Judge Lovins and I find ourselves unable to concur in the opinion of the majority filed in this case.
The facts in this case are not in dispute. Plaintiff is engaged in a special type of business in the City of Wheeling. She owns towels, aprons, coats, etc., which are laundered and prepared for use at Wheeling, in this State, and they are then delivered to customers in this State and in the adjoining State of Ohio. Compensation for the use thereof is charged, and is uniform whether the customer is located in Ohio or in this State. When used, they are collected and returned to the plaintiff's principal place of business in Wheeling, and are there re-cleaned, repaired and laundered, and then re-delivered to customers for use. The same article may be, and usually is, delivered to different customers. On this state of facts the question arises as to whether the defendant is entitled to impose a tax based upon the gross income derived from furnishing such supplies to customers in the State of Ohio.
Whether plaintiff is engaged in a service business, or in the business of collecting income for the use of real or personal property is in dispute. The measure of the tax and the rate of levy being the same, in either event, this dispute is, in my view of the entire case, of little practical importance. Service business or calling is defined in Section 1, Chapter 33, Acts of the Legislature, First Extraordinary Session, 1933, as follows: " 'Service business or calling' shall include all nonprofessional activities engaged in for other persons for a consideration, which involve the rendering of a service as distinguished from the production or sale of tangible property, but shall not include the services rendered by an employee to his employer." There is no definition of the business of collecting incomes from the use of real or personal property. The *Page 716 tax on these two types of business is imposed by subsections 2(h) and 2(i), Chapter 86, Acts of the Legislature, Regular Session, 1935. Section 2(h), covering service business reads as follows: "Upon every person engaged or continuing within this state in any service business or calling not otherwise specifically taxed under this act, there is likewise hereby levied and shall be collected a tax equal to one per cent of the gross income of any such business." Section 2(i), covering the business of collecting incomes for the use of real or personal property reads: "Upon every person engaging or continuing within this state in the business of collecting incomes from the use of real or personal property or of any interest therein, whether by lease, conveyance or otherwise, and whether the return be in the form of rentals, royalties, fees, interest or otherwise, the tax shall be one per cent of the gross income of any such activity * * *". It will be noted that the tax is only laid upon business carried on within this State. I am of the opinion that the business in which the plaintiff is engaged more clearly comes within the definition of service business or calling, than the business of collecting incomes from real or personal property, and I think this construction of the statute is supported by the case ofCharleston Transit Co. v. James, 121 W. Va. 412, 4 S.E.2d 297. While the word "otherwise" is used in Section 2(i), the apparent purpose of that section was to impose a tax arising from rentals, royalties, fees and interest. Quite frequently the use of real and personal property is involved in the rendering of services, and less confusion will arise if, in such case, the tax is laid on the activity as a service.
It should always be remembered that the tax in question was imposed for the privilege of doing business in this State. Section 2 of Chapter 33, Acts of the Legislature, First Extraordinary Session, 1933, provides: "There is hereby levied and shall be collected annual privilege taxes against the persons, on account of the business and other activities, and in the amounts to be determined by the application of rates against values or gross income as *Page 717 follows". Then follow subdivisions (a) to (i), both inclusive, which separate the different classes and types of business upon which the privilege tax is to be levied, and in each case the gross receipts of the business taxed are made the measure of the taxes. As to every business covered by the tax, the requirement is that the business taxed shall be carried on "within this state". This was obviously a necessary provision, because the Legislature of this State never had, and has never assumed, the right to levy a tax on business carried on beyond the boundaries of this State. Generally speaking, no reference or exception is made to a business established and carried on in this State which may extend beyond its borders; but as to the tax upon the business of producing for sale, profit or commercial use any natural resource, Section 2(a) of the Act provides that the measure of the tax is the value of the production in this State, regardless of the place of its sale or the fact that delivery may be made to points outside the State; and this same provision is made with respect to the business of manufacturing. No doubt these provisions were placed in the Act because of the fact that it was well known that a very large percentage of the production of natural resources and manufacturing were sold outside this State, and it was thought important to make certain that the tax imposed was laid upon the activity before the product thereof entered interstate commerce. Another special provision is that relating to public service business, wherein it is provided that the tax shall not include gross income derived from commerce between the states. The other subdivisions, being Sections c, d, e, f, g, h, and i, of Section 2, Chapter 33, contain no saving clause with respect to any business covered thereby, which may extend beyond the borders of this State, and counsel for plaintiff calls attention to this omission, and argues that the saving clause not being mentioned, it was necessarily intended that no business performed outside the State could be made the basis of taxation within this State. I attach little importance to this omission. The advisability of the provisions relating *Page 718 to the production of natural resources, manufacturing, and public service business is apparent, but the advisability or necessity therefor as to the other businesses does not, in my opinion, follow. Whether these businesses once established in this State, and whose ramifications may possibly extend beyond the State, are subject to be taxed upon the gross incomes of the entire businesses, is a question which, in my opinion, should be decided on grounds other than the technical form of the statute as written.
The tax imposed upon plaintiff's business is in effect based on, and measured by, the gross income therefrom; but its underlying basis is that of the privilege of doing business in this State. Therefore, the question of where the business is established and carried on is paramount. Few businesses of any magnitude are confined to a single state. We may take judicial notice of the fact that in this State a number of the most important cities are located at or very near the boundaries of adjoining and adjacent states, and necessarily businesses established and carried on in any of these cities, and in smaller communities so situated, extend beyond the borders of this State. Of course, if business carried on in these border cities and communities is that of the sale of tangible property, and there is a delivery beyond the State, no tax can be imposed, because of the direct burden imposed thereby on interstate commerce. Bluefield Produce Provision Co. v. Cityof Bluefield, 120 W. Va. 111, 196 S.E. 568. But does it necessarily follow that this principle should be applied to businesses of other classes, particularly service businesses, which are directed and controlled from an established place of business in this State, even though the services are actually performed and furnished at points outside the State?
The answer to this question involves a consideration of what was intended by the framers of the Federal Constitution. The inhibition upon the taxing power of a state, so far as it affects commerce between states, will be found in Section 8 and 10 of Article I of the Constitution of the United States. By Section 8, Congress is given *Page 719 power "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes", and by Section 10 it is provided that, "No State, shall without the consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection laws, * * *." The purpose is manifest. It was to prevent any restrictions upon the free flow of commerce between the states. It was not intended to curtail the power of the states to impose taxes upon businesses established and carried on within their borders, which did not directly or substantially impose a burden upon interstate commerce. The imposition of any tax, even property taxes, on businesses which engage in interstate commerce creates an incidental burden on such commerce. Imposition of such tax has never been understood to come within the inhibition of the Federal Constitution.
I am of the opinion that the tax in question in this case is not a direct or substantial burden on interstate commerce, but only an incidental one; and not a tax, burden or regulation of interstate commerce which the Federal Constitution intended to prevent. The business of the plaintiff is of a particular and unusual nature. To begin with, the instrumentalities of the business — towels, aprons, coats, etc. — are assembled at her place of business in this State; they are received and prepared for use in this State; entire control and direction of every step of the business is exercised and given in this State; the charges for the service are determined here, and such charges assembled in this State; there is no discrimination as between customers, whether within or without the State; when used, the instrumentalities are collected and returned to her place of business in this State, and are there processed and redistributed from that point. It is the same type and class of service wherever performed, and the only distinction is that the towels and garments are in one case delivered to customers within this State, and in the other outside. Should it be held that by reason of the fact that, in the course of a business established and *Page 720 carried on in this State, a single element — delivery outside the State — such outside deliveries are to be treated as a business not carried on within this State? I do not think it should be so held, and I assert that there is ample authority to sustain that position.
The plaintiff relies in particular upon two cases to sustain her contention. First, the case of Gwin, White Prince, Inc. v. Henneford, 305 U.S. 434, 59 S. Ct. 325, 83 L. Ed. 272. That was a case where a corporation of the State of Washington carried on the business of marketing agent for a fruit growers cooperative association, the business of which was to transport and sell fruit and fruit products in interstate commerce, and the business of the marketing agent was to promote such sales. It was held that the activities of the marketing agent were primarily a part and parcel of an interstate business, the income from which could not be taxed, although it was held in that case "that not every local tax laid upon gross receipts derived from participation in interstate commerce is forbidden, since even interstate business must pay its way by bearing its share of local tax burdens." As we understand that case, it is based upon the idea that the primary business of the cooperative was selling fruit in interstate commerce, and that the activities of its agent were merely promotion of such sales and therefore part of that commerce. Another case relied upon is that of James v. United Artists Corp., 305 U.S. 410. That was a case where the State of West Virginia attempted to impose a tax upon the distributors of motion picture films. The distributors had no place of business in the taxing state, and did nothing more than forward films to exhibitors within that state, who exhibited them, and paid to the State a tax upon the gross receipts of their business. It was held that the distributors of the films were not subject to the payment of the tax under the provisions of a statute (the same now being considered) imposing a tax upon the business of collecting incomes for the use of real and personal property. I do not think either of these cases reaches the situation presented in the case at bar. *Page 721
On the other side of the proposition, we have the case ofWestern Livestock v. Bureau of Revenue, 303 U.S. 250,58 S. Ct. 546, 82 L. Ed. 823. In that case a statute of the State of New Mexico levied a tax on the privilege of publishing newspapers and magazines, and based the same upon the gross receipts from the sale of advertising. This business involved the transmission from advertisers to publishers of cuts, mats, information, copy, etc., and payment for advertising through interstate facilities. The publication in question was published in the State of New Mexico, and it was held that the tax imposed upon the sale of advertising did not infringe the commerce clause of the Federal Constitution. The following comment was made in the body of the opinion in that case: "* * * We think the burden on the interstate business is too remote and too attenuated to call for a rigidly logical application of the doctrine that gross receipts from interstate commerce may not be made the measure of a tax. Experience has taught that the opposing demands that the commerce shall bear its share of local taxation, and that it shall not, on the other hand, be subjected to multiple tax burdens merely because it is interstate commerce, are not capable of reconciliation by resort to the syllogism. Practical rather than logical distinctions must be sought", and further: "That the mere formation of a contract between persons in different states is not within the protection of the commerce clause, at least in the absence of Congressional action, unless the performance is within its protection, is a proposition no longer open to question. * * * Nor is taxation of a local business or occupation which is separate and distinct from the transportation and intercourse which is interstate commerce forbidden merely because in the ordinary course such transportation or intercourse is induced or occasioned by the business. * * * It was not the purpose of the commerce clause to relieve those engaged in interstate commerce from their just share of state tax burden even though it increases the cost of doing the business. 'Even interstate business must pay its way.' * * * and the bare fact that *Page 722 one is carrying on interstate commerce does not relieve him from many forms of state taxation which add to the cost of his business. * * *". I think these observations are directly in point, on the theory that in the case at bar the plaintiff carries on a business within this State, and that it is required to assume its just share of state tax burdens, and cannot escape that burden as to its entire business merely because, in the course thereof and through a single element, incidental deliveries outside the State, may constitute a part of its business.
In Coverdale v. Arkansas-Louisiana Pipe Line Co.,303 U.S. 604, 58 S. Ct. 736, 739, 82 L. Ed. 1043, it was held that, "Taxation by the states of the business of interstate commerce is forbidden only because it is deemed an interference with that commerce, the uniform regulation of which is necessarily reserved to the Congress."; and, "Exemption of those engaged in interstate commerce from the taxation others bear should not be extended beyond the necessity of keeping that commerce free from interference." I do not believe the imposition of the tax complained of, based upon the entire business of the plaintiff, constitutes such interference with and burden on interstate commerce, as justifies our holding it invalid on that ground.
Another case, strongly relied upon by the court below, is that of Department of Treasury of Indiana v. Ingram-RichardsonManufacturing Co., 313 U.S. 252, 61 S. Ct. 866, 85 L. Ed. 1313. An Indiana corporation operated a factory in that state, which manufactured enamel and applied it by heat to metal articles, obtained through its travelling salesmen, from manufacturers in other states and on orders for enameled parts, used in the making of stoves and refrigerators. The contention of the taxpayer was that, as to business obtained outside of Indiana, the gross income tax of that state could not be applied. It was held that income derived from services, not from sales of the enamel in interstate commerce, were taxable in Indiana, and that the transportation involved was merely an incident of the enameling service. The distinction between *Page 723 that case and the case at bar is this: The Indiana concern performed a service on property which it did not own, and that service, aside from the transportation and delivery, was wholly performed within the State of Indiana, and may be said to be strictly a service business. In the case at bar the property involved is owned by the plaintiff. Such processing as she does in West Virginia is upon her own property, and not the property of others. This is, in my opinion, a distinction without a difference, as the court below held. The basis for my view is this: The business of the plaintiff is carried on in West Virginia, and any element of that business involving interstate transactions is merely incidental, and in this theory of the case it matters not whether the service performed is upon the property of another or from the use of the property of the taxpayer.
In the case of Holland Furnace Co. v. Department of Treasury,133 F.2d 212 (writ of certiorari denied by United States Supreme Court, October 11, 1943, 88 L. Ed. 30,) the contention of the appellants being that they were not subject to the Indiana gross income tax and that their only activities in the state of Indiana were "the solicitation of orders and installment of equipment in aid of interstate commerce." The state tax was upheld, the following language being used in the opinion: "The Holland and Interstate contracts were contracts to perform work and furnish labor and materials at specified places in Indiana; such contracts are local in character; * * * and we have no hesitancy in saying that the State of Indiana has the right to apply its gross income tax to business actually transacted within its borders, notwithstanding that interstate commerce, as an incident, may have intervened at some point in the transaction. It is the effect of the tax upon commerce which interests the courts. To be sure, when the possible effect of a state tax is to place interstate commerce at a disadvantage and cumulative burdens are imposed, competitively, with purely local trade, the fact that the tax is conditioned on a local event will not save it, but where interstate commerce is not *Page 724 subjected to a double tax burden to which intrastate commerce is not exposed, the tax is not invalid."
The questions presented in this case are technical in their nature, and involve many difficulties in their solution. The border line between a tax which burdens interstate commerce, and one which does not, is often difficult of definition, and it is so in this case. There is plausible argument for the proposition that the plaintiff is engaged in the sale of a service, and when that service is sold and performed outside the State, is subject to the same rule as if a transfer of title to tangible personal property were involved, and as to such sale it is admitted that no tax could be imposed, and reasonable arguments may be found in support of the proposition that the business of plaintiff is that of collecting incomes for the use of personal property; but, for reasons given above, I would discard both theories because I think the plaintiff's business is that of furnishing a service from an established place of business in this State, rather than a sale in interstate commerce, or collecting incomes. Furthermore, taxation is a practical matter, and courts should not attempt to construe a particular tax as a burden on interstate commerce when, in fact, it is not such burden.
The plaintiff's business is local in its nature. It serves a limited community. By reason of the fact that it is located on the line between states makes it feasible, and even necessary, for it to do business in both states. The plaintiff selected this State as the location of her business, and has had thrown around that business the protection of this State, and it should bear its equal share of the burden of local and state taxation. If the tax imposed by the State in fact created a burden on interstate commerce, it could not be collected, but until that burden is shown, or from the circumstances it can be clearly seen that such burden exists, there would seem to be no occasion for holding it to be a tax beyond the power of the State to impose. Then, the majority opinion will add to the complexities and difficulties in administering the privilege tax law, and open avenues for tax evasions, compared to which, the *Page 725 benefits secured to the plaintiff and others engaged in like business, are small indeed. I concede, of course, that if the statute requires such a result, it must be so; but I do not think a fair and practical consideration thereof calls for an interpretation which will bring about such a result, and I do not think we should take pains to find reasons to sustain an interpretation out of which so many difficulties are likely to arise. In saying this, I am not unmindful of the rule that, in tax matters, doubts are resolved in favor of the taxpayer. These considerations lead us to believe that the judgment of the Circuit Court of Ohio County should be affirmed. We would hold that a person who owns towels, aprons, coats and other textile products, which he cleans and prepares for use at a place of business, established for that purpose, in this State, and who, for a consideration, delivers from such place of business such products to customers of his business in this and adjoining states, and when such products become soiled, collects the same and returns them to his place of business in this State, where they are cleaned and prepared for further use, and from there re-delivered to his customers, is engaged in a service business or calling, the privilege of engaging in which in this State is taxable under subsections 2(h) of Chapter 86, Acts of the Legislature, Regular Session, 1935, and the measure of the tax is the gross income of such business, including that portion thereof received for services rendered outside this State.