Appendix — Standard Pressed Steel Co. v. Department of Revenue of Wash.

Supreme Court brief1975

Ask Donna

What actually matters in this document.

Text

SINGLE APPENDIX

IN THE

Supreme Court of the United States

October Term, 1973

No. 73-1697

STANDARD PresseD STEEL Co., a foreign corporation,

Appellant,

Vv.

DEPARTMENT OF REVENUE,

Appellee.

ON APPEAL FROM THE WASHINGTON STATE

COURT OF APPEALS, DIVISION II

JULY 31, 1974

FILED MAY 13, 1974

PROBABLE JURISDICTION NOTED JUNE 17, 1974

CRAFTEMAN @ MET Press Ge searrig wasninoron

SUBJECT INDEX

Page

Relevant Docket Entries 1

Determination by Department of Revenue...................... 3

Final Determination by Department of Revenue............ 9

Order and Final Decree of Board of Tax Appeals............ 13

Petition for Judicial Review. 23

Findings of Fact and Conclusions of Law........................ 26

Judgment ...... 30

Notice of Appeal to Washington Supreme Court ............ 32

Opinion of the Court of Appeals of the State of Wash-

ington, Division Two 33

Petition for Rehearing .....................-.-.-....-.--- 43

Order Denying Petition for Rehearing or Modification 43

EINE IIIT? cscccnsstnnimttnnipneennennsdeementeninnstins . 47

Respondent’s Answer to Petition for Review .................. 59

Order Denying Petition for Review 71

Remittitur 72

Notice of Appeal to United States Supreme Court.......... 74

Deposition of Robert Martinson, including Exhibits A

Through L 75

IN THE

Supreme Court of the United States

October Term, 1973

No. 73-1697

STANDARD PRESSED STEEL Co., a foreign corporation,

Appellant,

DEPARTMENT OF REVENUE,

Appellee.

ON APPEAL FROM THE WASHINGTON STATE

COURT OF APPEALS, DIVISION II

JULY 31, 1974

JURISDICTIONAL STATEMENT FILED MAY 13, 1974

PROBABLE JURISDICTION NOTED JUNE 17, 1974

SINGLE APPENDIX

Attorneys for Appellant:

Hanroxp S. FaRDAL, Esq.

KENNETH CORNELL, Esq.

KELLER, ROHRBACK, WALDO, MorEN & Hiscock

1220 IBM Building

Seattle, Washington 98161

Telephone (206) 623-1900

Attorneys for Appellee:

Olympia, WA 98504

415 General Administration Bldg.

Olympia, WA 98504

Telephone: (206) 753-5515

PP gene.

RELEVANT DOCKET ENTRIES

Title of Case:

STANDARD Pressep Steet Co., a foreign corporation,

Appellant,

DEPARTMENT or REVENUE,

Respondent.

SINGLE

APPENDIX

PROCEEDINGS Pace No.

Date

1970

July 24

October 21

1971

April 23

May 26

June 24

1972

june 16

October 10

October 11

1973

January 30

April 30

September 11

October 11

Determination by Dept. of Revenue .... 3

Final Determination by Dept. of

AE NTS SA 9

Hearing before Board of Tax Appeals

Order and Final Decision by Board

pS 13

Petition for Judicial Review .................. 23

Hearing and oral argument in

Thurston County Superior Court

Findings of Fact, Conclusions of

Law and Judgment ....................-....0-+ 26

Notice of Appeal to Washington

Supreme Court . —

Appellant's Brief on Appeal

Respondent's Brief on Appeal

Appellant's Reply Brief

Hearing before Court of Appeals of

State of Washington, Division II

PAE te ©

December 3

December 20 Petition for Rehearing

1974

January 3

January 16

January 25

February 20

February 21

March 14

May 13

May 31

June 17

Opinion of Court of Appeals filed

Order Denying Petition for Rehearing

or Modification

Petition for Review to Washington

Supreme Court

Respondent's Answer to Petition

for Review

Remittitur by Court of Appeals

Notice of Appeal to United States

Supreme Court

Praecipe for Certification and Trans-

fer of Record to the United

States Supreme Court

Appeal Docketed in United States

Supreme Court

Transmission of Record from Wash-

ington Court of Appeals

Probable Jurisdiction Noted.

TOC OOOEMO OOOOH OOOO eee

CP OCMMOSOO DOLE OOCO OSs SeCeosccecs

COPOCOMOCODES ESO OOSSCOeeeSSCescoes

Coooweesocsesousegososossosoeoooesoesens

[Letterhead omitted in printing]

E DEPARTMENT OF REVENUE OF

BER ORE THE STATE OF WASHINGTON

In the Matter of the Petition

For Refund and Petition for se

Correction of Assessment of Dre No. 70. 7 0-67

ARD Pressep STEEL COMPANY Registration No.

Pest Olliee Box 608 P409 011 840

Benson East

Jenkintown, Pennsylvania 19046

ENTED BY: H. Robert Martinson, Engi-

Tae Elizabeth J. Bracelin, Attorney; and Robert Keller,

Attorney

DEPARTMENT OF REVENUE REPRESENTED BY:

INTERPRETATION _ Appeas Division: Don R. McCuis

ton, Hearing Officer

FreLp Operations Drvision: S$. Aronin, Audit Unit Su

pervisor

Date AND PLACE OF CONFERENCE: March 16, 1970; Seattle,

Washington

"' taxpayer manufactures industrial and ——-

fasteners at Jenkintown, Pennsylvania and Santa Ana, “

fornia. In the state of Washington these products are <

to companies unbel © Gy apm at one >

dustries; the principal customer being The Boeing a

pany in Seattle. An audit, dated November 28, ve

been prepared from the accounting records main =

for the period from Januacy 1, 1965 through June 30, 2

Ee cot ante’ & oo od thet See ©

$2,681.38 and tax assessment 59849 was issued *

amount on December 30, 1969. The assessment, plus ex-

tension interest, is unpaid at this time.

TAXPAYER'S EXCEPTIONS:

The taxpayer has voluntarily paid the Wholesaling—All

other business and occupation tax, on periodic returns

filed, measured by the majority of its sales to local custom-

ers. However, some of these sales were not reported (ap-

parently through inadvertence) and this accounts for the

total deficiency reflected by the audit. The taxpayer feels

none of this tax is correctly due as its local activity is in-

sufficient to generate the liability. It was explained that

until February 11, 1966 a sales office was maintained at

1012 Summit Avenue in Seattle. This office was closed on

this date and thereafter the taxpayer has had only one

product specialist in the state. This is Mr. H. Robert Mart-

inson, an engineer employee, who is a Washington resident

residing at 2719 S.W. 322nd Street in Federal Way, Wash-

ington. Mr. Martinson operates out of his home and his pri-

mary duty is to consult with Boeing Company personnel

regarding the company’s anticipated needs and require-

ments for aerospace fasteners as well as discuss any diffi-

culties which might develop with the product after de-

livery. He also consults, but to a much lesser extent, with a

few other customers in the Seattle area. Since the facts are

basically similar regarding sales to all customers included

in the audit, we will confine this discussion to The Boeing

Company situation. The information regarding future re-

quirements for fasteners, as well as information regarding

any product difficulties which he is unable to reconcile, is

forwarded by Mr. Martinson to either Jenkintown,

Pennsylvania or Santa Ana, California for action by the

company. Information gathered by Mr. Martinson regard-

ing Boeing Company's future needs is used by the tax-

payer to determine if it should attempt to qualify for the

—

business. If it does, a sample of its proposed product is

sent directly to Boeing and, if accepted, shipment of the

product is made by common carrier from an out-of-state

point directly to Boeing. Preliminary price and delivery

data as well as orders and payments all run directly be-

tween Boeing and the taxpayer with no intervention by

M:. Martinson.

Under these facts it is stressed that the taxpayer's local

presence in Washington is limited to one resident em-

ployee who acts solely as a consulting engineer and who

has absolutely nothing to do with the mechanics of com-

pleting sales. This one employee’s function is characterized

as being similar to a conduit through which technical in-

formation passes to the company to enable it to keep

abreast of developments in its product line. As judicial

authority for believing this degree of local activity is in-

sufficient to support this state’s business and occupation

tax, the taxpayer refers to the decision of this state’s Su-

preme Court in B.F. Goodrich v. The State of Washington,

38 Wn.2d 663 (1951). In that case the court pointed out

that it was bound by the then recent decision of the United

States Supreme Court in Norton Company v. Department

of Revenue of Illinois, 340 U.S. 534, 95 L. Ed. 517, 71 S.

Ct. 377. The Norton case involved an attempt by the State

of Illinois to levy its gross receipts retailers occupation

tax on sales of abrasive machines and supplies manufac-

tured in Massachusetts and sold in Illinois. In addition to

its rather extensive selling activity in Illinois, the Norton

Company also “stood ready to receive complaints and to

give engineering and technical advice.” The court ruled that

the illinois tax did not apply to sales in which orders were

sent from Illinois customers directly to the Norton Com-

pany’s home office in Massachusetts and were filled by ship-

ment directly to the customer. The taxpayer feels that its

situation is extremely similar, if not identical in pertinent

points, with that considered by the court in the Norton

case and requests consideration of its petition on these

grounds,

DISCUSSION:

In our opinion the Norton and Goodrich decisions are

not controlling in this situation. Rather, we believe the

much more recent decision of the United States Supreme

Court in General Motors Corporation v. Washington, 377

U.S. 436, 12 L. Ed. 430, 84 S. Ct. 1564, constitutes the

authoritative case law on the subject. As an aside we might

point out that, in our opinion, the Norton case is distin-

guishable on the facts since there is no evidence that the

Norton Company engineers who stood ready to give tech-

nical advice were actually involved in the direct sales ruled

exempt by the court. In any event, the General Motors

case involved a situation where several different types of

employees conducted activities in Washington which

were not directly involved in the mechanics of completing

sales but which, of course, were indispensable factors to

General Motors in gaining and holding its share of the

Washington market. The Court said, on Page 438, that

.. . The Pontiac and Oldsmobile Divisions of Gen-

eral Motors had no branch offices in Washington. But

these divisions had district managers, service repre-

sentatives, and other employees who were residents

of the State and who performed substantial services in

relation to General Motors’ functions therein, partic-

ularly with relation to the establishment and mainte-

nance of sales, upon which the tax was measured. We

place little weight on the fact that these divisions had

no formal offices in the State, since in actuality the

Oe EP te 4

homes of these officials were used as corporate offices.

Despite their label as “homes” they served the cor-

poration just as effectively as “offices.

In our judgment, the services rendered locally by Mr.

Martinson, while not directly involved in the mechanics

of sales, are also substantial in relation to this particular

taxpayer’s functions since such services directly result in

the “establishment and maintenance of sales,” as in the

General Motors case. In other words, the taxpayer has ap-

proached the Washington market through the presence

and efforts of Mr. Martinson and we believe this is suffi-

cient nexus, under the rationale of the General Motors de-

cision to generate a business and occupation tax liability on

the taxpayer’s sales. It goes without saying that the tax-

payer had good and sufficient reason for basing Mr. Martin-

son in this state. We think it obvious that these reasons are

primarily related to the ultimate generation of sales and

handling of customer relations. We are convinced that

these activities, rather than being merely insignificant,

constitute vital and contributing services toward securing,

maintaining and holding a share of the local market for the

taxpayer and, as the court said in the General Motors case,

constitutes a business privilege for which the state can re-

quire a return.

We recognize that the taxpayer's local activities are

much less than those conducted by General Motors. How-

ever, the reason for this is that the taxpayer's local business

is on a much smaller scale. In proportion to the size of its

operation, the taxpayer's local activities are, in every

sense, equally as important as General Motors in gaining

and holding its share of the local market.

DECISION AND DISPOSITION:

The taxpayer's petitions are denied. Extension interest of

$91.95 has been added to tax assessment 59849 which in-

creases it to an amount due of $2,773.33. This is due and

payable within 30 days from the date of this Determina-

tion.

DATED this 24th day of July, 1970.

STATE OF WASHINGTON

DEPARTMENT OF REVENUE

s/ Don R. McCuiston, Hearing Officer

[Letterhead omitted in printing]

Law Offices FINAL

Horswill, Keller, Rohrback, DETERMINATION

Waldo & Moren

1220 IBM Building No. 70-67A

Seattle, Washington 98101

Attention: Mr. Robert K. Keller Re: Standard Pressed

Steel Company

Registration No.

P409 011 840

Tax Assessment

59849

Gentlemen:

Your petitions dated August 5, 1970 and October 13,

1970, appealing Determination 70-67, have been received.

In that Determination it was concluded that the taxpayer

had established sufficient nexus in this state to support the

assertion of the business and occupation tax on gross sales

delivered from an out-of-state point. The facts are fully set

out in the Determination and we reiterate only the follow-

ing salient points: One resident employee engineer is main-

tained here for the purpose of consulting primarily with

The Boeing Company regarding future requirements for

aerospace fasteners and to settle any problems arising with

this hardware after delivery. This product specialist oper-

ates out of his home at Federal Way, Washington and

while he does not directly participate in the mechanics

of completing the sales, information he gathers and his

product recommendations contribute greatly to the tax-

payer's ability to compete for this local business.

You contend that the impact of the business and occupa-

tion tax on the taxpayer’s gross Washington sales creates an

unconsitutional burden on interstate commerce. You also

point out that the local activities considered by the United

States Supreme Court in Norton Company v. Department

of Revenue of Illinois, 340 U.S. 534, 95 L. Ed. 517, 71 S.

Ct. 377, and General Motors Corporation v. Washington,

377 U.S. 436, 12 L. Ed. 430, 84 S. Ct. 1564, were much

greater than those present here. You make the further

point that the Norton Company maintained a branch

office and warehouse in Illinois as well as a group of

engineers (whether in Illiniois or not is not known) who

stood ready to give technical advice, and that the Court

still exenupted the Illinois business and occupation tax on

direct sales from Massachusetts.

We have given this matter careful consideration and

have concluded that Determination 70-67 correctly sets out

the position of the Department of Revenue. We are con-

vinced that the local activities of the resident employee

engineer are indispensable constributions to the taxpayer's

ability to gain and hold a share of the Washington market.

We think the maintenance of an employee in this state for

this purpose constitutes a local business location which

contributes directly tu the sales upon which the business

and occupation tax is imposed. In our opinion, this is

sufficient nexus to remove any possibility of an unconsti-

tutional burden on interstate commerce.

We think further that the Norton and General Motors

cases involve distinctions without any real differences. The

Norton Company maintained a branch office and ware-

house in Illinois and a group of engineers (either in Illi-

nois or Massachusetts) who stood ready to give technical

advice; yet the court exempted direct sales from Massa-

chusetts. The reason for this, with which, incidentally, we

are in complete agreement, was that unlike the taxpayer's

situation, none of Norton’s facilities in Llliniois or its engi-

neers actually participated in, or contributed to, such direct

sales. Further, we can attach no significance to the fact

that the degree of local activity conducted by both com-

panies was much greater than that engaged in by the tax-

payer. Obviously, the primary reason for this is that both

Norton Company and General Motors deal with far larger

segments of their respective local markets than does the

taxpayer. In other words, this is really a question of pro-

portion and not of comparable activities. In our opinion

the local activities of the taxpayer’s employee engineer are,

in every sense, as equally important to its ability to gain

and hold its share of the Washington market as the hier-

archy of activities performed here by General Motors.

Since the United States Supreme Court’s decision in the

General Motors case is the most recent decision in this area,

it is the most authoritative indication we have of the Court's

attitude regarding the imposition of state excises on gross

sales resulting from local activities performed by a resi-

dent employee engineer. We are convinced that the ration-

ale of this decision supports the business and occupation

tax here in question and your appeal is therefore, denied in

full. This decision does not in any way jeopardize your

right to further review of your protest. An appeal from this

Determination may be taken to the Tax Appeals Board

which will review it on an independent and impartial

basis. If you wish, the matter can be heard informally.

Mandatory extension interest of $131.36 has been added to

the balance due under tax assessment 59489 which in-

creases it to a total current amount due of $2,758.58. The

due date for payment of this amount has been set at thirty

days from the date of this letter. If you wish to follow this

appeal procedure, a petition for hearing must be directed

to State of Washington, Tax Appeals Board, 1017 Cherry

Street, Olympia, Washington, 98501, within this time.

Yours very truly,

STATE OF WASHINGTON

DEPARTMENT OF REVENUE

s/ JaMEs R. STANFORD

Assistant Director

JRS: ce

cc: Standard Pressed Steel Company

STATE OF WASHINGTON

Board of Tax Appeals

STANDARD PRESSED STEEL COMPANY, Docket No. 70-41

Appellant,] Re: Excise Tax

v. Appeal

STATE OF WASHINGTON ORDER

DEPARTMENT OF REVENUE, FINAL

Respondent.} DECISION

This matter came on as a formal appeal for hearing on

the 23rd day of April, 1971, before the Board of Tax Ap-

peals; appellant being represented by Robert K. Keller,

Counsel; and respondent being represented by Michael

D. Hansen, Assistant Attorney General; the Board having

heard and considered the arguments made on behalf of

both parties, the Board now makes its findings and de-

cision and issues its order as follows:

TAX IN CONTROVERSY

Tax Under Appeal Period Covered

Wholesaling Business and

Occupation Tax 1/1/65 - 6/30/69

OPINIONS AND FINDINGS OF FACT

The facts concerned in this appeal were not disputed and

were presented to this Board at the hearing substantially

in the form of an oral stipulation. In dispute is the appli-

cation of this state’s Business and Occupation Tax laws to

these facts. Specifically the appellant contends its activities

are exempt as being conducted in interstate commerce. The

respondent contends the appellant's activities are suffi-

ciently intrastate in nature to come within this state’s taxing

jurisdiction.

The appellant’s home office is located in Jenkintown,

Pennsylvania where it has one of its manufacturing plants.

Its other manufacturing plant is located in Santa Ana, Cali-

fornia. It manufactures industrial and aerospace fasteners.

Its principal customer in Washington is The Boeing Com-

pany in Seattle until February 11, 1966, the appellant main-

tains a sales office in Seattle. The appellant has a few other

customers in Seattle and its arrangements with these cus-

tomers are conducted in the same manner as with The

Boeing Company will be applicable also to these other

customers.

Until February 11, 1966, the appellant maintained a

sales office in Seattle. Subsequent to that date the appellant

has had only one employee in this state, Mr. Robert H.

Martinson, a Washington resident who has operated out of

his home in Federal Way, Washington, near Seattle. Mr.

Martinson’s primary duty as an engineer is to consult with

The Boeing Company personnel regarding the company’s

anticipated needs and requirements for aerospace fasteners

as well as to discuss any difficulties which might develop

with the appellant’s product after Cvlivery. The informa-

tion regarding future requirements for fasteners, as well

as information regarding any product difficulties which he

is unable to reconcile, is forwarded by Mr. Martinson to

either Jenkintown or Santa Ana for action by the appel-

lant. Information gathered by Mr. Martinson concerning

The Boeing Company’s future needs is used by the appel-

lant to determine if it should attempt to qualify for the

business. If it does, a sample of its proposed product is

sent directly to Boeing and, if accepted, shipment of the

product is made by common carrier from an out-of-state

point directly to The Boeing Company. Preliminary price

and delivery data as well as orders and payments all run

directly between The Boeing Company and the appellant

with no action required by Mr. Martinson. For purposes of

information, Mr. Martinson does receive copies of the sales

invoices issued by the appellant to customers Mr. Martin-

son has had contact with.

It was brought out in evidence that in addition to the

customer contact made by Mr. Martinson, a group of the

appellant’s engineers visited The Boeing Company for

about three days each six weeks. Mr. Martinson made

arrangements with Boeing personnel for meetings with the

engineer groups during their stays in Seattle. The engineers

augmented and enlarged on the consulting and engineer-

ing work performed by Mr. Martinson and further permit-

ted the appellant to meet the needs of The Boeing Comp-

any.

It was brought out that Mr. Martinson’s supervisor was

the appellant’s sales manager located in Jenkintown,

Pennsylvania. It was brought out that at times Mr. Martin-

son forwarded material to Jenkintown to be typed and

mailed to customers. Mr. Martinson did not list his home

phone in the appellant’s name, but he did furnish his home

phone number to Boeing personnel for more direct com-

munication at various hours. Mr. Martinson did maintain a

telephone answering service listed in the appellant's name.

Messages from this service were relayed to Mr. Martinson

for response and action. The bills for this service were

sent directly to Jenkintown for payment.

Mr. Martinson by deposition stated he maintained an

office location in his home consisting of a desk, file and a

telephone on the desk, even though the number was listed

in his own name. Mr. Martinson stated he took a deduction

on his income tax return for the use of his home as an

office.

In issue is whether the activities of Mr. Martinson on the

appellant’s behalf and the position maintained for the ap-

pellant in Seattle by Mr. Martinson are sufficient to justify

the respondent's imposition of Washington’s Business and

Occupation Tax. In our opinion they are.

We find the situation in this appeal to be very much like

that in the case of General Motors Corp. v. Washington,

377 U.S. 436 (1964), except for the size of the corporate

taxpayers and the volume of the taxpayers’ activities in this

state. We find also that the U.S. Supreme Court recently

denied Certiori in the somewhat similar New Jersey case

of Clairol, Incorporated v. Kingsley, 270 Atlantic 2d 702

(1970).

The appellant has placed particular reliance in support

of its position on the case of Norton Company v. Depart-

ment of Revenue of Illinois, 340 U.S. 534 (1951). The

court in its syllabus in that case stated:

“When a foreign corporation has gone into a state to

do local business by state permission and has sub-

mitted itself to the taxing power of the state, it can

avoid taxation on some sales to ns in that state

only by sustaining the burden of so particu-

lar transactions are disassociated from local busi-

ness and interestate in nature.

“The only transactions here involved that are so clear-

ly interstate in character that the state could not

reasonably attribute their proceeds to the local busi-

ness, are orders sent directly to its head office by

customers and shi directly to the customers from

a office; and such transactions are not subject

to tax.”

The appellant in the present appeal points out that The

Boeing Company’s orders for the purchase of the appel-

lant’s products are sent directly to the appellant’s manufac-

turing plants outside this state. The manufactured products

are shipped into this state directly to Boeing by common

carrier. The negotiations for the sales order, invo!*ing, and

payment are handled directly between the appellant's out-

of-state office and Boeing with no required action by Mr.

Martinson. On the basis of these facts, the appellant con-

siders the holding in the Norton case to be controlling.

In addition to these facts, we find the activities of Mr.

Martinson operating on behalf of the appellant to be

necessary in order that the appellant might:

1. Become aware of its products which The Boeing

Company might be able to use.

2. Obtain the engineering design for such products.

3. Secure the testing of sample products to qualify the

products for sale to The Boeing Company.

4. Resolve problems in the use of the products after

receipt and use by The Boeing Company.

5. Obtain and retain good will and working rapport

with Boeing personnel.

6. Secure and update lists of Boeing purchasing spe-

cialists or control buyers, and the commodities for

which they were ae for the use of the in-

voicing personnel at the appellant's home office.

We find that these factors were a necessary and vital

part in the appellant's ability to gain its market with The

Boeing Company in this state in the first instance and to

hold its market with Boeing in the second. We find that

without these factors, secured through the person of Mr.

Martinson, or by some other qualified agent or agency of

the appellant in this state, it is very unlikely the appellant

could have secured and retained The Boeing Company as

its customer. We find that Mr. Martinson’s activities, al-

though not directly concerned with the writing of a sales

order, the making of delivery, or the procurement of pay-

ment, constituted all the activities of selling necessarily

preliminary to the writing of the orders. We find the sales

activities of Mr. Martnison to be of such importance that

the writing of the orders and subsequent activities of de-

livery and payment are only the end result of his intensive

and extensive activities and the activities of the visiting

groups of appellant’s engineers in this state.

We cannot find that the acts of the purchaser mailing its

orders to the appellant's out of state address and making

payment to that address, and theshipment of the appellant's

products by common carrier direct to the purchaser can

be so divorced from the appellant’s other corporate sales

activities conducted in this state by Mr. Martinson and the

other engineers to create an aura of immunity around the

appellant’s total operation exempting it from this state’s

taxing jurisdiction.

We believe the following from the text of the General

Motors case, written in 1964 (The Norton case was written

in 1951), illustrates the factual similarity between the

facts in that case and the facts surrounding Mr. Martinson’s

activities in this areal:

“The district managers lived within the State of Wash-

ington and their jobs were ‘the maintenance of a qual-

ity organization—dealer organization—and the fol-

low-through and administration of programs, plans

and oy oy within their district, hat will help to

develop the dealer organization, for the best ible

financial and sales results.’ R. 109. While he had no

office within the State, the district manager operated

from his home where he received mail and telephone

calls and otherwise carried on the corporation’s busi-

ness. He called upon each dealer in his district on an

average of at least once a month, and often saw the

larger dealers weekly.”

In addition to the activities of the resident district man-

agers, General Motors out-of-state zone manager, service

manager and used car manager (living and headquartered

in Portland, Oregon) made periodic visits to Washington

dealers in a supervisory and advisory capacity. Their ac-

tivities generally were comparative to the appellant's

groups of out-of-state engineers that made periodic visits

to The Boeing Company.

Except for the obvious difference in the size and volume

of the business and activities conducted by General Motors

as compared to that of the appellant, we believe the factual

situations are quite parallel. We find the U.S. Supreme

Court’s opinion in the General Motors case was compatible

with and did not overturn the court's decision in the Nor-

ton case. The court in its several syllabi in the General

Motors case stated:

“1, Though interstate commerce cannot be subjected

to the burdens of multiple taxation, a tax measured by

gross receipts is constitutionally proper if fairly ap-

portioned.

“2. The burden of establishing exemption from a tax

rests upon a taxpayer claiming immunity therefrom.

Norton Co. v. Department of Revenue, 340 U.S. 534,

followed.

“3. The bundle of appellant’s corporate activities or

‘incidents’ in Washingtou afforded the State a proper

basis for imposing a tax.

“4. The evidence was sufficient to warrant the finding

by the state court of a nexus between appellant’s in-

state activities and its sales there, y where its

taxable business was so enmeshed with what it

claimed was nontaxable.

“5. This Court does not pass upon appellant’s claim of

‘multiple taxation’ in violation of the Commerce

Clause because appellant did not show what definite

burden in a constitutional sense the St. Louis tax

places on the identical interstate shipments by which

Washington measures its tax or that Oregon levies any

- on appellant's activity bearing on Washington

es.

In the present appeal this Board likewise does not pass

on an issue of “multiple taxation” because no showing was

made by the appellant that a definite burden was placed

upon it as a result of the taxation exerted by the respond-

ent.

In our opinion the holding of the U.S. Supreme Court

in the General Motors case cited herein is controlling with

respect to the factual situation presented to this Board in

this appeal.

In addition to considering the issues and facts in this

appeal, as noted above, we make the following specific

findings of fact and conclusions of law.

FINDINGS OF FACT

1. The appellant corporation, Standard Pressed Steel

Company, headquartered in Jenkintown, Pemnnsylvania,

made sales of its manufactured products to customers,

principally The Boeing Company, located in Seattle, Wash-

ington.

2. Its resident sales engineer, Mr. Martinson, operating

from his home located in Federal Way, Washington, main-

tained close and continuous contact with The Boeing

Company personnel.

-_ a ee ee ee ere ro

3. The purpose of Mr. Martinson’s activities, as the ap-

pellant’s employee, was to secure and maintain the ap-

pellant’s market for its products with The Boeing Com-

pany, the appellant's customer.

4. Mr. Martinson, with the aid of groups of the appel-

lant’s engineers who made periodic visits to The Beoing

Company, accomplished this objective, although not being

directly concerned with the writing of purchase orders,

delivery of the products, or collection of payment.

5. The instate activities of Mr. Martinson and of the

visiting engineer groups were so enmeshed with the total

of the appellant's sales activity with The Boeing Company,

they cannot be excluded from consideration with respect to

the question of whether the appellant's sales were exempt

under the Commerce Clause of the U.S. Constitution.

6. The evidence presented was sufficient to warrant the

respondent’s assessment of Business and Occupation Tax

upon the appellant's sales concerned in this appeal.

CONCLUSIONS OF LAW

1. The evidence presented was sufficient to warrant the

finding by respondent of the necessary minimum contact

between the appellant's in-state activities and its sales in

this state upon which to base its jurisdiction for the assess-

ment of Business and Occupation Tax.

2. The decision of the U.S. Supreme Court in the case

of General Motors Corp. v. Washington, 377 U.S. 436, sup-

ports the assessment made by the respondent.

3. The recent refusal of the U.S. Supreme Court to grant

Certiori in the case of Clairol, Incorporated v. Kingsley,

270 Atlantic 2d 702, indicates the court’s continuing consis-

tent holding.

4. The holding of the U.S. Supreme Court in the case of

Norton Company v. Department of Revenue of Illinois,

340 U.S. 535, does not contravene the court’s holding in the

General Motors case nor this Board’s decision in this ap-

peal.

DECISION

Having analyzed and considered the several issues

raised, we conclude that the respondent’s assessment of

tax in issue in this appeal is proper and we hereby order

that the same be sustained.

Dated at Olympia, Washington

this 26th day of May, 1971

s/ R. H. Suncer

Executive Secretary

STATE OF WASHINGTON

BOARD OF TAX APPEALS

s/Rosert I. TENNEY

Chairman

s/ J. Jay WauuiaMs

Member

[ Affidavit of Service omitted in printing. ]

IN THE SUPERIOR COURT OF THE STATE OF

WASHINGTON IN AND FOR THE COUNTY

OF THURSTON

STANDARD PRESSED STEEL COMPANY,

Res No. 44750

Vv. PETITION

FOR

STATE OF WASHINGTON JUDICIAL

DEPARTMENT OF REVENUE,

Respondent. REVIEW

COMES NOW Standard Pressed Steel Company, Peti-

tioner herein, and, pursuant to RCW 34.04.130, respective-

ly shows the court:

That petitioner was the Appellant in a contested pro-

ceeding for cancellation and abatement of $2,909.35 in

Business and Occupation taxes assessed against petitioner

and refund of $30,535.56 in Business and Occupation taxes

paid to the Department of Revenue, State of Washington,

on the ground that petitioner was and is not liable for pay-

ment of Business and Occupation taxes pursuant to the

Constitution of the United States of America and the State

of Washington, said proceeding being identified as Stand-

ard Pressed Steel Company, Appellant vs. State of Wash-

ington Department of Revenue, Respondent, Docket No.

70-41, Excise Tax Appeal before the State of Washington

Board of Tax Appeals.

That a Hearing in said proceedings was held by said

Board on April 23, 1971.

That on May 26, 1971, said Board entered a Decision in

said proceeding. That a true and correct copy of said De-

cision is attached hereto, marked Exhibit A, and is hereby

incorporated herein by reference.

That said Board’s decision of May 26, 1971, has preju-

diced petitioner's substantive rights and petitioner is ag-

grieved thereby.

That petitioner has paid the $2,909.35 interest and tax

assessment as required by RCW 82.03.180 to the Depart-

ment of Revenue and the amount sought by way of refund

herein is therefore $33,444.91 plus interest.

Vil

That petitioner hereby petitions the above-entitled court

for a review of said Decision entered by said Board on

May 26, 1971, and respectfully shows the court:

That the said Decision of said Board is in violation of

the Constitution of the United States Government and the

State of Washington in that the Business and Occupation

taxes herein constitute an unlawful interference with inter-

state commerce.

WHEREFORE, petitioner prays:

1. That this court proceed to review said decision of said

Board in the manner provided in RCW 34.04.130;

2. That this court reverse said decision of said Board and

to grant petiuoner judgment against the State of Washing-

ton Department of Revenue in the amount of $33,444.91

plus interest and costs.

3. That the court grant such other and further relief as

it may deem proper.

s/ Ropert K. KELLER

Robert K. Keller, Attorney for

Standard Pressed Steel Com-

pany, Petitioner

IN ‘THE SUPERIOR COURT OF THE STATE OF

WASHINGTON IN AND FOR THE COUNTY

OF THURSTON

STANDARD PRESSED STEEL COMPANY,

v. FINDINGS OF

FACT AND

DEPARTMENT OF REVENUE, CONCLUSIONS

Respondent. OF LAW

THIS MATTER coming on regularly for hearing before

the above-entitled court on the 16th day of June, 1972,

and the appellant appearing by and through its attorney,

Kenneth L. Cornell, of the law firm of Horswill, Keller,

Rohrback, Waldo & Moren, and the respondent appearing

by and through its attorneys, SLap—E Gorton, Attorney

General for the State of Washington, and William D. Dex-

ter, Assistant Attorney General, and the court considering

the evidence and the arguments of respective counsel, now,

therefore, the above-entitled court makes the following:

FINDINGS OF FACT

That at all times herein material, Standard Pressed Steel

Co., appellant herein, conducted business activities as a

foreign corporation within the state of Washington.

That the activities carried on by appellant in the state of

Washington have not been established as disassociated

from the gross receipts derived by appellant from the sales

in question to the Boeing Company.

That the appellant employed a full time resident agent

within the state of Washington to conduct activities with

the Boeing Company which activities were carried on in

part by appellant’s employee out of his residence in Wash-

ington as an office, and which activities were instrumental

in appellant establishing and maintaining Boeing as its

customer for the sales giving rise to the gross receipts in

question.

That it was necessary that appellant have its employee

Mr. Martinson in the state of Washington so that the

appellant could: (1) become aware of which of its pro-

ducts the Boeing Company might be able to use; (2) se-

cure the testing of sample products to qualify the products

for sale to the Boeing Company; (3) obtain the engineer-

ing designs for such products; (4) resolve problems in the

use of the products after receipt and use by Boeing Com-

pany; (5) obtain and retain goodwill and working rapport

with Boeing personnel, and (6) secure and update lists of

Boeing purchasing specialists or control buyers and the

commodities for which they are responsible for the use of

the invoi-.ing personnel at the appellant’s home office.

That the purpose of the appellant’s activities in the state

of Washington was to provide sufficient facts to the appel-

lant to enable it to make Washington sales to the Boeing

Company in the state of Washington.

CONCLUSIONS OF LAW

That the appellant conducted sufficient intrastate activi-

ty for imposition of the Washington business and occu-

pation tax on authority of General Motors Corp. v. State,

60 Wn.2d 862, 376 P.2d 843 (1962), aff'd 377 U.S. 436,

12 L. Ed. 2d 430, 84 S. Ct. 1564 (1964).

That while no one single aspect of appellant’s activity

can itself be determinative of doing business in this state

for business and occupation tax purposes, each activity

must be considered in conjunction with other activities to

determine whether the cumulative effect of any one ac-

tivity coupled with all other activities is instrumental in

the appellant's establishing and holding its Washington

market for the sale of its products.

Ill

That the appellant has the burden of proving under

General Motors Corp. v. State, 377 U.S. 436, 12 L. Ed. 2d

438, 84 S. Ct. 1564 (1964), and Norton Co. v. Dept. of

Revenue, 340 U.S. 534, 95 L. Ed. 517, 71 S. Ct. 377 (1951),

that its intrastate activities in this state were disassociated

from the gross receipts it derived from sales to the Boeing

Company in Washington.

That the effect of the activities involved in establishing

and holding Washington as a market for the appellant's

sales in questiun and not the form of the operation nor the

quantity of the operation in Washington controls in de-

termining Washington’s jurisdiction to impose its busi-

ness and occupation tax upon appellant's activities in

Washington measured by its Washington gross receipts.

That it is not necessary that appellant’s Washington

instate activities be denoted “sales” activities so long as

the activities cannot be disassociated from appellant's

Washington sales.

DONE IN OPEN COURT This 10th day of October,

1972.

s/ Franx E. BAKER

Judge

Presented by:

s/W1.11aM D. Dexter

William D. Dexter

Assistant Attorney General

415 General Administration Bldg.

Olympia, Washington 98504

Telep e: (206) 753-5515

Attorney for Respondent

Approved as to form and Notice

of Presentation waived:

iii sseceinuinengnsesnapecseenaguasenmmnaniyiassabenianen

Attorneys for Appellant

IN THE SUPERIOR COURT OF THE STATE OF

WASHINGTON IN AND FOR THE COUNTY

OF THURSTON

STANDARD PRESSED STEEL Co.,

Appellant, No. 44750

JUDGMENT

Vv.

DEPARTMENT OF REVENUE,

Respondent.

THIS MATTER Coming on regularly for hearing before

the above-entitled court on the 16th day of June, 1972, and

the appellant appearing by and through its attorney, Ken-

neth L. Cornell, of the law firm of Horswill, Keller, Rohr-

back, Waldo & Moren, and the respondent appearing by

and through its attorneys Slade Gorton, Attorney General

for the State of Washington, and William D. Dexter, Assis-

tant Attorney General, and the court having made its

findings of fact and conclusions of law, now, therefore, it is

hereby

ORDERED, ADJUDGED and DECREED That the ap-

pellant conducted sufficient intrastate activity for imposi-

tion of the Washington business and occupation tax on

authority of General Motors Corp. v. State, 60 Wn.2d 862,

376 P.2d 843 (1962), aff'd 377 U.S. 436, 12 L. Ed. 2d 430,

84 S. Ct. 1564 (1964).

It is futher ORDERED, ADJUDGED and DECREED

That the final decision of the State of Washington Board of

Tax Appeals in Docket No. 70-41 is affirmed.

IT IS FURTHER ORDERED, ADJUDGED and DE-

CREED That the refund requested by the petitioner in its

petition for judicial review is denied and that petitioner

take naught by this suit.

It is further ORDERED, ADJUDGED and DECREED

That respondent is entitled to recover its costs and dis-

bursements herein to be taxed.

DONE IN OPEN COURT This 10th day of October,

1972.

s/ Frank E. BAKER

Judge

Presented by:

s/ Witu1aM D. Dexter

William D. Dexter

Assistant Attorney General

415 General Administration Bldg.

Olympia, Washington 98504

Telephone: (206) 753-5515

Attorney for Respondent

Approved as to Form and Notice

of Presentation Waived:

Attorneys for Appellant

[ Affidavit of Service omitted in printing]

IN THE SUPERIOR COURT OF THE STATE OF

WASHINGTON FOR THURSTON COUNTY

STANDARD PRESSED STEEL Co.,

Appellant, No. 44750

Ve NOTICE OF

DEPARTMENT OF REVENUE, APPEAL

Respondent.

TO: DEPARTMENT OF REVENUE, STATE OF WASH-

INGTON, Respondent, and Slade Gorton, Attorney

General, and William D. Dexter, Assistant Attorney

General, its attorneys

AND TO: The Clerk of the Above-entitled Court

YOU AND EACH OF YOU are hereby notified that

appellant being aggrieved by reason of the judgment en-

tered in this cause against appellant on the 10th day of

October, 1972, does hereby appeal to the Supreme Court

of the State of Washington from that certain judgment

made, rendered and entered in this court and cause on the

10th day of October, 1972, and from each and every part of

said judgment of said Superior Court, and from all rulings

and orders, including Findings of Fact and Conclusions of

. Law, adverse to the appellant which occured during the

trial of this case and prior and subsequent to the entry of

. said judgment. One of the contentions of appellant on ap-

peal is that the case involves the question that the imposi-

__ tion of a tax is invalid on the ground of repugnancy to the

+ Constitution of the United States and of the State of

Washington.

DATED this 10th day of October, 1972.

KENNETH L. CORNELL

Of Keller, Rohrback, Waldo,

Moren & Hiscock

Attorneys for Appellant

IN THE COURT OF APPEALS OF THE STATE

OF WASHINGTON

STANDARD PRESSED STEEL COMPANY, No. 1022-II

A ’

v. Division Two

DEPARTMENT OF REVENUE, Filed

STATE OF WASHINGTON, Dec. 3. 1973

Respondent. '

ARMSTRONG, J.—This is an appeal from a Superior Court

judgment affirming the final decision of the Board of Tax

Appeals upholding the imposition of this state’s business

and occupation tax upon plaintiff, Standard Pressed Steel

Company. It was the contention of plaintiff that imposition

of the tax was unconstitutional. We hold that levying of

the tax was constitutionally permissible.

The hearings below before both the Board of Tax Ap-

peals and the trial court were conducted on the basis of the

deposition of H. Robert Martinson, an employee of plain-

tiff, various exhibits introduced in connection with the

deposition, and the pleadings in the case. There was no

“live testimony.” For this reason, it is unnecessary for us

to consider the five findings of fact assigned as error by the

plaintiff, because we may approach review of the plaintiff's

contentions as indicated by the Supreme Court in Smith v.

Skagit County, 75 Wn.2d 715, 718, 453 P.2d 832 (1969),

quoting with approval the following language from Carl-

son v. Bellevue, 73 Wn.2d 41, 48, 435 P.2d 957 (1968):

The ap therefore, from the trial court’s judgment

brings before us, in the same form and content, the

identical documents and records presented to the

trial court. Under these circumstances, we are

not

bound by disputed findings of the trial court to the

same extent and in the same manner as where the trial

court’s findings rest upon the oral testimony of wit-

nesses... . We are entitled to make our own examina-

tion of the records thus presented and determine the

merits of the contentions going to the issue of arbi-

trary, capricious, and unreasonable legislative action.

(Citations omitted )

In other words, this court on appeal stands in the same

position as the trial court in looking at the facts of the case

and should review the record de novo. Anderson v. Island

County, 81 Wn.2d 312, 316, 501 P.2d 594 (1972).

Both Anderson and Smith were zoning cases and the

standard of judicial review was whether there had been

arbitrary, capricious, and unreasonable legislative action.

In this case, the scope of judicial review is pursuant to the

Administrative Procedures Act and limited by the pro-

visions of RCW 34.04.130(6).' Our review here is to de-

termine from the facts whether the Board of Tax Appeals’

decision sustaining imposition of the business and occupa-

tion tax was in violation of constitutional provisions.

The record discloses that plaintiff, Standard Pressed Steel

Company, is a foreign corporation with production facili-

ties located in Jenkintown, Pennsylvania and Santa Ana,

California. A significant amount of plaintiff's business in-

volves the manufacture and sale of fasteners (nuts and

1. RCW 34.04.130(6) provides: “(6) The court may affirm the de-

cision of the agency or remand the case for further proceedings; or it

may reverse the decision if the substantial rights of the petitioners may

have been prejudiced because the administrative findings, inferences,

conclusions, or decisions are:

(a) in violation of constitutional provisions; or

(b) in excess of the statutory authority or jurisdiction of the agency; or

(d) affected by other error of law; or

(e) clearly erroneous in view of the entire record as submitted and

the public policy contained in the act of the legislature author-

izing the decision or order; or

boits, generally ) to be used in the aerospace industry, and

plaintiff's principal customer in this state during the tax

years in question was the Boeing Company in Seattle.

The only employee of Standard Pressed Steel present

within the State of Washington over the tax years in ques-

tion was H. Robert Martinson, a “sales engineer.” Martin-

son performed his activities for Standard Pressed Steel out

of a portion of a room in his home equipped with a desk,

telephone, and a file cabinet.

Martinson’s primary function was to work with Boeing's

engineers in the initial phases of aerospace design and con-

struction, and through contact with Boeing engineers in-

form himself of possible prospective needs of the Boeing

Company, and its various subcontractors, for aerospace

fasteners. He would then initiate a product engineering

request describing in detail the specifications required by

Boeing and send this information on to plaintiff's out-of-

state offices. After receiving this information from Martin-

son, plaintiff would make a decisior. as to whether or not

Standard Pressed Steel would attempt to “qualify” as a

Boeing supplier of a particular fastener; that is, Boeing de-

termined who could be a supplier of component parts by

qualification tests done at their Seattle facilities. If plain-

tiff should decide to attempt to qualify as a supplier, the

company would manufacture sample qualification pieces

and forward these to Boeing for qualification tests. If the

fasteners met the required specifications, Standard Pressed

Steel would become an “approved source” and the Boeing

Company would then enter into negotiations with plain-

tiff’s out-of-state offices for purchase of the fasteners.

The record reflects that all such dealings and negotiations

between Boeing and Standard Pressed Steel were carried

on directly between Boeing and plaintiff's out-of-state

offices. Martinson was bypassed completely, except to the

extent that he periodically informed plaintiff of the various

subcontractors, purchasing specialists, and control buyers

of commodities for which Standard Pressed Steel was an

approved source. Martinson had nothing to do with quot-

ing prices, delivery dates, receiving, soliciting, accepting

orders, handling shipments, or approving credit. No inven-

tories were kept in this state, and all deliveries were made

by plaintiff directly through a common carrier.

The above qualification process consumed approximate-

ly 80 to 90 percent of Martinson’s time, with the remainder

devoted to “trouble-shooting.” If Boeing experienced any

problems in their use of the fasteners supplied by the

plaintiff, Martinson’s duties were to relay this information

to plaintiff's engineers at the out-of-state offices, and there

the engineers would work to resolve any difficulties with

the product in their laboratories. The engineers would then

forward their solution to Martinson, who would present

the proposed solution to Boeing’s engineers in Seattle. In

addition, approximately three days every six weeks Martin-

son would set up meetings between Boeing engineers and

visiting groups of plaintiff's engineers to visit and discuss

engineering problems.

Based on the above activity within the State of Wash-

ington, the state contends that Standard Pressed Steel

Company is subject to the business and occupation tax

measured by gross receipt from plaintiff's sales to the Boe-

ing Company.

In assessing the constitutionality of imposing the busi-

ness and occupation tax in this case, we may start with the

undisputed proposition that a state may not tax the privi-

lege of engaging in interstate commerce, but may impose a

tax that is incident upon an activity that is peculiarly local

and distinct from interstate commerce. General Motors

Corp. v. Washington, 377 U.S. 436, 12 L. Ed. 430, 438,

84 S. Ct. 1564 (1964); Western Live Stock v. Bureau of

Revenue, 303 U.S. 250, 82 L. Ed. 823, 58 S. Ct. 546 (1938).

In other words, a state does have the right to tax the privi-

lege of doing local business, and if there is a taxable inci-

dent within the jurisdiction, the tax does not offend the

commerce clause of the constitution as a tax on the privi-

lege of doing interstate business. Greyhound Lines, Inc. v.

Tacoma, 81 Wn.2d 525, 527, 503 P.2d 117 (1972); Rena-

Ware Distrib. Inc. v. State, 77 Wn.2d 514, 519, 463 P.2d

622 (1970).

Here the record clearly discloses that Standard Pressed

Steel Company employed Mr. Martinson as a resident

agent within this state to conduct business activities with

the Boeing Company, in part out of his Washington resi-

dence as an office, so that Standard Pressed Steel could:

(1) become aware of which of its products the Boeing

Company might be able to use; (2) secure the testing of

sample products to qualify the products for sale to the

Boeing Company; (3) obtain the engineering designs for

such products; (4) resolve problems in the use of the pro-

ducts after receipt and use by the Boeing Company; (5)

obtain and retain goodwill and working rapport with Boe-

ing personnel; and (6) secure and update lists of Boeing

purchasing specialists or control buyers, and the commodi-

ties for which they are responsible, for the use of the per-

sonnel at the plaintiff’: home office.

We are of the opinion that the foregoing substantial

services constituted a sufficient peculiarly local and distinct

taxable incident within the State of Washington such that

impositica of the business and occupation tax was not on

the privilege of engaging in interstate commerce, but rath-

er on the privilege of doing !ocal business.

Our inquiry does not end here, however, for even when

there is a peculiarly local activity, the measure of the tax

must be reasonably related to those local incidents. General

Motors Corp. v. Washington, supra. A tax measured by

gross receipts from sales by a foreign corporation to custo-

mers within the state must be closely related to the local

activities of the corporation, for due process requires “some

definite link, some minimum connection, between a state

and the person, property or transaction it seeks to tax.”

Miller Bros. v. Maryland, 347 U.S. 340, 345, 98 L. Ed. 744,

74S. Ct. 535 (1954).

It might be argued that since gross receipts from plain-

tiffs sales to the Boeing Company represent extensive

manufacturing and operational activities in Pennsylvania

and California, such gross receipts are not fairly related to

the activities of Mr. Martinson. However, this contention

was discussed in Dravo Corp. v. Tacoma, 80 Wn.2d 590,

599, 496 P.2d 504 (1972), as follows:

The fact that the value which the gross receipts

measure is, in «| ane the result of activity out-

side the territorial limits of the taxing jurisdiction does

not mean the gross receipts are not fairly related to the

activity within the jurisdiction. There is no constitu-

tional objection to resorting to extraterritorial ele-

ments in determining the measure of a tax. General

Motors Corp. v. State, 60 Wn.2d 862, 874, 376 P.2d

843 (1962). aff'd, in General Motors Corp. v. Wash-

ington, supra; Wisconsin v. J.C. Penney Co., supra

at 445, rehearing denied, 312 U.S. 712, 85 L. Ed. 1143,

61 S. Ct. 444 (1941); Great Atl. & Pac. Tea Co. v.

Grosjean, 301 U.S. 412, 425, 81 L. Ed. 1193, 57 S. Ct.

772, 112 A.L.R. 293 (1937).

Plaintiff relies on Norton Co. v. Department of Revenue,

340 U.S. 534, 95 L. Ed. 517, 71 S. Ct. 377 (1951), in sup-

port of the contention that Standard Pressed Steel’s sales

to the Boeing Company were not sufficiently related to Mr.

Martinson’s activities to justify the tax. In that case, the

Norton Company was a Massachusetts corporation that

manufactured and sold abrasive machines. It sought a re-

fund for taxes paid under the provisions of Illinois’ occu-

pation tax. The Norton Company had no salesmen within

Illinois, but it did maintain an office and warehouse in

Chicago where it kept a substantial inventory. The com-

pany also had a group of engineers available to supply engi-

neering and technical advice.

The United States Supreme Court upheld the tax where

the measure of the tax attributed to the Chicago branch

income from all sales that utilized it either in receiving or-

ders or distributing goods. The court noted that the tax-

payer had not established that such services as were

rendered by the Chicago office were not decisive factors in

holding that market. On the other hand, the court held

that proceeds from orders sent directly to Massachusetts by

the customer and shipped directly to the customer from

Massachusetts were not reasonably attributable to the local

business, and therefore not subject to the Illinois tax.

Norton Co. v. Department of Revenue, supra.

From this holding plaintiff argues that since the presence

of consulting engineers in Illinois was not enough to justify

; 40

the tax on the interstate items in Norton, the activities of

Mr. Martinson should not sustain the tax on sales made di-

rectly between Boeing and plaintiff's out-of-state offices in

this case.

However, plaintiff overlooks the fact that implicit in the

Norton decision was the conclusion that the activities of the

the locai Chicago office, including the activities of the

engineers, were not decisive factors in holding or establish-

ing the market reflected by the direct, interstate sales. For

example, the Norton decision was construed by our State

Supreme Court as follows: “We only interpret the Norton

Co. case as holding that such a tax may not be levied upon

the proceeds from sales with which the local outlet had

nothing to do.” B.F. Goodrich Co. v. State, 38 Wn.2d

663, 675, 231 P.2d 325 (1951).

We are satisfied that the local activities of Mr. Martin-

son were instrumental in establishing and maintaining the

Boeing Company as a market for the sales giving rise to

the proceeds by which the state seeks to measure this

tax. We therefore conclude that because the gross receipts

from plaintiff's sales to the Boeing Cempauy were reason-

ably related to the lecal incidents of the tax, imposition of

the business and oecupation tax here was not offensive

to due process.

Plaintiff contends that the state’s impositiem of the busi-

ness and occupation tax creates a multiple burden of taxa-

tion on plaintiff's interstate commerce. It is of course true

that in judging the state's power to levy a tax measured by

activities connected with interstate commerce, the follow-

ing determinations represent guidelines presently em-

ployed:

(1) Whether the tax places an extra burden on inter-

state commerce no’. borne by intrastate commerce, or

erects barriers, placing out-of-state businesses at a

disadvantage when competing locally; the discrimina-

nation test. (2) Whether the interstate commerce in-

volved is subject to the risk of repeated exactions of

the same nature from other states; the multiple burden

test.

McKinnis Travel Service v. State, 78 Wn.2d 229, 232, 472

P.2d 392 (1970); Public Utility Dist. No. 2 of Grant

County v. State, 82 Wn.2d 232, 237, 510 P.2d 206 (1973).

In this case no argument has been advanced that dis-

crimination against interstate commerce exists; nor could

it be so argued, since this tax applies to all “businesses” in

the State of Washington whether they engage in inter-

state commerce, intrastate commerce, or both. McKinnis

Travel Service v. State, supra. As to the contention that the

tax creates a multiple burden, we note that the United

States Supreme Court, as well as the Supreme Court of

this state, has held that the burden is upon the taxpayer to

affirmatively show that its activities are subject to taxation

elsewhere. General Motors Corp. v. Washington, supra;

Washington-Uregon Shippers Cooperative Ass'n. v. Schu-

macher, 59 Wn.2d 159, 367 P.2d 112 (1961). In this case

we find no such affirmative showing other than the un-

supported assertion in plaintiff's appellate brief that a

multiple burden has been created.

For the foregoing reasons, we find no constitutional in-

firmities derived from either the due process or commerce

clauses to preclude the state from levying a tax upon the

local activities of Standard Pressed Steel Company. Fur-

ther, it was constitutionally permissible to measure that tax

by the value of gross receipt, from sales to the Boeing

Company’s facilities in this state. We therefore sustain the

imposition of the business and occupation tax in this case.

Affirmed.

We concur:

PEARSON, C. J.

PETRIE, J.

ARMSTRONG, J.

[ Affidavit of Service omitted in printing]

IN THE COURT OF APPEALS OF THE STATE

OF WASHINGTON

DIVISION II

STANDARD PRESSED STEEL COMPANY,

Appellant, No. 1022-II

* PETITION

DEPARTMENT OF REVENUE, FOR

STATE OF WASHINGTON, REHEARING

Respondent.

Appellant, Standard Pressed Steel Company, in response

to the opinion of this court filed on December 3, 1973, here-

by petitions the court for a hearing of this case.

Petitioner respectfully alleges that the opinion of this

court should be changed in the following respects:

1. Based on the holding of the United States Supreme

Court in Norton Co. v. Department of Revenue, 340 U.S.

534, 95 L. Ed. 517, 71 S. Ct. 377 (1951), the activities per-

formed by appellant’s resident engineer were not decisive

factors in holding or establishing the Washington market.

On page 5 of this court’s opinion, the court stated that

Martinson’s services on behalf of appellant were suffic-

ient to subject appellant to the state Business & Occupation

Tax. The court further stated that Norton could be dis-

tinguished in that the Supreme Court concluded the activi-

ties of the Norton engineers were not decisive in holding

the exempt “direct sales market”, while this court con-

cluded Martinson’s activities were decisive factors in hold-

ing the Boeing “direct sales market”.

What this court overlooked in its opinion is that the

activities of Martinson differed in no material respect

from those activities and services performed by the Nor-

ton engineers on the exempt direct sales. If the Supreme

Court held that those activities were not decisive, similarly,

Martinson’s activities and services should also be held to

be not decisive factors in holding or establishing the

market.

2. Based on the Norton case, the six enumerated serv-

ices listed by this court are not sufficient local incidents on

which to impose the tax.

On page 5 of its opinion, this court listed six services

which were said to be performed by Martinson on behalf

of appellant. A review of the Norton decision shows that

these enumerated services were basically those services

performed by the Norton engineers, which the Supreme

Court held were not sufficient local activities on which to

impose the tax. For example, the Norton Co. engineers con-

sulted with prospective customers as to their needs. This

can be compared to Martinson’s activities in becoming

aware of products which the Boeing Co. might be able to

use and securing the Boeing design drawings for such

products. As far as securing the testing of sample products,

the record shows that the decision to test was made by per-

sonnel in appellant’s out-of-state plants, and in no way

was involved in the qualification process (Martinson Dep.

14, 20). Both the Norton engineers and Martinson assisted

in resolving problems experienced by the customer in the

use of the product, and certainly, the Norton engineers

were concerned with obtaining and retaining good will

and working rapport with customers. Appellant submits

that based on the similarity of their activities, the Norton

decision compels a holding that Martinson’s activities were

not sufficient local incidents on which to base taxation.

3. The Norton engineers did perform services on the ex-

empt direct sales.

On page 8 of its opinion, this court stated that Norton

held merely that 2 tax may not be levied upon proceeds

from sales with which the local outlet had nothing to do,

citing B. F. Goodrich Co. v. State, 34 Wn.2d 663 (1951).

If by this statement, the court intends to say that the Nor-

ton engineers did not perform services on exempt sales, ap-

pellant respectfullv «zLmits the Norton case as not being

read correctly. First of all, the Norton decision does not

say that the local outlet performed no services in connec-

tion with the exempt sales. Further, there is nothing in the

opinion to support the court’s apparent conclusion that the

engineers were, in fact, part of the Chicago outlet. On this

point, the Norton opinion in defining the services of the

Chicago outlet did not mention any engineering services

being performed out of the Chicago office; therefore, even

if the court should conclude that the local outlet had

nothing to do with the exempt sales, that does not mean in

turn that the Norton engineers were not performing serv-

ices on those sales.

A careful reading of the Norton decision further shows

that the only reasonable conclusion one could draw is that

the engineers did perform their usual services in connec-

tion with the direct sales. (See appellant's reply brief, 2

thru 4).

DATED this 20th day of December, 1973.

s/ KennetH L. CorNELL

Of Attorneys for Appellant

IN THE COURT OF APPEALS OF THE STATE

OF WASHINGTON

DIVISION II

STANDARD PRESSED STEEL COMPANY, No. 1022-1

Appellant, ORDER

0. DENYING

DEPARTMENT OF REVENUE, STATE PETITION FOR

OF WASHINGTON, REHEARING OR

Respondent.} \ODIFICATION

The court has considered this petition for rehearing or

modification and has determined that it should be denied.

Accordingly, it is

ORDERED that the petition is denied.

DATED this 3rd day of January, 1974.

VERNON R. PEARSON

Chief Judge

IN THE SUPREME COURT OF THE STATE

OF WASHINGTON

STANDARD PRESSED STEEL Co.,

Appellant,] No. 42593-1022-II

v. PETITION FOR

DEPARTMENT OF REVENUE, REVIEW

Respondent.

STATEMENT OF FACTS

Appellant, Standard Pressed Steel Co., is a foreign cor-

poration with production facilities located in Jenkintown,

Pennsylvania and Santa Ana, California. A significant

amount of appellant’s business involves the manufacture

and sale of fasteners (nuts and bolts generally) to be used

in the aerospace industry, and appellant's principal cus-

tomer in this state during the tax years in question was

The Boeing Company in Seattle.

The only employee of Standard Pressed Steel present

within the State of Washington over the tax years in ques-

tion was H. Robert Martinson. Martinson performed his

activities for Standard Pressed Steel out of a portion of one

room in his home equipped with a desk, telephone, and a

file cabinet.

Martinson’s primary function was to inform himself of

possible prospective needs of The Boeing Company for

aerospace fasteners through contact with Boeing engineers

and its various subcontractors. Martinson would then re-

lay this information to appellant's out-of-state offices on a

form entitled “Product Engineering Request”, which de-

scribed in detail the Boeing specifications. After receiving

this information from Martinson, appellant would then

make the decision as to whether or not Stancard Pressed

Steel would attempt to “qualify” as a Boeing supplier of a

particular fastener; that is, Boeing determined who could

be a supplier of component parts by qualifcation tests

done by Boeing at its Seattle facilities. If appedlant should

decide to attempt to qualify as a supplier, tie company

would manufacture sample qualification pieces and for-

ward these directly to Boeing for qualification tests. if the

fasteners met the required specifications, Standard Pressed

Steel would become an “approved source”, and the Boeing

Company would then enter into direct negotiations with

appellant’s out-of-state offices for purchase of the fasteners,

which negotiations might or might not culminate in a sale.

Martinson was not consulted in any way either by Boe-

ing or appellant’s out-of-state offices in the qualification

process and Martinson was not consulted by appellant in

arriving at its decision as to whether or not to attempt to

qualify. Martinson’s only function in this entire process was

to relay to appellant’s out-of-state offices the information

concerning Boeing’s possible needs. From that point on,

all dealings and negotiations were carried on directly be-

tween Boeing and appellant’s out-of-state offices. Martin-

son was by-passed completely, except to the extent that

he periodically informed the appellant of the identity of

various subcontractors, purchasing sp .cialists, and control

buyers of commodities, for which Standard Pressed Steel

was an approved source. Martinson had nothing to do with

quoting prices, delivery dates, receiving, soliciting, accept-

ing orders, handling shipments, or approving credit. No

inventories were kept in this state, and all deliveries were

made by appellant directly through a common carrier.

The above qualification process consumed approxi-

mately 80% to 90% of Martinson’s time, with the remain-

der devoted to “troubleshooting”. If Boeing experienced

any problems in its use of the fasteners supplied by the

appellant, Martinson’s duties were to relay this information

to appellant’s engineers at the out-of-state offices, and there

the engineers would work to resolve any difficulties with

the product in their laboratories. The engineers would

then forward their solution to Martinson, who would pre-

sent the proposed solution to Boeing's engineers in Seattle.

In addition, approximately three days every six weeks,

Martinson would set up meetings between Boeing engineers

and visiting groups of appellant's engineers to visit and

discuss engineering problems.

Based on the above activitiy within the State of Wash-

ington, the state contends that Standard Pressed Steel Co.

is subject to the Business & Occupation Tax measured by

gross receipts from appellant's sales to The Boeing Com-

pany.

QUESTIONS OF LAW INVOLVED

1. Whether the assessment of the Business & Occupation

Tax on appellant's gross sales to Boeing is a violation of the

commerce clause of the federal constitution.

2. Whether the assessment of the Business & Occupation

Tax on appellant is a violation of the due process clauses of

the federal and state constitutions.

Ill

JURISDICTIONAL STATEMENT

A. Introduction: On December 3, 1973, the Washington

Court of Appeals, Division I, filed its opinion in the above-

referenced appeal. On January 3, 1974, that same court

denied appellant’s petition for rehearing.

This court should assume jurisdiction, as (1) the opinion

of the Court of Appeals is in conflict with B. F. Goodrich

Co. v. State, 34 Wn.2d 663 (1951); General Motors Corp.

v. State, 60 Wn.2u. 862 (1962), aff'd. 377 U.S. 436, 84 S. Ct.

1564 (1964); Norton Co. v. Dept. of Revenue, 340 U.S.

534, 95 L. Ed. 517, 71 S. Ct. 377 (1951); and McKinnis

Travel Service v. State, 78 Wn.2d 229 (1970); (2) the

assessment of the Business and Occupation Tax on appel-

lant violates the state and federal due process requirements

and the commerce clause prohibition of the federal consti-

tution, and (3) the opinion of the Court of Appeals below

is a radical extension of the taxing power of the State of

Washington, and the issues before this court affect many

and numerous businesses besides appellant and affects the

taxing powers of the state.

The presentation which follows will not discuss the

above-stated reasons for jurisdiction separately, as they

cannot properly be separated out for discussion. Rather, all

of the above-stated reasons why this court should assume

jurisdiction will be expanded on under one general heading

of Statement of the Law.

B. Statement of the Law: In its opinion, the Court of Ap-

peals held that appellant’s activities constituted a sufficient,

peculiarly local and distinct taxable incident within the

State of Washington such that the imposition of the tax did

not violate the interstate commerce limitations of the fed-

eral constitution, and that the measure of the tax was

reasonably related tu those local incidents so that due pro-

cess was not violated. Appellant respectfully submits that

this holding is in conflict with the decisions of Norton Co.

v. Dept. of Revenue, supra, B. F. Goodrich Co. v. State,

supra, and General Motors Corp. v. State, supra.

The record in this case is clear that the only in-state ac-

tivity of appellant consisted of Martinson’s (1) consulting

with Boeing as to its potential needs, and (2) offering a

measure of technical engineering assistance and advice.

Based on Norton Co. v. Dept. of Revenue, supra, the tax

based on these activities is unconstitutional.

The facts in Norton show that the Norton Co. was a pro-

ducer of industrial grinding wheels and abrasive materials

used in manufacturing. The Norton Co. maintained a large

sales office and warehouse in Chicago and made over the

counter sales to customers, which the Norton Co. admitted

were subject to the state Business & Occupation Tax. The

Norton Co. did, however, challenge the imposition of the

occupation tax measured by gross sales to Illinois custom-

ers on four different classes of sales, alleging in part that

the in-state activities as to those sales were not sufficient

to justify the tax. The Supreme Court held that as to three

of these four classes of sales in question, the tax was proper

and constitutional. As to sales resulting from direct orders

being placed by customers with Norton’s out-of-state of-

fices, with the only in-state activity being that performed

by Norton’s resident, liaison engineers, the in-state activity

of Norton’s engineers was held not sufficient to justify the

imposition of the tax.

It is clear from Norton that as to that class of sales to

Illinois customers held to be non-taxable, such as exists in

the present case, the only in-state activity associated with

the sales in question was performed by resident, liaison

engineers. It is also clear that the services of the Norton

Co.’s corps of liaison engineers were directly associated

with those sales to Illinois customers held by the court to

be non-taxable. It is also clear that the activities performed

by the Norton Co. engineers are the same as those activities

performed by appellant’s resident engineer, that is, (1)

consulting with customers as to their potential needs, and,

(2) offering technical engineering assistance and advice.

In B. F. Goodrich Co. v. State, supra, this court in discuss-

ing the Norton decision made the following observation:

No salesmen were employed by the in Illi-

nate, bat @ dad havo © aroun af enaianive anaitablo

to consult with prospective customers as to their

needs. These engineers did not solicit or take orders

for goods. (Emphasis added ). 34 Wn.2d at 670.

The Supreme Court in Norton further observed that these

engineers in their consulting work offered technical and

engineering assistance and advice to customers.

A review of the present records shows that Martinson’s

primary duties were the same as those of the Norton

engineers. Clearly, on the authority of Norton, which was

deemed to be controlling by this court in B. F. Goodrich,

supra, the State of Washington cannot constitutionally

subject appellant to the state Business & Occupation Tax.

If an out-of-state company, with an extensive local sales

office, cannot be taxed on its direct orders to the manufac-

turer, and the company maintains a corps of resident,

liaison engineers to consult with the customers who

ordered direct, clearly under the facts of the present case,

where there is no local sales activity of any kind, and no

local outlet, all sales being of the direct order type, ap-

pellant cannot constitutionally be subject to the Business

& Occupation Tax.

The Court of Appeals below distinguished Norton on the

basis that the Supreme Court in the Norton decision con-

cluded that the activities of the Norton engineers were

not decisive in holding the exempt “direct sales market”,

while the Court of Appeals concluded that Martinson’s

activities were decisive factors in holding the Boeing “di-

rect sales market”. What the court overlooked in this con-

clusion is that the activities of Martinson differed in no

material respect from those activities and services per-

formed by the Norton engineers on the exempt direct

sales. The court below listed six services which were said

to be performed by Martinson on behalf of appellant. A

review of the Norton decision shows that these enumer-

ated services were basically those services performed by

the Norton engineers, which the Supreme Court held were

not sufficient local activities on which to impose the tax.

For example, the Norton Co. engineers consulted with

prospective customers as to their needs. This can be com-

pared to Martinson’s activities in becoming aware of pro-

ducts which The Boeing Company might be able to use

and securing the Boeing design drawings for such pro-

ducts. As far as securing the testing of sample products,

the record shows that the decision to test was made by per-

sonnel in appellant's out-of-state plants in no way was

Martinson involved in the qualification process. Both the

Norton engineers and Martinson assisted in resolving prob-

lems experienced by the customer in the use of the product,

and certainly, the Norton engineers were concerned with

obtaining and retaining good will and working rapport

with customers. Appellant submits that based on the sim-

ilarity of their activities, the Norton decision compels a

holding that Martinson’s activities were not sufficient,

local incidents on which to base taxation.

The court below further attempted to distinguish Nor-

ton by stating that Norton held merely that a tax may not

be levied upon proceeds from sales with which the local

outlet had nothing to do, citing B. F. Goodrich Co. v.

State, 34 Wn.2d 663 (1951). If by this statement, the court

intends to say that the Norton engineers did not perform

services on exempt sales, appellant respectfully submits

the Norton case is not being read correctly. First of all, the

Norton decision does not say that the local outlet per-

formed no services whatsoever in connection with the

exempt sales. Further. there is nothing in the opinion to

support the court’s apparent conclusion that the engineers

were, in fact, part of the Chicago outlet. On this point, the

Norton opinion in defining the services of the Chicago re-

tail outlet and warehouse did not mention any engineering

services being performed out of the Chicago outlet; there-

fore, even if the court should conclude that the local out-

let had nothing to do with the exempt sales, that does not

mean in turn that the Norton engineers were not perform-

ing services on those sales. A careful reading of the Nor-

ton decision further shows that the only reasonable con-

clusion one can draw is that the engineers did perform

their usual services in connection with the direct sales.

Appellagt relies on the following as conclusive on this

point.

(1) The Washington Supreme Court in B. F. Goodrich

Co. v. State, 38 Wn.2d 663, 670, 231 P.2d 325 (1951),

stated that:

No salesmen were employed by the company in Illi-

nois, but it did have a group of engineers available to

consult with prospective customers as to their needs.

These engineers did not solicit or take orders for

goods. (Emphasis added )

- ee fe ed

The reference to the fact that the Norton engineers did

not solicit or take orders would only be significant and

meaningful if the engineers performed services associated

with exempt sales. This follows from the fact that the

Chicago retail outlet and warehouse performed services

on all but exempt sales and these services, in and of them-

selves were sufficient to justify taxation. It is, therefore,

only on those direct sales held to be exempt that the refer-

ence to the non-involvement of the engineers and soliciia-

tion or order-taking would be relevant. There is no other

reasonable explanation for the court's reference to the fact

that these engineers did not solicit or take orders except

that the group of engineers performed services associated

with exempt sales.

(2) The Washington Supreme Court in B. F. Goodrich,

supra, and the United States Supreme Court in Norton,

both noted that the Norton engineers consulted with pros-

pective customers as to their needs and offered technical

and engineering advice on the Norton products. Picture

these engineers in their office, available to consult with a

customer. A customer, or a prospective customer, contacts

one of these engineers with an engineering problem, or

wants to consult with an engineer concerning the Norton

products. Contrary to respondent's interpretation of Nor-

ton, it is certainly not reasonable to assume that prior to

consulting with the customer, or prospective customer, the

engineer would inquire of the customer as to whether the

customer was placing his order direct to Massachusetts

and receiving shipment back, in which case, the engineer

would decline to render services, or whether the customer

expected the help of the Chicago retail outlet and/or

warehouse in this sale, and if so, to what extent. And what

would the engineer do if the customer had not yet decided

how the order would be placed? And further, such an

inquiry would only be relevant after the Norton decision

in any event, unless we are to assume further that the

Norton Company and its engineers were able to predict

the outcome of the Norton decision.

(3) There is nothing in the Norton opinion which states

or implies that these engineers were not offering engineer-

ing assistance to customers involved in direct sales. On the

contrary, the Norton opinion describes the engineers as

providing engineering services to customers without limi-

tation. If, in fact, the Norton Co. engineers did not provide

engineering assistance to a certain class of customers, such

a critical fact would certainly have been mentioned by

the court in its opinion.

Based on the above, it is clear that the Norton Co. engi-

neers performed services in connection with sales held to

be exempt from taxation.

Appellant's reading of the Norton case is in accord with

General Motors Corp. v. State, supra, where this court

stated that “taxation of those who perform de minimus

activities through a local office would be unreasonable

and unjust” (60 Wn.2d at 874). This court further stated

that the presence or absence of a local office does not in

and of itself decide the question, and, therefore, taxation

of a corporation who maintains even a formal local office

may nevertheless violate due process. This court observed

in this regard that:

The essential inquiry must be directed to the amount

and effect of the activities involved and not the form

of the operations. 60 Wn.2d at 874. (Emphasis added )

In addition to the due process violations outlined above,

PO Bt

the assessment of the tax on appellant also is taxation of

sales in interstate commerce in violation of the interstate

commerce clause in the federal constitution. As stated by

the United States Supreme Court in Norton, the direct

sales which were filled by shipments directly to the cus-

tomer, with the only in-state involvement being the activi-

ties performed by the liaison engineers, were within the

protection of the commerce clause being sales in inter-

state commerce and, therefore, were sales which were not

subject to the [Illinois privilege tax.

In McKinnis Travel Service v. State, 78 Wn.2d 229, 232

(1970), this court held that the following tests represent

the guidelines to be employed in judging the state's power

to levy a gruss receipts tax on activities connected with

interstate commerce:

(1) Whether the tax places an extra burden on inter-

state commerce not borne by intrastate commerce, or

erects barriers, placing out-of-state businesses at a

disadvantage when competing locally; the discrimi-

nation text. (2) Whether the interstate commerce in-

volved is subject to the risk of repeated exactions of

the same nature from other states; the multiple bur-

dea test.

In the case at bar, on the authority of Norton Co. v.

Dept. of Revenue, supra, the significant taxable incidents

occurred outside of the State of Washington. There is no

local outlet; all significant incidents of the sale and delivery

take place in either California or Pennsylvania; appellant

owns no property in the State of Washington; all inven-

tories are maintained outside of the state; all of the nego-

tiations concerning the sale to Boeing are conducted from

appellant’s home or branch offices; and coordination be-

tween appellant and Boeing in the qualification process is

conducted by appellant through its out-of-state offices en-

tirely. Not only is there a substantial risk of multiple tax

burdens, it would appear that Pennsylvania and California

may be the only states who can tax the privilege of appel-

lant’s sales to Boeing, and, therefore, the sales to Boeing

are exempt from the Washington Business and Occupation

Tax. The burden on appellant here, as stated in McKinnis

Travel Service v. State, supra, is to:

. . . affirmatively show that the plaintiffs (appellants )

are taxable elsewhere . . . 78 Wn.2d at 233.

The burden, therefore, is not to show that appellants,

in fact, are taxed elsewhere, but merely that the taxable

situs is located elsewhere. Appellant contends that the rec-

ord clearly shows that the taxable situs for a privileged

tax on sales to Boeing is in Pennsylvania or California,

and, therefore, respondent’s imposition of the Business

Occupation Tax on appellant creates the risk of a multiple

burden on appellant’s interstate commerce.

The opinion filed by the Court of Appeals below is a

radical extension of General Motors Corp. v. State, supra,

which could not have been contemplated by either this

court or the United States Supreme Court. If the decision

of the Court of Appeals is allowed to stand, any business

which has a “resident employee” in this state, for what-

ever purpose, and regardless of the amount and effect of

the activities of said employee, would be subject to the

Business and Occupation Tax.

OPINION

A copy of the opinion of the Court of Appeals, dated

December 3, 1973, is attached hereto.

Respectfully submitted this 15th day of January, 1974.

s/ Kennetu L. Cornett

Attorney for Appellant

OBA AP AE mere tse etait hah

IN THE SUPREME COURT OF THE

STATE OF WASHINGTON

STANDARD PRESSED STEEL Co., No. 43099

Appellant! 2 epONDENTS

- ANSWER TO

DEPARTMENT OF REVENUE, PETITION FOR

Respondent. REVIEW

Appellant requests this court to take jurisdiction of this

matter (referred by this court on March 2, 1973, to the

Court of Appeals) upon the grounds that (1) the opinion

of the Court of Appeals violates the state and federal due

process requirements and the commerce clause prohibi-

tion of the federal constitution; and (2) the opinion is in

conflict with B. F. Goodrich Co. v. State, 38 Wn.2d 663,

231 P.2d 325 (1951); General Motors Corp. v. Washing-

ton, 60 Wn.2d 862, 376 P.2d 843 (1962), affd., 377 U.S.

436, 12 L.Ed.2d 430, 84 S.Ct. 1564 (1964); Norton Co. v.

Department of Revenue, 340 U.S. 534, 95 L.Ed. 517, 71

S.Ct. 377 (1951); and McKinnis Travel Service v. State,

78 Wn.2d 229, 472 P.2d 392 (1970).

To substantiate its claim that the Court of Appeals’

opinion is in error and should be reversed by this court,

the appellant purports to compare the facts in this case

concerning its wholesaling activities in this state, with the

facts pertaining to the exempt retail sales in the Norton

case and demonstrate by this comparison that Norton,

Goodrich, and General Motors specifically support its claim

for tax immunity.

While respondent believes that the opinion of the Court

of Appeals and its answering brief adequately refute ap-

pellant’s claim, respondent wishes to emphasize here the

complete lack of any factual basis for appellant’s claim.

It is the respondent's position that appellant’s claim of

constitutional immunity is based on at least three funda-

mental errors, namely: (1) An incomplete statement and

a misconstruction of the significance and operative effects

of the facts pertaining to its wholesaling activities in this

state; (2) A misstatement of the facts in Norton pertaining

to Norton engineers and on wholly unsupportable infer-

ences concerning the nature and extent of the Norton

engineers’ activities in Illinois concerning the exempt Nor-

ton sales; and (3) On an erroneous interpretation and ap-

plication of the rules of law established in the Norton,

Goodrich and General Motors decisions.

A comparison of the facts in this case, with the facts in

Norton pertaining to the exempt Norton sales, clearly dem-

onstrates that the Court of Appeals did not err by finding

that the case at bar is distinguishable from Norton.

Without referring to the record in this cause and the

specific findings of fact by the Court of Appeals, and with-

out referring to the record or opinion in Norton, the appel-

lant’s petition is primarily devoted to drawing unsupporta-

ble factual analogies between the facts of this cause and

the facts in Norton pertaining to Norton exempt sales.

The petitioner's characterization of and significance and

operative effect of the facts in this cause, as compared to

the facts in the Norton case, supra, concerning the exempt

Norton sales has not only been rejected by the Court of

Appeals, but also by the trial judge and the Board of Tax

Appeals. Each of these entities arrived at this result after

an independent examination of the record in this cause

and Norton.

te ee

Oe ee ee

In order to show that the findings of fact and conclu-

sions of law as found by the Board of Tax Appeals and the

trial court were supported by the record in this cause, the

respondent set forth in its answering brief in the Court of

Appeals what it deemed to constitute the facts in this

cause, with references, where applicable. to the deposition

(including exhibits) of appellant's Washington based em-

ployee Mr. Martinson, the Board’s decision and order and

the transcript in this cause. For convenient reference, that

statement of facts set forth on pages 5-7 of respondent's

brief is attached to this answer as Addendum A.

An examination of this statement shows that the Court

of Appeals did not err in making the following findings:

“Here the record clearly discloses that Standard

Pressed Steel Company employed Mr. Martinson as

a resident agent within this state to conduct business

activities with the Boeing Company, in part out of

his Washington residence as an office, so that Standard

Pressed Steel could: (1) become aware of which of

its products the Boeing Company might be able to

use; (2) secure the testing of sample products to

ualify the products for sale to the Boeing Company;

3 obtain e engineering designs for such ucts;

‘43 resolve problems in the use of the products after

receipt and use by the Boeing Coxipany; (5) obtain

and retain goodwill and working rapport with Boeing

personnel; and (6) secure and update lists of Boeing

purchasing specialists or control buyers, and the com-

modities for which they are responsible, for the use

of the personnel at the plaintiff's home office.

“We are of the opinion that the foregoing substan-

tial services constituted a sufficient peculiarly local

and distinct taxable incident within the State of Wash-

ington such that imposition of the business and occupa-

tion tax was not on the privilege of engaging in inter-

state commerce, but rather on the privilege of doing

local business.”' (Opinion of

op. 58) (Op Court of Appeals,

“We are satisfied that the local activities of Mr.

Martinson were instrumental in establishing and

maintaining the Boeing Company as a market for the

sales giving rise to the proceeds by which the state

seeks to measure this tax. We therefore conclude that

because the gross receipts from plaintiff's sales to the

Boeing Company were Sensenabiy related to the local

incidents of the tax, imposition of the business and

occupation tax here was not offensive to due process.””

(Opinion of Court of Appeals, p. 8)

There is absolutely no evidence in the Norton record or

language in the Norton decision that indicate any compara-

ble facts or factual findings or conclusions were involved

in Norton.

The only reference in the Supreme Court decision to

Norton's engineers is the following:

1. The Board of Tax Appeals, in its order and final decision

cus (Deshet Mo. 16-41) end the Wiel judas ta his andl dean on

findings of fact made findings of fact comparable to that of the Court of

“_ . But no solicitors work the territory out of either

the home office or the Chicago branch, although peti-

tioner will supply engineering and technical ad-

vice... .”

The only evidence in the record in the Norton case

concerning engineering activities was the following testi-

mony set out on page 20 of the transcript of record, con-

cerning activities out of the Chicago office of Norton:

“ _ . we have abrasive engineers who go out to the

customer and advise him on technicalities of grinding

wheels, what wheels would perform the work, etc.;

the engineers go in the field after the order is in; they

do not solicit; it is just technical advice; we have no

ae ae ey See ee Sie Sag oe Cong >

The Supreme Court of Illinois in Norton Co. v. Depart-

ment of Revenue, 405 Ill. 314, 90 N.E.2d 737 (1950)

in reference to the engineers stated:

“There are no salesmen used by quan. but it

does have a group of engineers available to consult

with prospective customers on their needs. These engi-

neers do not solicit or take orders for goods.”

There is no evidence or judicial statement in Norton

that associated the Norton engineers’ activities with any

exempt sales in Norton.

Since the Supreme Court held in Norton that any exempt

sales must be disassociated from local activities, the Su-

preme Court predicated its decision on the assumption

that the activities of Norton engineers did not constitute

local business associated with the exempt sales.

Appellant's statement on page 5 of its petition that “It

3. This court in B. F. Goodrich Co. v. State, supra, repeated this

language from Norton in its discussion of Norton (38 Wn.2d 663 at 670,

quoted on page 5 of appellant's petition ).

is also clear that the services of the Norton Co.’s corps of

liaison engineers were directly associated with those sales

to Illinois customers held by the court to be non-taxable”

is unsupportable by the record and opinion in Norton.‘

From the foregoing, it is self-evident that Norton facts

concerning the exempt sales are zeadily distinguishable

from the facts in the case at bar. As found by the Court of

Appeals, the trial court, and the Board of Tax Appeals,

the appellant's activities in Washington far exceed merely

making engineers available to Boeing for consultation.

They constituted decisive factors in appellant establish-

ing and maintaining Boeing as a market for its products.

In no sense can they be characterized as de minimis as to

appellant's wholesale sales to Boeing.

Under these circumstances, it is error for the appellant

to argue, on authority of Norton, Goodrich or General

Motors that its Washington activities are inadequate (i) to

establish taxable nexus (Washington jurisdiction to impose

its B&O tax on appellant's Washington wholesaling activi-

ties) or (ii) to permit the tax in question to be measured

“We only in the Norton Co. case as holding

—t ptt Ly) tax

levied u rege tat ay not be

local hed Sokins t dn” 150 Wand On}

General Motors makes it crystal clear that the B&O tax

on wholesaling is valid if the taxpayer's activities in the

taxing state are decisive factors in establishing and hold-

ing the wholesale market and the taxpayer has not dis-

associated the wholesale sales from these activities. This

accords with the express holding in Norton. Any so-called

de minimis rule either as to due process tax jurisdiction

or as to the measure of the tax is inapplicable where the

taxpayer exercises substantial and decisive wholesale activ-

ities in the state of destination and these activities have

In the language of Norton:

“But when, as here, the has gone into the

State to do local business by state permission and has

submitted itself to the power of the State, it

can avoid taxation on some Illinois sales only by show-

ing that transactions are dissociated from

the local

le here, is that a taxpayer claiming

al rae aplaehere the burden of establishing

his exemption.” (340 U.S. 537)

the evidence, the judgment attributing . . . [the cor-

Inasmuch as the facts establish that appellant came into

the state of Washington to do a local business in connec-

tion with its wholesale sales and that this activity is clearly

associated with its wholesale sales in this state, Norton,

Goodrich and General Motors are dispositive of this case

and establish the correctness of the decision of the Court

of Appeals. These cases indicate that there is no merit to

either appellant's due process of law or commerce clause

arguments.

Appellant's reliance on McKinnis Travel Service, supra,

and its argument that the state of origin can tax the whole-

sale sales in question with the result that these sales are

exposed to multiple taxation is equally unfounded. Appel-

lant cites no authority nor is respondent aware of any

that establishes that the state of origin has jurisdiction to

tax the sales in question. As stated by the Court of Appeals,

General Motors, supra, and Washington-Oregon Shippers

Cooperative Association, Inc. v. Schumacher, 59 Wn.2d

159, 367 P.2d 112 (1961) is dispositive of this issue.

CONCLUSION

The appellant's claim that the Court of Appeals decision

is contrary to controlling judicial precedent stems primarily

from its failure to properly analyze and give proper weight

to the facts of this cause. In essence it argues that even

though it conducts an intrastate business in this state

which was carried on solely in connection with its whole-

sale sales in question and even though this business was

necessary for it to make these wholesale sales, neverthe-

less it is constitutionally exempt irom the B&O tax on

wholesaling. No authority supports this novel interpreta-

tion of either due process of law or interstate commerce

et ed

er ee oe

et OR Oe

limitations on a state’s taxing power. It is therefore re-

spectfully submitted that this court should decline to take

jurisdiction of this matter.

DATED this 25th day of January, 1974.

SLADE GORTON

Attorney General

/s/ Wm.1am D. DexTER

Assistant Attorney General

Attorneys for Respondent

ADDENDUM A

The appellant appeals only the imposition of the B&O

tax upon its bolt division activities during the period in

question. The bolt division is composed of three groups:

aerospace, nut and urnbrako (Dep. 20). The appellant,

through these groups, manufactures highly specialized in-

dustrial and fastener systems (Ex. M, Dep. 21-22, BTA

order 1, Tr. 4). The appellant has its manufacturing plants

in Santa Ana, California, and in Jenkintown, Pennsylvania

—its home office (Dep. 4, BTA order 1, Tr. 4). During

the period in question, its principal customer in this state

was Boeing in Seattle ‘Dep. 4-5, BTA order 1, Tr. 4).

The appellant had Mr. Martinson, a resident employee,

in the state during the period in question. Martinson was

a “sales engineer” (Dep. 2, BTA order 1, Tr. 4). His super-

visor was the “sales manager” (Dep. 6). His typing was

done by the sales manager’s secretary (Dep. 6). In train-

ing for his job, Martinson spent many weeks in the appel-

lant’s plants learning how the products were made and

the general technology (Dep. 3). His training at the appel-

lant’s plants was continuous—about four trips a year to the

plant for about a week or ten days at each plant. (Dep. 4).

In his home Martinson had a desk, file and telephone in

a room which he used as his office (Dep. 5, BTA order 2,

Tr. 5). His office was significant enough to qualify as such

for federal income tax purposes (Dep. 6, BTA order 2,

Tr. 5). The telephone was listed under Martinson’s home

address, but was used by himself and the appellant's visit-

ing personnel for business purposes (Dep. 7-8, BTA order

1. Because the appellant treats its other customers in a similar manner

but to a lesser degree, the case has been limited by agreement of counsel

to the appellant’s treatment of Boeing as a customer.

Bb teteests ondias.

2, Tr. 5). An answ ring service was listed under the appel-

lant which received calls for Martinson in the bolt division

(Ex. K, Dep. 6-7, BTA order 2, Tr. 5).

On the job Martinson worked directly with Boeing de-

sign engineers, Standard’s engineers, and project engineers

(qualification engineers) (Dep. 4, BTA order 1, Tr. 4).

In working with Boeing's engineers in the initial phases

of aerospace design and construction, Martinson would

become aware that Boeing was considering a certain fas-

tener system (Dep. 5, BTA order 1-2, Tr. 4-5). He would

initiate a products engineering request describing in neces-

sary detail Boening’s specifications and would send it to the

appellant’s chief engineer in Santa Ana, California (Ex. J,

Dep. 20, BTA order 1-2, Tr. 4-5). If the appellant wished

to qualify for Boeing’s list of approved sources, samples

were made by the appellant and shipped directly to Boeing

for a qualification test (Ex. B, D, Dep. 14-16, BTA order 2,

Tr. 5). Martinson would work with Boeing’s engineers on

qualification problems to make sure the appellant was a

qualified source; and he would then notify the appellant

if it had indeed so qualified (Ex. B, Dep. 3-14, BTA order

2, Tr. 5). Martinson informed the appellant of the sub-

contractors and the purchasing specialists or control buy-

ers of each commodity for which it was a qualified source.

(Ex. A, E-1, Dep. 17-19, BTA order 3, Tr. 6). He supplied

the sales manager and other personnel of the appellant

with a list of competitive prices at Boeing with explana-

tions as to stock and delivery terms (Ex. A). Martinson

neither placed nor accepted orders; therefore, Boeing

placed its order directly with the appellant (Dep. 26, BTA

order 2-3, Tr. 5-6). The appellant through its out-of-state

offices, negotiated price and delivery date, accepted orders,

handled shipments and approved any credit (BTA order

2-3, Tr. 5-6). Martinson received a copy of each sales in-

voice (Dep. 25, BTA order 2, Tr. 5). Deliveries were

made by the appellant directly through a common carrier

(Dep. 25, BTA order 2-3, Tr. 5-6). No inventories were

kept in this state (Dep. 24-25).

Once a product was sold, Martinson would work with

Boeing's engineers as to any problem with the product

(Dep. 10, BTA order 1-3, Tr. 4-6). The problem-solving

process, including suggestions or modifications, was han-

dled by Martinson with the appellant in much the same

way as the qualification process (Dep. 10-13, BTA order

2, Tr. 5). The qualification process consumed 80 or 90

percent of Martinson’s time, while the remainder was con-

sumed by the problem-solving process (Dep. 26-27, BTA

order 2, Tr. 5).

In addition to his product-oriented activities, Martinson

performed public relation services, such as the arrange-

ment for a hospitality room at a meeting of the Society of

Aerospace and Process Engineers, which included Boeing

engineers (Ex. C, Dep. 15, BTA order 2, Tr. 5). All ex-

penses were sent directly to the home office (Dep. 15,

25-26). Martinson would also set up meetings between

Boeing engineers and visiting groups of engineers of the

appellant (Dep. 9, BTA order 2-3, Tr. 5-6). These visiting

engineers were application engineers, coding engineers

and general engineers who visit about three days every six

weeks to discuss problems relating to the appellant and

Martinson’s activities with Boeing (Dep. 8-9, BTA order

2-3, Tr. 5-6).

IN THE SUPREME COURT OF THE

STATE OF WASHINGTON

PRESSED STEEL COMPANY, No. 43099

arises Petitioner,| (1022-1)

©, ORDER

DENYING

Tue DEPARTMENT OF REVENUE, PETITION FOR

Respondent. REVIEW

The Court having considered the petition for review of

the decision of the Court of Appeals in this cause together

with the answer thereto,

It is ordered that the petition be and it is hereby denied.

Dated this 20th day of February, 1974.

By the Court:

/s/ FRANK HALE

Chief Justice

IN THE COURT OF APPEALS OF THE

STATE OF WASHINGTON

STANDARD PRESSED STEEL Co., REMITTITUR

Appellant,’ —_ No. 1022-II

: THURSTON

DEPARTMENT OF REVENUE, COUNTY

Respondent , No. 44750

The State of Washington to: The Superior Court of the

State of Washington in and for Thurston County.

This is to certify that the opinion of the Court of Appeals

of the State of Washington, Division II, filed on Decem-

ber 3, 1973, became the final judgment of this court in the

above entitled case on February 20, 1974. This cause is

remitted to the superior court from which the appeal was

taken for further proceedings in accordance with the at-

tached true copy of the opinion.

Pursuant to Rule 55 on Appeal, costs are taxed as fol-

lows:

Six hundred twenty two dollars and 76/100 ($622.76)

in favor of respondent and against appellant and against

appellant’s surety not to exceed the limit of the surety

bond.

Petition for Rehearing denied January 3, 1974.

Petition for Review denied February 20, 1974.

CC TO:

Kenneth L. Cornell

Slade Gorton

Clerk of Supreme Court

Reporter of Decisions

[SEAL]

IN TESTIMONY WHEREOF, I

have hereunto set my hand and

affixed the seal of said Court at

Tacoma, this 21st day of Febru-

ary, A.D. 1974.

/s/ Laurence P. Gri

Clerk of the Court of Appeals,

State of Washington, Division II.

[Affidavit of Service omitted in printing]

IN THE COURT OF APPEALS

OF THE STATE OF WASHINGTON

DIVISION II

STANDARD PRESSED STEEL Co., a

foreign corporation, No. 1022-II

Appellant,

v. NOTICE OF

DEPARTMENT OF REVENUE, APPEAL

Appellee.

To: Department of Revenue, State of Washington,

Appellee

Anp To: Slade Gorton, Attorney General, and William

D. Dexter, Assistant Attorney General,

attorneys for appellee

Anp To: The Clerk of the Above Entitled Court

YOU AND EACH OF YOU are hereby notified that

appellant Standard Pressed Steel Co., a foreign corpora-

tion, being aggrieved by reason of the opinion of the Court

of Appeals of the State of Washington, Division U, filed

on December 3, 1973, which became a final judgment on

February 20, 1974, does hereby appeal to the Supreme

Court of the United States from that certain opinion made,

rendered and entered in this court and cause on the 3rd

day of December, 1973 and which became final judgment

of this court in the above entitled case on February 20,

1974, and from each and every part of said opinion and

judgment adverse to the appellant. On the basis that the

Business & Occupation Tax statutes of R.C.W. 82.04 are

repugnant to the United States Constitution as applied to

appellant and as construed by the court, appellant takes

this appeal pursuant to 28 U.S.C. §1257(2).

DATED this 12th day of March, 1974.

s/ Harowp S. FARDAL

Of Attorneys for Appellant

STATE OF WASHINGTON

BOARD OF TAX APPEALS

STANDARD PRESSED STEEL COMPANY, 70-41

Appellant,! Re: EXCISE—

©. BUSINESS &

THE DEPARTMENT OF REVENUE, OCC —

Respondent.

DEPOSITION UPON ORAL EXAMINATION OF

ROBERT MARTINSON

APPEARANCES: —

For the Appellant: Rosert K. KELLER, Esq.

1220 IBM Building

Seattle, Washington

For the Respondent: SLape Gorton, Attorney General

“ of the State of Washington by

MicHAEL B. Hanson,

Assistant Attorney General,

State of Washington

Temple of Justice,

Olympia, Washington

March 30, 1971

Seattle, Washington — [2]

BE IT REMEMBERED, that on March 30, 1971, at

2:00 o'clock p.m., at 1220 IBM Building, Seattle, Wash-

ington, before Sue Master, Notary Public in and for the

State of Washington, appeared Ropert Martinson, the

witness herein;

WHEREUPON, the following proceedings were had,

to-wit:

RoBERT MARTINSON,

being first duly sworn by the Notary

Public to tell the truth, the whole

truth and nothing but the truth,

deposed and said as follows:

[3] —

DIRECT EXAMINATION

By Mr. Hanson:

Q Would you state your full name.

A Robert Martinson.

Q Mr. Martinson, where do you reside?

A Federal Way, Washington.

Q And how long have you resided in that area?

A Four years.

Q Four years. What is your capacity with the

in this case, Standard ey Steel? —

A I was a former employee of theirs.

Q And what was your job title in that capacity with

A Sales Engineer.

Q What is your educational background?

A Animal husbandry in college.

Q What school was that?

A California State Polytechnic.

Q Are you a member of any professional societies?

A No.

Q In the conduct of business in ,

quired to have wag nes Pe fw cates toa.

niques and engineering terminology?

A Yes.

Q To what extent?

be purchased, and to just generally work with the

engineers in the capacity of a man out in this area.

Q In dealing with these engineers, and in dealing with

their—shall we say shop talk, was there any training?

What training did you go through to engage in this

type business?

A We spent many weeks within our own organization

at our plants, going right out in the shop and learn-

ing how things were made, spending time with our

engineers, getting the general technology of the prod-

ucts we were using. — [4]

Q About how long would this type training last?

A It was a never ending thing. We would go back

and—sometimes we would—we have two plants, one

in Los Angeles and one in Jenkintown.

Q That is Pennsylvania?

Mr. Keer: Yes, it is J-e-n-k-i-n-t-o-w-n.

A (continuing) I would probably make four trips a

year to of the plants, and spend maybe a week

or ten days at each plant.

Q This is repetitious to a certain extent, but could you

describe - me the type of employees with which

you worked at Boeing Airplane Company?

A The design engineers, the standards en rs, the

~ pee ry yy trying to think of what they

that—it is the qualification engineers.

Q Mr. Martinson, did you service or did you represent

Standard Pressed Steel in regard to any other cus-

tomers other than Boeing Airplane Company in the

State of Washington?

A No.

Q Are aware of any other customers in the State of

Washington of Standard Pressed Steel—the Bolt Di-

vision, I am referring to?

A Yes, there are several other small customers, but I

was told not to spend any time with them beca

[5] —

[6] —

the amount of business these people would

was not worth your time. on ye

Q For instance, who would these people be?

A Rohr, for example, in Auburn, Intercoastal Su

distrdout valk tn ry: 2 yy

u to

small manufacturers of Boeing. — at

Q In your dealings with Boein customer, would

that extend to the subcontractors of Boeing?

A No.

Q You would deal only with representatives,

and est with Gale ecbusntenstent

A Right. I didn’t make any calls on subcontractors.

Q In the conduct of your business, did you have an

A No, I had a spot in my home that I called my office.

Q Can you describe this, the extent of it?

Q Yeo. Fou selessed to the gil Ghat typed &. Witeh gut

was

A The sales manager's secretary.

Q Who was the sales manager?

A Harry Wilkinson.

Q Where is he located?

A Jenkintown, Pennsylvania.

Q And his secretary these typewritten ones. I

assume you sent the handwritten correspondence to

her, she would type them at Jenkintown?

A That's correct.

Q So you did no typing personally, and no office work

of that nature?

A Right.

Q On your Federal Income tax return, did you take a

deduction for the use of you home as an office?

A Yes.

You mentioned you had a telephone in your home.

A No, sir.

Q Was there any answering service in regard to that?

A We do have an answering service in the Seattle area.

Q In the Seattle area. What answering service is that?

A I don't recall. The bills were sent directly to Jenkin-

town. — [7]

Did correspond with them in any way, other than

2 i> connel eaten of Gabe business?

A With the answering service?

Q Yes.

A No.

The answering service conducted all business, and

+ ies cnut de tne fl pews bent

A No.

Q Do you remember what exchange it was listed with?

A The name of the company?

[8] —

Q Well, what was the telephone exchange?

A 322-5600 was the number.

Q What is hour home number?

A VE 8-9118.

0 ce colors tet Pant oot 3

come te

than yourself?

A Occasionally, yes.

Q What is the nature of their business?

A The majority of the time it is to work on engineering

problems

Q How long would they be here? Can

estimate as to the ry tay 7 bn

yp Ge = wy yt

regard, referring to tax of 1968

~“imbihamam

A You mean the total number of days?

Q Yes, the extent of time, the months, days, weeks,

whatever it would be. -

A It would be days, and I would three da

sin ys, say maybe ys

on ——n -

A He did not.

Q He didn’t visit?

A No, sir.

Q What type of Standard Pressed Steel employees

would visit?

A Well, our application engineers, our coding engineers, _ [9]

ee See S ee Ga ae Se o>

Q What was the nature of their visits?

A To discuss problems in bolts or bolting material or

codings in conjunction with the airplane that Boeing

was building.

Q I assume they would all stay in the Seattle area?

A Yes.

Q When they were staying in the Seattle area, how

Cae? Ge eaten, Eg, aes Cae See

A Well, I would know when they were coming, and I

would know what they were coming out for, and I

would set up the meetings for them.

Q There was apparently an office of Standard Pressed

Ses te Go Cae oC Waniagen @p © Es O On

correct

A Yes, I believe so.

Q And this office no longer exists, is that correct?

A That's right.

tt 1 - aie

A Either in the plant at Santa Ana or in the plant at

Jenkintown.

[10] —

[11] —

Q What functions did the office perform?

A I don't know. I wasn’t here.

Q You weren't here until after that office had closed?

A Right. |

Q With regard to comageneente with the home office,

a frequently would you say that correspondence

was

A I am not going to say—don’t put this down.

( Discussion off the record. )

A (continuing) I would try to write reports on things

that were important enough that I would want—

even though I talked to them on the telephone, and

explained to them what was going on, I wanted to

have something in writing so that at a period of time

when som g was not done, they couldn’t come

back to me and say, “Why didn’t you tell us this,” so

it was just the important things I thought were neces-

any Cas Gap should do; also, the things I felt where

it e something that many people would get

involved in, I always wrote a letter with a copy to

those people.

Q I am skipping a little bit nase. Fam qpentiin of

a product by Standard Pressed Steel as so d to the

gee

see

problem, and we would in turn try to du

problem in our laboratory, and then an

would come up with some type answer,

would forward the answer to me, and they would

forward to me a laboratory report type form, and they

would call me on the phone, and we would discuss

it, and I would go and present this to Boeing.

Q I suppose some of this work you might classify as

original work. It was not pny the type product

you were giving to Boeing, but a new product or a

new form of that product?

A Not necessarily.

Q Not in all cases?

A I guess I could qualify that by saying any time you

change something on a bolt or a nut, you change the

characteristics of the bolt or the nut, and for example,

if you would put a different type lubricant on it, you

might change the torque tension relationship. If you

put a different type plating on it, you might change

the torque tension relationship, and you might also

through this plating, cause a problem with the ma-

terial itself.

Q Let's deal with a hypothetical. You are called upon

by the customer in regard to a mechanical bolt situa-

tion, where the product as given to them in the pres- —

ent manner does not work in its present form without

outside modification such as lubricants and such other

items as are added to or subtracted from the article,

but it calls for some type change in the article; what

takes place at that time?

A Who determines that there is a change made, Boeing,

or do we determine it?

Q For instance, who would determine this? Let’s even

qualify the hypothetical further, that Boeing has

called you with _ to a problem, and in your

judgment there needs to be changes in the item.

A We would make a suggestion, and then it would de-

pend on the engineering people to decide whether

or not they felt that our suggestion would solve the

problem.

[12]

[13] —

Q In forming the suggestion of the com , to what

extent would that contribute to the ma process?

A Are you talking about me, as an individual or we as

a company?

Q You as an individual.

A Well, I would get a laboratory report, and as J said,

we would try to duplicate the problem that Boeing

was having with the parts. n I would receive

the laboratory report, then I would call the people

who ran the test and discuss this with them, and

also what we would recommend as a change to solve

the problem. I in turn would then go to the Boeing

people about this.

Mr Hanson: Off the record.

( Discussion off the record. )

Q (By Mr. Hanson) Mr. Martinson, I am referring

here to a document, which is labeled—it has no dates.

It is apparently some correspondence of Mr. Wilkin-

son —- It is marked with a designation

A”. t is the purpose of that correspondence?

Could you perhaps describe it in some manner?

A This report was written so that our le, the out-

side — like myself, and the inside people, would

know what the Boeing subcontractors would be, and

what attempts they would make, and the approxi-

mate value of the items they would make for the first

two prototypes of the SST.

Q bate purpose does that serve for Standard Pressed

tee

A It serves several purposes, I guess. One is that when

our inside people receive a quotation from one of

these people, they would know it would be an SST

requirement.

Secondly, it would help our people to determine

maybe the amount of business p ary could expect

from these people in the next year.

Q That would be, now, the subcontractors listed?

A Yes, sir.

— aasubde ait

Q In regard to the contact with these subcontractors,

in regard to their business, who in your company

would handle that operation? — [14]

A An outside sales engineer lixe myself.

Q I refer you now to some correspondence which is

updated, and has the designation “B”. What is

Fairchild-Hiller -

A Fairchild-Hiller is a subcontractor of Boeing on the

SST.

Q And it refers in the correspondence to an approved

list. What is an approved list?

A Well, anything you manufacture for Boeing, you have

to have qualified at the Boeing source. Boeing de-

termines who will be a supplier of theirs by qualifica-

tions done her» in the Seattle area.

Now, all of their one ope oe have Ava buy oo

uirements ‘rom people who are on this appro

list This appreved list generally is always on the

drawing itself. The drawing shows what the part

looks like, and the iimensions and everything else,

and it will say “Approved sources are:”

You might get the qualification pieces after a draw-

ing has y been issued, they will in turn

write a letter to Standard Pressed Steel, and a sheet

saying that Standard Pressed Steel is an approved

source, and what I wanted in this letter to do, was

to let our people know that they could go to Fairchild-

Hiller and say “Yes, we are an approved source of

Boeing on this.”

Q That is just what I need right there. That is perfect.

Sometimes paraphrasing may be a bit difficult, but

just explain it the best you can, how it is and what is

your interest. Just give us your impression.

I am now referring to correspondence dated April

10th, and which I have marked with a “C”. Would

you explain the nature of that correspondence.

Q That was to inform Mr. Baumgartner that I had made

arrangements for a hospitality room at the Olympic

[16] —

Hotel for the Society of Aerospace Materials & Proc-

ess Engineers’ meeting here.

Q And in that respect, the company itself would take

care of the necessary expenses?

A Yes.

Q Is this society a local society?

A No, sir.

Q Were the participants in that meeting limited to Boe-

ing engineers?

A No, they are from all over the United States.

Q I am referring now to some correspondence dated

April 18, 1969. Would you explain the nature of that

correspondence?

A I am trying to get my mind back here. When

this, 1969? get my min was

Q I think I can be of assistance. M is in

general way, what is the purpose of this correspond-

ence

A Well, what I am trying to tell them is that Boeing

says “No, they don’t want any shortcuts in their

qualifying testing. They want you to run two samples

with two different counterbores and two different

thicknesses.” I am aeing epotenity to the last

and this is in the

Q This product here was solely for the needs of the

Boeing Airplane Company, is that right?

A No.

Q How did it arise?

A It arose because probably we felt that the existin

product that they were using, or that the oy

was sing couse Go inqsoved upen, and our

and development people spent some time and some

effort in trying to come up with a new way of doing

something.

Q And what other market is this new product used in,

do you know?

A It would have a tial in the electronics industry.

Are we talking about a specific product, sir?

Q I am talkin at So etemee Se Oi Set game

graph, in r words, “Let's go after this market.”

A This market would be a nut market, and the nut mar-

ket would be anyplace where they used nut plates,

which would be the electronics industry or the aero-

industry. In some instances you used them on— [17]

ving material, shelving, this type of thing.

Do you know any specific customer, other than Boe-

° ing, that uses this product?

A Boeing doesn’t use it.

Q Boeing doesn’t use it?

A No, sir.

I am referring now to pieces of correspondence, the

e first one dated September 26th, which is labeled “E,”

and on the same date, labeled “F,” on October 6th,

“G,” on October 7th “H,” and on the same date, Octo-

ber 7th, correspondence marked “I,” all of 1969.

In looking at all ot this correspondence as a group

rather than individually, as a group, what is the pur-

pose of this correspondence?

ocations so many times, personnel, you

deal with specifics. These pieces of correspondence

try to tell our ; ople which people are now handling

certain products.

The sixty-four dollar question, if you will pardon a

to know this information?

A Well, f reasons. As an example, a quotation

wap cium & coo @ ot gee at Jenkintown or

[18] —

[19] —

sate Ome, one ot eno ine Sry gene Gaeing with

Mr. “X", and the next day, Mr. “Y” called, and they

would want to know why is Mr. “Y” calling, has there

been a change in the organization.

Q I understand that. My question goes to why would

the people down at Santa Ana or Jenkintown, for in-

stance—up to this time we have always been

in terms of the context of your relationship to the

customer

Now, it appears that there is a relationship of either

Santa Ana or Jenkintown directly to the customer, of

ene? you are not an intermediary, shall we say,

A Well, there are many things that come up. For exam-

ple, if an order is placed with our facilities and one

of the Boeing people wants to follow up on it to see

where the delivery is, why the order was late, they

don’t come to me.

They go to either of the two plants, and you tell

them their phone number, or you can get the order

for them. As you will notice, phone numbers are

different. This could be that they moved from one

location to another location, and it just informs our

people what people are buying.

Q In addition to the individuals who are listed as pur-

oe Lawes or control buyers, there are other

indivi listed. I refer to a number of individuals

on correspondence “G.” Of what cular interest

are they, as opposed to the specialists?

A These would be the people that actually work for the

pupaing petenen, andl Gaeo weal bo Gs com>

modities that they themselves would be responsible

for.

2 Se Sty caeet, 8 ep Go Gin of conn biti

as uction specialists, on other viduals, it

dons cat Hist 0 title, When woudl bo teats Gemation

with Boeing Company?

A I am sorry, I don’t understand what you are saying.

As for example, let’s take the name of Rouse, or Max-

well or Tucker, what -—< classification are they?

What position would people have with Boeing

Company?

A As you notice, the name above that is Shish, referring

to a purchasing specialist?

Q Correct.

A The people below him report to Mr. Shish, and he

would be their group leader or supervisor, and they

in turn would be responsible and for lems or for

consultation, they would go to Mr. Shish.

What ualifications do those people have? I am

2 pete A ir educational background? What tvpe

qualifications would they possess?

A I don’t work for Boeing. I don’t know what they actu-

ally would have to have. Off the record, I think they

are all college graduates.

Q I am going to a document marked “J.” There are a

group of documents like it. I am interested not in— [20]

specific document, but generally, what does this

document do? What is its purpose in the conduct of

your business?

A I am telling our engineering people that Boeing is

considering replacing a certain type of fastener with

another one, with another type, and if we want to

make qualification pieces, I have given them the

diameter they will have to make it, and also Boeing

specifications, which they will have to qualify it to.

Q The title for the document is Products Engineering

Request. Who is this document submitted to?

A This document is submitted to Troyce Wiley, the

chief engineer in the Santa Ana plant.

Q This document does not go to Mr. Wilkinson?

There is to him, and a copy of it went to him

: ‘shen bee was net sales enenager, and bee fs nat cales

manager right now. He has another title.

[21] —

Q There are three fastener system classifications, I

guess, which would be listed in these documents

u give me

ony tg a ra rief explanation of what

A Yes, this one is circled Aerospace. Our division is

broken down into several groups, one of which is

Aerospace, another of which is Nut, and another of

which is Umbrako. This shows that this is an Aero-

space roduct. It doesn’t show in the Nut products,

and it t show in the Urnbrako producis.

Q Do you handle that product in other lines?

A In other lines?

Q What is the Nut line, posed to Che Acsmagace

line? What is the difference

A Aerospace generally is thought of as bolts and nuts

4. t go on bolts, and this is in the ‘Nut

Q I am beginning to understand the extent of speciali-

zation.

A It is a system, but as far as en , we ha

people to take care of bolts, and we be pene t

take care of nuts.

Ce ee et om rt Se er

ware store, I buy a bolt and a nut together. They

A Yes, we do. You talk about them separately.

you use a bolt, a bolt has to go through metal, and

these are all high precision bolts, tolerance

bolts, and the majority of the holes you go through

are close tolerance holes, and I am talking about a

tolerance of maybe 2/1000ths. Your bolt material

will go through whatever it is holding together.

Q So what we are saying is that there need not neces-

sarily be a nut onto the bolt?

A If they didn’t need threads on it, they wouldn't need

a bolt. They could just put a pin in it. The reason for

the threads and nuts are for vibration purposes, so

when you put the nut on it, it won't fall out of the

hole, but even more than that, the nuts you buy at

the store are not the nuts and bolts that go on your

airplane that Boeing used. They use nuts so they will

not vibrate olf, and they pass a vibration specification.

Q So on summing this up, simply because it is circled

Aerospace, doesn’t necessarily mean that is Boeing.

You might also circle Nut in regard to Boeing cus-

tomers?

A Yes, this is a standard form that we have. It is used

by all of our people when they are jotting little memos

down to our engineering people.

Q Briefly, what is the Urnbrako Division?

A They make sockets, capscrews, socket screws, dowel

pins, spring pins, and generally they are the type

items that are not used in the Aerospace industry.

Q Do you know if there are any other Standard Pressed

Steel people in the State of Washington at this point?__

A Not taking care of this division.

Q But do you know, outside of your division, do you

know if Standard Pressed Steel engages in this mar-

ket in the State of Washington at all?

A I am sure they do, through some distributors.

Q When you say through distributors, could you ex-

plain?

Off the record.

( Discussion off the record. )

[23]

[24] —

A Well, all of the products that Urnbrako sells do

sell through distributors, rather than 7 acne A

such as the Aerospace Division does or the Nut Divi-

sion does. They have their own people, and I believe

the man comes from San Francisco who calls on the

Seattle area.

A I think they make lockers.

Q > Wobiemat they are distributed in the State

A No, sir.

Q Are you familiar with Frank Cohen, Inc.?

A No, sir.

Q Have you had any contact with Frank Cohen, Inc.?

A No, sir.

Q During the period 1968 and up to November of 1969,

A No, sir.

Q I am showin Mr. Martinson, 841 of the

1970-71 tel y orem hy Heh

Pressed Steel there are two listings. Do you have

any knowledge of these listings?

A Yes, sir

A Yes.

Q What is the other number?

A I believe that is the Worley and/or Columbia Holwell

iin

Q Are there occasions when people will have the num-

bers mixed up in trying to contact you?

A It has pened once. I believe if would call

Begin pani By ong Bab meg ohn

know for sure, I believe once that has happened since

I have been here.

Q Why weren't the different divisions named, any par-

ticular reason you know of?

A I have no idea.

Q Mr. Martinson, in speaking of the Aerospace or the

Nut Divisions, at any time during the tax period in

volved, were inventories kept in the State of Wash-— [25]

ington?

A No, sir.

Q In regard to the price and quantities of your prod-

ucts, pote perform any services for the customer?

A No, sir.

Q How is that handled?

A That is through either one of the plants, depending

on the item that they want to have a price and deliv-

ery on, and they are given a price an’ delivery from

either of the two plants.

Q How are the deliveries made?

A Well, by air or by truck.

Q Are you informed of the orders, deliveries, et cetera?

A I get a copy of the invoice.

Q In performing your function for Standard Pressed

Steel, are you remunerated in any way based on the

volume of orders?

A No.

Q Your fee is fixed, I assume?

A Yes.

Q In referring back to the promotional room, the com-

plimentary room at the Olympic Hotel, to what ex-

‘sd

tent were you

poh SD wb

A All of the expenses were sent directly to the home

for your expenses in the

Q Were you provided natly with any reimbursed ex-

[26] — pape yams eae I am speaking now of food and

A IT had any fod or reeshment, was refunded,

was paid for it.

Mr. Hanson: I have no turther questions.

CROSS EXAMINATION

By Mr. KELLER:

Q I gather from your last testimony that you at no time

ever received an order from any

for Standard Pressed Steck prodecte, oy Se

A That's right.

Q And you never placed an order with Standard Pressed

Steel on behalf of or at the of

: or request of Boeing, is that

A Ge tent ay nee that is not the proced-

ure we f

Q The primary purpose of time then -

el in advising Standard P Pressed Steel pe Se

production and qualifying . _s Pressed Steel, to

assist them in q on were inter-

ested in, is that or a

A Yes.

ef pm hey time would sa

spent in performing those two functions?

A Saiidathe tae

Q And the balance of your time was ts and

visiting firemen, is that right? om

[27]— 4 Yes, that’s right. When we would talk about these

things, yes, sir.

ae wt 7

oe.

Mr. Ketter: I have nothing further.

(Deposition concluded at 3:15 p.m. )

ba - agreed thy between counsel

the witness that the reading, exami-

kW and signing of this deposition were

waived, and that notice of filing was also

waived. )

CERTIFICATE — [28]

STaTE Or WASHINGTON

County Or KING

I, the undersigned Notary Public in and for the State

of Washington, do hereby certify:

That the annexed and foregoing deposition of each wit-

ness named herein was taken stenographically before me

and reduced to typewriting under my direction;

I further certify that each said witness examined, read

and signed his deposition after the same was transcribed,

unless indicated in the record that the parties and each

witness waive the signing;

I further certify that all objections made at the time of

said examination to my qualifications or the manner of

taking each deposition, or to the conduct of any party,

have been noted by me upon each said deposition;

I further certify that I am not a relative or employee or

attorney or counsel of any of the parties to said action, or

a relative or employee of any such attorney or counsel,

and that I am not financially interested in the said action

or the outcome thereof;

I further certify that each witness before examination

was by me duly sworn to testify the truth, the whole truth

and nothing but the truth;

I further certify that the deposition, as transcribed, is

[29] —a full, true and correct transcript of the testimony, includ-

ing questions and answers, and all objections, motions

and exceptions of counsel made and taken at the time of

the foregoing examination;

I further certify that I am sealing the deposition in an

envelope with the title of the above cause thereon, and

marked “Deposition” with the name of each witness, and

promptly delivering the same to the Clerk of the above

entitled Court;

IN WITNESS WHEREOF, I have hereunto set my

hand and affixed my official seal this ............ day of April,

1971.

Notary Public in and for the State

See, residing at Mercer

FROM:

TO:

SUBJECT:

- PR, Martinson

a — EE EE

oh eaick i EXHIBIT A~-)

STANDARD PRESSED STEEL COMPANY

Intra Coinpany Correspondence

H. Wilkinson

SST Subcontractors s?

The Rocing subcontractors, whet they will make and approx-

imate Roeing cust for the two prototypes ore os folicw:

ADRONCA - Middletown, Ohio

Wing trailing edge flops and fleperons $6 million

CLEVELAND PNEUAATIC - Clevelond, Ohio

Main end nore landing gear §2.5 willion

FAULCVILD-HiLLER REPUNLIC - Fermingdele, B.¥. ond

Hager. town, Maryloud

Aft fusclage section, erpennsge mein structure 635 million

RORTH ALR LCAM hOCKWELY, - Los Angeles end Tilee

Leaving edge flaps, wutboerd wing box, ventriesl fin,

rutdeis, tail lesding edges $35 million

NORTHKUP - Hawthorne, California

Ceb end nose section 812 million

ROWR - Chulo Vista, California .

Engine pods, spares, teat equipment, main lending

geor doors §21 willion

BORING - Wichita

Two foreward fusclege sections, nose geor door $31 miliion

I feel it #8 importent that all outside coles, inside seles oid

enginuecrtiug departments ot both donkintowin and Santa hne receive

copive of this eo thet everyone will Le “were of tte SST

subecntracters. Tiss elong with the Liet of ej SST parts cupplicd

cerlier should heip SPS in getting theiv chare of the busim oe,

A-1

RM/ht

EXHIBIT A-2

weal JoIe4}UOIGNS adAojosg 1SS

Fe WNI3L HLY3H

DILVHINANd

3 GXNV13A319

dOYHLUON

VLIHIIM

¥vHOY

VINO3V

una

SUN

S396

OSOlOOS

A-2

EXHIBIT B

R, Martinson

iM. Wilkinson

Potentiol Large Users of Beta III Rivets

Interviewed: Rk, Loe

Foirchild Miller will be the lergest user of rivets. They

will moke two body sections and the vertical and horizontel

etabilizers, Northrup will mctke the noee end drop snoop.

Please make sure these customers know #8 ie on the approved

list. The other approved cources oro:

fot

. «of

A-3

EXHIBIT C

STANDARD PRESSED STEEL COMPANY

Intra Company Correspondence

April 10, 1969

R tiortinson

T. Boungartner

SOCIETY OF ALLOSPACE MATERIAL’ & PROCESS MNGINELRS

I hove contacted Gerry Long of the Olympic Motel and usde

arrangements for a hospitality room Septcnber B-9-10,

Plence advice oa whether we ore otill going to participute,

hVbt

cor I, Wilkinson

o™~

OM:

BILCT:

SS EE ee EE ee

EXHIBIT D

STANDARD PRESSED STEEL COMPANY

Intra Company Correspondence

April 18, 1969

R. Mortinson

NM. Wilkinson —

Evaluation of Se} f-Clinching nuts

"In my letter of April 9, 1969, I submitted a request

from Bocing to run a quelification test of the self-

clinching nuts on the pieces they requested.

Jake Devlin areked Len Smith to discuss with me the

possibility of cutting the mrvber of 6onples - using

only one counter bore in one eheet thicknens instend

of two, The onswer io "no", I feel this product haa

the beet porsibility for making SPS become a sole courcsa

item for the industry.

Let's go after thie market cnd prove to ourselves thet

6P3 can maiket a new product!

‘Bob Martincon

T. Bownartner

Hood

File vy

4 :

: EXHIBIT E

STANDARD PRESSED STEEL COMPANY

Intra Company Correspondence

September 26, 1969

" R, Martinson

H. Wilkinson

BJECT: JOB RESPONSIBILITY AND PHONE NUMBER CHANGES FOR 737_GRrouP

Here is the new job responsibility and phone nuwrbers for the

Seattle Division Material (737) effective 9/19/69.

Alex Tulentneff Group Supervisor 655-1554

Len Curtis “Purchasing Specfaliet 655-1536

Roger Stecds Control Buyer - 655-1737

: * - Rivets

, Nuts

, Nutplates

Washers

' Chuck Pen lloton Control Buyer 655-1421

, Taper- Lok

Straight Shank Bolts

(All alloys except

LU series)

Raw Material

Al Hultmon Control Buyer - 655-8431

; Lockbolts

Hi-loke

LU eeries bolte ,

Collers ‘

AN, MS, NAS bolte & screws

Donna Wooterd Clerk 655-1737

RM: pmb

‘ce: oH. Burgnon W. Miller

F. Corrigan W. Pompeo

J. Devlin . D. Redwan

W. Hoffman J. Trilling

A-6

—_——_ —_— eer eee mee —_

‘

EXHIBIT F

STANDARD PRESSED STEEL COMPANY >

Intra Company Correspondence

September 26,1969

ROM: R. Martinson

O: H. Wilkinson :

UBJECT: JOR RESPONSTRINITY & PHONE MVMBER CHANGES FOR 707-727 GROUP

Here ere the new hens numbers and job reeponsibility for the

Renton (707-727) waterfal group.

Hal Hammtli Group Supervisor 237-6698

Jin Hoffnguer ' Purchasing Specialist 237-8618

Cal Parker Control Buyer 237- 3071-3072

Hi-loks

“= Hi-Strength

Carl Thurman .. Control Buyer 237- 3794-3795

. Straight Shank

A286

160 KSI Bolts

John Tinsley Contro) Buyer 237- 3794-3795

Straicht Shank

Titaniin medium end low

strength bolte & ecrews

Dorothy Cox Control Duyer 237- 3071-3072

Taper lLoks

Lockboltu A

; * Blind bolte

V. Atkins ' Clerk ; 237- 3071-3072

RM: pmb

ce: H. Bergnon

F.Corrigan

J. Devlin

W. Hoffman

W. Miller

W. Pompeo

D. Redman

J. Trilling

A-7

\ \

=? EXHIBIT G o

‘

STANDARD PRESSED STEEL COMPANY

Intra Company Correspondence

October 6, 1969

R. Martinson |

H, Wilkinson

SUBJECT: New Phone Nunbers for Everett Div. (747) Material Group.

Also the job responsibility.

G. Thomas, Group Supervisor, will be leaving BOEING October 15;

no replacement hes been announced,

Shish - Purchasing Specialist, Major Fasteners, 386-3394,

Rouse - Titanium and Steet Taper-Lok and Titanium Straight

shank Bolts, 386-2337.

Maxwell - Alloy steel and titanium Hi-Lok bolte, 386-2337,

- Tucker - Stee), A286, H-11 and Managing bolts, 386-2276,

Shay - Nuts, nutplate, collars and alloy steel 180 KSI bolts,

386-2276.

Coats - Purchasing Specialist, minor fasteners.

Reidasch - Steel Hi-Lok bolts, 386-2415.

McDaniel - Steel lok and blind bolts and screws, 386-5415,

Richards - Washer, spacers bushing, insert, pin and studs, 386-2901,

Burt - Rivets and Riv-nuts, 386-2901. ‘

MAIL STOP NUMBER: 03-22,

cc: W. Millar

F,. Corrigan

J. Trilling

J. Devlin

W. Pompco

W. Hoffman

Nt. Burgnon

D. Redan

A-8

a EXHIBIT H ;

STANDARD PRESSED STEEL COMPANY ; é

Intra Company Correspondence

October 7, 1969

OM: « “* R, Martinson ;

H, Wilkinson

BJECT: MTU Group <

This is the new organizational chart for the MTU Group,

¢ . . P

RM:bs :

Enclosure ©

ec: C, Hood } Py

J. Trilling ~

J. Devlin ¢.

E. Gowen, Jr.

_—>

; ; R. A. DAVIS

e METALS & STANDARDS

I | j__-- |

Js. B. ZICCARELLI H. R. ZAHN J. F. BAISCH D. D. COENLER L. B. ZYLSTRA R. B. McKELVEY

: Subsonic Fasteners SST SST 747 Metals Beariaogs, Fluids, Subsonic

(20777277737 Metals} Joining & Mech./ Metals Documentation - Fastencr

| _——— Standards Subsonic Developrent

: ; n

- & : ' o)

} : = 1.

| ¢ x ” Kq

a J. C. McMILLAN

Research, Developnent ;

| and Laboratories - ns

: . oo

| r~ ‘

| j . i. ;

J. W. SWEET R. P. THIERRY D. T. LOVELL ® D. E. PIPER D. E. AUSTIN

Metals Lab Corrosion Welding Lab ARPA Contract Research

- PRODUCT ENGINEERING REQUEST

SP 8 OR AwiNG -4,_)

PROsECT NO.

| AEROSPACE) NUT

. 2

'UNBRAKO

FASTENER

SYSTEMS

ps es ~ OR awNe NO, REQUESTED BY 5 cate

1. \t. is *' \ _ \ \ ‘2 os N dan eh me , ar

PRODUCT DESCRIPTION ;

’ TEMP. RANGE —

' . .

er me. x

T Tonoue "

sPees. PRELOAO

‘ \ \ , a ‘ % > 66 _ - 7

ANCE SPECS. . ri UsEO with eee

oe \ 5) a) aS * Vs

c -

TH Lever —

ATION ; : . —_

o- . ¢ ‘ . - — , '

Pa LTE ee. SE OFF E Fa

a . ‘ ae a

. 4 >> 2% ¢* > . oh ‘ 7\ a4 § & A%— aS “>. * - —e \\ wht a on ‘e

} jaa oman \ aie

< Far we KO ee te,

. = > a Se vi =F ey oe Ae AAS KC. y is , a. 7

‘ ’ . ‘ — ~. .

oe ees ee ee a to ee ee

\ \ \

——_ a .

. ' * 7 = \

rote \* M>\ Ny. ee mN —_— Lo Ce -

o N P

Se St ee Sh ee Pm 2 Ee 7

oA a —\—— . + | “+

“= oo cocehe 1 Fen NPy gy DY a A .* A 8 4 ae 4. , Aa, -

‘

= . . oe a

~ a, ‘> a A be .

~ -

—_— {: i ~~ —- 4

4 ‘ ¢ o< % <* r “~ an ah A _* ‘ . ly ~ \ ° “ ¢ ‘,* #

\ \ t ® ad ' \ ‘ ‘

—

TEO COMPLETE DATE TAMGET CATE ENGINEER ASSIGNEO ear.

, tm x

~ Vi

—

NOATIONS

—-——

— | -

A-1l os . > ** - *

———— os ———o ° — am a ew iene ae em

7~. —- NM * m9. Tee - :2 . —@a~ er “Ty ig wenr _ -@: 4

t- F . ° : . ae 7°

~ # 87s OM aming HOW S PROJECT HO.

PRODUCT ENGINEERING REQUEST

FASTENER

AEROSPACE NUT UNBRAKO svsvens

CUST. OR AaING WO. REQUESTEO BY “ oate

a oe Lie \. of . * “hs \ b ‘ « - \\ ~ * ti \ »* hy

4 . PRODUCT DESCRIPTION

4 “ TkwP, MAnGe

5 mel . ’ \

te .™— 4 Pod uss vc \ » si

. : : TORGUE

RS ST We on

sPecs. - PRELOAO

MaANC Ee SPECS. . “loses win

BSCCAW POTENTIAL

Tn eee ™

DUI. oo cans

o . ’ "I €

~~ a. = : te: a \: i oe =a \

. . - « _— me ~ <<. \ oa el «8 ~~ oe ‘es -

\ \

\ -

‘

LO COMPLETE Date TARGET CATE ENGINEER ASSIGNEO "=

NOATIONS :

Te ase

le ea neath eh 0 te Ce | i ete ve ~_o “ * -'.

_" = a )- _

$8 OR AwinG NO! PROJECT WO.

PRODUCT ENGINEERING REQUEST

FASTENER

AEROSPACE NUT UNBRAKO euseeen

<uUSt. ORANG NO. Atouestas ey - cave

. + ‘ 1’ ‘ FT

PRODUCT DESCRIPTION ~

= , . Timer. RANGE —

oa oo aN ‘ + \ 4 & VU « — N\A e

Tomoue ne

, ._ 2 q \

\S\. . \ Pt SO ~ 4 :

seucs. _ -. PRELOAO ,

\ es 6 .

\ i . — ' = —

ance sPacs. . \ Useo witn —

‘\

’ TUaR POTENTIAL ~—

TH LEVEL —

s a a ~ 3 ee

ee Ee y\ eo. .8 A. ren, See .

\\; —e—e . P

\: | \S \b > 6.2 2 *. - a *. > om a mane tia

i e ox i ,

\ Aa a“. ™. '\ » 9 — cad ‘ ~ ai ore lf —_. > { et .

{ ‘ . 5 ! ° oe “5

a \_.. ee ee oe es :

‘ ‘ a —_ ‘

~ se o's ~ a mt " a .. . Fe “ Ne >», . \ - " Se —_

‘ . : wed | c °

—_— vs “ur ef NOS Ly = sa tase me i

&»

-< e -@ * . . “A. .

tee s \. C anata A « Sy ee ig PN rt. \ Ss : ad 5“ 7

p7 oa i

StS ac Se Oy ak tal ‘“ Ave Yois 355

: - . =. ¢ §

\ wre . CX. -- ae \, ad Pm Le <n OE EEE

‘ NX : "7 \ \ ‘ ,

4 , . es “a :

> 2

1EO COMPLETE OaTe TAMGET OATE ENGINEER ASSIGNED Gav

kent ¥

LK NOATIONS ' |

‘

(mee!

ee ee en ne a ee ee

pa al

. 4 tsonawinano ff PROJECT NO. -

PRODUCT ENGINEERING REQUEST ‘ ow

, FASTENER

AEROSPACE NUT UNBRAKO SYSTEMS

Cust. DRAMING NO. REQUESTED BY sive

4 _——, .

.* —— ‘ » &£.9 ‘ , —— “™\: ‘

: c PRODUCT DESCRIPTION .

\ Timer. Rance

me : Tomoue =

\ \ \ . &.6 so. .

‘ PReELoso —

\ 3 ees eee.

Ce SPECS. : VSO with

BOUL AM POTENTIAL os =

Lever P . e

Ys Py ge i ht ee et A)

— es - v

gE Se Se ee ee

. é 4 \ -

\ “- _ j%e-4 6 oo ‘ i Z- A ». a8

\ \ \ ‘2

s! ’

7 : e =

Vite Oe So oy Sey

= . i

‘ . ° . ote

Te Pe woe a. WA sy NY nk 2.

. NY Aer

‘ ad

Z é

, ‘

LO COMPLETE Cate TARGET CATE ENGINEER *551GNEO -

LnoaeTtions

A-14

- pneeatinite aaitiala

NOATIONS

PRODUCT ENGINEERING REQUEST

AEROSPACE

NUT UNBRAKO

jsver. OR AaING NO,

PEQVESTEO oY

PRODUCT DESCRIPTION

jrsue. Rance

—

PRELoao

anc & SPECS. “lite win

rs TEentiac

.3 xe 8 dee Shes

\. ‘aa NO NAA yH fr 2

TANGET O«TE

A-15

ee ae ee ee

ee eee

SPs OF AwinG HONS =~ }PROVECT nO.

en FASTENER

AEROSPACE NUT UNBRAKO SYSTEMS

UST. OF AaING HO. PEQVESTED oY ‘ - Dare

. ~ * i

. PRODUCT DESCRIPTION

. Rance

Tomoue

Ss. ..

erecs. Patcots

’

ance} €c8. : wits

ae .

~ LEwEL a

‘ ® \ wa ~ ee $

_—_—_

-\e'ar uy Y bet ‘ « “ aa .

‘4 Gat \ ‘ ‘ . ‘\ \ . c \ . Pa NY ‘

- ‘ ‘ ‘ dies = '

s4 ) ‘ ' i\ . *A a. ¢, \. \ \* —— 5 \/ 8

‘ \' . ‘ ~ =. “~~

H if \\t) ar FS, mp. “\s “ f-> \ ’ ¥ \\ 5 \

. r —

‘ \ \ ‘ oi ™

Se Any Vy: \\ ts -stad a ) ,

ri ’ \ \ \ 4 ' ‘ a ( \ a ae | ‘ + ° \ .

= ~~ < Paate > \ Tr. _

\ t Ny “hee

Pr. «

r —

O COMPLETE OATE TARGET CATE ENGINEER A58/GNEO ae

———

wOaTions

. A-16 -

Oe ee ne ee ree

. .* . ,

ee ee ee ee ee ee

a. + ; “< :

~ s AmING Hw «oc.

J: PRODUCT ENGINEERING REQUEST ee eae enema

r " R FASTENER

|” AEROSPACE NUT UNBRAKO :. cc

+» OR aanse nO. FEQVESTEO oY Oare

Jn Fae OF . \ sa. ras wi NS) ae

bd PRODUCT DESCRIPTION

: = Timur, Wanee

Preah. F.ten <

% TE VeaWSY NS

j - ‘ =

. Pe \r en | a ay ~ on _— La Gna

AN '

Cr. VN Kt) SY ae £3 Yan PO V

a oe AN 65 o> Mmm li . «. . NADA o 2S

‘ ; ° e —aoe - - * ;

3 \ se ME; wf mt, | a2 o 64 5 2... “. aan ¢ t 129.8. 09-2 A. “

i. * - °

r 2 2 nih, Ret — ite stn] a we -. C Ay \.

; \ - ‘ ’ ‘ ‘Ny 'y °

° e 3 “e . AY

a one td OP >) ™. Ay » _C i : 0, =7 VK G Shy. . oe 2. }

o'r | ; wt

near" —\, sosa Af, QV. 4 a. danege

©) ‘

EO COMPLETE O4TE TARGET OATE ENGINEER ASSIGNED Gav

tare

OaTions

‘

A-17

en ——— en ar meee ae

—

a _ eit etre Pods “ws. . - ‘* _“«

1 } - | =

o°8 Onawin 4 ;

PRODUCT ENGINEERING REQUEST 35 peewee

FASTENER

AEROSPACE NUT UNBRAKO qveveen

“ah Ohaanme no. MEQUESTEO OY bare

‘ ° ® ° iy

PRODUCT DESCRIPTION

7 Tine. Wanee

AuManc € SPECS. e

‘ >. Bee Ns, we ove d

-* “A Loe oP ‘ ue \, 7 = ‘ , ad 2 ~, Q oe ’

i . .

\% Ss = wth ; a ot ry 4‘ = a DPS % 5% ra

‘ ‘ )

on \ 7 (*. be . VV, Pa oe oe C\ A , » é A 2s \ so pork \ ee

’ te . . — - ‘

Assi WP sey Vravtts \

FY) + Yas x a = ak Vv" Varrk be \ Vf we AY ,

call in . °

ens a yt ( < \

o |

—

TEO COMPLETE OATE TARGET DATE ENGINEER ASSIGNEO ay.

wOaTions -

ss '

‘ ‘

—_"

a an oP

e . *--* “~~ - -* ——_—_ ——- =

hone hb Gaer . 7 Su 41047 Mercerisiand--AD 2-2449 St

9224P at atineN-- SU 4- joo anicy John S 8025-34tKNE ---

1417 Quees.Annet!--AT 2-9768 $i matey WR Mrs 14603 35thS--CH 6-014 he Starry Joserd € 3259 TsinSoe-)

SAS Dearborn Stradi we Larry K vise st 24in Mere ent ~AD 2-287 $ wnley Julie Ruth 9052 $305--

B01Rein'erS--EA 9-5390 207 7tticor€--EA $2441 Stangiand Ovare Stanley KA 4221 Seihbvineeect

$ & S HeCiction Stantring George L irs 4550 Silenderson--PA 2-0959 Siorley K G 14020.) dvaltN---.|

bovine Si 020 STALORIM ENO LEL HRD eee ttontond ley J 380 Seman PiSEN SAGG8 nn aesnsnen i

: o in PI-- Mot Iesequan--

. pute Toth sWe-hO 2-9592 ay ae Z seca ~~ CH3-1455 $ — » —~ eee =--PA S-S278 Staniey LV Wir Goo saearess --1

13706 1st S--CH 4-6900 13014-12th SW--CH E9100 4 67 09DaytonN--SU 3-1526 _ nf ay a ate> Setivond

Filth WE & Me asth Storek J € 2442 ethh---------285-04] Stangland William Se

nO” 4539-25004E--LA 249778 Stanevic Ath Us. 220i Smerten--PAS-IONG bac? SEn90 tercerts

Metron & Thirty. Third O18 S 194th--TA 45195 Starcie Don 100Vality-----=----285-058) Stanley MM J Puott Sound thea Co

ae At 4 aaa 2-9033 Starfet August J LISINGIsI-~--L A 2- 110? Stangie Fravk & 3049 PeIhsE Mercerisiang- <2

sane —~ Frank ty Rael SW----WE 57156 yn ae meme Stanley Mabe tere res

4-6100 Lawrence Stangie Lous th--0- 1F auntiereyv/ySW--\

Po PAPER CO tt S. smpemmmeged ~~) ~* 7k | 323 catelis a Oxcidentats <1

oor -1 tad -

1 201NE Fife-----------VE 8-0330 - e 3011 SOUNSW--WE $2572 sranrtk Neh 2228 4WOtet --=0-80 2-9593 spony aves p42 teem pant

POOR'S COnP Staaf lenguik ” 3st -- an ‘ 3269 390 $---0-!

copsocczeconnoctill 12716 SF172¢Penton--BAG-1020 Stonhope Coral Advertising & Public Stamtey Lary Jo 4225 § 158th.

Co -----£A 2- jaw | — 2239F Mitter--EA3-7099 Relay Diieie coasted taney bt ‘4 wet

franed Sues 6 Oscar U 6319-S6thNE =-LA3-3222 aemeinart » est a ——

$25V/2rrenN--AT 3-577 aoe ayane) L e--404-9817 _ teeta E8688 _ oer. Pr ae

MA 2-638) Stantill Jock & Sesatate . Pelee eR yh ee

RECORDS & HI-FI CO LE A eet pan we Hy whose teuin52 Looe

Stantill Keanevh a ' ee

yostalitorniaSw--WE 2-2397 Siariey RC 2779-40-0 S.7-=

ST - ithSw/--CH 4-5460 me Mer a RR Mrs P22 fi 79th-----

S12-26W--AT 41931 Coo iirg AE 11545-12th NE --2- EA 2019/5 Starislaw Richard I atty Allen | Roland ss 445 SHsISCLA-:

ocpey

why Res 6b4Rainiers ans eon be Ph) tad Be"tevane-t

16540CothelrvyNE--EM 4-06) eee eeneeee Stovtey Roy 423 i30Ne. ae :

natin H 14516-25tnNE bi! 4-275) Stanhevich Bernd A. os oy Stanley Fat arse sacanee

€361-16th NVY-----SU esi ‘

4526-54th $-----2-PA +9 432 Stankey Ed 5542-360 WE-~-----LA 2-8797 Decne

be €3.0°%3 Stabe Paine € SPTIUELIID~-E'S S-4972 61 4.60.0 Que ¢. aee-tee

ROL

Sianford E uM 3iar's SPervvnd---PA D708 Starve Bruce W 3425 5 176m--GH beboid SLATES #55 os a

. €555 IntortsheN--LA 3-3755 9015 WShorewoedDr--AD 2-4919 SUrley SUarsing Spices Bins a8

ane 5027 stantord Cider L 2531 SWillow--PA3-286b Stoniey Apts ¢ $20-Pth ~---0000-Wh 5725 ¢ Hd Siping Sierts o<cees

Everett-- Ab 2-4144 Starford Elen J 9547Phinney4--$U 4-5247 Sianiey Associates Worten®g----MA 43567 ¢ vey ay Oste som Go--

Store — Cine & #025 “Bib $---G $2942 Stanley MADMIN TS eg aga Stimmey Wersen D Pe0'.87ih- one

$ Tone Renton~-BA 6-222 Sere ect Givin Pike rccnwcUlA Qcbaie Stanley Bruce A yddsy pachseectH 40/74 Starter Yewal L 3997 $ 149th

299 24--04A 33442 Stanford K CPA Stariey € D £02 STistle----+--RO 2-3226 glarty Veterman 928148 P

j STETL FA: RICATINE cars snes erent tA aH ty S024 LTE LA DGAD oe wy Beard 3643-460m SW

1p Scesley WH E5530. ed ---

WS <-2----nnnne--RO7-9314 Mereerislond--AD 24387 o =, ofi)s 142456 Peet Sy npece Sioriey Water 1315 Siriarem-

Television Service Kenneth fay Sumey Witham

21050T bth--LA 5-4860 134-154tnP! NCReMewe--$M 6-572 212007 OK 12h Te nn cD 839° asrtierophdySW-=!

Stemford Lyods 320 SummitEé---EA 9.05% $ Darlene ld _ Stanley Wilitae .

1201 DerterN--AT 44630 Siariord WIR 1822 $ 924------F97-4219 SU™F 57 swnere- cH e-o218 3015 n24St M Is =-

FD TUS* CO DIV MICHIGAN er dl dig esr A Daytes D , Thoms CPA

USS TUBE CO =e Re Se 8 Ses COrcenLakewyW--ME 2-786 1272200 Remton==

: ones cence neeneGl 4-6209 733) .$P2-2007 cme trot co speey whe 9292-2418 Svfeeee-

ane o —_—_w EIN Central Vamt onwnene MA 2-BIS6 Sane Stephen 4717-2191 S¥v----'

1 vee Deperement Stanford Rudolf Derouny O Starrarg Cather? i2u? oth t--.

lo "GOVERNMENT OFFICES 9075 SewardPark$--PA 24304 asovietdeatat-<te 3-S651 Stannard EF 400%. SeSth--++--

YELLOW PAGES Stomtord Rusvell $ 125 SothE----EA 5-7763 Stantey Dorothy L 2920 26N----AT 4-44623 Storvess HR S92 PIN oo =~

su Stantey s Kee)

Onitle Thelma 5606-81. NW o-- Dargtt to blarness

4217 SWDawson--WE $-9018 _ 2 Juaior Coot S*2ps 14816 BothellWyNE-- ENA $-7548 S428VLaeter- =

Oscar 2030 SIngersaliPt -EA ——_ to. Coetsrects : Stanley EG Stonenes F re. 310. GON} cacecee

Poi Saran PATA gt Snr Grg a ort ua tah BRAT NEC ne ee Sone cna

¢ 420i

ath yME--LAS-6A9S wiee® Via yeCaene Betiewe--Cl 4-2606 a Weodinviie--HU 62048 Stan's Cleaners gu 10Pr nnty---

euneth Tie 7HiSoth «84 4A ib jam € A 218 J6thE---------EA4-9155 Stanley Edward R S129 § Ger Show

ts F 7526-26th WW----SU 45779 S Harotd W 18942" rrineVwOrSW--CM 3-2892 $297 @coseveltWyy NE ~~

Tom ne iseo7 38 L8ONPL SE Renton--AL S-477% Stanley Emery R 5427 eater AT 2 2-116 Stan's Service ores

$220 SardPoint¥/yNE--LA S-€493 Stang Insurance Stanley Enory 0 Jr Adm SC US" seocDe" ridgeveySw--'

Karin A 21S)N9I4---LA 46954 318 4th--MA 3-3957 TheHightoncs--E 4 :¢. 7374 Stan's Towirg

Wayne 7037-?toNW --$U 2-1491 STANG JNK W CD: PONATION F WN Mrs 9592 SWI? Eaten-CM 2-5590 e002 Celrisgetyy SW --

tu 2)37Lin.cim Taroma ---00-f ry 3-249 Lanicg Fred TOCEVercer---0--- EA 53326 Stans Union Serve

Rosie See nem My sees 4 Sane dasaen pA tL nema +EFie 2-07%5 wrntare 8 a Berentt-- WA 39733 Stansberry tm mmenens

BY oo S 27g Peter 1S4EnWovth----0- a

hiocae J 932 26th.--2€A 3.5793 Stray Thomas A SIDIMEDOIN--cLA 4-€ 105 Stasky ce¢ a0st0vive-nsnnn = EA 22987 99) Lenttmantt- -

F Ure P2? P2n------FAD-0995 Stony Thomas A atty 1918 4th--MA 3-395? STA: ey | Crane ron co Svasbery

A 2-65%6 iT) besten

Fiore & dr $29 26:hS-~f tir Starg Travet Service Inc BIdNCenteal Kent ------- ”

CeretaP te5-310:5 w-eEADY 1318 Gth--8'8 3-3797 Starter tone fr 4711 SDowven--PA 34973 Stensbery 4 972°. ° eceeece

Jeoes 6 007 3545----EA Resst Starge Martin 9958 32¢5V¥--~-WE 2-329) Stam'ey Corcom C 464 $ 290th--TASED1Y Stansdery Merman ¢

EM 3825 24thw----AT 2-3295 Storge O04 7928Greenwe GM ~n~- SU 4-6 7S) Sur riey Grover 6097-4GtnSW ~~-WE 71-2107 sas? VEST St-~

ees 1639 Bellewe----MA 3-6738 ley Helen E 2920 26N------AT i235 inter, BA toges-neim WW.

tnvie a

1816-S46thSE Betlewe-- = Keaq W

doe R Soanwsetn a Revertfo30 SURG M Isl-AD 25139 nT ane Serna 6160 svapAwrereh--

a sities _ “fs hens a ae io alae

DM:

JECT:

EXHIBIT L

STANDARD PRESSED STEEL CO.

Intra Company Correspondence

, Movember 4, 1970

.R, Martinson

H, Sturges

Competitive Prices at Boeing

As we discussed, Herb, SPS prices are considerably higher than

our competition in thio area, The fellowing priccs are from a

recent qvote, It is alzo interesting to note, Boeing didn't

always buy the lowest price, Delivery and stock also entered

into the decision, Most companies sre quoting four week

delivery,

anti Part Nucber | BPS Price Low Price Bought Por

500 , L34Dd-20 64,00/C 39.00/c 47,60/C

500 LJ5D-20 90,50/C 50,00/C 75.10/c

250 LJ6-7 125,60/C 43,00/C 61,00/Cc

250 LJ6-17 146,10/C 45,50/C 61,06/C

1,000 L¥3-8 , 28,70/C 13, 00/C 17, 00/C

100 LM4-64 a 294,70 155,00/C 149,00/C

1,0¢0 MT6-14 76.60/C 35,40/Cc 39,20/Cc

500 MT5-26 153, 00/c 67,00/Cc 70,00/C

250 NJ6-22 398.00/c 165,00/Cc 230,00/¢

MT14T-33 20,40/Ee, 4 10, 60/Ec.

MTGT-32X 6, 39/ Ta, 4,00/Te,

KI6T-40 2,54/2a, 1,50/va,

Bob ‘

RM: me

ect C, Hood

A, Leeces

B, Mattevich

fi, Wilkinson

A-20

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.