Phillips Chemical Company v. Dumas Independent School District

PETITIONER: Phillips Chemical Company
RESPONDENT: Dumas Independent School District
LOCATION: Superior Court of Bibb County

DOCKET NO.: 40
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: Supreme Court of Texas

CITATION: 361 US 376 (1960)
ARGUED: Nov 17, 1959 / Nov 18, 1959
DECIDED: Feb 23, 1960

Facts of the case

Question

Media for Phillips Chemical Company v. Dumas Independent School District

Audio Transcription for Oral Argument - November 17, 1959 in Phillips Chemical Company v. Dumas Independent School District
Audio Transcription for Oral Argument - November 18, 1959 (Part 2) in Phillips Chemical Company v. Dumas Independent School District

Audio Transcription for Oral Argument - November 18, 1959 (Part 1) in Phillips Chemical Company v. Dumas Independent School District

Earl Warren:

Number 40, Phillips Chemical Company, Appellant, versus Dumas Independent School District.

Mr. Davis, you may continue your argument.

John F . Davis:

Mr. Chief Justice, may it please the Court.

Yesterday, I was asked what had transpired practically since the Court's decision in the associated cases, similar cases year and a half ago, and I think I made a rather inadequate answer.

I'd like to refer the Court if -- to an article which appears in the March issue of the Wisconsin Law Review, an article by Mr. Harry Van Cleve of the General Counsel office of Department of Defense.

And this article reviews in some detail what has, in fact, occurred as a result of those decisions and it can do much better.

Felix Frankfurter:

Which month it would be?

John F . Davis:

March.

Felix Frankfurter:

March.

John F . Davis:

March.

Wisconsin Law Review from March by Mr. Van Cleve.

There are two rather important aspects of this case which Mr. Clifford promised I would deal with and which I haven't even touched yet and which I'd like to devote the rest of my time to.

First of this is the question of classification.

The State of Texas attempts to justify the peculiar application of this statute to lessees of the United States from the ground that this is a matter of classification.

Now, it is true that taxing authorities are given a good deal of latitude in making classifications among taxpayers in assessing different taxpayers at different rates.

And there's no reason why reasonable classifications shouldn't apply to the United States or lessees of the United States rather when they're taxpayers as well as to anybody else.

But as applied to this case, it -- it really doesn't -- it really doesn't help them because when their arguments are sifted down to the -- to the rock bottom, we find that the -- really the basis for classification that they would -- would apply in this case is that the United States is exempt from taxation and therefore, they cannot tax the lessor and therefore, it's a reasonable classification to tax the lessees.

Well, this -- this really is not -- it doesn't make any sense as a matter of classification.

It's merely another way of saying that the United States is exempted and we have to get around it in some way in it -- a way of destroying the -- destroying the -- the exemption.

In other words, as they would use the term “classification” and saying that we can discriminate without any -- without any basis other than a -- a basis that otherwise would not be able to raise our revenues.

Felix Frankfurter:

Doesn't that depend on that they should serve tax for what the State is taxable?

John F . Davis:

I think it depends on -- on the basis --

Felix Frankfurter:

If it does tax-- if it does tax this with fee value of the land that maybe one thing to tax (Inaudible) the -- the -- if it puts in the terms of what usually called alike of excise tax, that's another thing.

John F . Davis:

That is right.

That is right but --

Felix Frankfurter:

It -- it -- the State can tax certain monetary valuable facility that a person is exercising and using of having the benefit of and the fact that it may come from the United States isn't approved here.

John F . Davis:

That is right, but when they pick out the United States, a lease from the United States as being peculiarly subject to a use tax --

Felix Frankfurter:

Because -- because you mean it doesn't --

John F . Davis:

Because it is --

Felix Frankfurter:

-- because it doesn't pick out anybody else (Voice Overlap) --