Source: https://www.legalcrystal.com/case/96461/puget-sound-stevedoring-co-vs-state-tax-comm-n
Timestamp: 2019-04-25 14:48:53+00:00

Document:
Appellant Puget Sound Stevedoring Co.
1. The business of a stevedoring corporation, acting as an independent contractor, insofar as it consists of the unloading or discharge of cargoes of vessels engaged in interstate or foreign commerce by longshoremen subject to its own direction and control, is interstate or foreign commerce, and the privilege of doing it cannot be taxed by the State. P. 302 U. S. 92 .
2. Insofar as the business of a stevedoring corporation consists of supplying longshoremen to shipowners or masters without directing or controlling the work of loading or unloading, it is not interstate or foreign commerce, but rather a local business, and subject, like such business generally, to taxation by the State. P. 302 U. S. 94 .
189 Wash. 131, 63 P.2d 532, modified.
Appeal from a judgment affirming the dismissal of a suit to enjoin collection of a tax on the business of the appellant measured by gross receipts.
A tax laid upon the business of a stevedoring company, the amount to be measured by a percentage of the gross receipts, has been sustained against the protest of the taxpayer that an unlawful burden is imposed thereby upon interstate and foreign commerce. We are to determine whether the tax is valid, either altogether or in part.
A statute of the state of Washington provides that, for the privilege of engaging in business activities within the state, a tax shall be payable by persons so engaged, payment to be made according to a designated measure. As to certain forms of business -- as, for example, manufacturing and sales at retail or wholesale -- the measure is a specially prescribed percentage of the value of the products or the gross receipts of sales. As to all other forms of business, there is a general provision that the tax shall be equal to the gross income of the business multiplied by the rate of one-half of one percent. Washington Laws 1935, c. 180. This general provision is broad enough to cover the business of a stevedore.
job and "billing the ship and her owner the amount of the payroll plus a commission for services." All vessels served by the appellants are engaged exclusively in interstate or foreign commerce.
A suit by the taxpayer to enjoin the tax officials of the state from proceeding to collect the tax was dismissed by the trial court after a hearing upon bill and answer, the answer not disputing the allegations of the bill. The Supreme Court of Washington affirmed the dismissal, its judgment being placed upon the ground that the taxpayer was an independent contractor engaged in a local business. 189 Wash. 131, 63 P.2d 532. The case is here upon appeal. 28 U.S.C. § 344.
1. The business of appellant, insofar as it consists of the loading and discharge of cargoes by longshoremen subject to its own direction and control, is interstate or foreign commerce.
Transportation of a cargo by water is impossible or futile unless the thing to be transported is put aboard the ship and taken off at destination. A stevedore who in person or by servants does work so indispensable is as much an agency of commerce as shipowner or master.
"Formerly, the work was done by the ship's crew, but, owing to the exigencies of increasing commerce and the demand for rapidity and special skill, it has become a specialized service devolving upon a class 'as clearly identified with maritime affairs as are the mariners.'"
Stevedoring Co. v. Haverty, 272 U. S. 50 . A stipulation in the record tells us that any serious interruption in the service of such cargo handlers cripples at once the activities of a port and slows down and obstructs the free and steady flow of commerce. We might take judicial notice of the fact if the stipulation were not here.
"stevedoring services are essential to waterborne commerce, and always commence in the hold of the vessel and end at the 'first place of rest,' and vice versa."
of any contract or payment for strictly interstate transportation."
The business of loading and unloading being interstate or foreign commerce, the State of Washington is not at liberty to tax the privilege of doing it by exacting in return therefor a percentage of the gross receipts. Decisions to that effect are many and controlling. Philadelphia & Southern S.S. Co. v. Pennsylvania, 122 U. S. 326 , 122 U. S. 341 -342; Leloup v. Port of Mobile, 127 U. S. 640 ; Galveston H. & S.A. Ry. Co. v. Texas, 210 U. S. 217 ; Crew Levick Co. v. Pennsylvania, 245 U. S. 292 ; Matson Navigation Co. v. State Board of Equalization, 297 U. S. 441 , 297 U. S. 444 ; Fisher's Blend Station v. Tax Commission, 297 U. S. 650 , 297 U. S. 655 . The fact is not important that appellant does business as an independent contractor as long as the business that it does is commerce immune from regulation by the states. What is decisive is the nature of the act, not the person of the actor. An independent contractor undertaking to navigate a vessel would have the same protection as a pilot agreeing to navigate it himself.
2. The business of appellant, insofar as it consists of supplying longshoremen to shipowners or masters without directing or controlling the work of loading or unloading, is not interstate or foreign commerce, but rather a local business, and subject, like such business generally, to taxation by the state.
in question and those reviewed in McCall v. California, 136 U. S. 104 ; Texas Transport & Terminal Co. v. New Orleans, 264 U. S. 150 , and Di Santo v. Pennsylvania, 273 U. S. 34 . The contractors there considered were found to be acting as agents of foreign steamship companies with authority to make contracts binding on the principals and even running in their names. If appellant stands in that relation to the vessels that it serves in this branch of its activities, it has failed to make the fact apparent by the allegations of its bill. The effect of such a showing is not before us now.
The decree of the Supreme Court of Washington, being erroneous to the extent here indicated and no farther, is modified accordingly, the cause being remanded for further proceedings not inconsistent with the opinion of this Court.

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