Heublein, Inc. v. South Carolina Tax Commission

PETITIONER: Heublein, Inc.
RESPONDENT: South Carolina Tax Commission
LOCATION: Allegheny County District Court

DOCKET NO.: 71-879
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: South Carolina Supreme Court

CITATION: 409 US 275 (1972)
ARGUED: Nov 13, 1972
DECIDED: Dec 18, 1972

G. Lewis Argoe, Jr. - for the appellee
Stephen M. Piga - for appellant

Facts of the case


Media for Heublein, Inc. v. South Carolina Tax Commission

Audio Transcription for Oral Argument - November 13, 1972 in Heublein, Inc. v. South Carolina Tax Commission

Warren E. Burger:

We'll hear arguments next, in 71-879, Heublein against South Carolina Tax Commission.

Mr. Piga, you may proceed now.

Stephen M. Piga:

Mr. Chief Justice, may it please the Court.

I would like to introduce co-counsel Croft Jennings from Columbia, South Carolina and my associate counsel Paul Rooney, also from New York City.

This case is here on appeal from the Supreme Court of South Carolina.

The decision in that court unanimously reversed the trial court and upheld the position of the State Tax Commission.

Justice Lewis wrote the opinion in that case.

There are five principal parties involved directly or indirectly in this proceeding.

Heublein Inc. is a Connecticut corporation engaged in the business of manufacturing and distributing alcoholic beverages and other products throughout United States.

The appellee is the South Carolina Tax Commission, a branch of the South Carolina state.

The Distilled Spirits Institute, a trade association of the producers of alcoholic beverages in United States filed an amicus brief in the preliminary proceedings before this Court.

The Multistate Tax Commission and the Solicitor General of the United States have filed amicus briefs in support of South Carolina's position.

This case involves the application of the interstate income tax law, Public Law 86-272 to the corporate income tax laws of South Carolina.

The text of the Federal statute is set forth on page 30 of the jurisdictional statement.

If I may I would like to read the principal provisions of this statute.

Section 381 (a) and I quote with some omissions, "No State shall have power to impose a net income tax on the income derived within such State by any person from interstate commerce if the only business activities within such state by such person or the solicitation of orders by such person, or his representative, in State for sale of tangible personal property, which orders are sent outside the State for approval or rejection, and, if approved, are filled by shipment or delivery from a point outside the State.”

The statute seems really clear.

The Heublein's position that its activities in South Carolina were protected by the statute.

Thereby rendering Heublein immune from South Carolina income tax.

The lower court proceedings involved two important questions.

The Court of Common Pleas decided first, that the so called voluntary activities of Heublein in South Carolina which consisted of its usual business solicitation and promotional activities did not violate, did not exceed the minimum activities permitted by the Federal statute.

The lower court also held, this was after trial and testimony, that the activities of Heublein in South Carolina which were mandated by the South Carolina Alcoholic Beverage Control laws did not exceed the minimum permitted by the Federal statute.

The Supreme Court of South Carolina did not disturb the trial court's finding on voluntary activities.

It left standing the conclusion that Heublein's voluntary activities in South Carolina did not exceed the minimum permitted by the Federal statute.

However, the Supreme Court of South Carolina held that the activities of Heublein which were mandated by South Carolina's ABC laws, were sufficient to localize its business in South Carolina and thereby render the application of the Federal statute to it no longer effective.

Thus the sole issue before this Court is whether Heublein's compliance with the ABC laws of South Carolina is a sufficient basis to deprive Heublein of the protection of the Federal statute.

William H. Rehnquist:

You say that these Supreme Court of South Carolina left stand the lower court's finding favorable to your client.

Did the Supreme Court pass on that or treated in anyway or it just ignored it?

Stephen M. Piga:

There was no discussion of it at all in the opinion.

But this was a factual determination I believe on the trial court's record after testimony had been taken so that this factual conclusion of the trial court not being discussed passed upon or changed by the Supreme Court of South Carolina.