Williams v. City of Talladega

Background

A telegraph company organized under New York law operated an office in Talladega and accepted the terms of a federal 1866 law giving special rules for government messages. Its local manager was fined after refusing to pay a $25 city license fee for a three-month period. The city ordinance set a schedule of license fees for many trades and said the fees were imposed for police power and revenue; it did not exempt messages sent for the United States Government.

Reasoning

The Court reviewed whether a municipal license that covers all telegraph business can lawfully include messages sent for the federal government. Relying on earlier decisions, the Court explained that when a telegraph company acts as an agent carrying government messages, those government communications are protected from state or local taxation. Because the city’s tax made no exception for government business and thus affected the whole privilege, the Court found the license unconstitutional as applied to that business and reversed the Alabama courts.

Real world impact

The ruling prevents cities from enforcing license taxes that sweep in federal government telegraph business. Telegraph companies cannot be fined under a local ordinance that taxes the sending of official government messages. The decision leaves open the city’s power to tax local property or purely private commercial activity, but a municipal fee cannot constitutionally burden communications made for the United States Government.