Source: https://supreme.justia.com/cases/federal/us/358/534/
Timestamp: 2019-04-24 18:31:23+00:00

Document:
1. On the records in these two cases, held that manufacturing corporations which imported materials for their own use in their current manufacturing operations had so acted upon them as to cause them to lose their distinctive character as "imports" within the meaning of that term as used in the Import-Export Clause of the Constitution, and that, therefore, the materials had become subject to state taxation. Hooven & Allison Co. v. Evatt, 324 U. S. 652, distinguished. Pp. 358 U. S. 536-550.
2. In the Youngstown case, a manufacturer of iron and steel imported iron ore for use in its own manufacturing process. Upon arrival at destination, these ores were stored in "ore yards" adjacent to the furnaces. The daily ore needs of the plant were taken from those "ore yards" and conveyed to "stock bins," from which the ores were fed into the furnaces. Ohio assessed an ad valorem tax based on the average value of the ore in these "ore yards" during the tax year. Held: since these ores were not only needed, imported, and irrevocably committed to supply, but were actually being used to supply, the daily requirements of the manufacturing plant, they had lost their distinctive character as "imports," and all tax immunity as such. Pp. 358 U. S. 536-538, 358 U. S. 545-547.
the drying was completed. The imported veneers were received "in bundles," and kept in that form in piles, separated as to specie, in the manufacturer's plant for use as needed in the day-to-day operations of the plant. The City assessed a tax against petitioner based upon the value of one-half of the imported lumber and veneers then on hand. Held: the lumber and veneers that were taxed were not only needed, imported, and irrevocably committed to supply, but actually were being used to supply, the daily requirements of the manufacturing plant, and they had lost their distinctive character as "imports," and all tax immunity as such. Pp. 358 U. S. 538-540, 358 U. S. 547-548.
4. In the Plywood case, the fact that the veneers were received in "bundles" which were not opened until the veneers were put into the daily manufacturing operations of the plant does not require a different result. Pp. 358 U. S. 548-549.
5. In the Youngstown case, the fact that a tax was levied by Ohio on domestic ores stored on public docks in Ohio, whereas merchandise belonging to a nonresident when "held in a storage warehouse for storage only" was exempted from taxation, did not deny to appellant, a resident of Ohio, the equal protection of the laws guaranteed by the Fourteenth Amendment. Allied Stores v. Bowers, ante, p. 358 U. S. 522. Pp. 358 U. S. 550-551.
166 Ohio St. 122, 140 N.E.2d 313, affirmed. 2 Wis.2d 567, 87 N.W.2d 481, affirmed.
The principal question presented by these cases is whether appellant in No. 9, the Youngstown Sheet and Tube Company, and petitioner in No. 44, United States Plywood Corporation, have so acted upon the materials which they have imported for use in their manufacturing operations as to cause them to lose their distinctive character as "imports" within the meaning of that term as used in the Import-Export Clause, Art. 1, § 10, cl. 2, of the United States Constitution. [Footnote 1] The Supreme Courts of the States concerned have held that these manufacturers have done so. Our task is to decide whether, on the particular facts involved, those holdings violate the Import-Export Clause of the Constitution.
of "two parallel walls, on which there [is] a movable ore bridge." When the imported ores arrive at this final destination, they are unloaded into one of the ore yards, but, because the ore from each country is different from the others, and each is imported for a different use, the ores are kept segregated as to the country of origin by being "placed in a separate pile in a separate area of the ore yard." The daily manufacturing needs for ore are taken from these piles. As needed, ores are conveyed from the particular pile or piles selected to "stock bins" or "stock houses," holding one or two days' supply and located in close proximity to the furnaces, from which the ores are fed into the furnaces. As ore from a particular "pile" in the ore yard is thus taken and consumed, other like ore is similarly imported from the same country and is brought to the plant and unloaded on top of the remainder of that particular pile. This course is continuously repeated. Youngstown endeavors to maintain "a supply of imported ores to meet its estimated requirements for a period of at least three months." The ores are not imported "for resale," but "for use in manufacturing [at the Ohio plant]."
"Personal property is 'used' within the meaning of 'used in business' . . . when stored or kept on hand as material, parts, products, or merchandise . . . , [Footnote 4]"
assessment. It contended, among other things, that the imported ores had not lost their character as imports, and were therefore immune from state taxation under Art. I, § 10, cl. 2 of the United States Constitution.
"protection [of the Import-Export Clause cannot] extend to such iron ore (1) after it has been commingled with other iron ore imported at a different time, even though such other iron ore is of the same grade and was imported from the same place, and (2) after portions of such iron ore have been removed for use in manufacturing."
It then entered judgment sustaining the tax, 166 Ohio St. 122, 140 N.E.2d 313, 317, and we noted probable jurisdiction of Youngstown's appeal. 355 U.S. 911.
its plant, where it is stacked in the open in such a way as to allow the air freely to circulate through the stacks for the "dominant purpose" of air-drying it. This method does not so completely dry the lumber as to make kiln-drying unnecessary, but it does materially reduce the time and expense of that process. From time to time, so much of the lumber as is about to be put into veneered products is taken from the stacks and placed in a kiln where the drying is completed and the lumber readied for use. The veneers are imported from three countries. They are received in bundles, and are kept in that form in piles, separated as to specie, in petitioner's plant for use as needed in the day-to-day operations of the plant.
Supreme Court of Wisconsin affirmed. 2 Wis.2d 567, 87 N.W.2d 481. Because of the importance of the constitutional question presented, we granted certiorari. 356 U.S. 957.
"No State shall, without the Consent of the Congress, lay any Impost or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws. . . ."
and property within their territory. The power, and the restriction on it, though quite distinguishable when they do not approach each other, may yet . . . approach so nearly as to perplex the understanding. . . . Yet the distinction exists, and must be marked as the cases arise. Till they do arise, it might be premature to state any rule as being universal in its application. It is sufficient for the present to say generally that, when the importer has so acted upon the thing imported 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. . . ."
"when [the imported goods are] used for the purpose for which they are imported, they cease to be imports and their tax exemption is at an end."
Id. at 324 U. S. 665.
Thus, though Brown v. Maryland, supra, holds that goods brought into the country by an importer "for his own use" are not exempted from state taxation by the Import-Export Clause, and Hooven & Allison Co. v. Evatt, supra, holds that they are, both agree that, when the imported goods are "used for the purpose for which they are imported, they cease to be imports and their tax exemption is at an end." Hooven & Allison Co. v. Evatt, supra, at 324 U. S. 665. Compare Brown v. Maryland, supra, 12 Wheat. at 25 U. S. 441-443.
Do the facts as stipulated and found in the cases before us, when considered in the light of applicable legal principles, show that these manufacturers have so acted upon the imported materials as to cause them to lose their distinctive character as "imports" by irrevocably committing them, after their importation journeys have definitely ended, to "use in manufacturing" at the plant and point of final destination, and by "entering" and "using" them "in manufacturing" at that place? The manufacturers, relying upon their understanding of the Hooven case, argue that they do not, but we have concluded that they do.
"thought that Brown v. Maryland, supra, laid down a rule applicable only to imports for the purpose of sale, and that imports for use became, upon storage, even if still in the original package, so intermingled with the common mass of property within the state as to be subject to the state power of taxation"
"[I]t is unnecessary to decide whether, for purposes of the constitutional immunity, the presence of some fibers in the factory was so essential to current manufacturing requirements that they could be said to have entered the process of manufacture, and hence were already put to the use for which they were imported, before they were removed from the original packages. Even though the inventory of raw material required to be kept on hand to meet the current operational needs of a manufacturing business could be thought to have then entered the manufacturing process, the decision of the Ohio Supreme Court did not rest on that ground, and the record affords no basis for saying that any part of petitioner's fibers, stored in its warehouse, were required to meet such immediate current needs. Hence we have no occasion to consider that question."
Id. at 324 U. S. 667.
Unlike Hooven, these are not cases of the mere storage in a warehouse of imported materials intended for eventual use in manufacturing but not found to have been essential to current operational needs. Here, the Ohio and Wisconsin courts have, in effect, held that the stipulated and found facts show that the imported materials that were taxed by those States were so essential to current manufacturing requirements that they must be said to have entered the process of manufacture, and those courts have rested their judgments, in major part at least, on that ground. Our question therefore is precisely the one which the Court did not reach or consider in the Hooven case.
"the reconciliation of the competing demands of the constitutional immunity and of the state's power to tax is an extremely practical matter"
(Hooven & Allison Co. v. Evatt, supra, at 324 U. S. 668), we must approach the question whether these materials had been "put to the use for which they [were] imported" (id. at 324 U. S. 657) with full awareness of realities, and treat with them in a practical way.
Ohio plant; that Youngstown had imported them "for use in manufacturing" and "to meet its estimated [manufacturing] requirements" at that plant; that the ores had arrived at their destination, had been placed in "piles" in the "ore yards" of that plant, and their importation journey definitely had ended; that the ores were irrevocably committed to "use in manufacturing" at that plant and point of final destination; and that the daily ore needs of the plant were conveyed from the "piles" in the "ore yards" to "stock bins" or "stock houses," holding one or two days' supply, from which they were fed into the furnaces. Does not the stipulation thus show that the ores were not only needed, imported, and irrevocably committed to supply, but were actually being used to supply, the daily requirements of the plant? It seems to us that these stipulated facts inescapably establish that Youngstown had "so acted upon the [imported ores]" (Brown v. Maryland, supra, at 25 U. S. 441), by using them "for the purpose for which they [were] imported," that they must be held "to have then entered the manufacturing process" (Hooven & Allison Co. v. Evatt, supra, at 324 U. S. 665, 324 U. S. 667) and to have lost their distinctive character as "imports," and all tax immunity as such.
former to the latter, there would be no practical difference from the actual facts involved, but it could not be argued that the ores in the one are any less certainly being used in the processes of manufacture than the ores in the other. It seems entirely plain that the ores in the smaller piles in the "stock bins" and "stock houses" are no more definitely and irrevocably committed to use, or being used at the plant than are the ores in the larger piles in the ore yards from which the smaller ones are constantly kept supplied.
"[R]econciliation of the competing demands of the constitutional immunity and of the state's power to tax [being] an extremely practical matter"
(Hooven & Allison Co. v. Evatt, supra, at 324 U. S. 668), taxability cannot depend upon whether the size of the pile of stored materials or its distance from the place of actual fabrication or consumption is a little more or a little less.
needs. These findings are amply supported by the evidence, and are not contested here. We think they clearly show that the lumber and veneers that were taxed were not only needed, imported, and irrevocably committed to supply, but were actually being used to supply, the day-to-day manufacturing requirements of the plant. They thus establish that petitioner had "so acted upon the [imported materials]" (Brown v. Maryland, supra, at 25 U. S. 441) that were taxed by using them "for the purpose for which they [were] imported," that -- like the ores in the Youngstown case -- they must be held "to have then entered the manufacturing process" (Hooven & Allison Co. v. Evatt, supra, at 324 U. S. 665, 324 U. S. 667), and to have lost their distinctive character as "imports," and all tax immunity as such.
only one of the several factors to be considered in factually determining whether the goods are being "used for the purpose for which they [were] imported." Hooven & Allison Co. v. Evatt, supra, at 324 U. S. 665. Here, the fact that the bundles are not opened until the veneers are put into the day-to-day manufacturing operations of the plant was fully considered by the Wisconsin courts before they made the finding that the veneers that were taxed were "necessarily required to be kept on hand to meet [petitioner's] current operational needs," and were actually being "used" to supply those needs.
Because of the views expressed, it is unnecessary to reach or discuss the further finding and conclusion of the Wisconsin courts that, when the "green" lumber was stacked by petitioner in the open in a particular way for the "dominant purpose" of air-drying it, the lumber "entered the process of manufacture," and, for that reason also, lost its character as an import.
for the same use. We cannot impute to the Framers of the Constitution a purpose to make such a discrimination in favor of materials imported from other countries as would result if we approved the views pressed upon us by the manufacturers. Compare May & Co. v. City of New Orleans, 178 U.S. at 178 U. S. 509.
"For the reasons stated in Allied Stores of Ohio, Inc. v. Bowers, Tax Comm'r, ante, [166 Ohio St.] 116, the taxpayer's contentions [in that respect] must be rejected. . . ."
opinion in that case, we hold that § 5701.08(A) and the questioned tax laid thereunder did not violate the Equal Protection Clause of the Fourteenth Amendment.
* Together with No. 44, United States Plywood Corp. v. City of Algoma, on certiorari to the Supreme Court of Wisconsin, argued November 12-13, 1958.
"No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws. . . ."
Exhibits in the record, though not giving measurements, indicate that the nearest ore yard is located within two or three hundred feet, and the most distant one is located within two or three hundred yards, of the furnaces.
Title 57, Page's Ohio Rev.Code Ann.1953, § 5709.01.
Title 57, Page's Ohio Rev.Code Ann.1953, § 5701.08(A).
"by taking the value of all [such] property . . . owned by such manufacturer on the last business day of each month [that] the manufacturer was engaged in business during the year, adding the monthly values together, and dividing the result by the number of months the manufacturer was engaged in such business during the year."
Title 57, Page's Ohio Rev.Code Ann.1953, § 5711.16.
"are in the hands of the importer for sale . . . , they may be regarded as merely in transitu, and on their way to the distant cities, villages, and country for which they are destined and where they are expected to be used and consumed, and for the supply of which they were in truth imported."
License Cases, 5 How. 504, 46 U. S. 575.
"the tax intercepts the import, as an import, in its way to become incorporated with the general mass of property, and denies it the privilege of becoming so incorporated until it shall have contributed to the revenue of the State."
12 Wheat. at 25 U. S. 443. That imported goods lose their character as "imports" upon being sold is well settled. License Cases, 5 How. 504, 46 U. S. 575; Waring v. The Mayor, 8 Wall. 110; Low v. Austin, 13 Wall. 29; May & Co. v. New Orleans, 178 U. S. 496.
"[T]he tax finds the article already incorporated with the mass of property by the act of the importer. He has used the privilege [i.e., of importation and sale] he had purchased, and has himself mixed them up with the common mass, and the law may treat them as it finds them. The same observations apply to plate, or other furniture used by the importer."
"(A) Personal property is 'used' within the meaning of 'used in business' . . . when stored or kept on hand as material, parts, products, or merchandise; but merchandise or agricultural products belonging to a nonresident of this state is not used in business in this state if held in a storage warehouse for storage only. . . ."
Title 57, Page's Ohio Rev.Code Ann., 1953, § 5701.08(A).
MR. JUSTICE FRANKFURTER, whom MR. JUSTICE HARLAN joins, dissenting on the main issue.
As one follows the tortuous and anguished endeavors to establish a free trade area within Western Europe, unhampered by interior barriers, against the opposition of inert and narrow conceptions of self-interest by the component nations, admiration for the farsighted statecraft of the Framers of the Constitution is intensified. Guided by the experience of the evils generated by the parochialism of the new States, the wise men at the Philadelphia Convention took measures to make for the expansive United States a free trade area and to withdraw from the States the selfish exercise of power over foreign trade, both import and export. They accomplished this by two provisions in the Constitution: the Commerce Clause and the Import-Export Clause.
The former reached its aim, as a matter of settled judicial construction, by placing the regulation of commerce among the States in the hands of Congress, except insofar as predominantly local interests give the States concurrent power until displaced by congressional legislation. This leeway to the States was established by the decision in Cooley v. Board of Wardens, 12 How. 299, foreshadowed by Marshall's decision in Willson v. Black Bird Creek Marsh Co., 2 Pet. 245. This permissive area for state action has given rise, as we know too well, to multitudinous litigation.
"net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States, and all such Laws shall be subject to the Revision and Control of the Congress."
bound most respectfully to say, disregards this historic course of constitutional adjudication by allowing the States of Wisconsin and Ohio, and, therefore, all the States, to tax foreign imports despite the prohibition of Art. I, § 10, cl. 2, that "No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports . . . ," as that clause has been authoritatively interpreted by this Court. And it does so, moreover, without overruling the decisions which the basis and logic of this new reading of the Constitution can no longer sustain. But they remain decisions of this Court. Thus, we are left with a confusing series of conflicting cases amidst which the States must blindly move in determining the extent of their constitutional power to tax. This confusion is substituted for a principle so plain of application that the controversies in this Court over the meaning of this far-reaching constitutional provision have numbered less than a dozen in our entire history. Of course, I do not believe that we should overrule this consistent course of decisions. But to do so would at least have the merit of explicit announcement of a new legal policy, with its concomitant repercussions on the conduct of our national economic life.
Since the legal analysis of the challenged taxes must derive from due regard for the precise circumstances on which they are based, it becomes necessary to set forth the facts of the two cases now before us.
in wooden crates or in bundles secured by metal straps. After arrival at petitioner's plant, the veneers are stored in a warehouse in their original packages prior to their use in the manufacture of veneered products. When used, the packages are broken, and take their course through the factory. The lumber, birch and cedar, is imported from Ontario, Canada. When received, it is piled in the yard preparatory to use in manufacture.
The City of Algoma assessed for taxation one-half of the total value of the imported lumber piled in the yard and the veneers stored in their original packages in the warehouse, on tax day-May 1, 1955. The city said that at least that amount of the imported materials was necessary to meet the "current operational requirements" of petitioner, and thus was subject to state taxation.
The State Supreme Court upheld the tax on the basis of the finding below that the goods taxed were necessary for the "current operational needs" of the plant. The tax on the lumber was sustained on an alternative ground. Since the dominant purpose of piling the lumber in the storage yard was to prepare it for manufacture by air drying, the lumber had entered the process of manufacture, and lost its immunity from state taxation. Most of the Canadian lumber was received green, and, as a matter of good business practice, it is customary to air dry such lumber before running it through dry kilns to further remove moisture.
the vessels reach the port of entry, the ore is discharged into railroad cars and transported in bulk to appellant's plant in Youngstown. Upon arrival, the ore is unloaded into a storage yard adjacent to the manufacturing plant. A separate storage pile in a separate area of the storage yard is maintained for each grade of imported ore, and such ore is not commingled with any other property. A supply of ore necessary to meet estimated requirements for at least three months is maintained. Since the ore is located at some distance from stock bins and furnaces, when the need arises for a particular grade of ore, it is taken from the grade stockpile and transported to stock bins or stock houses preparatory to use in the furnaces. When a shipment of bulk ore of a particular grade is received, it is placed in the stockpile designated for that grade, i.e., all imports of Brazilian ore are placed in the Brazilian pile, etc. Hence, a stockpile of a particular grade may be diminished by a particular day's need and augmented the next by subsequently imported ore of the same grade.
Appellant conceded that the imported ores had lost their immunity from taxation once they were removed from storage piles and placed in stock bins. The Supreme Court of Ohio decided that all the imported ore, including that remaining in the storage piles, could be taxed by the State, and upheld the challenged assessment. The Ohio court thought that the mere mingling of imported ore with other imported ore of the same grade, coupled with the fact that parts of each pile were taken for use in manufacturing, had terminated the constitutional immunity and subjected the entire stock of imported ore to state taxation.
less advantageously situated parts of the country. This fear of the use of geographical position to exact a form of tribute found an especially forceful expression in the absolute prohibition against duties on exports by either Nation or States.
"when the prohibition ceases, and the power of the State to tax commences; . . . It is sufficient for the present to say generally that, when the importer has so acted upon the thing imported 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, 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."
12 Wheat. at 25 U. S. 441-442.
Since, in Brown v. Maryland, the object of importation had been sale, reasoned the Chief Justice, certainly the importer was entitled to realize that aim without being subject to state taxation. Although more subtle, more befogging cases might be imagined, it was "plain" that, at least while in the hands of the importer in its original form or package, the foreign good remained an import and thus free from state levies.
The counsel for the State of Maryland in Brown v. Maryland was its Attorney General, Roger B. Taney.
"goods imported, while they remain in the hands of the importer, in the form and shape in which they were brought into the country, can in no just sense be regarded as a part of that mass of property in the State usually taxed for the support of the State government. [Footnote 2/7]"
"reason why imported goods, exposed in the store of a merchant for sale, do not constitute a portion of the wealth of the State as much as do domestic goods similarly situated. [Footnote 2/8]"
"do not lose their character as imports, and become incorporated into the mass of property of the State, until they have passed from the control of the importer or been broken up by him from their original cases. Whilst retaining their character as imports, a tax upon them, in any shape, is within the constitutional prohibition. [Footnote 2/9]"
The historic standards governing the application of the Import Clause received recent reaffirmation in Hooven & Allison Co. v. Evatt, 324 U. S. 652. That case is of compelling significance here. For the situation there involved so precisely parallels the circumstances now before us as to control these cases, unless Hooven & Allison is to be overruled and the dissenting views expressed in that case adopted as the Court's views.
"Although one Justice dissented in Brown v. Maryland, supra, from that day to this, this Court has held, without a dissenting voice, that things imported are imports entitled to the immunity conferred by the Constitution; that that immunity survives their arrival in this country and continues until they are sold, removed from the original package, or put to the use for which they are imported."
324 U.S. at 324 U. S. 657.
". . . [N]o opinion of this Court has ever said or intimated that imports held by the importer in the original package and before they were subjected to the manufacture for which they were imported, are liable to state taxation. On the contrary, Chief Justice Taney, in affirming the doctrine of Brown v. Maryland, in which he appeared as counsel for the State, declared, as we now affirm:"
sense be regarded as a part of that mass of property in the state usually taxed for the support of state government. . . ."
". . . We do not perceive upon what grounds it can be thought that imports for manufacture lose their character as imports any sooner or more readily than imports for sale. T he constitutional necessity that the immunity, if it is to be preserved at all, survive the landing of the merchandise in the United States and continue until a point is reached, capable of practical determination, when it can fairly be said that it has become a part of the mass of taxable property within a state, is the same in both cases."
324 U.S. at 324 U. S. 666-667.
for the disposition of the present cases. We accept the finding of the Wisconsin courts that the imported lumber was stored for the dominant purpose of air drying. Having entered the process of manufacture, the goods had become subject to the taxing power of the State. However, neither the imported ores in No. 9 nor the foreign veneers in No. 44 had been subject to manufacturing. On tax day, they lay in the manufacturer's storage area, in their original "form and shape," awaiting their initial processing. Thus, the taxes sought to be levied on these materials are clearly barred by the historic series of adjudications of this Court, which have established that goods so situated, whether awaiting sale or manufacture, are constitutionally immune from state taxation under the proscription of Art. I, § 10, cl. 2, of the Constitution.
effectively departed from established doctrine and upholds the challenged taxes. It does so on the basis of a theory which is as elusive to logic as it is opposed to authority -- a theory which is not only unsupported by economic fact or reason and without basis in any of the invoked "realities," but which turns Brown v. Maryland and its progeny into ad hoc results unrelated to their rationale, and disregards the harmonious reasoning on which these decisions were based and the process of one hundred and thirty-two years of constitutional adjudication.
"these are not cases of the mere storage in a warehouse of imported materials intended for eventual use in manufacturing but not found to have been essential to current operational needs."
a manufacturing purpose. The manufacturer did not import them to sit idly in his storage area.
was done to them. They simply lay in storage areas awaiting use. To say that the goods "were actually being used to supply, the daily requirements of the plant," simply affirms the obvious fact that the imports, unaffected in the form in which they were brought in from abroad and deposited, awaited their intended, but not begun, manufacturing process. In all prior considerations of the Import-Export Clause, the immunity of imported goods has been terminated only by physical handling or alteration, not by reference to their assumed prospective role in the importer's use of them. The imported hemp in Hooven & Allison was similarly "needed." It too was "irrevocably committed to supply," and clearly it was "actually being used to supply, the day-to-day manufacturing requirements of the plant." To that end, the hemp was imported. If the hemp was not to be so used, it would not have been imported.
Furthermore, if we simply substitute "place of sale," for "plant" in the Court's reasoning -- and we are not vouchsafed reasons either in abstract reasoning or in practical logic to disallow it -- the identical enumeration of factors here thought sufficient to subject the imports to tax is found to be present in virtually every case in which this Court has invalidated a state tax on imports. The crates of champagne in Low v. Austin and the bags of nitrate in Anglo-Chilean Nitrate Sales Corp. were also "needed, imported, and irrevocably committed to supply," and "were actually being used to supply, the day-to-day manufacturing requirements" of the place of sale. In effect, the result of today's decision means that, if imported goods are needed, they are taxable. If useless, they retain their constitutional immunity.
and that "at least" three months' supply was generally kept on hand. (R. 35.) There were no stipulations, nor were there any findings, as to the rate of use of the ore, the immediacy of the need for it, or its relation to the requirements of the plant, which also used domestic ore in its manufacturing. We have simply the fact that an inventory of ore was kept for eventual use. The tax was sustained by the Ohio Supreme Court on the ground that the bulk ore had become mingled with the general property of the State because new ore had been added to the pile, and old ore removed. [Footnote 2/15] The Ohio court did not discuss or rest on the fact that the goods were "so essential to current manufacturing requirements that they must be said to have entered the process of manufacture." There is no possible way to make the Court's reasoning fit with the circumstances which underlie and define Brown v. Maryland or Hooven & Allison. Nothing has been done to the ore; it is in its original form and shape prior to use. Even as a matter of sound accounting, were that relevant, the goods could not be said to have entered the process of manufacture. We cannot assume or fictionalize facts. They must be found to exist. By assuming them, the Court strips them of relevance and impliedly rejects the unbroken meaning that the decisions have given the Import Clause.
Nor is the Court's conclusion strengthened by the suggestion that, since petitioner did not contest the taxability of that ore which had been removed to stock bins or houses, we must allow the rest of the ore to be taxed, as to distinguish between the two would be incongruous.
The question of the taxability of the removed ore is not before us. That question was not involved in any previous proceeding in this case. We have not the basis for knowledge as to what, if any, processing the ore underwent when removed to the stock bins. There is certainly no basis for assigning a hypothetical constitutional position to the removed ore and using such an argumentative figment as the means for upholding the tax on the ore about which we do have the precise facts and whose immunity is the question before us.
being used to supply, the daily [manufacturing] requirements of the plant."
I can only reiterate that the fact that goods were "actually" to be used for the purpose for which imported is not, and has never been thought to be, relevant in determining their taxability under the Import Clause. The abstract assignment of a status to goods which are to be used in manufacture is certainly not germane to an evaluation of that physical transformation of the goods which has hitherto been required before an import could become vulnerable to state taxes. To say that goods are necessary to meet requirements merely asserts a truism which is equally applicable in every case this Court has decided under the Import Clause.
"stood in the same relation to the State as like piles of domestic materials at the same place that were kept for use and used in the same way. . . . [Footnote 2/17]"
"In those circumstances, the tax was not on 'imports,' nor was it a tax on the materials because they had been imported, but because, at the time of the assessment, they were being used, in every practical sense, for the purposes for which they had been imported. They were therefore subject to taxation just like domestic property that was kept at the same place in the same way for the same use. We cannot impute to the Framers of the Constitution a purpose to make such a discrimination in favor of materials imported from other countries as would result if we approved the views pressed upon us by the manufacturers. "
preferential treatment. Certainly this Court should be reluctant to make inroads on a rule of law so well and lucidly settled that it may legitimately be regarded as an ingredient in the formulation which is made by the National Government when it determines, as a considered national policy, the extent to which import duties should be imposed.
Reluctant as one is to say so, it must be said that the Court proposes no reason for its decision which has not heretofore been rejected by this Court. Nor are we pointed to new compelling policies which must be invoked in order to upset a firmly established principle of our constitutional law -- a principle which, perhaps more clearly than any other constitutional standard, has arrived at a lucid, coherent, and eminently workable distribution of power between the Nation and the States.
In the Youngstown case, appellant also claims that the tax on a portion of its domestic ores was imposed in violation of the Equal Protection Clause of the Fourteenth Amendment. I concur in the Court's rejection of that claim.
Although the principles of Brown v. Maryland are often termed the "original package doctrine," Marshall was concerned with a "package" only because the statute in that case taxed the selling of goods in their original packages. 12 Wheat. at 25 U. S. 436 & 25 U. S. 443. Marshall himself is careful to use the phrase, "form or package," 12 Wheat. at 25 U. S. 442, and Mr. Chief Justice Taney, in his reformulation of Brown v. Maryland, used the characterization "form and shape." See p. 358 U. S. 560, infra.
"It is a matter of hornbook knowledge that the original package statement of Justice Marshall was an illustration, rather than a formula, and that its application is evidentiary, and not substantive. . . ."
City of Galveston v. Mexican Petroleum Corp., 15 F.2d 208.
See Letter of James Madison to Professor Davis, 3 Farrand, Records of the Federal Convention (1911), 520-521; Federalist No. 12 (Lodge ed. 1908) 67 (Hamilton); ibid., No. 44 at 280 (Madison).
See Federalist No. 12 (Lodge ed. 1908) 67 (Hamilton).
See 2 Farrand, Records of the Federal Convention (1911), 441-442.
". . . the law under the Commerce Clause has been fashioned by the Court in an effort"
"to reconcile competing constitutional demands, that commerce between the states shall not be unduly impeded by state action, and that the power to lay taxes for the support of state government shall not be unduly curtailed."
"That accommodation has been made by upholding taxes designed to make interstate commerce bear a fair share of the cost of the local government from which it receives benefits . . . and by invalidating those which discriminate against interstate commerce, which impose a levy for the privilege of doing it, which place an undue burden on it. . . ."
"It seems clear that we cannot write any such qualifications into the Import-Export Clause. It prohibits every State from laying 'any' tax on imports or exports without the consent of Congress. . . . It would entail a substantial revision of the Import-Export Clause to substitute for the prohibition against 'any' tax a prohibition against 'any discriminatory' tax. . . . [T]he two clauses, though complementary, serve different ends. And the limitations of one cannot be read into the other."
See also Woodruff v. Parham, 8 Wall. 123; Sonneborn Bros. v. Cureton, 262 U. S. 506; Federalist No. 32 (Lodge ed. 1908) 186-188 (Hamilton).
Hooven & Allison Co. v. Evatt, 324 U. S. 652; Anglo-Chilean Nitrate Sales Corp. v. Alabama, 288 U. S. 218; Gulf Fisheries Co. v. MacInerney, 276 U. S. 124; New York ex rel. Burke v. Wells, 208 U. S. 14; May & Co. v. New Orleans, 178 U. S. 496; Low v. Austin, 13 Wall. 29; Waring v. The Mayor, 8 Wall. 110; see also McGoldrick v. Gulf Oil Corp., 309 U. S. 414; Cook v. Pennsylvania, 97 U. S. 566. For additional statements of the authority and importance of the doctrine of Brown v. Maryland, see American Steel & Wire Co. v. Speed, 192 U. S. 500, 192 U. S. 519-520; Norfolk & Western R. Co. v. Sims, 191 U. S. 441, 191 U. S. 449; License Cases, 5 How. 504, 46 U. S. 575.
The License Cases, 5 How. 504, 46 U. S. 575.
1 Cal.Unrep.Cas. 638, 643. The passage is also quoted at 13 Wall. 80 U. S. 30-31.
13 Wall. at 80 U. S. 34.
New York ex rel. Burke v. Wells, 208 U. S. 14; Gulf Fisheries Co. v. MacInerney, 276 U. S. 124; May & Co. v. New Orleans, 178 U. S. 496. Cf. 75 U. S. The Mayor, 8 Wall. 110.
The record and proceedings below in Hooven & Allison are discussed in detail at notes 13 and 14, infra.
"holds that goods brought into the country by an importer 'for his own use' are not exempted from state taxation . . . , and Hooven & Allison Co. v. Evatt . . . holds that they are. . . ."
Surely this expresses a misapprehension of what Marshall said. Such a contention was made here, by the dissent in Hooven & Allison Co. v. Evatt, 324 U. S. 652, at 324 U. S. 686-688 (dissenting opinion), and silently rejected. For its refutation, see Professor Thomas Reed Powell's State Taxation of Imports -- When Does an Import Cease to be an Import, 58 Harv.L.Rev. 858, 859-864.
"This indictment is against the importer for selling a package of dry goods in the form in which it was imported without a license. This state of things is changed if he sells them, or otherwise mixes them with the general property of the State, by breaking up his packages, and traveling with them as an itinerant peddler. In the first case, the tax intercepts the import, as an import, in its way to become incorporated with the general mass of property, and denies it the privilege of becoming so incorporated until it shall have contributed to the revenue of the State. It denies to the importer the right of using the privilege which he has purchased from the United States until he shall have also purchased it from the State. In the last cases, the tax finds the article already incorporated with the mass of property by the act of the importer. He has used the privilege he had purchased, and has himself mixed them up with the common mass, and the law may treat them as it finds them. The same observations apply to plate, or other furniture used by the importer."
12 Wheat. at 25 U. S. 443.
It is clear that Marshall is referring to personal household goods brought in by the importer and used by him. He is rejecting the idea that immunity can continue indefinitely after use if there has been no sale. He does not say, as the Court would have him say, that goods brought in by an importer "for his own use," or goods "held for use," are subject to state taxation. The phrase "for his own use," which the Court places in quotation marks and attributes to Marshall, was the Chief Justice's statement of counsel's contention, and is not to be found in his own conclusion. The phrase "held for use," which the Court also attributes to Marshall in its paraphrase of his views, is an interpolation nowhere to be found in the Chief Justice's discussion. Goods which are imported for purposes of sale are brought in for "use" as much as are goods which have been brought in for manufacture. A tax imposed prior to processing "intercepts" goods on their way to incorporation in the general mass of property as effectively as does a tax prior to sale. Marshall was not distinguishing between goods brought in for manufacture and those brought in for sale. There is no rational distinction. He was merely denying immunity to goods which had been brought in and thereafter actively used by the importer. There is nothing in Brown v. Maryland that is not in complete accord with what was decided in Hooven & Allison.
"No; it might be we would need the stuff as soon as it got there, and, again, we might not; it comes from long distances, and we do not carry any more inventory than we need to; it takes three to six months for it to get to us; we attempt to keep a backlog for that; we attempt to run our business with a minimum working inventory, of course."
Transcript of Record, p. 42; Hooven & Allison Co. v. Evatt, 324 U. S. 652.
"The evidence in the instant case shows that the petitioner purchased fibers solely for its own use, never for sale. It was impracticable to buy fibers a bale at a time to meet the immediate needs of its mill. It took from three to six months to get delivery after an order was placed. The undisputed testimony shows that the petitioner did not carry any more inventory than was actually needed, but, due to the uncertainty of deliveries, it attempted 'to keep a backlog for that.' It attempted to operate 'with a minimum working inventory' (R. 16). In other words, when the imported goods reached the plant. they were immediately used, in that they were essential to the continuous daily operation of petitioner's plant."
Brief for Respondent, p. 20, Hooven & Allison Co. v. Evatt, 324 U. S. 652.
This Court's decision did not accept the arguments made by the State throughout the course of litigation. The theory thus rejected now serves as the basis for this decision.
"It cannot be said that the fibers were subjected to manufacture when they were placed in petitioner's warehouse in their original packages. And it is unnecessary to decide whether, for purposes of the constitutional immunity, the presence of some fibers in the factory was so essential to current manufacturing requirements that they could be said to have entered the process of manufacture, and hence were already put to the use for which they were imported, before they were removed from the original packages. Even though the inventory of raw material required to be kept on hand to meet the current operational needs of a manufacturing business could be thought to have then entered the manufacturing process, the decision of the Ohio Supreme Court did not rest on that ground, and the record affords no basis for saying that any part of petitioner's fibers, stored in its warehouse, were required to meet such immediate current needs. Hence, we have no occasion to consider that question."
(Italics added.) 324 U.S. at 324 U. S. 667.
". . . it is removed from the raw material account and charged into processing in the mill; each bale of fiber as it is removed from the raw material warehouse becomes, according to our records, in process. Of course, we have to batch and treat this stuff; it may not be used for a couple of days; but as soon as it leaves the warehouse it is charged in process. . . ."
Transcript of Record, p. 43, Hooven & Allison Co. v. Evatt, 324 U. S. 652.
"While the bales remain in the raw material warehouse, they are carried in a raw material account on appellant's books; but, upon their removal from such warehouse, the bales are immediately charged to goods-in-process account, whether the bales have been broken or not."
Hooven & Allison Co. v. Evatt, 142 Ohio St. 235, 237, 51 N.E.2d 723, 724.
"unnecessary to decide whether, for purposes of the constitutional immunity, the presence of some fibers in the factory was so essential to current manufacturing requirements that they could be said to have entered the process of manufacture."
Since the Court does not rely on the reasoning of the Ohio court, I will not stop to examine closely its ground of decision. It is sufficient to note that it is difficult to understand by what mutation an import loses its status as an import merely by mingling it with identical imported goods which are similarly being stored prior to use.
The Wisconsin court found that one-half of the imported goods was necessary to meet "current operational needs." On the basis of this finding of "fact," this Court finds its new interpretation of the Import Clause satisfied. Since that interpretation is far broader than the narrow concept of "current operational needs," as applied by the Wisconsin court, it is unnecessary to discuss the constitutional validity of a rule based on "current operational needs." It is sufficient to note here that such a formula possesses no basis in economics; it is merely an arbitrary figure assigned to a portion of inventory. An appropriate analysis of the formulas tentatively offered by the Wisconsin Circuit Court to support its finding would reveal the unreal and arbitrary nature of the finding. However such discussion would be superfluous here.
This merely states a legal conclusion. The physical status of the imports did not differ in the slightest from that of any other import this Court has held to be immune from state taxation. Their "relation" to the State is the question for decision.
See the passage quoted at note 5, supra, from Richfield Oil Corp. v. State Board of Equalization, 329 U. S. 69, 329 U. S. 75-76. See also Federalist No. 32 (Lodge ed. 1908) 186-188 (Hamilton).

References: v. 
 v. 
 Art. 1
 § 10
 § 10
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 5701
 v. 
 § 5709
 § 5701
 § 5711
 v. 
 v. 
 v. 
 § 5701
 v. 
 v. 
 § 10
 v. 
 v. 
 v. 
 v. 
 v. 
 § 10
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.