Petition for Writ of Certiorari — Standard Oil Co. v. Washington (No. 730)

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Po LION POR WREL OF CCE RTTORARI. TO TEE

PREME COURG OL THE SEALE OF WASHINGTON

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/ Supreme Court of the United States

_OcrosEr TERM 1960

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STANDARD Or CoMPANY OF CALIFORNIA, Petitioner,

- . V8.

THE STATE OF WASHINGTON, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

_ SUPREME COURT OF THE STATE OF WASHINGTON

‘,

THomAas Topp

1112 White Building .

_ Seattle 1, Washington

DeWitt WILLIAMS -

- 1440 Washington Building |

Ror -. Seattle 1, Washington

i ' Attorneys for Petitioner

THe Aaneue Peess, SEATTLE

—

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INDEX.

Page

Opinions Below sar cnn aisiconansacsvovassiiohurnscsesaasissluinnsantanssen 2

Jurisdiction ....... Inia cthaccssd cei adsccvamadsalaabde es 2

Question Presen EONS RN Et Le one

~ Constitution and Statutory Provision Involved....... 4

= re Or ec ea ee necaces e

“Stages at Which the Federal Question Was. Raised. 8

\ Raised ....... PRR aOb Teves Ai Nice ATO Peni Ebeiasaest Beh ae 8

aeiee Amplifying Reasons Relied « on for the

Allowance of the Writ....0..0.0...00000.00--. eee Ne 2 “tohaley 9

eae id Karte oe ao SH Pe” mesdiene 22

APPENDICES ;

Appehdix A — Opinion of the Supreme Court of

Washington, Cause No, 353804...0.0.000000002. 1A-10A

Appendix 3 — Opinion of trial court, Superior

Court the State-of Washington for Thurston

County, Cause No. 30937..:...............ccc000- nd ANE 11A-13A

Appendix C — Revised Code of W ashington ; 82.32-

180, 9 12 of Chapter 9, Laws of Washington,

First Ex. Session, 1951, pages 28 and 29........:....... 14A

Appendix D — Judgment of the ‘Superi ior Court of\:

the State of W ashington for Thurston County....16A

Appendix EK — Notice of Order of the Superi ior

Court of Washington Denyiug Petition for Re-

IN Sisal tiss ss aechce ac onseadasabaeinieneieminaphteareamagannaae 18A

“Appendix F — Judgment of the Supr eme Court of

I? cenit seca DOA |

Appendix G — Revised Code of Washington 82.04-

4.270; $47 of Chapter 389, Laws of Washington

Ry NE Eg Bic rcisnnctaiccnsdinbleicteianticiencemtaniesss 21A°

Appendix.H — Excerpts froni Respondent's Brief

to the Supreme Court of W ashington, pp. 6

and 8 Kcihbicipheneindeasebehennhsbeesnnsdsens Genes st teaseeeeenecegeeeeeenecereaeces VBA

‘ : ‘ Re..

tv INDEX

Appendix ’ — Excerpts from Petitioners’ Notice of

~ Appeal and Complaint to the Superior Court of

the State of Washington for Thur’ ‘on County,

Cause No. 30937 ........... jncdeneniilesieaindahinbsiahinaeiliaaaesaieail .24A

Appendix J — Rule 50, Rules on Appeal of the Su-

preme Court of Washington RCW, Vol. 0, p. 28..25A

Appendix K — Excerpts from Findings of the trial

court, Superior Court of the State of Washington .

for Thurston Cotunty, Cause No. 30937........ csbeeceee SOA

TABLE OF CASES

Adams, J. D.. Mfg. Co. wv, Storen, 304 U.S. 307 AIA

“Sh: MIT inten ia nies abadiie ensssaibeconnnidiciosasegieapeadaiseadcsmanoneniacion 17, 18

UBinderup v. Pathe Exchange, Ine., 263 US. 291

Sg RNIN rr a eC soot ce RH CMa CER WV

Central Greyhound Lines v. Mealey, 334 U.S. 653

oo)... ve EEG hk, LR 11,12

Charleston Federal Savings, & Loan Association v.

Alderson, 324 U\S. 182 (1945)... *y

Freeman v. Hew ¢, 329 UB. G02 (1951 )......;.........0:...2. 18

— Gwin, "White & Prince, Inc. v. Henneford, 305: U.S.

oe a : 2

Heisler v. Thomas Collierg Co., 260 U.S. 245 (1922)... 13

Joseph v. Carter and Weekes Stevedoring Co., 330

‘ = : : r ry .

US. 422 (1946) ..1..2......0.....- ined sahsaeuencanian vansoaniics igus

Lundberg v. Corporation of Catholic Archbishop, | et

Wn. (2d) 77, 346 P.(2d) 164.(1959).. eee. 9

Michigan- -Wisconsin Pipeline Co. v. Calvert, ae

RF ee © Be vnncminisccensenmesvsadapnapain cesaaeniieal 2.17, 18, 20

Spector Motor Service v. O? 2 onnor, 340 U.S. 602 .

ED <hcieclbilasssisnesncoesieieynancies comsalliNasinpaniaceniacnDbomaueaiactacatamicioe 17

Standard Oil Co. v. Federal Trade C ommission, 340

Ne TE IE PactiecssesnsensntcMectpnserscnnn mm 13, 19,21 .

Standard Oil Co. v. Federal Trade Commission, 173

: I I oes ae oe eee) 15, 16, 1°

Standard Oil Company of California v. The State of |

: Ww ashington, 156 Wash. Dec. 754, 355 P. (245 '

Fi ANG aN CR eek ee Ria oe EE 2; 1A

.,

+ PARLE uF CaSES | wv

LS ae | Page

State ex rel. Lindsey v. Derbyshire, 79 Wash. 227,

ID Pane. GD (HOG) nin ncn tre cnmenemnersencernconien 2

Western Livestock v. Bureau of Revenue, 303 U.S. .

250 (1938) TS RS paste kth ESA .

COURT RULES .

Supreme Court of the United States, ,

Rule 24 (28 USCA Suppl. p. 14)......0....... te 2

Supreme Court of W ashingtou Rule on Appeal 50

(RE W! Vol. 0, pp. 28) .nnn..cnni2---enecveccsonserenssenseesenenneaneneee

STATUTES

RCW 82.04.270; Section 47 of ¢ ‘hapter 389, Laws of

Washington, 1955, pp. 1671 and 1672....4, 5, 8, 12,214.

RCW 82.32.180; Section 12 of Chapter 9, Laws of

W ashington, First Ex. Session, 1951, pp. 28 and

GORENG RIE ie SOD 8 Atel INS ND AES TOROS TORS 2,14A

28 US. ‘» 9 1287-(3)-........ SERS SRA ee VCE, esate 4

CONSTITUTION

C mined States Cohstitution, Article I, Section 8,

7 FS aseessreseeinninennennennseeemenenmnnneienenesigpeannmemsctaienaanet 2,3, 4,5

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In the

Supreme Court of the United States

~ OcToBER TERM, 1960

- STANDARP OU. CoMP ANY OF (‘A.IFORNIA,

os Petitioner, Ps

ve. | BI imriniarisaees

THE Stave oF WasSHINGTON, Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF WASHINGTON

rn

The Chief Justice and Associate Justices of the

Supreme Court of the United States

Your petitioner, Standard Oil ‘Company of Califor-

nia. respectfully prays for the. issuance of a writ of

certiorari to the:Supreme Court of the:-State of Wash-

ington to review a judgment of that court entered De-—

_ vember. 5, 1960, reversing a judgment for petitioner of

‘the Superior Court of the State of Washington in and

for Thurston County, Washington. Upon such review

petitioner Will request this court to reverse the judg-

ment of the Supreme Court of Washington so as to

affirm and require the enforcement of ‘said Superior

‘.. Court judgment, insofar as it requires the refund to

petitioner of a tax imposed upon the transportation by

‘petitioner of its products from its tank farms ty _its

bulk plants in said state which products had been pre-

viously transported by petitioner from outside the state

in interstate commerce to‘said tank farms.

.

a

2

The certified record in this case, including the entire

‘proceedings in said Superior Court and said Suprenie

Court, is furnished herewith in accordance with Rule

21 of the Rules of this court. er

y

ay OPINIONS BELOW |

~The Washington Supreme Court opinion (not yet

officially reported) is reported unofficially at 156 Wash.

Dec. 754 and at 355 P.(2d) 349 (Appendix A, p. 1A).

The trial court’s opinion (Super ior ‘Court of Thurston

County, Washington) is unreported. (Appendix BL

p. 11A).

JURISDICTION |

‘This action -was brought under Section 12 of Chapter

9, Laws of Washington, -First Ex. Sessioi?1951, pages

28 and 29, being RCW 82.32.180 (Revised Code of

_ Washington, cited RCW; Appendix C, p. 14A) to

recover taxes imposed pursuant to a Washington

statute, the application of which petitioner challenged

(among other grounds) as repugnant to the Commerce ,

Clause of the Federal Constitution (Article I, Section

8, Ch.3). «The opinion and judgment of the trial

court granted judgment to petitioner on the*ground

that the statute under which th state taxed petitioner

was nf&t applicable to the distributions which were

taxed. Therefore it was not necessary to, and the

tr ial court, in accordance With established practice’ did

iSeate ex rel. Lindsey v. Derbyshire, 79 Wash. 227, 140 Pac. 540 (1914).

at page 240 approved this quote from Cooley, Constitutional | imita

tions (6th Ed.), p. 196:

“No, court will gratuitously pass upon a constitutional question or

Agee a statute or any part of it invalid.

"In any case, therefore, where a constitutional question is raised.

—py—w

3

hot rule upon the federal question -presented by this

‘petition (Opinion — Appendix B. p. 11A). Judgment

— purguant to said opinion Was entered June 29, 1959 -

(Appendix D, p. 16A)..

On appeal the Supreme Court of the State of Wash-

ington held said statute applicable to the distributions

which were taxed, and further upheld the validity of

the statute against petitioner's challenge that the ap-

plication of the statute was repugnant to the Com--

merce Clause of the Federal Constitution (Article 1,

Section 8, CL 3). The opinion of the Sapreme Court of

the State of Washington was. issued September 22,

_——

1960 CAppendix A, p. 1A). As permitted by Supreme -

Court Rule on Appeal 50 (RCW, Vol. 0,.p. 28) CAp-

pendix Jp. 2A), a petition for rehearing was, timely

tiled on October 20, 1960, which petition was denied

December 5, 1960 and the. judgment herein sought to be

reviewed was then entered on December 5, 1960 and

became final (Appendix FE, p. 18A and Appendix F,

».20A), As shown by the certified record filed with this

petition {he Supreme Court of the State of Washington

ou December 6, 1960 entered: its order to sta¥ the

judgment for ninety days from December 5,-1960and

on December 12, 1960 entered its order for cértifica-

tion of the record to the.Supreme Court of the United

States. | |

though it may be legitimately presented by the record. yet if the record

also presents some other and clear ground upon which the court may rest

its judgment.‘and thereby render the constitutional question immaterial

to the case, that course will be adopted, and the question of constitutional

_peower will be left for consideration until a case arising which cannot

_ be disposed of without considering it and when consequently a decision

upon such question will be unavuidable.’ ”

4

~ This court has jurisdiction-to grant this Petition for

Certiorari under 28 U.S.C.; § 1257 (3) which authorize:

this*court to review a final judgment rendered by the

_ highest court of a state where the validity of a state

statute is drawn in quétion on the ground of its being

repugnant to the Constitution of the United States, or

where any right, privilege or-immunity is + claimed une

der the Constitution. |

e Aes QUESTION PRESENTED

Is the tax which is measured by the full value of the

. products, imposed by RCW. 82.04.270 upon the distribu-

tion of ity products by petitioner from its tank farm:

in Washington to bulk plants in said state, invalid a:

being repugnant to the Commerce Clause of the Federa!

Constitution. (Article “1, Section 8, Cl. 3) When such

products owned by petitioner are shipped by it into the

State of Washington in movement from California or

other states pursuant ‘to accurately estimated demands

for future sales and stored at said tank farms prior te —

delivery to said bulk plants? (Said tank farms are

major receiving points with large storage facilities re-

ceiving said petroleum products directly: from outside

Washington. After storage at said tank farms the prod-

uets in question’ are distributed to petitioner's bulk

plants for storage and further distribution therefrom. )

- : . st

_ CONSTITUTION AND STATUTORY

PROVISIONS - INVOLVED

The taxing statute involved is Seetion- 47.0f, Chapter |

389, Laws of W ashington 1955, pages 1671 and 1672.

5 ‘ y | ‘

‘being RCW 82.04.270. It is quoted in part below, and is

set out verbatim in Appendix G, p. 21A.

The imposition of the taxes sought to be recovered in

_ this action is claimed by petitioner to be in violation

of and repugnant to Article L, ‘Section 8, Cl. 3 of the

( constitution, of the United States reading:

“POWERS OF CONGR ESS. The congress

shall have power * * *

» To regulate commerce with for eign nations, and

-among the several States, and with the Indian

" tribes;’. — °

STATEMENT. OF THE CASE

This was an action by petitioner for refund of an

eXcise:taX assessed by the Tax Commission of the State

of Washington upon the transportation of petitioner's

own petroleum preducts (shipped@by petitioner in in-

terstate commerce from outside the state to tank farms

‘in this state), the tax being on the transportation from

said tank farms, located usually at or near salt water in

Washington, to petitioner's bulk plants located at vari-

ous points insWashington. The tax was imposed under

Section 47 of Chapter 389, Laws of*Washington 1955,

pages 1671 and 1672, RCW 82.04.270 (Appendix G, p.

21A) which imposes an excise tax on the privilege of

distributing ** * * * afticles of tangible personal prop-

erty, owned by them (the taxpayer) from their own

Warehouse or yther central location in this state to two

or more of their own retail stores or outlets, where no

change of title or ownership occurs, * * * .”’ (Paren-

— thetieal words supplied ) :

The- facts relevant to ‘this taxed transportation

‘

6

( which petitionerclaims is a continuation of the inter-

state transportation originating when the products in-

volved were initially shipped from outside the State of

‘Washington ): are succinctly stated in the oe

findings of the trial court alaaectaasin of Fact, RP. 2,3, I—

) a K, page 26A):

Il

“Standard during the period covered by the as-

_ sessment in question, engaged in the distr ibution

and sale of petroleum products in the State of

- Washington, All of said petroleum products exceyt

as provided in Stipulation of April 28, 1959, plain-

tiff’s Exhibit Q, were shipped into the State of

- Washington in movement from California or other

states pursuant to accurately estimated demands

for. future sales. After storage at términals the

products in question were distributed to Stati-

ard’s bulk plants for storage and further distri-

bution therefrom, Standard, during the period in

question, owned and operated terminal storage

plants or tank farms, which are major receiving

points with large storage facilities and which re-

ceived petroleum products directly from outside

Washington. om

a

y

IV ;

“The Tax Conunission Assessment and the Tax

here in question related to the distribution of petro-

leum products by Stedard from terminal storage

plants in this state to such bulk plants in this state

to the extent that such products were later de-

livered from such bulk plants to consumers such

as government agencies, conimercial, agricultural!

and industrial customers and ‘to vessels, no taco

ee supplied). ‘

\

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, + .

; VI o Sd

The petroleum produets’in question were at. all

fimes owned by and at the risk of Standard until

they were sold for reais or until they reae hed the

ultimate consumer. wins |

Respondent agreed these findings were correct, as

"appears fom statements made on pages 6 and 8 of its

hrief to the Supreme Court (Appendix H, p. 23A).

As noted above the tax here involved is on the trans-

portation of pet troleum products from said tank farms

‘to the bulk plants. The statute expressly so states and

respondent so agreed at page 8 of its br ief to the Su-

sat ourt, Wherein it stated:

The privilege taxed in the case at bar is the (lis-

dribution from respondent's terminals to its bulk

stafions.’”

As will be more fully developed herein.such products

~ while being moved from outside the state through such

tank farms to the bulk plants have been conclusively

held to be at all times itrinterstate commerce. (Standard

Oil Co. Federal Trade Commission, 340 U.S. 231

(1950), in the course’of which opinion this court deter-

mined that petroleum products shipped from outside a

state remained ininterstate commerce notwithstanding

such storage at tank farms in the course of distribution

and sale. ) sf

It is the basie position of petitioner that the Com-

merce Clause is infringed by the tax here involved,

7 he small arnount of products not subject-te-the immunity. from tax

lierein claimed is described in Exhibit Q, said small portion being re-

ceived from refineries within the State of Washington. This amount is

identified in said exhibit and is not involved in the issue presented

un this petition.

8

since it is an unapportioned tax directly imposed on the

privilege of moving petitioner's produets while. still in

interstate commerce. The tax is measured by the whuie

value of the product. This tax is not even apportion a

with respect to the value of the property in relationsh))

to the extent of transportation in the State of Wash-

ington as compared to the entire interstate transport.

tion frorf: source to destination. If the tax were upheld.

then Washington could tax 100‘, of the value of the

property for the privilege of the continuance of i'-

interstate journey while in the State of Washingty:

and California, fay instance (from which most of th

products came and within whose borders the product

therefore also moved), could also impose a similar tax

‘on 100‘. of the value.

STAGES AT WHICH THE FEDERAL QUESTION

WAS RAISED

In the complaint on appeal from the ruling of: the

Tax Commission, as shown in the excerpt quoted at Ap-

pendix I, p. 24A, and at the trial of the action by argu-

ment and on brief, petitioner urged that the tax here .

involved was unconstitutional as applied to the trans- °

_ portation of petroleum products to bulk plants from.

tank farms when such products were shipped by peti-

tioner from outside the ~tate. The triak court found

(Opinion—Appendix B, p. 11A) that the tax in any

event was inapplicable to the transportation from tank

farms to the bulk stations, since the bulk stations were ;

not ‘‘retail stores or. outlets’? within the meaning of

RCW 82.04.270 and therefore the trial court did not

*

) .

tind it necessary : rule on the alleged constitutional

ground of recovery.®

The. sonsieaiiiinds the State of W tibia: saanbel

te the Supreme Court of the State of W ashington from

this inte rpretation of ‘retail stores or outlets”’ and pe-

titioner, having the right to do so,* again urged (Brief

of Réspondent, pp. 103-136); as a ground of sustaining —

the trial court's opinion (in respect to the tax on the

transpertation of the-products shipped into Washing-

ton) the ‘unconstitutionality of the application of the

tax in the face of the Commerce Clause. The Supreme -

Court having found that petitioner's bulk plants were

“retail stores or outlets” proe ‘eeded also to pass upon

this -« -austitutional point and, as liereinafter more fully

<t forth, found against petitioner on this alleged

ground of recovery (Opinion, Appendix. A, p. 8A).

This court will ateept the recognition by the higliest

court cof the state, that the®constitutional issue was

properly raised in ‘the state court. Charleston. Federal

Savings & Loun Association vr. Alderson, 324 U.S. 182,

Ind 1945). . )

- ARGUMENT AMPLIFYING REASONS RELLED ON

'— ° FOR THE ALLOWANCE OF THE WRIT .

“The issue here presented is of tremendous importance

het only to petitioner, but all of the oil companies en-

gaged in bringing petroleum products into the State of

SSS =

‘See note | supra.

We are committed to the rule that we will sustain the trial court's judg-

tment upon any theory established by the pleadings and supported by

the proof, Guerin v. Thompson. 33 Wn.(2d) 515. 519, 335 P.(2d) 36

(1959). Lundberg v. Corporation of Catholic tia 55 Wn. (2d)

16 at 85, 346 P.(2d) 164 (1959).

‘ 10 ;

j Wash®gton and other states, and therein distributing

such products. All of them, utilize tank farms and

transport to bulk plants in the ‘same manner as peti-

tioner. — Representatives of many of the oil com-

panies doing business in the State of Washington ap-

peared in the initial hearings before the Tax Commis-

sion of the State of Washington prior. to petitioner's

appeal to the Superior Court of the State of Washing:

ton fdr Thurston County®, and counsel for several of the

‘oil companies affected.appeared as am icus curiae in the

Superior Court and in the Supreme Court and by per-

mission were allowed to argue and participate on briet

(See Judgment, Appendix D, p. 16A and Notice of

Order, Denying Rehearing, Appendix E, p. 18A)..

Most of the petroleum products, consumed in the

State of Washington’ (and most other states) are

brought in front outside the state by various oil com-

panies and stored at similar tank farms as here involved. .

auc. thereafter’ distributed to similar bulk plants for

ultimate distribution and sale. As noted abeve the tax

here invelved is imposed directly on the privilege of

this transportation from the tank farms to the bulk |

plants. If this tax is upheld it will authorize throughout

the United States a similar such unapportioned tax on

similar transportation originating outside the state of

ultimate consumption, néi only ‘of petroleum products

but of all types of property. This court, we believe, can

‘As shown by Exh. P-+ notice of the ruling of the Tax Commission wa-

mailed to: Tidewater Associated Oil Co.. Union Oil Co. of California.

Standard Oil Co. cf California, Shell Oil Company, The Texas Company.

Richheld Oil Corporation, General Petroleum Corporation and certain

of the attorneys for said oil companies.

take judicial notice’ of the fact that state taxing authori-

ties and legislative draftsmen take advantage of any |

crack in the legal rule against the resurrection. of state

-customs barriers. If the published decision of the Su-,

prenie Court of the State of Washington is allowed to.

stand, it may be safely assumed that many similar un-

apportioned taxes on transportation will be enacted in.

other states, : .

As stated in Central Greyhound Lines .v. Mealey, 334

U.S. 653 at ‘662 (1947), in striking down an unappor- —

tioned tax on inter state commerce :

This being so, to allow New York to Impose a

tax on the gross reveipts for the entire mileage—

om the 57.47", within New York as well as the

42.53", without, would subject interstate commerce

to the unfair burden of being taxed as to the por~

tions of: its revenue by states which give protec-

tion to those portions, as well as to a state which

does not. *°* * But if neither Pennsylvania noy,

New Jefséy sought ‘to tax their proportionate

_ share of the revenue from this transaction, such

abstention would not justify the taxing by New

York of the entire revenue. Freeman v. Hewit, 329

U.S. 249, 256. By its very nature an unapportioned

gross receipts tax makes interstate transportation

. bear more than ‘a fair share of the cost of the local

government whose protection it enjoys.” Id at 253.

The vice of such a tax is that it lays ‘a direct bur-

den upon every transaction in. (interstate) com-

merce by withholding, for the use of the state a

part of every dollar received in such transactions.

Crew Levick Co. v. Pe nusylvania, 2490 US. 292,

297, ”9

avn

rc

12 or ae

2 .

So in the instant case the tax on the full val e of the

product without apportionment as te the extent of its

transportation within the State of Washington nmiust be

held -invalid under the doctrine of the Central Grey-

hound Lines ease. The Washington statute furnishes

no basis whatsoever for apportionment, and in fact hy

its terms precludes it. dt cannot be’sustained in part as

was done in the Central Greyhound: Lines case because

there apportionment was found feasible.

Under the holding of this court in Standard Oil Co. ¥.

Fede ral Trade Commission, 340 U.S. 231 (1930) said

' products remained directly in the course of interstate

commerce from the tank fafm storage to (at least) said

bulk plants. The tax on such distribution is therefore

direct burden upon such interstate commerce. In

summary :

1. The tax is on the movement of the property.

2.The movement is directly in interstate-commerce

‘which does not terminate until (at least) the prop-

Phin reaches the bulk plants, and

3. The tax is an unapportioned, direct and invalid

burden on such interstate commerce.

Tke above points will be covered i in the or _ stated:

1. The tax is on the movement of the property.

As stated. by the statute it is a tax on the privilege of

a la distributing in this state personal property

owned by them (in this instance the petitioner) from

their own warehouses * * *in this state to their own

retail stores or outlets * * *."° RCW 82.04.270 (Ap-

pendix G, p. Ape is a tax solely on the privilege

— i3

of amoving property between, two designated points

(while still moving in interstate commerce). The stat-

ute renders of no significance what is done by a w hole- —

saler to the property: at either point but is simply on ;

the privilege of moving the property regardless of |

. what occurs to oris done with the property before or

after reaching the second — pe (bulk

plant).

Whether any statute or action of a state im-

pinges upon interstate commerce depends upon

the statute or action, not upon what is saifl about

it or the motive which impelled it; * * * The action

of the state, as a regulation of interstate commerce,

dves not depend i itpon the degree of interference ;

it is illegal in any degree.”* Heisler v. Thomas Col-

licry Co., 260 U.S, 245 at 209 (1922).

. The interstate commerce transportation did not

terminate until (at least) the property reached the

bulk plants.

Practically the same. facts, but even less favorable

to the shipper, were involved in the case of Standard

Oil Co, v. Federal Trade Commission, 340 U.S; 231

(1950). No suibseqient case has in any way impaired

this holding. Theré this court held that gasoline coming

from outside a state remained in interstate corn-

merce notwithstanding storage in bulk for convenience

_ in distribution and sale. The court stated in part:

Tn order for the sales here involved to come

under the Clayton Act, as amended by the Robin-

son-Patman Act, they: must have been made in in-

terstate commerce. Fhe Commission and the sourt

e »

14

below agree that the sales were so made. 41 FTC °

263, 271; 173 F.(2d) 210, 213, 214. '

‘‘Facts determining this were found by the Com-

mission as follows: Petitioner is an Indiana cor-

poration, whose principal office is in Chicago. Its

gasoline is obtained from fields in Kansas, Okla-

homa, Texas and Wyoming. Its refining plant is at

Whiting, Indiana. It distributes its products in 14

middle western states, including Michigan. The

gasoline sold by it in the Detroit, Michigan area.

and involved in this case, is carried: for petitioner.

by tankers on the Great Lakes from Indiana to jr-

‘titioner’s marine terminal at River Rouge, Michi-

gan. Enough gasoline is accumulated there during

each navigation season so that a winter’s supply is

available from the terminal. The gasoline remain:

for varying periods at the terminal or in nearby

bulk storage stations, and while there it is under

the ownership of petitioner, and enroute from pe-__

tioner’s refinery in Indiana to its market in Michi-.

gan. ‘Although the gasoline was not broyght to

_ River Rouge pursuant to orders already taken, the

demands of the Michigan territory were fairly

constant, and the petitioner’s customers’ demands

could be accurately estimated, so the flow of the

stream of commerce kept surging from Whiting tv

Detroit.’ 173 F.(2d) at 213, 214. Gasoline delivered

to customers in Detroit,.upon individual or ‘ders for

it, is taken, from the gasoline at the terminal in

interstate commerce cu.route for delivery in that |

area. Such sales are well within the jurisdictional

requirement of the Act. * * * Such temporary stor-

age of the gasoline as,occurs within the Detiit

area does not deprive the gasoline of its interstate

character.”

15

It will be noted that the terminal storage there in-

volved was for much longer periods than in the facts

here under consideration, since the storage was for the

purpose «of accumulating an entire winter supply for”

sale so that the store age Was necessarily more substantial

and more extensive in point of time than in the instant.

case, As pointed out in the Circuit Court ease.173 F.

(2d) 210° (whieh was reviewed by this court in the

Standard Oil Co, case): |

0 9 * Tt is not disputed that the petitioner is

engaged in commerce, but: it is vigorously insisted

that commerce ended at the River Rouge plant and

the bulk plants in‘the Detroit Area and that the

petitioner’s transactions from thereon were wholly

intrastate. With this we are unable to agree: The

break that occurred at River Rouge was a break

in transportation but. not in the constant stream of

commerce that flowed from the Whiting refinery

to the petitioner’ 's customers in Miehigan, The

stream of commerce flowed continuously from the

tanks at the refinery -to the tankers on the lake;

from the tankers to the tanks at River Rouge and

the bulk plants in Detroit ;,and from there into tank

cars and tank trucks to the petitioner’s customers.

There may have been several breaks in transporta-

tion in getting from one v ehicle or receptacle to the.

other in eompleting the cominercial transaction of

getting the petitioner's gasoline from Whiting

(Indiana) into the Detrcit territory, but the stream :

of commerce was never broken, no matter how

‘many receptacles were used on the way. The rest at

River Rouge was not like a warehouse where the

goods awaited further sale and distribltion. * * *

(2) We decline, as the Supreme Court did in

16

Stafford v. Wallace, supra, 258 U.S. at page 951".

42 S.Ct. at page 403, 66 L.Ed. 735,°23 A.L.R. 229;

‘** * to defeat this purpose in respect of such a

stream and take it out of complete national regula-

_tion by a nice and technical inquiry into the Hone

s sie

interstate character of some of its necessary Micl-

dents and facilities, when considered alone and .*

without reference. to their association’ with the

‘movement of which they were an essential but sub-

ordinate part.’ After all, as Justice Holmes said in

Swift & Company v. United States, 196 U.S. 375. .

398, 25 S.Ct. 276, 280, 48 L.Ed. 518,* * * * commerce

among the states is nota technical legal conception, —

but a’ practical one, drawn from the course of busi-

- ness.’ "The modern cohcept of. conunerce is one

which gives full sweep to the commerce clause of

the Constitution within the limits of the implement-

ing statute a liberal view of the Congressional

purpose agexpressed in the statute, and a realistic

view of what business is doing as‘it moves across

state lines to accomplish its purpose. The late cases

support the view that the petitioner's, operations

are in commerce from the refinery to its customers.

Walling ¢. Jacksonville Paper (0.,.317 U.S. 564, 65

S.Ct. 332, 87 L.Ed: 460; Binderup v. Pathe Evr-

change, 263 U.S. 291, 309, 44 S.Ct. 96. 68 L.Ed. 30s:

Mid-Continent Petroleum Corporation v. Keen,

Cir; 157 F.(2d) 310, 314; Republican Pictures Cor-

poration v. Kappler, 8 Cir. 101 F.(2d) 543, 545, 162

A.L.R. 228; Walling v. American Stores Co., 3 is

133 F.(2d) 840.” ; |

It is deemed necessary to quote in full from this ca-e

because it demonstrates beyond question, since the facts

~-are,so similar (with any differences being in favor «1

the petitioner herein), that the products here involved

4

17

were directly in interstate ‘commerce. when the tax on

their transportation was levied by the State of Wash-

ington. Fang De bs

Tn Binderup et. Pathe Exchange, 1ne.. 263 U.S. 291

(1923) Mr. J ustice Sutherland, speaking for this court

at page 309, stated : | 3

«The intermediate delivery to the agency did not

end and was not intended to end the movement of

the commodity. It merely halted as 4 convenient

step in the process of getting it to its final destina-

tion. The general rule is that where transportation —

has acquired an ‘jnterstate’ eharacter it continues

at least until the load reaches the point where the

parties origitially intended that. the movement

should finally end.”* |

-¢ D. The tax is an invalid burden om interstate com-

merce, : ;

It is hevond question that a state may not lay a tax

on the privilege of engaging in interstate commerce,

Spector ‘Motor Service ve O'Connor, 340 U.S. 602 .

(1951), Michigan-Wisconsin Pipeline Co. v. Calvert,

347 U.S. 157 (1953), Binderup ve Pathe Exchange, Tne.,

263 TLS. 291 (1923), J. D. Adams Mfy. Co. uv. Storen,

304 U.S. 307. (1988). Guin, White & Prince, Inc. v.

Heuneford, 300 U.S. 434 (1938), and that without ap-

portionment.as to local activity state tuxex on interstate

commerce are invalid; J. D. Adams Mfg. Co... Storen,

504 U.S. 307. 314 (1938) ; Western Livestock v. Bureau

of Revenue, 303 U.S. 250 (1938 ) -and Joseph v. Carter

and Weekes Stevedoring Co., 330 U.S. 422 (1946).

A state may not fmpose a tax which discriminates

N

18 ‘

against interstate commerce by subjecting it to the

burden, or the pesoivility of the burden of, “multiple

taxation,”’ Michigan-Wisconsin Pipeline Co. v. Calvert,

347 U.S. 157 (1953) and J. D. Adams Mfg. Co. v. Storen,

304 U.S. 307 (1938). Such imposition of taxes has been

prohibited because the commerce. clause precludes what -

was described in Freeman v. Hewit, 329 U.S& 249

(1951), as **one single-tax- sth of direct interferenc r

with the free ‘flow of commerce.” .

As stated in Wichigan-W iscousin P.L. Co. v. Calvert,

347 U.S. 157 at 170 (1958) :

Hote it ‘is perhaps sufficient that the privilege ©.

taxed, namely the taking of the gas,-is uot so sepu-

rate and distinct from interstate transportation

_ as to support the tax. But additional ‘objection ix

present if the tax -be upheld. It would ‘permit i

multiple burden upon that commerce.’ Jose ph vis

Carter & Weekes Stevedoring Co., supra (3530

‘U.S. at 429), for if Texas may impose this ‘first’

taking’ tax measured by the total volume of gas s»

taken then Michigan and the other recipient state~

have at least equal right to tax the first taking or

‘unloadit g* from the pipeline of the same gas whet

it arrives for distribution. Oklahoma might ther

seek to tax the first taking of tle gas as it crossed

into that State. The net effect would be substan

tially to resurrect the customs barriers which the

C ommerce Clause wi~ designed to eliminate. *Th:

very purpose of the Commerce ¢ ‘lause was to ere-

" ate cn area of free trade among the several state-.

That clause vested the power of taxing a transac-

tion forming an unbroken process of interstat:

commerce in the Congress, not in the States." Me

19

Leod v. ds E. Dilu orth (wo. hes moe U~ Ss. nf 330, pi <4 9

88 L.ed. 1304, 1307, 64 S.Ct. 1028, 1030 (1944)."°

The basic error of the Supreme Court of the State of

Washington, which will be mere fully developed in the

event this petition is granted, Was in completely mis-

construing the Standard Oil Co. v. Federal Trade Com-

mission ease above referred to. In holding that case

hot applicable and refug$ng te follow it the court stated :.

Here, the interstate journey of the petroleum:

products ends when the products are. deposited at

the terminal stor age plants.” (Appendix A, p.

10A). |

Oni the contrary the express and explicit holding of

this court was that under facts less favorable to the »

~ shipper the interstate journey did not end with the flow

“inte the tank farms and did not end when the gasoline

ieft the tank farms, but continued until final delivery of:

the gasoline was made (certainly, at least, to the bulk

plants): This court adopted the Cireuit Court opinion

and quotes from it stating: |

‘Although the gasoline was not brought to River

Rouge pursuant -to orders already taken, the de-

mands-of the Michigan territory were fairly con-

stant. and = the petitioner's customer's demands |

‘could be accurately estimated so that the flow of the

stream of commerce kept surging from -Whiting

(Indiana ) to Detroit (which was the delivery point

after taking the gasoline from storage at River

Rouge, Michigan) 173 F.(2d) at 213, aJ4.°’ (Pa-

renthetical words supplied )

Certainly no construction can be placed on the fore-

golg language except that the gasoline in its entire

’

: a 20 |

travel from outside the state through the storage point

at the tank farms to the ultimate delivery point at

Detroit was in interstate commerce.

This resume of the facts corresponds very closely

_with the findings of the trial (Superibr Court ) oun in

- the instant case in which it stated (Appendix K, p. 26A):

* All of said petroleum products, except as pro-

vided in stipulation of April 28,1959, plaintiff’.

Exhibit Q, were shipped into the State of Wash-

ington in movement from California/or other state:

pursuant to accurately estimated demands for f ul

ture sales. After storage at terminals ine promeet tx

in question were distributed to Standard’s bulk

plants for storage and further distributiom there-

from. * * * The Tax Commission Assessment anid

the Tax here in. question related to the distributici

of petroleum products by Standard from termini!

storage plants in this state to such bulk plants in

this state.’’

The petroleum products in question were at all times

owned by and at the risk of Standard until they teached

the bulk plants and thereafter sold. Since the interstate

transportation was continuous through the tank farm

storage, the taking of the gasoline from the storage

cannot be separated from the. transmission of. it in in-

terstate commetee. Michi can-Wisconsin Pipeline Co.-

. Calvert, 347 U.S. 157 (1953) quoted above.

Many decisions of this court indicate that it is acutels

conscious of the peril to interstate commierce if the

right to engage in it is subject to direct state taxation.

and it is impor tant therefore that duterstate commerce.

a

21

'- .

_ especially when, as in this case, great volumes of such

~~“

‘commerce are concerned, he given by this court its full

constitutional pr otection.

If the decision of the Supreme Court of the State of

W ashington is allowed to stand ip obvious and clear

conflict with the r uling in the Standard Ou ('p. ease and

the other cases cited herein, a tremendous amount of

interstate cagnumerce jnvolving millions’ of gallons of.

gasoline will be directly taxed. Yown through the years

as well as for the prior period challenged in this case.

The distinction Which should and must be sustained is

drawn from the sentence in the Circuit Court case af-

tirmed by this court wherein the court stated in part:

~The rest at River Rouge (the original terminal

stordge point) was not like a warehouse where the

gin dis awaited further sale and distribution.”

Finally, it Should be noted that while the Standard.

Oil Co, case involved the application of the Robinson-

Patna act and not the imposition of’a state tax the

nature of the applicable statute was totally immaterial.

_ There it was essential to tind that the product involved

Was still ‘in interstate commerce.” and this court did

~o find. The issue in that case as to whether the product

Was in interstate commerce was squarely: before this

court because the petitioner contended that’ * * * in

the: instant case the Congres~ had limited the ,ommis- °

slon’s jurisdiction to purchases ‘in commerce’ and did

not extend the commission's jurisdiction to purchases

‘affecting commerce’ * * * —it raises the question

Whether interstate transportation ended at ‘the marine

terminals in Michigan from which no gasoline was ex-

ported to other states. — This whole line of argument) .

_ (that the gasoline was not in interstate commerce after

storage at River Rouge for the winter) was fully de-

veloped by the petitioner in that case,’ and as noted

above was ‘completely rejected by this court, which |

found the products to be directly in the flow of com- |

merce at all times to and from the marine tank: farm

* the bulk plants.

CONCLUSION

For the reasons set forth above, petitioner respect-

fully prays that this petition be granted and a writ of .

certiorari be issued to review the decision of the court _

below.

THOMAS Topp

White Building

Seattle 1, ‘Weslingten

DeWirt WILLIAMS

_ 1440 Washington Building

5 Seattle 1, Washington

Attorneys for Petitioner

»

*Brief for Petitioner, page 50.

~ *Brief for Petitioner, pages 56-58.

1A

"APPENDIX A

OPINION OF SUPREME COURT | OF WASHINGTON

156 Wash. Dee. Oe

, * 355 P.(2d) 49

it THE SUPREME COURT OF THE State oF W. ASHINGTON a

_ STANDARD OIL COMPANY OF CALIFORNIA, No 35304

a.corporation, — ~ Respondent, ie, 35004

Vs.

THE STATE OF. WasHINGTON, Appellant. , Two

. Filed September 22,1960

The plaintiff in this actigm seeks to recover certain

taxes which it has paid to the defendant state under

protest. The taxes were levied and collected under the _

authority of REW 82,04.270, which imposes a business ,

and occupation: tax upon what are known as *'whole-

‘sale functions.’ Lusofar as it is applicable in this case,

that section provides :

*(2) The tax imposed by this: section is levied

aud shall be collected from every person engaged

in the business uf distributing in this state articles

¢* tangible personal property, owned by thera from

their own warehouse or other central location in |

_ this state to two om more of their uwn retail stores

‘or outlets, where no change of title or ownership

vccurs, the intent hereof being to impose a tax ~

‘equal to the wholesaler’s tax upon persons per-

forming functions essentially comparable to those ~

of a wholesaler, but not actually making. sales:

s’‘rovided, That the tax designated in this section

may not be assessed twice to the same person for

the same article. ... Provided further, That deliv-

ery trucks or vans will not under the purposes of

this section be considered to be retail stores or out-

lets. [1959 Ist ex. s:¢ 59 3...)”

2

The plaintiff brings its products into this state by

Various means of transportation and deposits them at

‘terminal storage plants, from which they are there-

after distributed to some one hundred fifty- two bulk:

stations or plants within the state. These plants consist

of storage and warehouse facilities, with’ overhead lines

for filling trucks, and small offices used by the em-

ployees,

During the per ind involved in this suit, 58.2 per cent

of the dollar value of products handled by bulk -plaut-

was sold or transferred for resale to retail service sta

tions, dealers, jobbers and cooperatives. The wholesale

tax on these transfers was paid without prtest

The remainder of the products were ‘sold at) bulk

prices and.in bulk quantities for business use to indus:

trial, commercial, and agricultural consumers and te

governinent and marine vessels. Phe prices were deter:

rained ‘according te quantit’’ and were fafluenced by’

the competitive prices of other suppliers. Very few

sales were made at the bulk plants, and customers werr

hetwhevuraged to visit the plants. Deliveries were made

t

by tank tracks belonging to the defendant. and a si)’

Was considered completed at the time of delivery.

Retorl wiles tanes, imposed under ROW) 82.04.2074"

Were pad on the latter transactions. It was the thew:

of the Ta. commissions in levving the taxes in qiestiot.

that te the extent that retail sales were made from the

bulk. plants, they were “ret feos orontiets "with:

the mie AINE of ROW s2.4 200-2). and that the tra: -

fer of the plait iff's ine its fr tn its terminals te .*-

ieee 4 pMatits, to TheeNtent that these Praluels Were utr:

motied aire tiy feo ouotisuiners, Was a Whelesaie fun?

wit Tite? WLI Lara OL Thal slawliirte

‘ 2

'. ening tint detert t Mh the spe:

3A

or outlet’? was intended to have its common and ordi-

nary meaning, and that establishments which sell in

large bulk quantities for business uses do not. come

Within that meaning. The court sustained its position |

and ordered a refund of the taxes involved.

The legislature has defined the term “retail sale” for

purposes of the business and oc — tax statute.

RCW 82.04.010 provides: - ~

Por the purposes of this’ chapter [which in-

cludes RCW = 82.04.270] untess otherwise required

hy the context, the terms used herein shall have the

meaning given to them in RCW 82.04.020 through

82.04.210. [1955 ¢ 389 9 2...]"”

W — find this definition, RC W 82.04.050 :.

‘Sale at retail’ or ‘retail sale” means every sale

of Pierce personal property (including articles

-produced, fabricated. or imprinted) other than a

ie to one who (a) purchases for the®purpase of

resale as tangible personal property in the regular

course of business, or (b) installs, repairs, cleans,

alters, imprints, improves, constructs, or decorates

‘eal or personal property of or for consumers, if

such tangible personal property becomes an ingre-

dient or component of such real or personal prop-

erty, or (e€) purchases for the purpose of consum-

ing the property purchased in producing for sale a

new article of tangible personal property or sub-

stance, of which such property becomes an ingre-

dient or component or ax a chemical used in proc-

essing, When the primary purpose of such chemical

is to create a chemimal reaction directly through

contact with an ingredient of a new article being

produted for sale. The term also means every sale

vf tangible personal property to persons engaged

iu any business which is taxable under RCW 82-

oO 4A

04.280, subsection (2), and 82.04.290 .. . [1959 Ist

ex.s.¢5§2...].” OF

?

Further detailed definitiong then follow, not perti-

ent to the issue in the case.

RCW 82.04.060 ** *Sale at wholesale’ or *whole-

‘sale sale’ means any sale of. tangible personal prop-

erty which is not a sale at retail and means any

charge made for labor and services rendered. for

persous W ho are not consumers, in respect to real

or personal property, if such charge is expressly

defined as a retail sale by RCW = 82.04.050 when

rendered to or for consuniers: Provided, That the

term ‘real or personal property’ as used in this sec-

tiow Shall not include any natural products named

in RCW 82.04.100. [1955 Ist ex.s. ¢.10$4...]"

a. A reading of these statufes in their entirety will

\ show that the legislature was at some pains ‘to insure

“that a narrow definition ¢f the terms ** wholesale sale”

and ‘tretail sale’* would aot be implied, and.even went

so'far as to include labor awd services within these defi

nitions. Jt is also aie th the legislature intended

that every sale should be taX¢d, unless it was expressly

excepted from the operation of the statute. Nowhere do

we find in this chapter any indication that only stores

which sell packaged articles in small quantities for per-

sonat use were to be considered ‘‘retail stores or out-

Jets."" On the contrary, the broadest language is used.

The wholesale sales are defined as all sales not classi-

tied as retail sales, that is. not sales to constmers,. aud

the wholesale functions. tax is imposed ‘ton every per:

son engaged in the business of distributing in this state

articles of tangible personal property’’ (except those

expressly excluded) who engage in transactions which

would constittite sales at wholesaleif a transfer of own-

ership were involved. ame

a

_ oA

The plaintiff makes some contention that the use of

the term “‘articles’’ indicates that the legislature had

in mind many separate articles or packages such as are

distributed by chain-store owners to retail chain stores _

whieh deal-in merchandise. ‘“Article’’ is defined in.

Webster's New Twentieth Century (2d ed.) 1957, Dic-

tionary ds ‘ta particular commodity ; a thing for sale.”’

A tank of gasoline may be a much larger object than a

bottle of hair oil; but we fail to see-wherein it is any

~ jess an article. We find nothing in the statute to indi-

cate that the legislature intended to make the incidence

- of the tax dependent on the size of the article sold.

The plaintiff cites cases which: have ‘interpreted the

Federal fair labor standards act and have defined ‘*re-

tail establishment’ for the purposes.of that act to ex-

clude frumethat definition outlets such as are involved

in this suit, which sell for business use. It is from these

cases that the plaintiff’s ‘‘ordinary meaning’’ of the

term ‘retail store or outlet’’ is derived. However, our

statute has given the term ‘‘retail sale’’ a much broader

definition, including within it all sales for consumption

| by the purchaser and making no distinction between

busiyess.and personal use. If such a distinction. were

_ intended, as the plaintiff contends, then stores which

~ell. office supplies, tools, store and office furnishings

and the like, would be exempt from the tax whether or

hot they were chain stores.. We find no intention ex-

pressed ur implied in the statute to allow such ex-

cmptions.

The meaning ordinarily given to the term ‘‘retail

~ale,”* where a taxing statute similar to ours is under

consideration, is that which the legislature adopted in

this instance—a sale to an ultimate consumer. A few of

~ the recent cases acknowledging the correctness of this

detinition are Fritz v. Peck, 160 Ohio St. 90, 113 N.E.

[| 64

(2) 627; Gag. Canada Dry Bottling Co, of Fla, Lue.

(Fla.) 59 So.(2d) 788; Paper Products Co. vr. City of

Pittsburgh, 391 Pa. 47, 137 M(2d) 253: Market Strovt

~ Co. r. California State Board‘of Equalization, 137

(al. App.(2d) 87, 290 P.(2d) 20; and Trico Electro

— Cooperativ ¢, luciv. State Tar € omm., 49 Ariz. 293, 288

[ (2d) 782.

It is contended that while the legislature has detined

the term ‘sale at retail,’ it has not defined the term

‘retail store,” and therefore it must be assumed that

the legislative definition of a retail sale was not intended |

to affect the meaning gf the term “retail store or out-

let.’ The plaintiff is unable to point to anything in the

context of ROW $2.04,.270 (2) which would indicate .

that the legislature had-in mind anything other than a

place Where retail sales are made, It does not deny that

the sales made at its bulk plants were retail sales (sales

toe constumers—taxable under RCW 82.04.250), but en-

deavers te persuade the court that they were not made -

froma retail outlet. We are at.a loss to understand what

a retail outlet is if it is not a place from which retail

sales are inade, and are unable to find in the statute.any

suggestion that the legislature intended another det-

nition:

There is alse a <uggestion that the majority of the

‘sales. avere expressly exempted from the tax’ because

they were made trom delivery trucks. The statute

merely states that such trucks will not: be considered

retail stores or outlets. They have not been treated as

such stoves or outlets in this instance. It is. of course.

the bulk pl its which are found to be retail outlets and

not the trueks which they use for delivery.

It is argued that the legislature. in using the phrase

“to two or-more of its owni retail stores or outlets” had

in mind that such stores or outlets should be predunu-

TA

nantly used for such sales in order to come within the |

purview of the statute, and that because 58.2 per cent -

of the sales from the bulk plants were wholesale sales,

the plants could not be classed as retail outlets. The tax

is not imposed upon the store or outlet, but upon the

wholesaling function, that is, the distribution to two or

nore outlets. We see nothing in the statute to indicate

that the legislature intended to restrict the tax to dis-

tributions made to establishments which make niore

‘refail sales than wholesale sales. Nor do we subseribe to

the plaintiff's theory that the intent could not have been

to include establishments which make both types: of

sales because the tax cannot be computed-at the moment

of distribution. The inability to compute the tax until.

it is known what proportion of the products have been

sold at retail‘and what proportion at wholesale in no

Way prevents the ultimate computation and imposition

of the tax. A taxpayer cannot relieve himself of his

share of the tax burden by simply conducting his busi-

hess in such a. way as to make its computation difficult.

The plaintiff refers to the principle that administra-

tive aterpretation of an act is entitled to considerable

Weight in construing that act, and suggests that an ex-

cise tax division's interpretation of a former act, which

Was repealed in 1939, is persuasive that its operations

are hot covered by the present act. The former act did

- hot contain the words ‘tor outlet,’’ and the present act

has been consistently construed bythe commission as

applicable to the distributions made to the plaintiff’s:

bulk ‘plants fer sale to consumers..If the act were am-

biguous and resort to administrative construction were

needed in this instance, the latter interpretation is the.

one Which should command the attention of the court.

There are other theories of similat import which are

urged, though tess" ear nestly, by the plaintiff in support

ae

8A

oftits interpretation of the statute; but we think its at-

torneys are aware that none of these’can survive in the

glaring. light of the statutory language, and it would

serve no useful purpose to prolong this opinion by set-

ting them forth.

Finally, resorting to the rule that a judgiment will not

be reversed if it.can be sustained upon any ground

urged before the trial court, the plaintiff proposes that -

the law in question is forbidden by the United States

constitution because it constitutes an undue burden on

interstate commerce. The case Nae it claims to be

controlling, is Standard Oil Co. v. Federal Trade

Comm., 340 U.S. 231, 95 L.Ed. 239, 71 S. Ct?240, wherein

it was held that temporary storage of oil at dock termi-

nals pending distribution to ultimate customers did not

deprive it of its interstate character for purposes of

the Robinson-Patman act, regulating adi competi:

tion. Specifically. the court said:

Such sales [to jobbers in the Detroit area] are

well within the jurisdictional requirements of the

Act. Any other conclusion would fall short of. the

rec ognized purpose of the Robinson-Patman Act te

reach the operations of large interstate businesses

in competition with small local concerns. Such ten:

porary. storage of the gasoline as occurs within the

_ Detroit area does not deprive the gasoline of its in-

ac rstate char acter.’

It will-be seen that the court in that case did il say

that the oil had gained no intrastate character, but sim-

ply said that it had not }cen deprived of its interstate

character for purposes of the act. It is well settled ‘that’

an activity may be related to interstate commerce and

at the same time be subject to state taxation. The ap-

plicable principie is clearly stated in Michigan-Wiscow

stn Pipe Line Co. v. Calvert, 347 U.S. 157, 98 L.Ed, 583.

748.Ct. 396, as follows:

9A

‘Numerous cases have upheld state levies where

it is thought that the tax does not operate to dis-

criminate against commerce or unduly burden it

either directly or by the possibility of multiple

taxation resulting from other taxes of the same sort

being imposed by otlier states. The recurring prob-

lem ix to resolve a conflict between the Constitu-

tion's mandate that trade between the states be

permitted to flow freely without unnecessary ob- |

struction from any source, and the state’s rightful

desire to require that interstate business bear its

proper share of the costs of local government, in

return for beiefits received. ... It is now well set-

tled that a tax imposed on a local activity related

_to interstate commerce is valid if, and only if, the

local activity is not such an integral part of the

interstate process, the flow of commerce, that it

cannot realistically be separated from it. [citing

cases]. And if a genuine separation of the taxed

local activity from the interstate process is impos-

sible, it is more likely that other states through

Which the commerce passes or into- which it flows

can With equal right impose a similar levy on the

goods, with the net effect of prejudicing or unduly

burdening commerce.’’

The court in that case found that the tax in question

‘Was imposed on the taking of gas into the pipeline,

Which activity could not be separated from the trans-

Mission. of it in” initerstate commerce, Quoting from

United Fuel Gas Co. v. Hallasicin, 257 U.S. 277, 66 L.Ed.

234, 42 S.Ct. 105, it said: |

**'There is no break, no period of deliberation, -

but a steady tlow ending as contemplated from the |

beginning beyond the state line.’ ”’

We think it clear beyond question that the test, when

10A

applied to the activity subjected to taxation in this case.

reveals that no undue burden on interstate comme\er

_ is imposed. In the last cited -case, the tax was imposed |

upon the movement of the gas into interstate com:

‘merce. Here, the interstate. journey of the petrolenm

products ends when the products are deposited: at the

terminal storage plants. The transfer of these product:

to bulk plants for distribution to ultimate consumers

or retail dealers is not an activity which is duplicated

in any other state; therefore no other state can with .

equal right impose a similar tax. And a practical sepa

ration from interstate commerce takes place when thy

products leave the terminals, if not when they are de-

posited there. Thereafter they are subject to the taxing

power of the state.

The judgment is reversed.

We concur: Rosellini, J.

Hill, J.

Finley, J. |

Hunter, J.

Foster, J.

A.

APPENDIX Bess

- OPINION OF TRIAL COURT

bx THE Su PERIOR COURT.OF THE STATE OF ‘WASHINGTON

- FOR Tue "RSTON COUNTY : os

STANDARD OLL COMPANY OF CALIFORNIA, ie ORG

a corporation, Plaintiff ; No. 30937 -

THE Stare or W AsHINGTON, Defendant. -

" MEMORANDUM OPINION © ‘

Plaintiff seeks recov ery of taxes paid the. Tax Com-

tuission uinler the following circumstances. As part of

its total distribution system in the State, plaintiff oper-

ates terminals or tank farms at Point Wells and East

Paseo for the receipt of ‘petroleum products from out-

~ide the State and from a refinery within the State. It,

also operates bulk stations or beilk plants at 152 loca-

Nous, thronghout the State supplied by plaintiff from

its termiuals.or other sources. It also operates 3 othey

_ tern nals which function likewise as bulk plants, known

is Seattle Main, Aberdeen and Longview. The tax here

questioned Was upon that portion of tetal products

passing between ternrinals and bulk stations, consist-

ing of deliveries to, consumers such as government

agencies, commercial, agricultural and industrial cus-

‘omers and to vessels. Reference is made to the stipula-

tion of the parties, Exhibit P and the exhibits which

area part of the stipulation, for a statement of the facts

ih More detail.

The Tax Coumnission made no findings, conclusion,

worder. But it sufficiently appears that they taxed the

jrtion Of business hereinbefore described, pursuant to

"their construction of R.C.W. 82.04.270, the pertinent, *

“part of which reads as follows: °

12A

a8 © + Tee tak ‘iia by this section is we ied

and shall be collected from every person engaged i in

the business of distributing in this state articles of

tangible personal property, owned by them from

their own warehouse or other central location in

this state to two or more of their own retail stores .

or outlets, where no change of title or ownership

occurs, the intent hereof being to impose a tax -

equal to thé wholesaler’s tax upon persohs per-

forming functions essentially comparable to those

of a wholesaler, but not actually making sales: PRo-

VIDED, That the.tax designated in this section may -

not be assessed twice to the same person for the

same article. The amount of the tax as to such per-

sons shall be computed by multiplying one-quarter

of one percent the value of the article so distrib-

uted as of the time of stich distribution. .The tax

commission shall prescribe uniform and equitable

rules for the purpose of ascertaining such value,

whie h value shall correspond as nearly as possible

to the gross proceeds.from sales at wholesale in.

this state of similar articles of like quality and

character, and in similar quantities by other tax:

pavers, PROVIDED FURTHER, That delivery trucks or

vans Will not under the purposes of thi§ section be

considered to be retail stores or outlets.” ( Empha-

sis supplied)

The first. question preseiited is one of faet. Is a bulk

station a retail store or outlet? The record is replete

‘ with® proof deseriptive ot the bulk stations involved

here. It includes physical characteristics, personnel eni-

ployed and their functions, record keeping. operating

features, contractual relations, the types of sales made

therefrom, promotional activities, and many other mat-

ters. It is not all of one tenor, but it fairly preponder-

IBA

ates in cnaliaililias that these bulk stations are not

retail stores or, outlets, and we so find.

In Section 4 (d), Chapter 180, Laws of 1935, and in

similar context, the legislature used the language

“group of retail stores.”’ In 1941 this tax was elimi-

nated. The tax was restored in-1955 as quoted. supra,

and the language used is ** ‘retail stores or outlets.’ The

addition of ‘tor outlets’’ enlarged the category but not

the type of thing to which the statute applies. In Hills

r Joseph, 229 Fed: 865, it was held the rule of éjusdem

generis means that general and specific words capable

of an analogous meaning take color from each other,

~” that the general words are restricted to a sense an-

alogous to the less general. That rule applies: here.

The construction put upon the statute by the Tax

(Commission seems to indicate their determination that

hulk stations are retail stores or outlets with respect to

the portion of the ‘business taxed, and otherwise: as to

the remainder, But the statute gives no basis for con-

tending that this was the legislative intent. Moreover,

if the legislature so intended it would be simple to ex-

press it I appropriate language. The gist of the matter

is that the legislature made the character of the facility

the determinant of the application of the statute.

The plaintiff will prevail.

Raymond W. Clifford

Judge

16 June, 1959

: ——_

° : 14A

APPENDIX C

SECTION 12 OF CHARTER 9, LAWS OF WASHINGTON.

FIRST EX, SESSION, 1951, PAGES 28 AND 29

Revised Code of Washington 82.32.180

RCW 82.32.180. Any person, except one’ who ha:

failed to keep and preserve books,.records, and invoices

as required in this chapter and chapter 82.24, having

paid any tax as required and feeling aggrieved by th:

amount of the tax may appeal to the superior court ot °

Thurston county, within the time limitation fora r-

fund provided in this chapter, or within thirty, da)-

after the date of the notice denying a hearing, or withil

thirty days after the date of the order provided 1:

- RCW 82.32.170. In the appeal the taxpayer shall

forth.the amount of the tax imposed upon him whic

he concedes to be the correct tax and, the reason wi)

the tax should be reduced or abated. The appeal shal.

be perfected by serving a copy of the notice of appea.

upon the tax commission within the time herein spec

tied and by filing the original thereof with proof «:

service With the clerk of the superior court of Thursto

county. Within ten days after filing hotice of appea.

the taxpayer shall file with the clerk of the superior

court a good and suffie ‘ient surety bond payable to tl

state in the sum of two hundred dollars, conditioned +

diligently prosecute the appeal and pay the state a.

costs that may -be awarded if the appeal of the taxpaye

is not sustained.

The trial in the superior court on the appeal shal! |

de nove and without the neceskity of any pleadins

other than the notice of appeal.-The burden shall 1e~'

upon the taxpayer to prove that the tax as paid by him

is incorrect. either in whole or in part. and to establi=!

_ the correct amount of the tax. In such proceeding the

r ° > -

¢ : » aes

15A

| ae s

taxpayer shall be deemed the plaintiff, and the state,

the defendant; and both parties shall be entitled to

~ubpeeua the attendance of witnesses as in other civil

wtions and to produce evidence that is competent, rele-

vant, and material to determine the correct amount of -

the tax that should be paid by the taxpayer. Either

party shall be allowed to appeal to the supreme court

in the same manner as other civil actions are agpealed

te that court. ,

It shall not be necessary for the taxpayer to protest

against the payment of any tax or to make any demand

t» have the same refunded or to petition the commis-

~lon for a hearing in order to appeal to the superior

court, but no court action or proceeding of any kind

shall be maintained by the taxpayer to recover any tax

paid, or any part thereof, except as herein provided.

-16A

APPENDIX D>

IN THE SUPERIOR COURT OF THE STATE OF Ww ASHING TON

FOR THURSTON COUNTY

STANDARD OL COMPANY OF CALIFORNIA, ;

Plaintiff, - No. 80937

vs, ju DGMENT

THE STATE OF WASHINGTON, :, Defendant.

This cause having come regularly for trial before the |

undersigned Judge of the above Superior Court on the |

28th day of April, 1959, the plaintiff appearing by its

attorneys, Helsell, “Paul, Fetterman, Todd & Hokan-

son, aud the defendant:appearing by its attorney, John

W. Riley, Assistant. Atorney General, and Tidewat®

Oi] Company appearing as amicus curiae by its atter-

ney, DeWitt Williams of Rosling, Williams, Lanza &

Kastner, and Cnion Oil Company appearing as amicu-

curiae by Griffith Way of Little. LeSourd, Palmer.

Scott & Siemmons, and General Petroleum C orporation

appearing as amicus curiae by Max Kaminoff.of Bogle.

Bogle & Gates, and the parties having stipulated as

facts and testimony having been heard and exhibit»:

having been introduced and admitted and statement-/

having been made in open court and the Court having

considered all of said evidence and all of the record:

and files herein and having heard argument of counse:

and briefs having been submitted and Findings of Fae

and Conclusions of Law having been made, signed and

tiled herein, now, therefore, :

Ir ‘IS HEREBY ORDERED, ADJ UDGED and DECREED, as fol-

; OWS;

The plaintiff, Standard Oil Company*of Califoriia.

a corporation, is hereby granted judgment against. th

defendant, State of Washington, in the amount of #10

17A

977.00, and in the additional amount of One Hundred |

Fifty-three Thousand Five Hundred Twenty-three and

95 100 ($153,523.95) Dollars, with interest on the lat-

ter amount at the rate of 36. per annum from July 25,

_ 1998, together with its costs and disbursements herein

to be taxed.

DONE IN OPEN COURT this 29th day of June, 1959.

Raymond W. Clifford

Judge

Presented by:

Thomas Todd )

of Helsell, Paul, Fetter man, ‘odd & a

Attorneys for Plaintiff.

184

APPENDIX E

NOTICE OF ORDER DENYING PETITION FOR

* REHEARING

THE SUPREME C OURT, STATE OF WASHINGTON, OLYMPIA

Robert Holstein, Archie B. Stewart.

. Clerk aa Deputy Clerk

. December 5, 1/60

Helsell, Paul, pee ‘man, Todd & Hokanson

1112 White Building .

Seattle 1, Washington

Hon, John J. O’Connell, Attorney General

Mr. Timothy R. Malone

Temple of Justice

Olympia, W ashington

“Mr. John W. Riley, Deputy Attorney General :

Mr. JamesA. Furber, Assistant Attorney General

Tax Commission

General Administration Building

Olympia, Washington ,

Amici Curiae:

Bogle, Bogle-& Gates

Mr. Max Kaminoff

603 Central Building

Seattle 4, Washington

— Little, Palmer, Scott & Slemmons

Mr. Kenneth A. Cox

~ 15th Floor, Hoge Building ~ , *

Seattle 4. Washington ;

Rosling, Williams,“Lanza & Kastner

Mr. DeWitt AV illiams

1440 W ashington Building

Seattle 1, Washington

re .

7

e. 194

Standard Oil a ad of California

Re—No. 35304—

The State of Washington

Gentlemen:

The Court entered the following order in this cause

today:

“The court having considered the petition of the re-_

~ spondent and amici curiae for ayrehearing herein, the

appellant's answer to the petition and the respondent's | 3

reply to the answer.

“I? Is ORDERED that the pictition for rehearing be and

, w hereby denied. re .

Yours very truly,

/8/ Robert Holstein |

| Robert Holstein, Clerk

RH, lew ;

“¢

204 |

APPENDIX Fs

Ix THE SupREME Court OF THE STATE oF WASHING TON

Sranparp On. COMPANY OF Cassone. \ Wo, 50304

acorporation, Respondent, \ Thurston

, County

: , VB. No. 30937

THE State OF WASHINGTON, Appellant. | JUDGMENT

This cause having been heretofore submitted to the

court, upon the transcript of the récord of the Superior

Court of Thurston County, and upon the argument of

counsel, and the Court having fully considered the same

and being fully advised in thé premises, it ‘is now, on

this 5th day of December, A.D. 1960, on motion of John

J. O'Connell, Esquire, of counsel for appellant, con-

sidered, adjudged and decreed, that the judgment of

the said Superior Court be, and the same is hereby re-

versed; and that the said State of Washington have

and recover of and from the said Standard Oil Com-

pany of California, a corporation, the costs of this at-

tion taxed and allowed at Nine hundred sixty-three and

56 100° ($963.56 )}- Dollars. and that execution issue

therefor. And it ¢s further ordered, that this cause be

remitted to, the said Superior Court for further pro-—

ceedings, in accordance herewith. -

De le ee eee

| 21A

ao: APPENDIX G

SECTION 47 OF CHAPTER 389, LAWS OF WASHING-

TON 1955, PAGES 1671, 1672

_ Revised Code of Washington 82.04.270 -

RCW 82.04.270. (1) Upon every person except per-:

sons taxable under subsection (1) of RCW. 82.04.260

engaging within this state in the business of making

sales at Wholesale; as to such persons the amount of

tax with respect to such business sha?! be equal to the

— gross proceeds of sales of such business multiplied by

the rate of one-quarter of one percent.

(2) The tax imposed by this section is levied and_

shall be collected, from every person engaged in the

business of distributing in this state articles of tangible

personal property, owned by them from their own

Warehouse or other central] location in this-state to two

or more of their own retail stores or outlets, where no

change of title or Ownership. oceurs, ithe intent hereof

being to impose a tax equal|to the wholesaler’s tax upon

persous performing functions essentially comparable

to those of a wholesaler, but not actually making sales:

Provided, That the tax designated in this section may -

hot be assessed twice to the same person for the same

article, The amount of the tax as to such persons shall

he computed by multiplying one-quarter of one per-

cent the value of the article so distributed as of the

time of such distribution: Provided, That persons en-

gaged in the activities deseribed in this subsection shall

uot be Hable for the tax imposed if by proper invoice it

rau be shown that they have purchased such property

from a Wholesaler who has paid.a business and occupa- |

tion tas to the-state upon the same articles. This proviso

shall not apply to purchases from manufacturers as de-

fued iu RCW 82.04.110, The tax ‘commissioner’ shall

22.4.

prescribe tiniform and equitable rules for the purpose +

of ascertaining such value, which value shall corre-

spond as nearly as possible to the gross proceeds from

sales at wholesale in this state of similar articles of like

quality and character, and in similar quantities by

other taxpayers : Provided further, That delivery trucks

or vans will not under the purposes of this’ section be

_ considered to be retail stores or out!ts |

.

23A

APPENDIX H

Excerpts from Respondent’ 8 Brief to the Supreme Court

‘ of Washington, pp. 6 and 8

Thus Standard accumulates petroleum products in

the State of Washington at its ‘terminals’ or tank farms

(Ex. P, St. 161; Findings of Fact Tr. 12-18).

‘*Respondent’s terminals are supplied by ocean going

tankers, rail, interstate pipelines, trucks and river

barges (St. 161, Ex. P; see also Illustration No. 2,

infra).

‘From its terminals. inside the State of Washiiigton

respondent next distributes its product€ to its bulk sta-

tions which are located throughout the State of Wash-

ington (Ex. P, St. 161). Respondent owns and oper-

ates 152 such ‘bulk stations’ loeated throughout the

State of W ashington (Ex. P-11, St. 161) * * *

‘1. Terminals are ‘warehouses or other central lo-

cations’ (RCW 82.04.270) supplied by various trans-

portation media from points outside Washington”’ °

(emphasis supplied).

4A 0

APPENDIX I

Excerpts from Petitioners’ Notice of Appeal and Com.

plaint to the Superior Court of the State of Washington

for Thurston County, Cause No. 30937.

‘*(g) A large portion of the petroleum products

transported by plaintiff from said terminal storage

plants to the wholesale distributor plants was manufac-

tured or acquired by plaintiff at points outside of the

State of Washington and while being transported 1.

said terminal storage -plants, to said wholesalé distribu-

tor plants, and to plaintiff's customers were in inter-

_ state commerce. Section 47 of Chap. 389 of the Lays of

1955 as applied by the State Tax Commission of the

State of Washington is unconstitutional and void bhe-

cause it imposes’a direct burden of and diseriminate-

against interstate commerce in violation of Article L.

Section 8 of the Constitution of the United States."

265A

APPENDIX J

Rule 50, Rules on Appeal of Supreme‘Court of.

Washington

Revised Code of Washington, Vol. 0, p. 28

_ Any party te an appealed case may, after an opinion

hax been filed, present to the court; in the manner and

tine as hereinafter provided, a petition for rehearing.

Every petition for rehearing shall be filed ‘within

tuirty days after the opinion in the cause has been filed. .

No'more than one petition shall be filed by the same

party. The filing of a petition for rehearing shall sus-

pend the decision of the court until the cause is finally

determined.

When a rehearing is granted, the clerk shall notify

counsel for the respective parties thereof,

When an answer to a petition for. rehearing is cailed

for by the court, the clerk shall mail to the attorney of

the party from whom the answer is required a copy of

the original petition, with a request that he file an an-

‘wer thereto within fifteen days and serve a copy

thereof on opposing counsel.

Three copies each of the petition for rehearing and

~ of the answer thereto, if called for, shall be filed with

the clerk

Vetitious for rehearing and answers thereto may: be

printed, mimeographed, or typewritten. If a petition

tor rehearing be granted, the court may require addi-

liwual copies of the petition, answer and briefs to be

~ Supplied in the manner indicated by the court. (Adopted

November 22, 1950; Amended November 17, 1952.)

~

°

26A

APPENDIX K

Excerpts from Findings of the Trial Court, Superior

Court of the State of Washington for Thurston

County

Ifl

“Standard during the>period covered by the assess-

ment in question engaged in the distribution and sale

of petroleum product} the State of, Washington. All

of said petroleum niggers except as provided in

Stipulation of April 28, 1959, plaintiff's Exhibit Q,

were shipped into the State of. Washington in move-

ment from California or.6ther states pursuant to ae-

‘ curately estimated demands for future sales. After

storage at terminals the products in question were dis-

tributed to Standards bulk plants for storage and fw-

ther distribution therefrom. Standatd, during the

period in question, owned and operated terminal ster-

age plants or tank farms, whivh are major receiving

polits with large storage facilities and which received

* petroleum products directly from outside Washington.

ee

IV

“The Tax Commission Assessment and the Tax here

in question related to the distribution of) pettoleum

products by Standard from terminal storage plants in

this state to such bulk plants in this state to the extent

that such products were later delivered from such bulk

plants to-consumers such as government agencies, con-

mercial, agricultural anc industrial customers and to

s°¢

vessels, * * * ;

VI —

"The petroleum products in question were at all times

Sewned by and at the risk of Standard until they were

sold for resale or until they reached the ultimate con-

me | .