43 F.2d 170 (S.D.Ohio 1930), 792, East Ohio Gas Co. v. Tax Commission of Ohio

Docket Nº:792.
Citation:43 F.2d 170
Case Date:June 24, 1930
Court:United States District Courts, 6th Circuit, Southern District of Ohio

Page 170

43 F.2d 170 (S.D.Ohio 1930)




No. 792.

United States District Court, S.D. Ohio, Eastern Division.

June 24, 1930

Decree dismissing bill.

Page 171

Tolles, Hogsett & Ginn and William B. Cockley, both of Cleveland, Ohio, for complainant.

Gilbert Bettman, Atty. Gen. of Ohio, Lewis F. Laylin and William J. Ford, both of Columbus, Ohio, Special Counsel, for defendants.

Before HICKENLOOPER, Circuit Judge, and HOUGH and NEVIN, District judges.


The only question for decision in the present case is whether the business of the petitioner, the retail distribution and sale of natural gas in the cities of Cleveland, Youngstown, Akron, etc., is to be regarded as a local and intrastate business subject to the excise tax imposed by General Code, Sec. 5483, or whether such business is so colored by the fact that the gas is brought from West Virginia as to take on the characteristics of, and be classified as, interstate commerce, which, it is conceded, cannot be burdened by an excise tax. U.S. Constitution, art. 1, Sec. 8; Rosenberger v. Pacific Exp. Co., 241 U.S. 48, 50, 36 S.Ct. 510, 60 L.Ed. 880; New Jersey Telephone Co. v. Tax Board, 280 U.S. 338, 346, 50 S.Ct. 111, 113, 74 L.Ed. 463.

The petitioner is an Ohio corporation engaged in selling natural gas to consumers under local franchises from municipalities in the eastern part of that state. Some of its product is produced in the Ohio field, but, for determination of the pivotal question here involved, that fact is immaterial. It is conceded that, as regards the sale of the gas produced in Ohio, the excise tax is applicable. Most of the gas sold by petitioner is purchased from the Hope Natural Gas Company, a corporation under the laws of West Virginia with producing fields located in that state, and is delivered to petitioner by pipe line at the state boundary. It is with the sale of this gas only that we are concerned. It should also be observed that the Hope Natural Gas Company is not taxed by virtue of its sales to petitioner; nor is any excise tax attempted to be laid upon the right to transport such gas from the point of delivery at the state boundary to the point of consumption. The excise tax is computed solely upon gross receipts from sales to local consumers.

It must be conceded that, inasmuch as transportation of whatever goods, from a point of origin in one state to a point of consumption

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in another state, is interstate commerce, so here the transportation of gas by pipe line from West Virginia to Cleveland is interstate commerce. Such commerce retains its interstate character throughout the entire journey, or for so long as the journey itself is not broken, even though that be to the very burner of the consumer. Pennsylvania Gas Co. v. Public Service Comm., 252 U.S. 23, 40 S.Ct. 279, 64 L.Ed. 434; Illinois Cent. R.R. v. DeFuentes, 236 U.S. 157, 163, 35 S.Ct. 275, 59 L.Ed. 517. The fact that title to the gas passes at the state border is also of no material significance. People's Natural Gas Co. v. Public Service Comm., 270 U.S. 550, 554, 47 S.Ct. 371, 70 L.Ed. 726. Upon these hypotheses it is contended by the petitioner that the proceeds of the sale of the West Virginia gas at the end of its interstate journey must of necessity be receipts arising from interstate commerce, and that the tax cannot be sustained, since it is either 'a tax upon appellant's (petitioner's) gross receipts from interstate and foreign commerce or a license fee to be...

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