U.S. Supreme Court GRAVES v. TEXAS CO., 298 U.S. 393 (1936)

[Page 298 U.S. 393, 395]

Mr. Justice BUTLER delivered the opinion of the Court.

Appellee brought this suit against appellants, officers of the state of Alabama, to restrain the collection under statutes of that state of taxes in respect of gasoline and other liquid motor fuels-which for brevity we shall call 'gasoline'-sold to the United States and used by it in performing governmental functions. P aintiff applied to the court of three judges for a temporary and a permanent injunction. After hearing on an agreed statement of facts, the court held that the Alabama statutes assailed are not distinguishable from the Mississippi exaction condemned as unconstitutional in Panhandle Oil Co. v. Knox, 277 U.S. 218, 48 S.Ct. 451, 56 A.L.R. 583, and granted a permanent injunction. Texas Co. v. Carmichael (D.C.) 13 F.Supp. 242. The Governor and the other state officers appealed. 28 U.S.C. 345 (28 U.S.C.A. 345). The United States, by brief filed here as amicus curiae, presented its argument asking affirmance on the ground that the taxes impose a burden on sales to it. [Footnote 1]

[Page 298 U.S. 393, 406]

immunity of government from indirect obstructions been pushed to that extreme.

Gasoline refined in Texas and transported to Alabama to be stored in tanks or terminals is there for general uses. Part of it in the usual course of business will be sold to the United States; part of it will be sold to others; part will be withdrawn without sale to any one. This is not to say that the result would be any different though a definite sale were in view at the beginning of the storage. Even in such conditions, storage, like transportation, would be 'not part of the sale but preliminary to it and wholly the vendor's affair.' Wheeler Lumber B. & S. Co. v. United states, supra, 281 U.S. 572, at page 579, 50 S.Ct. 419, 421. However, the indefinite extension of the uses simplifies the problem. The burden, if any, upon the activities of government is remote and indeterminate. Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S. Ct. 172; Burnet v. A. T. Jergins Trust, 288 U.S. 508, 53 S. Ct. 439; Trinityfarm Construction Co. v. Grosjean, 291 U.S. 466, 54 S.Ct. 469. Sales to the United States are made under contracts for a stated term. There is no assurance that the tax or any part of it will be shifted to the buyer.

The decree should be reversed, and the bill dismissed.

I am authorized to state that Mr. Justice BRANDEIS joins in this opinion. Footnotes

Footnote 1 The government's brief states: On the basis of purchases in Alabama during the current year, it is estimated that the total annual added cost of gasoline would amount to $143.145.54. If Alabama succeeds in collecting the tax, other states will probably modify their statutes to produce a similar revenue; it is estimated that this would add a burden of $4,479, 661.40 per year upon the United States. That figure is arrived at on the basis of 4 cents a gallon. The use of fuel oil by the Navy Department, which purchased 273,354,228 gallons in 1934, suggests a further burden on the United States.

Footnote 2 Enacted Feb. 10, 1923, Gen.Acts 1923, p. 36, and amended August 27, 1927, Gen.Acts 1927, p. 326; January 25, 1927, Gen.Acts 1927, p. 16; July 27, 1931, Gen.Acts 1931, p. 859; November 5, 1932, Gen.Acts 1932, Ex.Sess., p. 314; January 31, 1935, Gen.Acts 1935, p. 30; July 10, 1935, Gen.Acts 1935, p. 508.

Footnote 3 The term 'refiner' first appears in the 1932 act; it has no application to this case.

Footnote 4 The same provisions are found in the statutes repealed by the Act of July 10, 1935.