309 U.S. 33 (1940), 475, McGoldrick v. Berwind-White Coal Mining Co.

Docket Nº:No. 475
Citation:309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565
Party Name:McGoldrick v. Berwind-White Coal Mining Co.
Case Date:January 29, 1940
Court:United States Supreme Court

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309 U.S. 33 (1940)

60 S.Ct. 388, 84 L.Ed. 565



Berwind-White Coal Mining Co.

No. 475

United States Supreme Court

Jan. 29, 1940

Argued January 2, 1940



1. By contracts of sale made, through a sales office in the City of New York, with public utility and steamship companies in that city, a Pennsylvania corporation agreed to sell and deliver to them large quantities of coal of specified grades (said to possess unique qualities) produced at its Pennsylvania mines. The coal moved by rail to Jersey City and thence by barge to the City of New York, and was there delivered to the purchasers' plants or steamships. Held, that the imposition of a tax by New York City on the purchasers of the coal, measured by the sales price, and the requirement that the tax be collected by the seller, do not infringe the commerce clause of the Federal Constitution. Pp. 42 et seq.

The tax is 2% of the receipts upon every sale, for consumption, of tangible personal property in the city, "sale" being defined as "any transfer of title or possession or both . . . in any manner or by any means whatsoever for a consideration or any agreement therefor." The tax is upon the buyer, the seller being liable only if he fails to collect and pay over. It is conditioned upon transfer of title or possession or an agreement therefor, consummated in the State.

2. Considering the necessity of reconciling the competing constitutional demands, that commerce between the States shall not be unduly impeded by state action, and that the power to lay taxes for the support of state government shall not be unduly curtailed, the Court finds no adequate ground for saying that this tax is a regulation which, in the absence of Congressional action, the commerce clause forbids. P. 49.

3. The tax as here applied is not open to the objections that it is aimed at or discriminates against interstate commerce, or that it is laid upon the privilege of interstate commerce, or that it is a tax upon interstate transportation or its gross earnings, or upon merchandise in the course of an interstate journey. P. 48.

The only relation of the tax to interstate commerce arises from the fact that, immediately preceding transfer of possession to the purchaser within the State, the merchandise has been transported

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in interstate commerce. In its effect upon interstate commerce it does not differ from taxes on the "use" of property which has just been moved in interstate commerce, or on storage or withdrawal for use, or a property tax on goods after arrival.

4. There is no valid distinction in this relationship between a tax on property -- the sum of all the rights and powers incident to ownership -- and a tax on the exercise of some of its constituent elements. P. 52.

5. The burden and effect of the tax are no greater when the purchase order or contract precedes, than when it follows, the interstate shipment. P. 54.

6. Robbins v. Shelby County Taxing District, 120 U.S. 489, has been narrowly limited to fixed-sum license taxes imposed only on the business of soliciting orders for the purchase of goods to be shipped interstate. P. 57.

7. The tax, being conditioned upon a local activity -- delivery of goods within the State upon their purchase for consumption -- is not subject to the objection applicable to a tax on gross receipts from interstate commerce, which exacts.tribute for the commerce carried on both within and without the State. Adams Manufacturing Co. v. Storen, 304 U.S. 307, distinguished. P. 57.

8. The question whether the taxing statute is intended to apply where contracts for purchase made in New York City call for delivery outside of the State is a question for the state court. P. 58.

281 N.Y. 610, 670; 22 N.E.2d 173, 764, reversed.

Certiorari, 308 U.S. 546, to review the affirmance of a judgment sustaining a sales tax assessed by the Comptroller of the City of New York.

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STONE, J., lead opinion

MR. JUSTICE STONE delivered the opinion of the Court.

[60 S.Ct. 390] The question for decision is whether the New York City tax laid upon sales of goods for consumption, as applied to respondent, infringes the commerce clause of the Federal Constitution.

Upon certiorari to review a determination by the Comptroller of the City of New York that respondent was subject to New York City sales tax in the sum of $176,703, the Appellate Division of the New York Supreme Court held that the taxing statute, as applied to respondent, does so infringe, 255 A.D. 961, 8 N.Y.S.2d 668, on the authority of Matter of National Cash Register Co. v.

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Taylor, 276 N.Y. 208, 11 N.E.2d 881, cert. denied, 303 U.S. 656; Matter of Compagnie Generale Transatlantique v. McGoldrick, 279 N.Y.192, 18 N.E.2d 28. The New York Court of Appeals affirmed without opinion, 281 N.Y. 670, 22 N.E.2d 764, but its amended remittitur declared that the affirmance was upon the sole ground that the taxing statute as applied violated the commerce clause. We granted certiorari, 308 U.S. 546, the question presented being of public importance, upon a petition which challenged the decision of the state court as not in accord with applicable decisions of this Court in Banker Brothers v. Pennsylvania, 222 U.S. 210; Wiloil Corp. v. Pennsylvania, 294 U.S. 169.

Chapter 815 of the New York Laws of 1933, Ex.Sess., as amended by Chapter 873 of the New York Laws of 1934, Ex.Sess., authorized the City of New York, for a limited period within which the present tax was laid, "to adopt and amend local laws imposing in . . . [the] city . . . any tax which the legislature has or would have power and authority to impose." It directed that "a tax imposed hereunder shall have application only within the territorial limits" of the city, and that

this act shall not authorize the imposition of a tax on any transaction originating and/or consummated outside of the territorial limits of . . . [the] city, notwithstanding that some act be necessarily performed with respect to such transaction within such limits.

It required the revenues from the tax to be used exclusively for unemployment relief.

Pursuant to this authority, the municipal assembly of the City of New York Adopted Local Law No. 24 of 1934, p. 164 (published as Local Law No. 25), since, annually renewed, which laid a tax upon purchasers for consumption of tangible personal property generally (except foods and drugs furnished on prescription), of utility services in supplying gas, electricity, telephone service, etc., and of meals consumed in restaurants. By § 2, the tax was fixed at "two percentum upon the amount of the receipts from

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every sale in the city of New York," "sale" being defined by § 1(e) as "any transfer of title or possession, or both . . . in any manner or by any means whatsoever for a consideration, or any agreement therefor." Another clause of § 21 commands that the tax "shall be paid by the purchaser to the vendor, for and on account of the city of New York." By the same clause, the vendor, who is authorized to collect the tax, is required to charge it to the purchaser, separately from the sales price, and is made liable, as an insurer, for its payment to the city. By §§ 4 and 5, the vendor is required to keep records and file returns showing the amount of the receipts from sales and the amount of the tax. In event of its nonpayment to the seller, the buyer is required, within fifteen days after his purchase, to file a tax return and to pay the tax to the Comptroller, who is authorized by § 2 to set up a procedure for the collection of the tax from the purchaser. [60 S.Ct. 391] Purchases for resale are exempt from the tax, and a purchaser who pays the tax and later resells is entitled to a refund.

The ultimate burden of the tax, both in form and in substance, is thus laid upon the buyer, for consumption, of tangible personal property, and measured by the sales price. Only in event that the seller fails to pay over to the city the tax collected or to charge and collect it as the statute requires is the burden cast on him. It is conditioned upon events occurring within the state, either

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transfer of title or possession of the purchased property, or an agreement within the state, "consummated" there, for the transfer of title, or possession. The duty of collecting the tax and paying it over to the Comptroller is imposed on the seller in addition to the duty imposed upon the buyer to pay the tax to the Comptroller when not so collected. Such, in substance, has been the construction of the statute by the state courts. Matter of Atlas Television Co., Inc., 273 N.Y. 51, 6 N.E.2d 94; Matter of Merchants Refrigerating Co. v. Taylor, 275 N.Y. 113, 9 N.E.2d 799; Matter of Kesbec, Inc. v. McGoldrick, 278 N.Y. 293, 16 N.E.2d 288.

Respondent, a Pennsylvania corporation, is engaged in the production of coal of specified grades, said to possess unique qualities, from its mines within that state and in selling it to consumers and dealers. It maintains a sales office in New York City, and sells annually to its customers 1,500,000 tons of its product, of which approximately 1,300,000 tons are delivered by respondent to some twenty public utility and steamship companies. The coal moves by rail from mine to dock in Jersey City, thence in most instances by barge to the point of delivery. All the sales contracts with the New York customers in question were entered into in New York City, and, with two exceptions, presently to be considered separately, call for delivery of the coal by respondent by barge, alongside the purchasers' plants or steamships. In many instances, the price of the coal was stated to be subject to any increase or decrease of mining costs, including wages, and of railroad rates between the mines and the Jersey City terminal to which the coal was to be shipped. All the deliveries, with the...

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