Wiloil Corp. v. Pennsylvania

Background

The dispute is between the Commonwealth of Pennsylvania and a Pennsylvania wholesale fuel company that sold and delivered liquid fuels to buyers in Philadelphia and Essington. The state law imposed a three-cent-per-gallon tax on liquid fuels “used or sold and delivered” by distributors in Pennsylvania, and distributors must state the tax separately on invoices. The company placed orders “f. o. b. Wilmington, Del., plus ’3¢ tax,” had the fuels shipped from Wilmington, and delivered tank cars on buyers’ private sidings in Pennsylvania.

Reasoning

The Court addressed whether Pennsylvania could tax those shipments without violating the Constitution’s limit on state power over interstate trade. The Court found the sales contracts were executory and related to unascertained goods, that delivery and title were treated as occurring in Pennsylvania, and that the tax did not discriminate against out-of-state goods. Relying on prior decisions about goods held in original packages for sale, the Court concluded the state may tax the fuel because the sales and deliveries occurred in Pennsylvania and any effect on interstate transportation was indirect.

Real world impact

The ruling lets Pennsylvania collect the three-cent tax on fuel sold and delivered to buyers in the State even when the seller arranged shipment from another State. Wholesale fuel sellers who deliver tank cars to Pennsylvania buyers and distributors who invoice for such deliveries will be subject to the tax and its invoice requirements. The decision affirms the state’s authority to tax property held for sale within its borders.