U.S. Supreme Court NATIONAL BELLAS HESS, INC. v. DEPARTMENT OF REVENUE OF STATE OF, 386 U.S. 753 (1967) 386 U.S. 753 NATIONAL BELLAS HESS, INCORPORATED, Appellant, v. DEPARTMENT OF REVENUE OF the STATE OF ILLINOIS. No. 241. Argued Feb. 23, 1967. Decided May 8, 1967. Archibald Cox, Washington, D.C., for appellant. Terence F. MacCarthy, Chicago, Ill., for appellee. Mr. Justice STEWART delivered the opinion of the Court. The appellant, National Bellas Hess, is a mail order house with its principal place of business in North Kansas [386 U.S. 753, 754] City, Missouri. It is licensed to do business in only that State and in Delaware, where it is incorporated. Although the company has neither outlets nor sales representatives in Illinois, the appellee, Department of Revenue, obtained a judgment from the Illinois Supreme Court that National is required to collect and pay to the State the use taxes imposed by Ill. Rev.Stat. c. 120, 439.3 (1965).1 Since National's constitutional objections to the imposition of this liability present a substantial federal question, we noted probable jurisdiction of its appeal. 2 The facts bearing upon National's relationship with Illinois are accurately set forth in the opinion of the State Supreme Court: '(National) does not maintain in Illinois any office, distribution house, sales house, warehouse or any other place of business; it does not have in Illinois any agent, salesman, canvasser, solicitor or other type of representative to sell or take orders, to deliver merchandise, to accept payments, or to service merchandise it sells; it does not own any tangible property, real or personal, in Illinois; it has no telephone listing in Illinois and it has not advertised its merchandise for sale in newspapers, on billboards, or by radio or television in Illinois.'3 All of the contacts which National does have with the State are via the United States mail or common carrier. Twice a year catalogues are mailed to the company's active or recent customers throughout the Nation, including Illinois. This mailing is supplemented by advertising 'flyers' which are occasionally mailed to past and potential customers. Orders for merchandise are mailed by the [386 U.S. 753, 755] customers to National and are accepted at its Missouri plant. The ordered goods are then sent to the customers either by mail or by common carrier. This manner of doing business is sufficient under the Illinois statute to classify National as a '(r)etailer maintaining a place of business in this State,' since that term includes any retailer:'Engaging in soliciting orders within this State from users by means of catalogues or other advertising, whether such orders are received or accepted within or without this State.' Ill.Rev.Stat. c. 120, 439.2 (1965). Accordingly, the statute requires National to collect and pay to the appellee Department the tax imposed by Illinois upon consumers who purchase the company's goods for use within the State. 4 When collecting this tax, National must give the Illinois purchaser 'a receipt therefor in the manner and form prescribed by the (appellee),' if one is demanded. 5 It must also 'keep such records, receipts, invoices and other pertinent books, documents, memoranda and papers as the (appellee) shall require, in such form as the (appellee) shall require,' and must submit to such investigations, hearings, and examinations as are needed by the appellee to administer and enforce the use tax law. 6 Failure to keep such records or to give required receipts is punishable by a fine of up to $5,000 and imprisonment of up to six months. 7 Finally, to allow service of process on an out-of-state company like National, the statute designates the Illinois Secretary of State as National's appointed agent, and jurisdiction in tax collection suits attaches [386 U.S. 753, 756] when process is served on him and the company is notified by registered mail. 8 National argues that the liabilities which Illinois has thus imposed violate the Due Process Clause of the Fourteenth Amendment and create an unconstitutional burden upon interstate commerce. These two claims are closely related. For the test whether a particular state exaction is such as to invade the exclusive authority of Congress to regulate trade between the States, and the test for a State's compliance with the requirements of due process in this area are similar. See Central R. Co. of Pa. v. Commonwealth of Pennsylvania, 370 U.S. 607 , 621-622, 82 S.Ct. 1297, 1306- 1307, 8 L.Ed.2d 720 (concurring opinion of Mr. Justice Black). As to the former, the Court has held that 'State taxation falling on interstate commerce ... can only be justified as designed to make such commerce bear a fair share of the cost of the local government whose protection it enjoys.' Freeman v. Hewit, 329 U.S. 249, 253 , 67 S.Ct. 274, 277. See also Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653, 663 , 68 S.Ct. 1260, 1266; Northwestern States Portland Cement Co. v. State of Minnesota, 358 U.S. 450, 462 , 79 S.Ct. 357, 364, 3 L.Ed.2d 421. And in determining whether a state tax falls within the confines of the Due process Clause, the Court has said that the 'simple but controlling question is whether the state has given anything for which it can ask return.' Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444 , 61 S.Ct. 246, 250. See also Standard Oil Co. v. Peck, 342 U.S. 382 , 72 S. Ct. 309; Ott v. Mississippi Val. Barge Line Co., 336 U.S. 169, 174 , 69 S.Ct. 432, 434. The same principles have been held applicable in determining the power of a State to impose the burdens of collecting use taxes upon interstate sales. Here, too, the Constitution requires 'some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.' Miller Bros. Co. v. State of Maryland, 347 U.S. 340 , 344-345, 74 S.Ct. 535, 539; Scripto, [386 U.S. 753, 757] Inc. v. Carson, 362 U.S. 207 -210-211, 80 S.Ct. 619, 621-622, 4 L.Ed.2d66 0. 9 See also American Oil Co. v. Neill, 380 U.S. 451, 458 , 85 S.Ct. 1130, 1134, 14 L.Ed.2d 1. In applying these principles the Court has upheld the power of a State to impose liability upon an out-of-state seller to collect a local use tax in a variety of circumstances. Where the sales were arranged by local agents in the taxing State, we have upheld such power. Felt & Tarrant Mfg. Co. v. Gallagher, 306 U.S. 62 , 59 S.Ct. 376; General Trading Co. v. State Tax Comm'n, 322 U.S. 335
View Full Document
Unlocking...