Document: 377 U.S. 436 84 S.Ct. 1564 12 L.Ed.2d 430 GENERAL MOTORS CORPORATION, Appellant,v.WASHINGTON et al No. 115. Argued Feb. 26, 1964. Decided June 8, Rehearing Denied Oct. 12, See 85 14. Donald K. Barnes, Detroit, Mich., for appellant. John W. Riley and Timothy R. Malone, Olympia, Wash., appellees. Mr. Justice CLARK delivered the opinion of Court. 1 This appeal tests constitutional validity, under Commerce Due Process Clauses, Washington's tax imposed upon privilege engaging in business activities within State.1 The is measured by appellant's gross wholesale sales motor vehicles, parts accessories State. Appellant claims that levied on unapportioned receipts from such is, therefore, a interstate commerce; inherently discriminatory; results imposition multiple burden; deprivation property without due process law. Washington Superior Court held presence branch office Seattle rendered some Chevrolet transactions subject to tax, but, as remainder, application statute would be repugnant Clauses United States Constitution. On appeal, Supreme reversed latter finding, holding all were ground bore reasonable relation 60 Wash.2d 862, 376 P.2d 843. Probable jurisdiction was noted. 374 824, 83 1871, 10 1049. We have concluded incidents substantial local constitutionally valid and, affirm judgment. I. 2 start with proposition '(i)t not purpose commerce clause relieve those engaged their just share state burden even though it increases cost doing business.' Western Live Stock v. Bureau Revenue, 303 250, 254, 58 546, 548, 82 L.Ed. 823 (1938). 'Even must pay its way,' Postal Telegraph-Cable Co. Richmond, 249 252, 259, 39 265, 266, 63 590 (1919), evidenced numerous opinions this For example, has approved taxes instruments employed commerce, Union Telegraph Attorney General, 125 530, 8 961, 31 L Ed. 790 (1888); devoted transportation fairly apportioned use State, Pullman's Palace Car Pennsylvania, 141 18, 11 876, 35 613 (1891); profits derived foreign or way net income William E. Peck & Lowe, 247 165, 38 432, 62 1049 (1918), Glue Oak Creek, 321, 499, 1135 (1918); franchise taxes, commercially domiciled corporation attributable done State apportioned, Underwood Typewriter Chamberlain, 254 113, 41 45, 65 165 (1920); proportional formula unitary manufacturing selling ale, 'the resulting no until ends sales,' Bass, Ratcliff Gretton, Ltd., Tax Comm'n, 266 271, 282, 45 82, 84, 69 282 (1924); personal domiciliary fleet airplanes whose home port taxing despite fact paid part other States, Northwest Airlines, Inc., Minnesota, 322 292, 64 950, 88 1283 (1944); revenues where Northwestern Portland Cement 358 450, 79 357, 3 421 (1959); an express company, lieu intangibles rolling stock, receipts, Railway Express Agency, Virginia, 434, 411, 450 (1959). However, always fared well. Because every equal rights when touches, there exists danger can impose cumulative burdens which are presented commerce. Cf. Michigan-Wisconsin Pipe Line Calvert, 347 157, 170, 74 396, 98 583 (1954); Philadelphia Southern S.S. 122 326, 346, 7 1118, 30 1200 (1887). Such destroy encourage re-erection trade barriers made Clause necessary. Baldwin G.A.F. Seelig, 294 511, 521—522, 55 120, 632 (1935). And connection, we specifically cannot subjected 'multiple taxation.' supra, at 170. Nevertheless, seen, well established taxation proper if apportioned. 4 A careful analysis cases field teaches validity rests whether exacting fair demand aspect bears special relation. our purposes decisive issue turns operating incidence tax. In words, question exerted power proportion consequent enjoyment opportunities protections afforded. Where, instant case, look taxpayer's i.e., incidents, determine therein may related activities. As said Wisconsin J. C. Penney Co., 311 435, 444, 61 246, 267 (1940), '(t)he simple but controlling given anything ask return.' 5 Here admitted General Motors entered therein. fact, voluntarily pays considerable operations contests levy four Divisions, Chevrolet, Pontiac, Oldsmobile Parts. Under these circumstances appellant showing divisions 'dissociated nature. general rule, applicable here, taxpayer claiming immunity establishing his exemption.' Norton Department 340 534, 537, 71 377, 380, 95 517 (1951). And, also met 6 'by difference original matter might decided differently. corporation, submitting itself * (of State), likewise submitted judicial construe apply insofar keeps bounds. Of course, cases, examine whole record arrive independent judgment been invaded, does mean will re-examine, court first instance, findings supported evidence.' At 537—538 U.S., 380 With principles mind, turn facts. II. 1. MOTORS' CORPORATE ORGANIZATION AND SALES OPERATION. 9 Delaware during period time involved January 1, 1949, through 30, 1953. Parts Motors, they operate substantially independently each other. manufactures automobiles, trucks merchandise sold dealers Washington. articles manufactured States. order carry sale, Washington, products Parts, maintains organization employees national, regional district level. During question, located western region corporation's national division, except maintained zone Portland, Oregon. These offices serviced Motors' Oregon, Idaho, portions Montana Wyoming then Territory Alaska. Division service nine southern counties still office. division broken down into geographical districts dealers, whom re-sale, selected located.2 orders sent Portland. They accepted rejected factory completed shipments f.o.b. factories. 2. PERSONNEL RESIDING WITHIN THE STATE THEIR ACTIVITIES. organizations Pontiac Divisions similar most respects. manager had charge operation. His job 'to secure maintain quality dealer administer promote programs, plans procedures cause give best possible representation area.' 76. managers lived th jobs maintenance organization—dealer organization—and follow-through administration district, help develop organization, financial results.' 109. While he operated received mail telephone calls otherwise carried business. He called average least once month, often saw larger weekly. supervision functioned manager's direct contact acting 'in supervisory advisory capacity see acquaint them Divisional policies promotional training improve ability organization.' 246. assisted dealer's force. appropriate times distributed material advised used car inventory control. It duty discuss work out 30-, 60- 90-day projection estimated needs filed manager. projections indicated number cars needed included estimates equipment. projected prepared month contained could, practical purposes, 'construed purchase order.'3 13 addition manager, representatives who regularity, assisting department any troubles experienced products. checked adequacy make certain agreement being complied ensure customers. note appearance place needed, require rehabilitation, improved cleanliness repairs necessary achieve attractive facility. request, direction superior, representative conducted clinics business, teaching personnel techniques operation efficient department. gave assistance more difficult customer complaints, registered dealer, others corporation. 14 here about 20 resident principally Washington.4 more. 15 Division's consisted one man secretary. That performed function getting better over personn l Since 1954, dispute. 16 3. OUT-OF-STATE PERSONNEL, PERFORMING IN-STATE 17 directed activities, visited days, ones, month. About one-half visits staged management efficiency expert supervised capital structure financing dealers. responsibility services worked representative, schools promotion good policies. (for only) disposition display reconditioning. 18 4. ACTIVITIES OF PARTS DIVISION. 19 warehoused, shipped vehicles. warehouses Seattle. No obtained warehouses. Items warehouse it, warehoused there. warehouse, items 28 people period. less frequently parts. filled protested. III. 'It beyond dispute,' 458, 362 'that lay 'privilege' commerce.' But case. To so contend overlook long line instate activity sufficient incident based. Spector Motor Service, O'Connor, 602, 609, 508, 512, 573 (1951), precluded imposing aspects (interstate) which, unlike sovereign State.' exactly what seeks do say shown reach. 380. Unlike Field Enterprises, 47 852, 289 1010, aff'd, 352 806, 77 55, (1956), citing Norton, managers, residents functions therein, particularly establishment sales, measured. little weight formal since actuality homes officials corporate offices. Despite label 'homes' served effectively 'offices.' addition, 21 Thus, bundle activity, test enmeshed connections various insists liable others. elected enter fashion, erred form basis run contrary supra. IV. 22 respective pointed out, suspect. closely 'some definite link, minimum between person, transaction tax.' Miller Bros. Maryland, 340, 344—345, 535, 539, 744 (1954). facts found conclusion impermissible. 538, Here, mingled taxable nontaxable only 'conclude that, light evidence, attributing (the activity) realm permissible Petitioner (through in-state factors market.' Ibid. Although mere entry take right continue immunity, follow channel maze advantage gain domesticity, same degree immunity. V. 23 arise claim taxation. Gwin, White Prince, Henneford, 305 440, 59 325, 272 (1939). taxed St. Louis license before shipment, levied. American Mfg. Louis, 250 459, 522, 1084 (1919). urged Oregon-based concerns afford touched problem Airlines 295, 952, laid side 'not now us.' Thereafter, 463, 365, '(i)n type case taxpayers show places sense.' this. demonstrated burden, sense, identical measures International Harvester Evatt, 329 416, 421—423, 67 91 390 (1947). further, Oregon levies bearing sales. refrained passing taxation,' e.g., adhere position. 24 Affirmed. 25 BRENNAN, dissenting. 26 presents again thorny arising occurring partly borders. upholding has, my judgment, confused two quite different issues raised n ignored fatal defect statute. 27 transaction, requires 'nexus exaction.' 464, 366, 421. considered McLeod Dilworth 327, 1023, 1304, 517, fundamental precondition strictures Constitution stop connection,' 465, '(t)axation (be) state.' 256, 549, 823. D. Adams Storen, 304 307, 913, 1365. recognizes 'taxation apportioner,' ante, p. 440. concluding includes apportionment, however, relies contacts sale satisfy standard, formulated meet defining requirements Clause. Part IV, ante. Our prior decisions clearly indicate scheme apportionment required. localized completely taxation, retail base total McGoldrick Berwind-White Coal Mining 309 33, 388, 565. far common complex economy kind exhibits significant than situation, commercial volume, determines State's ratio out-of-state taken account factor among apportioning firm's income, see, description 'Massachusetts Formula' Note, 75 Harv.L.Rev. 953, 1011 (1962), nevertheless remains true them, own borders contributed part. reflect concurring Agency 446, 450. wholesales very terms, applied 'gross proceeds sales' 'engaging making wholesale,' Rev.Code Wash. 82.04.270, sustained standards required 29 GOLDBERG, STEWART WHITE join, permits assess automobiles resale states (from sales) apportioned.' Ante, concludes determined asking "the (of) return." 441. elusively represent important departure principle heretofore provided guidance area fraught complexities inconsistencies. relevant facts, undisputed, merit brief restatement. California, Missouri Michigan none sell conducts 'Divisions' although separately incorporated entities. involves handled limited ('district managers') reside facilitate products, directly f.o.b., points outside useful divide transactions—the taxability dispute—into three categories: 32 (1) Sales: office, intrastate Washington; entirely representatives. 33 (2) both Seattle, disputed here. ordered were, 34 (3) Sales—'Class B' one-man territorial referred litigation 'Class A' transactions. handling dealt northern did deal counties; labeled connection Chevrolet's therefore category above. All above assesses wholesale.' 82.04.270; Wash.Laws c. 228, § 1(e).1 36 holds constitute 'an activity' forming 'a based.' 447. decision departs epartment adopts rejected. Massachusetts warehouse' Chicago, Illinois, 'local retail.' Id., 379. admittedly Illinois concededly 'over-the-counter' Chicago firm types inhabitants: Sales based point routed utilized outlet inhabitants shipment purchasers. regardless associated connected conducting stated when, 'as gone business,' could exempted 'only by' sustaining 'showing particular dissociated nature.' either receiving distributing goods judgment.' (Emphasis added.) spite persuasion resting having customers wholly involving proceeded becoming 'interstate character' 381. 'could approached market solicitors entitled *.' 37 holdings should compared present surely (Pontiac Sales) character free association respect (General Sales), appears create situation strikingly Illinois. identifiable group (those warehouse) appear over-the-counter readily distinguishable character. purely unconnected squarely nontaxable. Finally, (Chevrolet B,' definition lacked seem precisely like e tablishment accordingly exempted. oneman 'office,' 'office stocked authority accept orders. 'office' simply 40 seems imply threshold requirement exist 'fairly apportioned' conceive rationale adopted today. Every invariably incidents—some 'in-state' activity. difficult, distinguish traveling salesmen—activities insufficient 1304; cf. Real Silk Hosiery Mills City 268 525, 982; Robbins Shelby County Taxing District, 120 489, 592, 694. Surely distinction rest salesmen hotels motels 'offices' whereas regard, rested solidly goes consideration asserts 'rests relation.' What 'fair'? How 'proper State'? Developments—Federal Limitations Taxation Interstate Business, 957 (1962). I submit, complexity problem, formulation suggested unworkable. Constitutional adjudication find concept tested tax's 'fair' degree. attempt 'fairness' percentage almost unseemly 'fairly' infinite variety factual configurations frustrate usual clarification inclusion exclusion. coherent pattern would, reality, ultimately permissive attitude toward 42 dilemma inhering Court's revealed treatment 'more difficult,' inextricably related, alleged avoid basic saying 'has *. sales.'2 1572. problems engendered rule app ied evaded. because equally site directing consummating receipts. Moreover, 'fairer' Missouri—States manufactured, assembled delivered—to by, upon, Wash.L.Rev. 277, 281 (1963). Presumably, limitation first-come-first-tax basis. Alternatively, diverse bases multistate left determine, hypothetical maximum amount, transaction. 43 dangers apparent considering provisions. provision involved—the 'tax wholesalers'—provides person wholesale' shall 'equal multiplied rate one-quarter per cent.' 1(e).3 chapter imposes manufacturers' similarly provides manufacturer' value 82.04.240; 1(b). Then 'Persons activities' endeavors insure wholesalers.' 82.04.440; 2—A. Prior amendment 1950 exemptive terms designed manufacturer-wholesaler exempt provision, face, discriminated against purchasers locally while competing sellers. 1950, amended, reversing exemption, holesale then, extent thereunder, (special session), 5, McDonnell 553, 557, 383 905, 908. amended essentially economic effect appearing nondiscriminatory. 44 Even provisions producing residents. manufacturer competes manufacturer, seriously disadvantaged duplicative competitors, add producing, diminish product thus affect allocation resources economy. threat competitor consuming compel producer relocate Thus upheld today discourage development advantageous distribution resources; inhibits realization open unencumbered tariffs protective devices. 330—331, 1026, 1304: 'The several vested unbroken Congress, States.' nondiscriminatory fashion interstate, Clause, designed, Jackson H. P. Hood Sons, Du Mond, 336 657, 93 865 'federal unit'—a States; thereby precludes defending generally. Nondiscrimination alone burdening flow 'does merely forbid single hostile action. taking action deemed impeding immaterial encumbrance.' Freeman Hewit, S.Ct., 276. enabled put producers merchants disadvantage 'equalize' costs businessmen suffer competitive scheme. stemming created simultaneously obscure burdened protect market.4 46 view rules set forth Therefore, dealing instead departing adopting standard 'fairness.' hold wholesaler solicited processed agents living recognized, today, followed logically future permitted company salesmen. leave mail-order houses full sympathy revenue believe legitimate means raising undermining respectfully dissent. Relevant sections force 1953, are: 'Section From after day May, 1935, hereby collected act rates be, follows: '(e) Upon wholesale; persons amount cent; 5. title term 'sale 'wholesale sale' tangible labor real property, retail; '(f) proceeding accruing and/or deduction sold, materials used, costs, interest, discount paid, delivery expense whatsoever accrued losses.' Laws pages 814 819. merchants, themselves, owning facilities paying delivery. 341. that: 'Once estimate made, meeting minds arrived at, individual us separate merchandise. Those forms, allow him specify color option, things character.' 124. times, three, six assigned periods Iune depends existence actual, distinguished potential, compare 249, 274, 278, 265. depend another sought If burdensome consequences undeniable. being, irrelevant freedom generated. immunities implicit potential hardly depend, world affairs, shifting varying laws moment. Courts possessed determination delicate enable weigh complicated setting isolated mitigate obvious generally 523, 497, 500, 1032: 'To entrance excuse ('the welfare farmers class classes' businessmen) invite speedy end solidarity. framed dominion political philosophy parochial range. theory peoples sink swim together, prosperity salvation union division.' 532—539, 865.

Category: 7