As the above entitled cases present substantially identical issues on appeal, they have been consolidated for our review.
The plaintiff Tricon, Inc., brought suit in the Superior Court for King County to obtain a refund of an ad valorem
The рlaintiff Tricon, Inc., is engaged in the business of importing from foreign countries various kinds of steel products. All of these steel products are imported for the sole purpose of resale to purchasers in Washington and in other states. The products, upon which the tax here involved was assessed and paid, were imported from foreign countries and remained, until sold and delivered to purchasers, in their original bundles, reels, crates or packagеs in which they were received upon entry to this country.
The plaintiff F. L. Hartung Glass Company, Inc., is engaged in the business of importing from foreign countries glass produсts for resale to purchasers within this state. The glass products, upon arrival at the company’s place of business in Seattle, are stored in its warеhouse in the original packages in which they arrive upon importation and remain there in that condition until sold to purchasers.
The basis for the judgments in the trial court in favor of the plaintiffs was the prohibition contained in the United States Constitution, Art. 1, § 10, which provides:
“No state shall, without the consent of the cоngress, lay any imposts or duties on imports or exports, except what may be absolutely necessary for executing its inspection laws: . . . ”
It has been the long-standing rule since the early cases of
Brown v. Maryland,
The defendant King County (appellant in both cases) contends, howеver, that two recent cases decided by the Supreme Court of the United States,
Youngstown Sheet & Tube Co. v. Bowers
and
United States Plywood Corp. v. City of Algoma,
decided together and reported in
In the Youngstown Sheet & Tube Co. case, the taxpayer imported iron ores for its own use in manufacturing and stored them in piles until needed in the manufacturing process. In the United States Plywood Corp. case, the taxpayer imported lumber and wood veneers for its own use in manufacturing and stored them in their original containers until they were ready for the manufacturing process. State ad valorem property taxes were levied upon the goods in each case. Upon review from state decisions uрholding the constitutionality of the tax assessments, the United States Supreme Court affirmed the state courts and held that, although the goods were in their original containers, they had been committed to the use for which they were imported, i.e., the current inventory of the manufacturing process, and were, therefore, subject to state taxation.
The issue here involves the interpretation and application of the federal constitution and we are bound to follow the decisions of the Supreme Court of the United States, which have passed on this issue.
B. F. Goodrich Co. v. State
38 Wn. (2d) 663,
In Brown v. Maryland, supra, Chief Justice Marshall set forth the underlying principle which governs the question of state tax immunity for imports:
“ . . . when the importer has so acted upon the thing imрorted, that it has become incorporated and mixed up with the mass of property in the country, it has, perhaps, lost its distinctive character as an import, and has become subject to the taxing power of the State;”
The Chief Justice went on to say:
“. . . but while remaining the property of the importer, in his warehouse, in the original form or package in which it was imported, a tax upon it is too plainly a duty on imports, to escape the prohibition in the constitution.”
As to when the thing imported has been “so acted upon”, the court in the Youngstown Sheet & Tube Co. and United States Plywood Corp. cases, supra, specified some of the acts that would shed the tax immunity by recognizing, with approval, language in Brown v. Maryland, supra:
“. . . the goods lose their character as imports when the importer (1) ‘sells them,’ or (2) ‘[breaks] up his packages, and [travels] with them as an itinerant pеdlar.’ . . . More important to the question confronting us, he also held (3) that goods brought into this country by an importer ‘for his own use’ and here ‘used’ by him are to be regarded as a part of ‘the common mass’ of property and are not immune from state taxation.”
It is apparent from a reading of the opiniоn, that the issue presented by the facts was limited to an application of the rule as stated in class (3) in the above quote. This is illustrated by the following pаssages from the court’s opinion:
“. . . The constitutional design was then to immunize imports from taxation by the importing States, and all others through or into which they may pass, so long as they retain their distinctive character as imports. Hence, that design is not impinged by the taxation of materials that were imported fоr use in manufacturing after all phases of the importation definitely have ended and the materialshave been ‘put to the use for which they [were] imported’ (Hooven & Allison Co. v. Evatt, supra [324 U. S.] at 657), for in such a case they have lost their distinctive character as imports and are subject to taxation. . . .
“ . . . Whatever may be the significance of retaining in the ‘original package’ goods thаt have been so imported for sale (Brown v. Maryland, supra; Waring v. The Mayor,8 Wall. 110 , 122-123; Low v. Austin,13 Wall. 29 , 32-33; Cook v. Pennsylvania,97 U. S. 566 , 573; May v. New Orleans,178 U. S. 496 , 501, 507-508), goods that have been so imported for use in manufacturing are not exempt from taxation, though not remоved from the ‘original package,’ if, as found here, they have been ‘put to the use for which they [were] imported.’ Hooven & Allison Co. v. Evatt, supra, at 657. Breaking the original package is only one of the ways by which packaged goods that have been imported for use in manufacturing may lose their distinctive character as imрorts. Another way is by putting them ‘to the use for which they [were] imported. . . . ’ ”
We do not think the Supreme Court has indicated by implication that goods imported for rеsale, and which remain in their original containers, lose their character as imports immune from state taxation when they become a part оf the importer’s current inventory of goods held for sale. See
Miehle Printing Press & Mfg. Co. v. Department of Revenue,
18 Ill. (2d) 445, 164 N. E. (2d) 1 (1960);
State ex rel. H. A. Morton Co. v. Board of Review,
We, therefore, hold that the tax paid under protest by Tricon, Inc., and the tax assessed against F. L. Hartung Glass Company, Inc., are invalid because they were as
The judgments of the trial court are affirmed.
All Concur.