MICHELIN TIRE CORPORATION v. WAGES
The Michelin Tire Corporation (MTC) operated a warehouse in Gwinnett County, Georgia, in which products imported from France and Nova Scotia were stored for later distribution. The County levied a nondiscriminatory ad valorem property tax on the goods (a percent of the property's value). MTC claimed that the contents of the warehouse were constitutionally free from state taxation because they were in their original containers. The county declared that the products were subject to the tax because they had been sorted and arranged for sale.
Did the Gwinnett County tax violate the Import-Export Clause by taxing goods that maintained the character of imports?
Legal provision: Article 1, Section 10, Paragraph 2: Export-Import Clause
The Court affirmed the decision of the Georgia Supreme Court, finding the tax to be valid. The Court stated that the Framers of the Constitution had adopted the Import-Export Clause to give the federal government a source of revenue and the superior position to regulate such foreign trade. This was to overcome the problems under the Articles of Confederation where states lacked uniformity in import regulation, burdening inter-state trade. The property tax was consistent with the Import-Export Clause because it did not (1) interfere with the Federal Government's regulation of foreign commerce (2) deprive the Federal Government of its exclusive right to revenues from imposts and duties on imports (3) interfere with the free flow of goods between the states. It taxed the use of the property and was not based on the origin of the goods.
Argument of Earle B. May, Jr.
Chief Justice Warren E. Burger: We will hear arguments next in 74-1396, Michelin Tire Corp. against Wages.
Mr. May, you may proceed whenever you are ready.
Mr. Earle B. May, Jr.: Mr. Chief Justice and may it please the Court.
This is a case which involves the Import Clause of the Federal Constitution and the proper interpretation and application of that clause to imported tires and tubes.
The sole issue is whether tires imported without packaging and held for the sale by the importer in his warehouse, in the original form in which imported are immune from local ad valorem taxes by reason of the Import Clause.
The Trial Court upheld the importer’s claim of immunity with respect to both tires and tubes.
The Supreme Court of Georgia affirmed with respect to the tubes, but reversed with respect of the tires, notwithstanding the fact that both the tire and the tubes are handled precisely in the same manner while in the importer’s warehouse.
Justice William H. Rehnquist: And the state has taken no cross-petition from the decision adverse to it in the Supreme Court of Georgia?
Mr. Earle B. May, Jr.: That is correct, Mr. Justice Rehnquist, except the state is not actually the party, it is the local Gwinnett County tax officials who imposed the taxes, of course, pursuant to Georgia constitutional provisions, but the State of Georgia, as such, is not a party.
Justice William H. Rehnquist: I suppose your argument that you suggested a moment ago that the Supreme Court of Georgia’s decision is wrong because it has treated differently two things that are alike, would not necessarily win for you here.
Maybe it was wrong in ruling that the tube boxes were not taxable?
Mr. Earle B. May, Jr.: That could well be, Your Honor, but it is our position contrary to what you just said that we do think that if the result of Georgia Supreme Court decision is to accord less immunity to an unpackaged import then that accorded to a packaged import, that it is wrong because the constitutional prohibition is to command immunity for all imports, whether packaged or unpackaged.
Justice William H. Rehnquist: But you have got to make your comparison with some authoritative decision on the liability for a packaged import.
The Supreme Court of Georgia may have been wrong to the extent that it decided against the assessor?
Mr. Earle B. May, Jr.: Well, we submit there are numerous decisions of this Court which clearly recognized tax immunity for packaged imports, if the Court please.
The facts of their brief, may it please the Court, the importer is a New York corporation that is engaged in the business of importing and distributing wholesale tires and tubes that are manufactured outside the United States and as a part of its business, it operates a distribution warehouse in Gwinnett County, Georgia.
The tires are --
Chief Justice Warren E. Burger: Would these tubes fit any other tires than Michelin Tires?
Mr. Earle B. May, Jr.: If Your Honor please, I do not believe that answer is in the record and I do not honestly know.
I believe the answer would be no, Mr. Chief Justice, but I cannot answer that precisely.
Justice Harry A. Blackmun: Well, I take it, we are not concerned with the tubes in this case, are we?
Mr. Earle B. May, Jr.: That is correct, Mr. Justice Blackmun, except to the extent that our argument that the decision of the Georgia Court accords unequal treatment to packaged and unpackaged imports.
To that extent, the Court might be concerned with it, but there was no cross-petition filed by the tax officials.
Justice Harry A. Blackmun: I suppose if you lose here, your client can start packaging its tires than you have something?
Mr. Earle B. May, Jr.: Well, that would be one way under the present decision of the Georgia Supreme Court, that our client could avoid taxation by putting each tire in a separate package so long as the package was not broken and the tire would -- if the Georgia Supreme Court is to be consistent, would be immune from taxation.
Justice Potter Stewart: Or another way would be to separate them by style and size at the point of origin?
Mr. Earle B. May, Jr.: Yes, sir.
Justice Potter Stewart: In Nova Scotia or France?
Mr. Earle B. May, Jr.: Or France, yes sir.
The facts show that no sales are made to retail customers, all sale to be made to wholesale and on all such imported tires and tubes the importer has paid to the United States the 4% import duty.
The tires are imported without packaging and are never altered or modified in any way from the original form in which they were imported.
Now, the Supreme Court of Georgia, may it please the Court, expressly recognized at page A7 of the Appendix to the petition for certiorari that the individual tires are not treated or altered in any manner, but they, nevertheless, deny immunity upon the ground, as shown at page A18 of the Appendix to the petition for certiorari, that the tires had lost their status as imports when they were segregated by size and style and stacked in the importer’s warehouse with other similar imported tires of the same size and style and it is this decision, may it please the Court, which is presently here for review and we believe the decision is erroneous and our contentions are based primarily upon four facts.
Number one, the original form had not been changed.
Number two, the tires were still in the flow of import distribution and had not reached the point of final destination as they had in Youngstown, Mr. Justice Stewart.
The right to sell which has never been seriously challenged until now, the importer’s right to sell, and four, the unequal treatment accorded to unpackaged imports as compared with packaged imports as we were just discussing with Justice Rehnquist.
First, it is undisputed, Your Honors, that the tires were imported without packaging and at all times remained property of the importer in his warehouse, in the original form in which imported.
And, in 1827 this Court held in Brown versus Maryland in Chief Justice Marshall’s landmark decision that where these things imported, if it would please the Court, remains the property of the importer in his warehouse in the original form or package in which it was imported and “a tax upon it is to plainly a duty on imports to escape the prohibition in the constitution.
References to the term “original form” are found in many subsequent decisions of this Court.
And we suggest that the plain and natural meaning of those words is that where an article is imported without packaging, holding such an article in its unaltered original form in which imported, is equivalent to holding a packaged import in the original package in which it was imported, and that is the meaning that has been given to these words by the Courts of New York, Florida, and North Carolina and those decisions are cited in our brief and, in our judgment, was the meaning intended by Chief Justice Marshall.
Here, the Georgia Court ignored and disregarded the words “original form” completely.
They treated them as being completely meaningless and that is precisely what the tax officials in this case are asking this Court to do.
And, we suggest respectfully that the Court has not done so for nearly 150 years and no persuasive reason has been or can be advanced for doing so at this time.
The second factor that we rely upon is what we call the final destination factor.
It is undisputed that the tires are still in the flow of import distribution, have not reached their final destination, the importation journey has not definitely ended nor have the tires been irrevocably committed to the use for which they were imported --
Chief Justice Warren E. Burger: You are not suggesting that the journey would not be ended until they were put on an automobile, would you?
Mr. Earle B. May, Jr.: No --
Chief Justice Warren E. Burger: Where do you think the journey would end?
Mr. Earle B. May, Jr.: The journey would end, Mr. Chief Justice, in my opinion, at the point at which the tires had reached a retail selling type operation where they were to be sold at retail for local consumption at the point of final destination.
Justice Harry A. Blackmun: Maybe that is another way that your client can avoid the taxes to ship directly to the retailer from France or Nova Scotia?
It might take a little doing, but I suppose it could be done.
Mr. Earle B. May, Jr.: I suppose it could, Mr. Justice Blackmun.
We have not explored that possibility at this point.
But I say that, Mr. Chief Justice, because, one, as we all know one of the important reasons for the inclusion of the Import Clause in the Federal Constitution was a desire of the framers to prevent taxation by a seaboard state with their great ports of entry of imported goods flowing through to inland states and that was plainly stated in Brown versus Maryland and this Court reaffirmed it in the 1959 Youngstown decision where the Court said the constitutional design was to immunize imports from taxation by the importing states and all others.
Justice William H. Rehnquist: Of course, Brown against Maryland was the tax requirement of a license on someone who sold imports, it was not a general ad valorem property?
Mr. Earle B. May, Jr.: That is correct, Your Honor, but the arguments that a general ad valorem non-discriminatory ad valorem tax is not prohibited by the Import Clause had been consistently rejected by this Court for more than 100 years.
Justice William H. Rehnquist: What do you make of the case of May against New Orleans?
Mr. Earle B. May, Jr.: I think May versus New Orleans, Mr. Justice Rehnquist, was purely an original packaged case.
I think it is premised totally upon original package.
The Court held that the wooden creates in which the boxes were contained were the original package and when they were broken, the importer lost his immunity.
Justice William H. Rehnquist: You do not think then that -- do you pronounce it Gwin-nett or Gwinnett?
Mr. Earle B. May, Jr.: Gwinnett, Your Honor.
Justice William H. Rehnquist: You do not think that Gwinnett County is entitled to any sort of pro rata contribution from your client for the fire protection or the police protection that it provides for your client’s warehouse, even though it gets pro rata contributions from other people who get exactly the same services?
Mr. Earle B. May, Jr.: May I answer that in two ways, Mr. Justice Rehnquist.
Justice William H. Rehnquist: In as many ways as you want?
Mr. Earle B. May, Jr.: I would point out, number one, that Gwinnett County does receive taxation from the Michelin Property which is the land and the buildings and the typewriters, desks, that type of property.
Ad valorem tax is paid by my client to the county.
No exemption is claimed.
With respect to the other aspect of the question, my answer is no.
I do not claim that Gwinnett County is entitled to tax my property which is an import so long as it remains an import and the reason I say that is because the constitution prohibits it and it is an absolute prohibition contained in the constitution and there is, but one exemption, and that is no state shall without the consent of Congress lay any tax upon an import except what may be absolutely necessary to inspect its --
Justice William H. Rehnquist: I thought it said “impose or duties.”
I did not --
Mr. Earle B. May, Jr.: Well it does, but that has been construed to include a general ad valorem tax.
In Low versus Austin in 1872, the Court held that or California made that argument.
California made the same argument again in 1946 in Richfield Oil and the Court, again, rejected it in an opinion by Mr. Justice Douglas where he said that it would entail substantial revision of the language of the Import Clause to substitute for the prohibition against any tax the words in a discriminatory text.
And so, for those reasons, I respectfully answer Your Honor’s question by saying that no, I do not think my goods should be required to bear part of the expense of protecting the property.
Coming back now, if I may, for a moment to the final destination factor, we submit that that is essential and vital to a determination of whether the tires are still in the flow of import distribution, and are therefore, still imports.
The Georgia Court disregarded this fact and to do so is to lose sight of one of the underlying purposes of the Import Clause and the issue which really lies at the very heart of this case and that is, if it please the Court, whether the tires have retained their distinctive character as import.
And I cannot think of a better case to demonstrate this than this Court’s decision in Youngstown, where the Court held that the ore and lumber there involved had lost their distinctive character as imports and in so doing, the Court gave major weight to two factors.
One, the importation journey definitely had ended, and two, the articles had been irrevocably committed to use in manufacturing at the point of final destination.
And we respectfully suggest to the Court that the same consideration should be given to the final destination factor here because here, in short contrast, if the Court please, to the facts in Youngstown, we have undisputed evidence which shows, first, the tires are imported for sale and sold only at wholesale.
Two, they flow out from the importer’s warehouse to franchise dealers in six states in the original form in which imported.
And three, it is such dealers who sell the tires at retail for local consumption at the point of final destination.
And we respectfully submit that under those circumstances, while the tires are in the importer’s warehouse, they have neither completed their import journey nor have they been irrevocably committed to use it at the final point of destination.
On the contrary, they are in the language of Chief Justice Tony, if I may be permitted to quote a brief statement, Mr. Chief Justice, “merely intransitive and on their way to the distant cities, villages, and country for which they are destined and where they are expected to be used and consumed and for the supply of which they were in truth imported.”
That precise language from the license cases was quoted in the Youngstown decision, in 1959 and we submit, it is clearly applicable here and under these circumstances, the tires fall squarely within the underlying purposes of the Import Clause and clearly retain their status as imports.
Moving along, our third factor, may it please the Court, is the importer’s right to sell its goods, free from local taxation.
Again, we are referring to Brown versus Maryland.
It plainly held that one who had imported goods for the purpose of selling them had, by payment of the import duty to the United States, acquired not only the right to bring the goods into the country, but also the right to sell the goods free from local taxation --
Justice William H. Rehnquist: It did not hold that because --
Mr. Earle B. May, Jr.: -- in their original form or package.
Justice William H. Rehnquist: It did not hold that because what it was dealing with was a license tax on who sought to solely sell imports.
You can say that Justice Marshall said it in the opinion, but I do not believe there was a holding?
Mr. Earle B. May, Jr.: Well, I would not argue, Your Honor, that that may not have been the specific holding of Brown versus Maryland, but that certainly is the interpretation which has been placed upon that decision by this Court for almost 150 years.
Justice William H. Rehnquist: Would you say that once an importer pays a duty exacted by the federal government no further tax burden of any sort may be placed on his sale of those goods that are imported?
You would not go that far, would you?
Mr. Earle B. May, Jr.: I would with one exception, Mr. Justice Rehnquist, if the article which has been imported is still held by the importer in its original form or package in which imported.
But if the importation process has ended and the article is being exposed to sell at retail for local consumption at the point of final destination, it may well be that when such a case comes before this Court, that the Court would hold, irrespective of the fact that it is still in original form, that it has lost its distinctive character as an import and become subject to --
Justice William H. Rehnquist: Where do you distinguish between wholesale and retail?
What is there in the Import Clause that leads to that conclusion?
Mr. Earle B. May, Jr.: Well, the Import Clause prohibits taxation upon any imports.
The way the wholesale factor comes into it is that in a whole sale distribution process, the goods are still flowing through.
They have not reached the point as Youngstown said, the importation has not definitely ended.
Justice William H. Rehnquist: Can you not say the same that retail goods, they are still flowing.
You do not know who the ultimate purchaser is going to be?
Mr. Earle B. May, Jr.: Well sir, that argument can be made, but I think it is logical to assume that there is no further flow through once a tire or any other imported article reaches a retail outlet which is selling to local customers.
I can see there may be an instance where somebody from Alabama could come into Georgia at a retail tire store and buy a set of tires and they may wind up in Alabama, but I submit to Your Honor that that would be the exception rather than the rule.
Justice Harry A. Blackmun: Mr. May, it is of no import, I suppose and I do not mean that as a pun either, but how much tax are we talking about here annually, roughly?
Mr. Earle B. May, Jr.: Your Honor, I will give my guesstimate.
I think it is in the neighborhood of $10,000 per year.
The counsel for the county could probably give a more accurate answer.
Justice Harry A. Blackmun: Same principle whether it is $300 or (Inaudible)?
Mr. Earle B. May, Jr.: Yes, sir.
Justice Lewis F. Powell: Mr. May.
Mr. Earle B. May, Jr.: Yes, sir, Mr. Justice Powell.
Justice Lewis F. Powell: You are arguing your third point which as I understand it, is that the importer has the right to sell in this country.
Does that suggest that if the wholesaler in Atlanta had been an American wholesaler, an American Corporation, and Michelin had sold these tires to it, that the clause would not apply?
Mr. Earle B. May, Jr.: If Michelin were the importer, do I understand --
Justice Lewis F. Powell: If Michelin is an exporter, Michelin in France --
Mr. Earle B. May, Jr.: Yes, sir.
Justice Lewis F. Powell: -- makes a contract to sell to a Georgia wholesaler, just take this warehouse.
Assume that it was owned by a Georgia Corporation and everything else was the same, would the clause apply?
Mr. Earle B. May, Jr.: It would in my own judgment, Mr. Justice Powell, if the Georgia Corporation is deemed to be the importer because Chief Justice Marshall said the property, the thing imported, while remaining the property of the importer in his warehouse in the original form or package.
So, if your question includes the Georgia Corporation, which you suggest as the importer and it is his warehouse and everything else is the same, yes, sir, my answer would be the clause would apply.
Justice Lewis F. Powell: So you are saying that there must be, in those circumstances, two sales.
One from the manufacturer in France to the Georgia importer, then a second sale by the Georgia importer, say, to an American retailer?
Mr. Earle B. May, Jr.: Yes sir.
Justice Lewis F. Powell: While I have you interrupted, may I put this question.
It may not be entirely relevant but I would be interested in your answer.
Suppose these tires had been manufactured in Michigan by a US rubber company, for example, and shipped to a Georgia warehouse and handled precisely these tires were handled.
Under the Commerce Clause, could Georgia validly have imposed a property tax?
Mr. Earle B. May, Jr.: I think they could, Mr. Justice Powell, provided that the goods that were at the transit had stopped --
Justice Lewis F. Powell: That is exactly the same?
Mr. Earle B. May, Jr.: Yes sir, but as you are obviously aware, this Court has again for 100 years made distinctions in the cases involving interstate commerce and imports, and of course, we all know the reasons for that because the Import Clause has an absolute prohibition, whereas the Commerce Clause is nothing but the power to regulate --
Justice Thurgood Marshall: Mr. May, you put so much emphasis on retail.
It does not really mean that much, does it?
Would a wholesale not be in the same -- I mean, you transport them from here to the wholesaler in Michigan, say, 100 tires, when they get there, it is over, is it not?
Mr. Earle B. May, Jr.: No, sir, not under the facts in this record, Mr. Justice Marshall.
Justice Thurgood Marshall: Well, they are wholesalers.
For example, you and I know that fleets of cab and fleets of trucks buy tires wholesale, right?
Mr. Earle B. May, Jr.: Yes, sir.
Justice Thurgood Marshall: So that they would not be covered?
Mr. Earle B. May, Jr.: Well, if they were bought from that warehouse, Mr. Justice Marshall, but there is no evidence in this record that anything --
Justice Thurgood Marshall: I am not talking about this, but you keep emphasizing they are not liable until they go to retail and I am saying, could there not be a place where they could go liable and be a wholesale.
I do not think it hurts your case (Inaudible)?
Mr. Earle B. May, Jr.: Yes, it is conceivable, Mr. Justice Marshall, that that could be true if the correct facts existed.
Justice Thurgood Marshall: Right.
Justice Potter Stewart: In other words, if they were sent out from this Gwinnett County warehouse to wholesalers or in six states, your case would be the same as if they were sent to retailers?
That was my brother Marshall’s question.
Mr. Earle B. May, Jr.: Because there are still in the flow.
Maybe I misunderstood Mr. Justice Marshall’s question.
I think I have answered it.
I agree with you.
My final point, if the Court please, I think I did not finish the right to sell.
It is unquestioned here that we pay the 4% import duty and we say that by so doing, we acquire the right not only to import the tires, but to sell them and until they are sold, they retain their status as imports.
And the final factor is that unpackaged imports, in our judgment, should not be accorded a lesser degree of immunity than that which is generally recognized for packaged imports and that is precisely the result which the Georgia Supreme Court arrived at.
And in so doing, we think that it violated long-standing and fundamental constitutional prohibitions because the intent and purpose of the Import Clause was to command a uniform degree of immunity for all imports whether packaged or unpackaged and unless we are to ignore that constitutional command, it cannot be successfully argued that unpackaged imports are entitled to less immunity than packaged imports.
Mr. Chief Justice, I will reserve the balance of my time to respond to my opponents.
Chief Justice Warren E. Burger: Very well.
Argument of Hosea Alexander Stephens, Jr.
Mr. Hosea Alexander Stephens, Jr.: Mr. Chief Justice and may it please the Court.
Argument in behalf of the respondent, I respectfully submit, should begin by noting that the right of a state and its political subdivisions to levy non-discriminatory ad valorem taxes on property located within its boundaries is an inherent attribute of sovereignty.
The constitution of Georgia so declares.
Its taxation scheme expressly states that the property of non-residents shall not be taxed higher than that of residents.
So, there is no contention here on the part of the petitioner that there has been any discrimination against the petitioner on the ground that it is a non-resident of Georgia rather than a resident.
Now, the last term as is fully known to the members of the Court, in the National Cash Register case, there was a determination as to when American-made goods, possessing very unique qualities, unsuited for use except by some foreign nation, when they become exports and in this particular case, to some extent, the reverse side of the coin is before the Court and that is when foreign-made goods actually cease to be imports.
Now, the Georgia Supreme Court, after cataloging numerous cases, concluded that, in the language of Mr. Justice Gunter, that the case has established a sort of two-hat approach to the import process and it depends on which hat the particular concern is wearing, whether that of an importer or that of a wholesaler.
And certainly, the Supreme Court of Georgia spent some time analyzing Brown against Maryland and it is obvious that the Supreme Court of Georgia had no desire to ignore the holdings of that Court in that particular decision, but it did lay emphasis upon the factual aspect of this particular situation and while it is not a link to the record, it began with the first specific matter which is that Michelin owns a warehouse in Gwinnett County, Georgia on the north side of Atlanta, and utilizes a bonded warehouse in Clayton County, Georgia on the south side of Atlanta, thereby, a permanent distribution, a center has been set up in the Atlanta area.
Bulk shipped lots of tires in closed in sea vans and over-the-road containers arrive at these warehouses at recurring intervals.
The sea vans and over-the-road containers are opened, entries are made into it and the tires are placed on pallets. Each pallet with tires loaded on it, it is then moved into the warehouse.
The tires are segregated by size and style, as was mentioned by Mr. Justice Blackmun.
They are then stacked. Four stacks of five tires each on a pallet with a heavy cardboard comb put down between it and another pallet of three tires placed over.
There is no question, but a new shipment is introduced into that warehouse with the residue of what has been left from previous shipment, and furthermore, that shipment arriving from France and shipments arriving from Nova Scotia are distinguishable only by the word “made in France” or “made in Canada” appearing on it.
Then, the process of getting them out of the warehouse was developed.
Orders received by Michelin in Gwinnett County, Georgia at its facility, they are on Highway I85, are filled from this -- I am going to use the word “co-mingled” inventory because I submit that is what it shows had occurred.
They are shipped by common carrier, united parcel service, or a dealer.
Chief Justice Warren E. Burger: Does this record show whether the tires that were resting in the warehouse at the time of the arrival of the shipment were subjected to a tax, speaking of this record?
You say they co-mingled.
They had to co-mingle with something.
Mr. Hosea Alexander Stephens, Jr.: Yes, sir.
Chief Justice Warren E. Burger: Are those tires to which the current “imports” were added, were those tires subjected to a state tax?
Mr. Hosea Alexander Stephens, Jr.: No, sir.
Those were imports.
One thing developed in the course of the trial before Judge Peter in Gwinnett Superior Court and it was discovered that a small quantity of domestic-made tubes were left over from a previous year.
As I remember, they figured a small amount of tax and paid it in the courtroom as part of the hearing.
They realized that was not exempt.
Previous imports were in the warehouse.
Chief Justice Warren E. Burger: Has your plan just begun to levy tax on these tires for the first time?
Mr. Hosea Alexander Stephens, Jr.: Yes sir, they were what is known as NOD assessments, and of course, as the record indicates at one point, there are approximately five other import firms located in the county.
That is a byproduct of interstate highways, Your Honor, in north of Atlanta, four-lane highways on the either side, warehousing, so there are other import firms in the county.
Justice William H. Rehnquist: How does Gwinnett County mechanically go about levying its tax in this case?
Does the assessor come around once a year to every place?
Mr. Hosea Alexander Stephens, Jr.: Well, theoretically, Your Honor, all concerns are suppose like paying income taxes to voluntarily --
Justice William H. Rehnquist: Self-assessment?
Mr. Hosea Alexander Stephens, Jr.: It is a self-assessment situation.
If the investigator for the tax assessors concludes that maybe a return was due or not enough property was covered, he will go out and make an inspection on the premises and --
Justice William H. Rehnquist: But it is as of a particular date each year?
Mr. Hosea Alexander Stephens, Jr.: Yes sir, January 1 of each year is the critical date for ad valorem tax purposes in Georgia.
It is the position of the respondents, may it please the Court, that this matter is, in reality, controlled by May against New Orleans which has already been mentioned by Mr. Justice Rehnquist and discussed to some extent by the philosophy of Burke against Wells, that is the case in New York City in which an import firm established a wareroom and was vending in the original package articles imported from Ireland.
And the State of New York, instead of issuing an ad valorem assessment on the property itself, issued an assessment on the capital of the company utilized in that particular process which was retained from the sales of the goods, but much of the language in that opinion indicates that if it had been an ad valorem assessment the result would have been the same because the Court in its opinion, went back to Brown versus Maryland, discussed when the Original Package Doctrine loses its force or validity, and placed the two in exactly the same context.
Now, as to what an original package is, in our brief we have stressed a line of cases holding that if, as the Supreme Court of Georgia did, the sea van or over-the-road container concept is rejected as the original package that the aggregation of goods is a definition which emerged very early in jurisprudence in the Austin case from Tennessee and that the aggregation of goods where they are not individually wrapped, constitutes the original package.
And, we rely upon EJ Stanton & Sons case from California in which it was referred to as invisible customer and that is some language to which the petitioner took strong exception in the petition for certiorari and in the briefs, but it merely illustrates the premise that an aggregation of goods or, as the Supreme Court of Ohio termed it, the commercial unit of importation, when that is broken, the package is broken.
And in this particular case when Michelin established a distribution center in Gwinnett County, Georgia and even in Clayton County, Georgia, although they are not a party here, and on a regular sustained recurring basis just as in Burke against Wells in New York, on a week-to-week, day-to-day, month-to-month basis had goods available for shipment, received goods to replace those shipped, we submit, if the Court please, that that really is the end of the importation process and that the Supreme Court of Georgia correctly so determined.
Justice Harry A. Blackmun: Mr. Stephens, is this, I ask as I always do in ignorance, is the fact situation here somewhat similar to what I have seen in photographs of ships coming into Baltimore loaded with VWs on decks and they are not wrapped.
I do not know whether you have something in Savannah comparable to that, but do you think the State of Maryland could impose an ad valorem tax on those automobiles as they are taken off the ship and the warehoused there in Baltimore?
Mr. Hosea Alexander Stephens, Jr.: I believe that is --
Justice Harry A. Blackmun: It seems to me that this is somewhat comparable to that?
Mr. Hosea Alexander Stephens, Jr.: I believe that was the holding of the Volkswagen Pacific case from California, Your Honor.
That is referred to in the briefs.
In that particular case, the facts were packaged automobile parts and completed VW and Porsche automobiles were being brought in by sea going vessels.
And as I remember, and do not hold me to this because I have not read this case today, as I remember, the packaged auto parts were held exempt, but the automobiles had to have things done to them to get them ready and while the outward form or shape of the vehicle was not changed, it could no longer be in the original form because it would be the difference between being able to crank it up and drive it away and not crank it up and drive it away.
I believe the California case has ruled only.
As I remember, this Court declined a grant to certiorari in that particular case which I fully appreciate, is not very decisive.
Now, as to the statement in Brown versus Maryland which has been urged by petitioner’s counsel here, in a footnote to our brief, we invite attention to an article by Professor Thomas Reed Powell.
I was never so fortunate as to attend that university or be one of its students, but I have always regarded him as a very outstanding writer and his comment was that the language of Mr. Marshall, certainly was broad enough to include sale, or use, or breaking bulk and we submit when an import firm gets into the distribution business such as shown in the record in this case that the maintaining of the tires for inventory meet the test of use, as referred to as Youngstown and it certainly meets the test of Burke against Wells where they had a permanent wareroom in New York City and was vending from the original package.
If the Court would bear with me, I would like to conclude with just one quote from May against New Orleans.
“The goods imported, lost their distinctive character as imports and became a part of the general mass of the property of Louisiana and subject to local taxation as other property in that state the moment the boxes, cases, or bales in which they were shipped reached their destination for use or trade and were opened and the separate packages therein exposed to sale.”
Now, we submit that the breaking of a bulk shipment of tires, the aggregation of goods, the commercial unit of importation or whatever it is and the exposing of the individual tires for sale, if that occurs, the import process has terminated and just as the Supreme Court of Georgia said, then the concern dawns the hat of a wholesaler.
Thank you, Your Honor.
Chief Justice Warren E. Burger: Do you have anything further Mr. May?
Rebuttal of Earle B. May, Jr.
Mr. Earle B. May, Jr.: Very briefly, Mr. Chief Justice, I would like to make two or three quick comments.
Number one, in answer to your question that you posed to Mr. Stephens, the record shows that all tires in the warehouse were imported and none had sought to be taxed prior to the first taxable year here involved.
Chief Justice Warren E. Burger: I suppose that means no more than there is always a first time to levy a tax?
Mr. Earle B. May, Jr.: Yes sir.
Mr. Justice Blackmun, in answer to your question, there are photographs which are part of the original record in this case, color photographs showing the form in which the tires are in fact delivered to the importer’s warehouse in Gwinnett County, Georgia.
Exhibits P2, 3, and 4 to the record of those photographs and finally, I would like to mention Burke versus Wells which Mr. Stephens mentioned, as we read it, is an income tax case.
It was not a tax on imports and clearly is not applicable here.
I would like to conclude, if I may Mr. Chief Justice, by saying that when you carefully consider all of the arguments raised by the tax officials, the result sought would require a substantial revision of the language of the import clause as well as the overruling of the entire Brown versus Maryland line of decisions.
And we respectfully submit to the Court that it has consistently rejected all efforts to overrule Brown versus Maryland and expressly refused to undertake revision of the import clause in Richfield Oil in 1946.
And for this reason, we suggest, that these arguments should not be urged before this Court, but before the only branch of government which has the power to consent to the state taxation of imports which is the Congress.
As the Court recognized in HOOVEN & ALLISON, Congress has the power to lay down its own test for determining when immunity is and unless and until that body sees fit to do so, we respectfully urge the Court to continue to follow the test which it has consistently applied for almost 150 years.
That test, in our judgment, is contained in the Brown versus Maryland lines of decisions.
Those decisions reflect what we believe are a most thorough and careful consideration of what the framers intended when they originally adapted the Import Clause and we believe they are as sound today as they were when originally written.
Accordingly, we respectfully urge, Mr. Chief Justice, that such decisions be followed in this case and the decision of the Georgia Court reversed.
Thank you very much.
Chief Justice Warren E. Burger: Thank you, Gentlemen.
The case is submitted.