General Trading Co v. State Tax Commission of Iowa

• Citation: 64 S.Ct. 1028,322 U.S. 335,88 L.Ed. 1309
• Decision Date: 15 May 1944
• Docket Number: No. 441,441
• Parties: GENERAL TRADING CO. v. STATE TAX COMMISSION OF IOWA
• Court: United States Supreme Court

322 U.S. 335

64 S.Ct. 1028

88 L.Ed. 1309

GENERAL TRADING CO.

v STATE TAX COMMISSION OF IOWA.

No. 441.

Argued Feb. 4, 1944.

Decided May 15, 1944.

Mr. Edward S. Stringer, of St. Paul, Minn., for petitioner.

Mr. Jens Grothe, of Des Moines, Iowa, for respondent.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

The State Tax Commission of Iowa brought this suit under the authority of the Iowa Use Tax Law which was recently here in Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888, 132 A.L.R. 475, and Nelson v. Montgomery Ward, 312 U.S. 373, 61 S.Ct. 593, 85 L.Ed. 897. The question now presented is, in short, whether Iowa may collect, in the circumstances of this case, such a use tax from General Trading Company, a Minnesota corporation, on the basis of property bought from Trading Company and sent by it from Minnesota to purchasers in Iowa for use and enjoyment there.

By the Iowa Use Tax Law a tax is 'imposed on the use in this state of tangible personal property purchased * * * for use in this state, at the rate of two percent of the purchase price of such property. Said tax is * * * imposed upon every person using such property within this state until such tax has been paid directly to the county treasurer, to a retailer, or to the commission * * *.' § 6943.103, Code of Iowa 1939. The use of property the sale of which is subject to Iowa's sales tax is exempted from the use tax (§ 6943.104(1), but the sales tax can be laid only on sales at retail within the State. § 6943.075. The use tax constitutes a debt owed by the retailer to the State. § 6943.112. But 'Every retailer maintaining a place of business' in Iowa must collect this tax from the purchaser (§ 6943.109), and may not advertise that he will himself absorb the tax. § 6943.111. Finally an offsetting credit (see Henneford v. Silas Mason Co., 300 U.S. 577, 584, 586, 587, 57 S.Ct. 524, 527, 528, 529, 81 L.Ed. 814) if another use or sales tax has been paid for the same thing elsewhere is allowed, and if the tax 'imposed in such other state is two percent or more, then no tax shall be due on such articles.' § 6943.125.

A judgment in favor of the Tax Commission by one of the lower courts was affirmed by the Supreme Court of Iowa, —- Iowa —-, 10 N.W.2d 659. The application by that Court of its local laws and the facts on which it founded its judgment are of course controlling here. From these it appears that General Trading Company had never qualified to do business as a foreign corporation in Iowa nor does it maintain there any office, branch or warehouse. The property on which the use tax was laid was sent to Iowa as a result of orders solicited by traveling salesmen sent into Iowa from their Minnesota headquarters. The orders were always subject to acceptance in Minnesota whence the goods were shipped into Iowa by common carriers or the post. Upon these facts and its holding that Trading Company was a 'retailer maintaining a place of business in this state' within the meaning of the Iowa Statute, the Iowa Supreme Court held that Iowa had not exceeded its powers in the imposition of this use tax on Iowa purchasers, and that collection could validly be made through the Trading Company.

We brought the case here, 320 U.S. 731, 64 S.Ct. 206, to meet the claim that there was need for further precision regarding the scope of our previous rulings on the power of States to levy use taxes. In view however of the clear understanding by the court below that the facts we have summarized bring the transaction within the taxing power of Iowa, there is little need for elaboration. We agree with the Iowa Supreme Court that Felt & Tarrant Mfg. Co. v. Gallagher, 306 U.S. 62, 59 S.Ct. 376, 83 L.Ed. 488; Nelson v. Sears, Roebuck & Co., supra; and Nelson v. Montgomery Ward, supra, are controlling. The Gallagher case is indistinguishable—certainly nothing can turn on the more elaborate arrangements for soliciting orders for an intricate machine for shipment from without a State as in the Gallagher case, compared with the apparently simpler needs for soliciting business in this case. And the fact that in the Sears Roebuck and Montgomery Ward cases the interstate vendor also had retail stores in Iowa, whose sales were appropriately subjected to the sales tax, is constitutionally irrelevant to the right of Iowa sustained in those cases to exact a use tax from purchasers on mail order goods forwarded into Iowa from without the State. All these differentiations are without constitutional significance. Of course, no State can tax the privilege of doing interstate business. See Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944. That is within the protection of the Commerce Clause and subject to the power of Congress. On the other hand, the mere fact that property is used for interstate commerce or has come into an owner's possession as a result of interstate commerce does not diminish the protection which he may draw from a State to the upkeep of which he may be asked to bear his fair share. But a fair share precludes legislation obviously hostile or practically discriminatory toward interstate commerce....