Mexican Petroleum Corp. v. City of S. Portland

• Decision Date: 11 February 1922
• Citation: 115 A. 900
• Parties: MEXICAN PETROLEUM CORPORATION v. CITY OF SOUTH PORTLAND.
• Court: Maine Supreme Court

115 A. 900

MEXICAN PETROLEUM CORPORATION

v. CITY OF SOUTH PORTLAND.

Supreme Judicial Court of Maine.

Feb. 11, 1922.

Appeal from Supreme Judicial Court, Cumberland County, at Law.

The City of South Portland assessed taxes against the Mexican Petroleum Corporation. From a decision of the assessors refusing to abate the taxes, the latter appeals. Judgment for the City.

Argued before CORNISH, C. J., and SPEAR, HANSON, DUNN, MORRILL, and DEASY, JJ.

Verrill, Hale, Booth & Ives, of Portland, for petitioner.

Stephen W. Hughes and Hinckley & Hinckley, all of Portland, for defendant.

CORNISH, C. J. This is an appeal from the decision of the assessors of the defendant city refusing to abate the taxes assessed against the plaintiff for the year 1920, and comes before the law court on an agreed statement of facts. The following excerpts from that statement give all that is material for the decision of the case, viz.:

"On the 1st day of April, A. D. 1920, the day on which the petitioner was assessed for the tax appealed from, the petitioner was a corporation duly organized under the laws of the state of Maine; its principal office, as provided in its charter, was located in the city of Portland, county of Cumberland and state of Maine, where the clerk's records and other corporate records were kept; its principal office for administrative purposes was in the city of Los Angeles, in the state of California; it had branch offices in various parts of the United States; on said 1st day of April, 1920, it had a branch office in the city of South Portland under the charge of a local superintendent; said branch office was located on land in the city of South Portland owned by said petitioner, and there were also located on said land four tanks used for the purpose of storing oil awaiting its sale and delivery.

"Petitioner's branch office in said South Portland is, and at the time of the assessment of said tax was, engaged solely in the business of selling and distributing the oil from said tanks to buyers throughout the territory comprising the northern portion of New England; all contracts of sale are passed on to the New York office for approval; all of the oil sold and delivered by the said petitioner, through its branch office in said South Portland, is imported into the United States of America from the republic of Mexico in bulk in tank steamers; said tank steamers proceed from the port of shipment in Mexico directly to their destination at petitioner's dock in South Portland without touching at any other port. Upon the steamers reaching their destination in said South Portland the oil from said steamers is pumped from said tank steamers into the tanks hereinbefore mentioned. No other oil is sold by said petitioner in its branch office in South Portland, except such as has previously been pumped from its steamers as hereinbefore described. At the time of pumping said oil from the said steamers there is always oil in said tanks, so that the oil from any steamer is mixed with oil that has previously been imported in the same manner and pumped into said tanks from other steamers; several tank steamers thus loaded with oil from Mexico are received at South Portland by said petitioner each year and their cargoes pumped into said tanks. For the purpose of sale suction lines are laid from said tanks to the boiler houses whence the oil is pumped through pipes to tank car loading racks, motor truck loading racks, or the bunker line on the petitioner's wharf. The oil loaded on said tank cars is sold and delivered in various parts of the territory comprising Northern New England. The oil loaded into the tank motor trucks is sold and delivered in Portland and immediate vicinity. Some oil from said tanks is drawn out and used by said branch office for its private purposes, namely, to generate heat and power.

"The parties agree to limit the issue in this case to the question as to whether on the above agreed statement of facts the petitioner could be legally assessed for the oil in said tanks. If the court finds that the petitioner could be legally taxed under the above statement of facts, judgment shall be rendered in favor of the city of South Portland for the sum of $1,399.20, with interest thereon from the 1st clay of August, 1920, and costs. If the court finds that the city of South Portland did not legally assess the tax on said oil in said tanks, judgment shall be rendered for the petitioner, and the court may make such order relating to the payment of costs as justice may require."

The plaintiffs contention is that the tax upon the oil in the four tanks on the dock is a tax upon imports, and therefore illegal as in violation of article 1, § 10, cl. 2, of the federal Constitution, which is as follows:

"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 its inspection laws."

The levying of a tax upon imports by local authorities comes within this inhibition of the Constitution, so that the discussion of the case at bar is resolved into a single point, namely, whether on the 1st day of April, 1920, the oil of the plaintiff company accumulated in these tanks, under the admitted facts, must be regarded as still retaining its character as an import, and therefore immune from local taxation, or whether it had lost its character as an import and therefore, like all other property enjoying the protection of the local government, was subject to taxation for its proportional part of the expense thereof.

Chief Justice Marshall, in the leading case of Brown v. Maryland (1827) 12 Wheat. 419, 6 L. Ed. 678, discussed with characteristic fullness, clearness, and power the principles underlying this question, and blazed a way from which the courts have not strayed for the well-nigh completed century since that decision was announced. When goods are imported into the United States from a foreign country for sale and use here, there must be some point of time at which they lose their character as an import and therefore cease to possess rights superior to the general mass of property in the country. What that point is, just where the line of separation runs, depends upon the peculiar facts of each particular case and the manner in which the importer deals with the goods imported. In some instances the line may be sharply denned; in others it may be somewhat vague and indefinite. The great Chief Justice calls attention to this in his opinion in Brown v. Maryland, when he says:

"The distinction exists, and must be marked as the cases arise. Until they do arise, it might be premature to state any rule as being universal in its application."

But he continues:

"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."

The slight hesitation in announcing this rule as indicated by the word "perhaps" has entirely disappeared in subsequent decisions and the general rule there announced has often been reiterated in substantially the same essence, though in varying form. Twenty years after the decision in Brown v. Maryland, Chief Justice Taney approved of the rule there laid down and restated it thus:

"Goods imported, while they remain in the hands of the importer, in the form and shape in which they were brought into the country can in no just sense he regarded as a part of that mass of property in the state usually taxed for the support of the state government." License Cases (1847) 5 How. at pages 575, 576 (12 L. Ed. 256).

The term "original package" later came into use, not as a statutory or constitutional term, but as a judicial expression, applicable in this connection. In Low v. Austin (1872) 13 Wall. 29, 20 L. Ed. 517, after considering the opinion in Brown v. Maryland and the License Cases, the court said:

"The goods imported do not lose their character as imports, and become incorporated into the mass of property of the state, until they have passed from the control of...