The opinion
Robinson, J.
(dissenting) — I dissent from the foregoing opinion because I think the majority are in error both as to the facts presented in the case and as to the principles of law applicable thereto. The factual error appears most prominently in the following pivotal excerpt from the opinion:
“The appellant is a domestic corporation
operating, entirely within this state,
a business which is exclusively with his principals, certain fruit growers; and for its services to its principals the appellant is paid a commission as recited above.” (Italics mine.)
The complaint alleges, and the demurrer admits, that the appellant is engaged in the business of distributing Washington grown apples and pears throughout the states of the Union and in a number of foreign countries; that it maintains sales representatives at many points outside the state of Washington, who at such points negotiate said sales and execute written contracts of sale “on behalf of the appellant.” The appellant’s compensation is fixed at so much per box, that is to say, it is calculated per unit of volume.
It further alleges:
“That as a further part of its business plaintiff handles the bills of lading on all shipments made in compliance with the contracts of sale entered into in foreign and extra-state territory, most of said shipments being consigned to the plaintiff at extra-state points, and that through its foreign and extra-state representatives plaintiff attends to the delivery of said
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shipments and collects the proceeds therefrom which are thereafter forwarded to the plaintiff at Seattle, Washington, all in the course of interstate and foreign commerce.”
All of these allegations (except, of course, the last nine words of the quotation) are admitted by the demurrer. I do not see how the majority can rightly say that these allegations describe a concern operating “entirely within this state.” To me, they picture a far-flung business, actively operating in many of our sister states and in a number of foreign countries, in distributing Washington grown apples and pears throughout the channels of trade, a concern which, however, has, for quite understandable reasons of convenience, chosen to incorporate itself and maintain its head office in the state of Washington, the source of the product which it is engaged in distributing.
That interstate and foreign commerce is not confined to transportation of goods from one state to another or from one country to another, but comprehends, in addition, all commercial intercourse between states and countries and all activities necessary to its accomplishment, is so elementary that the citation of judicial decisions so holding would be superfluous. It is obvious that the mere carriage or transportation of the Washington fruit to New York, Philadelphia, or Boston, or to London, Paris, or Rome, would be futile unless someone performed the various services with relation to the shipments which the appellant alleges it performs. Without these services, the commerce involved could not be accomplished. Nor do I perceive any distinctive difference between the nature of the services performed by the appellant and the services performed by the railroad company which carries the fruit across the country, or the steamship company which carries it overseas.
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As to the fruit growers, both the appellant and the transportation company are independent contractors. The appellant’s services are paid for, not by a commission upon the value or sale price of the fruit, but are calculated per unit of volume. The transportation company’s compensation is, to a large extent, directly proportionate to weight and volume. The services performed by each are services necessary to the commerce involved. Upon what theory, then, is it cheerfully admitted on the one hand that a tax upon the transportation costs (the freight) would be a direct burden upon interstate or foreign commerce, and hotly contended on the other hand that a tax upon the other equally necessary and inescapable distribution costs is not?
The fact is that, although the opinion of this court in
Puget Sound Stevedoring Co. v. Tax Commission,
was reversed on November 8th last by the supreme court of the United States, 302 U. S. 90 , 58 S. Ct. 72 , its erroneous reasoning is by the majority again made the basis of decision in this case. In that case, the court held the compensation of the stevedoring company taxable because (1) earned wholly in a local business; and (2) carried on by an independent contractor. In this case, the majority attempts to fit the facts to (1) of that formula by reducing the appellant’s status to that of a mere commission merchant performing a merely local service, and this is done notwithstanding the broad admissions of the demurrer to the contrary. Having done that to their satisfaction, the majority proceed to apply the exploded and discredited “independent contractor” theory originally announced in the reversed
Puget Sound Stevedoring Co.
case, and thus arrive at their decision.
As justification for this rather strong language, I
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quote the following excerpt from the very heart of .the majority opinion:
“Appellant renders an independent service — engages in a business within this state— ...”
And lest this be insufficient to prove the point, I quote from that portion of the opinion which states the actual decision in the case:
“. . . it [the appellant] is merely a local agent for growers and associations in this state who have fruit to be sold. If those fruit growers and associations choose to make sales through the medium of an agent or independent. contractor, as in the case at bar, the agent’s or contractor’s activities in this state in making and promoting the sales are subject to state taxation like any other local business.”
The last sentence in the above quotation constitutes the decision in this case. It does not meet the test of either reason or authority. The fruit growers made a contract with the appellant in which the appellant agreed to render, for so much per box, certain services in connection with exchanging their fruit for the money of consumers in other states and countries. Let it be assumed that they, at the same time, also made a contract with a railroad to perform the actual carriage required by this commerce. Would the railroad be any less an independent contractor than the appellant? If not, and no other answer is possible, could its compensation under its contract be taxed? The answer is no, even though it is an independent contractor — for such a tax would be a burden upon interstate and foreign commerce. Neither can the compensation of the appellant be taxed
if
its compensation is received for services rendered in interstate and foreign commerce. The nature of the service is wholly decisive, and whether or not it is rendered by an independent contractor, has nothing whatever to do with the matter.
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I do not pursue this subject further because, in the first place, it is vain to labor overmuch in attempting to establish the obvious; and second, the question has been settled by authority binding upon this court. In reversing the judgment of this court in the
Puget Sound Stevedoring Co.
case,
supra,
the supreme court of the United States said, less than three months ago, that the judgment was “placed upon the ground that the taxpayer was an independent contractor engaged in a local business,” and, speaking through Mr. Justice Cardozo, disposed of the “independent contractor” theory in the following words:
“The fact is not important that appellant does business as an independent contractor as long as the business that it does is commerce immune from regulation by the states.
What is decisive is the nature of the act, not the person of the actor.”
(Italics mine.)
The rationale of the majority opinion is, therefore, clearly unsound. I think the result is, also. Whether it is or not, wholly depends upon whether or not the appellant renders a foreign and interstate commerce service, as has been indicated at the beginning of this dissent. I think that the complaint alleges facts which show that it does render such services in other states and in foreign countries, services indispensable to the accomplishment of the commerce involved, and some of them not differing in character from the services rendered by the carrier which transports the fruit.
The majority say that the appellant’s business is entirely carried on in this state, and that it is in no sense interstate in character. But when it is admitted that the appellant, acting through its representative, which is the only way a corporation can act, calls on a dealer in New York or London, negotiates a sale of Washington fruit, makes a contract in its own name, and, subsequently, personally atténds to the delivery
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and collection of the proceeds, I need more than I find in the majority opinion, and more than I think can be found anywhere else, to convince me that these acts are performed in the state of Washington, or that the collection of the freight, for example, is an act in any way differing in nature from a transportation company’s collection on a C. O. D. shipment.
In my opinion, the ruling and judgment appealed from should be reversed.
Main, J., and Steinert, C. J., concur with Robinson, J.