Continental Oil Co. v. Walker

• Decision Date: 08 January 1923
• Docket Number: 3857.
• Citation: 285 F. 729
• Parties: CONTINENTAL OIL CO. v. WALKER, State Treasurer.
• Court: U.S. Court of Appeals — Ninth Circuit

285 F. 729

CONTINENTAL OIL CO. v. WALKER, State Treasurer.

No. 3857.

United States Court of Appeals, Ninth Circuit.

January 8, 1923

Gunn Rasch & Hall, of Helena, Mont., for plaintiff in error.

Wellington D. Rankin, Atty. Gen., for defendant in error.

Before GILBERT and HUNT, Circuit Judges, and WOLVERTON, District judge.

GILBERT Circuit Judge.

The court below sustained a demurrer to a complaint, and entered judgment against the plaintiff in an action brought to recover $13,058.74, license tax, paid by the plaintiff under protest. The complaint alleged that the plaintiff was a Colorado corporation engaged in the business of selling gasoline and distillate in Montana; that between January 1 1921, and March 4, 1921, it sold and delivered in Montana 1,305,874 gallons of gasoline and distillate; that on the demand of the defendant, the state treasurer of Montana, the plaintiff paid as license tax the sum of one cent per gallon for each gallon so sold during that period; and that the license tax was imposed under chapter 156 of the 1921 Session Laws of Montana.

Chapter 156 was approved and became effective March 5, 1921. Section 3 requires that every dealer in gasoline and distillate 'shall for the year 1921, and each year thereafter when engaged in such business in this state, pay to the state treasurer * * * a license tax for engaging in such business in this state, equal to one cent for each gallon * * * sold or distributed by such dealer in this state during each year ' The complaint alleged that if the statute is construed to require the plaintiff to pay a license of one cent per gallon for each gallon sold during said period for conducting such business after March 4, 1921, it is in conflict with the Fourteenth Amendment, in that it denies to the plaintiff the equal protection of the laws by requiring the plaintiff and others engaged in such business prior to March 5, 1921, to pay a higher license for carrying on such business after March 5, 1921, and that if said statute is construed to be retroactive, and to require the payment of a tax for having carried on such business from January 1, 1921, to March 4 1921, it is in conflict with the Fourteenth Amendment, in that it deprives the plaintiff of its property without due process of law.

The tax so imposed upon the plaintiff was a tax for the privilege of carrying on the business of selling gasoline and distillate within the state. The power of the state to impose such tax cannot be questioned. In State v. Hammond Packing Co., 45 Mont. 343, 123 P. 407, it was held that the Legislature had power to single out dealers in any commodity and compel them to pay a license, and that none of them could complain of the tax as repugnant to the uniformity clause of the Constitution, so long as the burden fell upon all such dealers alike. In 26 R.C.L. 161, it is said:

'A state may lawfully require, as a condition of the grant of a franchise to be a corporation or to do business as such, and also for the continued exercise of such right or privilege, payment of a specific sum to the state each year or month, or a specific proportion of the gross receipts or of the profits of the corporation, or of a sum to be ascertained in any convenient mode which the Legislature may prescribe.'

In St. Louis S.W. Ry. v. Arkansas, 235 U.S. 350, 35 Sup.Ct. 99, 59 L.Ed. 265, it was held that nothing in the Fourteenth Amendment imposes any ironclad rule upon the states with respect to their internal taxation, or prevents double taxation or any other form of unequal taxation, so long as the inequality is not based on arbitrary distinctions. In Maine v. Grand Trunk R. Co., 142 U.S. 217, 12 Sup.Ct. 121, 35 L.Ed. 994, it was held that a state, in imposing such a tax, may apportion the amount exacted according to the value of the business permitted, as disclosed by its gains or receipts of the present or past...