Court Opinion

ID: 9651685
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:31:09.876892+00
Date Added: 2024-06-11T13:28:40.216309
License: Public Domain

LINDLEY, District Judge'
(dissenting).
I am of the opinion that the taxes were legally assessed. The debtor, engaged in selling merchandise in Illinois, with its chief place of business in the City of Chicago, from time to time, sold within Illinois to the Chicago, Milwaukee, St. Paul & Pacific Railroad Company, having offices and freight stations in Chicago, certain manufactured materials, each order emanating from an Illinois office of the railroad company. In'each instance the railroad company delivered to the debtor an order for merchandise to be delivered f. o. b. Chicago, at the local freight station of the railroad, consigned to one of the latter’s out of state shops. The debtor, accepting the orders, delivered the materials to the freight station in Chicago and received bills of lading acknowledging receipt of the material for shipment outside of the state. The railroad then transported the merchandise to its out of state office to which it was consigned. An employee of the railroad company testified, “we'- carry, our material to our shops at Milwaukee.”
The Illinois Retailers Tax Act imposes a privilege tax upon persons engaged in the selling of tangible personal property for use and consumption, the amount of the tax being determined by the volume of sales. The act expressly provides that it shall not apply to the privilege of engaging in business in interstate commerce. Chapter 120, Illinois Revised Statutes 1937, §§ 441, 441a; Reif v. Barrett, 355 Ill. 104, 188 N.E. 889.
Upon delivery of merchandise by a seller to a common carrier for transportation, pursuant to contract of sale, title passes to the purchaser. City of Carthage v. Duvall, 202 Ill. 234, 66 N.E. 1099; Golo Slipper Co. v. Hamilton Shoe Stores Co., 10 Cir., 43 F.2d 33, 34; United States v. Hecht, 2 Cir., 11 F.2d 128, 135; In re Arctic Stores, D.C., 258 F. 688, 690. Under a contract of sale, f.o.b. a certain point, title passes to the buyer at the time of delivery to the carrier at that point. Price v. Neiman Bros. Co., 240 Ill.App. 157, 162; Nelson Bros. v. Perryman-Burns, 2 Cir., 48 F.2d 99, 100; Higgins v. California Prune Growers, 2 Cir., 16 F.2d 190, 192; Hoffman v. Gosline, 6 Cir., 172 F. 113, 117. When this vendor delivered the merchandise to the carrier in Chicago, receiving bills of lading acknowledging receipt of the merchandise, under contracts of sale providing for delivery f.o.b. Chicago title passed to the purchaser. Performance of the contract of sale was completed in Illinois, People v. Young, 237 Ill. 196 at 201, 86 N.E. 589. The seller parted with its title there; the purchaser acquired title there. Thereafter the property was that of the vendee, and the seller had no interest therein. The property was from that time thence-forth under the domain and control of the buyer, who alone was endowed with the right to recover for damage thereto in transit, Pacific Exp. Co. v. Spaulding & Co., 199 Ill.App. 474. The sales were completed in Illinois, title passed in Illinois, and the taxes assessed in no wise conflict with, infringe upon or cast a burden upon interstate commerce.
It may well be that these well-known principles of law as to the passing of title do not apply if it appears that the parties intended differently; but the record is silent as to any such intention. It discloses merely that it was known to both parties that the railroad intended, after receiving the purchased wares, to transport them to points outside the state. And it appears further that the railroad considered itself the owner of the merchandise after delivery in Chicago, for the testimony was that it transported its own materials to points outside the state.
True, when a commodity has begun to move as an article of trade from one state to another, commerce in that commodity between the states has commenced. But the carrying of goods in carts, trucks or other vehicles to. the depot where the journey is to commence is no part of such commerce. Coe v. Town of Errol, 116 U. *921S. 517, 6 S.Ct. 475, 29 L.Ed. 715. The intent to forward the property, after being-received, to another state does not exempt it from taxation. Bacon v. Illinois, 227 U.S. 504, 33 S.Ct. 299, 57 L.Ed. 615; Minnesota v. Blasius, 290 U.S. 1, 54 S.Ct. 34, 78 L.Ed. 131. The goods “were delivered to the so-called consignee before they started, and were in its hands throughout,” to do with as it liked. Superior Oil Company v. Mississippi, 280 U.S. 390, 50 S.Ct. 169, 170, 74 L.Ed. 504. The purchase and supply of equipment for uses which constitute interstate commerce is not so identified with that commerce as to make the sale immune from a tax imposed by the state. Eastern Air Transport, Inc. v. South Carolina Tax Commission, 285 U.S. 147, 52 S.Ct. 340, 76 L.Ed. 673. In Edelman v. Boeing Air Trans., Inc., 289 U.S. 249, 53 S.Ct. 591, 77 L.Ed. 1155, the court said that a state may validly tax the “use” to which gasoline is put in withdrawing it from storage within the state and placing it within the tanks of planes, notwithstanding its ultimate function is to generate motive power for carrying on interstate commerce. Of similar import is Nashville, C. & St. L. R. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R. 1191.
The bare fact that one intends to transport in interstate commerce material purchased does not relieve him from non-discriminatory state taxation which adds to the cost of his business. And taxation measured by gross receipts from interstate commerce has been sustained when fairly apportioned to the commerce carriers within the taxing state. In still other cases, taxation has been rejected only because the apportionment was found to be inadequate or unfair. Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944. Here the taxation produces no direct burden on commerce but only the same incidental and indirect effect which results from the payment of property taxes or of like taxes by residents of Illinois; it cannot amount to a regulation of interstate commerce. American Mfg. Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084. In Graybar Electric Co., Inc. v. Curry, 238 Ala. 116, 189 So. 186, 190, affirmed. 308 U.S. 513, 60 S.Ct. 139, 84 L.Ed. 437, where-a company had entered into a contract of sale requiring that certain merchandise be shipped in interstate commerce, and the question was whether such transaction was exempted from the state sales tax on the ground that it constituted a burden upon interstate commerce, the court said:
" * * * It was no benefit to the purchasers that the goods were to be shipped ‘in interstate movement’ for the reason that the price of the goods would be the same, whether shipped ‘in interstate movement’ or not. Evidently this provision as to ‘interstate movement’ was to preclude, if possible, the imposition of a sales tax on the goods in Alabama. The transactions were Alabama sales within the provision of the Alabama Sales Tax Law. The form or language of the customers’ orders cannot affect the case.
“It is not ‘within the power of the parties by the form of their contract to convert what was exclusively a local business, subject to state control, into an interstate commerce business, protected by the commerce clause.’ ”
In McGoldrick, Comptroller of the City of New York v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 395, 84 L.Ed. 565, a seller, with sales offices in New York, contracted there to sell and "deliver in that city, coal produced at its mines in Pennsylvania and shipped to New York for delivery. The city imposed a tax upon the purchases, measured by the sales price under a statute so providing. The Supreme Court held that such tax did not infringe the commerce clause of the constitution; that it was assessed upon transfer of title, consummated wholly within the state. The court coukl find no adequate ground for holding that the tax was a regulation which, in the absence of Congressional action, the commerce clause forbids. Mr. Justice Stone writing the opinion, used this language: “ * * * the extension of the immunity of the commerce clause contended for would be at the expense of state taxing power by withholding from taxation property and transactions within the state without the gain of any needed protection to interstate commerce. * * * we have sustained the tax where the course of business and the agreement for sale plainly contemplated the shipment interstate in fulfilment of the contract, Wiloil Corporation v. Pennsylvania, supra, 294 U.S. [169] page 173, 55 S.Ct [358] page 359, 79 L.Ed. 838; Graybar Electric Co. v. Curry, supra. * * * Taxation of property or the exercise of a power over it immediately preceding its previously contemplated shipment interstate *922has been similarly sustained. Coe v. Town of Errol [supra]; Bacon v. Illinois, supra; Federal Compress & Warehouse Co. v. McLean, 291 U.S. 17, 54 S.Ct. 267, 78 L.Ed. 622. For reasons already indicated all such taxes upon property or the exercise of the powers of ownership stand in no different relation to interstate commerce and have no different effect upon it than has the present sales tax upon goods whose shipment interstate into the taxing state was contemplated when the contract was entered into.”
It is not a question of whether Congress might rightfully intervene with regulatory legislation. Nor are we concerned with the question of how far the Congress might legitimately go in legislation affecting the validity of the state tax, for it has not seen fit to take any action in that respect. In view of the statements. by Mr. Justice Stone in the case last cited, in the absence of Congressional action, I feel that the court is not justified in concluding that the tax unlawfully burdens interstate commerce.
For these reasons, I believe the judgment should be reversed.