City of Tacoma v. Hyster Co.

Dolliver, J.

(dissenting) — Hyster has no sales office, plant or warehouse within Tacoma. Sporadic service calls and contract negotiations are carried on by two nonresident service people and two nonresident sales people whose territory is considerably more than Tacoma. The company maintains a listing for its Seattle office in the Tacoma telephone directory. The majority claims this is a "sufficient nexus upon which to base taxing jurisdiction". I disagree. The listed activities are not enough, as a matter of due process, to allow Tacoma to tax Hyster.

*822Although it cites a number of cases which have interpreted the question of a sufficient nexus, none is directly in point and all are distinguishable. In Dravo Corp. v. Tacoma, 80 Wn.2d 590, 496 P.2d 504 (1972), the City of Tacoma sought to apply its business and occupation tax to the $40,000,000 contract for the construction of the Mossy-rock dam in Lewis County. We held for the City, pointing out that the delivery and acceptance of the bid as well as the signing of the contract for the dam took place in Tacoma. Here all sale contracts are subject to approval by Hyster's Seattle office. Similarly, in Greyhound Lines, Inc. v. Tacoma, 81 Wn.2d 525, 503 P.2d 117 (1972), the "taxable incident [was] the sale of a ticket." When an actual contract was considered necessary to form the proper nexus, I do not believe due process allows holding mere contract negotiations enough. See Norton Co. v. Department of Revenue, 340 U.S. 534, 95 L. Ed. 517, 71 S. Ct. 377 (1951).

In General Motors Corp. v. Washington, 377 U.S. 436, 447, 12 L. Ed. 2d 430, 84 S. Ct. 1564 (1964), the Supreme Court, in holding the state business and occupation tax applicable, relied on the "bundle of corporate activity" by which General Motors "enmeshed [itself] in local connections". An examination of that case reveals the "bundle of corporate activity" carried on by Hyster bears no relationship to the activities of General Motors.

In Standard Pressed Steel Co. v. Department of Revenue, 419 U.S. 560, 42 L. Ed. 2d 719, 95 S. Ct. 706 (1975), although the single employee did not take orders, make sales or receive franchise funds, it was found that the activities of the employee,

were necessary to [Standard Pressed Steel Company] in making it aware of which products Boeing might use, in obtaining the engineering design of those products, in securing the testing of sample products to qualify them for sale to Boeing, in resolving problems of their use after receipt by Boeing, in obtaining and retaining good will and rapport with Boeing personnel, and in keeping the *823invoicing personnel of [Standard Pressed Steel Company] up to date on Boeing's lists of purchasing specialists or control buyers.

Standard, at 561. The activities of Hyster in Tacoma are hardly comparable.

The due process principle of a sufficient nexus is simple enough to state but difficult to apply. The cases cited by the majority do not on their facts cast a broad enough net to reach Hyster. There is no reasonable relationship between the events taxed — either singly or collectively— and the benefit conferred. The constitutional requirements of due process are too sturdy to be overcome by the. gossamer nexus of the majority.

I dissent.

Brachtenbach, J., concurs with Dolliver, J.

Reconsideration denied October 16, 1980.