Warren Trading Post Company v. Arizona Tax Commission

PETITIONER: Warren Trading Post Company
RESPONDENT: Arizona Tax Commission
LOCATION: Criminal District Court, Parish of New Orleans

DECIDED BY: Warren Court (1962-1965)

CITATION: 380 US 685 (1965)
ARGUED: Mar 09, 1965
DECIDED: Apr 29, 1965

Facts of the case


Media for Warren Trading Post Company v. Arizona Tax Commission

Audio Transcription for Oral Argument - March 09, 1965 in Warren Trading Post Company v. Arizona Tax Commission

Earl Warren:

Number 115, Warren Trading Post Company, Appellant, versus Arizona State Tax Commission et al.

Mr. Jacobson you may proceed with your argument.

Edward Jacobson:

Mr. Chief Justice, may it please the Court.

This case comes on appeal from the Arizona Supreme Court.

It presents one question only of law, a question of first impression to this Court.

The question is whether a state may impose a license prohibition and a privilege tax upon a federally licensed Indian trader for the privilege of his engaging and making retail sales from his trading post on the reservation to reservation Indians.

By stipulation, there is excluded from this case any question of off reservation sales to Indians or others.

Equally excluded by stipulation is any question of on reservation sales to non-Indians.

The case comes to you with undisputed facts yet the history surrounding these facts, I shall briefly give, because I think it's important to put the action of the Arizona State Tax Commission into context.

Since 1876, the Congress of the United States has given to the Commissioner of Indian Affairs the sole power and authority to appoint traders to the Indian tribes and to make such rules and regulations as he may deem just and proper specifying the kind and quantity of goods and the prices at which such goods shall be sold to the Indians.

The appellant in this case, the Warren Trading Post is such a federally licensed Indian trader.

Its trading post is at Kayenta, Arizona that is on the Navajo Reservation.

It is on the south border of Monument Valley.

It is in Navajo County, Arizona and it rents its premises from the Navajo Tribe.

Pursuant to this congressional action, the Commissioner of Indian Affairs has issued a number of rules governing many and we think most phases of Indian commerce.

In the spring of 1935, the Arizona legislature passed a Privilege Tax Act not unlike that of Illinois and several other states levying a gross privilege tax measured by gross proceeds of sales on a variety of occupations including for our purposes the occupation of retailing.

In 1940, the Assistant Solicitor wrote an official opinion for Mr. Oscar Chapman, the then Assistant Secretary of Interior with specific reference to the Arizona Privilege Tax stating that it should not apply to federally licensed Indian traders making sales to Indians on the reservation.

That opinion was honored until the assessment made in this case in 1958.

In 1958, the Arizona State Tax Commission under the privilege tax section which levies a tax on retailing.

And pursuant to a rule which it had adopted two years earlier which said that this section shall apply also to Indian traders levied an assessment of $2800 odd dollars on the Warren Trading Post.

This was the first time in the 23 years since 1935 when the Arizona Privilege Tax went into effect that anybody had tried to tax a licensed Indian trader on these kinds of sales not alone in Arizona but in the other 24 states which happen to have Indian reservations lying in whole or in part within their boundaries.

Since that time, however, both the State of New Mexico and the State of California had taken similar positions.

The State of New Mexico's case is now pending before their Supreme Court by stipulation to be determined in accordance with the opinion of Your Honors.

The California position is reflected only in a recent opinion in 1958 of the California Attorney General, reversing a previous opinion to the contrary, his action also having been taken after the move made by Arizona.

In October of 19 -- in August of 1958, my esteemed and deceased partner Perry Ling brought an action for declaratory judgment in the Superior Court of Arizona.

The Superior Court held against Warren and for the State Tax Commission, basing their opinion on Thomas versus Gay finding no difference between a tax on an Indian trader's stock in trade and a tax on his right to engage in commerce the one came under Article I, Section 8, Clause 3 of the constitution and the other did not.

The Arizona Supreme Court in December of 1963 sustained the superior court but on a slightly different ground.

It found that so long as a law was neither in consistent with or burdensome to federal purposes, it could operate coexistent with federal law and found as a fact this tax to be neither inconsistent with or burdensome to federal purposes.

There was a long dissent filed by now Chief Justice Warren (Inaudible) one of our court adopting the view of the appellant Warren Trading Post and on October 12 of 1964, this Court noted probable jurisdiction.

Our case rests on three points.