Hercules Powder Co. v. State Board of Equalization of State

• Decision Date: 16 August 1949
• Docket Number: 2429
• Citation: 208 P.2d 1096,66 Wyo. 268
• Parties: HERCULES POWDER COMPANY, Appellant, v. THE STATE BOARD OF EQUALIZATION OF THE STATE OF WYOMING, Respondent
• Court: Wyoming Supreme Court

208 P.2d 1096

66 Wyo. 268

HERCULES POWDER COMPANY, Appellant, v. THE STATE BOARD OF EQUALIZATION OF THE STATE OF WYOMING, Respondent

No. 2429

Supreme Court of Wyoming

August 16, 1949

Rehearing Denied 66 Wyo. 268 at 309.

APPEAL from District Court, Laramie County; SAM M. THOMPSON, Judge.

Action by the Hercules Powder Company against the State Board of Equalization of the State of Wyoming for an adjudication that assessment by defendant against plaintiff for amount alleged due as sales tax was improper. From an adverse judgment, the plaintiff appeals.

Judgment reversed and cause remanded.

For the appellant the cause was submitted on the brief of Loomis &amp Lazear of Cheyenne, Wyoming and oral argument by Mr. Loomis.

POINTS OF COUNSEL FOR APPELLANT.

A statutory agent for service of process is not a business agent and his appointment does not constitute doing business in Wyoming. The sending of an engineer into the state to supervise installations is an incident of interstate commerce and does not constitute doing business in the state. Creamery Package Mfg. Co. v. Board (Wyo.) 166 P.2d 952.

A state has sales tax jurisdiction in a case in which there is a definite taxable event in the taxing state which cannot be duplicated in another state. Morrison-Knudsen Company Inc. v. State Board, 58 Wyo. 500.

The Wyoming Sales Tax Act specifically exempts transactions in interstate commerce such as are here involved, and applies only to sales and venders within Wyoming. Sec. 32-2506 W.C.S 1945.

The existence of a business office within the taxing state is of primary importance as a basis for tax jurisdiction. Creamery Package Mfg. Co. v. Board, supra.

The state's power to tax is not to turn on the technical legal effect, relevant for other purposes but not for this, that title passes on delivery to the carrier. In the absence of other and more substantial difference, that irrelevant technical consideration should not control. However, it may be determined for locating the incidence of loss in transit or other questions arising among buyer, seller and carrier, for purposes of taxation that factor alone is a will-o'-the-wisp, insufficient to crux a due process connection from selling to consuming state and incapable of increasing or reducing any burden the tax may place upon the interstate transaction. Harvester Co. v. Department of Treasury, 322 U.S. 340.

For the respondent the cause was submitted on the brief of Norman B. Gray, Attorney General, John S. Miller, Deputy Attorney General and Marion R. Smyser, Asst. Attorney General, all of Cheyenne, Wyoming and oral argument by Mr. Smyser.

POINTS OF COUNSEL FOR RESPONDENT.

There is nothing inherently wrong with the levying of a tax by a state on a "taxable event" occurring either immediately prior to an interstate shipment or immediately after an interstate shipment has been concluded, so long as such event cannot be duplicated in another state. State Board of Equalization v. Blind Bull Coal Company, 55 Wyo. 438; Morrison-Knudsen Company, Inc., v. State Board of Equalization, 58 Wyo. 500, 1943.

There is no adequate basis for distinguishing the present tax laid on the sale or purchase of goods upon their arrival at destination at the end of an interstate journey from the tax which may be laid in like fashion on the property itself. That the latter is a permissible tax has long been established. Here the tax is conditioned upon a local activity delivery of goods within the state upon their purchase for consumption. It is an activity which, apart from its affect on the commerce, is subject to the state "taxing power." The effect of the tax, even though measured by the sales price, neither discriminates against nor obstructs interstate commerce more than numerous other state taxes which have repeatedly been sustained as involving no prohibited regulation on interstate commerce. McGoldrick v. Berwind-White Coal Mining Company, 309 U.S. 33, 84 L.Ed. 565.

From the viewpoint of the Commerce Clause, where corporations carry on a local activity sufficiently separate from the interstate commerce, state taxes may be validly laid, even though the exaction from the business of the taxpayer is precisely the same as though the tax had been levied upon the interstate business itself. The choice of a local incident for the tax, without more, is not enough. There are always convenient local incidents in every interstate operation. Memphis Natural Gas Co. v. Stone, Adv. Ops. Oct. Term, 1947, 92 L.Ed. (No. 18) 1409.

The weight of juristic authority is to the effect that, where the goods or articles of merchandise (which are made the subject of regulation by state enactment) are in the state at the time of sale, the sale of such goods or merchandise is not a transaction of interstate commerce, regardless of what prior transportation of the goods or articles may have taken place. 12 C. J. 27. Star Square Auto Supply Company v. Gerk, 30 S.W. 2d. 447, 460.

RINER, Chief Justice. KIMBALL, J. and BLUME, J. concur. RINER, C. J. and KIMBALL, J. concur in the opinion of BLUME, J.

OPINION

RINER, Chief Justice.

The appellant, Hercules Powder Company, by direct appeal has brought a judgment of the District Court of Laramie County here for review. That judgment affirmed an order against appellant made October 7, 1947 in favor of the State Board of Equalization of the State of Wyoming, respondent, which order had also affirmed an assessment against appellant for a certain amount asserted to be due as sales tax, use tax, penalties, and interest. Subsequently herein the Hercules Powder Company will, for convenience, be usually designated as either the "appellant" or the "Powder Company" and the State Board of Equalization will be ordinarily referred to as the "Board."

A brief outline of the pleadings of the parties in the District Court will afford a substantial presentation of the positions taken by these parties in this litigation as well as the issues involved.

The petition of appellant alleges in paragraph "1" that it is a corporation organized and existing under the laws of the State of Delaware. Paragraph "2" states that about April 23, 1946 the appellant was notified by the Board that there was due from the Powder Company to the State of Wyoming certain assessed sales taxes and use taxes, the former totaling $ 2,348.64 and the latter $ 2.47 and that the board affirmed said assessment by its order of October 7, 1947, a copy of which is attached to the pleading and made a part of it as "Exhibit A". Paragraph "3" states that the amount of the use tax being negligible, no contention is now made by appellant regarding it but the latter's rights are reserved as to any future use tax assessments. By paragraph "4" it is recited that the larger sum above mentioned is due, as the Board claims, only as a sales tax.

Paragraph "5" alleges that the only substantial distinction between the transactions wherein a use tax is assessed and based and those wherein a sales tax is assessed and based is that the former involves sales of commodities sold F. O. B. cars of interstate carriers at points without this state while the latter dealt with commodity sales F. O. B. cars of interstate carriers at points within Wyoming. Paragraph "6" states that as a Delaware corporation it was authorized to do business in this state; that it is a manufacturer and seller of explosives and incidental materials; that it had no office nor any stock of such explosives or materials and no mill or magazine within the State of Wyoming; that it had no agent other than its statutory agent for the service of process in this state; that it had not taken out nor was it required to take out a Wyoming license as a wholesaler or retailer under the Wyoming Selective Sales Tax Act; that from about August 1, 1944 to about February 26, 1946 appellant had a special representative in the State of Wyoming to give technical or engineering advice to seismograph crews, said representative living in Wyoming during the period stated but having neither office nor phone listing in appellant's name, taking no orders from Wyoming customers; that appellant had service men in Wyoming during said period, one of whom covered territory served by appellant from its Denver office and the other covered territory served by its Salt Lake City office; that these men took no orders from Wyoming customers but were credited with sales in such Wyoming territory as was arbitrarily assigned to them by appellant; that all Wyoming orders for customers in this state were handled through the Denver or Salt Lake City offices of appellant; that no orders were ever shipped into Wyoming without the approval of these two offices, such orders as involved the assessment mentioned above having been sent by mail or telephoned to Denver or Salt Lake City offices or were received there from extra-Wyoming sources and were filled from mills or magazines without Wyoming; that such orders were delivered to interstate carriers by appellant at points without Wyoming for transportation on straight, uniform bills of lading for delivery by such carriers to purchasers at destination points within Wyoming; that appellant's Denver and Salt Lake City offices billed Wyoming customers by mail and the latter's remittances for the goods purchased were so received at such offices.

Paragraph "7" of appellant's petition states that the transactions above described are not subject to the tax imposed by the Selective Sales Tax Act aforesaid because the sales were not made in this state, but outside of it; because the sales were made in interstate commerce and being so made are transactions which Wyoming is prohibited from taxing under the United States Constitution and laws and are consequently,...