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decided: April 9, 1923.



Author: Taft

[ 261 U.S. Page 394]

 MR. CHIEF JUSTICE TAFT delivered the opinion of the Court.

This is an effort by writ of error, and if that is inappropriate for the purpose, by an application for a writ of certiorari, to review the action of the Supreme Court of Appeals of West Virginia in the judgment which it entered in avowed and attempted compliance with the judgment of this Court in the case on writ of error sub nomine Eureka Pipe Line Co. v. Hallanan, 257 U.S. 265. It is contended by the state authorities seeking review here that the Supreme Court of Appeals did not enter the judgment required by our mandate and that we should in some appropriate way direct that court specifically what judgment it should enter.

A summary of the litigation must needs be made in order that the controversy may be understood and decided.

The Pipe Line Company filed a bill against the State Tax Commissioner and other state authorities to enjoin them from enforcing a statute of the State which forbade anyone to engage in the business of transporting petroleum in pipe lines without the payment of a tax of two cents for each barrel of oil transported.The Pipe Line Company owned a system of pipe lines by which it transported 22 millions of barrels in the year ending June 30,

[ 261 U.S. Page 3951919]

     . Of this, it was admitted that 1,239,000 barrels had their origin in West Virginia, and their destination there, and that the privilege of transporting that amount might be taxed; but it was insisted that the remainder was a stream of interstate commerce, the privilege of conducting which could not be taxed under the commerce clause of the Federal Constitution. The Circuit Court in which the bill was filed and the causes heard held that the remainder was interstate commerce and no privilege tax could be imposed on a pipe line company engaging in it. It conceded that it would be competent for the Legislature to collect a privilege tax for the purely intrastate transportation of the 1,239,000 barrels already mentioned, but it inquired whether the State had done this by the act in question, and said:

"If it can be contended that the tax affects this particular oil it is only incidental to the like tax imposed upon the whole body of oil transported. It is plain the legislature did not mean to distinguish as between the two classes of oil, for the act makes no attempt at a division. We are not able to say from an inspection of the act whether or not the legislature would have imposed the tax upon the privilege of handling this intra-state oil alone, had it been exempting the balance of the oil when framing the law, as we think it should have done. Whether it would have made the tax applicable to the West Virginia oil alone, no one can say; and this we understand to be the test of whether or not the act is divisible. Eckhart v. State, 5 W. Va. 515; Robertson v. Preston, 97 Va. 296; Trimble v. Comm., 96 Va. 888."

Accordingly the Circuit Court held the whole act bad and granted an injunction against enforcing it against the Pipe Line "in any respect."

On appeal the Supreme Court of Appeals held that the act was to be construed as applying to pipe lines only so far as they were engaged in intrastate commerce, and that

[ 261 U.S. Page 396]

     it did not apply to transport of oil in interstate commerce. It held, however, that oil originating in West Virginia, a large part of which was ultimately carried out of the State but the destination of which was undetermined because its owners might withdraw it from the line at any point within the State, was intrastate commerce and was a proper basis for the privilege tax under the law. Accordingly, in so far as the decree of the Circuit Court enjoined collection of a privilege tax measured by intrastate commerce in oil as thus determined, it was reversed. In this Court it was held that oil produced in West Virginia and constituting in fact a stream of oil flowing out of the State was interstate commerce even though those who delivered the oil to the company for transportation might have diverted it from the interstate commerce stream, and though in comparatively small quantities some oil was thus diverted.

Accordingly the decree of the Supreme Court of Appeals was reversed, and the cause was remanded to that court for further proceedings not inconsistent with the opinion of this Court. That court then ...

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