tablish a business office in the state without the consent of the state. As a state has the right to exclude foreign corporations, it necessarily has involved therein the right to impose conditions upon their admission into the state.1

The state power of prohibiting, absolutely or conditionally, the foreign corporations, not engaged in interstate commerce in the constitutional sense from doing business in the state is illustrated by the rulings of the supreme court already referred to sustaining state statutes regulative of the insurance business. See §8 supra. Thus, the provisions of state statutes prescrib ing terms and conditions of insurance contracts have been held to be written into the policy contracts made by the parties, overriding the will of the parties and making contracts for them contrary to their expressed intent. These statutes were sustained on the theory that the state had the power to determine the conditions under which the insurance business should be conducted, to the extent of writing these conditions in the policies for the parties and controlling the terms of their contracts, and in the case of foreign corporations such conditions. would be enforced as conditions imposed upon their being permitted to do business in the state, and to which the companies are presumed to assent by doing businesss in the state. under its laws.3

16. When transit ends; the original package in interstate commerce. The" original package" rule, which has been the subject of extended judicial discussion both in relation to the taxing power as well as the police power of the state, was first

1 Waters Pierce Oil Co. v. Texas, 177 U. S. 28 (1900), 44 L. Ed. 657; Phil adelphia Fire Ass'n v. New York, 119 U. S. 110 (1886), 30 L. Ed. 342.

2 Orient Insurance Co. v. Daggs, 172 U. S. 557 (1899), 43 L. Ed. 552; Equitable Life Assurance Soc. v. Clements, 140 U. S. 226, 35 L. Ed. 497 (1890); New York Life Ins. Co. v. Cravens, 178 U. S. 389 (1900), 44 L. Ed. 1116.

In mutual life insurance it is obvious that the writing of different state statutes into the policy contracts is necessarily destructive of

the insurance scheme, which is based upon the uncertainty of the individual life and the comparative certainty of the average life ascertained from human experience, and which therefore contemplates the union of the interests of a large number of persons resident in different states and countries and the administration of a fund for the mutual benefit under a single applicatory law. Insurance Co. v. Statham, 93 U. S. 21, 23 L. Ed. 789; Bogardus v. Insurance Co., 101 N. Y. 329.

declared in 1827, in Brown v. Maryland. This case involved the validity of a statute of Maryland, requiring every importer of foreign merchandise to take out a license, paying therefor fifty dollars. The court admitted the difficulty of setting a time when the taxing power of the state should begin, but fixed it as beginning when the original package in which the goods had been imported was broken up or sold, and thus was first laid down the "original package" rule. While the court has adhered to this rule in respect to state taxation of foreign importations, it has not been extended to interstate commerce, so that goods brought from one state into another are subject to the taxing power of the state, whether they are in the original package or not;2 that is to say, such goods which have reached their destination in the state may be taxed as property in common with other property in the state, when the tax is levied without discrimination as between domestic and non-domestic goods."

There is a distinction, however, between the taxing power of a state and its police power with reference to the original packages in interstate shipments. In the absence of legislation by congress, commerce between the states must be free, and the right to sell goods imported is an inseparable incident of the right to import. Congress alone can act as to the admission of goods from one state to another, and its non-action means that the commerce must be free. This freedom of trans

112 Wheat. 419, 6 L.Ed. 678. Twenty years later Chief Justice Taney said in his opinion in the License Cases, 5 How. 1. c. 505, 12 L. Ed. 256, that he argued this case for the state of Maryland, but that since then matured reflection had convinced him that the rule laid down by the supreme court was a just and safe one. It was a very difficult question for the judicial mind, but he did not see how the line could be drawn more accurately.

2 Woodruff v. Parham, 8 Wall. 123 (1868), 19 L. Ed. 382; Brown v. Houston, 114 U. S. 622 (1885), 29 L. Ed. 257; Pittsburgh, etc. Coal Co. v. Bates. 156 U. S. 577 (1895), 39 L. Ed. 538.

3 American Steel & Wire Co. v. Speed, 192 U. S. 500, 48 L. Ed. 538 (1904).

4 Bowman v. Railway Co., 125 U. S. 465 (1888), 31 L. Ed. 700; Leisy v. Hardin, 135 U. S. 100 (1890), 34 L. Ed. 128, overruling the License Cases, 5 How. 504 (1847), 12 L. Ed. 256. The distinction between the state police power and the state taxing power in relation to "original packages" imported from other states is illustrated in two Iowa cases (January, 1905), decided by the supreme court. In Am. Exp. Co. v. Coffin the police interference with a liquor importation was denied: while in Cook v. County of Marshall tax on a ciga rette importation was sustained.

portation and of sale extends to goods in their original packages, when imported in packages. Thus, the original package first introduced in Brown v. Maryland, in reference to foreign importations, becomes material in interstate commerce in limiting the police power of the state. An original package in interstate commerce means the box or case in which the goods were shipped, and not the package in which they were placed by the manufacturer when manufactured and before they were placed in the larger boxes for shipment. The importation. however must be made in the usual manner prevalent among honest dealers, and in a bona fide package usual for shipment.

The original package rule was one of convenience, is not defined in any statute of the United States, and is of course only applicable where property is imported in packages. As to other property, such as live stock, the commercial transit ends when it is delivered to the consignee. Thus a flock of sheep driven through a state is a subject of interstate commerce and protected by the federal power against state taxation, although the sheep were permitted to graze during their journey.3 Property in commercial transit, however transported, through a state or into a state, is not subject to the taxing power of a state, and this immunity extends until the termination of the shipment by the delivery to the consignee. Goods, to be exempt, however, must be actually in commercial transit, that is, the transit must have commenced by the delivery to the carrier for shipment. It does not follow however that this immunity from the state taxing power would prevent the property from being subject of an illegal agreement or combination in violation of the anti-trust act (See infra, § 69.) The termination of the transit means that the property is subject to taxation in common with other property; but it cannot be subjected to any discriminating regulations on account of its foreign origin.

1 May v. New Orleans. 178 U. S. 496 (1900), 44 L. Ed. 1165, affirming 51 La. Ann. 1064, four justices dissenting; Schollenberger v. Pennsylvania, 171 U. S. 1 (1898), 43 L. Ed. 49.

2 Austin v. Tennessee, 179 U. S. 343 (1900), 45 L. Ed. 224. See also Cook v. County of Marshall, supra.

3 Kelley v. Rhoades Diamond Match Co. v. Ontonogon, 188 U. S. 82 (1903), 47 L. Ed. 394, 188 U. S. 1 (1903), 47 L. Ed. 394.

4 Rhodes v. Iowa, 170 U. S. 412 (1898), 42 L. Ed. 1088.

5 Coe v. Errol, 116 U. S. 517 (1886), 29 L. Ed. 715.

$17. The Wilson bill of 1890.- The judicial application. of the original package rule in interstate commerce to the police power of the state and the consequent inability of the state to exclude the importation of liquors resulted in the passage by congress in 1890 of the so-called Wilson bill,'-providing that liquors transported into any state or territory should, upon arriving in such state or territory, be subject to the operation and effect of its laws enacted in the exercise of its police powers to the same extent and in the same manner as though such liquors had been there produced, and should not be exempt therefrom by reason of being introduced in the original packages or otherwise. This act was in effect a prohibition by congress through state action of interstate liquor traffic. Its constitutionality was contested on the ground that congress could not delegate its control over interstate commerce to the states. It was sustained, however, by the Supreme Court. The court said that in surrendering their own power over interstate commerce the states did not secure absolute freedom in such commerce, but only the protection from encroachment afforded by conforming its execution to congress. The term "arrival" in this statute, it was held in a later case, means the completion of the shipment by delivery to the consignee in the state, and not the arrival at the station. (See § 52, infra).

§18 A state cannot tax interstate commerce.-Although the necessity for the regulation of commerce was the great moving force in the adoption of the constitution, and was thoroughly discussed in the proceedings of the convention and in the Federalist, there is in neither any reference to any possible interference with the taxing power of the state growing out of such regulation. The law of federal restraints upon. state taxation has been developed upon the fundamental principle of the supremacy of the federal authority. The exemption from state taxation of the means employed by the federal

1Áct of August, 1890, and 26 Stats, 313 c. 728. The same principle was also applied in 1900, in making effective the game laws of the states. Act of May 25, 1900, 3 Comp. Stats. U.S. p. 3181, and in Act of May 9,

1902, in making effective state laws as to "oleomargarine," "butterine" and other imitations of butter.

2In Rahrer, 140 U. S. 545 (1891), 35 L. Ed. 572.

3 Rhodes v. Iowa, supra.

government for carrying on its functions was first declared in 1819, in McCulloch v. Maryland,' and the principle was later extended in 1827, in Brown v. Maryland, to the limitation of the state taxing authority by reason of the national control over foreign commerce.

Under the rule declared by the Supreme Court for the first time in 1886,3 which has since been consistently adhered to by the court, the business of carrying on interstate commerce cannot be taxed at all, and as the right to bring goods from other states includes the right to sell them and to solicit sales therefor, as well as to deliver the property sold, the state cannot tax the right to sell or deliver, or to solicit sales, whether in the form of license tax or otherwise. It is immaterial that the tax is without discrimination, as between domestic and foreign drummers, as interstate commerce cannot be taxed at all.

§19. But a state can tax the property employed in interstate commerce. While a state cannot tax interstate commerce, that is, the privilege of carrying on such commerce, it can tax the property in its jurisdiction employed in carrying on such commerce. The difficulty of defining the line where the state and federal powers meet in such cases is illustrated by the not infrequent dissents of members of the supreme court in cases involving these questions of conflict between the state and federal power. No question is made as to the power of a state to tax the tangible property within its jurisdiction of a railroad, telegraph or other company engaged in interstate commerce, but the difficulty has been found in determining what portion of the intangible property of such corporations can be located within a state so as to be subject to its taxing power. Thus, has been formulated the so-called "unit rule" whereunder the entire value of an interstate railroad, tangible as well as intangible, may be apportioned upon a

1 Supra, § 4.
2 Supra, § 16.

3 Robbins v. Shelby County Taxing District, 120 U. S. 489 (1887), 30 L. Ed. 694.

4 Asher v. Texas, 128 U. S. 129 (1888), 32 L. Ed. 368; Brennan v. Titusville, 153 U. S. 289, (1894), 38 L. Ed. 719; Stockard v. Morgan, 185

U. S. 27 (1902), 46 L. Ed. 785; Caldwell v. North Car., 187 U. S. 622 (1902), 47 L. Ed. 336; N. & W. R. R. Co. v. Sims, 191 U. S. 411 (1902), 48 L. Ed. 254.

5 Erie R. Co. v. Pennsylvania, 158 U. S. 431 Lc. 437, (1895), 39 L. Ed. 1043.