# Petition — Matsushita Electric Corp. of America v. City of Farmers Branch

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1976
- **Citation:** 429 U.S. 861

## Text

In the
Supreme Court of the
Gited States

OctToBER TERM, 1976

MaTsusHITA ELECTRIC CORPORATION OF AMERICA,
Petitioner,
v.
City oF FARMERS BRANCH, TEXAS AND T. E. WALpDRIP,
Respondents.

Petition for a Writ of Certiorari to the

Supreme Court of Texas

Jerry L. Buchmeyer
2300 Republic Bank Building
Dallas, Texas 75201

Attorney for Petitioner

Of Counsel:
Timothy R. McCormick
Thompson, Knight, Simmons & Bullion
Dallas, Texas

Seth Waller

Secaucus, New Jersey

Page
RR SII OE NEN TD Sapeaaioaiad 1
ES ee Re TNE ts REE oe 2
SSIES TT LE EIR TRA 2
Constitutional Provision Involved .................. core 3
Statement 3

Reasons for Granting the Writ

1.

In matters of federal law, state courts must adliere
to federal standards in determining whether a con-
stitutiona! decision should be applied prospectively. 5

2. The decision of the Supreme Court of Texas is in
direct conflict with Chevron Oil Co. v. Huson. 8

3. The questions presented are substantial = --------—s«d20
co iI eal ia cage eel eiataahcas . 11
Appendix

1. Opinion of the Supreme Court of Texas. -——...... A-1

2. Judgment of the Supreme Court of Texas... ... A-7

3. Opinion of the Texas Court of Civil Appeals for the

Twelfth Supreme Judicial District —........__. ak oP A-9

Judgment of the Texas Court of Civil Appeals for
the Twelfth Supreme Judicial District... EOE A-23

Opinion of the Supreme Court of Texas in a related
case, City of Farmers Branch, et al v. American
Honda Motor Company, Ine. ......-...-.-- eee. A-25

ii
TABLE OF AUTHORITIES

CASES

Page
Bergstrom v. Kissinger, 387 F. Supp. 794 (D.D.C. 1974).. 6
Bourns, Inc. v. Allen-Bradley Co., 480 F.2d 123
(7th Cir.), cert. denied, 414 U.S. 1094 (1973) ............ 10
Brown v. State of Maryland, 25 U.S.

I WO oa nosnnscecavescecscrisvsstusesessncssdnnens 3,4
Bush v. Wood Brothers Transfer, Inc.,

398 F. Supp. 1030 (S.D. Tex. 1975) ...000 6
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) _ .. throughout
Gosa v. Mayden, 413 U.S. 665 (1973) 0 sD

Japan Food Corporation v. County of Sacramento,

Cal. App. 3d , 130 Cal. Rptr. 392 (1976). 7
Johnson v. New Jersey, 384 U.S. 719 (1966) 0... 6
Lemon v. Kurtzman, 411 U.S. 192 (1973) . 0... 5, 9, 10
Lemon v. Kurtzman, 403 U.S. 602 (1971) 0 10
Linkletter v. Walker, 381 U.S. 618 (1965) 0000. SS
Low v. Austin, 80 U.S. (13 Wall.) 29 (1872)... 2,3,4,7,8
Michelin Tire Corp. v. Wages,

423 U.S. 276 (1976) .. throughout
Michelin Tire Corp. v. County of San Mateo,

57 Cal. App. 3d 332, 127 Cal. Rptr. 791 (1976)... 7
People v. Livingston, 64 Mich. App. 247,

Be I ID nia cis ncn c ses coves ccsancecnsedacieenete 6

Ralston Purina Co. v. County of Los Angeles,
56 Cal. App. 3d 547, 128 Cal. Rptr. 556 (1976)... 7, 9,10

Relford v. Commandant, 401 U.S. 355 (1970) 200... Il

iii

Relford v. Commandant, 397 U.S. 534 (1970)
Rodrigue v. Aetna Casualty & Surety Co..

395 U.S. 352 (1969) eed
Sears, Roebuck & Co. v. County of Kings.

Cal. App. 3d , 130 Cal. Rptr. 694 (1976)
Southern Pacific Co. v. Cochise County,

92 Ariz. 395, 377 P.2d 770, 778 (1963).
Stovall v. Denno, 388 U.S. 293 (1967).
United States v. Carver, 260 U.S. 482 (1923)
United States v. Peltier, 422 U.S. 531 (1975)...

Wiggins v. State, 275 Md. 689, 344 A.2d 80 (1975)

Williams v. Estelle, 500 F.2d 206 (Sth Cir. 1974)

CONSTITUTIONAL PROVISIONS
U.S. Const. art 1, § 10

STATUTES

28 U.S.C. § 1257(3). .
Ga. Cope Ann. § 92-7701 (1974) |
Tex. Rev. Civ. Stat. ANN. art. 7298 (1960).

SECONDARY AUTHORITIES

Beytagh, Ten Years of Non-Retroactivity: A Critique
and a Proposal, 61 Va. L. Rev. 1557 (1975).

. 2,3

37 CCH State Tax Review No. 11 (Mar. 16, 1976)

10

In the
Supreme Court of the

United States

OcToBEerR TERM, 1976

MatsusuiTa ELectric CORPORATION OF AMERICA,
Petitioner,
v.
City or FARMERS BrANcu, Texas AND T. E. WALDRIP,
Respondents.

Petition for a Writ of Certiorari to the
Supreme Court of Texas

Matsushita Electric Corporation of America petitions for a
Writ of Certiorari to review a judgment of the Supreme Court
of Texas entered on May 5, 1976.

OPINIONS BELOW

The opinion of the Supreme Court of Texas (Appendix, infra,
A1-6) is not yet officially reported.’ The opinion of the Texas
Court of Civil Appeals (Appendix, infra, A9-22), is reported
in 527 S.W.2d 768 (Tex. Civ. App. — Tyler 1976).

' An unofficial opinion has been published in 19 Tex. Sup. Cr. J. 303
(May 5, 1976).

2
JURISDICTION

The judgment of the Supreme Court of Texas was entered on
May 5, 1976 (App. A-7). The jurisdiction of this Court is
invoked under 28 U.S.C. § 1257(3).

QUESTIONS PRESENTED

On January 14, 1976, this Court announced its decision in
Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976). Michelin
overruled Low v. Austin, 80 U.S. (13 Wall.) 29 (1871) and
held that states are not prohibited by Article I, Section 10,
Clause 2 of the United States Constitution (the “Import-Export
Clause”) from imposing a nondiscriminatory ad valorem prop-
erty tax on imported goods no longer in import transit. Relying
upon Michelin, the Texas Supreme Court held in Matsushita
Electric Corporation v. City of Farmers Branch, Texas and T. E.
RW aldrip that the City of Farmers Branch, Texas could assess a
nondiscriminatory ad valorem tax on imported goods in Matsu-

shita’s warehouse for the year 1972, four years prior to

Michelin.
The questions presented are:

(1) Whether a state court is required to apply the test arti-
culated by this Court in Chevron Oil Co. v. Huson, 404 U.S. 97
(1971) to determine whether a decision of this Court should

have prospective effect only;

(2) Whether Chevron requires that the decision in Michelin
Tire Corp. v. Wages, 423 U.S. 276 (1976), be accorded pros-
pective effect only.

3
CONSTITUTIONAL PROVISION INVOLVED

".S. Const. art. I, section 10 provides:

“No State shall, without the Consent of Congress, lay
any Imposts or Duties on Imports or Exports, except what

may be absolutely necessary for executing its Inspection
Laws; * * *.”

STATEMENT

This controversy involves the liability of importers for non-
discriminatory ad valorem property taxes assessed on imported
goods — which remained in the original, unbroken packages in
which they were shipped — for the period prior to this Court’s
decision in Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976).

a.

In 1972, the City of Farmers Branch and its Tax Assessor-
Collector, T. E. Waldrip, imposed ad valorem taxes on certain
personal property held by Matsushita Electric Corporation of
America on January 1, 1972 within the city of Farmers Branch,
Texas. Relying upon this Court’s decisions in Low v. Austin, 80
U.S. (13 Wall.) 29 (1872) and Brown v. State of Maryland,
25 U.S. (12 Wheat.) 419 (1827), Matsushita Electric Corpora-
tion of America requested an exemption from taxation for those
imported goods situated in its warehouse which remained in the
original packages in which such products were shipped. (App.
A10-11). Farmers Branch denied the request.

Matsushita Electric Corporation successfully enjoined collec-
tion of the disputed taxes.” In City of Farmers Branch v. Matsu-

? Matsushita Electric Cogpresiion of America v. City of Farmers
Branch and T. E. Waldrip, No. 72-9516-G (134th Judicial District Court
of Dallas County, Texas, filed October 14, 1974).

+

shita Electric Corporation of America, 527 S.W.2d. 768 (Tex.
Civ. App. — Tyler 1975), (App. A-9), the Texas Court of
Civil Appeals affirmed the decision. Relying upon this Court’s
decisions in Brown v. State of Maryland, 25 U.S. (12 Wheat.)
419 (1827) and Low v. Austin, 80 U.S. (13 Wall.) 29 (1872),
the Court held that imported goods contained in the original
packages which retained their distinctive character as imports
were not subject to ad valorem property taxes, regardless of
whether such tax was nondiscriminatory. (App. A-17). On
January 14, 1976, the Supreme Court of Texas denied the City
of Farmers Branch’s application for Writ of Error.’

On the same day, January 14, 1976, this Court announced
its decision in Michelin Tire Corporation v. Wages, 423 U.S.
276 (1976). Miche’in overruled Low v. Austin, 80 U.S. (13
Wall.) 29 (1872), and held that a local taxing authority could
assess a nondiscriminatory tax on imported goods no longer in

import transit.

2.

Farmers Branch applied for a rehearing on its application
for Writ of Error based upon this Court’s decision in Michelin.
The Supreme Court of Texas granted the application. The merits
of Michelin were not argued by petitioner before the Texas
Supreme Court. Instead, petitioner contended that the principles
articulated by this Court in Chevron Oil Co. v. Huson controlled
and therefore the Supreme Court of Texas should accord only
prospective effect to the decision in Michelin and deny Farmers

Branch’s assessments for the years prior to Michelin.

* The Supreme Court of Texas refused the writ with the notation “no

reversible error.” The action of the court is unofficially reported in
19 Tex. Sup. Cr. J. 134 (Jan. 14, 1976).

o

The Supreme Court of Texas reversed the lower courts and

held that Michelin was retroactive in application (App. A5-6).

REASONS FOR GRANTING THE WRIT

1. In matters of federal law, state courts must adhere to
federal standards in determining whether a consti-
tutional decision should be applied prospectively.

In Chevron Oil Co. v. Huson, 404 U.S. 97 (1971) this Court
articulated the standards to be used by reviewing courts to deter-
mine whether a civil decision involving a question of federal

law should be applied prospectively only: *

(a) the decision to be »pplied non-retroactively must estab-
lish a new principle of law, either by overruling clear
past precedent on which litigants may have relied or by
deciding a question of first impression whose resolution

was not clearly foresl:adowed;

(b) the merits and demerits in each case must be weighed to
determine whether the purpose of the overruling case

can be effected without retroactive application; and

(c) retroactive application would produce substantial in-
equitable results.

The factors enumerated by this Court in Chevron are refine-
ments of the standards adopted in Linkleiter v. Walker, 381
U.S. 618 (1965), and Stovall v. Denno, 388 U.S. 293 (1967),

for determining whether decisions involving substantial reinter-

* This Court has made it clear, however, that for purposes of pros-
pective or retroactive application of an overruling decision, no dis-
tinction should be drawn between civil and criminal cases. See, e.g.,
Lemon v. Kurtzman, 411 U.S. 192, 199 (1973); Linkletter v. Walker,
381 U.S. 618, 627 (1965).

6

pretations of rights of the criminally accused should be given
retroactive effect.

This Court has recognized that reviewing courts have “some”
discretion in determining whether a particular decision should
be accorded prospective effect only. This discretion arises be-
cause each particular constitutional rule has its own function,
background of precedent and impact on the administration of
justice. Johnson v. New Jersey, 384 U.S. 719 (1966). A review-
ing court must reconcile competing policy interests — con-
venience, expense and proper governmental objectives versus
the rights of the individual affected. However, the limits of
discretion do not extead to ignoring or altering the basic deci-
sional standards adopted by this Court. Therefore, in cases
subsequent to Linkletter and Stovall, state and federal courts
have considered the standards articulated by this Court to
determine the retroactive or prospective effect of a criminal
decision to be binding. See, e.g.. Williams v. Estelle, 500 F.2a
206 (Sth Cir. 1974); Wiggins v. State, 275 Md. 689, 344 A.2d
80 (1975); People v. Livingston, 64 Mich. App. 247, 236
N.W.2d 62 (1975).

The rationale for applying uniform standards in criminal
cases is equally applicable to the civil area. Federal cases sub-
sequent to Chevron have interpreted Chevron to be mandatory
in civil cases involving questions of federal or constitutional
law. Bush v. Wood Brothers Transfer, Inc., 398 F. Supp. 1030
(S.D. Tex. 1975); Bergstrom v. Kissinger, 387 F. Supp. 794
(D.D.C. 1974).

Although federal courts have adopted Chevron as the con-

trolling standard, state courts have not always applied Chevron

7

in cases involving federal or constitutional law, see, e.g., City
of Farmers Branch and T. E. Waldrip v. Matsushita Electric
Corporation of America, _____ $.W.2d______ , (App. A25),
or have misappl.ed Chevron. See Ralston Purina Co. v. County

of Los Angeles, 56 Cal. App. 3d. 547, 128 Cal. Rptr. 556
(1976).°

When this Court substantially changes existing federal or
constitutional law, the same considerations applicable to the
criminal area are applicable to civil cases. Uniform standards
are necessary to ensure that equitable results are reached. This
is particularly true because of this Court’s decision in Michelin.
Importers are faced with the possibility of state courts applying
different standards of retroactivity, depending upon applicable

periods of limiiations in each state.®

This Court has not provided specific guidance to lower courts
on the applicability of Chevron to constitutional decisions ren-
dered by this Court, and this issue is proper for resolution by
writ of certiorari. See, e.g., United States v. Peltier, 422 U.S.
531 (1975); Chevron Oil Co. v. Huson, 404 U.S. 97 (1971);
Relford v. Commandant, 397 U.S. 534 (1970).

®° See also, Sears, Roebuck & Co. v. County of Kings, _______ Cal.
App. 3d —___ _., 130 Cal. Rptr. 694 (1976); Japan Food Corporation
v. County of Sacramento, ______ Cal. App. 3d , 130 Cal.
Rptr. 392 (1976) ; Michelin Tire Corp. v. County of San Mateo, 57 Cal.
App. 2d 332, 127 Cal. Rptr. 791 (1976).

° For example, Texas allows a taxing authority to reassess for a period of
four years, Tex. Rev. Civ. Stat. ANN. art 7298 (1960) ; Georgia, seven
years. Ga. Cope ANN. § 92-7701 (1974). In Ralston Purina Co. v. County
of Los Angeles, 56 Cal. App. 3d 547, 128 Cal. Rptr. 556, 558 (1976), the
Court upheld, on the basis of Michelin, taxes assessed in violation of
Low v. Austin, 80 U.S. (13 Wall.) 29 (1871) for a period of eight years
prior to Michelin. Ohio, however, has decided to treat Michelin as apply-
ing only prospectively. 37 CCH State Tax Review No. 11 (Mar. 16.
1976).

8

2. The Decision of the Supreme Court of Texas is in
direct conflict with Chevron Oil v. Huson.

In Chevron, the Court established three factors to determine
if a decision should be accorded prospective effect only: reliance
on clear past precedent, the purpose of the overruling decision
could be effected without retroactive application, and retroactive

application would produce inequitable results.

Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976) over-
ruled Low v. Austin, 80 U.S. (13 Wall.) 29 (1872), a decision
which was settled law for ever one hundred years. Matsushita
and others similarly situated relied upon the principle estab-
lished in Low that nondiscriminatory ad valorem taxes on im-
ports were prohibited by the Import-Export Clause of the United
States Constitution. Matsushita’s position was affirmed by the
Texas Court of Civil Appeals in an opinion strongly relying

upon this holding in Low. (App. A-17).

The Supreme Court of Texas, although initially denying an
application for writ of error filed by the City of Farmers
Branch,’ abruptly reversed their position after the Michelin
decision and, without once mentioning this Court’s decision in

Chevron, held that Matsushita’s reliance on Low was misplaced.”

This Court has held that parties are entitled to rely upon legal
pronouncements from this Court and parties who conform their
conduct to prevailing constitutional norms cannot be held blame-
worthy. United States v. Peltier, 422 U.S. 531 (1975). Further,

"19 Tex. Sup. Cr. J. 134 (Jan. 14, 1976).
* This was somewhat anomalous in view of the statement of the
Court that:
Because of the earlier decision of the Supreme Court of the United
States which this Court is bound to respect, we at first upheld the
position of Matsustiita.

(App. A-2).

9

this Court upheld “reliance” upon statutory schemes which are
constitutionally suspect from their very inception. Lemon v.
Kurtzman, 411 U.S. 192 (1973). The Supreme Court of Texas,
contrary to the position taken by this Court, held that Matsushita
was not entitled to rely upon Low simply because Farmers
Branch had levied its tax prior to Michelin.? The reliance dis-
cussed by this Court clearly encompassed reliance on prevailing
constitutional doctrine and such reliance cannot be defeated
merely by the arbitrary acts of governmental officials who dis-

agree with a particular position taken by this Court.

The purpose of Michelin can be clearly effected without retro-
active application of Michelin. In Michelin, this Court noted
that ultimate consumers should pay for local governmental
services funded by ad valorem property taxes on goods, much
as they pay for transportation costs associated with such goods.
423 U.S. __, 45 L.Ed.2d 505. The taxes assessed by the
City of Farmers Branch were assessed four years prior to
Michelin and the goods have been sold to the ultimate consumer.
Prior to Michelin, business decisions and ad valorem taxation
were based, in part, upon the absolute ban on ad valorem taxes
on imported goods. To reach back now and disturb past legal
relationships would not further the purpose of Michelin because
it would penalize those who relied upon Low, allow local muni-
cipalities to reap a windfall in added revenues without a
concomitant increase in the expenses of local services, and
not affect those who actually benefited from Low — the ulti-

mate consumer. Allowing full retroactive application of

* Other state courts have ignored or misapplied the concept of
reliance, some going so far as to hold that Low itself was not sufficient
as clear past precedent. See, e.g., Ralston Purina Co. v. County of Los
Angeles, 56 Cal. App. 3d 547, 128 Cal. Rptr. 556 (1976).

10

Michelin would require Matsushita, and all other similarly
situated importers, to absorb increased costs without being
able to internalize such costs in the goods which allegedly
benefited from such services.”

3. The questions presented are substantial.

The Supreme Court of Texas held, in part, that Michelin
was fully retroactive because this Court denied Michelin’s
petition for rehearing. The reasoning of the court further
illustrates the confusion permeating lower court decisions
faced with a prospective-retroactive problem. This Court has
held that a determination not to review a question imports no
expression of opinion on the merits. United States v. Carver,
260 U.S. 482, 490 (1923). Nevertheless, lower courts have
held that new decisions are fully retroactive in the absence of
a definitive statement by this Court. See, e.g., Bourns, Inc. v.
Allen-Bradley Co., 480 F.2d 123 (9th Cir.), cert. denied,
444 U.S. 1094 (1973); Ralston Purina Co. r. County of Los
Angeles, 56 Cal. App. 3d 547, 128 Cal. Rptr. 556 (1976).
Such a position has been severely criticized '' and does not
reflect past decisions of this Court. In both Lemon v. Kurtzman,
411 U.S. 192 (1973) and Chevron, this Court determined
that prior decisions '* were not to be applied retroactively and

the extensive discussion of the non-retroactivity doctrine would

' Reversing the facts in the present case would not change the
retroactive-prospective analysis. In situations where a taxpayer has
been successful against a taxing authority, courts have limited the
decision to prospective effect only. See Southern Pacific Co. v. Cochise
County, 92 Ariz. 395, 377 P.2d 770, 778 (1963).

'’ Beytagh, Ten Years of Non-Retroactivity: A Critique and a Pro-
posal, 61 Va. L. Rev. 1557, 1617 (1975).

'?Lemon v. Kurtzman, 403 U.S. 602 (1971): Rodrigue v. Aetna
Casualty & Surety Co. 395 U.S. 352 (1969).

il

have been wasted if the prior decision had foreclosed the issue.

This Court has held the issue of prospective overruling is
best resolved in a case where the issue of retroactivity would
be solely dispositive of the case. Gosa v. Mayden, 413 U.S.
665, 668 (1973); Relford v. Commandant, 401 U.S. 355,
370 (1971). The issues presented in the present petition
would be resolved by a determination by this Court of the
questions presented. Petitioner does not question the holding
of this Court in Michelin. Petitioner does however, request
that this Court determine whether state courts must apply the
Chevron standards to determine the retroactivity of a decision
of this Court and whether, under Chevron, Michelin should
be accorded prospective effect only. The failure of this Court
to resolve this confusion in the lower courts surrounding both
the doctrine of pro:pective overruling and the decision in
Michelin will result in great hardship to those who have made
decisions based upon settled constitutional law.

CONCLUSION

For the foregoing reasons. a Writ of Certiorari should issue
to review the judgment and opinion of the Supreme Court of
Texas.

Respectfully submitted,

Jerry L. Buchmeyer
2300 Republic National
Bank Building
Dallas, Texas 75201

Attorney for Petitioner

12

Of counsel:
Timothy R. McCormick
Thompson, Knight, Simmons &
Bullion
2300 Republic Bank Building
Dallas, Texas

Seth Waller
One Panasonic Way

Secaucus. New Jersey

CERTIFICATE OF SERVICE

I, Jerry L. Buchmeyer, attorney for petitioner Matsushita
Electric Corporation of America and a member of the Bar
of the Supreme Court of the United States, hereby certify
that on July 30, 1976, I served three copies of the foregoing
petition for writ of certiorari on the respondents herein by
hand-delivering the same to Ronald M. Mankoff, Esq., counsel
of record for the respondents, at his office at 3900 First National
Bank Building, Dallas, Texas. I further certify that all parties
required to be served have been served.

J Bachoiyre

erry L. Buchmeyer
2300 Republic National Bank Bldg.
Dallas, Texas 75201]

Attorney for Petitioner

A-1

APPENDIX

1. Opinion of the Supreme Court of Texas.

In the

Supreme Court of Texas

No. B-5551

City oF FARMERS BRANCH, TEXAS and T. E. WaLprip,

Petitioners,
v.

Matsusuita Evectric Corp. oF AMERICA,

Respondent.

Appeal from the Texas Court of Civil A ppeals
for the Twelfth Supreme Judicial District

May 5, 1976

This case involves an interpretation of Section 10 of Article

I of the Constitution of the United States, which provides in
part that,

“No State shall, without the Consent of Congress, lay any
Imposts or Duties on Imports or Exports . . .”

The City of Farmers Branch assessed a nondiscriminatory

ad valorem tax on merchandise stored in warehouses within

A-2

its limits. In 1972, it assessed such a tax on the merchandise
here in question. It had been imported from Japan and Puerto
Rico and was the property of Matsushita Electrical Corpora-
tion of America, a wholly owned subsidiary of a Japanese
corporation of a similar name.

The property had come to its destination in Farmers Branch,
but was still in its original corrugated cartons. Matsushita
declined to pay the tax. In this declaratory judgment suit, its
contention is that the tax on its property is unconstitutional
under the above provision of the Constit:tion of the United
States.

Because of the earlier decision of the Supreme Court of the
United States which this court is bound to respect, we at first
upheld the position of Matsushita. The Court of Civil Appeals
had held the property was not subject to taxation by the city,
and we upheld that decision by refusing a writ of error with
a notation, “no reversible error.” 527 S.W.2d 768. Upon the
same day upon which our court acted, January 14, 1976, the
United States Supreme Court announced its decision in Michelin
Tire Corporation v. Wages, _____ U.S. —____,, 96 $..Ct. 535,
46 L.Ed.2d 495. We thereafter granted a writ of error upon
rehearing. It is our opinion that under Michelin, the tax of the
City of Farmers Branch is not an unconstitutional tax. In the
words of the Michelin decision, an “*. . . assessment of a non-
discriminatory ad valorem property tax ... is not within the
constitutional prohibition against laying any imposts or duties
upon imports...”

The property which is the subject of the tax consists of
Panasonic units and parts manufactured by or for Matsushita

in Japan and Puerto Rico. The items were packed in sealed

A-3

corrugated cartons and were shipped to the United States in
sea vans. After the sea vans reached their port of entry, they
were shipped by rail to Fort Worth. The seals on the sea vans
were broken at Matsushita’s warehouse in Farmers Branch,
and the individual cartons were there unloaded and stored.
No manufacturing, repairing or servicing is carried on at the
Matsushita warehouse. The warehouse is used only to store
the merchandise until needed by retail dealers. The disputed
items were all in their unopened corrugated cartons.

Tre “original package doctrine” had its origin in Brown v.
State of Maryland, 25 U.S. 262 (1827), in which Chief Justice
Marshall wrote:

“When the importer has so acted upon the thing imported
that it has become incorporated and mixed up with the mass
of property in the country, it has, perhaps, lost its distine-
tive characteristic as an import, and has become subject to
the taxing power of the state; but while remaining the prop-
erty of the importer, in his warehouse, in the original form
or package in which it was imported, a tax upon it is too

plainly a duty on imports to escape the prohibition in the
constitution.”” [Emphasis supplied. ]

Brown v. Maryland was enlarged upon in 1871 by Low v.
Austin, 80 U.S. 29, which is characterized by the Supreme
Court in Michelin as “the leading decision of the court tha‘
the States are prohibited by the Import-Export clause from
imposing a nondiscriminatory ad valorem property tax on
imported goods until they lose their character as imports . . . ™

In Michelin, however, the Supreme Court, upon its own
initiative, carefully reviewed the Brown and the Low v. Austin

decisions; and it concluded that, “Low v. Austin was wrongly

decided. That decision therefore must be, and is overruled.”
We understand the holding of Michelin to be that where

A-4

the tax is not upon the importation or movement of imported
goods, and where the goods are no longer in transit, the goods
are subject to the imposition of nondiscriminatory ad valorem
property taxation by the states and their subdivisions.

We agree with the Supreme Court that there is no reason
why an importer should not bear his share of the cost of ser-
vices such as police and fire protection along with his com-
petitors who handie only domestic goods. As the Supreme
Court said in Mickelin, the Import-Export clause “ . . . cannot
be read to accord :mported goods preferential treatment that
permits escape from uniform taxes imposed without regard to
foreign origin for services which the State supplies.”

The ad valorem tax imposed by Farmers Branch is clearly
nondiscriminatory and applicable to all such stored goods
whether imported or not. The property of Matsushita is there-
fore subject to the tax.

In the alternative, Matsushita contends that because the
Supreme Court changed the law in Michelin in 1976, that it
should not be liable for taxes assessed for the vear 1972 and
bevond; i.e., that the Michelin decision should not be given
retroactive effect, and that it should only be liable for taxes
assessed after January 14, 1976, the date of the Michelin
decision. We disagree for the following reasons.

First, the taxes assessed by Gwinnett County, Georgia, in
the Wichelin case were for the years 1972 and 1973, the same
periods involved here. The Supreme Court upheld the judg-
ment of the Supreme Court of Georgia that the taxes were valid,
and at least by inference, that they were collectible. Michelin
filed a motion for rehearing in the Supreme Court, and we

were furnished with a copy of it. In the motion, Michelin

A-5

limited its argument to the retroactive eect of the Michelin
decision, and it urged the Supreme Court to declare its opinion
to be prespective only because it had changed the law in effect
for 100 years. The Supreme Court overruled Michelin's motion.

Second, Matsushita contends that it is inequitable to apply
the Michelin decision and our decision as applying to taxes
assessed in 1972 because under Low v. Austin and other
decisions, Matsushita and others then considered their goods
exempt from taxation. At the same time, however, Matsushita
was plainly informed and put upon notice by the City of
Farmers Branch that the city considered that the goods were
taxable, and that Low v. Austin and similar cases were wrongiy
decided and should be overruled. Thece is no basis for a
contention that Matsushita relied on any previous action or
non-action of the city because the city assessed the Matsushita
property for taxes at its first opportunity.

And thirdly, the reasons for the collectibility of the non-
discriminatory tax as to Matsushita for the years in question
are prominent in the Michelin decision. Matsushita’s property
during such period was afforded the same public services,
including police and fire protection, as were afforded to their
competitors and to others in the community; and ther: is no
great inequity in their having to bear their same fair and
equal share of such expense; i.e., the nondiscriminatory taxes
assessed during such period.

The judgments of the trial court and the Court of Civil
Appeals are reversed. The injunction issued by the trial court
enjoining the assessment and collection of the taxes involved

is dissolved; and judgment is here rendered that the merchan-

A-6

dise in question was and is subject to the nondiscriminatory
ad valorem personal property taxes.

/s/ Joe R. GREENHILL
Chief Justice
Opinion Delivered:
May 5, 1976

A-7
2. Judgment of the Supreme Court of Texas.
JUDGMENT

Extract from the Minutes of May 5, 1976

No. B-5551

City oF FARMERS BRANCH, TEXas and T. E. WAcprip,

v.

MATSUSHITA ELECTRIC CORPORATION OF AMERICA

This cause came on to be heard on writ of error to the Court
of Civil Appeals for the Twelfth Supreme Judicial District and
the original transcript and transcript showing the proceedings
in the Court of Civil Appeals having been duly considered,
because it is the opinion of the Court that there was error in
the judgments of the District Court and Court of Civil Appeals,
it is, therefore, adjudged, ordered and decreed that said judg-

ments be, and hereby are, reversed and set aside.

And this Court now proceeding to render judgment as should
have been rendered below, it is considered, adjudged, ordered
and decreed that the judgment be, and hereby is, rendered that
the merchandise in question was and hereby is, subject to the
nondiscriminatory ad valorem personal property taxes, and ac-
cordingly the injunction issued by the trial court enjoining the
assessment and collection of taxes involved be, and hereby is
dissolved.

It is further ordered that respondent, Matsushita Electric
Corporation of America, pay ail costs expended and incurred

A-8 A-9

in this Court, Court of Civil Appeals and District Court, that 3. Opinion of the Texas Court of Civil Appeals for the

petitioners, City of Farmers Branch et al., have and recover of } Twelfth Supreme Judicial District.
and from respondent, Matsushita Electric Corporation of Amer-

In the
ica, the costs by them expended and incurred in said Courts,

and that this decision be certified to the District Court of Dallas Texas Court of Civil Appeals

County, Texas, for observance.

oa FOR THE TWELFTH SUPREME JUDICIAL DISTRIC?
(Opinion of the Court by Chief Justice Greenhill)

No. 838

City oF FARMERS BRANCH, Texas and T. E. WALpRIP,
Appellants,

v.

MATSUSHITA ELECTRIC CORPORATION OF AMERICA,
Appellee.

Appeal from the 134th Judicial District Court.

July 31, 1975

Plaintiff-appellee, Matsushita Electric Corporation of Amer-
| ica (MECA) brought suit against appellants, City of Farmers
y Branch, Texas, and T. E. Waldrip, the Tax Assessor-Collec r

of Farmers Branch, seeking a declaratory judgment that certain

inventory on hand at MECA’s Farmers Branch warehouse on

A-10

January 1, 1972, is exempt from taxation by virtue of the pro-
visions of Article 1, Section 10, Clause 2 (the Import-Export
Clause) of the United States Constitution. Further, MECA
sought both temporary and permanent injunctions, enjoining
Farmers Branch and Waldrip from attempting to impose, col-
lect or enforce any taxes upon or with respect to the disputed
inventory for the year of 1972. The trial court held that imported
merchandise brought from Japan and stored in its original
cartons in MECA’s Farmers Branch warehouse was exempt from
taxation, but that any merchandise stored in MECA’s warehouse
in Farmers Branch which was received from any other MECA
warehouse in the United States was not exempt even if the mer
chandise remained in its original cartons. Also, the court held
that any merchandise imported from Pu* to Rico and stored in
MECA’s warehouse in Farmers Branch was not exempt. The
parties filed stipulated facts, and pursuant to appellants’ re-
quest, the trial court filed findings of fact and conclusions of law.
We have this day decided an appeal in City of Farmers
Branch, et al v. American Honda Motor Co., Inc., No. 839, which
appeal raised some of the same questions as are presented here.
This cause of action arose by virtue of appellants’ imposition
of an ad valorem tax on personal property located within
Farmers Branch, under the power vested in it by Article 1165
of the Texas Revised Civil Statutes. MECA rendered to Farmers
Branch for taxation certain personal property situated in its
warehouse. MECA had additional personal property valued at
$2,425,334.70 situated in its Farmers Branch warehouse which
it did not render, claiming that the property was exempt under
Article 1, Section 10, Clause 2, of the United States Constitution.

Of that amount, the total value of Panasonic products imported

A-1]

from Puerto Rico was $140,714.71. It is undisputed that MECA
claimed this exemption and pursued all administrative remedies,
but was denied the claimed exemption for the disputed inventory.

No manufacturing, repairing or servicing is carried on at
the Farmers Branch warehouse, as it is only used to store the
imported products prior to their sale and shipment to retailers,
de: lers, distributors and others in Texas, Louisiana, Mississippi,
Arkansas, Oklahoma and three counties in Tennessee.

MECA did not claim any exemption from the ad valorem tax
for (1) non-inventory property, (2) property not imported from
outside the United States or (3) for imported products which
had been removed from the corrugated cartons in which they
were shipped from outside the United States. MECA did claim
an exemption from taxation for the imported Panasonic products
which remained in their original unbroken packages and were
imported from either Japan or Puerto Rico.

The Panasonic products imported from Japan were manutac-
tured in Japan and placed in corrugated cartons by the foreign
manufacturer. Each carton was taped or stapled at the factory
and was loaded into a large sea van, 40 feet long, 8 feet high and
814 feet wide, weighing 6,260 pounds, and leased by an inde-
pendent common carrier. After a sea van was loaded, it pro-
ceeded to dockside, was separated from its wheels and cab by
crane and loaded onto a ship, where title to the products passed
to MECA. The ship proceeded to the United States and at
Seattle, Washington, the port of entry, federal custom duties
were paid on the products. The entire van was removed from
the ship by crane and affixed to a railroad flat car, by which it
proceeded to Fort Worth, Texas. There, the van was once again
afhxed wheels and a cab and proceeded directly to MECA’s

A-12

,

warehouse in Farmers Branch. Upon the van’s arrival at the
warehouse, each of the original corrugated cardboard cartons was
unloaded and placed in the warehouse. Throughout the entire
process described, the original corrugated cartons remained
taped and/or stapled and were stored in that condition in the
warehouse until an order was received from a dealer or dis-
tributer to purchase the particular products contained in the
cartons. After unloading, the van was immediately returned to
the carrier for use in transporting goods of other manufacturers
and importers. At all times the van was owned or leased by the
independent common carrier and MECA at no time had direct
control over its progress. The Panasonic products imported from
Puerto Rico were purchased by and shipped to MECA in the
same manner as those imported from Japan except that the port
of entry was New Orleans, Louisiana.

On a few occasions, when the MECA warehouse in Farmers
Branch was in short supply of a particular Panasonic product,
MECA made arrangements for a shipment of these products
from another MECA warehouse in the United States. When
these products arrived at the Farmers Branch facility they were
in the original unbroken cartons in which they were imported
from Japan or Puerto Rico.

In their first point, appellants maintain that the trial court
erred in concluding that the goods in the Farmers Branch ware-
house of MECA on January 1, 1972, had not been incorporated
into the mass of goods in the United States, and, therefore, were
st'll “imports” for the purposes of Article 1, Section 10, Clause
2 of the United States Constitution. Appellants argue that (1)
the disputed inventory, through an elaborate marketing system,

has lost its character as imports; (2) the disputed inventory

A-13

has been fully committed to appellee’s operational needs and,
therefore, should not be tax exempt; and (3) the act of importa-
tion may end, and in this case has ended, before the goods are
removed from the original package. We disagree.

Article 1, Section 10, Clause 2 of the United States Constitu-

tion provides:

“No State shall, without the Consent of the Congress, lay
any Imposts or Duties on Imports or Exports, except what
may be absolutely necessary for executing its Inspection
laws...”

In Brown vy. State of Maryland, 25 U. S. (12 Wheat.) 419,
6 L. Ed., 678 (1827), the Supreme Court interpreted the
Import-Export Clause and adopted what has become known as
the “original package” doctrine. The Court stated, speaking

through Chief Justice Marshall:

.

*.. . When the importer has so acted upon the thing im-
ported, that it has become incorporated and mixed up with
the mass of property in the country, it has, perhaps, lost its
distinctive character as an import, and has become subject
to the taxing power of the State; but while remaining the
property of the importer, in his warehouse, in the original
form or package in which it was imported, a tax upon it is
too plainly a duty on imports to escape the prohibition in
the constitution.” Brown v. State of Maryland, supra,
p. 441-2.

The United States Supreme Court has continued to apply
the original package doctrine in Low v. Austin, 80 U. S. (13
Wall.) 29 (1872) ; Hooven & Allison Co. v. Evatt, 324 U.S. 652,
65 S. Ct. 870 (1945); and Dept. of Revenue v. Beam Distilling
Co., 377 U. S. 341, 84 S. Ct. 1247 (1964). Some of the more
recent state and federal court decisions which apply the “original

package”’ doctrine to imported goods held for sale are: Wages

A-14

v. Michelin Tire Corporation, 214 S. E. 2d 349 (Georgia S. Ct.,
1975) cert. granted; Wilson v. County of Wake, 199 S. E. 2d
665, 668 (N.C. Ct. App. 1973); Price Paper Corporation v.
Detroit, 202 N. W. 2d 523, 525 (Ct. App., Mich. 1972) ; Sterling
Liquor Distributors Inc. v. County of Orange, 83 Cal. Rptr. 571
(Ct. App., Cal. 1970) cert. denied, 400 U. S. 822 (1970);
Tricon, Inc. v. King County, 60 Wash. 2d 392, 274 P. 2d 174
(1962) cert. denied, 372 U. S. 908 (1963) ; Standard-Triumph
Motor Company v. City of Houston, Texas, 220 F. Supp. 732,
734 (S. D. Tex. 1963) vacated on other grounds, 347 F. 2d 194
(Sth Cire. 1965) cert. denied 382 U. S. 974, 86 S. Ct. 539
(1966) ; State ex rel H. A. Morton Company v. Board of Review,
City of Milwaukee, 15 Wis. 2d 330, 112 N. W. 2d 914 (1962);
Miehle Printing Press and Manufacturing Company v. Depart-
ment of Revenue, 18 Ill. 2d 445, 164 N. E. 2d 1, (Ill. 1960);
Singer Co. v. County of Kings, 121 Cal. Rep. 398, (Ct. of App.,
Cal. 1975).

In the case at bar, the disputed inventory remained as the
property of MECA, in MECA’s Farmers Branch warehouse in
the corrugated cartons in which it was imported. Therefore,
applying the “original package” doctrine, we believe that a tax
upon the disputed inventory could not escape the prohibition

set forth in the Import-Export Clause of the Constitution.

In Youngstown Sheet and Tube Company v. bowers, 358
U. S. 534, 541-2 (1959), 79 S. Ct. 383, the Supreme Court,
relying upon Brown v. Maryland, reemphasized some of the acts
or conduct of the importer that would deem the importer to
have ‘so acted upon the thing imported’ as to cause it to be ‘mixed

up with the mass of property in the country (and to !ose) its

A-15

distinctive character as an import.’ The Court stated that goods
lost their character as imports when the importer (1) ‘sells
them,’ (2) ‘(breaks up his packages, and (travels) with them
as an itinerant pedlar’ or (3) when goods are brought into this
country by an importer ‘for his own use’ and are here ‘used’ by

him. Also, see Brown v. Maryland, supra.

In the case at bar, at the time of the controversy MECA had
not (1) sold the disputed inventory, (2) broken the disputed
inventory out of the corrugated cartons in which it was imported,
nor (3) brought the disputed inventory into the country for its
own use and here used the inventory in such a manner that it
has become incorporated and mixed up with the mass of prop-

erty in the country.

Appellants attempt to rationalize by analogy the facts involved
in the case at bar with the op'nion of the court in Youngstown
in which the court stated that the iron ore, lumber, and veneers
had been irrevocably committed to use in manufacturing at the
plants to which they were shipped and that the iron ore, lumber
and veneers were necessarily required to be kept on hand to
meet current operational needs and were actually being used
to supply those needs. To show that imported goods which are
held for sale should be treated similarly to imported goods held
for use in manufacturing, appellants cite a quote from Hooven
& Allison Co. v. Evatt, supra, which is discussed in the following
quotation from Youngstown, supra, 542:

“In Hooven & Allison Co. v. Evatt, 324 U.S. 652, 65 S. Ct.
870, 89 L. Ed. 1252, it was held that goods imported for
‘use’ share the same immunity as goods imported for ‘sale,’
and that goods imported ‘for manufacture (do not) lose

their character as imports any sooner or more readily than
imports for sale’ (id., 324 U. S. at page 667, 65 S. Ct. at

A-16

page 373); but ‘when (the imported goods are) used for
the purpose for which they are imported, they cease to be
imports and their tax exemption is at an end.’ Id., 324 U. S.
at page 665, 65 S. Ct. at page 877.”

The Youngstown case has been distinguished many times from
cases similar to the case at bar, and we believe that the facts
involved here are distinguishable from Youngstown. Later in
the Youngstown opinion is found this language (79 S. Ct. 389):

.

*, . . The constitutional design was then to immunize im-
ports from taxation by the importing States, and all others
through or into which they may pass, so long as they retain
their distinctive character as imports. Hence, that design is
not impinged by the taxation of materials that were im-
ported for use in manufacturing after all phases of the
importation definitely have ended and the materials have
been ‘put to the use for which they were imported’ (Hooven
& Allison Co. v. Evatt, supra, 324 U.S. (652) at page 657,
65 5S. Ct. at page 873) for in such a case they have lost their

distinctive character as imports and are subjection to
taxation...”

We agree with a quote from Tricon, Inc. v. King County,
supra, p. 176:
“We do not think the Supreme Court has indicated by
implication that goods imported for resale, and which re-
main in their original containers, lose their character as

imports immune from state taxation when they become a

part of the importer’s current inventory of goods held for
sale.”

Appellants’ first point is overruled.
In their second point appellants maintain the trial court erred

in concluding that the general property tax imposed on the dis-

puted inventory is an “impost” or “duty” within the meaning of

A-17

the import clause of the United States Constitution. Appellants
argue that Youngstown established that a non-discriminatory
property tax does not viclste the Import-Export Clause, and
that the language of the Import-Export Clause indicates that a
general property tax was not within its intended prohibition.
We disagree.

The Supreme Court of the United States has rejected appel-
lants’ argument in Low v. Austin, supra, by holding that while
goods retain their character as imports, a tax upon them in any
form is within the constitutional prohibition. The court stated:
“The question is not as to the extent of the tax, or its equality
with respect to taxes on other property, but as to the power of
the state to levy any tax.” (Emphasis added.) If, in fact, any
discrimination against domestic and in favor of foreign pro-
ducers of goods does result because of the tax immunity of
imports, such discrimination is implicit in the constitutional
provision and in its purpose to protect imports from state taxa-
tion. Hooven & Allison Co. v. Evatt, supra. Moreover, the dis-
puted inventory was subject to substantial custom duties while

domestic goods are not.

The rationale of Low and Hooven thai all taxes, even non-
discriminatory ad valorem taxes, are unconstitutional if imposed
upon merchandise which retains its status as imports has been
reafirmed in Richfield Oil Corp. v. State Board of Equalization,
329 L. S. 69, 76, 67 S. Ct. 156 (1946) and Department of
Revenue v. James Beam Distilling Company, supra, p. 343.

Appellant also argues that the rationale employed in interstate
commerce cases should be applied to the disputed inventory so

that a non-diseriminatory tax will not violate the import clause.

A-18

The Import-Export Clause and the Commerce Clause, while
related, are not coterminous. There are two important differences
between the two clauses. First the Import-Export Clause prohibits
taxation by the states on the import or export, while the appli-
cation of the Commerce Clause has no relationship to whether
an article was, or ever had been, an import or export. Second,
the Commerce Clause is not cast in terms of a prohibition against
taxes but in terms of power of the Congress to regulate com-
merce. The Import-Export Clause does not prohibit every state
from laying “any discriminatory” tax on imports or exports,
but rather prohibits the state from laying “any” tax — “except
what may be absolutely necessary for executing its inspection
laws.”” Richfield Oil Corp. v. Board of Equalization, supra, 67
S. Ct. 159-60. Consequently, we cannot write any qualifications
into the Import-Export Clause. Appellants’ second point is
overruled.

In their third point, appellants maintain the trial court erred
in concluding that the goods stored in the Farmers Branch ware-
house of MECA had not been removed from the containers in
which they had been transported into this country and, there-
fore, were not subject to local taxation under the “original
package” doctrine. Appellants argue that the sea van is the
original package since it is the container in which the units are

shipped from Japan or Puerto Rico. We do not agree.

The facts in the case at bar reveal that the sea van is fur-
nished by the steamship lines for the purpose of carrying the
corrugated cartons overseas and that when the sea vans are
unloaded at Farmers Branch, they are returned to the steamship

line for use in transporting goods of other manufacturers and

A-19

importers. The mere use of new technology in shipping should
not destroy the tax immunity of the property shipped. Here,
the use of the sea van did not go to the essential nature of the
transaction, but only to formalities of transportation. Therefore,
we do not believe that the opening of the sea vans constitutes
the breaking of the original packages. Wages v. Michelin Tire
Corporation; supra; Montgomery Ward & Co., Inc. v. County
of Alameda, 390 Fd. Supp. 177 (N. D. Cal. 1975); Michigan
State Tax Commission vy. Garment Corpoartion, 32 Mich. App.
715, cert. denied, 404 U. S. 992 (1971).

In its first cross-point, appellee maintains the trial court erred
in holding that merchandise which was imported by MECA and
stored at MECA’s warehouse in Farmers Branch in its original,
unbroken cartons, was not exempt from taxation under the
Import-Export Clause if it was first stored in some other MECA

warehouse in the United States. We sustain appellee’s contention.

We are unable to distinguisn between the situation in which
the disputed inventory is shipped directly from its port of entry
to Farmers Branch and the situation in which the disputed inven-
tory is stored in the corrugated cartons in which it was shipped
in another MECA warehouse in the United States before it is
shipped to Farmers Branch. The Import-Export Clause was in-
tended to immunize imports from taxation by the importing
states, and all other states through or into which they may pass
so long as they retain their distinctive character as imports.
Youngstown Sheet & Tube Co. v. Bowers, supra, p. 389. It mat-
ters not that the imported merchandise is stored in the original
packages at the importer’s warehouse at the port of entry or in

an interior state. This tax immunity attaches and “survives their

A-20

arrival in this country and continues until they are sold, removed
from the original package, or put to the use for which they are
imported.” Hooven & Allison Co. v. Evatt, supra, p. 657; Wilson
v. County of Wake, supra.

Therefore, we believe the trial court erred in holding that
the disputed inventory, which was stored in the “surplus” stor-
age area of another warehouse before it was shipped to the
Farmers Branch warehouse, is not exempt from taxation. This
portion of the judgment is reversed and rendered for appellee.

In its second cross point, appellee maintains that the trial
court erred in holding that merchandise imported by MECA into
the United Siates from Puerto Rico was not an “import” within
the meaning of the Import-Export Clause of the United States
Constitution. We sustain appellee’s ceniention.

Merchandise which is brought into the United States from a
piace without the country, even though the merchandise does
not come from a foreign country, may be considered as
“imports.” The only material question which must be deter-
mined is whether it came from a place without the country.
Hooven & Allison Co. v. Evatt, supra, 671.

The United States acquired Puerto Rico by cession without
obligation to admit it to statehood or to incorporate it as a part
of the United States. We do not believe Puerto Rico is a part
of the United States in the sense that it is subject to and enjoys
the benefits or protection of the Constitution as do the States
which are united under the Constitution. Hooven & Allison Co.
v. Evatt, supra, 678.

Puerto Rico is apparently now a commonwealth. An instru-
ment of government or constitution was adopted by Puerto Rico

pursuant to a congressional statute; and it seems to have more

A-21

autonomy than a territory but is short of statehood. If not “a
territory” it is not a part of the country proper. Merchandise
brought into one of the United States from Puerto Rico would
be “imports” under the Import-Export Clause of the U. S. Con-
stitution and entitled to the immunity from taxation as goods
from a foreign country. See Rice Growers’ Assn. of California
v. County of Yolo, 94 Cal. Rep. 847, 852, 853 (Ct. of App.,
Cal. 1971).

Therefore, 2 believe that the trial court erred in holding
that merchandise imported by MECA into the United States from
Puerto Rico was not an “import,” and that portion of the trial
court’s judgment is reversed and judgment is rendered in favor

of appellee.

The judgment of the trial court is affirmed in part and re-
versed in part, and judgment is here rendered for appellee to
that portion of the judgment which is reversed.

Since we have affirmed the judgment in part and reversed
in part, we tax the costs on appeal and in the court below
equally against appellants and appellee. Coca Cola Bottling
Company of Houston v. Hobart, 423 S. W. 2d 118, 126 (Tex.
Civ. App. — Houston 14th Dist., 1967, writ ref’d, n. r. e.);
Combined American Insurance Company v. The City of Hills-
boro, 421 S. W. 2d 488, 491 (Tex. Civ. App. — Waco, 1967,
writ ref’d, n. r. e.); Wichita National Bank v. United States
Fidelity & Guaranty Co., 147 S. W. 2d 295, 298 (Tex. Civ. App.
— Fort Worth, 1941, n. w.h.); Rule 448, T. R. C. P.

/s/ CoNNALLY McKay
Associate Justice
Opinion delivered:

July 31, 1975.

A-22

ON MOTION FOR REHEARING

Appellee Matsushita Electric Corp. of America, moves for
a rehearing only insofar as our original opinion and judgment
taxes the cost one-half to appellants and one-half to appellee.
In our original opinion the judgment of the trial court was
affirmed in part and reversed and rendered in part. We taxcd
the cost one-half to appellants and one-half to appellee.

However, appellee reminds us that the portion of the trial
court’s judgment we reversed was on the cross-points of appellee
and therefore all relief was denied to the appellants and full
relief granted to appellee.

We confess our error in this regard and accordingly that
portion of our origina! decision in this cause is modified to the

extent that all of the costs are taxed against the appellants.

Appellants also have filed a motion for rehearing which we
have duly considered and same is overruled.

/s/ CONNALLY McKay

Associate Justice
Opinion delivered:

August 28, 1975

A-23

4. Judgment of the Texas Court of Civil Appeals for the
Twelfth Supreme Judicial District.

JUDGMENT

Extract from the Minutes of August 28, 1975.

No. 838

City oF Farmers Brancu, Texas and T. E. WALprRiP
v.

MATSUSHITA ELECTRIC CORPORATION OF AMERICA

The judgment heretofore entered on July 31, 1975, is set aside
and same withdrawn and the following judgment is entered in
lieu therefor, to-wit.

THIS CAUSE having been transferred to this Court from the
Court of Civil Appeals for the Fifth Supreme Judicial District
of Texas by Order of the Supreme Court, and said cause coming
on to be heard on the transcript of the record, and that the same
being inspected, it is the opinion of the Court that there was
error in the judgment as entered by the trial court, and that the
same should be affirmed in part and reversed and rendered
in part.

It is therefore ORDERED, ADJUDGED and DECREED that
that portion of the trial court’s judgment holding that merchan-
dise which was imported by Matsushita Electric Corporation of
America and stored in its warehouse in Farmers Branch in its
original, unbroken cartons, was not exempt from taxation if it
was first stored in another of its warehouses in the United States

A-24

is hereby reversed and judgment is here rendered for appellee,
Matsushita Electric Corporation of America; it is further
ORDERED, ADJUDGED and DECREED that that portion of
the trial court’s judgment holding that merchandise imported
by Matsushita Electric Corporation of America into the United
States from Puerto Rico was not an “import” and was subject
to taxation is hereby reversed and judgment is hereby rendered
for the appellee, Matsushita Electric Corporation of America;
that in all other respects, the judgment of the trial court is af-
firmed; and that the appellee, Matsushita Electric Corporation
of America, recover of and from the appellants, City of Farmers
Branch, Texas, and T. E. Waldrip, jointly and severally, all costs
in this behalf expended, both ia this court and the court below
for all of which execution may issue, and that this decision be

certified to the court below for observance.

A-25

5. Opinion of the Supreme Court of Texas in a related
case, City of Farmers Branch, Texas et al v. American
Honda Motor Company, Inc.

In the

Supreme Court of Texas

No. B-5550

City OF FARMERS Brancu, Texas and T. E. WaALpriP,

Petitioners,
v.

AMERICAN Honpa Motor Company, INc.,
Respondent.

A ppeal from the Texas Court of Civil Appeals
for the Twelfth Supreme Judicial District

May 5, 1976

This is a companion case to our Cause Number B-5551, City
of Farmers Branch v. Matsushita Electric Corp. of America,
decided this day. _____. $.W.2d _._____. The cases were
submitted and argued together in this court.

The Honda warehouse in Farmers Branch stores parts and

accessories for Honda automobiles, motorcycles, and outboard

A-26

motors. The parts and accessories were imported from Japan
in sealed sea vans. As in Matsushita, Farmers Branch assessed
ad valorem personal property taxes on these items for the year
1972. Honda declined to pay the tax and brought this suit for
a declaratory judgment that the merchandise was tax-exempt
under the import-export clause, Section 10 of Article 1 of the
United States Constitution.

The questions are the same as those presented in Matsushita,
and the disposition of those questions in Matsushita control
the disposition of this cause.

The judgments of the trial court and the Court of Civil
Appeals are reversed; the injunction entered by the trial court
against the assessment and collection of the taxes is dissolved:
and judgment is here rendered that Honda is subject to the

non-discriminatory ad valorem taxes assessed by Farmers
Branch.
/s/ Joe R. GREENHILL
Chief Justice
Opinion delivered:
May 5, 1976

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_0371%3A1. Public record. Not legal advice.