Standard Pressed Steel Co v. Washington Department of Revenue 8212 1697

• Decision Date: 22 January 1975
• Docket Number: No. 73,73
• Citation: 95 S.Ct. 706,419 U.S. 560,42 L.Ed.2d 719
• Parties: STANDARD PRESSED STEEL CO., Appellant, v. State of WASHINGTON DEPARTMENT OF REVENUE. —1697
• Court: U.S. Supreme Court

419 U.S. 560

95 S.Ct. 706

42 L.Ed.2d 719

STANDARD PRESSED STEEL CO., Appellant,

v State of WASHINGTON DEPARTMENT OF REVENUE.

No. 73—1697.

Argued Dec. 16, 1974.

Decided Jan. 22, 1975.

Syllabus

Appellant manufacturer, with a home office and manufacturing plant in Pennsylvania and another plant in California, challenges the constitutionality of Washington State's business and occupation tax which was levied on the unapportioned gross receipts of appellant resulting from its sale of aerospace fasteners to Boeing, its principal Washington customer. Appellant's one Washington-based employee, an engineer, whose office was in his home but who took no fastener orders from Boeing, primarily consulted with Boeing regarding its anticipated fastener needs and followed up any difficulties in the use of fasteners after delivery. The state taxing authorities found that appellant's business activities in Washington were sufficient to sustain the tax, and that decision was affirmed on appeal. Held: Washington's business and occupation tax on appellant is constitutional. Pp. 562—564.

(a) There is no violation of due as the measure of the tax bears a relationship to the benefits conferred on appellant by the State. P. 562.

(b) The tax is not repugnant to the Commerce Clause, appellant having made no showing of multiple taxation on its interstate business, the tax being apportioned to the activities taxed, all of which are intrastate. General Motors Corp. v. Washington, 377 U.S. 436, 84 S.Ct. 1564, 12 L.Ed.2d 430. Pp. 562 564.

10 Wash.App. 45, 516 P.2d 1043, affirmed.

Kenneth L. Cornell, Seattle, Wash., for appellant.

Slade Gorton, Atty. Gen., for appellee.

- Opinion of the Court by Mr. Justice DOUGLAS, announced by Mr. Chief Justice BURGER.

Appellant, a manufacturer of industrial and aerospace fasteners (nuts and bolts generally), has its home office in Pennsylvania, one manufacturing plant there and another in California. Its principal customer in the State of Washington is the Boeing Company, in Seattle. In the years relevant here it had one employee, one Martinson, in Washington who was paid a salary and who operated out of his home near Seattle. He was an engineer whose primary duty was to consult with Boeing regarding its anticipated needs and requirements for aerospace fasteners and to follow up any difficulties in the use of appellant's product after delivery. Martinson was assisted by a group of engineers of appellant who visited Boeing about three days every six weeks, their meetings being arranged by Martinson. Martinson did not take orders from Boeing; they were sent directly to appellant. Orders accepted would be filled and shipment made by common carrier to Boeing direct, all payments being made directly to appellant. Martinson had no office except in his home; he had no secretary; but appellant maintained an answering service in the Seattle area which received calls for Martinson, bills for that service being sent direct to appellant.

The State Board of Tax Appeals found that the activities of Martinson were necessary to appellant in making it aware of which products Boeing might use, in obtaining the engineering design of those products, in securing the testing of sample products to qualify them for sale to Boeing, in resolving problems of their use after receipt by Boeing, in obtaining and retaining good will and rapport with Boeing personnel, and in keeping the invoicing personnel of appellant up to date on Boeing's lists of purchasing specialists or control buyers. The Board sustained the assessment of the Washington business and occupation tax, Wash.Rev.Code § 82.04.270 (1972), levied on the unapportioned gross receipts of appellant resulting from its sale of fasteners to Boeing. ¹ The Superior Court affirmed the Board, and the Court of Appeals in turn affirmed, 10 Wash.App. 45, 516 P.2d 1043 (1973). The Supreme Court denied review. The constitutionality, as applied, of the Washington statute being challenged, we noted probable jurisdiction, 417 U.S. 966, 94 S.Ct. 3169, 41 L.Ed.2d 1138 (1974).

Appellant argues that imposition of the tax violates due process because the in-state activities were so thin and inconsequential as to make the tax on activities occurring beyond the borders of the State one which has no reasonable relation to the protection and benefits conferred by the taxing State, Wisconsin v. J. C. Penney Co., 311 U.S. 435, 61 S.Ct. 246, 85 L.Ed. 267 (1940). In other words the question is 'whether the state has given anything for which it can ask return,' id., at 444, 61 S.Ct. at 250. We think the question in the context of the present case verges on the frivolous. For appellant's employee, Martinson, with a full-time job within the State, made possible the realization and contin uance of valuable contractual relations between appellant and Boeing.

The case is argued on the interstate commerce aspect as if Washington were taxing the privilege of doing an interstate business with only orders being sent from within the State and filled outside the State, McLeod v. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304 (1944). Much reliance is placed on Norton Co. v. Department of Revenue, 340 U.S. 534, 71 S.Ct. 377, 95 L.Ed. 517 (1951), where a Massachusetts corporation qualified to do business in Illinois and maintained an office there from which it made local sales at retail. It was accordingly subjected to the Illinois gross receipts tax on retailers. There were, however, orders sent by...