1. A judgment of the Supreme Court of California reversing,
without directions, a judgment for the plaintiff in a suit for a
refund of a tax unconstitutionally levied on an export under the
California Retail Sales Tax Act, the case having been tried on the
pleadings and stipulated facts and the State Supreme Court having
passed on the issues which control the litigation, held
reviewable here as a "final judgment" within the meaning of
Judicial Code § 237, 28 U.S.C. § 344(a). P. 329 U. S.
2. Appellant, which was engaged in producing and selling oil in
California, entered into a contract for the sale of oil to the New
Zealand Government. The oil was delivered by appellant from
dockside tanks into a vessel of the New Zealand Government at a
California port; was consigned to a New Zealand official at
Auckland; was transported to New Zealand, and none of it was used
or consumed in the United States. Appellant filed with the
Collector of Customs
Page 329 U. S. 70
a shipper's export declaration, and did not collect, nor attempt
to collect, any sales tax from the purchaser. Held
tax levied upon appellant pursuant to the California Retail Sales
Tax Act and measured by the gross receipts from the transaction was
an impost upon an export, within the meaning of Art. I, § 10, Cl. 2
of the Federal Constitution, and therefore unconstitutional. Pp.
329 U. S. 71
329 U. S.
3. The fact that the provision of the Federal Constitution that
no State shall, without the consent of Congress, lay "any" tax on
imports or exports specifies but a single exception -- "except what
may be absolutely necessary for executing it's inspection Laws" --
indicates that no other qualification of the absolute prohibition
was intended. P. 329 U.S.
4. The constitutional prohibition against "any" state tax on
imports or exports is not to be read as a prohibition against any
"discriminatory" state tax. P. 329
5. The commerce clause and the import-export clause of the
Constitution, though complementary, serve different ends, and the
limitations of the former are not to be read into the latter. P.
329 U.S. 76
6. The constitutional prohibition of "any" state tax on exports
is not to be read as containing an implied qualification. Pp.
329 U.S. 76
7. The process of exportation commenced not later than when the
oil was delivered into the vessel of the foreign purchaser. P.
329 U. S.
8. The construction of a state tax law by the highest court of
the State is binding here, but is not determinative of whether the
tax denies the taxpayer a federal right. P. 329 U. S.
9. Whether a state tax denies a federal right depends not upon
the State's characterization of the tax, but upon its operation and
effect. P. 329 U. S.
10. The incident which gave rise to the accrual of the state tax
in this case -- viz.,
the delivery of the oil into the
vessel of the foreign purchaser -- was a step in the export
process. P. 329 U. S.
11. The constitutional prohibition of state taxes on exports
involves more than a mere exemption from taxes laid specifically
upon the exported goods themselves. P. 329 U. S.
27 Cal. 2d
, 163 P.2d 1, reversed.
Appellant brought suit in a state court for a refund of an
allegedly unconstitutional state tax. A judgment for the appellant
was reversed by the state supreme court. 27 Cal. 2d
, 136 P.2d 1. Appellant appealed to this Court.
p. 329 U. S.
Page 329 U. S. 71
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This case is here on appeal from the Supreme Court of
California, which sustained a California tax against the claim that
it was repugnant to Article I, Section 10, Clause 2 of the
Constitution of the United States. Judicial Code § 237, 28 U.S.C.
§§ 344(a), 861a.
Appellant is engaged in producing and selling oil and oil
products in California. It entered into a contract with the New
Zealand government for the sale of oil. The price was f.o.b. Los
Angeles, payment in London. Delivery was "to the order of the Naval
Secretary, Navy Office, Wellington, into N.Z. Naval tank steamer
at Los Angeles, California." The oil was to
be consigned to the Naval Officer In Charge, Auckland, New Zealand.
Appellant carried the oil by pipeline from its refinery in
California to storage tanks at the harbor, where the
appeared to receive the oil. When the
had docked and was ready to receive the oil,
appellant pumped it from the storage tanks into the vessel.
Customary shipping documents were given the master, including a
bill of lading which designated appellant as shipper and consigned
the oil to the designated naval officer in Auckland. Payment of the
price was made in London. The oil was transported to Auckland, no
portion of it being used or consumed in the United States.
Appellant filed with the Collector of Customs a shipper's export
declaration. It did not collect, nor attempt to do so, any sales
tax from the purchaser. Appellee assessed a retail sales tax
against appellant measured
Page 329 U. S. 72
by the gross receipts from the transaction. The tax was paid
under protest, a claim for refund was filed asserting that the levy
of the tax violated the provisions of Article I, Section 10, Clause
2 of the Constitution of the United States, and this suit was
brought to obtain a refund. The California Supreme Court, one
justice dissenting, first allowed a recovery on that ground. 155
P.2d 1. After a rehearing, it reversed its position and held the
tax constitutional, two justices dissenting. 27 Cal. 2d
, 163 P.2d 1.
I. We are met at the outset with the question whether the
judgment of the California Supreme Court is a "final judgment"
within the meaning of the Judicial Code § 237, 28 U.S.C. § 344(a).
The case was tried on the pleadings and stipulated facts, a jury
having been waived. The trial court found for appellant. The
Supreme Court ordered that the judgment "be and the same is hereby
reversed." The argument is that, under California law, where a
judgment has been reversed without directions, there is a new
trial; that, on a new trial, appellant might amend its complaint
and produce other evidence, and that, if a new trial were had, new
or different findings of fact might be made. See Erlin v.
National Union Fire Ins. Co., 7 Cal. 2d
, 61 P.2d 756.
The designation given the judgment by state practice is not
controlling. Department of Banking, Nebraska v. Pink,
317 U. S. 264
317 U. S. 268
The question is whether it can be said that "there is nothing more
to be decided" (Clark v. Williard, 292 U.
, 292 U. S.
), that there has been "an effective determination of
the litigation." Market Street R. Co. v. Railroad
Commission, 324 U. S. 548
324 U. S. 551
see Radio Station W.O.W. v. Johnson, 326 U.
, 326 U. S.
-124. That question will be resolved not only by an
examination of the entire record (Clark v. Williard,
), but, where necessary, by resort to the local law to
determine what effect the judgment has under the state rules of
practice. Brady v.
Page 329 U. S. 73
Terminal Railroad Assn. of St. Louis,
302 U.S. 688;
Brady v. Southern R. Co.,
319 U.S. 777. See
Boskey, Finality of State Court Judgments under the Federal
Judicial Code, 43 Col.L.Rev. 1002, 1005.
This suit is brought under the California Retail Sales Tax Act,
§ 23, and § 31, which prescribes the sole remedy for challenging
the tax. The procedure prescribed is payment of the tax, the filing
of a claim for refund which sets forth "the specific grounds upon
which the claim is founded," Cal.Stats.1941, pp. 1328, 1329, and,
in case the claim is denied, the institution of a suit within
ninety days "on the grounds set forth in such claim."
Cal.Stats.1939, pp. 2184, 2185. The claim thus frames and restricts
the issues for the litigation. Although the Supreme Court reversed
the judgment of the trial court without direction, its decision
controls the disposition of the case. See Estate of Baird,
193 Cal. 225, 223 P. 974; Bank of America v. Superior
Court, 20 Cal. 2d
, 128 P.2d 357. Since the facts have been stipulated
] and the Supreme
Court of California has passed on the issues which control the
litigation, we take it that there is nothing more to be
Page 329 U. S. 74
decided. The jurisdictional objection is thus without merit.
See Gulf Refining Co. v. United States, 269 U.
, 269 U. S.
II. We turn then to the merits. Article I, Section 10, Clause 2
of the Constitution provides that
"No State shall, without the Consent of the Congress, lay any
Imposts or Duties on Imports or Exports, except what may be
absolutely necessary for executing it's inspection Laws: and the
net Produce of all Duties and Imposts laid by any State on Imports
or Exports shall be for the Use of the Treasury of the United
States, and all such Laws shall be subject to the Revision and
Controul of the Congress."
The Supreme Court of California held that this provision did not
bar the tax because the delivery of the oil which resulted in the
passage of title occurred prior to the commencement of the
exportation. The court suggested, and the appellee concedes, that a
different result might follow if the oil had been delivered to a
"for then it would have been placed in the hands of an
instrumentality whose sole purpose is to export goods, thus
indelibly characterizing the process as a part of exportation."
27 Cal. 2d at 153, 163 P.2d at 3. The court, in reaching the
conclusion that the tax was constitutional, rested in part on our
recent decisions (particularly McGoldrick v. Berwind-White Coal
Mining Co., 309 U. S. 33
Department of Treasury v. Wood Preserving Corp.,
313 U. S. 62
International Harvester Co. v. Department of Treasury,
322 U. S. 340
which sustained the levy of certain state taxes against the claim
that they violated the Commerce Clause. Article 1, § 8, Cl. 3. The
court concluded that, if this had been an interstate transaction,
it would have been subject to the tax. It saw no greater limitation
on the power of the States under Article I, Section 10, Clause 2,
than this Court has found to exist under the Commerce Clause.
Page 329 U. S. 75
We do not pursue the inquiry as to the validity of the tax under
the Commerce Clause. For we are of the view that, whatever might be
the result of that inquiry, the tax is unconstitutional under
Article I, Section 10, Clause 2.
The two constitutional provisions, while related, are not
coterminous. To be sure, a state tax has at times been held
unconstitutional both under the Import-Export Clause and under the
Commerce Clause. Brown v.
12 Wheat. 419; Crew-Levick Co. v.
Pennsylvania, 245 U. S. 292
there are important differences between the two. The invalidity of
one derives from the prohibition of taxation on the import or
export; the validity of the other turns nowise on whether the
article was, or had ever been, an import or export. See Hooven
& Allison Co. v. Evatt, 324 U. S. 652
324 U. S.
-666, and cases cited. Moreover, the Commerce Clause
is cast not in terms of a prohibition against taxes, but in terms
of a power on the part of Congress to regulate commerce. It is well
established that the Commerce Clause is a limitation upon the power
of the States, even in absence of action by Congress. Southern
Pacific Co. v. Arizona, 325 U. S. 761
Morgan v. Virginia, 328 U. S. 373
the scope of the limitation has been determined by the Court in an
effort to maintain an area of trade free from state interference
and, at the same time, to make interstate commerce pay its way. As
recently stated in McGoldrick v. Berwind-White Coal Mining Co.,
p. 309 U. S. 48
the law under the Commerce Clause has been fashioned by the Court
in an effort
"to reconcile competing constitutional demands that commerce
between the states shall not be unduly impeded by state action and
that the power to lay taxes for the support of state government
shall not be unduly curtailed."
That accommodation has been made by upholding taxes designed to
make interstate commerce bear a fair share of the cost of the local
government from which it receives benefits (see e.g.,
303 U. S. Bureau
Page 329 U. S. 76
303 U. S. 250
303 U. S.
-255, and cases cited; McGoldrick v.
Berwind-White Coal Mining Co., supra
), and by invalidating
those which discriminate against interstate commerce, which impose
a levy for the privilege of doing it, which place an undue burden
on it. Adams Mfg. Co. v. Storen, 304 U.
; Gwin, White & Prince, Inc. v.
Henneford, 305 U. S. 434
Best & Co. v. Maxwell, 311 U.
; Nippert v. Richmond, 327 U.
It seems clear that we cannot write any such qualifications into
the Import-Export Clause. It prohibits every State from laying
"any" tax on imports or exports without the consent of Congress.
Only one exception is created -- "except what may be absolutely
necessary for executing its inspection Laws." The fact of a single
exception suggests that no other qualification of the absolute
prohibition was intended. It would entail a substantial revision of
the Import-Export Clause to substitute for the prohibition against
"any" tax a prohibition against "any discriminatory" tax. As we
shall see, the question as to what is exportation is somewhat
entwined with the question as to what is interstate commerce. But
the two clauses, though complementary, serve different ends. And
the limitations of one cannot be read into the other.
It is suggested, however, that the history of the Import-Export
Clause shows that it was designed to prevent discriminatory taxes,
and not to preclude the levy of general taxes applicable alike to
all goods. Support for that is found in the fact that this
provision was defended in the Convention, [Footnote 2
] and later in the debates, [Footnote 3
] on the ground that it protected
the inland States from levies by the coastal States through the
taxation of exports. Yet that function
Page 329 U. S. 77
was only a phase of a larger design. The Import-Export Clause
was considered in connection with Article I, Section 9, Clause 5,
which provides that "No Tax or Duty shall be laid on Articles
exported from any State." [Footnote
] The purpose was to withhold from Congress the power to tax
exports, [Footnote 5
] and to
deprive any the power except with the consent of Congress -- and
even then, it seems, to require the net proceeds to be paid into
the federal treasury. A proposal was made to prohibit the States
"from taxing the produce of other States exported from their
harbours." [Footnote 6
that suggestion was not followed. The language adopted was
supported by Madison "as preventing all State imposts." [Footnote 7
] The qualified
interpretation urged upon us has therefore no substantial support
in the history of the Import-Export Clause. Moreover, to infer
qualifications does not comport with the standards for expounding
the Constitution. As stated by Chief Justice Marshall in
4 Wheat. 122, 17 U. S.
"it would be dangerous in the extreme to infer from extrinsic
circumstances that a case for which the words of an instrument
expressly provide shall be exempted from its operation."
For, as Chief Justice Taney said in Holmes v.
14 Pet. 540, 39 U. S.
"In expounding the Constitution of the United States, every word
must have its due force, and appropriate meaning; for it is evident
from the whole
Page 329 U. S. 78
instrument, that no word was unnecessarily used, or needlessly
added. The many discussions which have taken place upon the
construction of the Constitution have proved the correctness of
this proposition, and shown the high talent, the caution, and the
foresight of the illustrious men who framed it. Every word appears
to have been weighed with the utmost deliberation, and its force
and effect to have been fully understood. No word in the instrument
therefore can be rejected as superfluous or unmeaning. . . ."
We cannot therefore read the prohibition against "any" tax on
exports as containing an implied qualification.
The questions remain whether we have here an export within the
meaning of the constitutional provision and, if so, whether this
tax was a prohibited impost upon it.
The requirement that foreign commerce be involved
8 Wall. 123, 75 U. S. 136
is met, for concededly the oil was sold for shipment abroad. The
question whether, at the time the tax accrued, the oil was an
export presents a different problem. There are few decisions of the
Court under Article I, Section 10, Clause 2, which illuminate the
problem. In Brown v. Houston, 114 U.
, Louisiana taxed coal held in that State for
sale. After the tax was assessed, some of the coal was sold for
export. The Court held that the coal, when taxed, was not an
export, saying, pp. 114 U. S.
"When taxed, it was not held with the intent or for the purpose
of exportation, but with the intent and for the purpose of sale
there, in New Orleans. A duty on exports must either be a duty
levied on goods as a condition, or by reason of their exportation,
or at least, a direct tax or duty on goods which are intended for
exportation. Whether the last would be a duty on exports it is not
necessary to determine. But certainly,
Page 329 U. S. 79
where a general tax is laid on all property alike, it cannot be
construed as a duty on exports when falling upon goods not then
intended for exportation though they should happen to be exported
In Coe v. Errol, 116 U. S. 517
Court had before it a case under the Commerce Clause. Logs, cut in
New Hampshire, were being held on a river there for transportation
to Maine. New Hampshire's nondiscriminatory tax on them was
sustained. What the Court said concerning commerce is what we deem
to be the correct principle governing exports:
". . . goods do not cease to be part of the general mass of
property in the state, subject, as such, to its jurisdiction, and
to taxation in the usual way, until they have been shipped, or
entered with a common carrier for transportation, to another state,
or have been started upon such transportation in a continuous route
Page 116 U. S.
That view has been followed in cases involving Article I,
Section 9, Clause 5 of the Constitution, which, as we have noted,
prohibits Congress from laying any tax on "Articles exported from
any state." In Turpin v. Burgess, 117 U.
, the Court sustained a federal excise tax on
manufactured tobacco. The tax was laid upon the goods before they
left the factory. The Court said, p. 117 U. S.
"They were not in course of exportation; they might never be
exported; whether they would be or not would depend altogether on
the will of the manufacturer."
The same result was reached in Cornell v. Coyne,
192 U. S. 418
where a federal manufacturing tax on filled cheese was sustained
against the claim that it was a tax levied by Congress on exports.
The cheese was manufactured under contract for export. The Court
"The true construction of the constitutional provision is that
no burden by way of tax or duty can be cast upon the exportation
Page 329 U. S. 80
articles, and does not mean that articles exported are relieved
from the prior ordinary burdens of taxation which rest upon all
property similarly situated. The exemption attaches to the export,
and not to the article before its exportation."
P. 192 U. S.
That line has been marked by other decisions under Article I,
Section 9, Clause 5 of the Constitution. Thus, a federal stamp tax
on a foreign bill of lading is a tax on exports, since it is the
equivalent of a direct tax on the articles included in the bill of
lading. Fairbank v. United States, 181 U.
. The same is true of federal stamp taxes on
charter parties made exclusively for the carriage of cargo in
foreign commerce, United States v. Hvoslef, 237 U. S.
, 237 U. S. 17
a tax on those charter parties is "in substance a tax on the
exportation, and a tax on the exportation is a tax on the exports."
The same is likewise true of federal stamp taxes on policies
insuring exports against maritime risks. Thames & Mersey
Marine Ins. Co. v. United States, 237 U. S.
9. The Court stated, p. 237 U. S.
"The rise in rates for insurance as immediately affects
exporting as an increase in freight rates, and the taxation of
policies insuring cargoes during their transit to foreign ports is
as much a burden on exporting as if it were laid on the charter
parties, the bills of lading, or the goods themselves. Such
taxation does not deal with preliminaries, or with distinct or
separable subjects; the tax falls upon the exporting process."
Closer in point is Spalding & Bros. v. Edwards,
262 U. S. 66
involved a federal tax on baseball bats and balls sold by the
manufacturer. A Venezuela firm ordered a New York commission house
to buy a quantity of bats and balls for their account. The New York
commission house placed the order with the manufacturer,
instructing it to deliver the packages to an exporting carrier
Page 329 U. S. 81
New York for shipment to Venezuela. The goods were delivered to
the carrier, and an export bill of lading was issued. In due
course, the goods were transported to Venezuela. The issue, as
stated by the Court, p. 262 U. S. 68
was "whether the sale was a step in exportation." The Court pointed
out that the goods would not have been exempt from tax while they
were "in process of manufacture," though they were intended for
export, but that they would be exempt "after they had been loaded
upon the vessel for Venezuela, and the bill of lading issued." The
question was whether the "export had begun." After noting that
title passed when the goods were delivered into the carrier's
hands, the Court stated, p. 262 U. S.
"The very act that passed the title and that would have incurred
the tax had the transaction been domestic committed the goods to
the carrier that was to take them across the sea, for the purpose
of export and with the direction to the foreign port upon the
goods. The expected and accomplished effect of the act was to start
them for that port. The fact that further acts were to be done
before the goods would get to sea does not matter, so long as they
were only the regular steps to the contemplated result."
The circumstance that title was in the New York commission house
and that it might change its mind and retain the goods for its own
use was dismissed by the statement that "Theoretical possibilities
may be left out of account." Page 262 U. S. 70
Court concluded that, if exportation was put at a later point,
exports would not receive "the liberal protection that hitherto
they have received." P. 262 U. S. 70
This line of cases was summarized in Willcuts v. Bunn,
282 U. S. 216
282 U. S. 228
as construing the constitutional prohibition against federal
taxation of exports so as to give
"immunity to the process of exportation and to the
Page 329 U. S. 82
and documents embraced in that process. . . . Only on that
construction can the constitutional safeguard be maintained."
The fact that delivery to a common carrier for export gave the
sale immunity in Spalding & Bros. v. Edwards, supra,
is seized upon as stating a rule that the process of exportation
has not started until such delivery has been made. And cases like
Superior Oil Co. v. Mississippi, 280 U.
, are relied upon as indicating that delivery to
the purchaser is not sufficient. That case arose under the Commerce
Clause. Mississippi was upheld in its effort to tax a distributor
or wholesaler who purchased gasoline and later took it to Louisiana
for sale. The Court said, p. 280 U. S. 395
that, although the course of business indicated the likely
destination of the oil, it 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."
The Court held, therefore, that the tax was not on goods moving
in interstate commerce. But it added, p. 280 U. S. 396
"Dramatic circumstances, such as a great universal stream of
grain from the 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."
The certainty that the goods are headed to sea and that the
process of exportation has started [Footnote 8
] may normally be best evidenced by the fact
that they have been delivered to a common carrier for that purpose.
But the same degree of certainty may exist though no common carrier
is involved. The present case is an excellent illustration. The
foreign purchaser furnished the ship to carry the oil abroad.
Delivery was made into the hold of the vessel
Page 329 U. S. 83
from the vendor's tanks located at the dock. That delivery
marked the commencement of the movement of the oil abroad. It is
true, as the Supreme Court of California observed, that, at the
time of the delivery, the vessel was in California waters, and was
not bound for its destination until it started to move from the
port. But, when the oil was pumped into the hold of the vessel, it
passed into the control of a foreign purchaser, and there was
nothing equivocal in the transaction which created even a
probability that the oil would be diverted to domestic use. It
would not be clearer that the oil had started upon its export
journey had it been delivered to a common carrier at an inland
point. The means of shipment are unimportant, so long as the
certainty of the foreign destination is plain.
It seems clear under the decisions which we have reviewed
involving Article I, Section 9, Clause 5 of the Constitution that
the commencement of the export would occur no later than the
delivery of the oil into the vessel. As the meaning of "export" is
the same under that Clause and the Import-Export Clause (see
Brown v. Maryland, supra,
p. 25 U. S. 445
Turpin v. Burgess, supra,
p. 117 U. S.
), the same result follows here.
It is argued, however, that the present tax is not an impost
within the meaning of the Import-Export Clause. The tax is measured
by the gross receipts of retail sales, and is levied on retailers
"[f]or the privilege of selling tangible personal property at
retail." Cal.Stats.1935, p. 1253. The retailers are authorized to
collect the tax from the consumers. Cal.Stats.1933, p. 2602. And a
sale is "any transfer of title or possession . . . in any manner or
by any means whatsoever, of tangible personal property, for a
consideration." Cal.Stats.1935, p. 1256. The California Supreme
Court held that the tax is an excise tax for the privilege of
conducting a retail business measured
Page 329 U. S. 84
by the gross receipts from sales; that it is not laid upon the
consumer and does not become a tax on the sale or because of the
sale. 27 Cal. 2d at 152, 163 P.2d at 2.
That construction, being a matter of state law, is binding on
us. But it is not determinative of the question whether the tax
deprives the taxpayer of a federal right. That issue turns not on
the characterization which the state has given the tax, but on its
operation and effect. See St. Louis Southwestern R. Co. v.
Arkansas, 235 U. S. 350
235 U. S. 362
Kansas City, Ft. S. & M. R. Co. v. Botkin,
240 U. S. 227
240 U. S.
Appellee concedes that the prohibition of the Import-Export
Clause would be violated if the goods were taxed as exports or
because of their exportation, or if the process of exportation were
itself taxed. We perceive, however, no difference in substance
between any tax so labeled and the present tax. The California
Supreme Court conceded that the delivery of the oil "resulted in
the passage of title and the completion of the sale, and the
taxable incident." 27 Cal. 2d at 153, 163 P.2d at 2, 3. The
incident which gave rise to the accrual of the tax was a step in
the export process.
Moreover, Brown v. Maryland, supra,
argument that, while a State could not tax imports, it could tax
the privilege of selling imports. Chief Justice Marshall stated, p.
25 U. S.
"All must perceive that a tax on the sale of an article imported
only for sale is a tax on the article itself. It is true, the State
may tax occupations generally, but this tax must be paid by those
who employ the individual, or is a tax on his business. The lawyer,
the physician, or the mechanic must either charge more on the
article in which he deals or the thing itself is taxed through his
person. This the State has a right to do, because no constitutional
Page 329 U. S. 85
extends to it. So a tax on the occupation of an importer is, in
like manner, a tax on importation. It must add to the price of the
article, and be paid by the consumer or by the importer himself in
like manner as a direct duty on the article itself would be made.
This the State has not a right to do, because it is prohibited by
The same reasoning was applied to exports, p. 25 U. S.
"The States are forbidden to lay a duty on exports, and the
United States are forbidden to lay a tax or duty on articles
exported from any State. There is some diversity in language, but
none is perceivable in the act which is prohibited. The United
States have the same right to tax occupations which is possessed by
the States. Now suppose the United States should require every
exporter to take out a license, for which he should pay such tax as
Congress might think proper to impose; would government be
permitted to shield itself from the just censure to which this
attempt to evade the prohibitions of the constitution would expose
it by saying that this was a tax on the person, not on the article,
and that the legislature had a right to tax occupations?"
The prohibition contained in the Import-Export Clause against
taxation on exports clearly involves more than a mere exemption
from taxes laid specifically upon the exported goods themselves.
That is true of the constitutional prohibition against federal
taxes on exports. United States v. Hvoslef, supra.
was said there (p. 237 U. S. 13
equally applicable here:
"If it meant no more than that, the obstructions to exportation
which it was the purpose to prevent could readily be set up by
legislation nominally conforming to the constitutional restriction,
but in effect overriding it."
And see Anglo-Chilean Nitrate Sales Corp. v. Alabama,
288 U. S. 218
Page 329 U. S. 86
We conclude that the tax which California has exacted from
appellant is an impost upon an export within the meaning of Article
I, Section 10, Clause 2, and is therefore unconstitutional.
MR. JUSTICE MURPHY took no part in the consideration or decision
of this case.
In California, a valid stipulation is binding upon the parties.
McGuire v. Baird, 9 Cal. 2d 353
70 P.2d 915; Webster v. Webster,
216 Cal. 485, 14 P.2d
23 Cal.Juris. 826. It is available at a second
trial unless in terms otherwise limited, Nathan v.
146 Cal. 63, 79 P. 739; Crenshaw v.
Smith, 74 Cal. App. 2d
, 168 P.2d 752; see Le Barron v. City of Harvard,
129 Neb. 460, 262 N.W. 26, and will be controlling at the second
trial unless the trial court relieves a party from the stipulation.
First National Bank of San Pedro v. Stansbury,
App. 80, 5 P.2d 13. Relief from a stipulation may be granted in the
sound discretion of the trial court in cases where the facts
stipulated have changed, there is fraud, mistake of fact, or other
special circumstance rendering it unjust to enforce the
stipulation. Sacre v. Chalupnik,
188 Cal. 386, 205 P. 449;
Back v. Farnsworth, 25 Cal. App. 2d
, 77 P.2d 295; Sinnock v. Young, 61 Cal. App. 2d
, 142 P.2d 85; see
161 A.L.R. 1163. In the present
case, there is no intimation in the record or briefs of fraud,
excusable neglect, or other ground for relief. Indeed, the parties
both accept the stipulation as accurate and complete.
2 Farrand, The Records of the Federal Convention
(1911), pp. 307, 359-362, 442.
Madison's statement, 3 Eilliot's
Debates,2d Ed., p. 483. And see
The Federalist No. 42.
2 Farrand, op cit. supra, note 2
pp. 305-308, 358-363, 441-442.
The consensus of opinion was expressed by Gerry -- that
"the legislature could not be trusted with such a power. It
might ruin the Country. It might be exercised partially, raising
one and depressing another part of it."
2 Farrand, op cit. supra, note 2
p. 307. Or as stated by Sherman, "A
power to tax exports would shipwreck the whole." Id.,
This was suggested by Langdon. See
2 Farrand, op.
cit. supra, note 2
2 Farrand, op. cit. supra, note 2
See Carson Petroleum Co. v. Vial, 279 U. S.
MR. JUSTICE BLACK, dissenting.
Richfield Oil Corporation, while doing business in California,
sold oil extracted from California soil. Its purchaser bought the
oil to transport and use abroad. California, like many other
states, raises a large proportion of its revenue by a generally
applied tax on sales.* The Court holds that application of the
California sales tax to this transaction is a "tax on exports," and
therefore violates Article 1, Section 10, Clause 2 of the Federal
Constitution. I cannot agree.
In Spalding & Bros. v. Edwards, 262 U. S.
, 262 U. S. 69
precedent upon which today's decision heavily relies, this Court
"with regard to any transaction we have to fix a point at which,
in view of the purpose of the Constitution, the export must be said
to begin. As elsewhere in the law, there will be other points very
near to it on the other side, so that, if the necessity of fixing
one definitely is not remembered, any determination may seem
This principle announced in the Spalding
case seems to
follow what was said in Cornell v. Coyne, 192 U.
, 192 U. S. 427
that the constitutional prohibition against a tax on exports was
not intended to relieve exported articles "from the prior ordinary
burdens of taxation which rests upon all property
Page 329 U. S. 87
similarly situated." Every transaction held by this Court to
have occurred after,
rather than before,
exportation began makes an encroachment not only on the power of
states to tax, but, as the Court points out, the Federal
Government's area of taxation is also narrowed. The result of such
holding is all the more serious because, unlike the consequences of
holding a state tax invalid under the Commerce Clause, the
prohibitions against taxing exports are, with a minor exception,
permanent, absolute, and unqualified. After today's ruling,
Congress itself can neither tax nor permit states to tax sales like
the one here proscribed. To classify sales transactions as having
occurred after exportation began therefore results in creating an
island of constitutional tax immunity for a substantial proportion
of the profitable business of the nation. Such a result not only
grants tax immunity to many profitable businesses which share
governmental protections from payment of their fair part of taxes;
it also throws an unfair part of the tax burden on others. Since we
cannot assume that the framers of the Constitution looked with
favor on such consequences, we should, before classifying a
transaction in such a way as to render a tax on it
unconstitutional, give it the most careful factual scrutiny. We
should not invalidate such a tax unless satisfied beyond doubt that
it falls squarely and wholly within the area marked by the
Constitution for tax exemption.
The economic consequences of such sales taxes are probably about
the same as would flow from a property or severance tax applied to
Richfield. For all three types of taxes would likely be reflected
in an increased sales price of Richfield's oil. No one, I suppose,
would think of saying that such a property or severance tax would
be unconstitutional as a tax on exports. The reason would be that
the taxable event clearly arose before, and not after, exportation
began. This sales tax was no more applied after export had actually
begun than a property or severance
Page 329 U. S. 88
tax would have been. The tax was not even levied on an exporter
or an exporter's agent or broker. Richfield was neither. Its sale
of local California goods was negotiated and completed wholly in
California. This purely intrastate sale transaction cannot properly
be held to have lost its intrastate pre-exportation status by
reason of the fact that the parties did not intend "title to pass"
until the oil was delivered at the purchaser's ship. For formal
"passage of title" is not an adequate criterion for measuring a
state's constitutional power to tax sales made within the state.
Private parties are free to decide, so far as their own interests
are concerned, when legal title shall be considered to "pass." But
a state surely is not required by the Constitution to forbear from
taxing that part of a sales transaction which precedes the
particular moment the parties have arbitrarily selected for a
conceptual transfer of title. Nor need a state withhold the
exercise of its power to tax sales until an article is delivered or
paid for. That delivery, perhaps the last step in executing this
agreement to sell, happened to border on the imaginary line where
the actual exporter took possession does not justify us in
concluding that therefore the whole sales transaction occurred
after exportation. Constitutional interpretations which make
serious inroads into the power of both the States and the Federal
Government to tax sales made by local businesses should not turn on
fine legal concepts of when title passed or delivery occurred in
relation to the beginning of exportation.
Concededly, as the Court points out, the Constitution prohibits
imposition of state and federal "imposts and duties" on "exports."
But the Constitution does not define in words what is an impost or
tax on exports and what is not. It is well known that taxation of
exports was primarily forbidden by the Constitution at the
insistence of inland states which feared that seaboard states would
exact a tribute from all goods sold in the interior which were
Page 329 U. S. 89
thereafter transported through ports en route to foreign
destinations. It was not intended to bestow a bounty of blanket tax
immunity upon all those who engaged in the production, processing,
purchase, or sale of goods shipped abroad. There was no broad
purpose of encouraging foreign commerce by making all these
preliminary steps tax-free. The motivation of this tax and its
economic consequences plainly are not those which the writers of
the Constitution condemned. This was no tax on goods from an inland
state which came through California in transit after severance,
processing, and sale had been completed. Nor was it a disguised tax
on a product of California soil or manufacture imposed solely
because the oil was intended for a foreign destination. The tax was
nothing more than an effort of California to defray a part of the
state's expenses by a uniform sales tax on all those businesses,
including Richfield, which enjoyed California's natural resources,
the labor of its people, and the services and protection of its
True, the tax would impose a burden on export commerce to the
extent that it increased the export price of Richfield oil. But if
a tax on export sales be unconstitutional for imposing such a
burden, so is a property tax or a severance tax applied to
Richfield's oil anywhere from well to consumer. For all these types
of taxes would likely be reflected in the price of Richfield's oil.
But the history and the evolution of the constitutional prohibition
against taxation of exports manifest that there was no intention to
subsidize either export businesses or foreign purchasers by any
such broad immunity from state and federal taxation.
I cannot believe that it was the purpose of the Constitution to
let all goods destined for shipment abroad escape uniformly applied
state and federal taxes, nor that a state whose resources are
depleted is powerless to enforce its sales tax if the depleter
sells to customers for immediate
Page 329 U. S. 90
shipment for ultimate use in foreign countries. No persuasive
evidence has been produced to indicate that those who wrote the
Constitution thought in such terms or that they would have
handicapped the state and federal taxing power in such a way. And
no other sufficiently cogent reasons have been advanced to require
a present interpretation which so disarranges, confuses, and
handicaps the sales taxes of all the states.
* In 1945, California's total revenue was $676,828,000. It
collected $242,757,000 from its sales tax. California State
Finances in 1945, 1 State Finances: 1945, Dept. of Commerce, Bureau
of the Census (1946) 33.