A. G. Spalding & Bros. v. Edwards

Background

A manufacturer of baseball bats and balls sold goods through New York commission agents to a buyer in La Guaira, Venezuela. The agents ordered, the manufacturer packed and marked the packages for export, and the manufacturer delivered the marked goods to an exporting carrier. The carrier gave a receipt that the agents exchanged for an export bill of lading; the goods were shipped and received abroad. The manufacturer paid the tax under the War Revenue Act and sued to recover it, arguing the tax was forbidden on articles exported from a State. The District Court dismissed the complaint, and the case reached this Court.

Reasoning

The core question was when exportation begins for tax purposes. The Court said the export had begun when the seller delivered the goods to the carrier and title passed for the purpose of sending them overseas. Steps like getting a bill of lading were just regular follow-up acts and did not stop the export from having already started. The Court rejected theoretical possibilities that the agents might have kept the goods, noting there was no real chance of that. Because the sale was effectively a step in exportation, the tax could not be laid on those exported articles under the Constitution’s protection for exports.

Real world impact

The decision means sales that are committed to export when goods are handed to the exporting carrier cannot be taxed under this wartime statute. Manufacturers, exporters, and shipping agents who follow the same sequence of sale, delivery to carrier, and export will be protected from similar taxes. The ruling reverses the lower court and prevents the government from collecting the tax in this situation.