Evco v. Jones

LOCATION: Allegheny County District Court

DOCKET NO.: 71-857
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: State appellate court

CITATION: 409 US 91 (1972)
ARGUED: Nov 08, 1972
DECIDED: Dec 04, 1972

John C. Cook -
Kendall O. Schlenker -

Facts of the case


Media for Evco v. Jones

Audio Transcription for Oral Argument - November 08, 1972 in Evco v. Jones

Warren E. Burger:

We’ll hear arguments next in 71-857, Evco against Jones.

Mr. Schlenker you may proceed whenever you’re ready.

Kendall O. Schlenker:

Mr. Chief Justice and may it please the Court, the case of Evco v. Jones is before the Court the second time.

The issue is whether the gross receipts of Evco from sales of tangible personal property to customers outside the State of New Mexico where delivery is made outside the State of New Mexico are exempt from the New Mexico Emergency School Tax and the Gross Receipts Tax.

New Mexico of course is a State which is not a heavily industrial state and as a result perhaps of the Atomic Energy Commission and some of the other government agencies and instrumentalities, in our state there have evolved a number of businesses which deal in scientific and technological materials of which Evco is one.

Now, Evco designs educational programs.

Its customers are many government agencies for the state and federal government.

It does a certain contract work for the Bureau of Indian Affairs and typical of the kind of work it does, which is involved in this case is the designing of instructional programs for the IBM Corporation up in Endicott, New York for its use in training people how to use its typewriters, magnetic tapes, electric typewriters, and other modern types of business equipment.

The products which evolved from this work, which Evco does consists of camera-ready copies of books and training manuals, film strips for instruction and audio tapes.

Now, this case arises under two different New Mexico statutes and for our purposes, I believe it can be considered the same.

The first one was the so-called Emergency School Tax Act which came about in 1939 and continued along until about 1961 when we changed the name to the New Mexico Gross Receipts Tax.

The practical effect of those taxes is the same and in each case an exemption was contained from the tax for sales of tangible personal property to government agencies and instrumentalities and to certain nonprofit corporations.

In this case, in the lower court’s opinion, typical of this were the sales to the U.S. for service into the University of Toledo and so forth.

Now, the first issue involved in this case initially was whether Evco was actually selling tangible personal property or whether it was in fact selling a service, which was not subject to this exemption.

The New Mexico Emergency School Tax contained no provision regarding interstate commerce.

The New Mexico Gross Receipts Tax provides an exemption in the case of sales which were an interstate commerce.

Notwithstanding this absence of a provision in New Mexico Emergency School Tax, I don’t believe anyone has ever contended that New Mexico -- that the presence of this provision one way or another would have any effect since, I think it’s always been fairly clear that if these sales are in interstate commerce that they would be just exempt as they are stated to be under the gross receipts tax.

The New Mexico Court of Appeals decided that Evco was selling tangible personal property which took care of a considerable part to this case, that relating to sales to the Government and sales to these tax-exempt institutions.

However, the Court of Appeals decided that notwithstanding their determination that tangible personal property was involved, these sales where delivery was made to IBM for example in New York were not exempt as being in interstate commerce.

We came to this Court before and petition for writ of certiorari and the New Mexico Attorney General’s Office at that time filed a brief, which -- in which it was stated that so far as a second point was concerned that the state would now agree that the sales were exempt as being in interstate commerce.

They expressed their dissatisfaction with the determination still about the services versus tangible personal property point.

This Court sent the case back in using language in the view of the attorney -- their New Mexico Attorney General’s position or concession that the case was being resubmitted for reconsideration.

And in effect what the New Mexico Court of Appeals said was that we have reconsidered but we don’t we change our mind on this point and we again came back with the petition this time which was granted.

The State raises this point about the tangible personal property versus services, but the state’s position on the second point is that if this is the sale of tangible personal property that we are correct in our position that these sales are exempt as being in interstate commerce.

We rely on the case of Adams Manufacturing Company versus Storen in which the sales there involved were so-called out-shipments and which this Court determined that those sales were exempt as being an interstate commerce.

William J. Brennan, Jr.:

As I understand what you have told us and as I understood it in reading the briefs and understood it, that when the case was last here you and the State of New Mexico are in agreement, are you not that if the sales are on personal property the tax cannot be imposed?

Kendall O. Schlenker:

Yes, Your Honor, we are.

William J. Brennan, Jr.:

And the -- what the State says that if these are services then the tax can be imposed and what do you say about that if these are services?

Kendall O. Schlenker:

I would say that if these had been determined to be services that the tax could be imposed.

William J. Brennan, Jr.:

So, there’s no disagreement between you, is there?