National Bellas Hess, Inc. v. Department of Revenue of Ill.

PETITIONER: National Bellas Hess, Inc.
RESPONDENT: Department of Revenue of Ill.
LOCATION: Alhambra police station

DECIDED BY: Warren Court (1965-1967)

CITATION: 386 US 753 (1967)
ARGUED: Feb 23, 1967
DECIDED: May 08, 1967

Facts of the case


Media for National Bellas Hess, Inc. v. Department of Revenue of Ill.

Audio Transcription for Oral Argument - February 23, 1967 in National Bellas Hess, Inc. v. Department of Revenue of Ill.

Earl Warren:

National Bellas Hess, Inc., Appellant, versus Department of Revenue of the State of Illinois.

General Cox.

Archibald Cox:

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

This appeal from the Supreme Court of Illinois presents the question whether Illinois constitutionally require an out-of-state mail order seller to collect the used tax which Illinois levies upon its residents subsequent use of goods purchased at retail, where the out-of-state seller has neither a place of business nor property nor salesman nor any other kind of representative within the jurisdiction.

The facts are very simple.

Appellant is a mail order house with its only offices and warehouse in Kansas City, Missouri.

Twice a year it sends out through the mail would-be purchasers in Illinois and elsewhere, catalogues seeking purchasers for its goods.

Now the catalogues are simply deposited in the mail, other fliers which were small sales book are sent out occasionally through the year.

The would-be purchasers write in to the Kansas City office where their orders are accepted or rejected.

The orders which are accepted are delivered usually to the United States mails in Kansas City, but occasionally to a common carrier like the American Railway Express and they are thus delivered to the purchasers in all of the states.

Just a matter of interest what kinds of merchandise do they sell?

Archibald Cox:

A wide variety of merchandise including books, but a large part of it is dry goods.

Illinois since 1955 has levied a use tax upon costumer's use of goods purchased at retail.

And it requires retailers maintaining a place of business in Illinois to collect the tax.

Originally, Illinois gave a customary meaning to retailers maintaining a place of business in Illinois, but in 1961 it added the artificial definition whose constitutionality is an issue in this case.

The provision appears on page 2 of our brief.

It provides that retailer maintaining a place of business in this state shall include engaging and soliciting orders within this state from users by means of catalogues or other advertisings.

In effect therefore, what Illinois is asserting is the right to impose upon an out-of-state seller the duty to collect the tax even so it is never been within the jurisdiction and does nothing more than send advertising through the mail.

Of course that provision alone couldn't possibly be enforced by usual methods of collection.

So having created one fiction, Illinois had to create another fiction.

It provided that those who were deemed to be doing -- maintaining a place of business in Illinois, when they weren't, should also be deemed to consent to the Secretary of State being their agent for the service process, when in fact of course they had given no such incent.

I don't suggest that the artificiality of those provisions in any way makes them unconstitutional.

Illinois can say its black and it's white if it wishes, but I do submit that the artificiality of the definition shouldn't obscure what Illinois is actually doing.

Relying on the statute in question, Illinois first assessed Texas beginning with the effective date of the amendment against the appellant, and then later brought suit by service upon the Secretary of State.

We entered a special appearance and preserved our rights throughout the litigation.

The trial judge granted the appellant's motions for summary judgment and the Supreme Court of Illinois affirmed.

It stated the case in our judgment entirely fairly and finding that we had no property, no representatives, no place of business, no nothing if I may put it that way in Illinois, it said nevertheless the regular sending of advertising through the mails was enough to permit Illinois to impose these extra territorial obligations.

There are two other facts which I must emphasize.

One of them was stated by a special subcommittee of the House Judiciary Committee that it made an exhaustive, much the most exhaustive study in state taxation of interstate commerce, and which emphasized that it must be brought in mind that efforts to subject mail are to sales, to sales taxation involve not only the major houses, but also a large number of much smaller businesses.

We're not talking here about Sears and Montgomery Ward.