Being unable to concur in the majority opinion, I respectfully dissent.
The Iowa Use Tax Act, imposing a 2 percent tax upon the use of tangible personal property, was enacted by the general assembly of Iowa (chapter 198, 47th G.A.) at its forty-seventh session held in 1937, and is complementary to the Retail Sales Tax Act, imposing a 2 percent tax upon the gross receipts from sales at retail, (chapter 196, 47th G.A.) passed at the same session of the legislature. The Use Tax Act provides for exemption from the tax when the property has already been subjected to a tax on sales or use by any other state equal to or greater than the use tax imposed by the Iowa law. By section 8 of the Act:
"Every retailer maintaining a place of business in this state and making sales of tangible personal property for use in *Page 1292 this state, [not exempt] * * * shall at the time of making such sales, whether within or without the state, collect the tax imposed by this act from the purchaser, * * *."
By section 11, the tax required to be collected and any tax collected by any retailer "shall constitute a debt owed by the retailer to this state." Other provisions of the Use Tax Act provide for making returns and remittance of the tax imposing penalties, etc., none of which are material in the consideration of the questions here involved.
The theory of the majority opinion, as I understand it, is based on this formula: The property, which the mail-order house, appellee, is selling to Iowa users, is situated outside of the state of Iowa; the sale is consummated outside of the state of Iowa; hence, to require the seller to collect the tax at the time of the sale is an attempt to regulate an out-of-state activity which is forbidden by the 14th Amendment to the United States Constitution.
This is exactly the setup which existed in the case of Felt Tarrant Mfg. Co. v. Gallagher, 306 U.S. 62, 64, 59 S. Ct. 376, 377, 83 L. Ed. 488, in which case the court upheld the California law, the collection feature of which is identical with that of the Iowa Use Tax Act. Appellee attempts to differentiate between the Felt Tarrant Mfg. Co. case and the instant case and further contends that the issue of extraterritoriality involved in the instant case was not raised, argued or decided in the California case. We disagree with counsel for appellee. Mr. Justice McReynolds, who has never been accused of being unable to clearly express himself, states the issues as follows:
"Appellant seeks an injunction prohibiting the state officers from enforcing against it the California Use Tax Act of 1935. (Cal. Stat. 1935, ch. 361, as amended by Cal. Stat. 1937, chs. 401, 671 and 683.) Counsel do not question the right of the state to collect this tax from the user, etc., but they say that, in the circumstances here disclosed, the officers may not compel appellant to serve as an agent for collecting the tax as they are threatening to do." (Italics ours.) *Page 1293
This is exactly the contention which appellee, in the instant case, is now making. From a reading of the opinion, it will be noticed that appellant was an Illinois corporation, engaged in manufacturing comptometers in that state and delivering them to purchasers in various states of the Union. Its method of doing business is set forth in the opinion. Mr. Justice McReynolds states, in the following paragraph taken from the opinion, what the argument was [306 U.S. 62, 66, 59 S. Ct. 376, 378, 83 L. Ed. 488]:
"The argument is this —
"The appellant, an Illinois corporation, carried on no intrastate operations in California and is not subject to its jurisdiction. Such business as it transacts in California is interstate in character. California, therefore, lacks the power to require it (1) to act as the state's collecting agent with respect to use tax which may become due from California storers, users or consumers, or (2) to insure payment of such tax if it fails to make collections from the tax debtors, or (3) otherwise to act as a `retailer' as defined by the Act and the appellees. The treatment of the appellant as a retailer subject to the provisions of the California Use Tax Act is a direct burden upon interstate commerce prohibited by the Federal Constitution. Numerous provisions of the statute, if applied, would deprive appellant of its property without due process of law."
The foregoing, in substance, is the argument now made to this court in the instant case. In deciding the California case, the United States Supreme Court simply said:
"The trial court thought that both contentions were foreclosed by what was said and ruled in Bowman v. Continental Oil Co.,256 U.S. 642, 650 [41 S. Ct. 606, 609, 65 L. Ed. 1139, 1145], Monamotor Oil Co. v. Johnson, 292 U.S. 86, 93, 95 [54 S. Ct. 575, 78 L. Ed. 1141, 1147, 1148], and Henneford v. Silas Mason Co.,300 U.S. 577, 582, 583 [57 S. Ct. 524, 526, 527, 81 L. Ed. 814, 818, 819]. And we agree with that conclusion."
It will be noticed that, in the California case, the *Page 1294 out-of-state corporation was not even qualified to do intrastate business in California. It was not licensed as a retailer but the federal court held that, in maintaining two offices in the state, it came within the definition of "retailer" as defined by the California Use Tax Act. The orders taken were required to be submitted to and approved by the plaintiff corporation in Illinois. All sales and deliveries were required to be made by the plaintiff corporation. The general agents, domiciled in California, were prohibited from making collections, and all payments for goods ordered were required to be made directly to the plaintiff. Some of the goods were shipped direct to the purchasers in California; others were shipped to the general agents, to save freight, who, in turn, delivered them to the purchasers. In so far as the activity of collecting the tax is concerned, it would necessarily have to be as completely an out-of-state activity as in the instant case. There was no sale in California; the agents were merely solicitors of orders; the orders were sent by mail to be accepted by the company in Illinois; purchase price was to be paid in Illinois and the goods shipped directly from Illinois to the purchaser. Only the machine used in demonstration was in California. We can see no material distinction in principle between the Felt Tarrant Mfg. Co. case and the instant case.
We do think the facts in the instant case in support of the regulatory means of collecting the tax are stronger than those in the California case. In the instant case, Iowa has granted the appellee two privileges: (1) The privilege of doing business as a foreign corporation, and (2) the privilege of operating a retail merchandising business within the state. These privileges granted furnish a more substantial basis for upholding and sustaining the burden imposed than anything appearing in the California case.
Appellee points out the activities of the two general agents soliciting orders in California and of the delivery of some of the machines by the agents to the purchasers as distinguishing features from the mail-order sales involved in the instant case. Counsel is overlooking the fact that the regulatory provision *Page 1295 for collecting the tax at the time of making the sale in Illinois is just as much an out-of-state activity. The purchase price was paid not to the agents but to the Illinois corporation which, under the California law, was required to collect the tax. Counsel is also wrong in saying there is no intrastate activity on the part of appellee in connection with the mail-order business. The intrastate activities, in connection with mail-order sales, consist first in the activity of the retailer, appellee, soliciting business from Iowa residents by means of distribution of large and small catalogues and special sales bulletins; by this means appellee displays its merchandise, its prices and gives its sales talk to the Iowa customers; by this means it made, in 1937, 1,200,000 sales to Iowa residents. The activity of the purchaser within the state of Iowa consisted of making out the order, enclosing the purchase price, the carrying charges, (and the requisite tax, if the law was obeyed) and placing the order in the mail and, after receipt of the goods, making use of same. The fact that the appellee, in distributing its catalogues, makes use of the express company or the United States mail instead of using its own motor trucks and making a house-to-house personal delivery of the catalogues does not make its conduct in this respect any less an activity within the state. Other activities within the state of Iowa, which obviously may be necessary, are — making adjustments in case of damaged, soiled, misfit or defective merchandise, or in the exchange of the merchandise, for any reason, which might require, in the adjustment, return of a portion of the purchase price paid; as to its credit or installment business, it might even require court action to repossess the property.
Activities, similar to the above, which are obvious were taken into consideration by the court in Equitable L. Assur. Soc. v. Pennsylvania, 238 U.S. 143, 147, 35 S. Ct. 829, 830, 59 L. Ed. 1239, wherein Justice Holmes, in expressing the views of the court, said:
"It is obvious that many incidents of the contract are likely to be attended to in Pennsylvania, such as payment of *Page 1296 dividends when received in cash, sending an adjuster into the State in case of dispute, or making proof of death."
Similar obvious activities were given consideration by Chief Justice Taft in the second division of the opinion in Compania General de Tabacos v. Collector of Internal Revenue, 275 U.S. 87, 98, 48 S. Ct. 100, 72 L. Ed. 177, 182. Justice Stone, in the opinion in the case of Connecticut Gen. L. Ins. Co. v. Johnson,303 U.S. 77, 82, 58 S. Ct. 436, 439, 82 L. Ed. 673 — which case is strongly relied upon in the majority opinion in the instant case — calls attention to the last two cited cases distinguishing them from the Johnson case. In the Johnson case, the reinsurance contracts involved were entirely out-of-state transactions. By its terms it called for no act in California. No act in the course of their formation, performance, or discharge took place there. The contracts were made in Connecticut; the premiums were payable there; the adjustment and payment of losses took place in Connecticut and the court said:
"* * * there is no basis for saying that reinsurance which does not run to the original insured, and which from its inception to its termination involves no action taken within California, even the settlement and adjustment of claims, is embraced in any privilege granted by that state."
We have no quarrel with the Johnson case. In discussing the 14th Amendment, Justice Stone, in the Johnson case, states [303 U.S. 77, 80, 58 S. Ct. 436, 438, 82 L. Ed. 673]:
"As a matter of convenience and certainty, and to secure a practically just operation of the constitutional prohibition, we look to the state power to control the objects of the tax as marking the boundaries of the power to lay it."
When we examine the Iowa Use Tax Act, we find the "objects" to be tangible personal property. The incident of the tax is the use of this property within the state of Iowa by the purchaser whether purchased within or without the state. Obviously, both the objects of the tax and the incident of the *Page 1297 tax are within the boundaries of the state of Iowa. The use tax being a tax against the purchaser-user within this state, the power to lay the tax is within the orbit of state power. This the appellee is forced to concede, under all the holdings of the United States Supreme Court. But they say, even so, yet, when it comes to the matter of collecting the tax from Iowa persons using the property purchased from appellee through the mail-order system, that Iowa may not require the Illinois corporation, as a condition to its right or privilege of continuing to conduct its business in this state, to assist the state authorities in the collection of the tax and that to require it to do so is an invasion of the due process clause of the federal constitution. The same contention was made in the case of Monamotor Oil Co. v. Johnson, supra, and in disposing of this feature, Justice Roberts, speaking for the court, said [292 U.S. 86, 93, 54 S. Ct. 575, 578, 78 L. Ed. 1141]:
"Instead of collecting the tax from the user through its own officers, the state makes the distributor its agent for that purpose. This is a common and entirely lawful arrangement. * * * and the requirement that the appellant as the shipper into Iowa shall, as agent of the state, report and pay the tax on the gasoline thus coming into the state for use by others on whom the tax falls imposes no unconstitutional burden either upon interstate commerce or upon the appellant.
"* * * The method of imposition and collection of the tax does not deny the equal protection of the laws guaranteed by the XIV Amendment." (Italics ours.)
In the case of Henneford v. Silas Mason Co., supra, the United States Supreme Court had under consideration the Use Tax Act of the state of Washington, which is very similar to the Iowa Use Tax Act. The extraterritorial feature presented in the instant case was not involved in the Henneford case; however, the opinion written by the late eminent Mr. Justice Cardozo does contain a very masterful, general analysis of the Use Tax Law and to our mind is a complete answer to every contention relied upon by appellee other than the so-called extraterritorial *Page 1298 issue. See also the recent case of Osborn v. Ozlin, 310 U.S. 53, 60 S. Ct. 758, 84 L. Ed. 705, opinion by Mr. Justice Frankfurter.
The Iowa Use Tax is not laid upon property outside state boundaries nor upon the sale of property made outside the state nor can it be said that the tax is upon any privilege exercised and enjoyed by appellee in other states. Contra, the tax is laid on the privilege of use within the state, and the incidental burden of collecting the tax is upon the privilege granted by the state to appellee — a privilege actually made use of — to engage in the retail business within the state. The place of making the sale has no connection with the duty of collecting the tax. The same duty applied to all retailers within the state no matter where the sale is made. The state in effect constitutes the retailer its agent for the purpose of collecting from the source, to wit, the purchaser, the tax which admittedly the purchaser-user owes the state. The state says to each retailer:
"In consideration of the right or privilege of engaging in the retail business in Iowa, you must aid the state in its administration of the law by performing this incidental duty of collecting the tax at the time of making the sale."
The difficulty of enforcing the tax provisions, in any other manner, would seem to be insurmountable; hence, the duty imposed of aiding the state in administering the law follows natural and reasonable avenues. The suggested difficulty, loss and expense, which appellee will sustain in connection with the collection of the tax from mail-order customers due to the fact that some would not include the tax with the purchase price, is answered by Mr. Justice Brandeis, in the opinion in Pierce Oil Co. v. Hopkins,264 U.S. 137, 139, 44 S. Ct. 251, 68 L. Ed. 593, 596, in the following language:
"A short answer to this argument is that the seller is directed to collect the tax from the purchaser when he makes the sale; and that a State which has, under its constitution, power to regulate the business of selling gasoline (and doubtless, *Page 1299 also, the power to tax the privilege of carrying on that business) is not prevented by the due process clause from imposing the incidental burden."
Appellee's contention, that the law discriminates against it in that other out-of-state mail-order houses, who have not qualified as retailers within the state of Iowa, are not subject to the burden of collecting the tax, may be disposed of by stating that such corporations enjoy no privilege granted to them by the state of Iowa. The mail-order business conducted by appellee is only one branch of its extensive business transacted with Iowa customers. It enjoys the privilege of operating 12 large retail stores within the state; all of these stores carry on a mail-order business for their customers if the goods wanted are not carried in stock; and, through the means of distributing hundreds of thousands of catalogues to people throughout the state of Iowa, they reach into the state and transact business, designated as Type 3, amounting to more than 5 1/2 million dollars annually, comprising approximately 1,200,000 orders with Iowa mail-order customers, in the year 1937. Needless to say, the privilege of doing business in Iowa is a valuable one, and the incidental burden of collecting the tax is no greater upon appellee than upon other domestic concerns doing business in competition with appellee within the state. It is a fact, so well known as to be judicially noticed, that practically all department stores in the state do a large mail-order business in connection with their regular business, and, as to such business, would experience the same difficulty in collecting the tax in full from mail-order customers. The incident of the tax being upon the use of the property within this state cannot be said to be an attempt on the part of the state to regulate out-of-state activities. No other state could impose a like burden upon the use of property within the state of Iowa, and, should the sister states, in which appellee's mail-order establishments are situated, impose a sales tax or use tax equal or greater than the use tax imposes by the Iowa law, and the user in Iowa has paid the *Page 1300 same, the Iowa Use Tax would not attach; hence, there is no possibility of a double imposition of the same burden.
The Use Tax Act being complementary to the Retail Sales Tax, the two acts should be construed together. In this state, statutes in pari materia are construed together. Conly v. Dilley,153 Iowa 677, 133 N.W. 730; Story County v. Hansen, 178 Iowa 452, 159 N.W. 1000; Balen v. Colfax Consolidated Coal Co., 183 Iowa 1198, 168 N.W. 246; Fitzgerald v. State, 220 Iowa 547, 260 N.W. 681. The propriety of this rule was recognized by the United States Supreme Court in Gregg Dyeing Co. v. Query, 286 U.S. 472, 480, 52 S. Ct. 631, 634, 76 L. Ed. 1232, 84 A.L.R. 831, wherein Chief Justice Hughes, speaking for the court, said:
"There is no demand in that Constitution that the State shall put its requirements in any one statute. It may distribute them as it sees fit, if the result, taken in its totality, is within the State's constitutional power."
When the two acts are considered together, it is manifest that the general plan and purpose running throughout the provisions of the statutes is that of equal distribution, as far as possible, of the burden as between domestic and foreign corporations conducting a retail business within the state, and that there is nothing in the law imposing the tax or the regulatory means adopted for collecting the same which imposes an inequality upon or discriminates against appellee.
We hold that the collection provisions of the Iowa Use Tax Act, as applied by the appellants, is not an invasion of the constitutional provisions of the constitution of the United States relied upon by appellee and, accordingly, the decree of the trial court should be reversed.
STIGER and RICHARDS, JJ., join in this dissent. *Page 1301