Petitioner, Canadian corporation, purchased in Michigan
1,500,000 gallons of gasoline, certified that it was purchased for
export, hipped it by rail to Detroit under bills of lading marked
"For Export to Canada," and placed it in storage tanks in Dearborn,
Michigan. Fifteen months later, when only 50,000 gallons had been
exported to Canada, Dearborn assessed an
ad valorem
property tax on the remaining gasoline. Because of a shortage of
shipping space, it was more than eighteen months after storage
before all of the gasoline had been exported to Canada.
Held: the tax was not in violation of the Export-Import
Clause, Art. I, § 10, cl. 2, of the Federal Constitution. Pp.
337 U. S.
286-289.
321 Mich. 335, 32 N.W.2d 472 affirmed.
An
ad valorem tax assessed by a Michigan municipality
upon a Canadian corporation's stores of gasoline was sustained by
the State Supreme Court against a claim of invalidity under the
Export-Import Clause of the Federal Constitution. 321 Mich. 335, 32
N.W.2d 472. This Court granted certiorari. 335 U.S. 812.
Affirmed, p.
337 U.S.
289.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
On December 29, 1945, petitioner Joy Oil Company, Ltd.,
purchased 1,500,000 gallons
Page 337 U. S. 287
of gasoline from Mid-West Refineries, Inc., of Grand Rapids,
Michigan. The bills of lading issued by the railroad to which the
gasoline was delivered were marked "For Export Only," but the
gasoline was consigned to petitioner at Detroit. In order to secure
the benefits of lower export freight rates and exemption from the
federal transportation and manufacturers' excise taxes, petitioner
furnished Mid-West Refineries and the railroad with prescribed
forms certifying that the gasoline was purchased for export. Rail
shipments were begun in January and completed in February of 1946.
As the gasoline reached Detroit it was accumulated in storage tanks
leased by petitioner at Dearborn.
On April 1, 1947, the city of Dearborn assessed an
ad
valorem property tax on the gasoline, all of which, except
20,000 gallons, shipped to Canada by truck over the Ambassador
Bridge, had then been in the Dearborn tanks for fifteen months.
Shipment by truck was halted by a federal regulation prohibiting
the transportation of inflammables over any international bridge,
and petitioner apparently chose not to ship the gasoline by rail
across the Detroit River. In July of 1947, petitioner began to ship
it to Canada by water; the last tanker load departed on August 22,
1947. Petitioner explains the delay as due to inability to obtain
shipping space at any earlier date.
Petitioner resisted payment of the tax on the ground that it
infringed Art. I, § 10, cl. 2, of the Constitution. The Tax
Commission of Michigan sustained Dearborn's assessment of the tax,
and the Supreme Court of Michigan affirmed. 321 Mich. 335, 32
N.W.2d 472. We granted certiorari because the case presented a
sufficiently important question in the accommodation of State and
Federal interests under the Constitution. 335 U.S. 812.
Page 337 U. S. 288
The circumstances which tended, at the time when the tax was
assessed, to establish petitioner's intent to export the gasoline
and the fact that the gasoline was eventually exported are not
enough, by themselves, to confer immunity from local taxation.
See, e.g., Cornell v. Coyne, 192 U.
S. 418;
Empresa Siderurgica v. County of
Merced, 337 U. S. 154. Nor
is it enough that, by the rail shipment to Detroit, one step in the
process of exportation had been taken or that a part of the total
bulk had already departed for its foreign destination. It is, of
course, true that commodities destined for shipment by water must
be transshipped at the water's edge, and so may require a brief
period of storage at that point which will not be deemed a delay
sufficient to interrupt the continuity of the export process.
Carson Petroleum Corp. v. Vial, 279 U. S.
95;
see Southern Pacific Terminal Co. v. Interstate
Commerce Comm'n, 219 U. S. 498;
Texas & N.O. R. Co. v. Sabine Tram Co., 227 U.
S. 111. But here, the period of storage at Dearborn was
so long as to preclude holding that the first step toward
exportation would inevitably be followed by others.
See,
by way of contrast,
Hughes Bros. Timber Co. v. Minnesota,
272 U. S. 469.
While in storage, the gasoline might have been diverted to domestic
markets without disruption of any existing arrangement for its
transshipment and without even breach of any contractual commitment
to a foreign purchaser. Neither the character of the property nor
any event equivalent to its redelivery to a common carrier made
export certain for all practical purposes.
See Richfield Oil
Corp. v. State Board, 329 U. S. 69,
329 U. S.
82.
The Export-Import Clause was meant to confer immunity from local
taxation upon property being exported, not to relieve property
eventually to be exported from its share of the cost of local
services.
See Coe v.
Errol,
Page 337 U. S. 289
116 U. S. 517,
116 U. S.
527-528. The fifteen-month delay at Dearborn barred
immunity of petitioner's gasoline from the taxing power of the
municipality.
Affirmed.
MR. CHIEF JUSTICE VINSON, with whom MR. JUSTICE DOUGLAS and MR.
JUSTICE JACKSON join, dissenting.
The Court holds that fifteen months' delay in transshipment of
the gasoline in question was so long that continuity of the process
of exportation was broken, because, during that period, it might
have been diverted to domestic markets. I think that this rationale
and the conclusion which follows therefrom mark a substantial and
unwarranted departure from our previous decisions in this
field.
As I understand it, the Court's opinion reflects the view that a
long delay in transshipment makes it uncertain whether the gasoline
will eventually be exported, and further, that a delay of fifteen
months makes it possible for this Court to say as a matter of law
that the uncertainty is so great that the process of exportation
has ceased, whatever the reason for the delay. But the Court
concedes that petitioner intended to export the gasoline at the
time the tax was imposed, and petitioner's uncontradicted evidence
shows that it had that intent throughout the period of delay, which
was caused by its inability to procure water transportation. That
intent was manifested in a number of ways. The bills of lading by
which the gasoline moved from Grandville and Alma, Michigan, to
Dearborn, a Great Lakes port, were marked "For export to Canada;"
petitioner certified that the gasoline was to be exported in order
to secure an exemption under the federal manufacturer's excise tax
and to qualify for lower freight rates accorded exports; it
transported 50,000 gallons of the gasoline by truck over the
Ambassador Bridge
Page 337 U. S. 290
into Canada until a federal regulation closed the bridge to
inflammable materials, and finally, petitioner exported all of the
gasoline to Canada when shipping space became available. There is
nothing in the record to indicate either that petitioner at any
time deviated from that expressed intent or that the delay was not
due solely to lack of shipping space.
The Court is in the anomalous position, therefore, of holding as
a matter of law that a fifteen-month delay in transshipment breaks
the "stream of export" because of the resulting uncertainty that
the goods will ultimately be exported, when all of the evidence is
to the effect that the shipper's intent to export has never
waivered; that exportation was as certain as of the date of the tax
as it had been fifteen months before. The Court has previously
considered the question to be quite a different one. We have held
that
"The character of the shipment in such a case depends upon all
the evidential circumstances looking to what the owner has done in
the preparation for the journey and in carrying it out. The mere
power of the owner to divert the shipment already started does not
take it out of interstate commerce if the other facts show that the
journey has already begun in good faith and temporary interruption
of the passage is reasonable and in furtherance of the intended
transportation, as in the
Champlain case (
Champlain v.
Brattleboro, 260 U. S. 366)."
Hughes Brothers Timber Co. v. Minnesota, 272 U.
S. 469,
272 U. S.
475-476 (1926).
This test was quoted with approval by Mr. Chief Justice Hughes
in
Minnesota v. Blasius, 290 U. S. 1,
290 U. S. 10
(1933), and he added,
"The question is always one of substance, and in each case it is
necessary to consider the particular occasion or purpose of the
interruption during which the tax is sought to be levied."
See also, to the same effect,
Page 337 U. S. 291
Champlain Realty Co. v. Town of Brattleboro,
260 U. S. 366,
260 U. S. 377
(1922);
Carson Petroleum Co. v. Vial, 279 U. S.
95,
279 U. S. 102
(1929);
United States v. Erie R. Co., 280 U. S.
98,
280 U. S. 102
(1929). The Court now refuses to look at any circumstances except
the delay -- not even the reason for the delay.
It is true that petitioner could have moved the gasoline more
quickly had it used the more expensive all-rail service. But, in
almost every case of delay, a quicker method of moving the goods
might have been devised. No doubt the logs held up by low water in
Coe v. Errol, 116 U. S. 517
(1886), could have been drawn overland by mules or oxen. And it
would have been possible, though not practical, for oil to have
been transferred directly from tank cars to waiting ships in
Carson Petroleum Co. v. Vial, supra, yet this Court found
that the delay necessarily attendant upon the accumulation of oil
in tanks at the waterfront to await the arrival of ships did not
constitute interruption of the process of exportation. The delay
was "reasonable, and in furtherance of the intended
transportation."
Concededly, he gasoline here involved was in the process of
exportation when taxed unless the delay was alone enough to break
the stream of export. It had been started on its journey with every
indication that it was to be transshipped for export. If actual
exportation had followed its arrival in Dearborn by a few days or
weeks, there is no question but that it would have been a commodity
in the process of exportation, and thus exempt from tax. In this
situation, the Court has always, until today, applied
"a liberal 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."
Carson Petroleum Co. v. Vial, supra, at
279 U. S.
105-106. But the Court now treats as immaterial the fact
that the process of exportation had
Page 337 U. S. 292
started, which has always been considered the decisive factor,
Cornell v. Coyne, 192 U. S. 418
(1904);
Empresa Siderurgica v. County of Merced,
337 U. S. 154
(1949), and assumes that a delay of fifteen months conclusively
demonstrates that certainty of exportation had been undermined. It
is almost always possible in cases of this kind that the owner of
the goods may change his mind before exportation is actually
carried out, as Mr. Justice Holmes pointed out in
Spaulding
& Bros. v. Edwards, 262 U. S. 66,
262 U. S. 70
(1923). Delay undoubtedly increases the possibility, but it does
not work such a change as a matter of law. The question, instead,
is that previously pointed out, namely, whether
"the journey has already begun in good faith and [whether]
temporary interruption of the passage is reasonable and in
furtherance of the intended transportation."
Hughes Brothers Timber Co. v. Minnesota, supra.
The result is that the Court, without consideration of the fact
that the gasoline had been started on its journey with the intent
that it be transshipped for immediate export to Canada, holds that
fifteen months' unavoidable delay is so productive of uncertainty
that the process of exportation ceases as a matter of law. It might
be pointed out that, in the leading case of
Coe v. Errol,
supra, logs being floated down a river were held up by low
water for about a year, but this Court did not consider that delay
enough to break the continuity of the interstate journey. The line
now seems to be drawn somewhere between twelve and fifteen months,
whatever the other circumstances. Such an arbitrary demarcation is
hardly consonant with "the liberal protection that hitherto
[exports] have received."
Spaulding & Bros. v. Edwards,
supra, at
262 U. S. 70. I
would adhere to the test set out in our previous decisions: whether
the delay was reasonable under all the circumstances and in
furtherance of the intended transportation.