Home Cases Quill Corp. v. North Dakota

Quill Corp. v. North Dakota

Quill Corp. v. North Dakota


Quill Corp. v. North Dakota: The Background

Through its local tax commissioner, the state of North Dakota filed an action in their local court system to force the Quill Corporation—an out-of-state mail-order office equipment company—to charge a local tax on Quill merchandise to be used within state lines.

The state court ultimately ruled in favor of the Quill Company, basing its decision on the previously rendered Bellas Hess Inc. v. Department of Revenue of Illinois Case. In this case, which was decided in 1967, the United States Supreme Court found a similar statute to be in violation of both the Fourteenth Amendment (specifically the Due Process Clause) and the Commerce Clause to the United States Constitution.

This case was ultimately appealed by the state. When the case went to the North Dakota Supreme Court, the state reversed the ruling while ultimately rejecting the Bellas Hess case. The primary motivation behind this ruling was that the Bellas Hass matter was obsolete and did not take into account the numerous economic, social, commercial and legal innovations that had since been established.

After the reversal, the case ultimately went to the United States Supreme Court.


Quill Corp. v. North Dakota: The U.S. Supreme Court Ruling

In Quill Corp. v. North Dakota, the state Supreme Court declined to uphold the precedent established in Bellas Hess because of the aforementioned innovations of the past quarter century. Therefore, the United States Supreme Court had a decision to make: either reverse the State Supreme Court or overrule Bellas Hess.

While the United States Supreme Court agreed with the majority of the state’s reasoning, the higher court opted to reverse the state’s ruling.

The Quill Corporation is a Delaware entity with warehouses and offices in California, Illinois and Georgia. None of the company’s employees resided or worked in North Dakota and its ownership of actual property in the state of North Dakota is either nonexistent or insignificant. Quill, which sells over $200,000,000 worth of goods each year, is the sixth largest vendor of office supplies in the state.

With this in mind, the state of North Dakota argued that under the Due Process Clause, the Quill Company established a presence because the company’s goods were physically located in the state. The United States Supreme Court; however, based its ruling primarily on the analysis of the Commerce Clause. This clause provides the federal government with the authority to regulate interstate commerce and prohibit certain state actions, including applying duties that interfere with trade among the states.

The United States Supreme Court ultimately reversed the decision of the state supreme court and required the Quill company to remit and collect use taxes on purchases made by customers from that state.

In Quill Corp. v. North Dakota, the Supreme Court ruled that a business must maintain a physical presence in a state for that state to collect a sales tax. That said, the court explicitly stated that the United States Congress may overrule the decision through legislation.