Texas Co. v. Cohn

• Decision Date: 17 April 1941
• Docket Number: 28173-28187.
• Citation: 8 Wn.2d 360,112 P.2d 522
• Parties: TEXAS CO. et al. v. COHN, Director of Licenses of State of Washington, et al.
• Court: Washington Supreme Court

112 P.2d 522

8 Wn.2d 360

TEXAS CO. et al. v. COHN, Director of Licenses of State of Washington, et al.

Nos. 28173-28187.

Supreme Court of Washington, En Banc.

April 17, 1941

Consolidated suits for injunction and actions recover fuel oil taxes by the Texas Company, the Tidewater Associated Oil Company Sunset Oil Company, Shell Oil Company, Inc., Standard Oil Company of California, Union Oil Company of California General Petroleum Corporation of California, and Richfield Oil Corporation against Dave S. Cohn, Director of Licenses of the State of Washington, and others. From decrees and judgments for the plaintiffs, defendants appeal.

Reversed and remanded, with directions.

BLAKE and MAIN, JJ., dissenting in part, and MILLARD, STEINERT, and SIMPSON, JJ., dissenting.

Appeal from Superior Court, Thurston County; D. F Wright, judge.

Smith Troy, Atty. Gen., and John E. Belcher, of Olympia, for appellants.

Grosscup, Morrow & Ambler, Eggerman & Rosling, Meier & Meagher, Hyland, Elvidge & Alvord, Hulbert, Helsell & Bettens, Little & Leader, and Bogle, Bogle & Gates, all of Seattle, for respondents.

DRIVER Justice.

This court, in the case of State v. Inland Empire Refineries, Inc., 3 Wash.2d 651, 101 P.2d 975, held unconstitutional in its entirety chapter 186, Laws of 1939, p. 581, Rem.Rev.Stat. (Sup.) § 8370-78a et seq., which levied an excise tax upon distributors of petroleum products at the rate of one-fourth cent for each gallon 'withdrawn, sold, distributed or in any manner used by such distributor * * *.' Section 1. The director of licenses thereupon notified the following corporations engaged in the business of selling fuel oil within the state: The Texas Company, Tidewater Associated Oil Company, Sunset Oil Company, Shell Oil Company, Incorporated, Standard Oil Company of California, Union Oil Company of California, General Petroleum Corporation of California, and Richfield Oil Corporation, to qualify as distributors and to comply otherwise with the provisions of the former fuel oil tax law (Title XI,§ 78 et seq., chapter 180, Laws of 1935, p. 749, as amended by chapter 116, Laws of 1937, p. 459), for brevity hereinafter called the 1937 statute.

All of the corporations qualified as requested, but each of them, with one exception, then instituted a suit in equity against certain state officials to enjoin the collection of any tax under the 1937 statute; and, at the same time, brought a companion action at law against the state to recover all taxes which the corporation had paid within the preceding three-year period under both the 1937 statute and the 1939 act. (The Sunset Oil Company commenced only one action, by which it sought both injunctive relief and the recovery of tax payments.)

These fifteen cases were consolidated for trial. In the equity suits, the superior court entered decrees enjoining the defendants from enforcing any of the provisions of either the 1937 statute or the 1939 act. In the actions at law, also tried Before the court without a jury, findings, conclusions, and judgments in favor of the plaintiffs were entered. The defendants have appealed.

The 1939 petroleum products tax law specifically repealed the 1937 statute, but it is the position of the appellants that, when the repealing act was wholly vitiated as unconstitutional by the Inland case, its repealing clause also fell. Therefore, they assert, the 1937 statute has never been legally repealed and has remained in full force and effect in contemplation of law, assuming, of course, that it is constitutional.

This position, we think, is sound. It is too apparent to require much comment that the legislature, when it enacted the 1939 act, attempted to set up a new and complete fuel oil tax law in place of the 1937 statute. The earlier law was repealed only to clear the decks and give the new act unobstructed operation and effect. It does not appear that the legislature intended, in any event, to repeal the prior law. Under such circumstances, the repealing clause falls within the unconstitutional statute of which it is a part. 59 C.J. 939; 25 R.C.L. 913, § 166; In re Rafferty, 1 Wash. 382, 25 P. 465; North Bend Stage Line v. Department of Public Works, 170 Wash. 217, 16 P.2d 206; Mazurek v. Farmers' Mutual Fire Ins. Co., 320 Pa. 33, 181 A. 570, 102 A.L.R. 798. See, also, the annotation following the last-cited case in volume 102 A.L.R. p. 802.

The respondents do not attempt to meet directly appellants' contention as to the survival of the 1937 statute, but assert that it is 'quite immaterial' because the trial court correctly held the statute to be unconstitutional and void. The principal contention of the respondents (supported as to its factual premise by the trial court's findings and adopted as a legal conclusion by the court's decrees and judgments) is that the 1937 statute violates the equal protection clause of the Fourteenth Amendment to the Constitution of the United States and the equal privileges and immunities provision of Art. I § 12, of the Constitution of the state, for the reason that it imposes a tax upon distributors of oil fuel without laying a corresponding tax upon distributors of solid fuels, such as coal, coke, wood, and sawdust. The two kinds of fuel are marketed in competition with each other, and there is no reasonable ground for making a distinction in classification between them for the purpose of taxing the one and exempting the other, the respondents maintain. They confidently assert that our decision in the Inland case is determinative in their favor on that point. The trial court has clearly indicated that it also subscribed to that view. Before undertaking a discussion of respondents' contention, we shall, therefore, state our position with reference to that case. To do so adequately, it is necessary that we briefly review its history.

The 1939 act contained a number of exemptions, one of which relieved distributors from payment of the tax on petroleum products 'derived from the refining within this state of crude petroleum or crude oil.' Section 15. The state took the position that this exemption was unconstitutional, and that fuel oil refined within the state was subject to the tax.

Acting through its then Attorney General, the state instituted the Inland case for the purpose of collecting from a domestic refinery taxes on its distribution of locally refined fuel oil. Other companies intervened in the action, and it was consolidated, for the purpose of trial, with two declaratory judgment cases which had been brought by the Great Northern Railway Company and the Weyerhaeuser Timber Company against the state director of licenses to obtain an adjudication of the rights of the companies under the 1939 act. The taxpayers in these consolidated actions maintained that the exemption of locally refined fuel oil and two other exemptions in the 1939 law were not only unconstitutional, but were also inseparable, and their invalidity voided the whole statute.

Both the superior court and this court adopted that view, and the statute was held to be unconstitutional. However, the Inland case involved not only the question of the exemptions, but also a number of other constitutional issues presented by the consolidated declaratory judgment actions. As a result, this court was called upon to construe the taxing statute and pass upon complex and difficult questions of constitutional law of far-reaching importance in order to predetermine the rights of financially interested taxpayers. Such procedure is permissible and entirely proper, but, from the standpoint of the court, it, nevertheless, entails serious disadvantages, which disadvantages were discussed in the case of Acme Finance Co. v. Huse, 192 Wash. 96, 73 P.2d 341, 345, 114 A.L.R. 1345, as follows: 'The confirmation [of the power of the courts to declare legislative acts unconstitutional] is reassuring, although wholly unnecessary, but we accept, with some doubt and hesitation, a procedure where these momentous constitutional questions will, in the future, be decided in cases where, on the one hand, the plaintiff and interveners are financially interested in striking down the legislative act and are represented by from five to a dozen firms of attorneys, and where, on the other hand, the defendant is only interested ex officio in sustaining it and is represented only by the Attorney General and such amici curiae as may come to his assistance.'

We adhere to our holding in the Inland case, but we do not regard it as controlling. On its principal, or 'exemption,' ground of decision, it is clearly distinguishable; and, under the circumstances, we feel that what may be termed its secondary ground of decision, upon which respondents here rely, should be subjected to a thorough and searching re-examination. The three grounds of decision of the Inland case are:

1. Three exemptions in the 1939 act were construed to be unconstitutional and inseparable from the remainder of the act, and their invalidity vitiated the entire statute.

2. Certain licensing 'conditions' of the statute were held to constitute a constitutionally forbidden burden upon interstate commerce.

3. The statute was declared to be repugnant to the equal protection clause of the Federal Constitution and the privileges and immunities provision of the State Constitution for the reason that it contained an arbitrary and discriminatory classification (oil fuel and solid fuel).

The first ground clearly does not apply to the instant case, for the 1937 statute here under consideration does not contain any of the three exemptions in question.

The second ground, likewise, is not apt, as we shall show later on in this opinion, since the licensing provisions of the 1937 statute, as construed by ...