McCaw v. Fase
Decision Date | 31 January 1955 |
Docket Number | No. 13920.,13920. |
Citation | 216 F.2d 700 |
Parties | J. Elroy McCAW and John D. Keating, Appellants, v. Earl W. FASE, The Tax Commissioner of the Territory of Hawaii, Appellee. |
Court | U.S. Court of Appeals — Ninth Circuit |
Kenneth Davis, Seattle, Wash., David N. Ingman, Honolulu, Hawaii, Justin Miller, Gen. Counsel, Pacific Palisades, for appellants.
Vincent T. Wasilewski, Atty., Washington, D. C., Edward N. Sylva, Atty. Gen., Rhoda V. Lewis, Deputy Atty. Gen., for appellee.
Before DENMAN and ORR, Circuit Judges, and YANKWICH, District Judge.
Writ of Certiorari Denied January 31, 1955. See 75 S.Ct. 340.
Appellant J. Elroy McCaw is a citizen and resident of Centralia, Washington, and appellant John D. Keating a citizen and resident of Portland, Oregon. In 1946, they obtained a license for a limited term from the Federal Communications Commission to operate a radio station known as KPOA in Honolulu, Territory of Hawaii, under the terms of the Communications Act of 1934, as amended, 47 U.S.C.A. §§ 151-609. The station, a 5000 kilowatt station, commenced broadcasting on October 15, 1946.
On May 3, 1951, the appellants filed in Law in the Circuit Court, First Judicial Circuit, Territory of Hawaii, an amended complaint in a suit brought under Section 1575 of the Revised Laws of Hawaii, 1945, to recover the sum of $7,637.33 paid under protest on March 21, 1951. It is conceded that the suit was begun within the period of thirty days after the protested payment, as required by Section 1575.
The amended complaint alleged that the taxes paid under protest were assessed under Chapter 101 of the Revised Law of Hawaii, 1945, upon the gross receipts from radio broadcasting by station KPOA, Honolulu, owned and operated by the appellants, which it challenged as unconstitutional and invalid.
The appellants are a co-partnership registered as such under the laws of the Territory of Hawaii and doing business under the name of "Island Broadcasting Company."
On June 11, 1946, the partnership obtained a license under Section 5451 of Chapter 101 of the Revised Laws of Hawaii, 1945, known as the "general excise tax" or "gross income" tax law, and for the period beginning October 1, 1946, and ending November 30, 1947, the partnership returned for taxation its broadcasting income, and paid the tax on it. For December, 1947, and thereafter, while continuing to report income from broadcasting, the partnership claimed exemption of all such income upon the ground that it was derived from interstate commerce.
It is the appellants' contention in this litigation that all broadcasting is interstate commerce, that the Congress has preempted the subject matter of radio broadcasting to the exclusion of state and territorial legislation of every kind, including taxation, and that the assessments made by the Tax Commissioner were unconstitutional and invalid. The Tax Commissioner, in his answer, asserted, in substance, that the gross receipts assessed for taxation were derived from the transmission of KPOA broadcasts to the radio audience in the Territory of Hawaii, that KPOA does not reach an audience outside the Territory of Hawaii with effective and satisfactory service that is of commercial value in the sale of radio time, that sponsors purchasing radio time on KPOA do not do so with a view of reaching an audience outside the Territory of Hawaii, that where sponsors have occasion to reach an audience outside the Territory, a short-wave relay is employed, and that the Tax Commissioner excluded from the tax assessments all the receipts from the programs transmitted by short-wave relay. In a counterclaim, the additional sum of $14,595.98, in accrued taxes with interest was sought.
The cause was tried without a jury. Findings were entered on January 28, 1952, the court making twelve specific findings, of which the following are the most important:
On the basis of these findings, the Court concluded that the plaintiff was not entitled to recover the taxes paid and gave judgment to the Tax Commissioner on his counter-claim.
This is a direct appeal from the decision. 28 U.S.C. § 1293.
While the appellants have challenged the findings in many respects, they have not brought up any of the evidence. In the circumstances, the presumption of correctness of the findings under Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C., applies with great strictness. Rickard v. Thompson, 9 Cir., 1934, 72 F.2d 807, 809; United States v. Van Dusen, 8 Cir., 1935, 78 F.2d 121, 122; Gallagher's Steakhouse v. Bowles, 2 Cir., 1944, 142 F.2d 530, 531. However, in reality, the appellants are contending that it appears from the pleadings themselves that the tax to which they are subject is a burden on interstate commerce and not within the power of the Territory of Hawaii to exact. The statute involved is one imposing a tax upon sales, services and, in general, all types of business in the Territory measured by gross receipts. The portion material to this cause reads:
It cannot be disputed that the legislature of Hawaii may levy an excise tax. Brodhead v. Brothwick, 9 Cir., 1949, 174 F.2d 21. The question to determine is whether the tax burdens interstate commerce. The control of the Congress over interstate commerce is absolute. U. S. Constitution, Art. I, § 8, Cl. 3. So any direct interference with it by any State must give way. The Supreme Court has summed up the primacy of this power in the sentence:
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