United States Express Co. v. Minnesota

Background

The dispute involved an unincorporated interstate express company with its main office in New York that ran delivery operations over many railroads and maintained about fifty offices in Minnesota. Minnesota sued to collect taxes it said the company omitted from its returns. The contested items included $54,209.19 from shipments that passed out of Minnesota in transit, and $9,702.89 from shipments involving through rates and through bills of lading where the company handled part of a continuous interstate movement.

Reasoning

The core question was whether Minnesota’s tax was an unconstitutional burden on interstate commerce or a valid way to tax the company’s property as a going concern. The Court reviewed past decisions and accepted the Minnesota Supreme Court’s reading that the statute was a property tax measured by gross receipts from business done in the State, and that the method was intended to value the company’s property in Minnesota. The Court allowed a 9% deduction for the first group of shipments because only 91% of that mileage was within Minnesota, but otherwise upheld the inclusion of the contested receipts in the tax base, distinguishing this statute from laws that directly tax interstate receipts themselves.

Real world impact

The ruling requires the company to pay the assessed taxes and confirms Minnesota’s approach of using gross in-state receipts as a measure of property value for express companies. The decision leaves intact the State’s statutory scheme where this tax replaces other property taxes and does not finally resolve broader questions beyond this statutory framework.