Court Opinion

ID: 9419151
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:46:42.36687+00
Date Added: 2024-06-11T17:22:15.642340
License: Public Domain

Mr. Justice Roberts,
dissenting.
I think that the judgment should be affirmed.
The respondent, a New York corporation, conducts an interstate mail order business. It has also established retail stores throughout the country. In 1928, to secure the privilege of conducting stores in Iowa as a foreign corporation, it obtained a permit which has been kept in force by payment of the fees prescribed by the State. No question arises with respect to the collection by the respondent of the tax on sales made in stores in Iowa or on sales based upon orders taken in those stores but fill p.d by forwarding articles from a warehouse in another state.
The controversy arises only over pure mail order sales. These are consummated in the following manner: The respondent forwards to persons in Iowa catalogues de*367tailing the articles it has for sale, the prices, and the cost of transporting them. A person in Iowa forwards his-written order to one of the respondent’s mail order houses located outside Iowa for the purchase of tangible personal property as listed and priced in respondent’s' catalogue, the order being accompanied by a remittance of the purchase price, plus transportation charges, and usually specifying the method of transportation desired by the purchaser. The order is accepted or rejected at the place where it is received and, if accepted, is filled by delivery to the post office or to a carrier for direct shipment from the extra-state mail order house to the purchaser in Iowa.
This mail order branch of respondent’s business is separate and distinct from any activity conducted at its stores in Iowa. In conducting it the respondent is in direct competition with other mail order houses which conduct their business in exactly similar fashion but have no stores in Iowa and are not therein registered as foreign corporations.
The method necessarily pursued in the respondent’s mail order business makes it a certainty that it will be unable, by whatever practical efforts it may put forth, to collect the amount of the use tax on all its mail order sales made to persons in Iowa. In 1937 the number of its mail order transactions with some 300,000 persons in Iowa was approximately 1,200,000. Under the statute as attempted to be enforced against its mail order business, if, in 1937, the respondent had failed to collect from each customer the sum involved as tax, it would have been liable to Iowa in'the aggregate for two per cent, on approximately $5,400,000, — the volume of its Iowa mail order business in that year. If it had made the effort to collect the tax, the cost of so doing would have been approximately eighteen per cent, of the total tax on the mail order sales made to persons in Iowa and, in addition to that cost, the respondént would have been liable *368for approximately $38,000 of tax uncollected from pur•chasers. In addition, as a result of the exaction, the respondent’s mail order business will be placed at a serious disadvantage in competition with other mail order concerns which have no retail stores in Iowa and so have a price advantage of two per cent, of sales price as against respondent.
The penalty for failing to collect the tax as agent for the State, or to pay the sum not susceptible of collection from purchasers, as required by the State, will be the revocation of respondent’s permit for the conduct of its stores in Iowa, which represent a large expenditure for furniture, fixtures, appliances, and stock, and will entail loss of rental values under long term leases.
I am of opinion that the attempted enforcement of the statute .in the manner proposed by the taxing-authorities of the State violates both the commerce clause and the Fourteenth Amendment of the Constitution.
First. The respondent’s mail order business is interstate commerce,1 and Iowa may not prohibit the respondent from conducting that business with her citizens.2 To attempt so to do would be a violation of the commerce clause of the Constitution.
Not only so, but Iowa may not directly burden such commerce. Therefore she may not tax the privilege of engaging in it; regulate or license its pursuit,3 or tax the *369gross income derived from it.4 And even if the respondent maintained a force of agents in Iowa soliciting orders to be shipped in interstate commerce that fact would not render it amenable to the regulation or taxation of its mail order business.5
Thus Iowa may not lawfully license or regulate the business of agents soliciting orders to be shipped in interstate commerce;6 or limit or condition the right to enforce mail order contracts in Iowa courts.7 The power to exclude foreign corporations altogether from doing a local business does not enable the State to impose burdens upon the transaction of interstate commerce by a foreign corporation registered in the State; and registration by a foreign corporation in order to do business within the State does not constitute a waiver of the corporation’s right to transact interstate business free from the burdens of state regulation or taxation.8
Iowa may not abuse its conceded power to tax or regulate the respondent’s activities within the State by attempting to compel compliance by the respondent with unconstitutional efforts to tax or burden its interstate commerce.9 And Iowa may not forfeit, as it proposes to do, the right to conduct a domestic business by reason of the refusal of the respondent to submit to a burden upon its interstate business.10
*370Clearly in this instance the effort is directly and substantially to burden the transaction of an interstate business with the state’s citizens, in violation of the commerce clause, by the threat of penalizing disobedience by the forfeiture of the right to transact, within Iowa, an independent business which the respondent conducts in accordance with all existing laws, including the law requiring it to deduct and pay over the amount of the Iowa sales tax. Upon reason, as well as upon the unbroken current of authority in this court, Iowa has no such power to burden interstate commerce.
Monamotor Oil Co. v. Johnson, 292 U. S. 86, and Felt & Tarrant Mfg. Co. v. Gallagher, 306 U. S. 62, relied upon by the petitioners, are not in point.
The first is not apposite because there the company was engaged in the distribution of gasoline in the State of Iowa. This was the only activity drawn in question. The statute merely required the company, in distributing gasoline to users, to add the tax to its sales price and report and return the amount of tax thus withheld. In the second, the collection of the use tax was imposed with respect to property sold by the corporation through its general agents who were doing business in the State of California and were handling articles sold for delivery in that State. As an incident of such sales, the seller was required to add the tax and make return of it to the State.11
In justification of the exaction it is said that the purchaser is in Iowa and the tax is on the purchaser’s use in that State. But if these facts were determinative they would justify the imposition of a tax or burden, by the *371state of the purchaser’s residence, on every transaction in. which goods are sold in interstate commerce. Attention is also called to the fact that Iowa cannot effectively reach its own citizens in order to enforce the use tax on them. This cannot, however, justify the state’s attempt to save itself trouble by placing an unconstitutional burden upon interstate commerce conducted by a citizen of another state. Reference is made to the circumstance that, as a similar tax is laid on local sales in Iowa, there is no discrimination in imposing the tax or its collection upon the respondent, but the argument will not serve to legalize the tax. A state cannot justify a burden on interstate commerce by laying a similar burden on local commerce.12
Second. So far as the Fourteenth Amendment is concerned, Iowa may lay a tax on any activity of the respondent which it pursues within the State, but plainly, upon the facts disclosed, there is, in the conduct of respondent’s mail order business, no such local activity. The Supreme Court of the State correctly found:
“The sales are consummated outside the State of Iowa in each instance. They are separate and distinct from plaintiff’s activities in Iowa. The statute here challenged seeks to impose upon plaintiff the obligation that it 'shall at the time of making such sales, whether within or without the state, collect the tax imposed by this chapter from the purchaser.’ The sales are made outside of Iowa and the statute requires plaintiff to collect the tax at the time the sales are made. It clearly seeks to regulate activities of plaintiff outside the state. . . . Under repeated pronouncements of the Supreme Court of the United States, hereinbefore reviewed and quoted from, the State of Iowa has no such right.”
*372Delivery to a designated carrier is delivery to the customer13 and, in this case, is completed outside Iowa. The attempt, therefore, to impose a burden upon such delivery or to regulate the transaction is but an effort on the part of Iowa to regulate or tax an event which occurs outside her borders and over which she has no jurisdiction.14 This court has recently enforced this principle in a case on its merits more favorable to the State’s contention than the present.15 There it was said:
“It follows that such a tax, otherwise unconstitutional, is not converted into a valid exaction merely because the corporation enjoys outside the state economic benefits from transactions within it, which the state might b.ut does not tax, or because the state might tax the transactions which the corporation carries on outside the state if it were induced to carry them on within.”
McGoldrick v. Berwind-White Coal Mining Co., 309 U. S. 33, is distinguishable from the instant case for there the decision was grounded on the fact that the transfer of title and consummation of sale depended upon delivery by the seller in the taxing state.
In this aspect also the power of the State does not extend to measures which condition respondent’s privilege to do business in another state free from the regulation or taxation of Iowa.16
The Chief Justice joins in this opinion.

 Heyman v. Hayes, 236 U. S. 178, 186.

 Bowman v. Chicago & N. W. Ry. Co., 125 U. S. 465; Leisy v. Hardin, 135 U. S. 100; Schollenberger v. Pennsylvania, 171 U. S. 1; West v. Kansas Natural Gas Co., 221 U. S. 229, 250, 262; Louisville & Nashville R. Co. v. Cook Brewing Co., 223 U. S. 70, 82; Minnesota Rate Cases, 230 U. S. 352, 401.

 International Text Book Co. v. Pigg, 217 U. S. 91, 105, 108; Buck Stove Co. v. Vickers, 226 U. S. 205, 215; Sault Ste. Marie v. International Transit Co., 234 U. S. 333, 340; Lemke v. Farmers Grain Co., 258 U. S. 50; Puget Sound Stevedoring Co. v. Tax Commission, 302 U. S. 90, 94.

 Fisher’s Blend Station v. Tax Commission, 297 U. S. 650, 655; Adams Manufacturing Co. v. Storen, 304 U. S. 307.

 Crutcher v. Kentucky, 141 U. S. 47; International Text Book Co. v. Pigg, supra.

 Brennan v. Titusville, 153 U. S. 289; Crenshaw v. Arkansas, 227 U. S. 389.

 Sioux Remedy Co. v. Cope, 235 U. S. 197, 201; Furst & Thomas v. Brewster, 282 U. S. 493.

 Fidelity & Deposit Co. v. Tafoya, 270 U. S. 426, 434; Hanover Fire Ins. Co. v. Harding, 272 U. S. 494, 507, 517.

 Looney v. Crane Co., 245 U. S. 178, 187.

 Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 34; Pullman Co. v. Kansas, 216 U. S. 56; Atchison, T. & S. F. Ry. Co. v. *370O’Connor, 223 U. S. 280, 285; Western Union Tel. Co. v. Foster, 247 U. S. 105, 114; Frost Trucking Co. v. Railroad Commission, 271 U. S. 583, 593.

 Compare Wiloil Corporation v. Pennsylvania, 294 U. S. 169; Graybar Electric Co. v. Curry, 308 U. S. 513.

 Western Union Telegraph Co. v. Kansas, supra; Crew Levick Co. v. Pennsylvania, 245 U. S. 292.

 United States v. B. P. Andrews & Co., 207 U. S'. 229; compare Garretson v. Selby, 37 Iowa 529.

 St. Louis Cotton Compress Co. v. Arkansas, 260 U. S. 346.

 Connecticut General Life Ins. Co. v. Johnson, 303 U. S. 77.

 New York Life Ins. Co. v. Dodge, 246 U. S. 357, 375; Home Insurance Co. v. Dick, 281 U. S. 397, 407; James v. Dravo Contracting Co., 302 U. S. 134, 139.