imported goods after the shipping package is opened and items are placed for sale. Importers cannot avoid local property taxes simply by having goods wrapped in many small original parcels. The Supreme Court affirmed the Louisiana Supreme Court’s judgment and upheld the challenged assessments.

Dissents or concurrances

Four Justices — Fuller, Brewer, Shiras, and Peckham — dissented; their separate views are noted but not detailed in the opinion text.