State Board of Equalization v. Blind Bull Coal Co.

• Decision Date: 16 April 1940
• Docket Number: 2144
• Citation: 55 Wyo. 438,101 P.2d 70
• Parties: STATE BOARD OF EQUALIZATION v. BLIND BULL COAL CO
• Court: Wyoming Supreme Court

101 P.2d 70

55 Wyo. 438

STATE BOARD OF EQUALIZATION v. BLIND BULL COAL CO

No. 2144

Supreme Court of Wyoming

April 16, 1940

APPEAL from the District Court, Lincoln County; H. R. CHRISTMAS Judge.

Action by the State Board of Equalization against the Blind Bull Coal Company to recover sales tax which defendant failed to collect on sales of coal during the years 1935 and 1936. From judgment for defendant, plaintiff appeals.

Reversed.

For the appellant, there was a brief by Ewing T. Kerr, Attorney General; Harold I. Bacheller, Deputy Attorney General; and Arthur Kline, Assistant Attorney General, all of Cheyenne and oral argument by Mr. Kline.

Prior to the trial, the parties entered into a stipulation as to certain facts. Said stipulation was supplemented by some oral testimony. The only portions of the sales act involved are Sections 4 and 5. Section 6 relates to certain exemptions affected by Article I, Section 8 of the Federal Constitution. The sole question involved is whether the tax was a burden on interstate commerce. Appellant contends that the sales do not constitute transactions in interstate commerce. Coe v Errol, 116 U.S. 517, 29 L.Ed. 517; Spalding & Brothers v. Edwards, 292 U.S. 66; Superior Oil Co. v. Mississippi, 280 U.S. 390; Sonneborn Bros. v. Keeling, 262 U.S. 506. Recent cases decided by the Supreme Court as to the right of a state to levy a sales tax upon gasoline, in which the court followed the rule laid down in Superior Oil Company v. Mississippi, supra, are: Edelman v. Boeing Air Transport, Inc., 289 U.S. 249; Nashville R. Co. v. Wallace, 288 U.S. 249; Wiloil Corporation v. Pennsylvania, 294 U.S. 169; Union Stock Yards v. Commission of Utah, 71 P.2d 542; Utah Power and Light Company v. Pfost, 286 U.S. 165. The tax in question does not impose a burden upon interstate commerce. Sears Roebuck & Co. v. McGoldrick, 18 N.E.2d 25; Manufacturing Company v. St. Louis, 250 U.S. 459; Western Live Stock v. Bureau of Revenue, 303 U.S. 250; Coverdale v. Pipe Line Co., 303 U.S. 604; Mfg. Co. v. Storen, 82 L.Ed. 1365; Gwin, White & Prince v. Henneford, 83 L.Ed. 276; Bell Tel. Co. v. Tax Board, 280 U.S. 338; 52 Harvard Law Review 617. The burden is upon the defendant to prove that the sales were made in interstate commerce. Kentucky Oil Co. v. Coleman, 33 S.W.2d 615. Statutes are presumed to be constitutional. Southern Pacific v. Corbett, 23 F.Supp. 193. The judgment below should be reversed.

For the respondent, there was a brief by Ivan S. Jones of Kemmerer, Wyoming; Thatcher & Young of Ogden, Utah; and A. A. Merrill of Idaho Falls, Idaho, and oral argument by Roy D. Thatcher.

The coal moved directly from the mine into Idaho and was hauled by people who went from Idaho to the mine, for the sole purpose of buying the coal. The interstate movement was inevitable. 9 Bancroft's Code Practice, pp. 9528, 9535 and 9537; 20 Amer. Jur. 46, 48, 49, 52. The tax would be a violation of Article I, Section 8, Federal Constitution. Decisions of courts depend upon the making of valid distinctions.. Superior Oil Company v. Mississippi, 280 U.S. 390; Coverdale v. Pipe Line Company, 303 U.S. 604; Spalding & Bros. v. Edwards, 262 U.S. 66. Artificial standards cannot be employed. Gregg Company v. Query, 286 U.S. 472; Pacific Tel. & Tel. Co. v. Tax Comm., 297 U.S. 403. The Federal power is paramount. Southern Pacific Co. v. Corbett, 20 F.Supp. 940; Minnesota Rate Cases, 230 U.S. 352; Santa Cruz Company v. Relations Board, 91 F.2d 790. The existence of prejudice is not essential. Pacific Company v. Tax Commission, supra. A tax imposing a burden on interstate commerce is void. Valley R. R. Co. v. Pennsylvania, 145 U.S. 192. As to what constitutes commerce is defined by numerous cases. Comm. v. Pacific States Association, 273 U.S. 52; Carter v. Carter Coal Company, 298 U.S. 238; Krueger v. Acme Fruit Company, 75 F.2d 67. Wallace v. Currin, 95 F.2d 856, contains an excellent review of the authorities. Foster Company v. Haydel, 278 U.S. 1. The present tendency is to broaden the concept of interstate commerce. Board v. Jones, 301 U.S. 1; Santa Cruz Pack. Co. v. National Relations Board, 303 U.S. 452. Interstate shipments are exempt from tax. 11 Amer. Jur. 67; notes in 6 L. R. A. 579 and 60 L. R. A. 660; Helson v. Kentucky, 279 U.S. 245; Bingaman v. Golden Lines, 297 U.S. 626; Leloup v. Port of Nobile, 127 U.S. 640. An occupation tax on interstate commerce is invalid. Cooney v. Tel. Co., 294 U.S. 384; Henneford v. Silas Mason Company, 300 U.S. 577; Minnesota v. Blasius, 290 U.S. 1. Carriage by private means does not affect the character of interstate commerce. 11 Amer. Jur. 65; United States v. Simpson, 252 U.S. 465. The passing of title does not affect the question. East Ohio Company v. Commission, 283 U.S. 465; U. S. v. Erie Railroad Company, 280 U.S. 98; Company v. Minnesota, 272 U.S. 469; Natural Gas Co. v. Public Service Comm., 270 U.S. 550; Pipe Line Company v. Hallanan, 257 U.S. 265; Railroad Company v. Clark Bros. Coal Mining Co., 283 U.S. 456; Ry Co. v. Texas, 204 U.S. 403. The question as to when interstate commerce begins has been discussed in a number of cases. Champlain Realty Co. v. Brattleboro, 260 U.S. 366; Blount v. Munroe Co., 60 Ga. 61; State v. Hammerill Paper Co., 184 N.W. 182. The purchase of a commodity in one state for transportation to another state is interstate commerce. U. S. v. 7 Oaks Dairy Company, 10 F.Supp. 995; R. R. Co. v. Sabine Tram Company, 227 U.S. 111; Hughes Bros. Timber Co. v. Minnesota, 272 U.S. 469. The intent may characterize the shipment. Oregon-Washington Company v. Strauss, 73 F.2d 912. The power to divert is immaterial, if not availed of. 11 Amer. Jur. 68; Hughes Bros. Timber Company, supra; Stafford v. Wallace, 258 U.S. 495; Annotations 60 L. R. A. 662; Eureka Pipe Line Co. v. Hallanan, 257 U.S. 265; Columbia Petroleum Company v. Vail, 279 U.S. 95; Milling Company v. Bondurant, 257 U.S. 282; Lemke, Attorney General, v. Farmers Grain Company, 258 U.S. 50; Attorney General v. Farmers Grain Co., 268 U.S. 189; Spalding & Bros. v. Edwards, 262 U.S. 66; Superior Oil Company v. Mississippi, 280 U.S. 390; Standard Oil Company v. Johnson, 92 P.2d 470; Louisville Company v. Parker, 242 U.S. 13; Southern Pacific Company v. Gallagher, 83 L.Ed. 352; Currin v. Wallace, 83 L.Ed. 413. The judgment below should be affirmed.

Ewing T. Kerr, Harold I. Bacheller and Arthur Kline in reply.

Counsel for respondent cite a large number of cases in support of their theory that the sales tax is a burden on interstate commerce. Only three of their cases deal with the question as to when a sales tax constitutes a burden on interstate commerce. The first is that of Petroleum Company v. Clark, 55 F.2d 963. It is clearly not in point and requires no discussion here. Spaulding v. Edwards, 262 U.S. 66 was discussed in our former brief, but because of the distinction between that case and our case, it perhaps merits further discussion. In the Spaulding case, the sale contract involved delivery of the goods to a common carrier for transportation to a foreign country; in the instant case, the sale contract contemplated no delivery of goods to a consignee at a foreign designation, but was completed within the state. The case of Standard Oil Company of California v. Johnson, 92 P.2d 470 is against the contention of the plaintiff, and was not a decision of the Supreme Court of California. We understand that the question there involved is now on its way to the Supreme Court. There is nothing in the record showing that Wyoming is a great coal exporting state, as contended by respondent, and we do not believe this court will take judicial notice of such fact, nor that the decisions cited in support of that contention are in point. The right of a state to impose a tax was considered in Baltimore & Ohio R. R. Co. v. United States, 15 F.Supp. 674, dealing with the jurisdiction of the Interstate Commerce Commission. See also 48 Law Journal 273, as to the tendency of courts to expand the meaning of the term "interstate commerce," as applied to the right of states to levy sales taxes. The possibility, or even certainty, of exportation of a product from a state does not determine it to be in interstate commerce before the commencement of its movement from the state. Bacon v. Illinois, 227 U.S. 504, Heisler v. Thomas Colliery Co., 260 U.S. 24; Champlain Refining Company v. Commission, 286 U.S. 210; Chassaniol v. Greenwood, 291 U.S. 584; Carter v. Carter Coal Company, 298 U.S. 238; Oliver Mining Co. v. Lord, 262 U.S. 929. The facts in Chassaniol v. Greenwood, we believe, are particularly applicable here. Local intrastate transactions occurring prior to the beginning of interstate commerce are taxable. Hopkins v. United States, 171 U.S. 578; Fecklen v. Shelby County Taxing District, 145 U.S. 1. Interstate commerce must pay its own way. Stone v. Natural Gas Co., 103 F.2d 544; Sales & Use Taxes, 28 Columbia L. R. 49; State Tax on Interstate Commerce, 52 Harvard L. R. 502.

KIMBALL, Justice. RINER, Ch. J., and BLUME, J., concur.

OPINION

KIMBALL, Justice.

Plaintiff, the state board authorized to administer and enforce the Emergency Sales Tax Act of 1935, Sess. Laws 1935, ch. 74, appeals from a judgment against it in an action to recover taxes that defendant failed to collect on sales of coal during the years 1935 and 1936. The defense was that the sales were in interstate commerce and the taxes prohibited by section 8 of article 1 of the federal constitution providing that "The congress shall have power * * * to regulate commerce * * * among the several states." Judgment was for defendant on that ground.

The act levied "a tax upon every retail sale of tangible personal property made within the State of Wyoming equivalent to two per cent. of the purchase price...