Alpha Portland Cement Co. v. Commonwealth
248 Mass. 156
Mass.
1924
Check Treatment
Rugg, C.J.

This is a petition under G. L. c. 63, § 77, to recover an excise alleged to have been exacted from the petitioner illegally for the year 1922. This section of the statute enables a corporation to bring before this court the inquiry whether there has been a wrongful assessment of a tax or excise upon that which was not the proper subject of taxation. A corporation cannot by petition under this section cause inquiry to be made whether there has been an overvaluation of that which is rightly subject to the tax or excise, relief for wrong of that nature being afforded by G. L. c. 63, §§ 51, 71. Boston Manuf. Co. v. Commonwealth, 144 Mass. 598. Attorney General v. East Boston Co. 222 Mass. 450.

The petitioner is a corporation organized under the laws of New Jersey, engaged in business in this Commonwealth. Its only tangible property within this Commonwealth is office furniture of a value of $573. It conducts within this Commonwealth, in the sale and delivery of cement and the maintenance of a sales force, an extensive business exclusively interstate in character. Its nature and extent are described in Alpha Portland Cement Co. v. Commonwealth, 244 Mass. 530, in substantially the same general terms.as shown on this record and need not now be repeated.

The excise here assailed was levied under the provisions of G.L. c. 63, §§ 30-43, both inclusive, § 52, and St. 1921, *160c. 361. All these sections are printed in 244 Mass. 532-543, and need not here be recited. It is provided by G. L. c. 63, § 47, that the commissioner of corporations and taxation “ shall make from time to time such reasonable rules and regulations, consistent with sections thirty to fifty-one, inclusive, as he may deem necessary for carrying out their provisions.” Pursuant to that mandate the commissioner made a general ruling of the following tenor: “ 2505. Ordinarily, such proportion of an intangible asset employed in business will be deemed to be employed in business within Massachusetts as that portion of the remainder of income allocable in Massachusetts under the provisions of section 19 of the act bears to the total of said remainder. If, however, because of the peculiar circumstances of any particular case such method of apportionment does not fairly reflect the proportion of an asset employed in business in Massachusetts, the corporation may submit its reasons for requesting determination by another method. The department also reserves the right in such cases to make the apportionment by another rule, even though the corporation does not request determination by another method; but in such event the corporation will be notified.” The petitioner filed its return and made no request for determination by any other method. So far as this method affects valuation, it is not open to inquiry in this proceeding. The.remedy for a wrong of that nature would be under §§ 51, 71.

This statute in its application to the present petitioner was considered at length in Alpha Portland Cement Co. v. Commonwealth, 244 Mass. 530. The purpose of bringing the present petition respecting the excise levied for the year succeeding that under investigation in the earlier case apparently is to make certain the view of this court as to points thought by the petitioner not to have been fully developed there, in order that the Supreme Court of the United States on writ of review may have before it all aspects of the statute.

The method of calculation of the excise is set out with greater detail in the present than in the earlier record. The basis of the excise is the value of the corporate excess em*161ployed within the Commonwealth and the net income derived from business within the Commonwealth. Thus the express terms of the statute confine its operation and effect to property located and net income earned within the Commonwealth. Without pursuing the details of the method of computation to ascertain these two elements, it is enough to say that it is in conformity to the statute. This conclusion finds confirmation in the fact that the petitioner failed to exercise the option, extended to it by the ruling of the commissioner already quoted, of requesting an apportionment by some other method.

The petitioner founds its objections to the statute on no narrow ground. The only contention now urged by it, stated broadly, is that the tax is illegal and in violation of its rights under the federal Constitution. That contention is understood to mean that, as matter of constitutional right, the only factor capable of being used to ascertain the excise due from it is the tangible personal property owned by it and located in this Commonwealth, that is to say, its office furniture worth $573. It is said in the brief of the learned counsel for the petitioner: “ In the former case it was stipulated that the amount of the tax assessed was not questioned, and while in the court’s opinion reference was made to the petitioner’s intangible assets, the extent to which the valuation of corporate excess consisted of a valuation of these intangible assets arising solely from the conduct of interstate commerce did not appear. If in the former case the court intended to construe the statute as including as assets employed in business within the Commonwealth these intangibles constituting a part of and arising exclusively from the conduct of interstate commerce, why that is of course the end óf this case.”

The former decision rested in its ultimate analysis upon the theory that under the statute the excise might be measured in part upon intangible assets of the petitioner having a situs in this Commonwealth and arising exclusively from the conduct of its interstate business. We understand that credits due from residents within this Commonwealth to nonresidents may be made the subject of direct property *162taxation here. Metropolitan Life Ins. Co. of New York v. New Orleans, 205 U. S. 395. Liverpool & London & Globe Ins. Co. v. Orleans Assessors, 221 U. S. 346. State Board of Assessors v. Comptoir National D’Escompte, 191 U. S. 388. Shaffer v. Carter, 252 U. S. 37, and cases there reviewed. The source from which such credits arise is not material. They are not immune from taxation because coming into existence through the transaction of interstate commerce. That being so, it would seem that such credits may be used as a measure of an excise levied indifferently upon all corporatians under a general law.

The case at bar appears to us to be governed in every essential particular by the authority of Alpha Portland Cement Co. v. Commonwealth, 244 Mass. 530, and the decisions there collected and reviewed. ' Its reasoning is adopted without discussion as decisive of the case at bar.

Petition dismissed with costs.