322 U.S. 349 (1944)

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U.S. Supreme Court

MCLEOD v. J.E. DILWORTH CO., 322 U.S. 349 (1944)

322 U.S. 349

Murray B. McLEOD, Commissioner of Revenue of the State of Arkansas, Petitioner, v. J. E. DILWORTH COMPANY and Reichman-Crosby Company.

GENERAL TRADING COMPANY, a Corporation doing business as Minneapolis Iron Store, Petitioner, v. STATE TAX COMMISSION OF THE STATE OF IOWA.

INTERNATIONAL HARVESTER COMPANY and International Harvester Company of America, Appellants, v. DEPARTMENT OF TREASURY OF THE STATE OF INDIANA et al.

Nos. 311, 441, 355.

Supreme Court of the United States

May 15, 1944

Rehearing Denied, No. 355, June 12, 1944.

See 322 U.S. 772, 64 S.Ct. 1281.

Mr. Justice RUTLEDGE.

These three cases present in various applications the question of the power of a state to tax transactions having a close connection with interstate commerce.

In No. 311, McLeod v. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, Arkansas has construed its tax to be a sales tax, but has held this cannot be applied where a Tennessee corporation, having its home office and place of business in Memphis, solicits orders in Arkansas, by mail, telephone or sending solicitors regularly from Tennessee, accepts the orders in Memphis, and delivers the goods there to the carrier for shipment to the purchaser in Arkansas. This Court holds the tax invalid, because 'the sale-the transfer of ownership-was made in Tennessee. For Arkansas to impose a tax on such transactions would be to project its powers beyond its boundaries and to tax an interstate transaction.' Though an Arkansas 'use tax' might be sustained in the same situation, 'we are not dealing with matters of nomenclature even though they be matters of nicety.' And the case is thought to be different from the

Page 322 U.S. 349, 350

Berwind-White case, 309 U.S. 33, 60 S.Ct. 388, 128 A.L.R. 876, where New York City levied the tax, because, in the Arkansas court's language, 'the corporation maintained its sales office in New York City, took its contracts in New York City and made actual delivery in New York City ....' 205 Ark. 780, 171 S.W.2d 62, 65.

On the other hand, in No. 441, General Trading Co. v. State Tax Commission, 322 U.S. 335, 64 S.Ct. 1028, Iowa applies its 'use tax' to a transaction in which a Minnesota corporation ships goods from Minnesota, its only place of business, to Iowa purchasers on orders solicited in Iowa by salesmen sent there regularly from Minnesota for that purpose, the orders being accepted in Minnesota. This tax the Court sustains. While 'no State can tax the privilege of doing interstate business. ... the mere fact that property is used for interstate commerce or has come into an owner's possession as a result of interstate commerce does not diminish the protection which it may draw from a State to the upkeep of which it may be asked to bear its fair share. But a fair share precludes legislation obviously hostile or practically discriminatory toward interstate commerce. ... None of these infirmities affects the tax in this case ....' And the foreign or nonresident seller who does no more than solicit orders in Iowa, as the Tennessee seller does in Arkansas, may be made the state's tax collector.

In No. 355, International Harvester Co. v. Department of Treasury of State of Indiana, 322 U.S. 340, 64 S.Ct. 1019, the state applies its gross income tax, among other situations, to one (Class D) where a foreign corporation authorized to do and doing business in Indiana sells and delivers its product in Indiana to out-of-state customers who come into the State for the transaction. The Court sustains the tax as applied.


For constitutional purposes, I see no difference but one of words and possibly one of the scope of coverage between the Arkansas tax in No. 311 and the Iowa tax in No. 441. [322 U.S. 349, 351]

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