Pennsylvania Petroleum Products Co. v. Clark

• Decision Date: 08 February 1932
• Docket Number: No. 374.,374.
• Citation: 55 F.2d 963
• Parties: PENNSYLVANIA PETROLEUM PRODUCTS CO. v. CLARK et al.
• Court: U.S. District Court — District of Rhode Island

55 F.2d 963 (1932)

PENNSYLVANIA PETROLEUM PRODUCTS CO. v. CLARK et al.

No. 374.

District Court, D. Rhode Island.

February 8, 1932.

William A. Needham, of Providence, R. I., for complainant.

Benjamin M. McLyman, Atty. Gen., and Edward W. Day and Sigmund W. Fischer, Jr., Asst. Attys. Gen., and Comstock & Canning, of Providence, R. I., for respondents.

Before ANDERSON, Circuit Judge, and MORTON and LETTS, District Judges.

ANDERSON, Circuit Judge.

Decision of this case has been unavoidably delayed by the serious illness of one of the sitting judges. It is a bill in equity seeking an injunction against state taxation of interstate commerce. The complainant is a Rhode Island corporation. The respondent, James B. Berry Sons' Company, Incorporated (hereinafter called the Berry Company), is a Pennsylvania corporation with its principal place of business at Oil City, Pa. The other respondents are the members of the board of public roads, the Governor, Treasurer, and Attorney General of Rhode Island. These officials have the duty of licensing distributors of petroleum products within Rhode Island, and assessing and collecting a tax of 2 cents per gallon on sales of fuel gasoline sold within the state. The complainant and the Berry Company are both licensed distributors within Rhode Island.

In May, 1931, the complainant purchased from the Berry Company 840,000 gallons of gasoline, about half of a shipment then being made to the Berry Company from California. At the time of the purchase the gasoline was on board the steamer J. W. Van Dyke. Under date of May 27, 1931, the seller wrote the complainant:

"Confirming our telephone conversation of May 25th, we have sold you twenty thousand barrels (840,000 gallons) of California gasoline at 5 1/8¢ per gallon f. o. b. your storage at the New England Terminal Company plant, Tiverton, Rhode Island, plus 2% financing charge, terms as previously arranged with you on material you have taken from us."

One of the terms of such sale was that if Rhode Island assessed a tax on this gasoline it should be paid by the purchaser. The gasoline arrived at Tiverton on or about May 30, and was thereupon unloaded and placed in storage at the New England Terminal Company plant, which was a storage plant jointly owned or controlled by the complainant and the Berry Company. This gasoline was intended in large part by the complainant for resale in Massachusetts and Connecticut. In Massachusetts such sales would be subject to a 3-cent tax and in Connecticut to a 2-cent tax.

Rhode Island assessed a tax of 2 cents, or $16,800, on the purchase of 840,000 gallons, against the Berry Company as the seller, and the seller thereupon demanded payment of this tax by the complainant. The Berry Company refused to institute legal proceedings to test the validity of the tax, but it has joined in the complainant's prayer for an injunction against the tax collection. While in their answer the state officials deny the complainant's allegation that title to the 840,000 gallons passed from seller to purchaser while the gasoline was on board the steamer J. W. Van Dyke on the high seas, the weight of the evidence on that issue clearly sustains the complainant's contention. We find as a fact that title did pass while the gasoline was on the high seas. The sale, therefore, was in interstate commerce and the gasoline not subject to the State tax.

Parenthetically, even if title had not passed until the gasoline had reached Tiverton, it is far from clear that the tax would not be unconstitutional, under the doctrine of Sonneborn Bros. v. Cureton, 262 U. S. 506, 43 S. Ct. 643, 67 L. Ed. 1095; but we ground our decision on our finding of fact that the title passed while the gasoline was on the high seas.

From the foregoing, it is plain that the tax was invalid under the Commerce...