LOCATION: Austin's Auto Body Shop and mobile home
DOCKET NO.: 91-321
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: Tennessee Supreme Court
CITATION: 507 US 60 (1993)
ARGUED: Oct 14, 1992
DECIDED: Feb 23, 1993
Charles W. Burson - on behalf of the Respondent
Edwin S. Kneedler - on behalf of the United States, as amicus curiae, supporting the Respondent
Philip W. Collier - on behalf of the Petitioner
Facts of the case
Media for Itel Containers International Corporation v. HuddlestonAudio Transcription for Oral Argument - October 14, 1992 in Itel Containers International Corporation v. Huddleston
Audio Transcription for Opinion Announcement - February 23, 1993 in Itel Containers International Corporation v. Huddleston
William H. Rehnquist:
The opinions of the Court in two cases will be announced by Justice Kennedy.
Anthony M. Kennedy:
The first case I have to announce is Itel Containers versus Huddleston, No. 91-321.
The case comes to us on writ of certiorari to the Supreme Court of the State of Tennessee.
It is a tax case involving the standard large steel containers that are used in the international shipping industry for transporting the goods by truck and rail and oceangoing carrier.
In 1990, a cargo container ships 60% of United States in marine imports and 52% of our marine exports.
Petitioner Itel Containers is an American corporation and its principal business is leasing these containers.
The petitioner’s leases are solicited and negotiated in six different states and the leased containers are delivered to lessees or their agents in many of the 50 states including Tennessee.
The Tennessee deliveries occur either at the petitioner’s Memphis terminal or at several designated third party terminals.
In December 1986, the Tennessee Department of Revenue assessed $392,000.00 in sales tax penalties and interest on the proceeds petitioner earned from leased containers delivered in Tennessee between January 1983 and November 1986.
The petitioner paid under protest and filed an action for refund challenging the constitutionality of the Tennessee tax under the Commerce Clause, the Import-Export Clause, and the Supremacy Clause.
The State Court reduced the tax assessed on a state low grounds but it rejected the petitioner’s constitutional claims and essentially ordered all of the tax paid.
The Supreme Court of Tennessee affirmed.
The court concluded that Congress had not acted to bar state sales taxes on cargo container leases and the State Supreme Court further concluded that the state tax does not violate the Commerce Clause because it does impose only upon a discreet transaction, the transferred possession of cargo containers in Tennessee.
Finally, the Court held that the Tennessee Tax does not offend the Import-Export Clause because it does not prevent the Federal Government from speaking with one voice on Foreign Affairs and it is not a direct tax on the value of goods destined for export.
In an opinion filed with the Clerk today we affirm the Supreme Court of Tennessee.
Petitioner’s primary challenge is that the Tennessee sales tax is proscribed by two International Conventions, the 1972 and 1956 customs convention on containers.
The text of the conventions, however, makes it clear that it is the reason the State imposes a tax that determines whether it violates the container conventions.
The conventions disallow only those taxes imposed based on the act of importation itself.
The Tennessee sales tax in contrast is a sales tax of general application that does not discriminate against imported products either in its purpose or effect.
The petitioner also argues that Tennessee sales taxes preempted because it would frustrate the federal objectives underlying the Container Conventions and the federal laws and regulations granting favored status for the international containers, but the Federal regulatory scheme for containers discloses no congressional intent to exempt those containers from all or most domestic taxation.
The precise Federal policy regarding promotion of container used is satisfied by a prescription against taxes or imposed upon or discriminated against the importation of containers.
We find that Tennessee’s general sales tax, which applies to domestic and foreign goods without differentiation does not impede the federal objectives expressed in the 1972 and 1956 Container Conventions and related federal statutes and regulations.
Petitioner also challenges the Tennessee’s tax has violated the Foreign Commerce Clause and of the provision in the Constitution prohibiting states from taxing imports or exports and for the reasons given in our opinion, we reject these contentions as well.
Justice Scalia has filed a concurring opinion; Justice Blackmun has filed a dissenting opinion.