Susquehanna Coal Tax Dispute
Uploaded by
Scribd Government DocsSusquehanna Coal Tax Dispute
Uploaded by
Scribd Government Docs228 U.S.
665
33 S.Ct. 712
57 L.Ed. 1015
SUSQUEHANNA COAL COMPANY, Appt.,
v.
MAYOR AND COUNCIL OF THE CITY OF SOUTH
AMBOY et al.
No. 301.
Argued May 6 and 7, 1913.
Decided May 26, 1913.
Messrs. Alan H. Strong and James B. Vredenburgh for appellant.
Mr. Frederic M. P. Pearse for appellees.
Mr. Justice McKenna delivered the opinion of the court:
Bill in equity to restrain the collection of taxes levied by the city of South
Amboy upon coal belonging to appellant, on the ground that the coal was in
transit from points in the state of Pennsylvania, through the state of New Jersey,
to destinations outside of the latter state; and being, as it is alleged, in interstate
commerce, the taxes on it were illegally levied because in contravention of the
commerce clause of the Constitution of the United States.
Appellant is a Pennsylvania corporation and a dealer in coal, buying three fifths
of what is sold in the years 1906, 1907, and 1908, and producing two fifths
itself. Appellant shipped its coal from its mines in Pennsylvania to New York
and the states east thereof by the Pennsylvania Railroad, across New Jersey, to
leave the latter state at Harsimus Cove, Greenville, or South Amboy piers, the
termini of the road on New York harbor. In the year 1906 it shipped 1,582,000
tons of coal; in 1907 it shipped 2,010,200 tons, and in 1908 it shipped
2,050,500. Of these amounts, 3 1/2 per cent, 4 1/2 per cent, and 6 per cent,
respectively, were unloaded at South Amboy. The balance of the amounts
shipped passed through Harsimus Cove and Greenville piers. The cars, on
arrival at the latter points, were floated across the harbor and transferred to
railroads on the opposite side. The bills of lading for the coal thus shipped were
made out to designated purchasers as consignees; the coal which arrived at
South Amboy was consigned to appellant at such place, and was intended to be
transferred to bottoms at tidewater, and shipped to states east of New Jersey.
'This coal,' we quote from the opinion of the district court, 'was forwarded from
the mines on orders from the complainant's Philadelphia agents, who issued
such orders upon requisitions made upon them from complainant's New York
agents. Neither the agents at the mines nor at Philadelphia knew for which
particular customers the coal thus forwarded to South Amboy was intended.
Complainant had a number of regular customers east of New Jersey, to whom it
promised to make deliveries on monthly contracts; the exact requirements of
such customers, in tonnage and kind of coal, were known only to the New York
agents. These agents from time to time totaled such requirements, plus other
orders for coal, and issued their requisition based upon such totals, to the
Philadelphia agents. Such requirements and the shipments made thereunder
varied in tonnage and kind of coal. At South Amboy complainant had an agent
who, upon the orders of New York agents, superintended the loading upon such
bottoms of the kind and amount of coal required for designated customers.
When so loaded, the master of the bottoms issued bills of lading in the name of
the complainant as shipper, and particular persons as consignees. These bills of
lading were sent to complainant's New York agents, whereupon the latter made
out invoices to the consignees. Up to the time of loading the bottoms, the title
of the coal was in complainant.
3
'If, upon arrival of the coal at South Amboy, bottoms were on hand to take the
kind of coal arriving, such coal was transferred from the cars to the bottoms. If
not, such coal was dumped into a coal depot or storage yard of the railroad
company, located about 2,000 feet from the piers, equipped with derricks for
the loading and unloading of coal, and where the different kinds of coal of the
complainant were put into piles, which would be subsequently transferred into
bottoms; not necessarily the first bottoms arriving, as the preference was given
to coal subsequently arriving and still in cars. In the year 1906 the expense of
dumping the coal from the cars, and its subsequent transfer into bottoms, was
borne by the railroad company. Subsequently, such expense was borne by
complainant.' [184 Fed. 943.]
It appears from the testimony that the amount of coal in the depot or storage
yard at South Amboy varied. 'It went,' it was testified, 'to 10,000 tons, but it
ranges from 20,000 up to 150,000 tons.' The conclusion of the district court was
that, by the storage of coal, appellant 'obtained two beneficial results: First, cars
arriving when no bottoms were on hand could be released and demurrage
charges saved; second, when bottoms arrived and no cars were on hand
containing the kinds of coal desired, such vessels could be loaded from the
piles, resulting in a saving of time in the departure of such bottoms.' In other
words, there was something more than the submission to delay in transportation
and the acceptance of its consequences. The situation was made a facility of
business,a business conducted through agents and employees. And, it will be
observed, there was valuable property kept in the state, represented by the coal,
varying in quantity from 10,000 tons to 150,000 tons. There was something
more, therefore, than an incidental interruption of the continuity of its journey
through the state.
5
The principal witness in the case for appellant, assenting to the testimony of its
vice president, given before the State Board of Equalization, testified that,
without regard to any orders, even anticipating the market, the attempt was to
keep a certain amount of coal on hand at South Amboy. This anticipation, the
witnesses explained, was an anticipation of orders from regular customers in the
near future, the witness saying that while there was no order for it, still there
was an implied order; 'that is, an implied order and a regular condition of trade,
and to supply that trade we keep that coal there. . . . The condition was, to take
care of the trade that was regular; and this coal was not kept there for that
purpose: it was there from an overplus, or inability to load it in boats, and
therefore was to fill these implied contracts and orders,they weren't orders,
but were implied contracts.' This is confusing, but it is manifest that the coal
was used to fill anticipated orders,orders not immediately made, but, it may
be, certain to be made. It does not appear how they could be filled, uncertain in
time as they were, except from the accumulations at South Amboy. Indeed, it is
in the testimony that without such accumulations the orders might strike a
period when there were no cars and no coal, and then customers would suffer.
It is clear, we repeat, that such trade could only be accommodated through the
storage of coal somewhere, and appellant availed itself of the conditions to put
the storage in New Jersey.
The coal, therefore, was not in actual movement through the state; it was at rest
in the state, and was to be handled and distributed from there. Therefore, the
principles expressed in General Oil Co. v. Crain, 209 U. S. 211, 52 L. ed. 754,
28 Sup. Ct. Rep. 475, and Bacon v. Illinois, 227 U. S. 504, 57 L. ed. , 33
Sup. Ct. Rep. 299, are applicable to it. The products in neither of those cases
were destined for sale in the states where stored; the delay there was to be
temporary,a postponement of their transportation to their destinations. There
was, however, a business purpose and advantage in the delay which was
availed of, and while it was availed of, the products secured the protection of
the state. In both cases it was held that there was a cessation of interstate
commerce and subjection to the dominion of the state.
In Bacon v. Illinois, the grain which was taxed had been shipped by the original
owners, who were residents of southern and western states, under contracts for
its transportation to New York and Philadelphia and other eastern cities, with a
reservation to the owners to remove it from the cars at Chicago for certain
temporary purposes,' or change the ownership, consignee, or destination
thereof.' The grain, while in transit, was purchased by Bacon, he succeeding to
the rights of the vendors. Upon arrival of the grain at Chicago, he exercised the
right to remove it from the cars to his private elevator, to avail himself of the
privilege reserved. The privilege being exercised, he turned the grain over to
the railroad companies for transportation in accordance with original contracts.
After commenting upon the power he had over the grain while in Chicago, we
said: 'He had established a local facility in Chicago for his own benefit; and
while, through its employment, the grain was there at rest, there was no reason
why it should not be included with his other property within the state in an
assessment for taxation which was made in the usual way, without
discrimination.' For this conclusion cases were cited. It was further said: 'The
property was held within the state for purposes deemed by the owner to be
beneficial.'
In General Oil Co v. Crain, oil contained in tanks at Memphis, Tennessee, was
subject to an inspection tax. The oil was shipped to Memphis from producing
and refining points in Ohio and Pennsylvania, and handled in tank cars and
other receptacles, to be forwarded to customers in Arkansas, Louisiana, and
Mississippi, in which states the oil company had many regular customers from
whom it always had on hand many unfilled orders for oil to be delivered as
soon as possible or convenient. At Memphis the oil company maintained two
tanks, one of which was plainly marked: 'Oil already sold in Arkansas,
Louisiana, and Mississippi,' and which remained in Memphis only long enough
(a few days) to be properly distributed according to the orders therefor. The
other tank or vessel was for oil sold in those states, and kept separate and apart
until orders should be received from customers in those states. The oil was
never sold otherwise than upon such orders. We said of this situation that the
company was doing business in the state, and that its property was receiving the
protection of the state. Its oil was not in movement through the state. To the
contention that the oil was only there for distribution and to fulfil orders
already received, was said: 'It required storage there,the maintenance of the
means of storage, of putting it in and taking it from storage.' In that case and in
Bacon v. Illinois we considered the cases relied on here by appellant, in which
particular exercises of the state power were decided to be in conflict with the
paramount authority of Congress over interstate commerce. We need not again
review the cases. We are not unmindful of their principle and reasoning, and
the difficulty presented in them and presented here of marking the line of
dominion between the national and state jurisdiction. The one is as necessary as
the other to be preserved.
10
It is contended by appellees that the basis of the taxes of all three years is the
same, and that the taxes of 1906 were attacked by proceedings in the New
Jersey state courts, the same grounds of legality being asserted there as here
(Susquehanna Coal Co. v. South Amboy, 76 N. J. L. 412, 69 Atl. 454, 77 N. J.
L. 796, 72 Atl. 361), and that therefore the decision of the state court is res
judicata. The views we have expressed make it unnecessary to pass upon the
contention or to considerthe question not being raisedwhether the decision
as to the taxes in 1906 is an adjudication also under the laws of the state of the
taxes of 1907 and 1908. See New Orleans v. Citizens' Bank, 167 U. S. 371, 42
L. ed. 202, 17 Sup. Ct. Rep. 905; Deposit Bank v. Frankfort, 191 U. S. 513, 48
L. ed. 281, 24 Sup. Ct. Rep. 154; Citizens' Bank v. Parker, 192 U. S. 73, 48 L.
ed. 346, 24 Sup. Ct. Rep. 181.
11
Judgment affirmed.
