Vancouver Oil Co. v. Henneford

• Decision Date: 28 August 1935
• Docket Number: 25759.
• Citation: 183 Wash. 317,49 P.2d 14
• Parties: VANCOUVER OIL CO. v. HENNEFORD et al.
• Court: Washington Supreme Court

49 P.2d 14

183 Wash. 317

VANCOUVER OIL CO. v. HENNEFORD et al.

No. 25759.

Supreme Court of Washington, En Banc.

August 28, 1935

Appeal from Superior Court, Clark County; Geo. B. Simpson, Judge.

Action by the Vancouver Oil Company against H. H. Henneford and others. From a judgment dismissing the action, plaintiff appeals.

Affirmed.

McMullen & Snider, of Vancouver, for appellant.

A. C L. B. daPonte and Robert S. Macfarlane, both of Seattle amici curiae.

G. W Hamilton and R. G. Sharpe, both of Olympia, for respondents.

MAIN Justice.

This action was brought to restrain the defendants from enforcing title 4, c. 180, Laws 1935, being that part of the chapter which covers the matter of what is called the compensating tax. To the complaint a demurrer was interposed and sustained. The plaintiff elected to stand upon its complaint, and refused to plead further. From the judgment dismissing the action, it appeals.

The facts, as stated in the complaint, which will present the questions here for determination, may be summarized as follows: The appellant, Vancouver Oil Company, is a corporation organized under the laws of this state, with its principal place of business in the city of Vancouver, Clark county. It is engaged in carrying on and conducting a gasoline, lubricating oil, and fuel oil business in the city mentioned. In connection with such business, it uses automobile trucks and trailers. The respondents are the members of the tax commission of this state.

May 1, 1935, the appellant purchased a trailer from the Truck Equipment Company, a manufacturer of Portland, Or. The order was accepted at Portland, and the transaction consummated at that place. Thereafter, the property was delivered by the manufacturer to the appellant in the city of Vancouver, this state. Early in May, 1935, the appellant purchased from the Steel Tank & Pipe Company, a manufacturer in the city of Portland, Or., a large gasoline tank. This order was likewise accepted, and the purchase consummated in Portland. Thereafter, the property was delivered by the manufacturer to the appellant in this state. After the delivery of these two items of property, the appellant began using them in its business in this state. The respondents, as members of the tax commission, demanded that the appellant pay a tax upon the property, which is provided for in title 4, chapter 180, Laws of 1935. Appellant refused to pay the tax, and the respondents threatened, and prepared to take legal proceedings to distrain and sell the property to satisfy the same.

Section 16 of chapter 180 provides that from and after the 1st day of May, 1935, '* * * there is hereby levied and there shall be collected a tax on each retail sale in this state equal to two per cent of the selling price.'

Section 31, which is the first section under the heading, title 4, Compensating Tax, provides that there is '* * * hereby levied and there shall be collected from every person in this state a tax or excise for the privilege of using within this state any article of tangible personal property purchased subsequent to April 30, 1935. Such tax shall be levied and collected in an amount equal to the purchase price paid by the taxpayer multiplied by the rate of 2%.'

Section 32 provides that the provisions of this title shall not apply (a) in respect to the use of any tangible personal property brought into this state by a nonresident thereof for his or her use or enjoyment while within the state; (b) in respect to the use of tangible personal property purchased other than at retail; (c) in respect to the use of any article of tangible personal property 'the sale or use of which has already been subjected to a tax equal to or in excess of that imposed by this title' whether under the laws of this or some other state of the United States; and (d) in respect to the use of tangible personal property purchased during any calendar month, the total purchase price of which is less than $20.

It will be observed that section 16 is general in its language, and provides that there shall be collected 'a tax on each retail sale' in this state equal to 2 per cent. of the selling price. Section 31 provides that there shall be collected from every person in this state a tax or excise for the privilege 'of using within this state any article of tangible personal property purchased subsequent to April 30, 1935.' Subdivision (c) of section 32, which immediately follows, provides that any article of tangible personal property, the 'sale or use of which has already been subjected to a tax equal to or in excess of that imposed by this title,' shall not be subject to the tax upon the use.

The appellant makes three principal contentions: (a) That the so-called compensating tax is a direct property tax; (b) that the tax levied by title 4 is not uniform, and is discriminatory, unfair, and unjust; and (c) that title 4 violates the commerce clause of the Federal Constitution.

With reference to the first contention, that is, that the tax is a property tax, little need be said, because this contention is covered by what is said in the recent case of Morrow v. Henneford et al. (Wash.) 47 P.2d 1016, where it was held that the tax provided for in chapter 180 was an excise tax, and not a property tax.

With reference to the second contention, that of discrimination, it being an excise tax that we are dealing with, rather than a property tax, the constitutional provisions with reference to uniformity do not apply.

In Hart Refineries v. Harmon, 278 U.S. 499, 49 S.Ct. 188, 73 L.Ed. 475, it is said: 'But, because the state Legislature could have laid a tax upon the use of the commodity as well as upon its sale, it by no means follows that a failure to do so constituted a discrimination forbidden by the equal protection clause of the Fourteenth Amendment. That clause does not prohibit classification, and the power of the state to classify for purposes of taxation is of wide range and flexibility, provided that the classification rest upon a substantial difference, so that all persons similarly circumstanced will be treated alike. Statutes which tax one class of property while exempting another class necessarily result in imposing a greater burden upon the property taxed than would be the case if the omitted property were included. But such statutes do not create an inequality in the constitutional sense. Nor is the imposition of an excise tax upon one occupation or one activity from which other and different occupations or activities are exempt, a denial of equal protection. It is enough if all in the same class are included and treated alike. These propositions are so firmly established by repeated decisions of this court that further discussion is unnecessary. [Citing authorities.]'

In the case now Before us, we see no substantial basis for the claim of lack of uniformity and discrimination. The tax here involved was a tax upon the use of property after it had been brought into this state, and is the same in amount as the tax upon the sales of other like or similar property in this state.

With reference to the commerce clause of the Federal Constitution, it is well settled, of course, that the state, through its Legislature, has no power to restrict or regulate interstate commerce, or to impose a tax upon an article which would place a direct burden upon such commerce. A state tax, however, on merchandise brought into this state from another state, or upon its sales, whether in original packages or not, after it has reached its destination and is in a state of rest, is lawful, providing the tax does not work a discrimination against merchandise because of its origin in another state.

In Sonneborn Bros. v. Cureton, 262 U.S. 506, 43 S.Ct. 643, 646, 67 L.Ed. 1095, it is said: 'A state tax upon merchandise brought in from another state or upon its sales, whether in original packages or not, after it has reached its destination and is in a state of rest, is lawful only when the tax is not discriminating in its incidence against the merchandise because of its origin in another state. * * *'

In Bowman v. Continental Oil Co., 256 U.S. 642, 41 S.Ct. 606, 608, 65 L.Ed. 1139, with reference to a state law which imposed an excise tax of 2 cents for each gallon of gasoline sold or used, it is said: 'With the excise tax as imposed upon the use of gasoline by plaintiff at its distributing stations, in the operation of its automobile tank wagons and otherwise, we have no difficulty. Manifestly gasoline thus used has passed beyond interstate commerce, and the tax can be imposed upon its use, as well as upon the sale of the same commodity in domestic trade, without infringing plaintiff's commercial rights under the federal Constitution.'

In the case of Gregg Dyeing Co. v. Query, 286 U.S. 472, 52 S.Ct. 631, 634, 76 L.Ed. 1232, 84 A. L. R. 831, the court had Before it a statute of the state of South Carolina, which provided for a tax upon gasoline brought from another state to be used and consumed in that state, and the law was sustained. Speaking with reference thereto, it was said: 'It imposes an exaction with respect to gasoline purchased in other states and brought into South Carolina and there placed by appellants, in storage for future use within the State. By the terms of the act, as construed by the state court and applied to these appellants, interstate commerce in relation to the subject of the tax had ended. The gasoline has come to rest within the state, having been placed in appellants' storage tanks and added to appellants' property kept for local purposes. In such circumstances the state has the authority 'to tax the products or their storage or sale.' Texas Company v. Brown, 258 U.S. 466, 478, 42 S.Ct. 375,...