American Manufacturing Co. v. City of St. Louis

Background

A West Virginia manufacturing company challenged a St. Louis ordinance requiring manufacturers to get a license and pay an annual tax based on sales. Missouri law authorized cities to license and tax manufacturers and to base the license on prior-year sales. The company made goods in its St. Louis factory, moved them to storage outside Missouri, and later sold them to buyers in other states. It sued to recover the portion of the tax tied to those sales. State courts gave conflicting rulings before the state supreme court upheld the city and the case reached this Court on a writ of error.

Reasoning

The Court examined whether the tax worked as a regulation of trade between the states or as an unlawful taking of property. Relying on the state statute and the state court’s construction, the Court treated the charge as a license or excise on the privilege of manufacturing in the city. Although the tax is calculated from sales, it applies only to goods made in St. Louis, and the city postponed payment until the goods were sold. The Court saw this as a legitimate method that produces only an indirect burden on commerce similar to ordinary property taxes, and therefore not an unconstitutional regulation of interstate trade or a deprivation of property without due process.

Real world impact

The ruling allows cities, under similar state authority, to impose license taxes on local manufacturing measured by sales even when goods are later stored or sold outside the state. The decision rests on the practical operation of the tax as described by the state court and does not establish a broad rule for all possible tax schemes.