Appellee brought this suit against appellants, officers of the State of Alabama, to restrain the collection under statutes of that State of taxes in respect of gasoline and other liquid motor fuels — which for brevity we shall call "gasoline" — sold to the United States and used by it in performing governmental functions. Plaintiff applied to the court of three judges for a temporary and a permanent injunction. After hearing on an agreed statement of facts, the court held that the Alabama statutes assailed are not distinguishable from the Mississippi exaction condemned as unconstitutional in Panhandle Oil Co. v. Knox, 277 U.S. 218, and granted a permanent injunction. 13 F.Supp. 242. The governor and the other state officers appealed. 28 U.S.C., § 345. The United States, by brief filed here as amicus curiae, presented its argument asking affirmance on the ground that the taxes impose a burden on sales to it.
In substance the Alabama statutes
All the Acts here involved declare that the excise shall not be laid upon sales in interstate commerce and that the specified tax shall be paid but once. They make the excise apply whether "withdrawals be for sale or other use," declare that sellers may pay on the basis of their sales and require that others upon whom the excise is laid shall compute and pay the tax on the basis of their withdrawals. All must make monthly return of "sales and withdrawals" and preserve records of "sales, distributions or withdrawals." Anyone who shall violate any provision may be restrained "from distributing, refining, selling or withdrawing from storage any gasoline, the sale or withdrawal of which is taxable."
Practically all the gasoline received by the United States from the company in Alabama is sold and delivered pursuant to written contracts. Some provide for deliveries at the Mobile terminal, some at bulk plants and some at service stations. The deliveries from the Mobile terminal are made in railroad tank cars on tracks adjacent to the terminal. Gasoline delivered from bulk plants is that shipped from the terminals and stored in tanks at the plants until withdrawn. That delivered from service stations is shipped from the terminals to bulk plants and thence conveyed to the stations.
The United States requires that prices specified in bids and contracts shall be exclusive of state and municipal taxes. Between January 1, 1930, and September 22, 1935, the company sold and delivered to the United States in Alabama 286,639.36 gallons of gasoline. At the time of the trial, there were in force two contracts for sale and delivery of gasoline by the company to the United States in Alabama. One covered the period from October 1 to December 31, 1935, and called for deliveries at the Mobile terminal for the United States Army and the Tennessee Valley Authority. The other covered the period from October 1, 1935, to June 30, 1936, and called for service station deliveries for the Department of the Interior.
That construction was accepted by the state taxing officers and followed until July 5, 1935, when the then attorney general advised the tax commission that the taxes levied under the Acts of 1927, 1931 and 1932 were essentially different in character from those condemned in the Panhandle case. His ruling did not depend upon or result from the statutes enacted after 1927. He held the taxes were laid not upon sale but upon storage and subsequent withdrawal, accruing at the time of withdrawal, and to be computed upon the basis of withdrawals. He said that "so far as purchases of gasoline by the United States Government are concerned, these tax acts in question do not impose a burden upon the United States. . . . True it may be that the effect of these taxes may be to increase the price of the commodity which the Federal Government may desire to purchase."
The company has not reported for taxation or paid any tax under these Acts on gasoline sold to the United States since the attorney general's ruling of August 22, 1928. On August 30, 1935, the commission informed appellee that it could not "permit deductions from gasoline sales by
Appellants say that, upon the privilege of storing gasoline, the company is subject to a tax accruing upon and measured by the amount withdrawn, irrespective of subsequent sale or use. Upon that basis they maintain that the tax in respect of gasoline sold and delivered by the company to the United States is not one that operates to retard, impede or burden the exercise by the United States of its constitutional functions.
But mere storing, i.e., that unassociated with selling, distributing or withdrawing from storage, was not taxable under prior laws and is not taxable under the Act of July 10, 1935 now in force. While a storer is subject to excise in the Act of January 25, 1927 and subsequent statutes, storing without more is not enough to make one a storer. To be a storer, one must ship into the State and there store and withdraw gasoline for some use. Storing was not included among the acts or things taxed until the Act of July 10, 1935. That Act supersedes and consolidates the earlier levies. We read its taxing clause with its other provisions that in substance were taken from the earlier statutes. In all the measures involved, it unmistakably appears — and it is conceded by the taxing officers — that one who has paid a tax on selling is not taxable on distributing, storing or withdrawing from storage. The opinion of the attorney general, August 22, 1928, rightly held that the State taxes but once and, where there is a sale, the tax is on the sale. The purpose of the statutes subsequent to that of 1923 was to reach gasoline which was used but not sold within the State. But, excepting only the addition of the word "storing" in the taxing clause of the Act of July 10, 1935, there is nothing to suggest intention to tax "storing" as such.
There are other indications that storing alone was not intended to be taxed. The tax commission has never required, and distributors, retail dealers and storers have not made, reports in respect of gasoline until it passes from seller to purchaser or until withdrawn for use. The State has never claimed a tax upon storing of gasoline withdrawn for sale and delivery in interstate commerce. In the absence of withdrawal, there is no tax no matter how long gasoline is stored. The amount at any time received or held in storage is immaterial. The tax depends solely upon the amount withdrawn. No notice is taken of losses by evaporation or otherwise, or of storing for hire or of storing after taxable sale, distribution or withdrawal for use. Clearly, storing alone is not the thing taxed; withdrawing is essential. Ervin v. Alabama, 80 F.2d 432. Pan American Petroleum Corp. v. Alabama, 67 F.2d 590. State v. Montgomery, 228 Ala. 93, 95; 151 So. 856. Dawson v. Kentucky Distilleries Co., 255 U.S. 288, 293.
But, assuming that, by the Acts under consideration the State meant to tax mere storing, that purpose cannot be given effect in respect of the company's sales and
Appellants suggest that appellee has an adequate remedy at law and therefore may not resort to equity.
It was required to give a bond and obtain a license to carry on its business. Section 6, Act of October 6, 1932, Gen. Acts 1932, p. 57. It is required monthly to report and pay taxes to the tax commission for the previous month. Act of July 10, 1935, schedule 156.3.
November 22, 1928, the attorney general of Alabama advised the attorney general of the United States that Alabama had no statute authorizing refund of taxes that had been collected upon sales of gasoline to the United States. January 28, 1935, the gasoline department of the tax commission wrote appellee that, where the tax had been paid upon gasoline furnished the United States by a dealer for appellee's account, there was no provision for refund.
Appellants intimate, but do not definitely claim, that a distributor or dealer, if illegally compelled to pay taxes on sales to the United States, would under Alabama law be entitled to recover the amount so collected. They cite the Act of September 9, 1927, Gen. Acts 1927, p. 635. It appears to extend only to taxes paid while their
Appellee suggests that the provisions of the Act of July 10, 1935, are repugnant to § 14 of the Constitution of Alabama: "That the State of Alabama shall never be made a defendant in any court of law or equity." In support of that view, it shows that, since this suit was commenced, a telephone company brought suit under § 379 in the court below against the members of the state commission, appellants here, to recover license taxes paid
It sufficiently appears that appellee had no plain, adequate or complete remedy at law. Union Pacific R. Co. v. Weld County, 247 U.S. 282, 285-286. Atlantic Coast Line v. Daughton, 262 U.S. 413, 426. Di Giovanni v. Camden Fire Ins. Assn., 296 U.S. 64, 69. Risty v. Chicago, R.I. & P. Ry. Co., 270 U.S. 378, 388. American Airways v. Wallace, 57 F.2d 877, 879. Hopkins v. Southern California Tel. Co., 275 U.S. 393, 399-400.
MR. JUSTICE STONE took no part in the consideration or decision of this case.
MR. JUSTICE CARDOZO, dissenting.
Under the Alabama statute, the appellee, the Taxes Company, is a "storer." It is one "Who ships or causes to be shipped or receives, gasoline into this State in any quantities, and stores the same in any manner and withdraws or uses the same for any purpose." If it did business in some other way, it might be taxable as a "distributor," or "refiner," or "retail dealer." Doing business as it does, it is taxable as a "storer." It brings into Alabama a dangerous commodity which it keeps there indefinitely for indefinite uses. For the privilege of doing this it must make a payment to the state upon the termination of the storage, whether the purpose of the withdrawal is sale or something else. The statute was amended by adding the word "storing" in order to cover
In its application to appellee, a tax thus conditioned is an excise upon the privilege of storage, and so the cases hold. State v. Montgomery, 228 Ala. 93; 151 So. 856; Ervin v. Alabama, 80 F.2d 432, 433; Pan American Petroleum Corp. v. Alabama, 67 F.2d 590. It is not transformed into a tax upon something else, or, more particularly, into a tax upon the privilege of sale, because payable when the gasoline is taken out of storage or because measured by the amount withdrawn. Edelman v. Boeing Air Transport, Inc., 289 U.S. 249, 252; Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 268; Ervin v. Alabama, supra; Pan American Petroleum Corp. v. Alabama, supra; State v. Montgomery, supra. The nature of the excise being what it is, liability is the same whether withdrawal of the gasoline is for one purpose or another.
Panhandle Oil Co. v. Knox, 277 U.S. 218, is not a decision to the contrary. The tax considered in that case and condemned when applied to transactions with the government was upon the privilege of sale exclusively, and not upon some activity or condition antecedent thereto. The decision evoked dissent from four members of the court. It is now carried to new bounds by the ruling that "a tax upon anything so essential to the sale of the gasoline to the United States [as storage followed by withdrawal] is as objectionable as would be a tax upon the sale itself." If that ruling is to stand, it will equally forbid a tax upon the process of refining or upon transportation to a market (Wheeler Lumber B. & S. Co. v. United States, 281 U.S. 572), since these, as much as storage, are preliminary to sale. Cf. Edelman v. Boeing Air Transport, Inc., supra; Vashville, C. & St. L. Ry. Co. v. Wallace, supra. Not yet has the
Gasoline refined in Texas and transported to Alabama to be stored in tanks or terminals is there for general uses. Part of it in the usual course of business will be sold to the United States; part of it will be sold to others; part will be withdrawn without sale to anyone. This is not to say that the result would be any different though a definite sale were in view at the beginning of the storage. Even in such conditions, storage, like transportation, would be "not part of the sale but preliminary to it and wholly the vendor's affair." Wheeler Lumber B. & S. Co. v. United States, supra, at p. 579. However, the indefinite extension of the uses simplifies the problem. The burden, if any, upon the activities of government is remote and indeterminate. Metcalf & Eddy v. Mitchell, 269 U.S. 514; Burnet v. A.T. Jergins Trust, 288 U.S. 508; Trinityfarm Construction Co. v. Grosjean, 291 U.S. 466. Sales to the United States are made under contracts for a stated term. There is no assurance that the tax or any part of it will be shifted to the buyer.
The decree should be reversed and the bill dismissed.
I am authorized to state that MR. JUSTICE BRANDEIS joins in this opinion.