General Motors Corp. v. Washington, 377 U.S. 436 (1964)

General Motors Corp. v. Washington

No. 115

Argued February 26, 1964
Decided June 8, 1964
377 U.S. 436

APPEAL FROM THE SUPREME COURT OF WASHINGTON

Syllabus

Appellant, a Delaware corporation, manufactures motor vehicles and parts outside the State of Washington some of which it sells to retail dealers in that State. It operates through substantially independent "Divisions," here, three automotive and one parts, all but the latter maintaining zone offices in Oregon which handle sales and other orders from dealers in Washington. Sales originate through projection of orders of estimated needs, for practical purposes, "a purchase order," worked out between the dealers and the corporation’s district managers who conduct business from their homes in Washington and constantly call upon dealers, assisting in sales promotion, training of salesmen, etc.; service contacts are maintained through service representatives. One automotive division has a small branch office in Washington to expedite delivery of cars for dealers in all but nine counties. During the pertinent period, the automotive and parts divisions had about 40 employees resident or principally employed in the State. In addition, out-of-state zone office personnel visited dealers in the State from time to time. The parts division maintains warehouses in Oregon and Washington from which orders from Washington dealers are filled (though only the tax on Oregon shipments is protested). Appellant claims that its products taxed by Washington are manufactured in St. Louis, which levies a license tax measured by sales before shipment. This litigation arises from application of Washington’s tax on the privilege of doing business in the State measured by the wholesale sales of appellant within the State. Appellant contended that it constituted a tax on unapportioned gross receipts in violation of the Commerce and Due Process Clauses. The lower court upheld this view except for some of the business conducted from appellant’s local branch office. The State Supreme Court reversed, holding that all appellant’s activities in the State were subject to the tax, which was measured by its wholesale sales and was found to bear a reasonable relation to appellant’s in-state activities.

Held:

1. Though interstate commerce cannot be subjected to the burdens of multiple taxation, a tax measured by gross receipts is constitutionally proper if fairly apportioned. Pp. 439-440.

2. The burden of establishing exemption from a tax rests upon a taxpayer claiming immunity therefrom. Norton Co. v. Department of Revenue, 340 U.S. 534, followed. P. 441.

3. The bundle of appellant’s corporate activities or "incidents" in Washington afforded the State a proper basis for imposing a tax. Pp. 442-448.

4. The evidence was sufficient to warrant the finding by the state court of a nexus between appellant’s in-state activities and its sales there, especially where its taxable business was so enmeshed with what it claimed was nontaxable. P. 448.

5. This Court does not pass upon appellant’s claim of "multiple taxation" in violation of the Commerce Clause, because appellant did not show what definite burden in a constitutional sense the St. Louis tax places on the identical interstate shipments by which Washington measures its tax, or that Oregon levies any tax on appellant’s activity bearing on Washington sales. Pp. 448-449.

60 Wash.2d 862, 376 P.2d 843, affirmed.