Goldrick v. Gulf Oil Corporation

Citation84 L.Ed. 840,60 S.Ct. 664,309 U.S. 414
Decision Date25 March 1940
Docket NumberNo. 473,473
PartiesMcGOLDRICK, Comptroller of City of New York, v. GULF OIL CORPORATION. Re
CourtUnited States Supreme Court

[Syllabus from pages 414-416 intentionally omitted] Mr. Paxton Blair, of New York City (Messrs. William C. Chanler, Corp. Counsel, Sol Charles Levine and Milton Sandberg, all of New York City, on the brief), for petitioner.

[Argument of Counsel from pages 416-420 intentionally omitted] Mr. Matthew S. Gibson, of New York City, for respondent.

Mr. Justice STONE delivered the opinion of the Court.

The Comptroller of the City of New York determined that respondent was subject to a New York City tax laid upon sales in 1934 and 1935 of fuel oil manufactured in New York City from crude petroleum which had been imported from a foreign country to New York and there sold and delivered as ships' stores to vessels engaged in foreign commerce. Upon certiorari to review the Comptroller's determination, the Appellate Division of the New York Supreme Court held that the taxing statute as applied infringed the power of Congress to regulate foreign commerce which it had exercised by statutes regulating the control and disposition of the imported oil. 256 App.Div. 207, 9 N.Y.S.2d 544.

The New York Court of Appeals affirmed without opinion, 281 N.Y. 647, 22 N.E.2d 480, but by its amended remittitur declared that the affirmance was upon the ground, and none other, that the tax as applied violated the commerce clause of the Federal Constitution, Article I, § 8, Clause 3, Article I, § 10, Clause 2, which commands that no state shall lay any imposts or duties on imports or exports, and Article VI, Clause 2, making the 'Constitution, and the Laws in Pursuance thereof * * * the supreme Law of the Land'.1 We granted certiorari upon a petition which challenged the several grounds of decision as defined by the amended remittitur of the Court of Appeals, the questions presented being of public importance.

The taxing enactment, Local Law No. 24 of 1934, p. 164, published as Local Law No. 25, is that of the municipal assembly of the City of New York, adopted pursuant to authority of Chapter 815 of the New York Laws of 1933, Ex.Sess., as amended by Chapter 873 of New York Laws of 1934, Ex.Sess. Its details were recently discussed in our opinion in McGoldrick v. Berwind-White Coal Mining Company, decided January 29, 1940, 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. —- and it is unnecessary to repeat them here. It suffices to say that it lays a tax on purchasers for consumption of tangible personal property at the rate of 2 per cent. of the sales price. The tax 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 who must pay it whether he collects it or not, in addition to the duty imposed upon the buyer to pay the tax to the Comptroller when not so collected.

The material facts are not in dispute. In 1934 and 1935 respondent's predecessor imported crude petroleum from Venezuela and made customs entry of it for its own manufacturing warehouse in New York City, pursuant to its bonds known as 'Proprietor's Manufacturing Warehouse Bond, Class 6', given to the United States under the warehouse laws of the United States and treasury regulations. The bonds were given for the purpose of enabling the importer, under statutes of the United States and treasury regulations, to bring the petroleum into the United States, to manufacture it while in bond into fuel oil and then to withdraw it for export or other lawful purpose free of the import duty which would otherwise be payable. The bonds were conditioned, among other things, upon compliance with laws and regulations relating to the custody and safekeeping of the imported merchandise and its products held in bond, and to its lawful withdrawal from the warehouse under permit of the collector of the customs within the time permitted by law.

The tax in question was laid on the sale of bunker 'C' fuel oil, manufactured in respondent's bonded warehouse from the imported oil and delivered alongside foreign bound vessels in New York City which purchased the oil as ships' stores for consumption as fuel in propelling them in foreign commerce.

Petitioner argues that the tax imposed on the purchaser for consumption of the fuel oil after it had been changed radically by manufacture from the imported oil, and after it had been withdrawn from the bonded warehouse, is not a prohibited tax on imports and does not contravene any policy which the laws of the United States have sanctioned.

For present purposes we may assume, without deciding, that had the crude oil not been imported in bond it would, upon its manufacture, have become a part of the common mass of property in the state and so would have lost its distinctive character as an import and its constitutional immunity as such from state taxation. See Gulf Fisheries Co. v. MacInerney, 276 U.S. 124, 126, 48 S.Ct. 227, 228, 72 L.Ed. 495; Waring v. Mayor of Mobile, 8 Wall. 110, 19 L.Ed. 342; F. May & Co. v. New Orleans, 178 U.S. 496, 20 S.Ct. 976, 44 L.Ed. 1165; People of State of New York ex rel. Edward & John Burke v. Wells, 208 U.S. 14, 28 S.Ct. 193, 52 L.Ed. 370. Respondent rests its argument on different considerations growing out of the control over the foreign commerce involved in the importation of the oil and its ultimate disposition as ships' stores of vessels engaged in foreign commerce, which Congress has exercised in pursuance of a national policy with which, it is insisted, the tax conflicts. Expression of this policy, it is urged is to be found in the statutes of the United States, read in light of their legislative history, exempting the imported oil from federal taxation, otherwise imposed, if it is sold for use as fuel on vessels engaged in the foreign trade, and in the measures taken in statutes and regulations to make that policy effective by segregating the oil under the direction of customs officers of the United States from the time of its importation until it is delivered to the purchasing vessel.

The provisions of the Revenue Act of 1932 laying a tax on the importation of crude petroleum and granting exemptions, and the related provisions of the Tariff Act of 1930 and the applicable treasury regulations support this contention.

Section 601(a), (c)(4) of the Revenue Act of 1932, 47 Stat. 169, 260, 26 U.S.C.A.Int.Rev.Acts, pages 603, 605, lays a tax 'with respect to the importation' of crude petroleum of one-half cent per gallon unless otherwise provided by treaties of the United States, and declares, § 601(b), that the tax imposed 'shall be levied, assessed, collected, and paid in the same manner as a duty imposed by the Tariff Act of 1930, and shall be treated for the purposes of all provisions of law relating to the customs revenue as a duty imposed by such Act * * *.' Section 630 of the Revenue Act of 1932, added by amendment of June 16, 1933, 48 Stat. 256, 26 U.S.C.A. Int.Rev.Code, § 3451, declares that no tax under § 601 shall be laid 'upon any article sold for use as fuel supplies, ships' stores * * * or * * * equipment on vessels * * * actually engaged in foreign trade * * *.' and provides that 'articles manufactured or produced with the use of articles upon the importation of which tax has been paid under this title, if laden for use as supplies on such vessels, shall be held to be exported for the purposes' of the drawback provision of § 601(b).

Section 309(a) of the Tariff Act of 1930, 46 Stat. 590, 690, 19 U.S.C.A. § 1309(a), authorizes the withdrawal, duty free, under regulations of the Secretary of the Treasury of articles from bonded manufacturing warehouses, for supplies to vessels of the United States engaged in foreign trade and directs that no such article shall be landed at any port or place in the United States or its possessions. By virtue of the terms already noted of §§ 601 and 630 of the Revenue Act of 1932, these provisions were extended to articles sold for fuel to vessels engaged in foreign trade, and the provisions of statutes and regulations relating to withdrawal from manufacturing bonded warehouses2 for export were thus extended to similar withdrawals of fuel oil for disposition as ships' stores.3

It will be noted that the tax imposed on importation of crude petroleum by § 601 of the Revenue Act of 1932 is, by force of its own provisions, to be treated as a duty imposed by the Tariff Act of 1930, which, in turn, has incorporated, by reference, customs regulations relating to the entry of merchandise in bonded manufacturing warehouses, its manufacture there and its withdrawal from bonded warehouses for exportation or disposition as ships' stores;4 that § 630, read in conjunction with § 601(b) and the related provisions of the Tariff Act of 1930 (§ 309(b)) provides that articles manufactured from imported articles and laden for use on vessels engaged in foreign commerce under customs regulations are to be duty free and considered or held as exported for the purpose of the drawback provisions of both § 601 of the Revenue Act of 1932 and § 309(b) of the Tariff Act of 1930.

From the time of importation until the moment when the bunker 'C' oil is laden on vessels engaged in foreign trade, the imported petroleum and its product, the fuel oil, is segregated from the common mass of goods and property within the state, and is subject to the supervision and control of federal customs officers.5 It cannot lawfully be removed from the manufacturing warehouse except for delivery for use as fuel to a vessel engaged in foreign commerce and it cannot lawfully be diverted from such destination and use and cannot, after delivery to the vessel, be landed in the United States. Throughout, the oil is...

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