Smith v. State

• Decision Date: 23 April 1964
• Docket Number: No. 37249,37249
• Citation: 391 P.2d 718,64 Wn.2d 323
• Court: Washington Supreme Court
• Parties: Wilbur J. SMITH, Appellant, v. The STATE of Washington, Respondent. LONGVIEW TUGBOAT COMPANY, a corporation, Appellant, v. The STATE of Washington, Respondent.

Page 323

64 Wn.2d 323

391 P.2d 718

Wilbur J. SMITH, Appellant, v. The STATE of Washington, Respondent.

LONGVIEW TUGBOAT COMPANY, a corporation, Appellant, v. The STATE of Washington, Respondent.

No. 37249.

Supreme Court of Washington, En Banc.

April 23, 1964.

John F. McCarthy, Longview, for appellant.

John J. O'Connell, Atty. Gen., Henry W. Wager, James A. Furber, Asst. Attys. Gen., Olympia, for respondent.

HALE, Justice.

Shall the happy picture of tugboats and barges, log booms and rafts, and ships and the sea--towing and being towed in bustling harmony upon the broad waters of the mighty Columbia--suffer the discordant intrusion of the business and occupation tax? Appellants, skipper and tugboat company alike, say no; the tax commission says yes. We must decide.

Wilbur J. Smith, individually, and Long-view Tugboat Company, a corporation, plaintiffs, operate tugboats and barges on the Columbia River and its tributaries. From findings of fact based on an agreed statement of facts, we observe that appellants carry on their tug and barge business as common carriers under a certificate of authority issued by the Interstate Commerce Commission, pursuant to the Interstate Commerce Act, Part III (49 U.S.C.A. §§ 901-923). In addition, the United States has licensed plaintiffs' vessels for coastwise trade. 46 U.S.C.A. § 251. Plaintiffs do not engage in the buying or selling of goods or commodities in the state of Washington, nor do they operate docks, wharves, warehouses or other facilities for receiving or transferring cargo transported by them. They limit their business activities to transporting the property of others as common carriers upon navigable waters.

Plaintiffs own neither booming nor rafting facilities, but tow logs assembled into rafts by others. Plaintiff Smith does own some log raft moorage facilities, in both Oregon and Washington waters of the Columbia. These moorage facilities consist of wooden piles driven into the riverbed at points below the line of low tide and are used solely for tying up log rafts during times that they are not being towed. Plaintiff Longview Tugboat Company owns no log moorage facilities but uses those of plaintiff Smith, paying him a monthly rental.

June 20, 1958, defendant state of Washington, through its State Tax Commission, levied and assessed a tax against plaintiff Wilbur J. Smith in the sum of $4,839.37, and against Longview Tugboat Company in the sum of $959.88 under the business and occupation tax law of the state. RCW 82.04.010 et seq., and RCW 82.04.290 particularly. After paying these assessments under protest, plaintiffs brought action to recover, urging that the purported tax constitutes both an interference with their rights on navigable waters and an impermissible burden on interstate commerce.

The business activities of plaintiffs can be said to fall into 6 fairly distinct categories. We classify them separately, stating each of the party's position concerning each activity in this way:

1. Direct and continuous towing of log rafts and booms between points in Washington to points in Oregon and from points in Washington to points on Oregon. The state makes no claim and puts no assessment upon either of these activities.

2. Towing of log rafts from points in Oregon to a final destination in Washington, but interrupting or stopping the journey one or more times to tie up the log rafts at plaintiff Smith's log moorage areas in Washington, before final delivery in Washington. The tax commission apportions the tax on this activity by assessing upon that part of the service from the point where the logs are moored at plaintiff's moorage facility to final delivery. The assessment apparently is on a pro rata basis with a tax upon that share of the gross revenue derived through towing the logs from the moorage to the place of final delivery.

3. Towing of log rafts between points of origin in Washington to points of delivery in Oregon with interruptions and stops at plaintiff Smith's log moorage facilities in Washington. The State Tax Commission, similar to its position in activity No. 2 above, claims a tax on that apportioned part of the service from the point of origin in Washington to the stopping of the towage at the plaintiff's moorage facility in Washington.

4. Movements from points of origin in Washington to points in Washington where a part of the towage takes place in Oregon's territorial waters of the Columbia because of the ordinary incidents of navigation. That portion of the journey taking place in Washington waters only is claimed assessable, except where, from examination of appellants' books, the commission could not exactly apportion the income from transportation within and without the state it assessed on a 50 per cent basis, i. e., it claimed one half of the income as being derived from service rendered in Washington.

5. Plaintiffs' tugboats help ships sailing in foreign and interstate commerce in docking, departing, turning around, and moving from one pier to another. Some of this was done entirely in Washington waters and some partially in Washington and partly in Oregon waters.

The tax was assessed pro rata on only that part of the activity taking place in Washington waters.

6. Occasional rentals of boom sticks, tugboats and other personal property by plaintiff Smith to persons in Washington. Neither Smith nor Longview Tubgoat Company has offices in Washington. These rental arrangements are usually made in and rental paid in Oregon. The tax commission assessed the business and occupation tax on the rentals made to Washington residents.

From a judgment sustaining the tax as assessed and apportioned by the tax commission and dismissing the action, plaintiffs appeal.

The tugboat men claim a strong tide of federal and state sovereignty running in their favor against which they say the tax commission can make no headway. They say that the concurrent jurisdiction over the Columbia granted to Oregon on admission, coupled with the paramount power of federal sovereignty over navigable rivers and navigation, make them immune from legislative action by Washington concerning activities on the Columbia.

Appellants first argue that the tax here imposed does violence to rights forever granted them under § 2 of the Oregon Admission Act, 11 Stat. 383, chapter 33, § 2. ¹ Under this enactment, the Columbia and other rivers were declared to be common highways, to be kept free to all citizens of the United States of tax, duty, impost or toll. Appellants read the expression concurrent jurisdiction on the Columbia to imply that the tax here imposed impairs Oregon's concurrent jurisdiction over the whole of the Columbia and thus deprives citizens of Oregon and the United States of the protection granted under the Admission Act, supra.

That Washington and Oregon exercise concurrent jurisdiction over the Columbia River has not been doubted since Nielsen v. Oregon, 212 U.S. 315, 29 S.Ct. 383, 53 L.Ed. 528 (1909), but that case also declares that each state exercise state sovereignty over that part of the Columbia within its territorial boundaries to the exclusion of the other. Thus it holds that a citizen and resident of Washington who operated a net or seine within 3 miles of the mouth of the Columbia, on the Washington portion of the river, under a license from the fish commissioner of Washington, could not be found guilty in an Oregon court of violating Oregon statutes making it unlawful to operate a purse seine on any river of the state within 3 miles of the river mouth. The court said:

'* * * It is enough to decide, as we do, that, for an act done within the territorial limits of the state of Washington under authority and license from that state, one cannot be prosecuted and punished by the state of Oregon.'

Moreover, the purported grant of concurrent jurisdiction to Oregon and Washington on the Columbia in the Oregon Admission Act cannot be held to grant to one state powers not held equally by another. Each state on admission becomes the equal of all others.

So it was said in Coyle v. Smith, 221 U.S. 559, 31 S.Ct. 688, 55 L.Ed. 853 (1911):

'The plain deduction from this case is that when a new state is admitted into the Union, it is so admitted with all of the powers of sovereignty and jurisdiction which pertain to the original states, and that such powers may not be constitutionally diminished, impaired, or shorn away by any conditions, compacts, or stipulations embraced in the act under which the new state came into the Union, which would not be valid and effectual if the subject of congressional legislation after admission.'

And, on the subject of the paramount power of the United States to regulate and control navigable waters, the court said:

'That the power of Congress to regulate commerce among the states involves the control of the navigable waters of the United States over which such commerce is conducted is undeniable; but it is equally well settled that the control of the state over its internal commerce involves the right to control and regulate navigable streams within the state until Congress acts on the subject. This has been the uniform holding of this court since Wilson [Willson] v. Black Bird Creek Marsh Co., 2 Pet. 245, 7 L.Ed. 412; Gilman v. Philadelphia, 3 Wall. 713, 18 L.Ed. 96; Escanaba & L. M. Transp. Co. v. Chicago, 107 U.S. 678, 683, 27 L.Ed. 442, 445, 2 Sup.Ct.Rep. 185.'

That Washington claims to the middle of the Columbia beginning at a point in the Pacific Ocean 1 marine league west of the mouth of the river and thence upstream on a line through the center of the river is evidence by amendment 33 to the state constitution (Const. Art. 24, § 1) and the enactment of RCW chapter 43.58, setting up and defining the powers and duties of the Washington-Oregon boundary commission. We would say, then, that nothing of a legislative nature has taken place in this state since its admission to the Union which...