46 495 Michelin Tire Corporation v. Wages

• Decision Date: 14 January 1976
• Docket Number: No. 74-1396,74-1396
• Citation: 46 L. Ed. 2d 495,423 U.S. 276,96 S.Ct. 535
• Parties: . 46 L.Ed.2d 495 MICHELIN TIRE CORPORATION, Petitioner, v. W. L. WAGES, Tax Commissioner, et al
• Court: U.S. Supreme Court

423 U.S. 276

96 S.Ct. 535.

46 L.Ed.2d 495

MICHELIN TIRE CORPORATION, Petitioner,

v W. L. WAGES, Tax Commissioner, et al.

No. 74-1396.

Argued Oct. 15, 1975.

Decided Jan. 14, 1976.

Rehearing Denied Feb. 23, 1976. See 424 U.S. 935, 96 S.Ct. 1151.

Syllabus

Georgia's assessment of a nondiscriminatory ad valorem property tax against petitioner's inventory of imported tires maintained at its wholesale distribution warehouse in the State held not to be within the Import-Export Clause's prohibition against States laying "any Imposts or Duties on Imports." Low v. Austin, 13 Wall. 29, overruled. Pp. 281-302.

(a) In the history of the Import-Export Clause, whose purposes were to commit to the Federal Government the exclusive power to regulate foreign commerce and the exclusive right to all revenues from imposts and duties on imports, and to assure the free flow of imported goods among the States by prohibiting the taxing of goods merely flowing through seaboard States to other States, there is nothing to suggest that a nondiscriminatory ad valorem property tax imposed on imported goods that are no longer in import transit was the type of exaction that was regarded as objectionable by the Framers of the Constitution. Pp. 283-286.

(b) Such nondiscriminatory property taxation cannot affect the Federal Government's exclusive regulation of foreign commerce, since such a tax does not fall on imports as such because of their place of origin and it cannot be used to create special protective tariffs or particular preferences for certain domestic goods or be applied selectively to encourage or discourage any importation in a manner inconsistent with federal regulation. P. 286.

(c) Nor will such taxation deprive the Federal Government of its exclusive right to all revenues from imposts and duties on imports, since that right by definition only extends to revenues from exactions of a particular category. Unlike imposts and duties, which are essentially taxes on the commercial privilege of bringing goods into a country, such property taxes are taxes by which a State apportions the cost of such services as police and fire protection among the beneficiaries according to their respective wealth, and there is no reason why an importer should not share these costs with his competitors handling domestic goods. Pp. 286-288.

(d) Nor does such nondiscriminatory property taxation interfere with the free flow of imported goods among the States. Importers of goods destined for inland States can easily avoid such taxes by using modern transportation methods, and to the extent such taxation may increase the cost of goods purchased by "inland" consumers, the cost, which is the quid pro quo for benefits actually conferred by the taxing State, is one that ultimate consumers should pay for. The prevention of exactions that are no more than transit fees that could otherwise be imposed due to the peculiar geographical situation of certain States may be secured by prohibiting the assessment of even nondiscriminatory property taxes on goods that are still in import transit. Pp. 288-290.

(e) The Import-Export Clause, while not in terms excepting nondiscriminatory taxes with some impact on imports or exports, is not couched in terms of a broad prohibition of every "tax," but only prohibits States from laying "Imposts or Duties," which historically connoted exactions directed only at imports or commercial activity as such. Pp. 290-293.

(f) Since prohibition of nondiscriminatory ad valorem property taxation would not further the objectives of the Import-Export Clause, only the clearest constitutional mandate should lead to a condemnation of such taxation, and the Clause's terminology "Imposts or Duties" is sufficiently ambiguous as not to warrant a presumption that it was intended to embrace taxation that does not create the evils the Clause was specifically intended to eliminate. Pp. 293-294.

233 Ga. 712, 214 S.E.2d 349, affirmed.

Earle B. May, Jr., Atlanta, Ga., for petitioner.

H. A. Stephens, Jr., Atlanta, Ga., for respondents.

Mr. Justice BRENNAN delivered the opinion of the Court.

Respondents, the Tax Commissioner and Tax Assessors of Gwinnett County, Ga., assessed ad valorem property taxes against tires and tubes imported by petitioner from France and Nova Scotia that were included on the assessment dates in an inventory maintained at its wholesale distribution warehouse in the county. Petitioner brought this action for declaratory and injunctive relief in the Superior Court of Gwinnett County, alleging that with the exception of certain passenger tubes that had been removed from the original shipping cartons,¹ the ad valorem property taxes assessed against its inventory of imported tires and tubes were prohibited by Art. I, § 10, cl. 2, of the Constitution, which provides in pertinent part: "No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws . . .." After trial, the Superior Court granted the requested declaratory and injunctive relief. On appeal, the Supreme Court of Georgia affirmed in part and reversed in part, agreeing that the tubes in the corrugated shipping cartons were immune from ad valorem taxation, but holding that the tires had lost their status as imports and had become subject to such taxation because they had been mingled with other tires imported in bulk, sorted, and arranged for sale. 233 Ga. 712, 214 S.E.2d 349 (1975). We granted certiorari, 422 U.S. 1040, 95 S.Ct. 2652, 45 L.Ed.2d 692 (1975). The only question presented is whether the Georgia Supreme Court was correct in holding that the tires were subject to the ad valorem property tax.² We affirm without addressing the question whether the Georgia Supreme Court was correct in holding that the tires had lost their status as imports. We hold that, in any event, Georgia's assessment of a nondiscriminatory ad valorem property tax against the imported tires is not within the constitutional prohibition against laying "any Imposts or Duties on Imports . . . " and that insofar as Low v. Austin, 13 Wall. 29, 20 L.Ed. 517 (1872) is to the contrary, that decision is overruled.

I

Petitioner, a New York corporation qualified to do business in Georgia, operates as an importer and whole- sale distributor in the United States of automobile and truck tires and tubes manufactured in France and Nova Scotia by Michelin Tires Ltd. The business is operated from distribution warehouses in various parts of the country. Distribution and sale of tires and tubes from the Gwinnett County warehouse is limited to the 250-300 franchised dealers with whom petitioner does all of its business in six southeastern States. Some 25% Of the tires and tubes are manufactured in and imported from Nova Scotia, and are brought to the United States in tractor-driven, over-the-road trailers packed and sealed at the Nova Scotia factory. The remaining 75% Of the imported tires and tubes are brought to the United States by sea from France and Nova Scotia in sea vans packed and sealed at the foreign factories. Sea vans are essentially over-the-road trailers from which the wheels are removed before being loaded aboard ship. Upon arrival of the ship at the United States port of entry, the vans are unloaded, the wheels are replaced, and the vans are tractor-hauled to petitioner's distribution warehouse after clearing customs upon payment of a 4% Import duty.

The imported tires, each of which has its own serial number, are packed in bulk into the trailers and vans, without otherwise being packaged or bundled. They lose their identity as a unit, however, when unloaded from the trailers and vans at the distribution warehouse. When unloaded they are sorted by size and style, without segregation by place of manufacture, stacked on wooden pallets each bearing four stacks of five tires of the same size and style, and stored in pallet stacks of three pallets each. This is the only processing required or performed to ready the tires for sale and delivery to the franchised dealers.

Sales of tires and tubes from the Gwinnett County distribution warehouse to the franchised dealers average 4,000-5,000 pounds per sale. Orders are filled without regard to the shipments in which the tires and tubes arrived in the United States or the place of their manufacture. Delivery to the franchised dealers is by common carrier or customer pickup.

II

Both Georgia courts addressed the question whether, without regard to whether the imported tires had lost their character as imports, Georgia's nondiscriminatory ad valorem tax fell within the constitutional prohibition against the laying by States of "any Imposts or Duties on Imports . . . ." The Superior Court expressed strong doubts that the ad valorem tax fell within the prohibition but concluded that it was bound by this Court's decisions to the contrary. The Superior Court stated:

"While it would seem that where said tires and tubes have been placed in (petitioner's) general inventory for the purpose of sale to its customers, . . . such inventory should be taxed to the same extent as any other inventory of any other business in Gwinnett County, and the Court would so hold if supported by the law, it is clear that where the property is imported for resale it retains its import exemption from ad valorem taxes until after such sale," "(for) (t)he immunity of imported goods from local taxation includes immunity from local ad valorem property taxes; Hooven & Allison Company v. Evatt, 324 U.S. 652 (65 S.Ct. 870, 89 L.Ed. 1252); Low v. Austin, 80 U.S. 29 (20 L.Ed. 517)." Pet. for Cert., App. A-4, A-3.

Similarly, the Georgia Supreme Court stated, 233 Ga., at 722, 214 S.E.2d, at 355:

"(Petitioners) argue that an annual ad valorem tax is not a tax on imports within the meaning of the federal constitutional provision. We reject this argument on the basis of the...