Miller Bros Co v. State of Maryland, No. 160

CourtUnited States Supreme Court
Writing for the CourtMr. Justice DOUGLAS, with whom THE CHIEF JUSTICE
Citation74 S.Ct. 535,98 L.Ed. 744,347 U.S. 340
Docket NumberNo. 160
Decision Date05 April 1954
PartiesMILLER BROS. CO. v. STATE OF MARYLAND

347 U.S. 340
74 S.Ct. 535
98 L.Ed. 744
MILLER BROS. CO.

v.

STATE OF MARYLAND.

No. 160.
Argued Jan. 5, 1954.
Decided April 5, 1954.
Rehearing Denied May 3, 1954.

See 347 U.S. 964, 74 S.Ct. 708.

Mr. William L. Marbury, Baltimore, Md., for appellant.

Page 341

Mr. Francis D. Murnaghan, Jr., Baltimore, Md., for appellee.

Opinion of the Court by Mr. Justice JACKSON, announced by Mr. Justice REED. *

Appellant is a Delaware merchandising corporation which only sells directly to customers at its store in Wilmington, Delaware. It does not take orders by mail or telephone. Residents of nearby Maryland come to its store and make purchases, some of which they carry away, some are delivered to them in Maryland by common carrier, and others by appellant's own truck. Maryland lays upon its residents an excise tax on 'the use, storage or consumption' in the State of such articles,1 and it requires every vendor to collect and remit the tax to the State.2 This the appellant did not do. Finding appellant's truck in Maryland, the State seized it, and the State's highest court has held it liable for the use tax on all goods sold in the Delaware store to Maryland residents, however delivered.3 This was against appellant's timely contention that the Maryland taxing act, so construed, conflicts with the federal commerce power and attempts to extend the power of the State beyond its borders in violation of the Due Process Clause of the Fourteenth Amendment. The parties have stipulated facts in detail, and, so far as they seem important, we set them forth in the Appendix.4

The grounds advanced by Maryland for holding the Delaware vendor liable come to this: (1) the vendor's advertising with Delaware papers and radio stations, though not especially directed to Maryland inhabitants,

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reached, and was known to reach, their notice; (2) its occasional sales circulars mailed to all former customers included customers in Maryland; (3) it delivered some purchases to common carriers consigned to Maryland addresses; (4) it delivered other purchases by its own vehicles to Maryland locations. The question is whether these factors, separately or in the aggregate, in each or all of the above types of sales, establish a state's power to impose a duty upon such an out-of-state merchant to collect and remit a purchaser's use tax.

It is a venerable if trite observation that seizure of property by the State under pretext of taxation when there is no jurisdiction or power to tax is simple confiscation and a denial of due process of law. 'No principle is better settled than that the power of a state, even its power of taxation, in respect to property, is limited to such as is within its jurisdiction.' New York, L.E. & W.R. Co. v. Com. of Pennsylvania, 153 U.S. 628, 646, 14 S.Ct. 952, 958, 38 L.Ed. 846. 'Where there is jurisdiction neither as to person nor property, the imposition of a tax would be ultra vires and void. If the legislature of a State should enact that the citizens or property of another State or country should be taxed in the same manner as the persons and property within its own limits and subject to its authority, or in any other manner whatsoever, such a law would be as much a nullity as if in conflict with the most explicit constitutional inhibition. Jurisdiction is as necessary to valid legislative as to valid judicial action.' City of St. Louis v. Wiggins Ferry Co., 11 Wall. 423, 430, 20 L.Ed. 192.

But visible territorial boundaries do not always establish the limits of a state's taxing power or jurisdiction. In the last twenty years, revenue needs have come to exceed the demands that legislatures feel it expedient to make upon accumulated wealth or property with fixed location within the state. The states therefore have turned to taxing activities connected with the movement

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of commerce, such as exchange and consumption. If there is some jurisdictional fact or event to serve as a conductor, the reach of the state's taxing power may be carried to objects of taxation beyond its borders. When it has the taxpayer within its power or jurisdiction, it may sometimes, through him, reach his extraterritorial income or transactions. On the other hand, if it has jurisdiction of his taxable property or transactions, it may sometimes, through these, reach the nonresident. Whether this is one of these cases we must inquire.

We are dealing with a relatively new and experimental form of taxation.5 Taxation of sales or purchases and taxation of use or possession of purchases are complementary and related but serve very different purposes. The former, a fiscal measure of considerable importance, has the effect of increasing the cost to the consumer of acquiring supplies in the taxing state. The use tax, not in itself a relatively significant revenue producer,6 usually appears as a support to the sales tax in two respects. One is protection of the state's revenues by taking away from inhabitants the advantages of resort to untaxed out-of-state purchases. The other is protection of local merchants against out-of-state competition from those who may be enabled by lower tax burdens to offer lower prices. In this respect, the use tax has the same effect as a protective tariff becoming due not on purchase of the goods but at the moment of bringing them into the taxing states.7 The collection of the use tax from inhabitants is a difficult administrative problem, and if out-of-state vendors can be compelled to collect it and remit it to the taxing state, it simplifies administration. But this raises questions of great importance to particular taxpayers, to the course of commercial dealing among the states and as to appropriation by other states of tax resources properly belonging to the state where the event occurs.

Page 344

The practical and legal effect of the Maryland statute as it has been applied to this Delaware vendor is to make the vendor liable for a use tax due from the purchaser. In economic consequence, it is identical with making him pay a sales tax. The liability arises only because of a Delaware sale and is measured by its proceeds. But at the time of the sale, no one is liable for a Maryland use tax. That liability arises only upon importation of the merchandise to the taxing state, an event which occurs after the sale is complete and one as to which the vendor may have no control or even knowledge, at least as to merchandise carried away by the buyer. The consequence is that liability against the Delaware vendor is predicated upon use of the goods in another state and by another person. We do not understand the State to contend that it could lay a use tax upon mere possession of goods in transit by a carrier or vendor upon entering the State, nor do we see how such a tax could be consistent with the Commerce Clause.

The question here is whether this vendor, by its acts or course of dealing, has subjected itself to the taxing power of Maryland or whether it has afforded that State a jurisdiction or power to create this collector's liability. Despite the increasing frequency with which the question arises, little constructive discussion can be found in responsible commentary as to the grounds on which to rest a state's power to reach extraterritorial transactions or nonresidents with tax liabilities. Our decisions are not always clear as to the grounds on which a tax is supported, especially where more than one exists; nor are all of our pronouncements during the experimental period of this type of taxation consistent or reconcilable. A few have been specifically overruled, while others no longer fully represent the present state of the law. But the course of decisions does reflect at least consistent adherence to one time-honored concept: that due process requires some

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definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.

Thus, the Court has frequently held that domicile or residence, more substantial than mere presence in transit or sojourn, is an adequate basis for taxation, including income,8 property,9 and death10 taxes. Since the Fourteenth Amendment makes one a citizen of the state wherein he resides, the fact of residence creates universally reciprocal duties of protection by the state and of allegiance and support by the citizen. The latter obviously includes a duty to pay taxes, and their nature and measure is largely a political matter. Of course, the situs of property may tax it regardless of the citizenship, domicile or residence of the owner, the most obvious illustration being a tax on realty laid by the state in which the realty is located.11 Also, the keeping of tangible12 or intangible13 personalty within a state may give it a similar taxable situs there (sometimes called a business or commercial situs or domicile). Certain activities or transactions carried on within a state, such as the use14 and sale15 of property may give jurisdiction to tax whomsoever engages therein, and the use of highways may subject the use to certain types of taxation.16 These cases overlap with those in which incorporation by a state17 or permission to do business there18 forms the basis for proportionate taxation of a company, including its franchise, capital, income and property. Recent cases in which a taxable sale does not clearly take place within the taxing state, elements of the transaction occurring in different states, have presented peculiar difficulties,19 as have those where the party liable for a use tax does not use the product within the taxing state.20

We are unable to find in any of our cases a precedent for sustaining the liability asserted by Maryland here. In accordance with the principles of earlier cases, it was recently settled that Maryland could not have reached

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this Delaware vendor with a sales tax on these sales. McLeod v. J. E. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88...

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270 practice notes
  • Vt. Nat'l Tel. Co. v. Dep't of Taxes, No. 19-280
    • United States
    • Vermont United States State Supreme Court of Vermont
    • October 9, 2020
    ...link, some minimum connection, between a state and the person, property or transaction it seeks to tax." Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45, 74 S.Ct. 535, 98 L.Ed. 744 (1954). A state's authority to tax is accordingly based on the "protection, opportunities and benefits [it]......
  • Shell Oil Co. v. State Bd. of Equalization
    • United States
    • United States State Supreme Court (California)
    • June 6, 1966
    ...(Freeman Page 532 [414 P.2d 828] v. Hewit (1946) 329 U.S. 249, 67 S.Ct. 274, 91 L.Ed. 265; Miller Bros. Co. v. State of Maryland (1954) 347 U.S. 340, 74 S.Ct. 535, 98 L.Ed. 744; McLeod v. J. E. Dilworth Co. (1944) 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304.) For the foregoing reason the Sup......
  • SFA Folio Collections, Inc. v. Bannon, No. 14023
    • United States
    • Supreme Court of Connecticut
    • January 22, 1991
    ...or transaction it seeks to tax.' " National Bellas Hess, Inc. v. Department of Revenue, supra, quoting Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45, 74 S.Ct. 535, 538-39, 98 L.Ed. 744 (1954); see also Cally Curtis Co. v. Groppo, supra. "The existence of such a link or nexus will turn ......
  • Hoechst Celanese Corp. v. Franchise Tax, No. S085091.
    • United States
    • United States State Supreme Court (California)
    • May 14, 2001
    ...some minimum connection, between a state and the person, property or transaction it seeks to tax." (Miller Bros. Co. v. Maryland (1954) 347 U.S. 340, 344-345, 74 S.Ct. 535, 98 L.Ed. 744.) Corporate income "earned in the course of activities unrelated to [corporate activities in the taxing] ......
  • Request a trial to view additional results
271 cases
  • Vt. Nat'l Tel. Co. v. Dep't of Taxes, No. 19-280
    • United States
    • Vermont United States State Supreme Court of Vermont
    • October 9, 2020
    ...link, some minimum connection, between a state and the person, property or transaction it seeks to tax." Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45, 74 S.Ct. 535, 98 L.Ed. 744 (1954). A state's authority to tax is accordingly based on the "protection, opportunities and benefits [it]......
  • Shell Oil Co. v. State Bd. of Equalization
    • United States
    • United States State Supreme Court (California)
    • June 6, 1966
    ...(Freeman Page 532 [414 P.2d 828] v. Hewit (1946) 329 U.S. 249, 67 S.Ct. 274, 91 L.Ed. 265; Miller Bros. Co. v. State of Maryland (1954) 347 U.S. 340, 74 S.Ct. 535, 98 L.Ed. 744; McLeod v. J. E. Dilworth Co. (1944) 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304.) For the foregoing reason the Sup......
  • SFA Folio Collections, Inc. v. Bannon, No. 14023
    • United States
    • Supreme Court of Connecticut
    • January 22, 1991
    ...or transaction it seeks to tax.' " National Bellas Hess, Inc. v. Department of Revenue, supra, quoting Miller Bros. Co. v. Maryland, 347 U.S. 340, 344-45, 74 S.Ct. 535, 538-39, 98 L.Ed. 744 (1954); see also Cally Curtis Co. v. Groppo, supra. "The existence of such a link or nexus will turn ......
  • Hoechst Celanese Corp. v. Franchise Tax, No. S085091.
    • United States
    • United States State Supreme Court (California)
    • May 14, 2001
    ...some minimum connection, between a state and the person, property or transaction it seeks to tax." (Miller Bros. Co. v. Maryland (1954) 347 U.S. 340, 344-345, 74 S.Ct. 535, 98 L.Ed. 744.) Corporate income "earned in the course of activities unrelated to [corporate activities in the taxing] ......
  • Request a trial to view additional results

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