State Tax Commission of Utah v. Pacific State Cast Iron Pipe Company

PETITIONER: State Tax Commission of Utah
RESPONDENT: Pacific State Cast Iron Pipe Company
LOCATION: Bay County Circuit Court

DOCKET NO.: 178
DECIDED BY: Warren Court (1962-1965)
LOWER COURT:

CITATION: 372 US 605 (1963)
ARGUED: Mar 20, 1963
DECIDED: Apr 01, 1963

Facts of the case

Question

Media for State Tax Commission of Utah v. Pacific State Cast Iron Pipe Company

Audio Transcription for Oral Argument - March 20, 1963 in State Tax Commission of Utah v. Pacific State Cast Iron Pipe Company

Earl Warren:

Number 178, Tax -- State Tax Commission of Utah, Petitioner, versus Pacific States Cast Iron Pipe Company.

Mr. Howard.

F. Burton Howard:

May it please the Court.

This case involves the imposition of sales tax by the petitioner, the State Tax Commission of Utah upon sales of cast-iron pipe, fittings and other related commodities by the Pacific States Cast Iron Pipe Company, who is the respondent here, to contractors who came within the State of Utah, took title to and accept the delivery of the items so purchased within that State, and thereafter pursuant to the contractual agreement with the seller, transport of the items outside of the State of Utah for use and consumption.

This is an interstate commerce situation which has arisen to trouble less court in times passed.

Utah law requires that every sale consummated within the borders of that State be subjected to a sales tax and the question here presented for review is whether or not this tax as imposed by the Tax Commission on sales conducted by the respondent in this manner is a burden on interstate commerce which is prohibited by the Commerce Clause of the United States Constitution.

The case began as an original proceeding in the Supreme Court of Utah to review an order and decision of the Tax Commission imposing sales tax liability upon to respondent for these sales.

The pipe company below contended that as its quotations which it issued to prospective purchasers, call for a sale FOB, its foundry Provo, Utah and as it claimed to be legally obligated to effectuate delivery across state lines out of Utah and that out-of-state use and consumption being conceded by the Tax Commission, and because of these facts, there was sufficient certainty of out-of-state use or destination to require the decision of these sales were in interstate commerce.

Respondent further contended below that the risk of multiple taxations herein constituted the sales tax imposed by the Tax Commission, a burden on interstate commerce.

Now after argument, the Utah Supreme Court ruled that the states sales tax statute as applied under the facts of this case reflected a situation offensive to the Commerce Clause, apparently because of the certainty of foreign destination and with considerable reliance upon the Richfield Oil case.

The Tax Commission filed a timely petition for certiorari which is granted by this Court on October 8, last fall.

The facts as found on the record indicate that the pipe company respondent is a Nevada corporation qualified to do business in Utah, that it manufactures cast-iron pipe, fittings and related items, selling in most of the Western States, and that the majority of its sales are in interstate commerce, that is the delivery is made to the purchaser across state lines.

These sales are not involved in the present controversy at all.

The materials purchased from the pipe company by contractors coming into Utah, wherein they took delivery of the materials in Utah, the title passed in Utah subject to quotations given them by the pipe company and invitations given them by the pipe company to haul their our own materials on their own trucks are the only matters which are involved and need efficiency assessment which has been levied by the State.

These materials, the materials which were taken in Utah by the ultimate consumers whereof specified sizes and lengths to conform to the specifications of out-of-state jobs.

Often these specifications were federal specifications.

They were concededly designed to be used out of Utah and this is one of the items that the respondent relies upon in great detail.

All of the sales however, were proved at the home office of the respondent in Provo, Utah.

John M. Harlan II:

(Inaudible)

F. Burton Howard:

No, Your Honor.

The original quotations which where issued by the respondent to all bidders on these federal projects or other projects, the original quotations contemplated that delivery would be made out of Utah to the job site, where the work was going to be done, but in these quotations, as a matter of fact, provide that the prices quoted under FOB are foundry at Ironton with whole present 3,500 or whatever it may have been found a minimum rate of truckload freight allowed to the foreign destination, that the parties here on all of the sales which we've included in this deficiency assessment, the parties by a subsequent correspondents are dealing have modified this original requirement.

And they have agreed that delivery is to be made to the purchaser at the pipe company's foundry in Utah.

Exhibit 6B is typical of this, it's found in the record on 197, and this exhibit and other similar ones which we've included provides the prices quoted herein are FOB, our foundry at Littleton, Provo, Utah with full truckload freight allowed to Farmington, New Mexico.

Therefore, these are delivered prices and then significantly, should you desire to haul this material from our foundry at Provo, Utah, we will allow $20.40 per net ton which is the current freight rate.

All of these sales, where the contractor came into Utah pursuant to this or similar invitations to haul the pipe in its own trucks and to take delivery in Utah have been included in this deficiency assessment, others have not.

Now --

Potter Stewart:

But those are the only ones that were --

F. Burton Howard:

That's right.

Potter Stewart:

-- included in this deficiency assessment?

F. Burton Howard:

That's right.