Asiatic Trans-Pacific, Inc. v. Maddox

• Decision Date: 19 January 1967
• Docket Number: No. 20654.,20654.
• Parties: ASIATIC TRANS-PACIFIC, INC., Appellant, v. A. G. MADDOX, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

371 F.2d 132 (1967)

ASIATIC TRANS-PACIFIC, INC., Appellant, v. A. G. MADDOX, Appellee.

No. 20654.

United States Court of Appeals Ninth Circuit.

January 19, 1967.

W. Scott Barrett, David S. Madis, Walter Ferenz, of Barrett, Ferenz & Trapp, Oakland, Cal. and Agana, Guam, for appellant.

Harold W. Burnett, Atty. Gen., John C. Dierking, Jr., Asst. Atty. Gen., Agana, Guam, for appellee.

Before HAMLEY and ELY, Circuit Judges, and MATHES, District Judge.

ELY, Circuit Judge:

Seeking abatement of additional gross receipts taxes assessed by the appellee in his capacity as Commissioner of Revenue and Taxation of the Government of Guam, the appellant commenced this action in the District Court pursuant to 48 U.S.C. § 1424(a) (Sec. 22(a), Organic Act of Guam, as amended). The appeal to our court, which has jurisdiction founded upon 28 U.S.C. §§ 1291 and 1294 (4), is from a judgment upholding the assessment.

Appellant's tax returns for the years 1961, 1962 and 1963, during which time the appellant, a California corporation, conducted a crating, packing, and draying business in Guam, are the subjects of the disputed assessment. The corporation's activities were of two sorts. The first involved appellant's acting as principal in performing military contracts to pack, crate, and transport goods from one Guamanian military base to another and in performing local civilian moves and general hauling operations in the Territory. Gross receipts tax liability for these activities is not denied. It is the second type of activity, in which appellant acted as agent for several mainland van and storage companies in handling both inbound and outbound shipments, with which the dispute is concerned. Appellant contends that, as applied to this branch of its business, the tax is violative of the commerce clause of the federal constitution.

In its capacity as agent, the appellant handles the Guam portion of the movement of household goods and effects between Guam and points on the mainland. On a move originating in Guam, it packs, crates, and hauls the goods on its own vehicles, in a "through" or sealed container, to the Commercial Port of Guam, where it arranges for ocean transportation on civilian bottom. On arrival at destination, the container is handled by another agent of the principal van and storage company and delivered to an agent handler who completes the move to its final destination. On a move terminating in Guam, the "through" containers are picked up at the port and delivered by the appellant, as agent for the principal van and storage company, to the final destination. For both types of shipments, the appellant receives from the principal, as compensation for its services in Guam, a portion of the total transportation charge, determined by the weight of the goods shipped.

The briefs of both parties explore the question of whether the movements conducted by appellant, wholly within the Territory of Guam but being a portion of a more extensive interstate journey, are moves in interstate commerce or whether they are separable therefrom. Although we have no doubt that appellant would be deemed to be engaged in interstate commerce in performing that service, we do not regard this determination as dispositive of the ultimate issue.

The challenged tax, levied under sections 19540 and 19541.03 of the Government Code of Guam (rev. ed. 1961),¹ is imposed upon the privilege of doing business within the Territory. It is measured, in the case of a "service business," of which appellant's is one, by the amount of the gross income of such a business. In upholding a similar tax levied by the State of Washington, the Supreme Court has observed that, despite historic reluctance to accept state taxation measured by gross receipts from interstate commerce, it is now "well established that taxation measured by gross receipts is constitutionally proper if it is fairly apportioned." General Motors Corp. v. Washington, 377 U.S. 436, 440, 84 S.Ct. 1564, 1568, 12 L.Ed.2d 430 (Emphasis supplied.), rehearing denied, 379 U.S. 875, 85 S.Ct. 14, 13 L.Ed.2d 79 (1964). Appellant's contention is that the court below, finding that a portion of appellant's activities constituted interstate commerce, upheld the assessment only because of appellant's failure to demonstrate how much of its revenue was derived from such commerce. Appellant urges that the duty to apportion is governmental and non-delegable and that the District Court's delegation of that duty to the appellant has resulted, in effect, in the upholding of an unapportioned gross receipts tax.

In Central Greyhound Lines of N. Y. v. Mealey, 334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633 (1948), the taxpayer, a common carrier, challenged the validity of a gross receipts tax which the State of New York levied on the entire revenue from the carrier's transportation of passengers between two points within the state. The Supreme Court held that, since nearly 43% of the route lay in New Jersey and Pennsylvania, the taxpayer was engaged in interstate commerce and that, hence, the levy was...