Fisher Blend Station, Inc v. Tax Commission of State of Washington, 628

• Citation: 297 U.S. 650,80 L.Ed. 956,56 S.Ct. 608
• Decision Date: 30 March 1936
• Docket Number: No. 628,628
• Parties: FISHER'S BLEND STATION, INC., v. TAX COMMISSION OF STATE OF WASHINGTON et al
• Court: United States Supreme Court

297 U.S. 650

56 S.Ct. 608

80 L.Ed. 956

FISHER'S BLEND STATION, INC.,

v TAX COMMISSION OF STATE OF WASHINGTON et al.

No. 628.

Argued March 9, 1936.

Decided March 30, 1936.

Messrs. Godfrey Goldmark, of New York City, and Donald G. Graham and R. J. Venables, both of Seattle, Wash., for appellant.

Mr. E. P. Donnelly, of Seattle, Wash., for appellees.

Mr. Justice STONE delivered the opinion of the Court.

This appeal from a judgment of the Supreme Court of the state of Washington, Judicial Code, § 237 (28 U.S.C.A. § 344), presents the question whether a state occupation tax, measured by the gross receipts from radio broadcasting from stations within the state, is an unconstitutional burden on interstate commerce.

Appellant brought suit to enjoin appellees, the State Tax Commission, from collecting the tax, laid by section 2 of chapter 191, p. 870, of the Washington Laws of 1933, as an infringement of the commerce clause of the Federal Constitution. On demurrer to the bill of complaint, and on stipulation of the parties that the cause might be decided upon the facts there alleged, the state Supreme Court gave final judgment for the appellees. 182 Wash. 163, 45 P.(2d) 942; Id., 49 P.(2d) 1151.

Appellant maintains, within the state, two broadcasting stations licensed by the Federal Radio Commission (now the Federal Communications Commission). One is licensed to operate with power and a radio frequency enabling it to broadcast throughout the 'fifth zone,' which comprises eleven western and northwestern states, including Washington, and the Territories of Alaska and Hawaii. The other is licensed to operate as a 'clear channel' station, that is to say, a station to which the Commission has assigned a radio frequency to be used at such times and with such power as will enable it to broadcast throughout the United States without interference by other stations. Sections 2, 4, 5, Federal Radio Act of 1927,¹ 44 Stat. 1162; Regulations, Federal Radio Commission, File No. 5-R-B-63 and Official No. 63; File No. 5-R-B-67 and Official No. 67, Nos. 70-75, No. 111, Nos. 116-124. These stations broadcast over the areas for which they are licensed, and the adjacent high seas and a part of Canada.

Broadcasting, according to the allegations of the complaint, is accomplished by the generation, at the broadcasting station, of electromagnetic waves, which pass through space to receiving instruments which amplify them and translate them into audible sound waves. The essential elements in the broadcasting operation are a supply of electrical energy, a transmitter, the connecting medium or 'ether' between the transmission and r ceiving instruments, and the receiving mechanism.

Appellant's entire income consists of payments to it by other broadcasting companies or by advertisers for broadcasting, from its Washington stations, advertising programs originating there or transmitted to them from other states by wire. Appellant 'sells time' to its customers at stipulated rates, during which it broadcasts from its stations such advertising programs as may be agreed upon. During such time as is not sold, it broadcasts, at its own expense, 'sustaining' programs, as required by the regulations of the Federal Radio Commission. The customers desire the broadcasts to reach the listening public in the areas which appellant serves, and a large number of persons, many of them in other states, listen to the broadcasts from appellant's stations.

The state Supreme Court recognized that state taxation of gross income derived from interstate commerce is forbidden by the commerce clause. But it upheld the tax on the ground that the business from which appel- lant receives its income is not interstate commerce. It conceded, as it had previously held, Van Dusen v. Department of Labor and Industries, 158 Wash. 414, 290 P. 803, that broadcasting is commerce, and that the broadcasting by appellant of its own programs for which it does not receive pay is interstate commerce. But it concluded that appellant's remunerative business is not interstate commerce because it consists of furnishing, within the state, the facilities of its stations to customers who use them for broadcasting their programs, and the business of providing such facilities, like that of providing a bridge for the use of others in crossing state lines, is not commerce. See Detroit International Bridge Co. v. Corporation Tax Appeal Board, 294 U.S. 83, 55 S.Ct. 332, 79 L.Ed. 777; Henderson Bridge v. Kentucky, 166 U.S. 150, 17 S.Ct. 532, 41 L.Ed. 953.

We may assume, although it is not alleged, that appellant's customers produce the sounds which are broadcasted. But it sufficiently appears, although the complaint does not specifically so state, that appellant, and not the customer, generates the electric current and controls the apparatus (generator, transmitter, and their controls) by which the sounds are broadcasted. The complaint states that appellant operates its stations and conducts the business of broadcasting in the manner already described, and that the license to operate them is granted to appellant by the Federal Radio Commission under the Federal Radio Act. These allegations, read in the light of the statute, which forbids any save licensees to operate broadcasting apparatus, section 1, Federal Radio Act of 1927, 44 Stat. 1162, and of the facts of which we have judicial knowledge, see Buck v. Jewel-LaSalle Realty Co., 283 U.S. 191, 200, 51 S.Ct. 410, 75 L.Ed. 971; DeForest Radio Co. v. General Electric Co., 283 U.S. 664, 670, 51 S.Ct. 563, 75 L.Ed. 1339, et seq., must be taken to state that the broadcasting of radio emanations, as distinguished from the production of the sounds broadcasted, is effected by appellant and not by its customers.

The sounds broadcasted are not transmitted from the microphone to the ears of listeners in other states. They do not pass as sound waves to the receiving mechanisms. They serve only to enable the broadcaster, by the use of appropriate apparatus, to modulate the radio emanations which he generates. These emanations, as modulated, are projected through space to the receiving sets. There, by a reverse process, they so actuate the receiving mechanisms as to produce a new set of sound waves, of frequencies identical with those produced at the microphone. On the argument it was conceded that, in broadcasting for its customers, appellant, by generating the necessary electric power and controlling the transmitter, produces the radio emanations which actuate the receiving mechanisms located in other states. Upon the facts alleged, we see no more basis for saying that appellant's customers o the broadcasting than for saying that a patron of a railroad or a telephone...