Goldrick v. Coal Mining Co

Decision Date29 January 1940
Docket NumberNo. 475,BERWIND-WHITE,475
Citation84 L.Ed. 565,128 A.L.R. 876,309 U.S. 33,60 S.Ct. 388
PartiesMcGOLDRICK, City Comptroller, v. COAL MINING CO
CourtU.S. Supreme Court

Messrs. William C. Chanler and Paxton Blair, both of New York City, for petitioner.

[Argument of Counsel from pages 34-36 intentionally omitted] Mr. John W. Davis, of New York City, for respondent.

[Argument of Counsel from page 37 intentionally omitted] Mr. Justice STONE delivered the opinion of the Court.

The question for decision is whether the New York City tax laid upon sales of goods for consumption, as applied to respondent, infringes the commerce clause of the Federal Constitution. U.S.C.A.Const. art. 1, § 8, cl. 3.

Upon certiorari to review a determination by the Comptroller of the City of New York that respondent was subject to New York City sales tax in the sum of $176,703, the Appellate Division of the New York Supreme Court held that the taxing statute as applied to respondent does so infringe, 255 App.Div. 961, 8 N.Y.S.2d 668, on the authority of Matter of National Cash Register Co. v Taylor, 276 N.Y. 208, 11 N.E.2d 881, certiorari denied McGoldrick v. National Cash Register Co., 303 U.S. 656, 58 S.Ct. 759, 82 L.Ed. 1115; Matter of Compagnie Generale Transatlantique v. McGoldrick, 279 N.Y. 192, 18 N.E.2d 28. The New York Court of Appeals affirmed without opinion, 281 N.Y. 670, 22 N.E.2d 764, but its amended remittitur declared that the affirmance was upon the sole ground that the taxing statute as applied violated the commerce clause. We granted certiorari December 4, 1939, 308 U.S. 546, 60 S.Ct. 261, 84 L.Ed. —-, the question presented being of public importance, upon a petition which challenged the decision of the state court as not in accord with applicable decisions of this Court in Banker Brothers v. Pennsylvania, 222 U.S. 210, 32 S.Ct. 38, 56 L.Ed. 168; Wiloil Corporation v. Pennsylvania, 294 U.S. 169, 55 S.Ct. 358, 79 L.Ed. 838.

Chapter 815 of the New York Laws of 1933, Ex.Sess., as amended by Chapter 873 of the New York Laws of 1934, Ex. Sess., authorized the City of New York, for a limited period within which the present tax was laid, 'to adopt and amend local laws imposing in (the) city any tax which the legislature has or would have power and authority to impose'. It directed that 'a tax imposed hereunder shall have application only within the territorial limits' of the city; and that 'this act shall not authorize the imposition of a tax on any transaction originating and/or consummated outside of the territorial limits of (the) city, notwithstanding that some act be necessarily performed with respect to such transaction within such limits'. It required the revenues from the tax to be used exclusively for unemployment relief.

Pursuant to this authority the municipal assembly of the City of New York Adopted Local Law No. 24 of 1934, p. 164 (published as Local Law No. 25), since, annually renewed, which laid a tax upon purchasers for consumption of tangible personal property generally (except foods and drugs furnished on prescription), of utility services in supplying gas, electricity, telephone service, etc., and of meals consumed in restaurants. By § 2 the tax was fixed at 'two per centum upon the amount of the receipts from every sale in the city of New York', 'sale' being defined by § 1(e) as 'any transfer of title or possession, or both * * * in any manner or by any means whatsoever for a consideration, or any agreement therefor'. Another clause of § 21 commands that the tax 'shall be paid by the purchaser to the vendor, for and on account of the city of New York'. By the same clause the vendor, who is authorized to collect the tax, is required to charge it to the purchaser, separately from the sales price; and is made liable, as an insurer, for its payment to the city. By §§ 4 and 5 the vendor is required to keep records and file returns showing the amount of the receipts from sales and the amount of the tax. In event of its nonpayment to the seller the buyer is required, within fifteen days after his purchase, to file a tax return and to pay the tax to the Comptroller who is authorized by § 2 to set up a procedure for the collection of the tax from the purchaser. Purchases for resale are exempt from the tax, and a purchaser who pays the tax and later resells is entitled to a refund.

The ultimate burden of the tax, both in form and in substance, is thus laid upon the buyer, for consumption, of tangible personal property, and measured by the sales price. Only in event that the seller fails to pay over to the city the tax collected or to charge and collect it as the statute requires, is the burden cast on him. It is conditioned upon events occurring within the state, either transfer of title or possession of the purchased property, or an agreement within the state, 'consummated' there, for the transfer of title, or possession. The duty of collecting the tax and paying it over to the Comptroller is imposed on the seller in addition to the duty imposed upon the buyer to pay the tax to the Comptroller when not so collected. Such, in substance, has been the construction of the statute by the state courts. Matter of Atlas Television Co., Inc., 273 N.Y. 51, 6 N.E.2d 94; Matter of Merchants Refrigerating Co. v. Taylor, 275 N.Y. 113, 9 N.E.2d 799; Matter of Kesbec, Inc. v. McGoldrick, 278 N.Y. 293, 16 N.E.2d 288.

Respondent, a Pennsylvania corporation, is engaged in the production of coal of specified grades, said to possess unique qualities, from its mines within that state and in selling it to consumers and dealers. It maintains a sales office in New York City and sells annually to its customers, 1,500,000 tons of its product, of which approximately 1,300,000 tons are delivered by respondent to some twenty public utility and steamship companies. The coal moves by rail from mine to dock in Jersey City, thence in most instances by barge to the point of delivery. All the sales contracts with the New York customers in question were entered into in New York City, and with two exceptions, presently to be considered separately, call for delivery of the coal by respondent by barge, alongside the purchasers' plants or steamships. In many instances the price of the coal was stated to be subject to any increase or decrease of mining costs including wages, and of railroad rates between the mines and the Jersey City terminal to which the coal was to be shipped. All the deliveries, with the exceptions already noted, were made within New York City, and all such are concededly subject to the tax except insofar as it infringes the commerce clause.

Section 8, clause 3, article 1, of the Constitution declares that 'Congress shall have Power * * * To regulate Commerce with foreign Nations, and among the several States * * *.' In imposing taxes for state purposes a state is not exercising any power which the Constitution has conferred upon Congress. It is only when the tax operates to regulate commerce between the states or with foreign nations to an extent which infringes the authority conferred upon Congress, that the tax can be said to exceed constitutional limitations. See Gibbons v. Ogden, 9 Wheat. 1, 187, 6 L.Ed. 23; South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 185, 58 S.Ct. 510, 513, 82 L.Ed. 734. Forms of state taxation whose tendency is to prohibit the commerce or place it at a disadvantage as compared or in competition with intrastate commerce and any state tax which discriminates against the commerce, are familiar examples of the exercise of state taxing power in an unconstitutional manner, because of its obvious regulatory effect upon commerce between the states.2 But it was not the purpose of the commerce clause to relieve those engaged in interstate commerce of their just share of state tax burdens, merely because an incidental or consequential effect of the tax is an increase in the cost of doing the business, Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 254, 58 S.Ct. 546, 548, 82 L.Ed. 823, 115 A.L.R. 944. Not all state taxation is to be condemned because, in some manner, it has an effect upon commerce between the states, and there are many forms of tax whose burdens, when distributed through the play of economic forces, affect interstate commerce which nevertheless falls short of the regulation of the commerce which the Constitution leaves to Congress. A tax may be levied on net income wholly derived from interstate commerce.3 Non-discriminatory taxation of the instrumentalities of interstate commerce is not prohibited.4 The like taxation of property, shipped interstate, before its movement begins,5 or after it ends,6 is not a forbidden regulation. An excise for the warehousing of merchandise preparatory to its interstate shipment or upon its use,7 or withdrawal for use,8 by the consignee after the interstate journey has ended is not precluded. Nor is taxation of a local business or occupation which is separate and distinct from the transportation or intercourse which is interstate commerce, forbidden merely because in the ordinary course such transportation or intercourse is induced or occasioned by such business, or is prerequisite to it. Western Live Stock v. Bureau of Revenue, supra, 303 U.S. page 253, 58 S.Ct. page 547, 82 L.Ed. 823, 115 A.L.R. 944, and cases cited.

In few of these cases could it be said with assurance that the local tax does not in some measure affect the commerce or increase the cost of doing it. But in them as in other instances of constitutional interpretation so as to insure the harmonious operation of powers reserved to the states with those conferred upon the national government, courts are called upon to reconcile competing constitutional demands, that commerce between the states shall not be unduly impeded by state action, and that the power to lay taxes for the support of state government shall not be unduly curtailed. See Woodruff v. Parham, 8 Wall. 123,...

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