Jurisdictional Statement — HC&D Moving & Storage Co. v. Yamane

*

Oftice-Supreme Court, U.S.

| FILED

oa ces =; UP, Eee.

ee “7 DEC 2 81965

Pees oe eee yeaa | F. DAVIS, CLERK

o a IN THE

Rapreni Guurt of the Wnited States

OcTOBER TERM, 1965

‘No 855 ..

HC&D Movine & Storace Company, INC.,

a Hawaii corporation ;

_Crry TRANSFER Company, Lrtp., a Hawaii corporation;

Y. Higa ENTERPRISES, Lrp., a Haw ail corporation ;

and:

HawallaAN HAUvLinG SERVICES, Lrp.,

a Hawaii corporation, Appellants,

conceit = : rf aa a

TTAROLD “YAMANE: ‘State Tax Collector,

_ First Taxation Division, Appellee.

On Appeal From the Supreme Court of the State of Hawaii |

JURISDICTIONAL STATEMENT

J. GARNER ANTHONY

Fourth Floor,

- Bishop Trust-Bldg.

._ Honolulu,-Hawaii |

_ ? Attorney .for — ,

ROBERTSON, CASTLE & ANTHONY

Of Counsel

€

a

a

Press or Byron S. ApaMs, WASHINGTON, D. C.°

oT

INDEX

oe . Page

‘Opinion BELow ......:. ste peta sad ae a

JOMMBECENON *. . 6.05 svc cnccsci Sewkkeegesseanens een

Questions PRESENTED .......... ateaene ceeakene oh 2

‘Statutes INVOLVED .:.......... ihe keane ks eke

STATEMENT ..:...... aieenaven gee erreret Tr eeee <a

THE Questions: Ane Superanrut abe i cal Re eae eee nS

ConcLuston (ciencereaneesuanenn eth oat se —

EE get ee eT ease nena ak la

—— “TABLE OF CITATIONS | .

Cases:

Adams Mfg. Co. v. Storen, 304 U. 8. 307 (1938) cae we

General Motors -v. Washington, 377 U.S. 436 oh iks

2, 9, 10, 11

Greyhound Lines v. Mealey, 334 U.S. 653 (1948): “epee : Oy

HC&D Moving & Storagé Co. et al. v. Harold Yamane,

State Tax Collector; 48 Hawaii 486 (1965) ...:.. 1,9

Interstate Pipe Line Co. v..Stone, 337 U.S. 662.(1949).. -8

Mich.-Wis. Pipe Line Co. v. Calvert, 347.U:S. 157 .

. oS arate te dike ia he ok eee ara eS alas cag on ae 2

Northwestern States Portland Cement Co. v. Minnesota,

ke EE RC eae: 9

Puget Sound Co. v. Tax Commission, 302 U.S. 90 (1937) 11. .

Railway -Express Agency v. Virginia, 347 US. (859

; HE gh ain bck be Oa RONaA \ Gu oe kaw e ale 2,8

Spector Motor Service v. O°Connor, 340; Uv. S. 602 |

; (1951) er erece Teese ee ee 8

_ - STATUTES: : .

. Revised Laws of Hawaii 1955: ae

| Section 94-94 ..'.........:. Siereserian | a

fr ree rer Leabnanen 2,3

Section 117-14... si pee adate e ‘i wee Rha bee 3,7

Section 117-18 .o\......... Sesinenawees ee WO

ii .> * ‘Index Continued

_ Special Session-Laws of Hawaii 1957; | |

Act 1, Section 3(q) ....... ete peerTeedeeeeee, 8

2WUSC.: —° Laon Sie |

| .. icocissidtcsec ck

‘ .. _. Section 2101(c) se eeadepeeeeseeecesesetense 25s

__——{nited States Constitution; ©———

|" “Article I, Section. .:........ alee 2,3, 7."

?

* IN THE

ape Court of the United States

' OcToBER TERM, 1965

No.

HC&D Movine & SrorAGE ComPANY, INc.,

a Hawaii. corporation ;

City TRANSFER ©CMPANY, LitD., a Hawaii corporation ;

Y. Higa ENTERPRISES, Lrp., a Hawaii eorporation;

and

: “HAWAIIAN “Havume SERVICES, Lrp.,

a Hawaii corporaéion, A ppellants,

vo CC : |

Hanoi ‘ai, State Tax Collector,

First Taxation Division, Agpanes.

On Appeal From the Supreme Court of the State of Hawaii

_ JURISDICTIONAL STATEMENT

OPINION BELOW

The decisions of the trial court are not reported.

- The opinion of the Supreme Court of the State of

Hawaii, affirming the judgment below is reported at

48 Hawaii 486 (1965). Copies-of ‘the opinion and

judgment are attached as an Appendix.

a } 2 4

JURISDICTION

This appeal challenges the judgment of the Supreme

Court of the State of Hawaii upholding a state gross

receipts tax imposed upon the privilege of _ engaging

* in interstate commerce,

The action was brought under Revised Laws of

Hawaii 1955, Section 34-24, for the recovery of the tax

levied and collected pursuant to Chapter 117, Revised .

Laws of Hawaii 1955, here challenged as unconstitu-

3 tional as applied in this case. |

The Supreme Court of the State of Hawaii in its. .

opinion rendered August 4, 1965, upheld the validity

of the tax and entered judgment August 16, 1965. No- pac

tice of appeal was filed November 3, 1965.

Jurisdiction is conferred on this Court by 28 J.S.C.,

_- Sections 1257(2) and 2101(¢), and is sustained by .

Railway Express Agency v. Virginia, 347 U.S. 359

(1954) ; Mich.-Wis. Pipe Line Co. v. Calvert, 347 U.S.

157 (1954); Genexal Motors v. hee ected 377 U. ome.

436 (1964).

QUESTIONS PRESENTED

1. Is a state tax on the privilege of doing an inter-

state commerce business measured by the gross re-

ceipts thereof valid under the Commerce Clause of the

United States Constitution,,Article I, Section 8?

2. Is an unapportioned state tax on the privilege of

doing an interstate commerce business measured by the

entire gross receipts therefrom valid under the Com-

merce Clause of the United States Constitution, Article

a Section 8? |

3. Is a state taxon the privilege of ron an inter-

state commerce business measured by the gross receipts

3 | s

thereof and levied against taxpayers who were.engaged

solely in an interstate commerce business valid under

the Commerge Clause of the United States Constitu- .

tion, Article I, Section 8? _

STATUTES INVOLVED

Chapter 117, Revised ‘Laws: of, Hawaii 1955, and ;

particularly the following: portions ‘of Section 117-14,

Revised Laws of Hawaii 1955:

Imposition of tax. There is hereby levied anil

shall be assessed and collected annually privilege

taxes against persons on account-of their business

and other activities in the Territory measured .

by the application of rates against values, gross

proceeds of sales or gross income, as the case may

be, as follows: phe :

a * *

-(f) Tax on service business. Upon every per-

~ engaging or continuing within the Territory

service business or calling not otherwise

specif cally taxed under this chapter, there is like-

wise hereby levied and shal]l be assessed ‘and col-

lected a tax equal to two and one-half per cent

of the gross income of any such business.

(The effective rate at the time of assessments, ¥ was

amended by Section 3(q) of Act 1 of the Special

Session Laws of Hawaii 1957 sa three and one-half

per cent.)

STATEMENT .

The testimony with respect to Overseas Van, Lim- .

- ited, and HC&D Moving &. Storage Company, : Inc.

(Nos. 9476.and 10562) appears in Exhibit B and the

exhibits thereto attached and in Exhibits N and O.

Briefly stated, Overseas Van (subsequently merged |

4

into HC&D Heten & Storage Oe Ex. B, p. 3),

.was assessed $50, 516. 81 for 1958, 1959 and 1960. In

“cooperation with main land carriers. it handled in’

_ Hawaii shipments originating and terminating i in Ha-

waii on through bills of lading ee by the carrier.

_ (Ex. B. p. 5).

Upon’ originating shipments, han Van would

.document the shipment with the carrier’s bill of lading, |

_go to the residence, pack the furniture and accessories

into a sea van or-through ‘container, transport the con-

* tainer to the pier and arrange for transportation to

the mainland by steamship and — the necessary

documents (Ex. By pp. 6-7). :

On! in-bound shipments the taxpayer. received the

_ earrier’s through bill of lading and the government bill

of: lading and a notice of arrival from the steamship °

company. It picked up the cargo when it was unloaded

and transported it to the point of destination. If the

consignee had no residence, the goods were moved into

storage called ‘‘storage in transit” and held until the

consignee gave notice of his residence. The goods were

then delivered to the residence and unpacked, at which

‘time the consignee signed a receipt (Ex. B, pp. 7, 8, 13).

» With respect to -accessorial ‘charges for packing,

erating and cleaning on both ends of the shipment, in

. ‘the beginning Overseas Van received eighty per cent

of these charges made to the consignee on out-bound

shipments and twenty per cent of the charges on in-

bound shipments. With respect to the ocean freight,

after, deduction of actual ocean freight charged the

mainland carrier by the steamship company, the tax- —

_ payer received-seventy per cent of the out-bound ocean

freight override and thirty per cent of the in-bound

ee

eee ae ee ee sd) bathe ahich eth Isai tate eat We tliat heathy ca tebitdatidlbid Aesth eign chee a aha

ocean freight override (Ex. B, p. 9). At a later date -

this arrangement was changed to a flat payment per

hundred weight of the goods moved and this payment

included accessorial charges (Ex. B, pp. 10-11).

In addition/ the taxpayer receivéd all charges for

- storage in transit and delivery out of it (Ex. B, pp. 11-

12). The mainland carriér would collect from: the con-

- signee or the government, as the case might be and remit

to the taxpayer its share of the proceeds (Ex. B, p. 14).

The taxpayer’ s only business was that of acting for van

line companies and freight forwarding’ companies en-

"gaged in moving household goods for military person-

nel and civilians on through bills of lading to and

from Hawaii and the mainland United States and other

parts of the world on oceasion (Ex. B, p. 4).

'. With respect to HC&D Moving & Storage, it took |

over the business of the division of Honolulu Construc-

tion and Draying Company ofthe same name which op-

erated it theretofore (Tr. 19). In 1959 and in 1960 it,

like Overseas Van, engaged only in the particular.

household goods interstate business involved in this

. appeal. In 1961 it also did some local hauling (Ex.

B, p. 18). The services it performed’were the same

as those performed by Overseas Van but it was com-

pensated according to a number of different arrange-

ments (Ex. B, pp. 18-24). .

City Transfer Company, Ltd., as agent for Aero-

Mayflower Transit Company, performed the same type

of services as were performed by Overseas Van and

HC&D Moving & Storage Company, Inc., for the re- |

spective carriers with which they had arrangements.

* These shipments were handled on a through bill of |

lading in the same. manner, although the arrange-

2,

‘

ments for compensation varied somewhat (Ex. C, pp.

3-20).

Y. Higa Enterprises, Ltd., with ak to the assess-

ment herein questioned, performed the same services

as the other taxpayers with respect to their assess-

_ ments. It represented a number of different carriers:

(Tr. 3-9).

The situation as to Hawaiian Hauling: Services, .

Ltd., is somewhat different. That-company handled

mostly commercial goods store door to store door (Ex. -

A, p. 10). This was done under arrangements with

Emory Air Freight, an air freight forwarder, and

' two surface freight forwarders, Hawaii Consolidators .

of Los Angeles and Hawaiian Express, of San Francisco

(Ex. A, p. 4). However, the goods were handled on

through bills of lading and run store door to store door

(Ex. A, pp. 10-11). Roughly the same services were

performed as in the case of the other taxpayers with

‘respect to household goods (Ex. A, pp. 8-9).

City Transfer and Y. Higa Enterprises, Ltd., were

engaged in both local haulage and the tiousehold gocds

_ through bill of lading business (Ex. C and D). Ha- :

waiian Hauling was engaged in local haulage and the

store door to store door through bill of lading business

(Ex. B). Overseas Van, Limited, was engaged exclu-

sively in the interstate household goods shipment busi-

ness. The same was true of HC&D Moving & Storage.

Company, Inc., itself in the years 1959 and 1960, but

in 1961 it engaged in a certain amount of local haulage

(Ex. B). All used through bills of — in all inter-

state shipments. :

The assessments in question r ran against all receipts

by the respective taxpayers from the through bill of

lading business. :

7

With respect to each of the five assessments here

involved, the assessed appellant taxpayer paid the -

. taxes under protest, setting up as the ground for pro-

test the claim of invalidity of the assessment and the

taxing statute as a burden on. interstate commerce.

Each appellant filed a complaint in the Circuit Court

of the First Circuit, State of Hawaii, raising the same

contention, all pursuant to Section 34-24, Revised Laws

of Hawaii 1953. , The Circuit Court of ‘the First Cir-

cuit in each case upheld the validity of the assessment

and the tax against the contention that the assessment

and tax were unconstitutional under the Commerce

Clause of the United States Constitution.. An appeal

was timely taken to the Supreme Court of the State

of Hawaii, which affirmed the judgment below. From .

the’ judgment of the Supreme Court of the State of

Hawaii this appeal was taken.

The appellants contended at every , stage of the pro-

ceedings that Section 117-14, Revised Laws of Hawaii

1955 as amended, is repugnant to the Constitution of

the United States and invalid in that it constitutes a

burden upon interstate commerce. The constitutional

questions -were raised in the trial court by the com-

plaints (R. 3-43) and also in the Supreme Court of

‘Hawaii.. The constitutional questions were considered

but rejected both by the trial court (R. 53-92) and the .

Supreme Court of Hawaii (R. 104-132).

THE QUESTIONS ARE SUBSTANTIAL

This appeal presents important constitutional ques-

tions involving state taxes on the privilege of doing >

business in interstate commerce measured by the -unap-

portioned gross receipts therefrom. The decision of

the Supreme Court of Hawaii upholding the validity

of the tax in this‘case rejects the settled constitutional

8

principle that a state may not levy a tax measured

by gross receipts upon the privilege of doing an inter-

state commerce business. Under the decisions of this.

Court, the tax in question is unconstitutional.

1. In Interstate Pipe Line Co. v. Stone, 337 US.

662 (1949), a privilege tax was upheld on gross receipts

derived from shipments within a state in.the course of °

interstate commerce. Four justices held that whether

or not interstate comimerce was involved the tax was

fairly apportioned and hence valid. Four justices —

held that interstate commerce was involved and the

tax was invalid. One justice held that interstate com-

merce was not involved. In the present case, since

there were through bills of lading-in-the case of each

shipment, it is obvious that interstate commerce is in- -

volved. Accordingly, the point undecided in Interstate

Pipe Line Co. v. Stone, supra, is squarely =

here. |

' 2. The activities of ‘erating, packing, delivery and

storage in transit within the State of Hawaii under

through bills of lading are clearly a part of inter-

state commerce under the decisions of this Court in

Spector Motor Service v. O’Connor, 340. U.S. 602 |

(1951), and Railway Express Agency v. Virginia,

347 U.S. 359 (1954).

| 3. This is a privilege tax on the privilege of doing.

--an interstate business as clearly appears from: the

opinion of the Supreme Court of the State of Hawaii

stated :

. It is readily seen that the tax by its express

terms is a privilege tax upon engaging or con-

tinuing within the State in any service business

and is measured by the gross income of such busi-

ness. .... Here the operating inciderice of the tax

9

is on the privilege of doing business in Hawaii

measured by the gross income received therefrom.

.. (48 Hawaii 486, 490) |

-and again,

. In support of their chief contention taxpayers

maintain that “the business taxed is. interstate

commerce’’ and again that ‘‘the shipments of

goods here involved are in interstate commerce.”’

Viewed in the light of the principal contract be- ©

tween the consignor and the mainland carrier, the

shipments involved the transportation of goods

from a place in one state to a place in another——

which pring. them within-the realm‘ of interstate

—~eommerce. - (48 Hawaii 491)

This Cunt has repeatedly stated that a state may

not lay a tax on the privilege of engaging in interstate

commerce. General Motors Corporation v. Washing-

ton 377 U.S. 436,°446 (1964); Northwestern. States

Portland Cement Co. v. Minnesota, 358 US. 450 (1959).

4. Here one of the taxpayers throughout the assess-

ment period (Overseas Van, Limited, later merged

into HC&D Moving & Storage Company, Inc.), and

another, through most of the assessment period (HC&D

Moving & Storage Company, Inc.) engaged only in this

interstate commerce business. The other taxpayers

engaged in other business activities within the State

of Hawaii but conducted what is in effect a separate —

operation with respect to the business in question. Each

taxpayer handled ‘shipments only on through. bills of

lading and the services rendered were all part of the

services called for and paid for under the through

bills of lading. In the case of HC&D Moving & Stor-.

age Company, Inc., Overseas Van, Limited, City Trans-’

fer Company, Ltd., and'Y. Higa Enterprises, Ltd., the _

10

shipments hauled under through bills of lading were

household goods and were almost all for military per- .

_ sonnel.. In the ease of Hawaiian Hauling Services,

Ltd., the shipments involved commercial goods, but in

each case the business engaged in was d aie and

separable business activity.

5. The facts inthe case in mentite show that the tax

was levied on the taxpayers’ entire receipts from the

shipment even though those receipts thémselves were

: larger than the amounts paid by the consignee for the

services rendered in-Hawaii. No attempt was made to

apportion the receipts in any manner, and in fact, since

the taxpayers each engaged in business only in Hawaii,

_ any apportionment was expressly forbidden by the pro-

.. visions of Section. 117-18, Revised Laws of Hawaii

1955 as amended, which reads i in part as follows:

Apportionment. If any person, other than per-

sons liable to the tax on manufacturers as provided

by subsection (a) of séction 117-14, is engaged in

business both within and without the State or in

selling goods for delivery outside the State, and’

if under the Constitution or.laws of the United ©

States the entire gross income of such person can-

not be included in the measure of this tax, there

shall be apportioned to the State and included ‘in

the measure of the tax that portion of the gross

income which is derived from activities within the

State, to the extent that such apportionment is re-

quired by the Constitution or laws of the United

States. . |

6. This case is distinguishable’ from General M otors

v. Washington, 377 U.S. 486 (1964), in that the tax .

‘there involved, while similar in wording to the tax

here, was a tax on engaging in the in-state activity of

conducting business within the State of Washington ~

11.

whereas the tax in this case, as construed by the Su-

preme Court of Hawaii, is a tax on the privilege of en-

_.. gaging in a service business and the seryice business

in question has been held by the Supreme Court of

Hawaii to be interstate commerce. Thus the Supreme

Court of Hawaii in effect has held that a tax on the

privilege of engaging in interstate commerce may con-

stitutionally be levied. This is a misinterpretation of

General Motors Corporation,v. Washington, supra, and

if allowed to stand, will have far-reaching consequences

with respect to other states since the states can then

by taxation regulate interstate commerce.

_ %, The fact that the taxpayers here involved were

all Hawaii corporations does not change the result in

this case. In Puget Sound Co. v. Tax Commission, 302

U.S. 90 (1937), a tax on the privilege of engaging in

interstate commerce was struck down even though the —

corporation involved was a domestic corporation. Com-

- pare also Greyhound Lines’ v. _Mealey, 334 U.S. 653

(1948), and Adams Mfg. Co. v. Storen, 304 U.S. 307

(1938), in which state taxes were held invalid as bur-.

dens on interstate commerce even though the corpora-

tions were domestic corporations.

8. We think it plain that this case presents a ques-_ |

tion of substantial importance which affects the United .

States and every state. If the Supreme Court-of Ha-

‘wali is- correct, the time-honored legal principle that

taxes on the privilege of engaging in interstate com-

merce and measured by the gross receipts thereof ean-

not be levied by a state will have been set aside. The

states will be free to prevent, through taxation, their

citizens and others from engaging in interstate com-

merce. The correctness of the Supreme Court of Ha-

12

waii ’s ruling in this regard can be —— only wal a

decision of this Court.

‘CONCLUSION ™

For the reasons stated, the questions presented by

-this appeal are substantial and are of public impor-

tance. Itis ne ne My submitted that —— juris-

diction should be noted.

DATED: Honolulu, Hawaii, ‘December 17, 1965.

| Respectfully submitted,

J.-GARNER ANTHONY

Fourth Floor,

Bishop Trust Bldg.

Honolulu, Hawaii

: Attorney for Appellants

. Rospertson, CastLe & ANTHONY,

Of Counsel