Northern Pac. Ry. Co. v. Henneford

HANEY, Circuit Judge

(dissenting).

1 believe the rules of law governing this case to he comparatively simple. The question is whether or not the “use” tax, imposed by the Washington statute on the personal property purchased by complainant outside that state, transported into and stored within that state, and later .consumed in maintaining its railroad, which engages in both intrastate and interstate commerce, is a direct burden on interstate commerce. If such taxes are burdens on interstate commerce, then they are invalid because they are forms of attempts to regulate interstate commerce,1 such regulation being reposed exclusively in Congress by the Constitution.

When is such a “use” tax a direct burden on interstate commerce? The cases which seem to be directly controlling appear generally to relate to gasoline. If “consumption” of gasoline in interstate commerce is the use which is taxed, then the tax is a direct burden on interstate commerce. Helson and Randolph v. Ken*314tucky, 279 U.S. 245, 49 S.Ct. 279, 73 L.Ed. 683; Bingaman v. Golden Eagle Western Lines, Inc., 297 U.S. 626, 56 S.Ct. 624, 80 L.Ed. 928, decided by the Supreme Court March 30, 1936.

On the other hand, where a “tax is imposed on the successive exercise of * * * storage and withdrawal from storage of the gasoline”' and “both powers are completely exercised before use of the gasoline in interstate commerce begins,” then it is held that “the tax imposed upon their exercise is therefore not one imposed on the use of the gasoline as an instrument of commerce, and the burden of it is too indirect and remote from the function of interstate commerce itself to transgress constitutional limitations.” Nashville, C. & St. L. R. Co. v. Wallace, 288 U.S. 249, 268, 53 S.Ct. 345, 350, 77 L.Ed. 730, 87 A.L.R. 1191. Likewise it is held that “a state may validly tax the ‘use’ to which gasoline is put in withdrawing it from storage within the state, and placing it in the tanks of the planes, notwithstanding that its ultimate function is to generate motive power for carrying on interstate commerce.” Edelman v. Boeing Air Transport, 289 U.S. 249, 53 S.Ct. 591, 592, 77 L.Ed. 1155.

I see little difference between the facts appearing in the Edelman Case and the facts appearing in the instant case. This, together with the striking similarity with respect to the Wyoming legislative act and the legislative act involved herein, impels me to the conclusion that the decision in the Edelman Case is controlling herein.

The statute here in question levies a tax on “the privilege of using within” the state tangible personal property. As the statute stands, the “use” taxed might be the actual consumption of the articles, or it might be the storage and withdrawal of the articles, or the withdrawal alone. The mere fact that the tax might be levied on one use, and because thereof be invalid, does not make the statute at once invalid. To determine which of the particular uses is being taxed, we must look to the administrative construction and application, as was done in the Edelman Case.

The administrative construction by the Washington tax commission is quoted in the majority opinion. That general statement is a construction applicable to all users whether carriers or otherwise. The same statement is contained in the letter directed by the commission to complainant, demanding payment of the tax. This general statement shows that the “privilege of using” means either (1) actual consumption or (2) the act of making available for use. The commission construed this second act to be (a) keeping; (b) storing; (c) withdrawing from storage; (d) moving; (e) installing or performing any act by which dominion or control over the property is assumed by the purchaser.

As declared by the Washington tax commission, this is a general statement, and it does not say specifically, on what “use” the tax is exacted. In the same administrative circular is the statement:

“The Tax Does Not Apply in Respect to the Use "of: * * * (2) Rolling stock or floating equipment by a common carrier, the first use of which within the state is actual use. in conducting interstate or foreign commerce. * * * ”

It might well be said that such provision negatives an intent to tax a “use” which is only the equivalent of consumption.

However, the Supreme Court has said many times that a statute is presumed to be valid. Graves v. Minnesota, 272 U.S. 425, 47 S.Ct. 122, 71 L.Ed. 331. We must presume, therefore, that the tax is exacted on the use of “storage and withdrawal” or “withdrawal from storage.” I find nothing either in the pleadings or the stipulation which overcomes this presumption, and therefore I dissent from the conclusion of the majority holding that the tax is invalid.

United States Exp. Co. v. Minnesota, 223 U.S. 335, 342, 32 S.Ct. 211, 56 L.Ed. 459; Baltic Min. Co. v. Massachusetts, 231 U.S. 68, 82, 34 S.Ct. 15, 58 L.Ed. 127.