Opposition Brief — Williamson Marine Transport, Inc. v. Louisiana Tax Commission

LIK ARY | FILED.

- ee SEP 6 18%

No. 74-103 ; a

in the

Supreme Court of the United States

OCTOBER TERM, 1974

WILLIAMSON MARINE TRANSPORT, INC.,

TRI-W TowiNG COMPANY, INC., AND

GREENVILLE TOWING COMPANY, INC.,

Petitioners,

Vv.

LOUISIANA TAX COMMISSION,

Respondent.

BRIEF IN OPPOSITIO:' TO PETITION FOR

WRIT OF CERTIORARI

WILLIAM J. GUSTE, JR.,

Attorney General,

State of Louisiana.

WARREN E. MOULEDOUX,

First Assistant Attorney General,

State of Louisiana.

LOUIS M. JONES,

Assistant Attorney General,

State of Louisiana.

7th Floor — 2-3-4 Loyola Building

New Orleans, Louisiana 70112

(504) 527-8375

i

TABLE OF CONTENTS

I Statement of the case 2......0...........-cecccsccceccosenee 1

II Statement of the facts 0000000. eeeeeeeeeeeee 3

i ogee cea en ee ee 4

ir, MI occ ncere sl eect ee eee 8

F oc 10

TABLE OF AUTHORITIES

CASES:

Braniff Airways, Inc. v. Nebraska State Board of

Equalization and Assessment, 347 U.S. 590;

Pe I UN osc ricmsecctendcakcs. 8

National Bellas Hess, Inc. v. The Department of

Revenue, 386 U. S. 753; 87 S.Ct. 1889 (1967) 7

Northwestern States Portland Cement Co., v. Min-

nesota, 358 U.S. 79 S.Ct. 357 (1959) 20... 7

Ott v. Mississippi Valley Barge Line Co., 336 U.S.

169; 69 S.Ct. 482 (1949) oo. 2, 4, 5, 9

Pullman’s Palace Car Co. v. Commonwealth of

Pennsylvania, 141 U.S. 18; 11 S.Ct. 876

Ment ted RC SEAT Ss EE AAT ORE 7

STATUES AND CONSTITUTIONAL PROVISIONS

U.S. Const. Article 1, Sec. 8, Cl. 3 000.000 2

U.S. Const. Article XIV, See. Loo... ccoeececceceeeeeeee 2

Louisiana Act No. 59 of 1944 00. 1, 5, 9

Louisiana Revised Statutes 47:1984 1, 5, 6

Louisiana Revised Statutes 47:1984(4) 000000000... 7

RL ORES IN RAE CLR Te tn ear yipnct Eg

PRIOR ELE RI OEP AOe

OIE EIEN St BR es

Fo PE Py Heke

No. 74-103

In the

Supreme Court of the United States

OCTOBER TERM, 1974

WILLIAMSON MARINE TRANSPORT, INC.,

TrI-W TOWING COMPANY, INC., AND

GREENVILLE TOWING COMPANY, INC.,

Petitioners,

Wa

LOUISIANA TAX COMMISSION,

Respondent.

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

TO THE HONORABLE CHIEF JUSTICE AND AS-

SOCIATE JUSTICES OF THE SUPREME COURT

OF THE UNITED STATES:

May it Please the Court:

Statement of the Case

These proceedings were commenced by Petitioners

challenging the constitutionality of tax assessments for

the years 1973 and 1974 made by the Louisiana State

Tax Commission. These assessments were made pur-

suant to LA-R.S. 47:1984; La. Act No. 59 of 1944.

Petitioners claim these assessments violate the Due

Process Clause of the Fourteenth Amendment and the

2

Commerce Clause of the United States Constitution,

U. S. Const., Article 1, Sec. 8, Cl. 3; U. S. Const.,

Amendment Article XIV, Sec. 1.

Respondent answered Plaintiffs’ original and

amended petitions; then filed an exception of no cause

of action on the ground that the United States Su-

preme Court in Ott v. Mississippi Valley Barge Line

Co., 336 U. S. 169, 69 S.Ct. 432 (1949) upheld Re-

spondent’s right to tax Plaintiffs under the factual

allegations contained in Plaintiffs’ petition.

Argument on Respondent’s rule to show cause

was heard on September 4, 1973, and on September

21, 1973 the Louisiana District Court handed down

written reasons sustaining Respondent’s peremptory

exception of no cause of action, Petitioners’ Appendices

B 5a. Judgment in favor of Respondent and against

Plaintiffs dismissing the action at Plaintiffs’ cost was

signed on October 19, 1973. Thereafter, Plaintiffs filed

a petition praying that they be granted a devolutive

appeal from said decision, and on October 23, 1973,

the District Court granted a devolutive appeal. The

Court of Appeal, First Circuit, State of Louisiana,

affirmed the judgment of the District Court on March

18, 1974, Petitioners’ Appendices C 9a. Rehearing was

refused April 22, 1974. Application for a writ of cer-

tiorari to the Court of Appeal, First Circuit was made

to the Louisiana Supreme Court. The writ was denied

by the said Supreme Court on May 31, 1974 which held

that there was no error of law.

Petitioners now seek a writ of certiorari from

3

this Court to review the decisions of the Louisiana

Court of Appeal and Supreme Court.

Il

Statement of the Facts

Respondent recognizes, that for the purpose of

this application, the well pleaded facts of Petitioners

are to be accepted as true. Those statements in Plain-

tiffs’ petition which are conclusions of law as stated

in the District Court’s reasons for judgment need not

be accepted as true.

Plaintiffs’ petition states that their businesses

consist solely of the conducting of towage operations

whereby they tow barges from outside Louisiana into

the State to the port of New Orleans and Baton Rouge.

Plaintiffs allege that all cargoes are solicited from

outside the State; further, that they are entities or-

ganized and created under the laws of other States

owning no property or other assets in the State of

Louisiana. Piaintiffs’ aver that they have no offices,

agents or employees in Louisiana. Plaintiffs further

concede and stipulate, that their vessels also carry

cargo back up river out of the State of Louisiana.

Plaintiffs’ other allegations are conclusions of

law, as stated by the District Court. Specifically the

allegation that Plaintiffs have no contact with the

state of Louisiana sufficient to create a situs for taxa-

tion of its barges and tow boats is a legal conclusion

which restates the very constitutional point at issue.

+

Ill

Argument

Respondent contends that the right of the State

of Louisiana to impose ad valorern tax assessments on

barge lines whose lines are partly within the State

of Louisiana was conclusively settled by the United

States Supreme Court in Ott v. Mississippi Valley

Barge Line Co. 336 U.S. 169, S.Ct. 432 (1949).

Plaintiffs’ list three requirements which they feel

are necessary in order for an ad valorem tax to be im-

posed on a taxpayer engaged in interstate commerce.

(1) The taxpayer must maintain such minimal

contacts within the taxing State so as to be

deemed doing intrastate business in the State;

(2) The property sought to be taxed must be

present within the taxing State;

(3) The tax must be properly apportioned so that

it bears a relation to the benefits afforded

by the taxing State.

Plaintiffs claim that the existence of offices or

agents was a fundamental factor in the Ott decision

and that in the present case there are no offices or

agents.

The logic of Plaintiffs must fail as any doubt as

to what Ott says can be resolved by reading the deci-

sion of the court in that case. If, as Plaintiffs state,

the existence of offices and agents in the State was a

fundamental basis for the Ott decision, then why did

the Supreme Court make no further mention of this

5

t *

fact that bne sentence in the first paragraph of the

decision which reads:

“Each has an office or agent in Louisiana but its

principal place of business is elsewhere.”

It seems rather incredible that if this one sentence

was the fundamental basis for the decision in Ott

that no mention or discussion of the importance of

that fact would be made by the Court at any place in

its decision.

Further, the Statute under which these assess-

~ments are made, La. R.S. 47:1984, La. Act 59 of 1944

would have been declared unconstitutional by the

United States Supreme Court in the Ott case. It is

well established law that courts must construe statutes

as they are written.

The existence of offices and agents in the Ott

case played no part in the decision of the United States

Supreme Court.

Plaintiffs are correct however in stating that

minimal contact with the State is necessary for taxa-

tion. ~

The test, however, for what is the minimal contact

required was clearly stated by the U.S. Supreme Court

in Ott v. Mississippi Valley Barge Line Co., 69 S.Ct.

432, 435, 336 U.S. 169, 175:

“Tt is argued that the doctrine of the Pullman

case is inapplicable here because its basis is the

continuous protection afforded by the taxing state

throughout the tax year to a portion of the com-

merce. See 141 U.S. at page 26, 11 S.Ct. at page

~“

a4

6

879. (citations omitted). It is said in this case

that the visits of the vessels to Louisiana were

sporadic and for fractional periods of the year

only and that there was no average number of

vessels in the state every day. The District Court

indeed said that there was no showing that the

particular portion of the property sought to be

taxes was regularly and habitually used and em-

ployed in Louisiana and for the whole of the tax-

able year.

We do not stop to resolve the question. Louisi-

ana’s Attorney General states in his brief that the

statute ‘was intended to cover and actually covers

here an average portion of property permanently

within the State — and by permanently is meant

throughout the taxable year.’ Appellees do not

suggest an absence for any administrative or

judicial remedy in Louisiana to correct error in

the assessments.”

The position of the State of Louisiana as to who is

covered by the statute is the same as it was in 1949. As

the Louisiana District Court in its written reasons for

judgment stated:

“Plaintiffs do not say that the Tax Com-

mission has unfairly apportioned the tax assess-

ments in question. They merely charge 1) that

there is not sufficient connection between the

State of Louisiana and their towing business to

support the tax here levied, and 2) that the chal-

lenged tax places an undue burden in inter-state

commerce.”

Since La. R.S. 47:1984 has been determined in the

Ott case to be constitutional, if Plaintiffs feel they do

7

not come under the coverage of the statute because they

feel they are not doing sufficient business to be con-

sidered minimal contact as defined in Ott, they have a

right to judicial review of the assessment made which

review is provided for in La. R.S. 47:1984(4).

Instead of asserting this right, Plaintiffs have

taken the position that a lack of physical presence of

agents or employees in the State, in and of itself, pro-

hibits the taxing power of the State of Louisiana from

being applicable to them.

To support their position Plaintiffs cite North-

western States Portland Cement Co. v. Minnesota, 358

U.S. 450, 79 S.Ct. 357 (1959), and National Bellas

Hess, Inc. vs. The Department of Revenue, 386 U.S.

753, 87 S.Ct. 1389 (1967). These cases involve privi-

lege and use taxes and not ad valorem taxes that we are

concerned with here.

Privilege or use taxes are not at issue here and

Respondent claims no right under the statute in ques-

tion to exact such taxes from Plaintiffs.

As the Supreme Court of the United States stated

- in Pullman’s Palace Car Co. v. Commonwealth of Penn-

sylvania, 141 U.S. 18, 11 S.Ct. 876 (1891).

“Much reliance is also placed by the plaintiff

in error upon the cases in which this court has

decided that citizens or corporations of one State

cannot be taxed by another State for a license or

privilege to carry on interstate or foreign com-

merce within its limits.

But in each of those cases the tax was not

8

upon the property employed in the business, but

upon the right to carry on the business at all, and

was therefore held to impose a direct burden upon

the commerce itself. (Citations omitted).

The tax now in question is not a license tax

or a privilege tax; it is not a tax on business or

occupation; it is not a tax on, or because of, the

transportation, or the right of transit, of persons

or property through the state to other states in

countries. The tax is imposed equally on corpora-

tions doing business within the states, whether

domestic or foreign, and whether engaged in in-

terstate commerce or not. The tax on the capital

of the corporation, on account of its property

within the State, is in substance and effect, a tax

on that property.”

Plaintiffs further cite Brainiff Airways, Inc. v.

Nebraska State Board of Equalization and Assessment,

347, U.S. 590, 74 S.Ct. 757 (1954). In view of the fact

that reference was made to rented ground facilities,

Plaintiffs feel this case supports their position. To the

contrary this case, as does Ott, supports the position

that interstate commerce can be made to bear a non-

discriminatory portion of the tax burden of the State

where the tax bears a relation to benefits conferred by

the State. The rented facilities had no relation to the

tax as the property being taxed was aircraft flight

equipment determined to be permanently in the State

although used in interstate commerce.

IV

Conclusion

In summary, Respondent feels that the jurispru-

9

dence is clear that having offices or agents is not the

test for ad valorem taxation as it might be for a tax on

gross receipts. The minimal contact requirement is met

by Petitioners having an average portion of property

permanently within the State throughout the taxing

year as stated by the Supreme Court of the United

States in Ott v. Mississippi Valley Barge Lines, supra.

Further, because the statute in question makes no

mention of offices or agents as Plaintiffs suggest, this

factor could not have played any part in the decision

of the U.S. Supreme Court in the Ott case as the Court

was bound to rule on the statute as written, which in

fact the Court did in holding La. Act 59 of 1944 con-

stitutional.

There is no violation of the Due Process and Com-

merce Clauses of the U.S. Constitution.

Respectfully submitted,

WILLIAM J. GUSTE, JR.

Attorney General

WARREN E. MOULEDOUX

First Assistant Attorney General

LOUIS M. JONES

Assistant Attorney General

By

LOUIS M. JONES

Assistant Attorney General

7th Floor, 2-3-4 Loyola Bldg.

234 Loyola Avenue

New Orleans, Louisiana 70112

Phone: (504) 527-8373

10

CERTIFICATE

I hereby certify that copies of this brief have been

duly served on counsel of record in this cause by trans-

mitting the same to them by United States mail in ac-

cordance with the Rules of this Court, postage })r°-

paid, at their record respective addresses.

September. __, 1974.

LOUIS M. JONES

ASSISTANT ATTORNEY GENERAL