Bacon v. Illinois

Background

A Chicago grain buyer named Bacon purchased grain that had been shipped from other States under contracts to eastern cities. The shipping contracts let owners remove the grain at Chicago "for the mere temporary purposes of inspecting, weighing, cleaning, clipping, drying, sacking, grading or mixing, or changing the ownership, consignee or destination." Bacon removed the grain from railroad cars into his private elevator in Chicago for inspection, grading, and related business steps and then intended to forward it under the original shipping contracts. Illinois included the grain in a local tax assessment while it was in Bacon's elevator. The Illinois Supreme Court had treated the key issue as whether the grain was "in transit" on the assessment date.

Reasoning

The Court's central question was whether applying the local tax unconstitutionally interfered with interstate commerce. The Court explained that goods actually moving in interstate transportation are protected from state taxes, but goods that have been withdrawn from carriers and are held for the owner's business are not. The buyer had taken the grain out of carriers, had control and the power to sell or forward it as he chose, and kept it in his local facility for inspection and sale. Because the grain was at rest in his elevator and not committed to carriers for shipment, the tax did not conflict with the federal power to regulate interstate commerce. The Court affirmed the lower court's judgment.

Real world impact

The ruling means that merchants and companies who remove goods from carriers and keep them in local warehouses or elevators for business purposes can be included in local property tax assessments. Goods remain protected from state taxation only while they are actually in continuous interstate transport or committed to carriers.