279 U.S. 95
CARSON PETROLEUM CO.
VIAL, Sheriff and Tax Collector, et al.
Argued Feb. 28, 1929.
Decided April 8, 1929.
[279 U.S. 95, 96] Messrs. George M. Burditt and John K. Murphy, both of Chicago, Ill., and William E. Leahy, of Washington, D. C., for petitioner.
Mr. Harry P. Sneed, of New Orleans, La., for respondents.
Mr. Chief Justice TAFT delivered the opinion of the Court.
This was a petition by the Carson Petroleum Company, a corporation of Delaware, to enjoin Leon C. Vial, sheriff and tax collector of the parish of St. Charles, La., R. A. De Broca, assessor for the parish, and the Louisiana Tax Commission, from laying and levying against it an alleged illegal assessment of duties on a quantity of oil in storage tanks at St. Rose in the parish. They were ad valorem duties levied on all the property of the petitioner subject to taxation. The taxation was objected to because it was deemed an interference with interstate and foreign commerce.
The District Court granted the injunction on the ground that the oil was in transit from another state to a foreign country and was halted only temporarily at St. Rose and had no situs in the parish or state. The Supreme Court of Louisiana reversed the decree and ordered that the tax be collected with the penalties imposed by law. [279 U.S. 95, 99] 166 La. 378, 117 So. 432. There is no dispute about the facts. We avail ourselves of the statement made by the Chief Justice of the Supreme Court of Louisiana, which is a clear and fair presentation of the case:
The oil company asserts that the interstate and foreign shipment of the oil, from the refineries in the Mid-Continent Field, into and across the state, and across the sea to the foreign ports, is a continuous interstate and foreign shipment, notwithstanding the stoppage and storage of the oil at St. Rose where it had to await either the arrival of a ship or the accumulation of a sufficient quantity of oil to load a ship. On the other hand, the state authorities claim that there were two separate shipments-the one which ended when the tank cars arrived and were unloaded at St. Rose, and the foreign shipment, which began when the oil was loaded aboard ship for a foreign port. Hence they contend that while the oil was stored in the tanks at St. Rose, under the protection of the state and local government, it was subject to state and local taxation, even though intended and prepared for exportation.
The crucial question to be settled in determining whether personal property or merchandise moving in interstate commerce is subject to local taxation is that of its continuity of transit. The leading case is that of Coe v. Errol, 116 U.S. 517 , 6 S. Ct. 475, in which Mr. Justice Bradley for this court laid down the principles that should be applied. It was a case of floating logs. There were two lots, one where the logs were cut in Maine, and were floated down the Androscoggin on their way to Lewiston, Mr., but after starting on the trip were detained for a season in New Hampshire by low water. It was held that they were free from local taxation in New Hampshire because they had begun the interstate trip and the cause of detention was to be found in the necessities of the passage and trip back to Maine, which was held to be continuous. [279 U.S. 95, 102] This ruling which was by the state court of New Hampshire was approved by this court. But in respect to the other lot, this court found that the logs were gathered in New Hampshire in what the court termed an 'entrepot,' looking to ultimate transportation to another state, but that when taxed they had not started on their final and continuous journey, and hence were not in interstate commerce and were taxable.
In Champlain Realty Co. v. Brattleboro, 260 U.S. 366 , 43 S. Ct. 146, 25 A. L. R. 1195, logs gathered on the West river in Vermont for a destination in New Hampshire were held not taxable in Vermont, though detained for a considerable time by a boom at Brattleboro to await subsidence of high water in the Connecticut river. It was held that as the interruption was only to promote the safe or convenient transit, the continuity of the interstate trip was not broken, as shown in State v. Engle, 34 N. J. Law, 425; State v. Carrigan, 39 N. J. Law, 35, and in Kelley v. Rhoads, 188 U.S. 1 , 23 S. Ct. 259, where sheep driven 500 miles from Utah to Nebraska, traveling 9 miles a day, were held immune from taxation in Wyoming, where they stopped and grazed on their way.
In Hughes Bros. Timber Co. v. Minnesota, 272 U.S. 469 , 47 S. Ct. 170, pursuant to a contract of sale, logs cut were gathered on the Swamp river in Minnesota by the vendors and were floated by river to Lake Superior, there loaded onto the vendee's vessels and transported to their destination in Michigan. This court said, page 475 (47 S. Ct. 172):
The principle of continuity of journey is shown in Railroad Commission of Ohio v. Worthington, 225 U.S. 101 , 32 S. Ct. 653, where coal from the Ohio mines intended for transportation on the lakes and stored for some weeks or months on docks in Cleveland for delivery beyond the lakes was held to be subject to interstate rates. So in Western Oil Co. v. Lipscomb, 244 U.S. 346 , 37 S. Ct. 623, in which, speaking of the effect of billing and rebilling in causing a break in the trip, it was said, page 349 (37 S. Ct. 624):
An instance of interruption of railroad transportation is Bacon v. Illinois, 227 U.S. 504 , 33 S. Ct. 299. Bacon, the owner of the grain, and the taxpayer, had bought it in the South and had secured the right from the railroads transporting it to remove it from their custody to his private grain elevator in Illinois where for his own purpose he proceeded to inspect, weigh, clean, clip, dry, sack, grade, or mix it, and had power under his contract with the carriers either to change its ownership, consignee, or destination, or to restore the grain, after the processes mentioned, to the carriers to be delivered at the destination in another state according to his original intention. The question was whether the removal of the grain to his private elevator interrupted the continuity of the transportation and made the grain subject to local taxation there. It was held that it did; that the grain was locally dealt with in the interest of the owner while it was in his custody and was subject to his complete disposition for a collateral business purpose of his own.
Another case is that of General Oil Co. v. Crain, 209 U.S. 211 , 28 S. Ct. 475. The company conducted a large oil business in Memphis, where it gathered from the North much oil and maintained an establishment for its distribution. It had tanks of various sizes, from which the oil was put in barrels or other small vessels to be sold locally or in other states, or to fill orders already received from customers in Arkansas, Louisiana, and Mississippi. For years the company had unloaded its oil from its tank cars on arrival into large stationary tanks indiscriminately, and had sold and distributed it as required in its business. After a time, in order to escape the local inspection tax, part of the oil was deposited in a stationary tank No. 1 [279 U.S. 95, 105] marked 'Oil already sold in Arkansas, Louisiana and Mississippi,' while the local oil and that yet to be sold was kept in other tanks. The oil in No. 1 was divided according to the orders already received into barrels and larger containers, to be forwarded by rail to customers in the three states named. It was contended that oil of tank No. 1 was on a continuous trip through Memphis from sources in the North to the ascertained customers in Arkansas, Louisiana, and Mississippi, and was not taxable at Memphis. It was held that the doings of the company in thus separating the oil after it reached Memphis into various amounts in different containers was itself a local business in Memphis, and that the delivery into Memphis of the oil and its subsequent shipment made two separate interstate shipments and permitted local taxation on the oil while it awaited the second shipment. The court seemed to regard the redistribution of the oil at Memphis as a rest interrupting the journey, and the Memphis yard for the tanks as an assembling entrepot like that described by Mr. Justice Bradley in Coe v. Errol.
The court was divided and there was very vigorous dissent. The case has caused discussion, and it must be admitted that it is a close one and might easily have been decided the other way. The result was probably affected by the impression created by the original situation and the somewhat artificial rearrangement of tanks in a large entrepot for redistribution of oil to avoid previous taxability.
We do not think in deciding the case at bar that we should give the Crain Case the force claimed for it by the court below and by counsel for the state. Since its decision this court had had to consider several cases where there was transshipment of the commodity from local carriage in a state to a ship at an export port and conveyance thence to a foreign destination. There has been a liberal [279 U.S. 95, 106] construction of what is continuity of the journey, in cases where the court finds from the circumstances that export trade has been actually intended and carried through.
In Southern Pacific Terminal Co. v. Interstate Commerce Commission, 219 U.S. 498 , 31 S. Ct. 279, cotton oil cake and meal destined for export was bought by the intending exporter in Texas, Oklahoma, and Louisiana. It was shipped to him on bills of lading and waybills showing the point of origin in those states and the destination at Galveston. The purchases were made for export, there being no consumption of the products at Galveston. His sales to foreign countries were sometimes for immediate and sometimes for future delivery, irrespective of whether he had the product on hand at Galveston. At times he had it on hand. At other times orders must be filled from cake or meal to be purchased in the interior or then in transit to him. When the cake reached Galveston, it was ground into meal and sacked by the exporter, and for the meal thus ground and such meal as had been bought in ground form he took out ships' bills of lading made to his order. The court said, page 526 (31 S. Ct. 288):
In Texas & New Orleans R. Co. v. Sabine Tram Co., 227 U.S. 111 , 33 S. Ct. 229, the question was whether the rates charged on shipments of lumber on local bills of lading from one point in Texas to another, but destined for export, were intrastate or foreign commerce. The exporter purchased the lumber from other mills in Texas with which to supply its sales in part. It did not know when any particular car of lumber left the starting point into which ship or to what particular destination the contents of the car would ultimately go, or on which sale it would be applied; this not being found out until its agent inspected the invoice mailed to and received by him after shipment. The lumber remained after arrival at the shipping port in the slips or on the dock until a ship chartered by the exporter arrived, when the exporter selected the lumber suited for that cargo and shipped it to its destination. There was no local market for lumber at the port of shipment, the population of which did not exceed 50, and the exporter had never done any local business at that point. This court held that the shipments to the point of shipment from other points of Texas were in interstate and foreign commerce and should pay rates accordingly. The court said, page 126 (33 S. Ct. 234):
Again this court said, page 130 (33 S. Ct. 236):
We do not think the Sabine Tram Case can be distinguished from the one before us. It has been suggested that in the present case there was a failure to fix the exact point of destination abroad before shipment and that this prevents the continuity required in a continuous exportation. But there was the same indefiniteness on this point in the Sabine Tram Case. Then, it is said, there was no separation of the various shipments of oil from the interior points to the tanks and thence to ships at the port of shipment. But in the Sabine Tram Case cars of lumber were sent to the transshipment point without regard to the filling of one order or another. In both cases the delay in transshipment was due to nothing but the failure of the arrival of the subject to be shipped at the same [279 U.S. 95, 109] time as the arrival of the ships at the port of transshipment. The use of the tanks at the point of transshipment cannot be distinguished from the storing of the lumber on the docks or in the slips between them till the vessel to carry it should be ready. The quickness of transshipment in both cases was the chief object each exporter plainly sought. In both cases the selection of the point of shipment and the equipment at that point were solely for the speedy and continuous export of the product abroad and for no other purpose. No lumber or oil was sold there but that to be exported. There was no possibility of any other business there. Whatever hesitation might be prompted in deciding this case, if the Crain Case stood alone, the effect of the decisions of this court since is such as to make it inapplicable to the case before us.
The judgment is reversed.
Mr. Justice McREYNOLDS and Mr. Justice SANFORD are in favor of affirming the judgment on the authority of General Oil Co. v. Crain, 209 U.S. 211 , 28 S. Ct. 475.