*1 197, seq. Although question Rev. et does 179, L. definitely to have appear settled, been support received some for its view. See Commission Comm’n, Trade Commerce v. Federal 13 F. Chamber of Cf. Can Ladoga Canning 2d 684. American Co. v. 673, power 2d 770-771. But 1939 that 44 F. Industry Rice was denied. v. Federal Trade California F. 2d 723. Comm’n, Nonuse of the asserted clearly cannot be inferred from that power record. not be if would relevant place, power this did
second Mere nonuse years. dormant does not lay subtract granted. has been host prac- defer which may exhaustion of tical reasons administra- lies the realm of policy. From that powers tive delay infer hardly need did not can we does not exist. Black and Mr. join Justice Reed
Mr. Justice this dissent. COMMISSION, CHAIRMAN OF THE
NELSON, STATE TAX . SEARS, ROEBUCK & CO. et al. v Argued January 13, 14, 255. No. 1941. Decided February *2 Mulroney, Assistant Attorney Mr. John E. General of Rankin, John whom Mr. M. Iowa, Attorney with Gen- brief, petitioners. eral, was on Gamble, with whom Messrs. Charles Joseph Mr. G. L. Lederer, and Bert Klooster were Ralph Read, L. on respondent. brief, Douglas opinion delivered the of the Justice Mr. Court. constitutionality of the
This case involves (la. 6943.102-6943.125) ap- §§ Use Tax Code mail order business conducted di- plied rectly between customers The Supreme located outside Iowa. Court
order houses
held for
Iowa,
decision,
a five to four
that issue.
tail Tax. et tangible on the use Iowa of a tax personal property per the rate of two cent the purchase price.1 at material “Use,” here, so far as defined as “the exer- right tangible over any person any cise incident of that property ownership prop- personal the tax is imposed “every § 6943.102. While erty.” within until using this state such person *3 it further (§ 6943.103), provided is paid” tax has been every maintaining place “retailer of (§ 6943.109) that tangible making of per- in this state and sales business . . time use this state . at the for shall property sonal without sales, within or making such whether of by pur- this act from imposed state, collect the tax By . 6943.112 constitutes “debt § . .” chaser ifAnd the retaüer the state.2 by the retañer” to owed 1 6943.103, provides Act Tax Use § tangi- the use of hereby imposed on state this “An tax is excise after the effective date of this purchased on or personal property ble state, per two cent at rate of (April 16, 1937) for use in this act hereby imposed property. Said tax purchase price of such of until such using such within this state every person county retailer, treasurer, to a directly to the paid tax has been provided.” hereinafter the commission as receipts from gross tax on per two cent The sales is a in the consumers or tangible at retail state to personal property sold need not be here, the Tax as material Use users. 6943.075. So far § under required paid to be Sales paid property where a tax is Act. Tax 6943.104. § 2 quarterly 6943.113. Pen must returns. The retailer also make § 6943.118), for imposed delay filing (§ failure returns alties are required by commission. so or for to furnish data do failure 6943.120. §
362 the tax,
fails to collect his etc., permit retailer’s (§ 6943.084) may be revoked; and in foreign case of a corporation, its permit to do business the state as 6943.122. § weh.
Respondent is a New York corporation authorized since 1928 to do It has various retail stores there. It pays tax on sales made at those pays stores. also the tax on orders at placed those stores, though shipment made direct the purchaser from one of out of state branches. But it has refused to collect the tax on mail orders by sent purchasers to its out of state branches and filled direct through the shipments mails or a common carrier from those branches to the On threat purchasers.3 peti- tioners respondent’s permit to revoke because of such respondent brought injunction, suit refusal, this alia, inter Act alleging, applied § violates Article I of the Constitution and the Fourteenth Amendment. Supreme
The Iowa Court held that if had respondent limited its activities to mail order business the kind doing Iowa; involved, here would not 600,000 mailed to residents of about catalogues 427,000 large Respondent small ones. maintains exceeding $500,000. Iowa, investment therein retail stores in *4 aggregate sales of retail stores in Iowa for 1936 amounted to $5,600,000. $5,080,000; Its mail order sales in for aggregated 1937,.about $5,400,000. $5,900,000; about It 300,000 Iowa customers its mail estimates that some it 1,200,000 houses and that there were orders about received from Iowa customers. catalogues
One witnesses testified that and bul- securing” letins mailed were “our sole means of out mail order testified, business. But he customer inquired also “If a from a clerk to whether not he pay the store as would have to a use tax order, upon I believe clerk would inform him that if he him- mailed self the order that there would be no sales tax or use charged.” that, although technically may pur- the tax be on the at chaser, made, must be collected when the sale is time the state; which is outside these separate are and distinct from activi- therefore concluded the tax as ties was unconstitutional since Iowa has no applied the state or outside regulate respondent’s activities to respondent’s condition regulate such activities in the state. do business right to continue to constitutionality of a tax law “we passing on not its only practical operation, with its are concerned descriptive form of words precise definition or the Comm’n, Tax it.” Lawrence v. State be applied Gallagher, Co. v. 276, 280; 286 U. S. Southern Pacific Co., 311 Penney v. J. C. Wisconsin law the sale is that under Iowa 435. The fact mean that the power not of the state does made outside Wisconsin nothing operate.” which to “has of Iowa inis Co., purchaser supra. Penney v. J. C. validity in Iowa. the tax is use
and
“has been
concerned,
tax,
purchaser
far as
so
the arena of debate.”
withdrawn
Henneford
Co.
Co.,
Southern
Silas Mason
Pacific
the well-known func
It is one of
Gallagher, supra.
remove the
use and sales
integrated
tions of
their orders
other states
place
“to
temptation
buyers’
of the tax on local sales.”
escape payment
in the effort to
Co.,
p.
pointed
581. As
supra,
Mason
Silas
Henneford
buyer employs
that the
the fact
(p. 582),
in that case
out
effectuate
order to
commerce
of interstate
agencies
“upon
the tax is
since
material,
purchase
his
end.” And
at an
see
commerce is
after
privilege of use
Gallagher, supra. Use
Iowa is
v.Co.
Southern Pacific
place
passing
the time
regardless of
is taxed
what
required
tax is
time the
regardless of
title and
Mining
Coal
Berwind-White
Cf. McGoldrick
paid.
33, 49.
*5
centers on the
controversy
present
nub of
So
agent for Iowa.
the collection
respondent
use of
held not to be
duty, however, was
of such
imposition
foreign corporation
burden on a
unconstitutional
Johnson, 292 U.
Felt &
Oil Co. v.
Monamotor
Gallagher,
Respondent, regulation it a of and placed collection on constitutes and results interstate commerce substantial the free flow of such commerce. impairment of an it its mail order business that points It fact houses which with out of state mail order in competition the tax their Iowa sales. not collect on need not and do doing business are not other concerns But those unlike Hence, respondent, foreign corporations. state as for which it receiving benefits from Iowa they are not Respondent further price. to exact a making these collections and it of the cost to stresses inability its to collect the loss as a result probable its and inconvenience inhered But cost sales.4 on all tax foreign corporations on the duty imposed in the same & Tarrant cases. And so far and Felt Monamotor respondent undertakes to collect the sales tax on mail In Illinois A notice and schedule of the Illinois customers. orders from its catalogue. in the orders are contained Illinois amounts of for various approximately of those orders include an allow asserts that It 65% accompanied by the orders are not for the tax. Where ance tax; respondent up covering the Illinois sales does not hold amount customer order but fills it and sends the a bill the difference. says approximately collects of those deficiencies where it 36% 75%, the amount is less than where the amount is more. 70% assumption purchasers On the that on sales to Iowa the use tax $100,000 year, respondent that, asserts based would amount experience, maximum that would be collected Illinois would be that, says, it would entail $68,000. To a direct cost it of do. approximately $13,700 year. Those assump calculations are on put catalogues tion would a notice its Iowa simi given, If such a lar to the one used Illinois. notice were not it $35,000 asserts that collections of the Iowa use tax would exceed (out $100,000) approxi of an assumed and that its cost would $18,000. mately concerned, tax collections re- losses on are
as assumed right found a constitutional position no spondent for tax avoidance which opportunities practical on the residents, doing business affords Iowa or to its method of immunity because elect to claim a constitutional goods paid. before the tax is deliver discriminatory burdens on interstate com- Prohibited be determined abstractions. Par- merce are not to given whether cases determine specific facts of ticular against discriminates com- prohibitively *7 adjudications of based on prior Hence a review merce. general in embedded facts, howsoever widely disparate not an answer to the present does facilitate propositions, problem. and the cause is remanded judgment is reversed
The proceedings Court for Supreme not incon- to the Iowa opinion. with this sistent
Reversed. in part took no the consideration Me. Justice Stone this case. of disposition or dissenting. Roberts, Justice
Mr. judgment the should be affirmed. I think that corporation, a New York respondent, The conducts an mail order business. has also established throughout country. the to secure stores retail conducting in Iowa foreign stores as a privilege the permit it obtained a has been kept corporation, prescribed by of the fees the payment State. by in force respect with the collection by arises question No in in the tax sales made stores Iowa respondent in orders taken those based stores but or on p.d fill from a warehouse in forwarding articles by an- other state. only pure over mail order controversy arises sales. in following manner: The are consummated
These catalogues persons de- forwards respondent sale, tailing prices, articles cost A them. transporting person Iowa forwards his- written order one of the mail respondent’s order houses purchase tangible located outside Iowa for the per- sonal as listed and priced respondent’s' cata- being logue, accompanied by the order a remittance of purchase plus transportation and usu- price, charges, ally specifying transportation method of by desired purchaser. accepted rejected order is at the if and, it is received place where filled accepted, is delivery post office or to a carrier for direct ship- ment the extra-state order mail house the pur- chaser
This mail branch of activity and distinct from separate any conducted at its In conducting it the in Iowa. stores mail direct with other order houses which competition in exactly similar but conduct their fashion have registered and are therein no as foreign stores corporations. necessarily pursued
The method it a certainty order business makes it will *8 practical be whatever efforts it unable, by may put forth, amount the collect the of use on all mail its order in persons made to 1937 the sales number of transactions with some 300,000 its mail order persons in approximately 1,200,000. was Under the statute against to be enforced its attempted as mail order busi- in the had failed ness, if, to collect from the tax, each customer sum involved as it would have cent, aggregate been liable to Iowa in'the for per two $5,400,000, on approximately volume of its Iowa —the year. that If mail order it had made the the the tax, doing effort to collect cost of so would have cent, eighteen been approximately per of the total tax on the sales made to persons mail order Iowa and, ad- cost, respondént the dition to would have been liable 368 $38,000
for approximately of tax pur- uncollected from In addition, (cid:127)chasers. as the exaction, a result of the mail order will be respondent’s placed at a seri- disadvantage competition with other ous mail order have no concerns which retail stores Iowa and so have cent, advantage of two of price per price as against respondent. failing penalty for collect the tax agent as for State, the pay susceptible not sum of collec- required by from purchasers, State,
tion will be permit revocation of the conduct of large represent Iowa, expenditure stores its fixtures, appliances, and furniture, stock, and will long under term loss rental values leases. entail attempted opinion I am of enforcement proposed the manner taxing- statute .in both the the State violates commerce clause authorities Amendment of the Constitution. Fourteenth business is inter- First. commerce,1 may prohibit not and Iowa the re- state conducting that business with her spondent attempt so to do would To violation of citizens.2 of the Constitution. clause commerce directly may but Iowa only so, Not she not tax privilege Therefore commerce. regulate pursuit,3 or license it; or tax engaging 1 Heyman Hayes, 178, 186. 236 U. S. v. 465; Ry. Co., 125 U. Chicago Leisy & N. W. S. v. v. 2 Bowman Schollenberger 100; 1; v. Pennsylvania, Hardin, 135 U. U. S. S. 229, 250, 262; U. S. Gas v. West Kansas Natural Louisville Brewing Co., 70, 82; R. Cook Minnesota & Co. Nashville 352, 401. Cases, Rate Pigg, Book Text 3 International Buck Vickers, Sault Ste. Marie Inter Stove Co. *9 333, 340; 234 Co., U. S. v. Farmers Lemke national Transit Grain 50; Puget Stevedoring 258 U. v. Tax Co., Commission, Co. S. Sound 90, 302 U. S. 94.
369 from it.4 And income derived even if the gross respond- agents a soliciting force Iowa orders ent maintained in interstate commerce that shipped to fact would not regulation it amenable to the or taxation of its render order business.5 mail regulate not or may lawfully license
Thus in in- soliciting agents shipped orders to be business right limit to or or condition commerce;6 terstate power Iowa courts.7 The order contracts enforce doing altogether a foreign corporations to exclude impose not the State to bur- does enable local business aby of interstate commerce the transaction upon dens regis- registered State; in the foreign corporation do foreign corporation by tration cor- a waiver of the not constitute does within State business free from transact interstate right to poration’s taxation.8 regulation or of state the burdens to tax its conceded abuse may not by within State respondent’s activities regulate the by the with compliance respondent compel attempting burden its to tax or interstate efforts unconstitutional forfeit, proposes And Iowa commerce.9 reason conduct domestic right to do, submit refusal business.10 4 650, 655; v. 297 S. Commission, U. Tax Station Blend Fisher’s U. 307. Storen, Manufacturing Co. v. 304 S. Adams 5 47; 141 Kentucky, Text Book International Crutcher v. Co. supra. Pigg, v. 6 289; Crenshaw v. 227 Titusville, Arkansas, 153 U. S. v. Brennan 389. 7 201; 235 S. Cope, Furst Co. v. U. Remedy & Thomas Sioux S. 493. 282 U. Brewster, v. 8 S.U. Tafoya, Deposit Co. v. Hanover Fidelity & 494, 507, 517. S. 272 U. Harding, Fire Ins. Co. v. Crane Looney 34; Kansas, S. Telegraph U. Pull Co. Western Union Ry. Atchison, T. & F. S. Co. Kansas, man *10 370
Clearly in this instance effort directly the and sub- the an stantially to burden transaction of busi- in citizens, ness with violation the com- the state’s the clause, by threat of disobedience penalizing merce the by right the forfeiture of within transact, Iowa, the independent business which conducts all existing including accordance with the law laws, deduct and the the requiring pay it to over amount of Upon well as the un- reason, upon Iowa sales tax. in this Iowa no authority court, broken current of interstate commerce. Oil Johnson, Monamotor Co. v. 292 and U. S. Gallagher, Co. relied Mfg. Felt & Tarrant v. by point. the are not petitioners, there apposite company because the first is gasoline in in the distribution of the State engaged was activity the drawn in only question. Iowa. This was merely required distributing the company, The statute add the tax to its gasoline price and to users, In the amount of thus and return withheld. report the use tax collection of was imposed second, corporation through sold respect with doing who were in the agents State general handling were articles delivery and sold for California As an incident of such sales, in that State. seller and make to add return of it required was the State.11 of the exaction is said justification pur- the purchaser’s tax is on
chaser is use if these facts were they But determinative that State. tax or imposition justify burden, by would Co. Foster, Union Tel. S. O’Connor, U. Western 114; Trucking Commission, Railroad 247 U. S. Frost 583, 593. 11 Compare Corporation Pennsylvania, Wiloil Curry, Graybar Electric Co. purchaser’s every
state of the transaction residence, in. Attention goods are sold interstate commerce. effectively cannot is also called to the fact reach citizens order to enforce use tax on its own cannot, however, attempt the state’s justify them. This *11 by placing to trouble unconstitutional save itself conducted a citizen interstate commerce upon to the Reference is made circumstance of another state. in Iowa, laid on local sales there as a similar tax is that, the or its collection imposing tax is no discrimination argument the but the will not serve upon respondent, A justify the tax. state cannot a burden on legalize to local by laying a similar burden on interstate commerce commerce.12 the Fourteenth Amendment is con- So far as
Second. re- activity of the may lay any tax on cerned, but State, plainly, the pursues it within which spondent re- there the conduct of disclosed, is, the facts activity. no local business, such mail order spondent’s found: correctly the State The Court Supreme of Iowa consummated outside State are “The sales distinct from separate are and They in each instance. chal- here statute plaintiff’s activities obligation plaintiff impose upon lenged seeks within making whether sales, the time of at 'shall imposed by this collect state, without or made outside The sales are purchaser.’ chapter from to collect requires plaintiff the statute of Iowa and seeks clearly made. are time the sales at . . . state. plaintiff outside activities of regulate Court Supreme of the pronouncements repeated Under quoted reviewed hereinbefore States, the United right.” has no such of Iowa the State from, Kansas, supra; Levick Telegraph Crew Co. Union Western Pennsylvania, Delivery designated to a carrier is delivery to the cus- in this completed tomer13 outside Iowa. and, case, impose a burden attempt, upon such therefore, delivery regulate or transaction is but an effort regulate part tax an event her occurs outside borders and over which she has no jurisdiction.14 This court recently enforced this principle a case on its merits more favorable to the than the present.15 contention State’s There it was said:
“It follows that such a tax, otherwise unconstitutional, converted into a valid exaction merely because the corporation enjoys outside the state economic benefits within transactions which the it, might state b.ut does not or because the might state tax, tax the trans- corporation actions which the carries on outside the state if it were induced to carry them on within.” *12 v. Berwind-White Coal Mining Co., 309
McGoldrick is distinguishable U. instant case for there the grounded decision was on the fact transfer of title and consummation of sale depended upon delivery by seller the taxing state.
In this aspect also the power of the State does not extend to measures which condition respondent’s privi lege to do another state free from regula tion or taxation of Iowa.16
The Chief
joins
this opinion.
Justice
13 United
P.
v.
States
B.
Andrews &
229;
U. S'.
compare
v.
Garretson