Atlantic Coast Ports Service Corp. v. Commonwealth

Opinion by

Judge Wilkinson,

This case comes before the Court on appeal by Atlantic Coast Ports Service Corporation from the refusal of the Board of Finance and Revenue to review the corporation’s petition for review of the Pennsylvania corporate net income tax assessment for the year ending December 31, 1964. All of the facts were stipulated by the parties. We adopt this stipulation and set forth those facts most pertinent to our opinion.

Atlantic is a corporation which provides tallymen on the dock to count items and check for damage as shipments are unloaded from vessels by stevedores. It is a Delaware corporation sharing offices in Philadelphia with Norton, Lilly & Company, a corporation engaged in arranging various services needed by vessels while they are in port.

The issue on which this case turns is whether the tallymen are engaged in interstate or foreign commerce, rather than in local commerce. If they are, Atlantic is immune from Pennsylvania corporate net income tax under the import-export clause of the federal Constitution. It is the decision of this Court that the tally-men are not engaged in interstate or foreign commerce and that Atlantic Coast Ports Service Corporation is subject to the state tax.

*257There are no cases deciding the issue of whether tallymen are engaged in interstate or foreign commerce. Therefore, this case is one of first impression. There are cases which determine that stevedores are engaged in interstate commerce when a stevedoring corporation maintains supervision and control over the men as they work. On the other hand, where the stevedoring corporation merely rents out its men to a shipping company, it is engaged in local rather than interstate or foreign commerce. In the latter instance a stevedoring corporation is subject to state taxation, while in the former instance it is not. Puget Sound Stevedoring Company v. State Tax Commission, 302 U.S. 90 (1937); Joseph, Comptroller, et al. v. Carter & Weekes Stevedoring Co., 330 U.S. 422 (1947). In its brief, Atlantic attempts to draw an analogy between tallymen and stevedores. However, such an analogy is improperly made. Further, this case does not turn on the element of whether Atlantic was an independent contractor.

In Western Maryland Railroad Company v. State Tax Commission, 340 U.S. 520 (1950), Mr. Justice Douglas, in holding the railroad subject to state tax, said, “The ultimate impact of such a holding is difficult to measure, since manifold services are involved in the movement of exports and imports within the country. Problems of this nature, like many problems in the law, involve the drawing of lines. So far as taxes on activities connected with bringing exports to or imports from the ship are concerned, we think the line must be drawn at the water’s edge.”

At all times the tallymen in this case sat on the dock, counting items and checking them for damage. They never boarded the ship, never unloaded cargoes and never extended their activities beyond the water’s edge in any fashion. Applying Mr. Justice Douglas’ test, we draw the line at the water’s edge. Doing so *258puts Atlantic’s services out of the stream of interstate and foreign commerce. Because tlie corporation was not engaged in interstate or foreign commerce, the import-export clause of the federal Constitution does not provide Atlantic with immunity from the Pennsylvania corporate net income tax. Accordingly, we find that its services are subject to the state tax for the year in question.

CONCLUSIONS OF LAW

1. Atlantic Coast Ports Service Corporation, which shares offices with another corporation in Philadelphia, is subject to Pennsylvania corporate net income tax liability for the year ending December 31, 1964, under the Pennsylvania Corporate Net Income Tax Act, Act of May 16, 1935, P. L. 208, as amended by Act of August 24, 1951, P. L. 1417.

2. In its activities of providing tallymen on docks to count items and check for damage as items were unloaded from vessels, Atlantic was not engaged in interstate or foreign commerce during the year in question and is therefore not immune from tax liability under the import-export clause or the commerce clause of the federal Constitution for that year.

3. Judgment should be entered in favor of the Commonwealth and against Atlantic in the amount of |275.99 plus interest and costs, the amount due for the year ending December 31, 1964 under the Pennsylvania Corporate Net Income Tax Act.

Accordingly, we enter the following

ORDER

And Now, this 9th day of March, 1971, the appeal is hereby dismissed and judgment is directed to be entered in favor of the Commonwealth and against Atlantic Coast Ports Service Corporation in the amount *259of $275.99 together with interest and costs according to law unless exceptions he filed hereto within thirty (30) days.