Source: https://supreme.justia.com/cases/federal/us/409/275/case.html
Timestamp: 2017-01-17 21:35:35
Document Index: 550424903

Matched Legal Cases: ['§ 381', '§ 381', '§ 381', '§ 381', '§ 4', '§ 4', '§ 4', '§ 4', '§ 4', '§ 4', '§ 381', '§ 381', '§ 381', '§ 4', '§ 381']

Heublein, Inc. v. South Carolina Tax Comm'n (full text) :: 409 U.S. 275 (1972) :: Justia U.S. Supreme Court Center Log In
› Heublein, Inc. v. South Carolina Tax Comm'n
Heublein, Inc. v. South Carolina Tax Comm'n 409 U.S. 275 (1972)
U.S. Supreme CourtHeublein, Inc. v. South Carolina Tax Comm'n, 409 U.S. 275 (1972)Heublein, Inc. v. South Carolina Tax CommissionNo. 71-879Argued November 13, 1972Decided December 18, 1972409 U.S. 275APPEAL FROM THE SUPREME COURT OF SOUTH CAROLINA
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and DOUGLAS, BRENNAN, WHITE, POWELL, and REHNQUIST, JJ., joined. BLACKMUN, J., filed a statement concurring in the result, post, p. 409 U. S. 284. STEWART, J., took no part in the consideration or decision of the case. Page 409 U. S. 276
In this case, we must determine whether South Carolina may tax the income from local sales of Heublein's products, consistent with the limitations on the State's power to tax imposed by 15 U.S.C. § 381(a). [Footnote 1] The South Carolina Tax Commission assessed Heublein, Inc., a Connecticut corporation that produces alcoholic beverages, a total of $21,549.50 in taxes on income derived from the sale of its goods in South Carolina. [Footnote 2] After a hearing before the Tax Commission, Heublein paid the taxes and brought suit to recover them. The Court of Common Pleas held that § 381(a) protected Heublein from tax liability in South Carolina. The Supreme Court of South Carolina reversed. 257 S.C. 17, 183 S.E.2d 710. We noted probable Jurisdiction, 405 U.S. 952 (1972), and now affirm. We hold that Heublein's activities within South Carolina exceed the minimum standards established in 15 U.S.C. § 381(a), Page 409 U. S. 277 and that South Carolina may, pursuant to an otherwise valid regulatory scheme, compel Heublein to undertake activities that take it beyond the protection of 15 U.S.C. § 381(a).
This arrangement, which served none of Heublein's business interests, was adopted to conform to the requirements of the South Carolina Alcoholic Beverage Control Act. S.C.Code Ann. § 4-1 et seq. (1962 and Supp. 1971). Under that Act, only registered producers of registered brands of alcoholic beverages may ship those brands of alcoholic beverages into the State. §§ 4-134, 4-135. Such producers must have a resident representative who has no direct or indirect interest in a local liquor business. §§ 4-131(3), 4-139. Shipments of liquor into the State may be made only to the producer in care of its representative. § 4-141. Prior to the shipment, the producer must mail a copy of the invoice showing the quantity and price of the items shipped, and a copy of the bill of lading, to the Alcoholic Beverage Control Page 409 U. S. 278 Commission. Immediately after accepting delivery, the representative must furnish the Commission a copy of the invoice showing the time and place of delivery. Ibid. When received, the shipment must be stored in a licensed warehouse of the producer, or, after delivery is complete, the shipment may be transferred to a licensed wholesaler. §§ 4-140, 4-141. Before the goods are shipped to a wholesaler, however, the representative must obtain the Commission's permission to make the transfer. § 4-141. Heublein complied with this regulatory scheme.
We need not decide whether, as the State urges, the actions of Heublein's representative in maintaining a local office, meeting with retailers, distributing promotional literature, and personally delivering some orders to the wholesaler, do not fall within the term "solicitation." Compare Smith Kline & French v. Tax Comm'n, 241 Ore. 50, 403 P.2d 375 (1965), with Clairol, Inc. v. Kingsley, 109 N.J.Super. 22, 262 A.2d 213, aff'd, 57 N.J. 199, 270 A.2d 702 (1970), appeal dismissed, 402 U.S. 902 (1971). For here Heublein has done more than just those acts. It sent its products to its local representative, who transferred them to a local wholesaler. This transfer occurred within the State, and clearly was neither "solicitation" nor the filling of Page 409 U. S. 279 orders "by shipment or delivery from a point outside the State" within the meaning of § 381(a)(1).
358 U.S. at 358 U. S. 452. Congress promptly responded to the "considerable Page 409 U. S. 280 concern and uncertainty" [Footnote 3] and the "serious apprehension in the commercial community" [Footnote 4] generated by this decision by enacting Pub.L. 8272, 73 Stat. 555, 15 U.S.C. § 381, within seven months.
In this statute, Congress attempted to allay the apprehension of businessmen that "mere solicitation" would subject them to state taxation. Such apprehension arose because, as businessmen who sought relief from Congress viewed the situation, Northwestern States Portland Cement did not adequately specify what local activities were enough to create a "sufficient nexus" for the exercise of the State's power to tax. [Footnote 5] Section 381 was designed to define clearly a lower limit for the exercise of that power. Clarity that would remove uncertainty was Congress' primary goal. By establishing such a limit, Congress did, of course, implicitly determine that the State's interest in taxing business activities below that limit was weaker than the national interest in promoting an open economy. But it did not address the questions raised by a requirement, incident to a valid regulatory scheme, that a business undertake activities above the limit as a condition of doing business within the State. [Footnote 6] Page 409 U. S. 281
Congress, then, did not address in § 381 the problem of taxing a business when it undertook local activities simply in order to comply with the requirements of a valid regulatory scheme. Such regulation is an important function of local governments in our federal scheme. As we said last Term, "unless Congress conveys its purpose Page 409 U. S. 282 clearly, it will not be deemed to have significantly changed the Federal-State balance." United States v. Bass, 404 U. S. 336, 404 U. S. 349 (1971).
South Carolina's Alcoholic Beverage Control Act is a long and detailed statute. Requirements that certain records be kept by the manufacturer, the wholesaler, and the retailer pervade the scheme. There must be complete records of the quantities, brands, and prices involved at every stage of each liquor sale. By requiring manufacturers to localize their sales, South Carolina establishes a check on the accuracy of these records. For Page 409 U. S. 283 example, when a manufacturer can transfer its goods to a wholesaler in the State only after it submits an invoice showing the price and after it receives permission for the transfer, it is easier for the State to enforce its requirement that the wholesale price in South Carolina be no higher than that elsewhere in the country. S.C.Code Ann. § 4-137.1 (Supp. 1971). The requirement that sales be localized is, unquestionably, reasonably related to the State's purposes, and is not simply an attempt by the State to provide a basis for the taxation of an out-of-state seller's local sales.
The requirement that, before engaging in the liquor business in South Carolina, a manufacturer do more than merely solicit sales there is an appropriate element in the State's system of regulating the sale of liquor. [Footnote 10] Page 409 U. S. 284 The regulation in question here is therefore valid, and § 381(a) does not apply. The judgment of the Supreme Court of South Carolina is