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Superior Oil Co. v. Mississippi

U.S.
Feb 24, 1930
280 U.S. 390 (1930)

Summary

In Superior Oil Co. v. State of Mississippi, 280 U.S. 390, 395, 50 S.Ct. 169, 170, 74 L.Ed. 504, the court said: "The fact that it desired to evade the law, as it is called, is immaterial, because the very meaning of a line in the law is that you intentionally may go as close to it as you can if you do not pass it."

Summary of this case from J.R. Wood Sons, Inc. v. United States, (1942)

Opinion

APPEAL FROM THE SUPREME COURT OF MISSISSIPPI.

No. 28.

Argued October 31, 1929. Decided February 24, 1930.

1. In a regular course of business, gasoline was sold by an oil company in Mississippi to shrimp packers in that State, was delivered at the wharves of their packing plants there and was thence carried by the packers' boats to a neighborhood in Louisiana and delivered to shrimp fishermen for use in fishing. The fishermen brought their catches to the packing plants, sold them to the packers and were charged with the cost of the gasoline. The Oil Company received in each case from the packer a so-called bill of lading, signed by the master of the boat on which the gasoline was loaded, purporting to show a consignment to the packer, to the Louisiana neighborhood as destination, on that boat and providing that the gasoline should remain the property of the Oil Company until delivered to the consignee or its agent at such "destination," and that all risks should be upon the purchaser. The Oil Company paid no freight. The packers, when the gasoline was delivered at their plants, were free to do with it as they liked. Held, that the sales by the Oil Company were not in interstate commerce and were subject to be taxed by Mississippi. P. 395. 2. It is not within the power of the parties by the form of their contract to convert a local business into an interstate commerce business protected by the Commerce Clause, when the contract achieves nothing else. P. 394. 156 Miss. 377, affirmed.

APPEAL from a judgment of the Supreme Court of Mississippi upholding taxes. The suit was brought by the state Attorney General to collect the taxes from the Oil Company. A judgment of the Chancery Court dismissing the bill was affirmed by the Supreme Court after a hearing before a division thereof consisting of three judges. Upon suggestion of error there was a rehearing by the full court, resulting in the decree here considered.

Messrs. W. Lee Guice and William H. Watkins, with whom Mr. John L. Heiss was on the brief, for appellant.

The sale and delivery of gasoline in this case, according to the established course of dealing, was in a regular channel of interstate commerce, and formed an integral part thereof.

Interstate commerce comprises not only shipments but negotiations and contracts. Dahnke-Walker Milling Co. v. Bondurant, 257 U.S. 282; Lemke v. Farmers' Grain Co., 258 U.S. 50; Rosenberger v. Pacific Express Co., 241 U.S. 48; Federal Trade Commission v. Pacific States P.T. Asso., 273 U.S. 52; Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1.

It is not dependent upon passage of title, nor does it necessarily involve transportation by carrier. Browning v. Waycross, 233 U.S. 16.

From the moment the interstate movement begins, the commodity is not subject to local taxation.

This case is even stronger in that the tax is one upon the sale itself and not a property tax. The gasoline started on its interstate journey as it was drawn from storage tanks and placed in sealed drums. While it may have been within the range of possibility that the purchaser might divert the shipment, the amount ordered corresponded as to quantity with the requirements of the fishermen in the Louisiana marshes. From the time the gasoline was drawn, there was one continuous movement. To state the case most strongly for Mississippi, the sale was not completed until the drums were placed on the wharf at the water's edge.

The essential facts are that here was a continuous flow of gasoline from Mississippi into Louisiana to be used in the latter State. The question is not of an occasional or an isolated sale. We have a well-established course of business carried on in a practical manner. Suppose the seller in its own conveyances had contracted to sell and deliver the gasoline at Grant's Pass. That such course of business would have constituted interstate commerce can not be questioned. Suppose there had been a regular carrier either by land or water transporting property to Grant's Pass and the contract of sale had required the seller to deliver the commodity to such carrier. Title would have passed to the buyer upon delivery to the carrier. Yet the transactions would have been in interstate commerce although the title passed in Mississippi. The essential characteristics of interstate commerce are the negotiations, the contract of purchase and the transportation in interstate commerce.

The State can lay no tribute directly or indirectly upon the right to engage in interstate commerce. Foster-Fountain Packing Co. v. Haydel, 278 U.S. 1, illustrates the immateriality of the means employed in transportation. Substance and not form determines. Heyman v. Hays, 236 U.S. 178; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196; South Covington C.S.R. Co. v. Covington, 235 U.S. 235 U.S. 537.

It was competent for the purchaser and the seller to make any agreement they saw fit respecting the passage of the title. Harkness v. Russell, 118 U.S. 663; Beardsley v. Beardsley, 138 U.S. 262; Williston on Sales, 2d ed., Vol. 1, par. 259; Allgeyer v. Louisiana, 165 U.S. 578; Segrist v. Crabtree, 131 U.S. 287.

If the transactions possess the characteristics and essentials of interstate commerce, they are such, irrespective of what parties may term them. At the same time the form of billing and the terms applied by the parties to the transaction may be looked into in order to determine the real nature of the transaction. Savage v. Jones, 225 U.S. 501; Heyman v. Hays, 236 U.S. 178; South Covington C.S.R. Co. v. Covington, 235 U.S. 537; Western Oil Refining Co. v. Lipscomb, 244 U.S. 346; Atlantic Coast Line R. Co. v. Standard Oil Co., 275 U.S. 257; Browning v. Waycross, 233 U.S. 16; York Manufacturing Co. v. Colley, 247 U.S. 21.

Mr. James W. Cassedy, Jr., Assistant Attorney General of Mississippi, pro hac vice, by special leave of Court, with whom Messrs. George T. Mitchell, Attorney General of Mississippi, and E.C. Sharp were on the brief, for appellee.

Mississippi has the power to levy an excise tax on the sale of gasoline by a distributor to a purchaser, both being residents of the State and the sale being completed in the State, and does not thereby place a burden upon interstate commerce, even though the purchaser move the gasoline to another State. Pierce Oil Corp. v. Hopkins, 264 U.S. 137.

The State's power to tax property is not destroyed by the fact that it is intended for and will move in interstate commerce. LaCoste v. Department of Conservation, 263 U.S. 545.

The contracts for sale and delivery must be for sale and delivery across state lines to make the sale exempt from state taxation. A tax without discrimination on sales of gasoline after the interstate transportation ceases, or before it begins, is not a burden on interstate commerce where the sales are entirely contracted for and completed in the taxing State.


This is a suit by the State of Mississippi to collect a tax on distributors of gasoline of three and four cents respectively per gallon sold, according to the statute in force at the time of the sales. The defence was that the sales were in interstate commerce. The Supreme Court of the State upheld the tax, 119 So. 360, and the defendant, the Superior Oil Company, appealed to this Court on the ground that the statutes as applied violated the commerce clause of the Constitution of the United States. Article 1, Section 8.

The facts are as follows. The Superior Oil Company, a corporation created and doing business in Mississippi, sold gasoline to packers in Biloxi in that State and delivered it at the packers' wharves. The latter loaded the oil upon their own fishing boats and sent it out to the neighborhood of Grants Pass, Louisiana, where they delivered it to shrimp fishermen for use in fishing. The fishermen brought their catch back to Biloxi, sold it to the packers and were charged with the cost of the oil in account. The appellant received in each case from the purchaser what is called a bill of lading, signed by the master of the boat on which the oil was loaded and reading in part: "Consigned to Gussie Fontaine Pkg. Co. [or other purchasers]. Destination: Grants Pass, La. By boat Frank Louis, owned or operated by Gussie Fontaine Pkg. Co." The instrument then provided that "The property consigned herein remains the property of said Superior Oil Company until it shall be delivered to consignee or consignee's agent at point of destination", with provisions throwing all risks upon the purchasers. The seller of course paid no freight. The document seems to have had no other use than, as the Supreme Court of Mississippi said, to try to convert a domestic transaction into one of interstate commerce. There was no consignee at the point of destination. The goods were delivered to the so-called consignee before they started, and were in its hands throughout. There was no point of destination for delivering of the oil but merely a neighborhood in which the packers that had bought it and already held it expected to sell it again. The document hardly can affect the case, because it is "not within the power of the parties by the form of their contract to convert what was exclusively a local business, subject to state control, into an interstate commerce business protected by the commerce clause"; Browning v. Waycross, 233 U.S. 16, 23; at least when the contract achieves nothing else.

The importance of the commerce clause to the Union of course is very great. But it also is important to prevent that clause being used to deprive the States of their lifeblood by a strained interpretation of facts. We may admit that this case is near the line. There was a regular course of business known to the appellant, that took the gasoline into another State, and if by mutual agreement the oil had been put into the hands of a third person, a Common carrier, for transportation to Louisiana the mere possibility that the vendor might be able to induce the carrier to forego his rights might not have been enough to keep the transaction out of interstate commerce. A.G. Spalding Bros. v. Edwards, 262 U.S. 66, (a case of foreign export, see Sonneborn Brothers v. Cureton, 262 U.S. 506, 520, 521). But here the gasoline was in the hands of the purchaser to do with as it liked, and there was nothing that in any way committed it to sending the oil to Louisiana except its own wishes. If it had bought bait for fishing that it intended to do itself, the purchase would not have been in interstate commerce because the fishing grounds were known by both parties to be beyond the State line. A distinction has been taken between sales made with a view to a certain result and those made simply with indifferent knowledge that the buyer contemplates that result. Louisville Nashville R.R. Co. v. Parker, 242 U.S. 13, 14. Kalem Co. v. Harper Brothers, 222 U.S. 55, 62. The only purpose of the vendor here was to escape taxation. It was not taxed in Louisiana and hoped not to be in Mississippi. The fact that it desired to evade the law, as it is called, is immaterial, because the very meaning of a line in the law is that you intentionally may go as close to it as you can if you do not pass it. Bullen v. Wisconsin, 240 U.S. 625, 630, 631. But on the other hand the desire to make its act an act in commerce among the States was equally unimportant when it was apparent that the buyer's journey to Louisiana was accidental so far as the appellant was concerned. It is a matter of proximity and degree as to which minds will differ, but it seems to us that the connection of the seller with the steps taken by the buyer after the sale was too remote to save the seller from the tax. Dramatic circumstances, such as a great universal stream of grain from the State of purchase to a market elsewhere, may affect the legal conclusion by showing the manifest certainty of the destination and exhibiting grounds of policy that are absent here.

Judgment affirmed.

MR. JUSTICE VAN DEVANTER and MR. JUSTICE BUTLER dissent.


Summaries of

Superior Oil Co. v. Mississippi

U.S.
Feb 24, 1930
280 U.S. 390 (1930)

In Superior Oil Co. v. State of Mississippi, 280 U.S. 390, 395, 50 S.Ct. 169, 170, 74 L.Ed. 504, the court said: "The fact that it desired to evade the law, as it is called, is immaterial, because the very meaning of a line in the law is that you intentionally may go as close to it as you can if you do not pass it."

Summary of this case from J.R. Wood Sons, Inc. v. United States, (1942)

In Superior Oil Company v. State of Mississippi, 280 U.S. 390, 395-396, Mr. Justice HOLMES succinctly expressed the law's attitude to tax avoidance when he said, — "The only purpose of the vendor here was to escape taxation.... The fact that it desired to evade the law, as it is called, is immaterial, because the very meaning of a line in the law is that you intentionally may go as close to it as you can if you do not pass it."

Summary of this case from Hitchcock Estate

In Superior Oil Co. v. Mississippi, 280 U.S. 390, 50 Sup. Ct. 169, referring to a document offered for a similar purpose, it was said that it was "not within the power of the parties by the form of their contract to convert what was exclusively a local business, subject to state control, into an interstate commerce business, protected by the commerce clause."

Summary of this case from Dept. of Rev. v. Jennison-Wright Corp.

In Superior Oil Co. v. Mississippi ex rel. Knox, 280 U.S. 390, 396, 50 S.Ct. 169, 170, 74 L. ed. 504, 508, the court held that after gasoline had come into the hands of the purchaser it had come to rest.

Summary of this case from State v. Continental Oil Co.
Case details for

Superior Oil Co. v. Mississippi

Case Details

Full title:SUPERIOR OIL COMPANY v . STATE OF MISSISSIPPI EX REL. KNOX, ATTORNEY…

Court:U.S.

Date published: Feb 24, 1930

Citations

280 U.S. 390 (1930)
50 S. Ct. 169

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