Gregg Dyeing Co v. Query City of Greenville v. Same

• Decision Date: 31 May 1932
• Docket Number: 245,Nos. 170,s. 170
• Parties: GREGG DYEING CO. v. QUERY et al. CITY OF GREENVILLE et al. v. SAME
• Court: U.S. Supreme Court

286 U.S. 472

52 S.Ct. 631

76 L.Ed. 1232

GREGG DYEING CO.

v QUERY et al.

CITY OF GREENVILLE et al.

v. SAME.

Nos. 170, 245.

Argued Dec. 10, 1931.

Decided May 31, 1932.

Messrs. James M. Lynch, of Florence, S. C., and P. F. Henderson, of Aiken, S. C., for appellants.

Messrs. John M. Daniel, Atty. Gen., and J. Fraser Lyon, of Columbia, S. C., for appellees.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

By these actions, within the original jurisdiction of the Supreme Court of South Carolina, appellants sought to restrain the enforcement of the state statute known as the 'Gasoline Tax Act of 1930' (Acts So. Car., 1930, p. 1390). The statute was assailed upon state and federal grounds, the latter being that the act violated the commerce clause (article 1, § 8, par. 3), and the equal protection clause of the Fourteenth Amendment of the Federal Constitution. The state court overruled these contentions and dismissed the complaints. The cases are brought here by appeal.

The provisions of the statute which give rise to the federal questions are found in sections 1 and 6 as follows:

'Section 1. * * * Every person, firm, corporation, municipality, * * * in the State of South Carolina which shall import into this State from any other State or foreign Country, or shall receive by any means into this State, and keep in storage in this State for a period of twenty-four hours or more, after the same shall have lost its interstate character as a shipment in interstate commerce, any gasoline or any other like products of petroleum or under whatever name designated, which is intended to be stored or used for consumption in this State, shall pay a license tax of six cents per gallon for every gallon of gasoline, or other like products of petroleum aforementioned, which shall have been shipped or imported into this State from any other State or foreign country, and which shall hereafter, for a period of twenty-four hours after it loses its interstate character as a shipment of interstate commerce be kept in storage in this State to be used and consumed in this State by any person, firm, or corporation, municipality, * * * and which has not already been subjected to the payment of the license taxes imposed upon the sale thereof by acts of the General Assembly of the State of South Carolina, the same being Act No. 34, Acts of 1925, approved the 23rd day of March, 1925, and Act No. 102, Acts of 1929, approved the 16th day of March, 1929, imposing license taxes for the privilege of dealing in gasoline or other like products or petroleum: Provided, That this Act shall not impose a tax upon crude petroleum, residium or smudge oil: Provided, further, That one per cent. to cover loss by evaporation, spillage or otherwise shall be deducted by the taxpayer when remitting the tax required by this Act. * * * '§ 6. Nothing within this Act shall be construed to impose a license tax upon any selling agent, consumer, or retailer, selling, consigning, shipping, distributing or using gasoline, combinations thereof, or substitutes therefor, which may have been bought from any oil company on which the license taxes imposed by Act No. 34, Acts of the General Assembly of 1925, approved the 23rd of March, 1925, and Act No. 102, Acts of the General Assembly of 1929, approved the 16th day of March, 1929, have been paid nor shall this Act be construed as applying in the case of interstate commerce.'

In the case of Gregg Dyeing Company (No. 170), the facts alleged in the complaint were admitted by demurrer, and other facts were stipulated as if the complaint had set them forth. It thus appeared that plaintiff conducted a bleachery in Aiken, S. C., and used gasoline in its processes; that its practice is to buy gasoline in bulk from dealers outside the state of South Carolina and to have the gasoline shipped in interstate commerce to plaintiff's plant where the gasoline is unloaded and stored, and kept in storage, in plaintiff's tanks, for more than twenty-four hours and until it is needed for use, and in its entirety is used by plaintiff in its manufacturing business and for its own purposes, and is not brought into the state for resale and is not resold; that there is in Charleston, S. C., a refinery maintained by the Standard Oil Company at which large quantities of gasoline are produced; that much of the gasoline thus produced, and much that is brought into the state by oil companies for resale, is stored within the state for more than twenty-four hours before it is sold or used, and is not taxed for its importation and/or storage in South Carolina, but is taxed when it is used or sold in that state by such oil companies; and that such gasoline, produced in the refinery above mentioned, as is shipped to other states is not taxed in South Carolina. Final judgment was rendered in favor of defendants upon the demurrer. 164 S. E. 588.

In the case brought by the City of Greenville (No. 245), plaintiff alleged that it was a municipal corporation which had brought into the state of South Carolina gasoline in tank car lots, purchased outside the state, and thereafter had stored, and used and consumed it for public purposes. Defendants demurred, there was an agreed statement of facts in addition to the allegations of the complaint, and the judgment upon the demurrer thus raised the same federal questions as those presented in the case first mentioned.

In maintaining rights asserted under the Federal Constitution, the decision of this Court is not dependent upon the form of a taxing scheme, or upon the characterization of it by the state court. We regard the substance rather than the form, and the controlling test is found in the operation and effect of the statute as applied and enforced by the state. St. Louis Southwestern Railway Co. v. Arkansas, 235 U. S. 350, 362, 35 S. Ct. 99, 59 L. Ed. 265; Hanover Fire Insurance Co. v. Harding, 272 U. S. 494, 509, 510, 47 S. Ct. 179, 71 L. Ed. 372, 49 A. L. R. 713. The operation and effect of this tax act has been determined definitely by the state court in the instant cases. Construing the act, that court has said:

'The Act in question may be said to be complementary to the other statutes of South Carolina under which are assessed a gallonage tax on gasoline and other petroleum products. Indeed, it expressly excludes from its provisions all gasoline upon which a like tax has been paid under other statutes. It so declares in its title and specifically designates in its body the statutes, payment of the tax under which exempts from its burden. * * *

'In South Carolina, commencing about a decade ago, the General Assembly expressed its public policy as to revenue to be derived from the use of gasoline, vol. 32, Stat. at Large, p. 835. The tax then imposed was two cents a gallon. In 1925, the tax was increased to five cents, and in 1929, to six cents on the gallon. These statutes, however, only reached 'dealers' in this commodity.

'Statutes of this nature have been uniformly construed as imposing a tax on the ultimate consumer or user, as will be hereafter shown. Realizing that large users of gasoline either were evading or would evade the payment of the tax imposed under these Acts, by bringing in gasoline in quantities from without the State, and storing it for their own purposes, the Legislature in 1930 enacted the statute under consideration, applying the six cents tax to every person, firm, corporation, municipality or any subdivision subject to its terms. * * * Thus, with the Act of 1930 complementing the other statutes referred to, all consumers of gasoline in South Carolina pay a tax of 6 cents per gallon, no matter what the origin of, or State in which, the gasoline is produced. * * *

'On its face, the Act expressly negatives an intention to tax interstate commerce. It does not purpose to tax any gasoline until twenty-four hours after it has lost its interstate character. It seeks to operate only after the commodity has been severed from its interstate character and has become at rest as a part of the general mass of property in this State subject to the protection of its laws. * * *

'The tax here imposed is an excise tax and not a property tax. * * * All oil companies in South Carolina, including the Standard Oil Company in Charleston, S. C., are required to pay and do pay the tax upon any gasoline they sell and all that they use in South Carolina, whether it be for operating their trucks upon the highways or otherwise (34 Stat. at Large, p. 197). * * *

'The tax applies only to persons who store with intent to use and consume the gasoline in South Carolina. * * * Mere storage after manufacture or production is not enough to provoke the application of the tax. The only kind of storage affected is that with intent to use and consume the product in South Carolina. Such intention on its part petitioner admits to exist in the instant case, and in all future transactions. The fact that the Standard Oil Company at Charleston, S. C. manufactures and produces large quantities of gasoline which is stored at its refinery and which is untaxed before its sale or use in South Carolina, does not, to our mind, work a discrimination against petitioner or producers in other States. It is admitted that that...