Stanford
Chief Justice. La Prade, Judge (specially concurring).
Morgan, Judge (dissenting).
OPINION
Stanford,
Chief Justice.
Appellant paid certain taxes under our excise tax law and
thereafter under Sec. 73-1318, A.C.A.1939,
filed its protest addressed to the State Tax Commission
claiming:
"1.
The sales are not sales within the State of Arizona, and are,
therefore, not subject to the privilege sales tax for the
reason that delivery was made without the State of Arizona.
"2.
The transactions are and were transactions in interstate
commerce and exempt from tax under the provisions of Section
73-1308, A.C.A.1939."
Thereafter,
appellant asked for a hearing before the tax commission and
after hearing and denial, brought its action in the superior
court. Judgment there was rendered on behalf of appellee,
from which judgment this appeal is taken.
When
the appellant made its return of sales each month as the law
required, it did not include sales f. o. b. outside the
state. This particular sale occurred at the office of
appellant in Phoenix, Arizona, and payment made there, and
the appellants contend that since the sales were f. o. b.
points outside of Arizona they were, therefore, sales in
interstate commerce and not subject to our excise revenue
act.
In our
recent case of Crane Co. v. Arizona State Tax Commission,
Ariz., 163 P.2d 656, 661, we said:
"Under
the agreed facts, the sales were made in Arizona and are,
therefore, taxable. If the transactions were in interstate
commerce, under the terms of section 73-1308, A.C.A.1939, no
tax based on such sales could be levied or collected. But
obviously they are not in interstate commerce, within the
meaning of the commerce clause. It has been repeatedly held
that sales taxes do not unconstitutionally burden interstate
commerce as applied to sales under the circumstances shown
here. It seems to be well settled that general sales taxes or
privilege taxes based on sales do not unconstitutionally
burden interstate commerce in the following situation: Where
the seller solicits or enters into a contract of sale within
the state and the seller maintains a place of business within
the state, even though the article cannot be purchased within
the boundaries of the taxing jurisdiction, and it is
necessary to transport the property in interstate channels
from without the boundaries of the taxing jurisdiction;
provided, however, that the delivery of the merchandise is
made to the purchaser in the taxing jurisdiction either
directly from such extrastate course or through the offices
of the seller within the taxing state; and provided further,
that no congressional enactment or policy is offended.
McGoldrick v. Berwind-White Coal Co., 309 U.S. 33,
60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876, and note p. 900.
It would serve no useful purpose to discuss the various
reasons why a transaction of this character does not come
within the interstate rule. No cases were cited by appellant
in support of its claim that the transactions mentioned were
in interstate commerce, nor is any
congressional enactment or policy involved.
"The
late case of Montgomery Ward & Co. v. State Comm. of
Revenue and Taxation, 156 Kan. 408, 133 P.2d 1008, deals
with the precise question we now have for consideration. In
that case the supreme court of Kansas rejected a similar
contention on behalf of the taxpayer. There, as here, the
taxpayer was a foreign corporation maintaining a place of
business in Kansas. It sold to residents of the state
merchandise which was shipped from without the state either
directly to the customer within the state or by relay through
the seller's office in Kansas. Under a similar statute to
ours, it was held that these were taxable transactions. They
were Kansas sales within the meaning of the statute, and not
interstate commerce transactions."
In the
instant case appellant in its brief states:
"The
identical question here presented was before the Supreme
Court of Missouri in the cases of American Bridge Co. v.
Smith, 352 Mo. 616, 157 A.L.R. 798, 179 S.W.2d 12 and
Bingley Coal Co. v. Smith, 352 Mo. 627, 179 S.W.2d
17.
"In
holding the Missouri sales tax void as applied to sales f. o.
b. points outside the State of Missouri, the Missouri Court
state in American Bridge Co. v. Smith, supra, 179
S.W.2d at page 15:
"'*
* * further the application of a sales tax to an event of a
sales transaction of interstate commerce, which event does
not occur in the territory of the taxing authority, should be
held invalid (cf. McGoldrick v. Berwind-White Coal Mining
Co., supra); the sale as stated in the brief of
defendant's counsel "must occur in this
state."'"
We
further quote from the case of American Bridge Co. v.
Smith, supra [352 Mo. 616, 179 S.W.2d 15]:
"The
transfer of the ownership of, or title to, the property --
the sale at retail as defined by the Sales Tax Act [Mo.R.S.A.
§ 11407 et seq.], the 'taxable event'
(McGoldrick v. Berwind White Coal Mining Co., supra) --
appears, under the facts of the case at bar, to be in some
instances in states other than Missouri, for the evidence
shows that in compliance with many of the contracts of sale
plaintiff's products were delivered free on board cars at
its plants without this state. The transfers of the ownership
of, or title to, the products of the plaintiff are presumed
to have taken place where the possession of the products was
delivered to the vendees; there is no evidence that the
plaintiff and the purchasers had a contrary intention. And in
these instances where title was presumptively transferred to
the purchasers in a foreign state (delivery f. o. b. cars at
plaintiff's plants in other states) it would seem beyond
question that such sales may not be taxed (basically) under
the provisions of our Sales Tax Act, inasmuch as the sales
were not sales at retail 'in this State,' Subsection (a), Section 11408, supra; * * *."
As
stated by appellant,
"The
Supreme Court of the United States denied a petition for
certiorari in Smith v. American Bridge Co., supra,
323 U.S. 712, 65 S.Ct. 37, 89 L.Ed. 573, thus approving the
decision of the Supreme Court of Missouri."
The
answering brief of the appellee in the instant case states:
"*
* * the American Bridge Co. case, supra, conceded that if
section 11409, supra, (the Missouri Code Section), was
intended to exempt only those sales the taxation of which
would infringe the Commerce Clause, then the sales in
question would not have been exempt from taxation.
Those sales, as in the instant case, were sales f. o. b. a
point outside the State of Missouri. * * *"
We
quote further from Smith v. American Bridge Co., supra:
"It
must be conceded that the Sales Tax Act, if applicable to the
sales in controversy, does not aim at, or discriminate
against interstate commerce, and imposes the same burden upon
the sales in controversy as is imposed on sales in intrastate
commerce. To construe the exemption section to include sales
of tangible personal property in which the transfer of
ownership, or title to, the property occurs after the
property has come to its destination in this state, would
exempt sales at retail in the state with resultant loss of
revenue, although the personalty so sold, being at the end of
its journey within Missouri was consequently receiving the
protection of the state's laws. And a construction of the
exemption section which would exempt sales in interstate
commerce which the state may otherwise tax -- the purchasers
of goods from sellers in intrastate commerce being required
to pay the sales tax, and purchasers, in sales in interstate
commerce (otherwise taxable), not being obliged to pay --
would place sellers in intrastate commerce in a position of
competitive disadvantage. Of such a tax, although imposed
upon a taxable event in integral part of a transaction of
interstate commerce, it is now written that the burden of
such a tax upon interstate commerce is merely incidental or
consequential. * * *"
That
part of Section 11409, Mo.R.S.A., as amended, of the laws of
the state of Missouri 1941, which is relative to the issue
here, is as follows:
"*
* * There is hereby specifically exempted from the provisions
of this article and from the computation of the tax levied,
assessed or payable under this article such retail sales as
may be made in commerce between this state and any other
state of the United States * * * and any retail sale which
the State of Missouri is prohibited from taxing under the
Constitution or laws of the United States of America, * *
*."
Our Section 73-1308, supra, relating to the matter
at issue is as follows:
"Constitutional
prohibition. -- The taxes herein levied shall not be
construed to apply to transactions in interstate commerce
which, under the Constitution of the United States, the state
of Arizona is prohibited from taxing or upon any sales made
to the United States government, its departments or agencies,
nor to businesses or transactions exempted from taxation
under the Constitution of the United States, or the
constitution of the state of Arizona."
As
stated by appellees, "The only interstate transactions
exempted from the sales tax are those that the federal
constitution required to be exempt."
In the
instant case, an Arizona corporation, having offices in and
place of business in Arizona, entered into the sales
contracts in this state and received payment...