State of Minnesota v. National Tea Company

• Decision Date: 25 March 1940
• Docket Number: No. 500,500
• Citation: 60 S.Ct. 676,84 L.Ed. 920,309 U.S. 551
• Parties: STATE OF MINNESOTA v. NATIONAL TEA COMPANY et al
• Court: U.S. Supreme Court

309 U.S. 551

60 S.Ct. 676

84 L.Ed. 920

STATE OF MINNESOTA

v NATIONAL TEA COMPANY et al.

No. 500.

Argued March 7, 1940.

Decided March 25, 1940.

Messrs. Matthias N. Orfield and George W. Markham, both of St. Paul, Minn., for petitioner.

Mr. Michael J. Doherty, of St. Paul, Minn., for respondents.

Mr. Justice DOUGLASdelivered the opinion of the Court.

In 1933 Minnesota enacted a chain store tax (L.1933, c. 213) one item of which was a tax on gross sales.Sec. 2(b).The gross sales tax was graduated: one-twentieth of one per cent was applied on that portion of gross sales not in excess of $100,000; and larger percentages were applied as the volume of gross sales increased, until one per cent was exacted on that portion of gross sales in excess of $1,000,000.Respondents(chain stores conducting retail businesses in Minnesota) paid under protest the gross sales tax demanded by the Minnesota Tax Commission for the years 1933 and 1934 and thereafter sued in the state court for refunds.¹Judgments granting refunds were affirmed by the Supreme Court of Minnesota, 205 Minn. 443, 286 N.W. 360.We granted certiorari, 308 U.S. 547, 60 S.Ct. 294, 84 L.Ed. —-, because of the importance of the constitutional issues involved in Stewart Dry Goods Co. v. Lewis, 294 U.S. 550, 55 S.Ct. 525, 79 L.Ed. 1054, andValentine v. Great Atlantic & Pacific Tea Co., 299 U.S. 32, 57 S.Ct. 56, 81 L.Ed. 22, which cases, it was asserted, controlled the decision below.

At the threshold of an inquiry into the applicability of the Stewart and Valentine cases to these facts, we are met with a question which is decisive of the present petition.That is the question of jurisdiction.

The Supreme Court of Minnesota discussed not only the equal protection clause of the Fourteenth Amendment of the federal constitution but also Art. 9, § 1 of the Minnesota constitution which provides: 'Taxes shall be uniform upon the same class of subjects * * *.'It said that 'these provisions of the Federal and State Constitutions impose identical restrictions upon the legislative power of the state in respect to classification for purposes of taxation.'²It stated that the 'question is * * * whether the imposition of a graduated gross sales tax upon all those engaged in conducting chain stores is discriminatory as between such owners, thus violating the constitutional requirement of uniformity.'It quoted the conclusion of the lower Minnesota court that the statute violated both the federal and the stateconstitution.It then adverted briefly to three of its former decisions which had interpreted Art. 9, § 1 of the Minnesota constitution and quoted from one of them.³It merely added: 'So much for our own cases'; and proceeded at once to a discussion of cases based solely on the Fourteenth Amendment of the federal constitution.While its discussion of Art. 9, § 1 of the Minnesota constitution was in general terms, its analysis of the Fourteenth Amendment was specifically related to chain store taxation.It distinguished decisions of this Court which held that the number of stores in a given chain affords an appropriate basis for classification for imposition of progressively higher taxes.⁴It then stated that the 'precise question here presented' had been directly passed upon adversely to the state's contention in five cases: Stewart Dry Goods Co. v. Lewis, supra;Valentine v. Great Atlantic & Pacific Tea Co., supra;Ed. Schuster & Co. v. Henry, 218 Wis. 506, 261 N.W. 20;Lane Drug Stores, Inc., v. Lee, D.C., 11 F.Supp. 672;Great Atlantic & Pacific Tea Co. v. Harvey, 107 Vt. 215, 177 A. 423.It added that the tax here involved was on all fours with that struck down by this court in Stewart Dry Goods Co. v. Lewis, supra.It quoted with approval from the opinion in Ed. Schuster & Co. v. Henry, supra.And it concluded with the following statement:

'We think the five cases to which we have referred have so definitely and finally disposed of the legal problem presented as to make it needless for us to analyze or discuss the great number of other tax cases where the same constitutional question was involved.These being the only cases to which our attention has been called directly deciding the question presented, we are of opinion that we should follow them and that it is our duty so to do."⁵(Italics added.)

Respondents contend that the court held the statute invalid for violation not only of the federal constitution but also of the stateconstitution.Hence they seek to invoke the familiar rule that where a judgment of a state court rests on two grounds, one involving a federal question and the other not, this Court will not take jurisdiction.Fox Film Corp. v. Muller, 296 U.S. 207, 56 S.Ct. 183, 80 L.Ed. 158;Lynch v. New York ex rel. Pierson, 293 U.S. 52, 55 S.Ct. 16, 79 L.Ed. 191;New York City v. Central Savings Bank, 306 U.S. 661, 59 S.Ct. 790, 83 L.Ed. 1058.In support of this position they point to the court's discussion of the Minnesota constitution and to the fact that the syllabus states that such a tax is violative of both the federal and state constitutions.⁶But as to the latter we are not referred to any Minnesota authority which, as in some states,⁷ makes the syllabi the law of the case.And as to the former the opinion is quite inconclusive.For the opinion as a whole leaves the impression that the court probably felt constrained to rule as it did because of the five decisions which it cited and which held such gross sales taxes unconstitutional by reason of the Fourteenth Amendment.That is at least the meaning, if the words used are taken literally.For if, as stated by the court, the 'precise question here presented' was ruled by those five cases, that question was a federal one.And in that connection it is perhaps significant that the court stated not only that it 'should follow' those decisions but that 'it is our duty so to do.'

Enough has been said to demonstrate that there is considerable uncertainty as to the precise grounds for the decision.That is sufficient reason for us to decline at this time to review the federal question asserted to be present, Honeyman v. Hanan, 300 U.S. 14, 57 S.Ct. 350, 81 L.Ed. 476, consistently with the policy of not passing upon questions of a constitutional nature which are not clearly necessary to a decision of the case.

But that does not mean that we should dismiss the petition.This Court has frequently held that in the exercise of its appellate jurisdiction it has the power not only to correct errors of law in the judgment under review but also to make such disposition of the case as justice requires.State Tax Commission v. Van Cott, 306 U.S. 511, 59 S.Ct. 605, 83 L.Ed. 950;Patterson v. Alabama, 294 U.S. 600, 55 S.Ct. 575, 79 L.Ed. 1082.That principle has been applied to cases coming from state courts where supervening changes had occurred since entry of the judgment, where the record failed adequately to state the facts underlying a decision of the federal question, and where the grounds of the state decision were obscure.Honeyman v. Hanan, supra, and cases there cited.That principle was also applied in State Tax Commission v. Van Cott, supra, where it was said, 306 U.S. page 514, 59 S.Ct. page 606, 83 L.Ed. 950:

'* * * if the State court did in fact intend alternatively to base its decision upon the Statestatute and upon an immunity it thought granted by the Constitution as interpreted by this Court, these two grounds are so interwoven that we are unable to conclude that the judgment rests upon an independent interpretation of the State law.'

The procedure in those case was to vacate the judgment and to remand the cause for further proceedings, so that the federal question might be dissected out or the state and federal questions clearly separated.

In this type of case we deem it essential that this procedure be followed.It is possible that the state court employed the decisions under the federal constitution merely as persuasive authorities for its independent interpretation of the stateconstitution.If that were true, we would have no jurisdiction to review.State Tax Commission v. Van Cott, supra.On the other hand we cannot be content with a dismissal of the petition where there is strong indication, as here, that the federal constitution as judicially construed controlled the decision below.

If a state court merely said that the Fourteenth Amendment, as construed by this Court, is the 'supreme law of the land' to which obedience must be given, our jurisdiction would seem to be inescapable.And that would follow though the state court might have given, if it had chosen, a different construction to an identical provision in the stateconstitution.But the Minnesota Supreme Court did not take such an unequivocal position.On the other hand, it did not declare its independence of the decisions of this Court, when the state constitutional provision avowedly had identity of scope with the relevant clause of the Fourteenth Amendment.In the latter respect this case differs from New York City v. Central Savings Bank, supra.The cases in which the New York Court of Appeals professes to go on both the state and federal due process clauses clearly rest upon an adequate nonfederal ground.For that court has ruled that its own conception of due process governs, though the same phrase in the federal constitution may have been given different scope by decisions of this Court.SeeIves v. South Buffalo Railway Co., 201 N.Y. 271, 317, 94 N.E. 431, 34 L.R.A.,N.S., 162, Ann.Cas.1912B, 156.The instant case therefore presents an intermediate situation to which an application of the procedure followed in State Tax Commission v. Van Cott, supra, is peculiarly appropriate.

It is important that this Court not indulge in needless dissertations on constitutional law.It is fundamental that state courts be left free and unfettered by us in interpreting their state constitutions.But it is equally...