Stockard v. Morgan

Background

A group of sales agents and brokers who worked for firms outside Tennessee were cited under a Tennessee law that required drummers and people offering goods by sample to pay a license fee. The state courts had upheld the tax and treated the agents’ activity as a local occupation subject to the fee. The facts were agreed: each complainant solicited orders in Tennessee only for non‑resident principals and did no general local business.

Reasoning

The central question was whether Tennessee could tax or require licenses for people who solicit orders in the State on behalf of companies from other States. The Court relied on earlier decisions, especially Robbins v. Shelby Taxing District and related cases, holding that such taxes place a direct burden on trade between the States. The Court explained that forcing out‑of‑state sellers to pay state privilege taxes on the act of getting orders would hinder ordinary interstate trade and could amount to prohibiting it. The Court distinguished a case where a business had taken a general local license to operate, finding that here the agents did not conduct a general local business. The Supreme Court concluded that the Tennessee statute, as applied to these complainants, was effectively a tax on interstate commerce and therefore invalid. The Court reversed the state court’s judgment.

Real world impact

The ruling protects traveling salesmen, solicitors, and agents who seek orders for out‑of‑state firms from state license taxes for that activity. It limits a State’s ability to treat solicitation for non‑resident principals as a taxable local privilege. The case was reversed and sent back for further proceedings consistent with this opinion.