Hooven Allison Co v. Evatt v. 8212 1944, 38

Citation65 S.Ct. 870,89 L.Ed. 1252,324 U.S. 652
Decision Date09 April 1945
Docket NumberNo. 38,38
PartiesHOOVEN & ALLISON CO. v. EVATT, Tax Commissioner of Ohio. Argued Nov. 7—8, 1944
CourtUnited States Supreme Court

See 325 U.S. 892, 65 S.Ct. 1198.

Messrs. Luther Day and Curtis C. Williams, Jr., both of Cleveland, Ohio, for petitioner.

[Argument of Counsel from page 653 intentionally omitted] Mr. Aubrey A. Wendt, of Columbus, Ohio, for respondent.

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

Respondent, a tax official of the state of Ohio, has assessed for state ad valorem taxes certain bales of hemp and other fibers belonging to petitioner. The fibers had been brought from the Philippine Islands or from other places outside the United States. When assessed for the tax, they were stored in the original packages in which they had been imported, in petitioner's warehouse at its factory at Xenia, Ohio, preliminary to their use by petitioner in the manufacture of cordage and similar products.

The State Board of Tax Appeals sustained the assessment for the three years in question, 1938, 1939, and 1940. Petitioner then brought the present proceeding in the Supreme Court of Ohio to review the Board's determination. That court rejected petitioner's contention that the fibers are imports, immune from state taxation under Article, I, § 10, cl. 2, of the Constitution, which prohibits state taxation of imports or exports; and it sustained the tax. 142 Ohio St. 235, 51 N.E.2d 723.

The State Court recognized that Brown v. Maryland, 12 Wheat. 419, 6 L.Ed. 678, established the rule that imports in their original packages may not be taxed by a state. But it thought that the present case fell within the qualification upon that rule laid down in Waring v. City of Mobile, 8 Wall. 110, 19 L.Ed. 342. The Waring case held that since a purpose of importation is sale, imports are immune from state taxation only so long as they are in the hands of the importer, and lose their immunity upon being sold by him. The Supreme Court of Ohio held that petitioner acquired title to the merchandise here taxed after its arrival in this country. It concluded from this that the foreign sellers or their agents, and not petitioner, were the importers, and that the merchandise, after the sale to petitioner, had ceased to be an import constitutionally immune from state taxation.

In any case the Ohio court thought that even if petitioner were the importer and the merchandise were immune from taxation on its receipt by petitioner, it nevertheless ceased to be an import, and lost its immunity as such, upon its storage at petitioner's warehouse, awaiting its use in manufacturing. The Court thought that Brown v. Maryland, supra, laid down a rule applicable only to imports for the purpose of sale, and that imports for use became, upon storage, even if still in the original package, so intermingled with the common mass of property within the state as to be subject to the state power of taxation.1 The Court found it unnecessary to decide whether the fibers brought from the Philippine Islands, which are not a foreign country, could be imports within the meaning of the constitutional immunity, since they would be taxable in any event upon the two grounds already stated.

We granted certiorari, 321 U.S. 762, 64 S.Ct. 939, because of the novelty and importance of the constitutional questions raised. The questions for decision are (1) whether, with respect to the fibers brought from foreign countries, petitioner was their importer; if so, (2) whether, as stored in petitioner's warehouse, they continued to be imports at the time of the tax assessment; and (3) whether the fibers brought from the Philippine Islands, despite the place of their origin, are likewise imports rendered immune from taxation by the constitutional provision.

The Constitution confers on Congress the power to lay and collect import duties, Art. I, § 8, and provides that 'no State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws * * *.' Art. I, § 10, Cl. 2. These provisions were intended to confer on the national government the exclusive power to tax importations of goods into the United States. That the constitutional prohibition necessarily extends to state taxation of things imported, after their arrival here and so long as they remain imports, sufficiently appears from the language of the constitutional provision itself and its exposition by Chief Justice Marshall in Brown v. Maryland, supra. We do not understand anyone to challenge that rule in this case.

It is obvious that if the states were left free to tax things imported after they are introduced into the country and before they are devoted to the use for which they are imported, the purpose of the constitutional prohibition would be defeated. The fears of the framers, that importation could be subjected to the burden of unequal local taxation by the seaboard, at the expense of the interior states, would be realized, as effectively as though the states had been authorized to lay import duties.2 It is evident, too, that if the tax immunity of imports, commanded by the Constitution, is to be reconciled with the right of the states to tax goods after their importation has become complete and they have become a part of the common mass of property within a state, 'there must be a point of time when the prohibition ceases, and the power of the state to tax commences.' Brown v. Maryland, supra, 12 Wheat. 441, 6 L.Ed. 678.

In Brown v. Maryland, supra, the state sought to impose a license tax on the sale by the importer of goods stored in his warehouse in the original packages in which they were imported. In holding the levy to be a prohibited tax on imports, Chief Justice Marshall said (12 Wheat. at pages 441, 442, 6 L.Ed. 678):

'It is sufficient for the present to say, generally, that when the importer has so acted upon the thing imported, that it has become incorporated and mixed up with the mass of property in the country, it has, perhaps, lost its distinctive character as an import, and has become subject to the taxing power of the state; but while remaining the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty on imports, to escape the prohibition in the constitution.'

Although one Justice dissented in Brown v. Maryland, supra, from that day to this, this Court has held, without a dissenting voice, that things imported are imports entitled to the immunity conferred by the Constitution; that that immunity survives their arrival in this country and continues until they are sold, removed from the original package, or put to the use for which they are imported. Waring v. City of Mobile, supra, 8 Wall. 122, 123, 19 L.Ed. 342; Low v. Austin, 13 Wall. 29, 32, 33, 20 L.Ed. 517; Cook v. Pennsylvania, 97 U.S. 566, 573, 24 L.Ed. 1015; F. May & Co. v. New Orleans, 178 U.S. 496, 501, 507, 508, 20 S.Ct. 976, 977, 979, 980, 44 L.Ed. 1165; People of State of New York ex rel. Edward & John Burke v. Wells, 208 U.S. 14, 21, 22, 24, 28 S.Ct. 193, 195, 196, 52 L.Ed. 370; Gulf Fisheries Co. v. MacInerney, 276 U.S. 124, 126, 127, 48 S.Ct. 227, 228, 72 L.Ed. 495; McGoldrick v. Gulf Oil Corporation, 309 U.S. 414, 423, 60 S.Ct. 664, 667, 84 L.Ed. 840.

All the taxed fibers, with the exception of those brought from the Philippine Islands, which will presently be separately considered, were brought to this country from foreign lands and were undoubtedly imports, clothed as such with a tax immunity which survived their importation, until the happening of some event sufficient to alter their character as imports. As we have said, the Supreme Court of Ohio found such events in what it deemed to be a sale of the merchandise to petitioner after it had been landed in the United States, and in the further cir- cumstance that by storing the merchandise in the warehouse at petitioner's factory, it had become a part of the common mass of property subject to state taxation and so could no longer be regarded as an import.

Resolution of either point in favor of respondent is decisive of the case. Hence we must first consider whether petitioner, rather than the foreign producers or shippers acting through their American agents, was the importer. If so, the tax immunity of the imported merchandise survived its receipt by petitioner and we must determine the further question whether petitioner's subsequent treatment of the merchandise deprived it of its character, and hence its immunity, as an import.

I.

Petitioner's relationship to the merchandise at the time of importation and afterward is of significance only in determining whether, as the state court has found, the relationship was so altered after importation that it can be said that the purpose of the importation had been fulfilled. If it had, there was no longer either occasion or reason for the further survival of the immunity from taxation. That relationship is to be ascertained by reference to all the circumstances attending the importation, particularly as shown by the long established course of busines by which petitioner's supply of fibers has been brought into the country for use in manufacturing its finished product.

The state introduced no evidence, and there is no dispute in point of substance as to petitioner's evidence. The latter consists of the oral testimony of petitioner's general manager, some examples of the contracts by which petitioner procured the merchandise to be brought to this country, and two stipulations containing statements, admitted to be true, which were made by the American agents of the producers and shippers of the merchandise.

Both the Board of Tax Appeals and the state court, without specially finding some of the facts which we regard as of controlling significance, contented...

To continue reading

Request your trial
135 cases
  • Schettler v. County of Santa Clara
    • United States
    • California Court of Appeals Court of Appeals
    • November 9, 1977
    ...in their original package are immune from local taxation until they are exposed for sale or sold (Hooven & Allison Co. v. Evatt (1945) 324 U.S. 652, 657, 65 S.Ct. 870, 89 L.Ed. 1252; Singer Co. v. Kings County (1975) 46 Cal.App.3d 852, 863, 121 Cal.Rptr. 398; Sterling Liquor Distributors, I......
  • Rice Growers' Association of California v. County of Yolo
    • United States
    • California Court of Appeals Court of Appeals
    • April 28, 1971
    ...States, the considerations advanced by a highly divided court relative to 'imports' from the former in Hooven & Allison Co. v. Evatt (1945) 324 U.S. 652, 671, 65 S.Ct. 870, 89 L.Ed. 1252, not since repeated, are not deemed applicable to the issue before us. II To summarize: The cases establ......
  • Sea-Land Services, Inc. v. Municipality of San Juan
    • United States
    • U.S. District Court — District of Puerto Rico
    • September 18, 1980
    ...IV, § 3, Cl. 2; American Insurance Co. v. Canter, 26 U.S. (1 Pet) 511, 542-43, 7 L.Ed. 242 (1828); Hooven & Allison Co. v. Evatt, 324 U.S. 652, 673, 65 S.Ct. 870, 880, 89 L.Ed. 1252 (1945); District of Columbia v. John R. Thompson Co., 346 U.S. 100, 105-107, 73 S.Ct. 1007, 1010-1011, 97 L.E......
  • Portland Pipe Line Corp. v. Environmental Imp. Com'n
    • United States
    • Maine Supreme Court
    • June 4, 1973
    ...duties until they are opened, sold, or until they are used by the importer. Brown v. Maryland, supra; Hooven & Allison Co. v. Evatt, 324 U.S. 652, 65 S.Ct. 870, 89 L.Ed. 1252 (1945); Youngstown Sheet & Tube Co. v. Bowers, supra. The transfer fee is imposed upon oil which, at the outset, is ......
  • Request a trial to view additional results
1 books & journal articles

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT