Central Machinery Company v. Arizona State Tax Commission

PETITIONER: Central Machinery Company
RESPONDENT: Arizona State Tax Commission
LOCATION: United States District Court for the Northern District of Illinois, Eastern Division

DOCKET NO.: 78-1604
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: Arizona Supreme Court

CITATION: 448 US 160 (1980)
ARGUED: Jan 14, 1980
DECIDED: Jun 27, 1980

ADVOCATES:
Ian A. Macpherson - for appellee
Louis F. Claiborne - for the United States, as amicus curiae, by special leave of Court
Rodney B. Lewis - for appellant

Facts of the case

Question

Media for Central Machinery Company v. Arizona State Tax Commission

Audio Transcription for Oral Argument - January 14, 1980 in Central Machinery Company v. Arizona State Tax Commission

Warren E. Burger:

We'll hear arguments first this morning in Central Machinery Company against Arizona State Tax Commission.

Mr. Lewis, you may proceed whenever you are ready.

Rodney B. Lewis:

Mr. Chief Justice Burger and may it please the Court.

This case is here on appeal from the Supreme Court of the State of Arizona.

It involves a question of whether the State of Arizona can impose a transaction privilege tax on the sale of 11 tractors to the Gila River Indian Community.

In 1973, representatives of Central Machinery went upon the Gila River Indian Reservation for the purpose of selling farm machinery to Gila River Farms.

Gila River Farms is a subsidiary and business enterprise of the Gila River Indian Community, a recognized Indian Tribe, organized pursuant to Section 16 of the Indian Reorganization Act.

After negotiations which occurred on the reservation, Gila River Farms agreed to purchase 11 John Deere tractors.

Subsequently, delivery and payment for the tractors was made on the reservation.

Central Machinery added to the purchase price the amount of $2916.62 which was paid by Gila River Farms to Central Machinery.

Central Machinery remitted these funds to the State of Arizona as payment for the transaction privilege tax.

Central Machinery paid this tax under protest.

The sale was approved by the Superintendent of Pima agency, the Secretary's representative on the Gila River Indian Reservation.

The Pima agency Superintendent allowed Central Machinery to come onto the reservation and transact this business without securing a trader's license.

The Superintendent, prior to the sale, had also approved the Farms' budget which had set aside moneys for the purchase of the tractors.

Administrative appeals and court action in the Arizona courts followed, culminating in this appeal before this Court.

The trader statute, U.S.C. 261-264, and federal regulations preempt Arizona's jurisdiction to levy this tax on this sale.

It is our position that Warren Trading Post governs this case, thereby, preventing application or imposition of the transaction privilege tax, a tax which is measured by sales to this sales transaction.

William H. Rehnquist:

Mr. Lewis, would you agree that if, instead of the transaction taking place on the Gila River Reservation, it had taken place in New Mexico and Arizona had sought to levy its privilege tax, it would be taxable?

Rodney B. Lewis:

I am not sure whether or not there would be a sufficient connection to the State of Arizona, allowing Arizona to impose that tax.

And of course, it's not the situation here before us.

William H. Rehnquist:

But if there had been a -- do you -- do you think the same standard would govern or do you think that it's the licensing by the Secretary of Interior and the other peculiarly Indian aspects of this case that govern?

Rodney B. Lewis:

I don't think the licensing by the Interior is dispositive in this case nor do I think it would be handled the same way regarding a transaction in New Mexico.

We're -- our position is that Warren Trading Post, which held that federal statutes and accompanying regulations preempted the field, did not allow the -- did not allow the imposition of this tax to this transaction.

Warren Trading Post held that -- that Congress has undertaken to regulate reservation trading in such a comprehensive way that there's no room for the States to legislate the subject.

Any assessment and collection of a tax involved here was held in Warren to frustrate the evident congressional purpose of ensuring that no burden be imposed upon Indian traders, trading with Indians or reservations, except as authorized by Acts of Congress or by valid regulations promulgated under those Acts.

Congress enacted the trader statute to deter fraud and prevent exploitation of Indians engaged in commercial transaction with an Indian country.

John Paul Stevens:

Mr. Lewis, could I ask you a question.

Was this transaction approved by the Federal Government?

Rodney B. Lewis:

The transaction was approved by the Federal Government.