Appellants Brief — Hart Refineries v. Harmon

INDEX

Subject Matter: Page

Official report of opinion delivered below 2

Statement of grounds upon which jurisdic-

tion to review invoked 2

Statutory provision believed to sustain the

jurisdiction 2-3

Date of judgment sought to be reviewed 3

Date on which application for appeal was

presented 3

Nature of case to bring case within jurisdic-

tional provision 3-5

Assignments of error 5-6

Rulings below to bring the case with jurisdic-

tional provision 6-7

Citation of cases believed to sustain the jur-

isdiction 7-9

Concise statement of case containing mate-

rial questions presented 9-19

Specification of assigned errors intended to

be urged 19

Summary preceding argument 20-22

4 Argument 22-39

Authorities Page

hghou man v. Continental Oil Co., 256 U. S. 648,

649 28. 8

Columbia Water Power Co. v. Columbia Elec.

St. Ry. Co. 172, U. S. 475, 488-9 7

Detroit City Ry. Co. ». Guthard 114 U. S. 133,

134 N

Hart Refineries v. Harmon, 81, Mont. 423,

427 34, 6

Levy v». San Francisco Sup. Ct. 167 U. S. 175,

177 oa

Miedric} v. Lauenstein 232 U. S. 236, 243 8

RPT RAE NH DERN ARPT INT ES Sr Pe RAY leet eh arena

INDEX (Continued)

Subject Matter: Page

Miller vs. Cornwall R. Co. 168 U. S. 131, 134 7

Murdock vs. Memphis (20 Wall) 87 U. S. 590.

639, 640

Seudder v. New York 175 U. S. 32, 36 7

Sonneborn Bros. » Keeling, 262 U. S. 506, 508,

509 31, 9, 8

State v. Sunburst Refining Co. 73 Mont. 68,

82, 80 38, 36, 33, 9

State v. Silver Bow Refining Co., 78 Mont. I,

19 37, 9

Texas Company v. Brown, 258 U.S. 475, 476,

480 30, 31, 8

Statutes:

Montana Gasoline Licence Tax Law of 1925,

Sec. 2382, 2383 26

Sec. 2381, Rev. Codes, 1921 26, 27

Montana Gasoline License Tax Law of 1927 23, 24

28 U.S.C. A. See. 344, Judicial Code Sec. 237 2

Text Books:

Foster-Creighton Co. » Graham, 47, A. I. R.,

971, 258 S. W 971, 975, 977 32, 33

IN THE

SUPREME COURT

OF THE

UNITED STATES

October Term, 1928

No. 210

HART REFINERIES, a Corporation,

Appellant,

W. E. HARMON, as

TREASURER OF THE STATE OF MONTANA,

Appellee.

Appellant’s Brief

JOHN E. PATTERSON,

Missoula, Montana,

Attorney for Appellant

L. A. FOOT,

Attorney General

A. H. ANGSTMAN,

Assistant Attorney General

Attorneys for Appellee

8

BRIEF OF APPELLANT.

1. The above entitled case was decided in the

Supreme Court of Montana on the 31st day of Jan-

uary, 1928, and is reported under the title Hart

Refineries, Appellant, v. Harmon, Appellee, 81 Mon-

tana, 423.

STATEMENT DISCLOSING JURISDICTION

TO REVIEW.

2. It is contended that the Court has jurisdiction

to review on appeal the judgment of the Supreme

Court of Montana, upon the following grounds:

It is an appeal from the Highest State Court of

Montana, wherein there has been drawn in question

the validity of a statute of Montana, on the ground

of its being repugnant to the provisions of Section

One of the l4th Amendment to the Constitution of

the United States, providing that no state shall make

or enforce any law which shall deny to any person

within its jurisdiction the equal protection of the

laws, and the decision of the Supreme Court of Mon-

tana was in favor of its validity.

(a) .

The statutory provision believed to sustain the juris-

diction of this Court is as follows:

28 U.S.C. A. See. 344, Judicial Code Sec. 237, pro-

vides as follows:

“A final judgment or decree in any suit in

the highest court of a State in which a decision

in the suit could be had, where is drawn in

question the validity of a treaty or statute of,

or an authority exercised under the United

States, and the decision is against their valid-

ity, or where it is drawn in question the valid-

ity of a statute of, or an authority exercised

—3—

under any State, on the ground of their being

repugnant to the Constitution, treaties or laws

of the United States, and the decision is in

favor of their validity, may be re-examined and

reversed or affirmed in the Supreme Court

upon writ of error.”

(b)

A. The date of judgment sought to be veviewed

was January 31st, 1928 (R. 26).

B. The petition for appeal to the Supreme Court

of the United States was presented to the Chief Jus-

tice of the Supreme Court of Montana, and allowed

by him on the 27th day of April, 1928.

(e

Appellant's contention is that the Montana Gaso-

line License Tax Law of the year 1925 taxed the

Montana refiner two cents a gallon on all gasoline

and distillate he manufactured and sold. It permitted

gasoline manufactured in sister states to be shipped

into Montana, but required no tax on any such gaso-

line which was not sold after it had reached a state

of rest in Montana. This permitted all gasoline and

distillate transported from sister states, which was

not resold, after reaching Montana, but which was

used or consumed in the state, to avoid the tax. Con-

sumers and dealers were not required to pay a tax on

such as they used or consumed, but did not sell. That

such discrimination could have been avoided by ex-

tending the law to include all gasoline and distillate

used in Montana after its interstate character had

ceased, and it had come to rest. Such law would have

been valid and not in conflict with the Interstate

Commerce Clause of the Constitution; but the Mon-

tana Court nevertheless held that to tax the use of

CCC TAME IIS LAT DTI PRIA ISA BOOED EO Fe ede

—

gasoline transported from a sister state, after it had

reached a state of rest and its interstate commerce

status ended, would still interfere with interstate

commerce, and bePalid.

This was an action brought by Hart Refineries to

recover the sum of $6,071.84 (K. 1-14) required of

appellant under the Gasoline License Tax Law of the

State of Montana for the vear 1925 (Mont. 1925, 359.

360). The tax was paid under written protest that

the same was unlawful and so received by the State

Treasurer. (R. 2, 3. Pars. V. VI). The ground of

protest that said tax was unlawful, was that the

provisions thereof permitted persons and corpora-

tions (R. 5, 6, 7. Pars. XII. XI) refining gasoline

in sister states, and making sales inside and outside

the state, before gasoline products were resold, after

being brought to rest in Montana, did not require the

payment of the gasoline tax of (wo cents per gallon:

that (R. 6, 7 Par. XViii> piainutr, who is a Mon-

tana Refiner, designated as a manufacturing dis-

tributor, Was required to pay the tax of two cents per

galion on all gasoline products he manufactured and

sold, but refiners from sister states who were com-

petitors of plaintiff were permitted to ship to non-

manufacturing distributors, dealers and consumers

in Montana, said tax being avoided on all that was

not resold after being brought to rest in Montana

That by reason of this discrimination, plaintiff could

not compete with his competitors in securing the

business of non-manufacturing distributors, dealers

and consumers in Montana in plaintiff's territory

That (R. 7,8 Par. XIX), the competitors from other

states sell their products both before and after they

arrive in Montana, but no tax being required on euch

as is not sold after it has reached a state of rest in

**

Montana, permits all that is transported into the

state, and used or consumed, to avoid the tax. Deal-

ers are not required to pay a tax on what they use,

and use gasoline for their own delivery trucks, tank

wagons, and automobiles for the distribution of their

gasoline to their stations over several counties, and

such as they use in other lines of mercantile business

owned by them, tax free. If such dealers buy of

plaintiff or the Montana refiner he has to pay the

tax, 8o Will not patronize the Montana refiner. That

by reason of the discriminations the manufacture and

sale of gasoline in the state by Montana refiners is

unjustly and arbitrarily discriminated against.

(R. 11. Par. XXIV). That by reason of the prem-

ises plaintiff is denied the equal protection of the

laws, and is unable to compete under said law permit-

ting such unreasonable and unlawful discrimination.

(R. 12. Par. XXV). Not only the Montana refiner,

but also such dealers, persons and distributors as

purchase said gasoline and distillate from Montana

manufacturing distributors, (refiners), are denied

the equal protection of the law.

That by reason of the premises (R. 13), the said

provisions of the said Montana law, are in violation

and contravention of the following Constitutional pro-

visions, to-wit:

Section One (1), Article XIV of Amendments to

the Constitution of the United States.

The appellant assigned errors of the Supreme Court

of Montana, as follows: (R. 32, 33)

“ASSIGNMENTS OF ERROR

And the said Hart Refineries, appellant, as-

signs the following errors in the record and

3

proceedings of the said case.

The Supreme Court of the State of Montana

erred in rendering judgment in favor of ap-

pellee, and against appellant as follows:

First. The Supreme Court of the State of

Montana erred in overruling plaintiff's de-

murrer to the defendant’s answer for the rea-

son that the provisions of the Montana Gasoline

Tax Law, upon which said tax was based, were

unconstitutional and void, by reason of which

appellant was injured in its business in the re-

spect hereinafter set forth.

Second. The Supreme Court of the State of

Montana should have held Sections 2382 and

2383 of Chapter 186 of the laws of 1925 of

Montana void as being in violation and contra-

vention of the provisions of Section 1, Article

14 of Amendments to the Constitution of the

United States, which provides: “No state shall

make or enforce any law which shall deny to

any person within its jurisdiction the equal

protection of the laws.”

Third. The Supreme Court of the State of

Montana should have held said tax denied ap-

pellant the equal protection of the laws.”

The same assignments were made on appeal from

the District Court (R. 26, 27).

In the opinion of the Supreme Court of Montana in

deciding this case, it said: (R. 27, 28), as follows:

“It is the plaintiffs contention that the

statute upon the authority of which the tax was

collected is unconstitutional. It is urged that

it discriminates between Montana products and

those im into the state; that it is in vio-

lation of Section 1 of the Fourteenth Amend-

ment to the Constitution of the United States;

and also, Section II of Article XII. and Section

II of Article XV and Section 26 of Article V

of the state Constitution. Section I of the

=

Fourteenth Amendment, so far as applicable,

provides that ‘no state shall make or enforce

any law which shall abridge the privileges or

immunities of citizens of the United States?

nor, (shall any state) deny to any person with-

in its jurisdiction the equal protection of the

laws. The principal contention is (R. 29) that

the law is discriminatory. Upon similar on-

slaught this Act has been by this Court held

to be unconstitutional, (State v Silver Bow

Refining Co., 78 Mont. I), and not withstand-

ing the elaborate brief and argument of counsel

for the appellant, we see no good reason to

change our minds in this regard.”

1. The Statute does not violate the Four-

teenth Amendment to the Constitution of the

United States.”

Counsel quotes thus far to show the raising

of the Constitutional question and the passing

thereon. The decision and its further holding

will be referred to in the subsequent argument.

(d)

The following cases are believed to sustain the jur-

isdiction of the Supreme Court of the United States

in this action, to-wit:

As to the application of the provisions of 28

U. S. C. A. Sec. 344. Section 237 Judicial Code here-

tofore quoted:

Columbia Water Power Co., vs. Columbia

Electric St. R. etc., 172 U. S. 475, 488. 489.

Levy vs. San Francisco Sup. Ct. 167 U. S.

175, 177.

Miller vs. Cornwall R. Co., 168 U. S. 131,

134.

Murdock vs. Memphis (20 Wall) 87 U. 8.

590, 639, 640.

Scudder vs. New York, 175 U. S. 32, 36.

— 8

In Miedriej v. Lauenstein, 232 U. S. 236, 243, this

Court said:

“Where a state Court holds that a federal

question is made before it, according to its

practice and proceeds to determine it, this

Court will regard the question as duly made.”

(Citations).

In Detroit City Ry. Co. v. Guthard, 114 U. S. 133,

134, the Court said:

“In Choteau v. Gibson, 111 U. S. 200, it was

said: ‘From the beginning it has been held,

that to give us jurisdiction in this class of

cases, it must appear affirmatively on the face

of the record, not only that a federal question

was raised and presented to the highest court

of the state for decision, but that it was decided,

or that its decision was necessary to the judg-

ment or decree entered in the ease.

2nd. The taxation of the use or consumption of

gasoline products shipped from sister states, after

they have come to rest in the State of Montana, and

the interstate commerce status has terminated, is

lawful, and does not violate the interstate commerce

clause of the Federal Constitution. The 1925 Act

could have included the same, and avoided the dis-

crimination complained of:

Bowman v. Continental Oil Co., 256 U. 8.

648, 649.

Texas Company v. Brown, 258 U. 8. 475,

176, 480.

Sonneborn Bros. v. Keeling, 262 U. S. 506,

508, 509.

3rd. Failure to remove discrimination against

citizens of State, which it was within the province of

the Legislature to remove, in favor of products of

other states, is in contravention of the provisions of

_

Section I of the 14th Amendment, and void:

State vs. Silver Bow Refining Co., 78 Mont. 1, 18,

18, saying at page 19:

“In the first case of State vs. Sunburst Re-

fining Co., above, the Act of 1923 was held

unconstitutional because of an unjust discrim-

ination which could have been eliminated,” etc.

State vs. Sunburst Refining Co., 73 Mont.,

68, 82, 80.

Hart Refineries vs. Harmon (case at bar),

81 Mont., 423, 427, 428.

Sonneborn Bros. v. Keeling, 262, U. S., 506,

520.

The foregoing authorities are considered more

fully in the argument contained later in this brief,

and relevant parts thereof quoted.

We believe the foregoing shows the jurisdiction of

this Honorable Court to review this appeal.

(d)

STATEMENT OF THE CASE

This is an appeal from a judgment on the pleadings

rendered on the 10th day of February, 1927 by the

District Court of Lewis and Clark County in favor

of respondent, and against appellant, Hart Refineries,

whereby it was ordered, adjudged and decreed that

the plaintiff Hart Refineries take nothing by its ac-

tion, and it was further ordered adjudged and decreed

that the plaintiff has no further right, title or interest

in or to the sum of $6,071.84 involved in said action,

and which was paid by the plaintiff under protest,

and it was ordered that the said sum be by the de-

fendant State Treasurer taken from the “Protest

License Fund” and deposited to the credit of the

funds to which it belongs, as provided in Chapter 186,

=

Laws of 1925 (R. 21).

The complaint is based upon the unconstitutionality

of the Gasoline License Tax Law, as set forth in the

R. C. of 1921, as amended by the provisions of

Chapter 186 of the Laws of the Nineteenth Legisla-

tive session for the vear 1925, pages 359, 360, which

laws provide for the payment of a Gasoline License

Tax of two cents per gallon by every distributor for

carrying on business in the state, on every gallon of

gasoline and every gallon of distillate refined, manu-

factured, produced or compounded by a distributor

and sold by him within this state; that the plaintiff

alleges that it paid under protest the sum of $6,071.84

for the manufacture and sale of 303,592 gallons of

gasoline and distillate, refined and sold during the

quarter ending on the 30th day of September, 1925,

by the Hart Refineries, a corporation organized un-

der the laws of Montana, having a refining plant at

Missoula, Montana. Plaintiff's complaint alleges sub-

stantially as follows: (R. 1-13)

(1). That at all times since April, 1924, plaintiff

was and is a Montana corporation, with its principal

place of business at Missoula. Montana, and engaged

in manufacturing, refining, producing and compound-

ing gasoline and distillates and selling the same in

Montana; that the defendant is the State Treasurer

of Montana; that under the provisions of Sections 1,

2. 3 and 5, being Sections 2382, 2353, 2884 and 2392

of Chapter 186 of the laws of the Nineteenth Legis

lative Assembly for the year 1925, plaintiff was re-

quired to pay to said State Treasurer a license tax of

two cents for each gallon of gasoline and distillate

refined, manufactured, produced and compounded and

sold by plaintiff in the State of Montana; that for the

elite

quarter ending September 30, 1925, plaintiff refined

and sold in Montana 303,592 gallons, by reason of

which plaintiff became liable for the payment of two

cents per gallon, amounting to $6,071.84. That plain-

tiff did not ship nor transport any gasoline or dis-

tillate into the State of Montana; that within thirty

days after the 30th day of September, 1925, the end

of the said quarter period the plaintiff paid to the

defendant the sum of said $6,071.84, as State Treas-

urer of the State of Montana, to be held by him pend-

ing the outcome of this action to recover the same as

paid under protest that the tax was unlawful, which

said sum was so received and accepted by him; that

the plaintiff deemed said license tax to be unlawful,

and at the time said license was paid, and before the

tax became delinquent the plaintiff paid said tax

te the defendant as State Treasurer of Montana, un-

der written protest that the same was unlawful, and

the defendant received and accepted the same as so

paid. (R. 1-3, par. 1-6 of Compl.)

(2). That the complaint further alleges (R. 3, 4,

Par. VII, VIII, IX) that during all the time appellant

was engaged in the refining, manufacture and selling

of gasoline and distillate a large number of corpora-

tions organized under the laws of the states of the

Union, other than Montana, were engaged in the

manufacture, refining, and compounding of gasoline

and distillate in such states, and were authorized to

do business in Montana under the laws applicable to

foreign corporations; that on and at all times after

April 1, 1925, said corporations were engaged in the

manufacture, refining, compounding and production

of gasoline and distillate at places within the United

States outside of Montana and during said time they

were engaged in the shipment and transporting into

=

Montana of great quantities of gasoline and distillate

which were sold by them outside of the State of Mon-

tana, and also great quantities of which were sold

within the State of Montana before it was brought to

rest in Montana, to corporations, persons and con-

cerns within the State; that said corporations at all

times from April Ist to Sept. 30th, 1925, maintained

places of business without the State of Montana and

also within the State of Montana during which time

said respective corporations made sales both without

the State of Montana and in the State of Montana,

before it arrived and was brought to rest in Montana

to persons, corporations, dealers, consumers and users

in Missoula County and the territory occupied by

plaintiff, in quantities by said various corporations

respectively of 400,000 gallons per vear and amount-

ing in the agyregate to several million vallons, and

during all the period herein mentioned said corpora-

tions have been competitors of plaintiff:

(3). That none of said persons, corporations or

concerns engaged in refining gasoline and transport-

ing and shipping the same into Montana, and in the

sale thereof inside and outside of the State of Mon-

tana to their respective customers in the State of

Montana „tore the same has arrived and heen

brought to rest in Montana and then resold, was re-

quired to pay tio cents per ga'lon as license tar or

any other tax upon the sale of said gasoline and dis-

tillate. (R. 5. Par. XII).

(4). That in addition to said foreign corporations

other Montana corporations and individuals were

during said time engaged in the selling and distribu-

tion of gasoline and distillate to persons residing in

Montana. (R. 5. Par. XIII).

8. EERIE e * ee rere eee, ae νπντντπ D er ge

— 1 —

(5). That under said law the plaintiff is required

to pay two cents per gallon license tax on each gallon

sold for the privilege of conducting its business, but

said competiting foreign corporations, being com-

petitors of plaintiff, solicit and ship orders to dealers

and non-manufacturing distributors and consumers

in plaintiff's territory, and sell said products before

they arrive and are brought to rest in the State of

Montana, at a price of two cents per gallon less than

the market price, by deducting two cents per gallon

which plaintiff is required to pay under said law,

but which neither said competitors, dealers, non-

manufacturing distributors nor consumers are re-

quired to pay on such as is transported from without

the state and is not resold after being brought to rest

in Montana. (R. 6. 7. Par. XVIII). That by reason

of this discrimination of two cents per gallon the

plaintiff is unable to compete in its territory with

said corporations from other states in securing the

business of non-manufacturing distributors, dealers,

users and consumers.

(6). (R. 7, 8. 9. Par. XIX). That plaintiff's

competitors solicit orders and ship to dealers and con-

sumers in Montana, large quantities of gasoline sold

in Montana before it has been brought to rest in Mon-

tana, and also large quantities sold in neighboring

states before it has been brought to rest in Montana;

that many of said dealers in gasoline in Montana

are engaged in other lines of business requiring the

use of many delivery trucks and automobiles deliver-

ing gasoline to customers, their own service stations

located over several counties, running delivery trucks

for mercantile businesses, owned by them, besides

running touring cars and trucks for their own use

Pte CCC ATI AED ARNO aR ete Tie epee nog ueber

=

and enjoyment; that if said dealers purchase from

plaintiff or a Montana refiner the license tax of two

cents per gallon is payable on all of such sales which

are required to be reported by plaintiff, when, how-

ever, such dealers and consumers purchase their gas-

oline from said competitors of plaintiff who sell and

ship the same from neighboring states, or sell the

same before it is brought to rest in Montana, the

dealer receives the same delivered to him, in Montana,

tax free. That the dealer being absolved from al!

tax until required to be reported by him within 30

days after the end of the quarter, and then, for such

quantity only as has been resold by such dealer, as

provided by Sections 2383 and 2384, Chapter 186,

Laws 1925, such dealers are entitled to have all that

they procure for their own consumption and use tax

free.

(7). That neither such dealers, foreign corpora-

tions, non-manufacturing distributors or consumers

of gasoline are required to pay a tax on such gasoline

as is purchased by them before it is hraught to rest

in Montana, and are not required to pay a tar on

such imported casoline they sell before the me has

arrived in and te browaht to reat in Montane; that by

reason thereof not only said foreign corporations and

non-manufacturing corporations but the dealers who

are also competitors of plaintiff solicit orders and

sell auch gasoline tax free, as has been purchased by

such dealers and resold by them before it comes to

reat in Montana, and thereafter delivered from a for-

eign state direct in original packages to the consumer,

or, upon such re-sales as the dealer may make before

it comes to rest in Montana, and thereafter delivered

either in broken or unbroken packages, tax free (R.

a oe

9). The Montana dealer may purchase gasoline be-

fore it comes to rest in Montana, resell it before it

comes to rest in Montana, and then after it has come

to rest in Montana, deliver it either in broken or un-

broken packages, tax free.

(8). That by reason of the premises such dealers

and consumers ceased and refused to purchase from

Montana manufacturers and from plaintiff, but pur-

chase from plaintiff's competitors, and plaintiff is

unable to compete with said competitors, and by rea-

son of the said two cents per gallon which plaintiff

has to pay and which his competitors do not have to

pay the plaintiff's customers have been lost to him,

and plaintiff and Montana manufacturers have been

and are unjustly and arbitrarily discriminated

against by reason of being a manufacturer and tax-

payer in the State of Montana.

(9). That by reason of the premises the plaintiff

lost for the quarter ending September 30th, 1925, a

profit of $4,000.00 it would otherwise have realized,

and will continue to lose $1,500.00 per month, by

reason of the discrimination in favor of said foreign

corporations. (R. 9, 10).

(10). That by reason of the premises and said

discrimination in favor of non-manufacturing dis-

tributors and dealers, the plaintiff lost for the quar-

ter ending September 30th, 1925, a profit of $4,000.00

which it otherwise would have realized, and will con-

tinue to lose $1,500.00 per month. (R. 10. Par. XXI).

(11). That the imposition of said two-cent license

tax on plaintiff is the sole cause of the inability of

plaintiff to sell gasoline and distillate to persons

within Montana, at the prices which have been paid

by such persons to the corporations and individuals

aan $ Gu

hereinbefore mentioned, and but for said tax plaintiff

would be able to meet such prices and to sell substan-

tially all of the gasoline which it manufactured, to

persons within the State of Montana. (R. 10. Par.

XXII).

(12). That no part of said license tax prescribed

was for police regulation or supervision of oil refin-

eries but said license tax, when paid, is used for rev-

enue purposes only. (R. 11. Par. XXIII).

(13). That by reason of the premises the plain-

tiff is denied the equal protection of the laws as

against its competitors established in other states, in

the State of Montana, and in plaintiff's territory in

Missoula, and Western Montana, and is unable to

compete under said law permitting such unreasonable,

unlawful and arbitrary discrimination, and said gas-

oline license tax law is in violation and contravention

of Section 1 of Article XIV of Amendments to the

Constitution of the United States, and is void. (KR.

11. Par. XXIV).

(14). That by reason of the premises said gas-

oline license tax law permitted foreign corporations

to exercise and enjoy within the State of Montana,

greater rights, privileges and immunities, under the

laws of the State of Montana, than those enjoved by

plaintiff, a domestic corporation, and other manufac-

turing distributor corporations of similar character

organized under the laws of the State of Montana,

which is in violation and contravention of Section

Eleven (11) of Article Fifteen (XV) of the Constitu-

tion af the State of Montana. (R. 11. Par. XXV.

(15). That the imposition of said license tax con-

stitutes an unjust discrimination against appellant,

a domestic corporation, and in favor of foreign and

—

other domestic corporations and individuals; that

such tax is not uniform in its operation upon the

same class of subjects, to-wit: upon gasoline and dis-

tillate sold by domestic corporations, being manufac-

turing distributors, within the territorial authority of

the State of Montana, which levies the tax, and such

as is sold in other states to non-manufacturing dis-

tributors, dealers and consumers within Montana,

before it has arrived and been brought to rest in Mon-

tana, and such as is sold in Montana, before it has ar-

rived and been brought to rest in Montana, by for-

eign corporations, non-manufacturing distributors,

domestic corporations, dealers and individuals doing

business in the State of Montana; that by reason

thereof the provisions of Sections 2382, and 2383 of

Chapter 186 of Laws of 1925 are in violation and

contravention of the provisions of Section Eleven of

Article XII, of the Constitution of the State of Mon-

tana. (R. 11-13. Par. XXV).

(16). That by reason of the premises said law is

in violation and contravention of Sections One (1)

and Seven (7) of Article Twelve (12) of the Consti-

tution of the State of Montana.

(17). That by reason of the premises there is due

and owing plaintiff the sum of $6,071.84 for which

plaintiff demands judgment. (Tr. p. 18).

(18). The answer of the defendant admits the al-

legations of paragraphs I to XI inclusive of plaintiff's

second amended complaint, except the defendant al-

ledges insufficient knowledge as to whether the cor-

porations mentioned in Paragraph VII or any other

corporation or individuals with places of business out

of the state transported into the state gasoline. or

made sales within their respective states outside of

3

Montana or within Montana, before it arrived in and

was brought to rest within Montana for delivery to

persons, corporations, dealers and consumers in Mon-

tana in quantities alleged in paragraph IX, or in any

amount, and as to whether said parties were com-

petitors of plaintiff, and defendant denies that some

of said corporations enumerated in Par. VII. were

authorized to do business in Montana. (R. 14, 18).

(19). The answer admits the allegations of para-

graphs XIII. XIV, XVI and XVII. and alleges insuf-

ficient knowledge as to Par. XV. Admits that the

State of Montana does not regulate the manufactur-

ing, refining or compounding of gasoline or distillate,

or the sale or distribution thereof within the State of

Montana.

(20). The answer denies the other allegations of

plaintiff's complaint.

(21). The plaintiff demurred to the defendant's

answer on the ground that it did not state facts suffi-

cient to constitute a defense to plaintiff's second

amended complaint, which demurrer was overruled.

(R. 19).

(22). The plaintiff replied denying all affirma-

tive matter set forth in defendant's answer as amend-

ed. (R. 19).

(23). The defendant moved for judgment on the

pleadings. (R.20). This admitted the truth of mat-

ters of fact pleaded.

(24). The motion for judgment on the pleadings

waa sustained and judgment entered for the defend-

ant and against the plaintiff. (R. 20).

(25). The plaintiff filed its notice of appeal from

the judgment. (R. 25).

— a

(26). Petition for Appeal, Assignments of Error,

and Prayer for Reversal, presented and filed April

27, 1928. (R. 32, 33).

(27). Order allowing Appeal filed April 27, 1928,

by the Chief Justice of the Supreme Court of Mon-

tana, fixing bond in sum of $1,000,00, and directing

the record be sent to the Supreme Court of the United

States, within sixty days.

(28). Citation, issued in usual form, showing

service on L. A. Foot and others. (R. 34).

(29). Bond on Appeal for $1,000.00 approved

and filed, May 2, 1928. (34).

(30). Praecipe for Record and service thereof

filed May 16, 1928. (R. 35, 36).

(31). Clerk's Certificate of Transcript. (R. 36).

(32). Statement of Points to be Relied Upon Des-

ignation of the parts of the Record to be printed, and

service of same, filed June 19, 1928.

(33). Endorse on cover: File No. 33,519, No.

210. Filed June 16, 1928.

(e)

All of the assigned errors are hereby specified as

intended to be urged by counsel for appellant, to-wit:

As set forth (R. 32, 33), and hereinbefore set forth

at page — hereof. Said Assignments of Error raise

the sole question of appellant's claim that the law in-

volved is in violation of Section I, of the 14th Amend-

ment to the Constitution of the United States, pro-

viding that no state shall deny to any person within

its jurisdiction the equa! protection of the laws.

~

SUMMARY PRECEDING ARGUMENT

It is appellant’s contention that the Montana Li-

cense Tax Law of 1925 discriminates against the

Montana refiners. This discrimination could have

been prevented, by having included in said law, tax-

ation of gasoline shipped from sister states, after its

interstate commerce status was terminated and it

was at rest in Montana, by applying to such as was

used or consumed. Said law limited the gasoline tax

on such as was shipped from sister states, to such as

was sold after it had been brought to rest in Montana.

It eliminated all shipped for consumption or use, or

consumed or used after it had reached a place of rest

in Montana and its interstate commerce status term-

inated. That the Legislature of Montana had au—

thority to have lawfully included in said law, the

taxation of such gasoline as was shipped from sister

states and used or consumed, which would have avoid-

ed such discrimination. That such a law would not be

any burden upon, or regulation of interstate com-

merce. That the Supreme Court of Montana erred

in holding that such law avoiding said discrimination

would be a burden on interstate commerce.

That the holding of said law as invalid would entail

little loas to Montana, as only a few thousand dollars,

perhaps less than fifty thousand dollars, remains un-

paid under said law of 1925. In 1927 the Legislature

of Montana passed a gasoline license tax law, remov

ing said discrimination, just as suggested above, by

extending said tax to the consumption and use. It

stands independent of the 1925 Act, and over two mil-

lion dollars have been paid under it. No objection has

been raised to it as Montana manufactured products

are not discriminated against in favor of products of

— von

sister states. The declaring of the 1925 Act invalid

would not affect the collection of gasoline license taxes

as they have all been paid under the 1927 Act, since

January first, 1927.

The appellant, as a Montana refiner, under the

1925 gasoline license tax law, was required to pay

two cents a gallon on all gasoline manufactured and

sold, but said law did not require any tax on gasoline

shipped from other states to pay said tax, nor any

tax on gasoline which was not sold after it was

brought to rest in Montana. The law did not require

said tax, nor any tax, on such gasoline as was shipped

into the state for consumption or use, or which was

used and not resold. After gasoline shipped from

sister states had completed its interstate commerce

status, and had come to rest in Montana, it could

have lawfully been included in such license tax.

To do so would not be any interference with, or bur-

den upon interstate commerce. The Supreme Court

of Montana held in this case (81 Mont. 426), as fol-

lows:

“As to the contention that products may be

imported into the state for consumption with-

out the payment of a tax, and thus users are

induced to deal with outside concerns when

their needs are sufficiently great to warrant

buying in bulk and thus withdraw their patron-

age from dealers within the state, the situation

is one which cannot be remedied by state legis-

lation. By Sections 9 and 16, Article I, of the

Constitution of the United States, the regula-

tion of interstate commerce is granted exclu-

sively to Congress; Congress has long since

acted on the subject, and ‘the states have no

power by taxation or otherwise to retard, im-

pede, burden, or in any manner control, the

—22—

2 — of the — itutional * enacted

n to carry into execution the powers

— Tn the 4 government.“ hi

Again, it was held by the Supreme Court of Mon-

tana,

W Silver Bow Refining Co., 78 Mont.

In the first case of State vs. Sunburst,

above, (73 Mont. 68), the Act of 1923 was held

unconstitutional because of an unjust discrim-

ination which could have been eliminated under

the decision in Sonneborn Bros. v. Cureton, 262

U. S. 506, 67 I. Ed. 1095, holding that ‘a tax

on the sale of oil imported after it had come to

rest in the state would be neither a regulation

nor a burden of the interstate commerce of

which the oil had been the subject.“

That said law could have been extended to include

such gasoline as was shipped into the state for con-

sumption or use, or was consumed or used, was de-

cided by this Court in the cases of Bowman v. Con-

tinental Oil Co., 256 U. S. 648, 649. Texas Company

v. Brown 258 U. S. 475, 476, 480, 481, 482. Sonne-

born Bros. v. Keeling, 262 U. S. 506, 508, 509, which

cases are hereinafter cited in the argument.

The allegations of appellant's complaint raise these

issues.

ARGUMENT

The effect of a decision of this Court validating the

principle involved in this controversy would, under

such law, entirely destroy the refining industry of the

State of Montana, and have a most far-reaching ef-

fect on the oil industry of the State requiring freight

rates shipping the oil from the State for refining,

raising the price and in the end defeating the very

object of the law, which is to raise revenue.

*

It may be noted here that to hold said law invalid

would entail no appreciable loss to the State of Mon-

tana, as only a few thousand dollars above what is

involved in this action remains unpaid. The heavy

penalty feature of the law, of ten per cent and one

per cent per month, (Mont. 1925, Sec. 2384), for non-

payment leaving few who had the courage to refuse

payment. Then the taking effect of the law of Jan.

1, 1927, (Mont. Laws 1927 P. 30), removed the dis-

crimination, in a companion measure, running along

with this law, which did just what appellant claims

should have been done by the law in controversy, ex-

tended it to require the tax to be paid on all gasoline

used in Montana, after it had reached a state of rest

in Montana, and its interstate status terminated.

Over two million dollars have been collected under

this 1927 Act. The Act involved being declared in-

valid, would not effect the law of 1927, under which

all taxes have been paid since Jan. 1, 1927, which

reaches all imported and consumed or used.

The effect of a decision of this Court foreclosing

any attack upon the 1925 Act, might bring about a

repeal of the 1927 Act, and leave the discrimination,

which was cured by the 1927 Act, still stand, with all

its iniquities.

Said Act of 1927, (Mont. 1927, Chapter 19, at Page

30), eliminating said discrimination is, in part, as

follows:

(6). The word ‘handle’ means to produce,

refine, manufacture, compound, or import gas-

oline, or to purchase gasoline for one’s own

use, upon which the license tax herein imposed

has not been paid.“

“(7). The word ‘Dealer’ means and in-

cludes any person who engages in the business

*

in the State of Montana of producing, refining,

manufacturing or compounding or of purchas-

ing in this State, or of importing into this

State, gasoline for sale or use in this State.

Such gasoline, for the pu of this Act shal!

be deemed to be ‘handled’ by the dealer.”

“Section 2. Every dealer shall pay to the

State Treasurer A LICENSE TAX for engag-

ing in and carrying on such business in this

State in an amount equal to three cents for

each gallon of gasoline handled by him in this

State while engaging in such business as here-

tofore defined.”

That such a law as the 1927 Law could be lawfully

passed by the Legislature, was alleged in appellant's

answer, in the following language, which was ad-

mitted by the motion for judgment on the pleadings,

to-wit: (R. 17).

“That in the of said gasoline license

tax law upon which plaintiff relies for recovery

in this action, it was within the province of the

islative Assembly of the State of Montana,

which passed said law, to have so framed said

law that every advantage accruing under said

law, would have remained under said law as a

gasoline license tax law, whereby said law

would have been more general in its applica-

tion, and extended to cover the inequalities in

this answer mentioned, causing said tax to

apply to the parties herein mentioned in whose

favor said law discriminated, making said law

and said discriminations unnecessary and ar-

bitrary, as against the defendant and Montan

manufacturing distributors, and said Legis-

lative Assembly could have lawfully passed a

commodity tax or a user's or consumer's tax, to

appiy after shinments to and into the State

of Montana, were within the jurisdiction of the

State of Montana, for purposes of taxation, and

*

thereby have created a more general tax which

would have met all of the benefits of the 1925

Act, and have extended its application to have

avoided the unnecessary, arbitrary and unjust

discriminations herein mentioned.”

The 1927 Act increased the tax to three cents a

gallon, and in increase above that is probable in the

future. The higher the tax naturally the greater the

discrimination.

When gasoline is shipped into Montana for use, or

which is used in Montana, there comes a time between

the shipment and use, when it has terminated its in-

terstate commerce status. At this point, it is within

state jurisdiction and authority to tax. To do so is

no interference with interstate commerce. Upon this

theory the gasoline tax law of 1927, was based and

very properly so.

Appellant’s contention has been, not that the law

was invalid because it did not tax such gasoline as

was in interstate commerce but, on the contrary, that

the law should have avoided discrimination against

the Montana refiner, by extending the tax to such

gasoline as was consumed or used after it had come

to rest in Montana and its status in interstate com-

merce ended.

Under said Act the gasoline license tax law, did not

extend to any gasoline or distillate not sold after its

arrival in the state, thereby permitting all gasoline

shipped from sister states to consumers to be A.

tax free, while if such consumer hourht as “ wu

product, he would have to pay the ta ..

The provisions of the Mon 4 Gasoline License

Tax Law of 1925 necessary to show the points at issue

are quoted as follows:

=

“Section 2382. Every distributor shall pay

do the State Treasurer a license tax

for engaging in and carrying on such business

in this State, in an amount equal to two cents

for each gallon of line and two cents for

each gallon of distillate refined, manufactured,

produced, or compounded by such distributor

and sold by him in this state, or shipped, trans-

ported or imported by such distributor into,

and distributed and sold by him within this

state; after it had arrived in and was brought

to rest within this State, whether sold in orig-

inal packages or broken packages.“

“Section 2383. Every dealer shall!

when engaged in such! * business in

this state, pay the State Treasurer

a license tax for engaging in such business

in this State equal to two cents for each gallon

of gasoline and two cents for each gallon of

distillate sold or distributed by such dealer in

this State during such year, provided, however,

that no gasoline or distillate sold by said dealer,

which was purchased from a producer who had

paid the tax thereon, shall be included or con-

sidered in determining the amount of such li-

cense tax to be paid by such dealer, but onl

such gasoline and distillate as was shipped,

transported, or imported into this State and

purchased by such dealer before it had arrived

and was brought to rest within this State and

then resold by such dealer, whether in original

packages or in broken packages, shall be in-

cluded or considered for the purpose of com-

puting the amount of such license tax.”

Sec. 2381 of Rev. Codes of 1921, is as follows:

“Section 2381. ‘Person,’ ‘distributor’ and

‘dealer’ defined. As used in this act: The term

‘person’ means and includes every individual,

rm, association, joint-stock company, syndi-

cate, and corporation.

—

The term ‘distributor’ means and includes

every person who engages in the business in the

State of refining, manufacturing, producing, or

compounding gasoline or distillate, and selling

the same in this State; and also every person

who engages in the business in this State of

shipping, transporting or importing any gaso-

line or distillate into, and making original sales

of the same, in this State.

The term ‘dealer’ means and includes every

rson, other than a distributor, who engages

in the business in this State, of distributing or

selling gasoline or distillate within the State.“

This law requires the Montana refiner to pay two

cents per gallon on all gasoline and distillate he man-

ufactures and sells.

It does not require such tax on any gasoline as is

imported by refiners located in sister states, which

is not sold in Montana.

It does not require such tax upon such as is shipped

by distributors or dealers in Montana, from sister

states, until it is sold, after it is brought to rest in

Montana.

Gasoline imported to consumers, from sister states

could have been included in said tax, after it had

reached a state of rest in Montana, and completed its

interstate commerce status, but was not.

Gasoline imported to dealers, from sister states,

used for their own consumption, could have been in-

cluded in said tax, after it had reached a state of rest

in Montana, and its interstate status was terminated,

but it was not.

The tax permitted competitors of appellant to ship

gasoline from sister states and, after it had come t

rest in Montana, use it tax free, which could have

—

been lawfully brought within the tax, but was not.

Said law permitted dealers to purchase gasoline in

sister states, ship it to Montana, and after its status

in interstate commerce had ceased, and the gasoline

was in their own storage tanks, use such as they de-

sired for their own consumption, tax free.

The effect of such discrimination was such that the

Montana refiner who paid a tax of two cents per

gallon, could not compete against sales of gasoline

imported from a sister state which was not required

to pay two cents a gallon, nor any tax, if sold to con-

sumers, importing distributors and dealers in the

State of Montana.

The Montana refining and manufacturing industry

could not survive under said discrimination.

The allegations of appellant's answer brought it

within the decision of this Court in the late case of

Bowman ». Continental Oil Co., 256 U. S., 648, 649,

as follows:

“With the excise tax as imposed upon the

use of gasoline by plaintiff at its distributing

stations, in the operation of its automobile tank

wagons and otherwise, we have no difficulty.

Manifestly, gasoline thus used has passed be-

yond interstate commerce, and the tax can be

imposed upon its use, as well as upon the sale

of the same commodity in domestic trade, with-

out infringing plaintiff's commercial rights

under the Federal Constitution The

tax imposed by the act under consideration

upon the “sale or use of gasoline sold or used

in this state,” is not property taxation, but in

effect, as in name, an excise tax. We see no

reason to doubt the power of the state to select

this commodity, as distinguished from others,

in order to impose an excise tax upon its sale

and use: and since the tax operates impartially

—

upon all, and with territorial uniformity

throughout the state, we deem it “equal and

uniform upon subjects of taxation of the same

class, within the meaning of Section 1 of

Article 8.“

Appellant’s answer raised the same question, to-

wit: (R. 7, 8, Par. XIX.)

That the competitors of appellant:

“Solicit orders for and ship to dealers and

consumers in Montana, large quantities of gas-

oline and distillate sold in Montana before it

has arrived and is brought to rest in Montana,

and also large quantities of gasoline and dis-

tillate sold in said neighboring states before it

has been brought to rest in Montana; that be-

sides being such dealers in the sale and delivery

of said gasoline and distillate, many of the said

dealers operate other lines of business requir-

ing the use of many delivery trucks and auto-

mobiles in delivering gasoline to their cus-

tomers, their own service stations located over

several counties, running delivery trucks for

mercantile businesses owned by them, besides

using touring cars and trucks for their own

use and enjoyment,” etc.

The complaint also further alleges: (R. 7, Par.

XVIII.)

That by reason of this diserimination of two cents

per gallon, plaintiff is unable to compete with said

corporations from other states in the territory of

plaintiff in securing the business of non-manufactur-

ing distributors, dealers, users and consumers in

plaintiff's territory in Montana. That among the

important consumers for whose business plaintiff is

unable to compete in its territory by reason of their

exemption from said tax when they buy gasoline

which is shipped from out of the state, but purchased

ae eA

before it has been brought to rest in this State, are

the Chicago, Milwaukee and St. Paul Railway Com-

pany and the Northern Pacific Railway Company,

who, prior to the enactment of said law, were im-

portant and profitable customers of plaintiff, but

whose business by reason of the premises has been

lost to plaintiff.

Again, in the later case of

Texas Company v. Brown, 258 U. S. 475-

476,

the Court said:

“Plaintiff makes the broad contention that

inspection charges, amounting in effect to tax-

ation, cannot be imposed even upon that part

of its products which has come to rest within

the state, or is disposed of in domestic trade, in

view of the fact that all of it has come from

other states. But American Steel & Wire Co.

v. Speed, 192 U. S. 500, 520, 48 L. Ed. 538,

546, 24 Sup. Ct. Rep. 365, settles the principle

that goods brought into a state, not from a for-

eign country, but from another state, having

reached their destination, and being held in

storage awaiting sale and distribution, enjoy-

ing the protection which the laws of the state

afford, may, without violation of the commerce

clause, be subjected to non-discriminatory state

taxation, even though still contained in original

packages. This decision is in line with the

previous cases of Woodruff v. Parham, 8 Wall.

123, 140, 19 L. Ed. 382, 387, and Brown v.

Houston, 114 U. S. 622, 632, 634, 20 I. Ed.

257, 260, 261, 5 Sup. Ct. Rep. 1091, and it was

pointed out that their authority was not over-

ruled by Leisy v. Hardin, 135 U. S. 100, 34 L.

Ed. 128, 3 Inters. Com. Rep. 36, 10 Sup. Ct.

Rep. 681, or other cases of like character.“

In the same case, at page 180, the Court said:

=

“That the legislature intended the effect of

the tax to fall upon the ultimate consumer is

evident, not only irom the obviously inevitable

resuil OF requiring its payment, ordinarily, by

the first domestic seller, but from the specific

provisions oi the amendatory Act of 1913, that

tne 1912 Act “shail apply not only to gasolenes,

benzins, and napthas sold or offered for sale in

the State of Georgia, but likewise to all such

commodities that may be sold elsewhere and

brought into the State of Georgia, for consump-

tion or use. Where such commodities or any of

them may be purchased within the state, or

without the state, and brought into the state,

by any person, firm, or corporation, not for the

purpose of selling or offering the same for sale,

but for the purpose or use or consumption by

the purchaser in manufacturing or other law-

ful uses, either as a fuel or otherwise, the in-

spections herein prescribed shall be made, and

the fees above fixed shall be paid therefor.”

In the same case, at Pages 481 and 482, the Court

said:

“The peculiar qualities of illuminating oils

and 2asoline seem to us a sufficient warrant

for putting them in a class by themselves for

excise taxation upon their sale or use. So we

held in Bowman v. Continental Oil Co., 256

U. S. 642, 65 IL. Ed. 1139, with respect to an

excise tax upon the sale or use of gasoline, un-

der a provision of the Constitution of New

Mexico, not differing materially.”

In Sonneborn Bros. v. Keeling, 262 U. S.

506, 508, 509,

The Court said:

Our conclusion must depend on the answer

to the question: Is this a regulation of, or a

burden upon, interstate commerce? We think

it is neither. The oil had come to a state of

a

rest in the warehouse of the appellants, and

had become a part of their stock, with which

they proposed to do business as wholesale deal-

ers in the state. The interstate transportation

Was at an end, and whether in the original

packages or not, a state tax upon the oil as

property, or upon its sale in the state, if the

state levied the same tax on all oil or all sales

of it, without regard to origin, would be neither

a regulation nor a burden of the interstate

commerce of which this oil had been the sub-

ject.”

In Foster-Creighton Company v. Graham,

(285 5. W. 570) 47 A. L. R. 971

commenting upon the foregoing question and deci-

sions the Court said: (Page 975)

“We think the effect of the amendatory Act

of 1925 when properly interpreted, is to reach

line that is stored and thereafter with-

rawn and used without being sold by any per-

son, etc.”

“Under the act of 1923, a large consumer,

desiring to escape the tax levied by the Act,

could do so by buying his gasoline in quantities,

say in tank lots, storing it, thereafter with-

drawing it, and using it as needed. In such

case there would be no intrastate sale or dis-

tribution within the meaning of said act, and

such consumer would not, therefore, be subject

to the tax.

“It was manifestly the purpose of the legis-

lature in passing the amendatory act, to cut

off this avenue through which large consumer:

might evade the tax.”

“We think the act, when properly interpreted

not only applies to distributors and dealers in

gasoline, but applies to consumers who pur-

ager mame in interstate commerce and store

it, and thereafter distribute the same, or allow

—

the same to be withdrawn from storage, wheth-

er such withdrawal be for sale or other use. It

therefore follows that complainant and all other

persons, etc., in like situations, come within the

provisions of the act.”

Page 977:

“The validity of a tax on the use and con-

sumption of gasoline has been recognized and

sustained by the Supreme Court of the United

States in the two recent cases of Bowman v.

Continental Oil Co., 256 U. S. 642, 65 L. Ed.

1139, and Texas Co. v. Brown, 258 U. S. 466,

66 L. Ed. 721.

The decisions of the Supreme Court of Montana as

set forth in the case of State v. Sunburst Refining

Co., 73 Mont. 68, and State v. Sunburst Refining Co.,

76 Mont. 472, sustain appellant's contention in these

cases. In those cases the Court concedes, that if there

was a discrimination affecting the Montana refiner,

which could have been eliminated by said act, and

was not, it violates the provisions of the 14th Amend-

ment to the Constitution of the United States.

The Montana Court erred in holding that such dis-

crimination could not be removed.

The Court said in

State v. Sunburst, 73 Mont. 68, 82:

“It may be accepted, then, as settled beyond

all further controversy that gasoline or distil-

late, brought into this state from a sister state

and stored in original packages, afterward to

be sold in this state, is no longer an article in

interstate commerce, but is merely property in

thie state, and as such does not enjoy any

greater privilege or immunity than gasoline or

distillate manufactured in this state. In other

words, such gasoline or distillate, though

brought here from another state and held in

—-84—

the original packages for sale in this state, is

subject to a property tax, or may be made the

basis of an occupation tax, the same as gasoline

or distillates manufactured in this state.”

Again, the Court said in said decision at Page 80

as follows:

“What, then, is the basis of the classification

made by this statute ete. * ° ' The only

ground upon which the attorney general seeks

to justify the classification is that the statute

discriminates only between a business which is

a lawful subject of license tax, and one which

is not, and this contention has its foundation in

the — that a license tax imposed upon

any one who sells in the original packages gaso-

line or distillate shipped into this state from

another state, would constitute a burden upon

or regulation of interstate commerce. If this

assumption were 12 the argument in

support of it would be unanswerable, but since

the assumption is altogether unwarranted, the

argument falls of its own weight.”

It is the contention of appellant that the Court

erred in not holding the same decision in the case

at bar by holding that said gasoline license tax law

of 1925 could have been extended, to avoid such dis-

crimination against the Montana refiner, which was

in fact done by the legislature in the year 1927,

which was made to and did apply to all gasoline sold

or distributed from and after December 31, 1926.

That only by reason of said supplemental law was

the appellant and Montana refiner enabled to con-

tinue in business.

The Supreme Court of the State of Montana, in

passing on said 1925 act said, in

E * v. Harmon, 81 Mont. 423.

4 .

—35—

“The principal contention is that the law is

discriminatory. Upon similar onslaught this

Act has been by this Court held to be constitu-

tional (State v. Silver Bow Refining Co., 78

Mont. 1, 252 Pac. 301), and notwithstandin

the elaborate brief and argument of learn

counsel for the appellant, we see no good reason

to change our views in this regard.

1. The statute is not violative of the Four-

teenth Amendment to the Constitution of the

United States. (State v. Silver Bow Refining

Co., supra) That which would invalidate the

law because of unjust discrimination has been

thoroughly considered in the case last cited, and

in the two cases entitled State v. Sunburst Re-

fining Co., 73 Mont. 68, 235 Pac. 428; Id., 76

Mont. 472, 47 A. L. R. 969, 248 Pac. 186.

The law is now settled. As was well said by

Mr. Justice Matthews, speaking for this court

in the Silver Bow Refining Co. case: ‘As to

the contention that products may be imported

into the state for consumption without the pay-

ment of a tax, and thus users are induced to

deal with outside concerns when their needs

are sufficiently great to warrant buying in

bulk and thus withdraw their patronage Foam

dealers within the state, the situation is one

which cannot be remedied by state legislation.

By sections 9 and 10, Article I, of the Consti-

tution of the United States, the regulation of

interstate commerce is granted exclusively to

the Congress; Congress has long since acted on

the subject, and “the states have no power, by

taxation or otherwise, to retard, impede, bur-

den, or in any manner control, the operations

of the constitutional laws enacted by Congress

to carry into execution the powers vested in

the general government”.’

“Under the authority of the case of Sonne-

—36—

born Bros. v. Cureton, 262 U. S. 506, 67 L. Ed.

1095, 43 Sup. Ct. Rep. 643: ‘It may be ac-

cepted * as settled beyond all further

controversy that gasoline or distillate brought

into this state from a sister state and stored in

the original packages, afterward to be sold in

this state, is no longer an article in interstate

commerce, but is merely property in this state,

and as such does not enjoy any greater priv-

ilege or immunity than gasoline or distillate

manufactured in this state. In other words,

such gasoline or distillate, though brought here

from another state and held in the original

packages for sale in this state, is subject to a

property tax, or may be made the basis of an

occupation tax, the same as gasoline or distil-

late manufactured in this state. (State v.

ar Refining Co., 73 Mont. 68, 235 Pac.

428.

The foregoing holding is certainly contradictory,

holding that if the law had extended to tax the use of

gasoline, it would have been interstate commerce and

that it would not have been in interstate commerce.

All seem to agree that the tax could have been ex-

tended to gasoline used and eliminate the discrimina-

tion, and the 1927 Act actually did so, and yet the

decision of the case at ir holds that it could not be

done, and in the former cases that it could have been

done, and that if it could have been done, but was not,

that it violated Section One of the 14th Amendment.

In State v. Sunburst Refining (Co., 73 Mont. 68, 82,

the Court said:

“It may be accepted then, as settled beyond

all further controversy that gasoline or distil-

late brought into this state from a sister state

and stored in the original packages, afterward

to be sold in this state, is no longer an article

in interstate commerce, but is merely property

= =

in this state, and as such does not enjoy any

greater privilege or immunity than gasoline or

distillate manufactured in this state. In other

words, such gasoline or distillate, though

brought here from another state and held in the

original packages for sale in this state, is sub-

ject to a porperty tax, or may be made the basis

of an occupation tax, the same as gasoline or

distillate manufactured in this state.”

The Court said, in

oa Silver Bow Refining Co., 78 Mont.

l, ;

“In the first case of State v. Sunburst Re-

fining Co., above, the Act of 1923 was held un-

constitutional because of an unjust discrimina-

tion which could have been eliminated under

the decision in Sonneborn Bros. v. Cureton, 262

U. S. 506, 67 L. Ed. 1095, holding that a tax on

the sale of oi] imported after it had come to

rest in the state would be ‘neither a regulation

nor a burden of the interstate commerce of

which the oi] had been the subject.”

Under the 1925 law, transportation companies having

passenger stages and freight trucks, running in

numerous directions out of Missoula and other towns

of the state, could purchase the foreign product, store

it in their tanks after the transportation was entirely

over, and use the same, tax free. Thereby parties

whose sole business was the use of the highways were

not required to pay a tax, and the market is lost to

the Montana refiner, and the State of Montana loses

the benefit of a tax. Also parties can contract to do

trucking, making all deliveries for numerous mer-

cantile establishments, and can thus secure their gas-

oline without tax. Numerous instances occur of vari-

ous characters to the same effect.

The following further allegations of appellant's

— 2

complaint appear and are admitted by . otion for

judgment on the pleadings, viz: .

That said discriminations in favor of foreign cor-

porations and foreign refiners for the quarter for

which said tax was paid, ending September 30th,

1925, by reason of shipments from sister states,

caused appellant a loss of $4,000.00 and by said dis-

criminations in favor of non-manufacturing distribu-

tors and dealers during said period, caused appellant

a loss of $4,000.00. R. 10. Par. XXI).

That the imposition of said tax of two cents per

gallon was the sole cause of the inability of appellant

to sell said gasoline causing appellant's loss. (R. 10.

Par. XXII).

That the said gasoline tax was imposed by the

State of Montana, solely for revenue purposes, and

none was used for police regulation or supervision

of oil refineries or the sale and distribution of gaso-

line and distillate. R II. Par. XXIII).

That by reason of the premises appellant was de-

nied the equa! protection of the laws of Montana.) R.

II. Par. XXIV).

Illustrations have been set forth showing the actual

discrimination against the Montana refiner in the

working out of the law, and many others logically

occur. As said by the Supreme Court of Montana,

State vs. Sunburst Refining Co., 73 Mont. 83:

“The statute very clearly authorized such

successive taxes, the test is, not what has

been done under it, but what may be done un-

der it. (State ex rel. Holliday v. O'Leary, 43

Mont. 157).“

In conclusion it is most earnestly contended by ap-

pellant that the 1925 gasoline license tax law was dis-

inal

criminative against Montana industries in favor of

the products of refiners of gasoline in sister states,

transported to Montana; that the discrimination

could lawfully have been avoided, but was not; that

it was of such a character that the Montana refiner

was unable to compete and that the refining industry

of Montana could not survive under it. That it was

arbitrarily and unjustly discriminative and void.

Wherefore appellant respectfully submits that said

judgment should be reversed, and the judgment of

this Court, require that the sum of money involved in

this action, to-wit: $6,081.74, paid under protest by

appellant, be ordered restored to the “Protest License

Fund,” referred to in the judgment, (R. 21), and

that judgment be had and given in favor of appellant

for the said sum involved, and for costs.

Respectfully submitted,

JOHN E. PATTERSON,

Counsel for Appellant.