termination by law as an evil of a business otherwise flourishing, and neither becomes more applicable because the death is lingering rather than instantaneous. It is incredible that Congress by an Act approved on February 24, 1919, should have meant to enable parties to cut down their taxes on such grounds because of an amendment to the Constitution that it had submitted to the legislatures of the States in 1917 and that had been ratified by the legislatures of a sufficient number of States the month. before the present Act was passed.

Judgment reversed.

MR. JUSTICE MCREYNOLDS and MR. JUSTICE STONE concur in the result.

RENZIEHAUSEN v. LUCAS, COMMISSIONER OF INTERNAL REVENUE.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT.

No. 114. Argued January 17, 1930.-Decided January 27, 1930.

1. Under § 214 (a) (8) of the Revenue Act of 1918 and § 214 (a) (8) of the Revenue Act of 1921, which provide that in computing net income there shall be allowed as deductions to individuals a reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence," the owner of a distillery and wholesale liquor business is not entitled to a deduction for the "exhaustion " or "obsolescence" of good will-treated as embracing trade-marks, trade brands and trade names-during the years 1918, 1919, 1920, and 1922, because of federal legislation which proscribed the business. Following Clarke v. Haberle Crystal Springs Brewing Co., ante, p. 384. P. 389.

2. Whether, under § 214 (a) (4) of the Revenue Act of 1918, which provides that in computing net income there shall be allowed as deductions "losses sustained during the taxable year and not compensated for by insurance or otherwise, if incurred in trade or

business," the owner of a distillery and wholesale liquor business terminated by federal prohibition legislation is entitled to a deduction on account of the loss of good will,-not decided, in absence of evidence sufficient to support the claim. P. 389.

3. Where the owner of a distilling company at the close of each distilling season charged to a special account which he regarded as a personal investment, all whiskey manufactured and not sold, selling it to the trade after two years when it had matured, the whiskey is properly regarded as a part of the stock in trade of the business, and the owner is not entitled to the more favorable rate allowed by the Revenue Act of 1921, § 206 (a) (6), for taxes on capital gain. P. 389.

31 F. (2d) 675, affirmed.

CERTIORARI, post, p. 539, to review a judgment of the Circuit Court of Appeals affirming, on appeal, an order of the Board of Tax Appeals.

Mr. William A. Seifert, with whom Mr. William W. Booth was on the brief, for petitioner.

Assistant Attorney General Youngquist, with whom Solicitor General Hughes, and Messrs. Sewall Key and Norman D. Keller, Special Assistants to the Attorney General, were on the brief, for respondent.

MR. JUSTICE HOLMES delivered the opinion of the Court.

This case raises the same questions as the preceding one, Clarke v. Haberle Crystal Springs Brewing Co., ante, p. 384, but was decided the other way. 31 F. (2d) 675. A writ of certiorari was granted by this court on October 14, 1929.

The good will here concerned, (treated as embracing trade-marks, trade brands and trade names,) was that of a business of distilling and selling whiskey, warehousing, and a wholesale liquor business. The Board of Tax Appeals adjudged a deficiency in the petitioner's income tax returns for 1918, 1919, 1920 and 1922. A deduction is

387

Opinion of the Court.

claimed by him, as in the other case, for exhaustion or obsolescence of the good will, under the Revenue Act of 1918, (Act of February 24, 1919,) c. 18, § 214 (a) (8); 40 Stat. 1057, 1067, using the same words for individuals that are used in § 234 for corporations, and under the Revenue Act of 1921, (Act of November 23, 1921,) c. 136, § 214 (a) (8); 42 Stat. 227, 240, using the same words again. What has been said in the Haberle Crystal Springs Brewing Co.'s case is sufficient to dispose of this one, and here there is the additional fact that in 1919 the petitioner became aware that he could manufacture whiskey for medicinal purposes and did so until the Willis-Campbell Act of November 23, 1921, c. 134; 42 Stat. 222, was passed and the petitioner failed to obtain a permit under it. The evidence does not seem to warrant an alternative claim under the Revenue Act of 1918, § 214 (a) (4), for losses incurred in business in 1919, even if otherwise it could be sustained.

The only other question that seems to need mention is raised by an account headed "Old Whiskey," on the books of the Large Distilling Company, under which name the petitioner did the distilling business. At the close of each distilling season the whiskey manufactured and not sold was charged to this account, matured and sold to the trade. The petitioner regarded this whiskey as a personal investment, but the whole business was his, and we agree with the Circuit Court of Appeals that the whiskey was clearly a part of the stock in trade, and therefore that he was not entitled to the more favorable rate allowed by the Act of November 23, 1921, c. 136, § 206 (6), for taxes on capital gain, excluding stock in trade. The petitioner has no reason to complain of the allowance for obsolescence of the warehouses.

Decree affirmed.

MR. JUSTICE MCREYNOLDS and MR. JUSTICE STONE concur in the result.

SUPERIOR OIL COMPANY v. STATE OF MISSISSIPPI EX REL. KNOX, ATTORNEY GENERAL.

APPEAL FROM THE SUPREME COURT OF MISSISSIPPI. No. 28. Argued October 31, 1929.-Decided February 24, 1930.

1. In a regular course of business, gasoline was sold by an oil company in Mississippi to shrimp packers in that State, was delivered at the wharves of their packing plants there and was thence carried by the packers' boats to a neighborhood in Louisiana and delivered to shrimp fishermen for use in fishing. The fishermen brought their catches to the packing plants, sold them to the packers and were charged with the cost of the gasoline. The Oil Company received in each case from the packer a so-called bill of lading, signed by the master of the boat on which the gasoline was loaded, purporting to show a consignment to the packer, to the Louisiana neighborhood as destination, on that boat and providing that the gasoline should remain the property of the Oil Company until delivered to the consignee or its agent at such "destination," and that all risks should be upon the purchaser. The Oil Company paid no freight. The packers, when the gasoline was delivered at their plants, were free to do with it as they liked. Held, that the sales by the Oil Company were not in interstate commerce and were subject to be taxed by Mississippi. P. 395.

2. It is not within the power of the parties by the form of their contract to convert a local business into an interstate commerce business protected by the Commerce Clause, when the contract achieves nothing else. P. 394.

156 Miss. 377, affirmed.

APPEAL from a judgment of the Supreme Court of Mississippi upholding taxes. The suit was brought by the state Attorney General to collect the taxes from the Oil Company. A judgment of the Chancery Court dismissing the bill was affirmed by the Supreme Court after a hearing before a division thereof consisting of three judges. Upon suggestion of error there was a rehearing by the full court, resulting in the decree here considered.

390

Argument for Appellant.

Messrs. W. Lee Guice and William H. Watkins, with whom Mr. John L. Heiss was on the brief, for appellant.

The sale and delivery of gasoline in this case, according to the established course of dealing, was in a regular channel of interstate commerce, and formed an integral part thereof.

Interstate commerce comprises not only shipments but negotiations and contracts. Dahnke-Walker Milling Co. v. Bondurant, 257 U. S. 282; Lemke v. Farmers' Grain Co., 258 U. S. 50; Rosenberger v. Pacific Express Co., 241 U. S. 48; Federal Trade Commission v. Pacific States P. T. Asso., 273 U. S. 52; Foster-Fountain Packing Co. v. Haydel, 278 U. S. 1.

It is not dependent upon passage of title, nor does it necessarily involve transportation by carrier. Browning v. Waycross, 233 U. S. 16.

From the moment the interstate movement begins, the commodity is not subject to local taxation.

This case is even stronger in that the tax is one upon the sale itself and not a property tax. The gasoline started on its interstate journey as it was drawn from storage tanks and placed in sealed drums. While it may have been within the range of possibility that the purchaser might divert the shipment, the amount ordered corresponded as to quantity with the requirements of the fishermen in the Louisiana marshes. From the time the gasoline was drawn, there was one continuous movement. To state the case most strongly for Mississippi, the sale was not completed until the drums were placed on the wharf at the water's edge.

The essential facts are that here was a continuous flow of gasoline from Mississippi into Louisiana to be used in the latter State. The question is not of an occasional or an isolated sale. We have a well-established course of