Joy Oil Co v. State Tax Commission of Michigan

• Decision Date: 13 June 1949
• Docket Number: No. 223,223
• Citation: 337 U.S. 286,69 S.Ct. 1075,93 L.Ed. 1366
• Parties: JOY OIL CO., Limited, v. STATE TAX COMMISSION OF MICHIGAN
• Court: U.S. Supreme Court

337 U.S. 286

69 S.Ct. 1075

93 L.Ed. 1366

JOY OIL CO., Limited,

v STATE TAX COMMISSION OF MICHIGAN.

No. 223.

Argued Jan. 6, 7, 1949.

Decided June 13, 1949.

Mr. Clayton F. Jennings, Lansing, Mich., for petitioner.

Mr. Edmund E. Shepherd, Lansing, Mich., for respondent.

Mr. Justice FRANKFURTER delivered the opinion of the Court.

On December 29, 1945, petitioner Joy Oil Company, Ltd., purchased 1,500,000 gal- lons of gasoline from Mid-West Refineries, Inc., of Grand Rapids, Michigan. The bills of lading issued by the railroad to which the gasoline was delivered were marked 'For Export Only,' but the gasoline was consigned to petitioner at Detroit. In order to secure the benefits of lower export freight rates and exemption from the federal transportation and manufacturers' excise taxes, petitioner furnished Mid-West Refineries and the railroad with prescribed forms certifying that the gasoline was purchased for export. Rail shipments were begun in January and completed in February of 1946. As the gasoline reached Detroit it was accumulated in storage tanks leased by petitioner at Dearborn.

On April 1, 1947, the city of Dearborn assessed an ad valorem property tax on the gasoline, all of which, except 20,000 gallons, shipped to Canada by truck over the Ambassador Bridge, had then been in the Dearborn tanks for fifteen months. Shipment by truck was halted by a federal regulation prohibiting the transportation of inflammables over any international bridge, and petitioner apparently chose not to ship the gasoline by rail across the Detroit River. In July of 1947, petitioner began to ship it to Canada by water; the last tanker load departed on August 22, 1947. Petitioner explains the delay as due to inability to obtain shipping space at any earlier date.

Petitioner resisted payment of the tax on the ground that it infringed Art. I, § 10, cl. 2, of the Constitution. The Tax Commission of Michigan sustained Dearborn's assessment of the tax, and the Supreme Court of Michigan affirmed. 321 Mich. 335, 32 N.W.2d 472. We granted certiorari because the case presented a sufficiently important question in the accommodation of State and Federal interests under the Constitution. 335 U.S. 812, 69 S.Ct. 55.

The circumstances which tended, at the time when the tax was assessed, to establish petitioner's intent to export the gasoline and the fact that the gasoline was eventually exported are not enough, by themselves, to confer immunity from local taxation. See, e.g., Cornell v. Coyne, 192 U.S. 418, 24 S.Ct. 383, 48 L.Ed. 504; Empresa Siderurgica v. County of Merced, 337 U.S. 154, 69 S.Ct. 995. Nor is it enough that by the rail shipment to Detroit one step in the process of exportation had been taken or that a part of the total bulk had already departed for its foreign destination. It is of course true that commodities destined for shipment by water must be transshipped at the water's edge and so may require a brief period of storage at that point which will not be deemed a delay sufficient to interrupt the continuity of the export process. Carson Petroleum Corp. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626, see Southern Pacific Terminal Co. v. Interstate Commerce Comm., 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310; Texas & N.O.R. Co. v. Sabine Tram Co., 227 U.S. 111, 33 S.Ct. 229, 57 L.Ed. 442. But here the period of storage at Dearborn was so long as to preclude holding that the first step toward exportation would inevitably be followed by others. See, by way of contrast, Hughes Bros. Timber Co. v. Minnesota, 272 U.S. 469, 47 S.Ct. 170, 71 L.Ed. 359. While in storage, the gasoline might have been diverted to domestic markets without disruption of any existing arrangement for its transshipment and without even breach of any contractual commitment to a foreign purchaser. Neither the character of the property nor any event equivalent to its redelivery to a common carrier made export certain for all practical purposes. See Richfield Oil Corp. v. State Board, 329 U.S. 69, 82, 67 S.Ct. 156, 163, 91 L.Ed. 80.

The Export-Import Clause was meant to confer immunity from local taxation upon property being exported, not to relieve property eventually to be exported from its share of the cost of local services. See Coe v. Errol 116 U.S. 517, 527—528, 6 S.Ct. 475, 478, 29 L.Ed. 715. The fifteen-month delay at Dearborn barred immunity of petitioner's gasoline from the taxing power of the municipality.

Affirmed.

Mr. Chief Justice VINSON, with whom Mr. Justice DOUGLAS and Mr. Justice JACKSON join, dissenting.

The Court holds that fifteen months' delay in transshipment of the gasoline in question was so long that continuity of the process of exportation was broken, because during that period it might have been diverted to domestic markets. I think that this rationale and the conclusion which follows therefrom mark a substantial and unwarranted departure from our previous decisions in this field.

As I understand it, the Court's opinion reflects the view that a long delay in transshipment makes it uncertain whether the gasoline will eventually be exported, and further, that a delay of fifteen months makes it possible for this Court to say as a matter of law that the uncertainty is so great that the process of exportation has ceased, whatever the reason for the delay. But the Court concedes that petitioner intended to export the gasoline at the time the tax was imposed, and petitioner's uncontradicted evidence shows that it had that intent throughout the period of delay, which was caused by its inability to procure water transportation. That intent was manifested in a number of ways. The bills of lading by which the gasoline moved from Grandville and Alma, Michigan, to Dearborn, a Great Lakes port, were marked 'For export to Canada'; petitioner certified that the gasoline was to be exported in order to secure an exemption under the federal manufacturer's excise tax and to qualify for lower freight rates accorded exports; it transported 50,000 gallons of the gasoline by truck over the Ambassador Bridge into Canada until a federal regulation closed the bridge to inflammable materials; and finally, petitioner exported all of the gasoline to Canada when shipping space became available. There is nothing in the record to indicate either that petitioner at any time deviated from that expressed intent, or that the delay was not due solely to lack of shipping space.

The Court is in the anomalous position, therefore,...