Court Opinion

ID: 4004840
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:05:59.007879+00
Date Added: 2024-06-11T07:44:35.760203
License: Public Domain

This dissent from my brethren goes only to their conclusion that the law in its practical operation burdens unduly interstate commerce, and to the resultant relief thereby afforded the petitioner.
This Court holds, and rightly so, that the tax sought to be imposed here is an occupation tax. This fact being established, in logical sequence is the question of the mode and ascertainment of the value thereof. The reference by the statute to the gross receipts and to a certain percentage of the same, in determining the amount of the tax, is simply to ascertain the value of the business done by the corporation, and thus obtain a guide to a reasonable conclusion as to the amount of the occupation tax which should be levied. This reason finds support in Maine v. Railway Co., 142 U.S. 217. There a state statute required every corporation, person or association operating a railroad within the state to pay an annual tax for the privilege of exercising its franchise therein, to be determined by the amount of its gross transportation receipts. The court said that this tax was not on the goods *Page 285 
nor on proceeds of the goods, and, if it can be said to affect interstate commerce in any way, it is incidently and so remotely as not to amount to a regulation of interstate commerce. The same court in Ficklen v. Shelby County TaxingDistrict, 145 U.S. 1, approved the foregoing doctrine, holding that one cannot escape payment of percentage tax on its gross yearly earnings on the ground that its business for the year consisted entirely in sales to non-residents, and that the tax therefore would be a burden on interstate commerce.
Our Legislature adopted what it considered the most practicable way of determining the value of the business of the corporation in the state whose occupation was sought to be taxed. There was no measurement of the volume of gas at the mouth of the well obtainable. It adopted the only method left open by the petitioner under its plan by which its gas is produced to obtain the value thereof. Might not the state, therefore, urge that the corporation, since it chooses to combine local business and interstate business in such a way that the value of the former cannot be determined, cannot complain that the only method by which such value can be determined must necessarily include receipts from interstate commerce? No constitutional objection lies in the way of a legislative body prescribing any mode of measurement to determine the amount it will charge for the privilege it bestows. Home Insurance Co. v. New York, 134 U.S. 594. The manner in which the value shall be assessed, the rate of taxation, however arbitrary or capricious, are mere matters of legislative discretion. It is not for us to suggest in any case that a more equitable mode of ascertainment or rate of taxation might be adopted than the one prescribed by the Legislature of the state; our only concern is with the validity of the tax; all else lies beyond the domain of our jurisdiction. Minot v.Philadelphia R. Co., 85 U.S. 206; Coal  Coke Co. v. TaxCommissioner, 59 W. Va. 607.
In interpreting the federal statute imposing a tax on any firm, corporation, or person carrying on or doing business of refining sugar, etc., based upon the gross annual receipts of such business, the court said, in Spreckels Sugar Refining Co. *Page 286 
v. McClain, 192 U.S. 397: "Clearly the tax is not imposed upon the gross annual receipts as property, but only in respect to the carrying on or doing the business of refining sugar. It cannot be otherwise regarded because of the fact that the amount of the tax is measured by the amount of the gross annual receipts." How apropos is this of the case under consideration? There, as here, an effort was made to get away from the language of the statute, upon the inquiry as to what the subject was and the nature of the tax.
Ficklen v. Shelby County Taxing District, supra, has not been overruled. (31 Harvard L. Rev., 763, note 156.) This decision makes it possible for the Supreme Court to permit taxes on taxable occupations to be measured in part by receipts not themselves directly taxable. It is contended that this decision was shaken by the latter decision of Crew Levick Co. v.Commonwealth, 245 U.S. 292. The opinion of the court distinguished the Ficklen case, on the ground that the tax in question in the latter case was not an occupation tax, as was the case in the former. The Galveston case, 210 U.S. 217, upon which the petitioner leans so confidently was likewise a case where the statute did not impose the tax as an occupation tax. Mr. Justice Holmes observing that the tax in question "is merely an effort to reach the gross receipts." This decision loses its force as a precedent when we recall that the greater part of the business of the railroad in the latter case was admittedly interstate. These facts need only to be stated to show the inapplicability of that decision to the case under consideration here, where the business of producing gas on which the tax is levied is intrastate.
Our Supreme Court held, in Suttle v. Hope Natural Gas Co.,82 W. Va. 729. that: "Production of natural gas * * * is local in nature and clearly separable and distinguishable from the marketing or interstate portion of the industry." No case has been cited by counsel for the petitioner where the United States Supreme Court has condemned a state tax on wholly local or intrastate business of mining or manufacturing, even though the products or commodities mined or manufactured were sold in interstate commerce and the tax measured by the amount of *Page 287 
such sales. Following the line of reasoning, which the court lays down, to its logical conclusion, to support the contention that an occupational tax levied upon any other value than the price at the well would render the statute unconstitutional as a burden upon interstate commerce, it would follow that no tax whatever could be imposed, for the reason that the gas produced by the petitioner is flowing in interstate commerce from the time it escapes from its rock bed, even before reaching the surface.
If the tax under § 2a affects interstate commerce, it does so only incidently, and therefore is not a regulation of, a burden on, or interference with, such commerce, and is not invalid on account of such incidental effect. As heretofore stated, the Supreme Court of the United States has repeatedly held that the consequential burden of proper local taxation on interstate relations and transactions, including sales, transportation and everything else that enters into such commerce, is incidental, not direct, hence not an invasion by the state of the domain of interstate commerce. American Manufacturing Co. v. City of St.Louis, 250 U.S. 459; Oliver Iron Mining Company v. Lord,262 U.S. 172.
The two last mentioned cases are the most recent pronouncements of the court of last resort on the question under discussion. In the Oliver Iron Mining Company case, Minnesota had imposed a tax on persons engaged in the business of mining or producing iron ore, the amount of the tax being equal to six per centum of the valuation of all ores mined or produced in addition to all other taxes. The tax was assailed as being in conflict with the commerce clause of the federal Constitution. The court there said: "Plainly the facts do not support the contention. Mining is not interstate commerce, but, like manufacturing, is a local business, subject to local regulation and taxation. * * * Its character in this regard is intrinsic, is not affected by the intended use or disposal of the product, is not controlled by contractual engagements, and persists even though the business be connected with interstate commerce. * * * The ore does not enter interstate commerce until after mining is done, and the tax is imposed *Page 288 
only in respect to the mining. No discrimination against interstate commerce is involved. The tax may indirectly and incidentally affect such commerce, just as any taxation of railroad and telegraph lines does, but this is not a forbidden burden or interference." The determinative question here is answered in the American Manufacturing Company Case. The Supreme Court of Missouri in that case (270 Mo. 40) said of the tax: "We hold the tax in question is a tax upon the privilege of pursuing the business of manufacturing these goods in the city of St. Louis; that when the goods were manufactured the obligation accrued to pay the amount of tax represented by their production when it should be liquidated by their sale by the manufacturer; that their removal from the city of St. Louis and storage elsewhere * * * worked no change in this obligation; that their sale by respondent wherever they may have been stored at the time, whether it was done through its home office in New York or the office of its factory in St. Louis should have been reported in its return to the license collector of the city of St. Louis, and the amount included in fixing the amount payable on account of its license tax." The Supreme Court of the United States disposed of this case in the following language: "There is no doubt of the power of the state, or of the city acting under its authority, to impose a license tax in the nature of an excise upon the conduct of a manufacturing business in the city. Unless some particular interference with federal right be shown, the states are free to lay privilege and occupation taxes. Clark v. Titusville,184 U.S. 329, 46 L. Ed. 569, 22 Sup. Ct. Rep. 382; St. Louis v.United R. Co., 210 U.S. 266, 276, 52 L. Ed. 1054, 1058,28 Sup. Ct. Rep. 630. The city might have measured such tax by a percentage upon the value of all goods manufactured, whether they ever should come to be sold or not, and have required payment as soon as, or even before, the goods left the factory. In order to mitigate the burden, and also, perhaps to bring merchants and manufacturers upon an equal footing in this regard, it has postponed ascertainment and payment of the tax until the manufacturer can bring the goods into market. * * * In our opinion, the operation and effect of *Page 289 
the taxing ordinance are to impose a legitimate burden upon the business of carrying on the manufacture of goods in the city; it produces no direct burden on commerce in the goods manufactured, whether domestic or interstate, and only the same kind of incidental and indirect effect as that which results from the payment of property taxes or any other and general contribution to the cost of government. Therefore it does not amount to a regulation of interstate commerce." From the opinion of the court it appears that the case of Crew LevickCompany, supra, relied on by the gas company here, was likewise relied on by the manufacturing company in opposition to the view of the court heretofore quoted — the court stating that it is "so obviously distinguishable that particular analysis is unnecessary." The sales price of the goods on which the tax was levied, after they had been taken to other states would necessarily include the cost of transportation of the statute in this case, it is only such an indirect and the court in the last mentioned case went farther than is necessary to go in upholding the tax in this case which only permits the tax to be levied on sales made within the state.
The conclusion, as I view it, to be drawn from a consideration and analysis of the cases of the Supreme Court of the United States in point, is that the states will be permitted to indirectly encroach on federal authority by their taxing powers. In a federal system there must be reciprocal give and take between the whole and the several parts. If there be any interference with interstate commerce in the practical application of the statute in this case it is only such an indirect and incidental burden as is sanctioned by the federal decisions. The question of whether the state has imposed unduly a burden by the method of imposition of this tax upon interstate commerce being the only question with which I am at variance with my brethren, and the effects flowing from an affirmative holding thereon, I content myself with the statement that, after due consideration of all questions involved in the appeal, my conclusion is that the statute under consideration, without being limited in its operation as interpreted by the Court, violates no provision of either state or federal Constitutions, *Page 290 
and therefore it becomes our duty to uphold and enforce it.