Empresa Siderurgica Sa v. County of Merced California/Dissent Frankfurter

Mr. Justice FRANKFURTER, dissenting.

Though figures of speech may aid analysis, they do not dispense with the need for it. When a State seeks to tax what is to leave the United States, we may agree that its privilege to do so ceases when the export enters 'the export stream.' But the problem for decision is to determine when that point has been reached. The Export-Import Clause of the Constitution (Art. I, § 10) embodies on phase of the accommodation between the States and the Union; it can be applied only by considering the bearing of a particular exertion of State power on the fulfillment or frustration of its purpose. A mechanistic formula, whether derived from phrases in Coe v. Town of Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715, or elsewhere culled, advances us little toward the solution of such a concrete problem.

The case before us is peculiarly ill-fitted for mechanical disposition; it presents unusual circumstances giving rise to unusual contentions. It involves the sale to a Colombian purchaser of what the contract of sale describes as 'all machinery, equipment, removable structures, removable facilities, spare parts, supplies and miscellaneous items comprising' the Yosemite Portland Cement Plant located at Merced, California, but 'excluding the land upon which the plan is situated' and various other specified items. The appellant urges that the objects of this sale, which are collectively referred to by the contract as 'the cement plant,' should be regarded as interdependent parts of an organic whole like a 200-inch telescope or a cyclotron. Since no such part has a separate usefulness comparable to its usefulness as a supporting member of the structure or as a link in the productive process for which the structure is designed, shipment of part-in this case 14 of an eventual total of 123 carloads-makes virtually certain that the rest will follow. In the case of such an export, so runs the argument, it is a degree of certainty fully equivalent to the certainty marked by delivery to a common carrier of a bulk cargo, like oil or grain or timber, for whatever part of a cargo of the latter sort has not actually left the country can even then be diverted and separately sold without loss in value either to the diverted or to the exported part. It is the degree of certainty, moreover, and not conformity to a prescribed ritual like delivery to a carrier, that is significant:

'The certainty that the goods are headed to sea and that the process of exportation has started may normally be best evidenced by the fact that they have been delivered to a common carrier for that purpose. But the same degree of certainty may exist though no common carrier is involved.' Richfield Oil Corp. v. State Board of qualization, 329 U.S. 69, 82, 67 S.Ct. 156, 163, 91 L.Ed. 80.

The case was submitted to the Superior Court of Merced County on an agreed statement of facts which leaves in doubt whether the items comprising the 'cement plant' were actually interdependent, as appellant contends, or consisted merely of a collection of machines and other pieces of equipment which could have been individually installed without loss of usefulness in any other cement plant. Tending to establish appellant's position are provisions of the dismantling contract which indicate that the existing structure was to be carefully taken apart like a Chinese puzzle so that it could be fitted together again in Colombia exactly the way it was before 'Contractor shall take at least one photograph of each machine or piece of equipment before dismantling said machine or piece of equipment, and shall also take at least one photograph after such machine or piece of equipment is dismantled.' 'All separations shall be made at the point of joinder, and there shall be no cutting or disassembling of any part of the Cement Plant which will have as its effect the weakening of the structure or parts when such structure or parts are reassembled * *  * .' 'The Contractor shall match-mark all parts of the plant and equipment *  *  * .' Tending to look the other way is an itemized list of all the items to be exported which was attached to the export license issued to appellant by the War Production Board. Those items, ranging from thousand-ton kilns and locomotives to friction tape, seem to be things of a sort which are independently useful; each is assigned a dollar value and the total of all these separate values exactly equals the sale price of the 'plant.' Appellee insists, moreover, that so many parts of the original plant were excepted from the contract of sale that what was sold cannot be considered an organic unit.

The Superior Court resolved this issue of fact in favor of the interpretation urged by appellant and reached a conclusion based on that interpretation:

'I think that the payment for the property and proceeding to change it from parts in place of a complete building, into a mass of disconnected materials made the completion of the exportation economically imperative. This was not a mere preparation of the plant for exportation; by such action and change the parts had 'been started upon such transportation' with the degree of certainty demanded by Coe v. Town of Errol and the many cases which have endorsed it. * *  *

'If the exportation of the materials of the plant was not before assured, that became certain when the twelve per cent of the corpus of the building had been sent abroad. * *  * Whatever possibility there might have been that after plaintiff had torn the plant down and carried the parts off the premises that it would sell them or re-erect them into a plant in California would be rendered extremely improbable when it appeared that it had kept here only a part of the materials of the plant which of course could not be sold as the materials from which a plant could be built or used to reassemble the old one.'

The appellant presented the same contentions to the Supreme Court of California. Without explicitly rejecting these contentions, it referred to the objects of export and of taxation merely as 'the machinery and equipment of a cement plant' and alluded to the above-quoted portion of the Superior Court's opinion only as 'another basis for the decision.' Its opinion is open, therefore, to two very different interpretations.

1. The Supreme Court of California may have exercised a right under California law to draw its own inferences from uncontroverted facts and thus have found that what was called a 'plant' was really only a collection of machinery and equipment. If that is what it did, we would not, of course, reinstate the findings of the Superior Court merely in order to raise an interesting question under the Export-Import Clause. Affirmance would be amply supported by bare citation of cases holding that intent to export, no matter how firm, is not by itself enough to confer immunity from taxation.

2. The Supreme Court of California may have taken the view that only delivery to a carrier of each successive part even of an organic whole removed that part from the State's taxing power. This would have been in effect to say, 'Upon the facts as found by the Superior Court, it makes no difference to the taxing power of the County of Merced that parts of this integrated plant had left the country since the County is merely taxing the remaining parts.' Surely this is a doubtful proposition; it presents, at any rate, a difficult question of the adjustment of local needs to the protection of exports from local interference.

Between these two possible interpretations of the situation before the Supreme Court of California, therefore, lies the difference between a simple question of Constitutional power and a very troublesome one. Since the record leaves in doubt whether the troublesome question is presented, to assume that it is presented and then to pass upon it would be to embrace unnecessarily what may be a hypothetical issue. We should, therefore, remand the case for the resolution of the crucial question of fact upon which depends what Constitutional issue we are called upon to decide. Cf. City of Hammond v. Schappi Bus Line, Inc., 275 U.S. 164, 48 S.Ct. 66, 72 L.Ed. 218.