Allen v. Pullman's Palace Car Co.
Headline: Court invalidates Tennessee’s broad sleeping‑car privilege tax on interstate travel but upholds a separate intrastate passenger tax, changing how sleeping‑car companies are taxed for local versus through service.
Holding:
- Strikes down broad state tax on sleeping cars that applies to interstate travel.
- Permits states to tax genuinely intrastate passenger service by sleeping‑car companies.
- Allows companies to avoid intrastate tax by declining local passenger service.
Summary
Background
A company that operated sleeping railroad cars sued the State of Tennessee after paying several annual privilege taxes. Tennessee statutes from 1887–88 required each company doing business in the State to pay a fixed sum per car, while an earlier 1877 law taxed each car at a smaller rate. A later 1889 law imposed a much larger annual sum on companies that carried passengers taken up and set down entirely within the State. The company recovered taxes in the lower court and the case reached this Court for review.
Reasoning
The central question was whether Tennessee could impose these privilege taxes when the sleeping cars also carried interstate passengers. The Court found the 1887–88 tax indistinguishable from the earlier statute the Court had already held invalid when it burdened interstate commerce, because it applied to all cars without separating interstate use. By contrast, the 1889 law specifically targeted passengers transported wholly within the State. The Court explained that a tax limited to genuinely intrastate service does not improperly burden interstate commerce. The opinion also noted Tennessee law that allows carriers to refuse local passengers, meaning a company could avoid the local tax by not engaging in intrastate carriage.
Real world impact
As a result, the Court declared the broad 1887–88 privilege tax invalid to the extent it sought to tax interstate operations, but treated the 1889 intrastate passenger tax as lawful. The Court ordered the lower court’s judgment modified and sent the case back for further proceedings consistent with this opinion.
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