110 Tenn. 524 | Tenn. | 1903
delivered the opinion of the court.
This suit was instituted in the chancery court of Shelby county to recover $1,031.44, a merchant’s tax assessed against complainant by R. A. Speed, clerk of the county court of that county, and which was paid by complainant, under protest, on the 18th of October, 1902. The chancellor rendered a decree in favor of complainant, and the cause is now in this court on appeal of the defendant clerk.
The facts upon which the controversy arises are as follows: Complainant is a corporation created under the laws of New Jersey. Its situs is in the State of New Jersey, and its principal business office is situated at Chicago, Illinois. It is engaged in the manufacture of nails, staples, barbed and smooth wire, at different
Prior to the 1st of February, 1900, its manufactured products were sold and distributed throughout the Southwest, from Louisville, Ky., Memphis, Tenn., Green-ville, Vicksburg, and Natchez, Miss., and New Orleans, La. About that time the Patterson Transfer Company, a corporation created under the laws of Tennessee, having its situs at Memphis, and doing business at Memphis, represented to appellee that Memphis was the most available point in the Southwest at which to mass and distribute its manufactured products to its customers in that section. At this time and for many years prior thereto, the Patterson Transfer Company -had been engaged in the business of transferring passengers and freights to and from the various depots at Memphis and from the landings on the Mississippi river. Appellee entered into an arrangement with the Patterson Transfer Company whereby said company was to receive its manufactured products at Memphis, assort them so as to separate the different kinds of nails, staples, and wire, and then to deliver them either to the jobbers at Memphis, or to the jobbers beyond the limits of Tennessee, over the various lines of railroads and steamboats running into Memphis, as directed by complainant.
None of complainant’s products are ever sold to the Patterson Transfer Company, or are by it sold to others,
Under the arrangement between them, the business of the Patterson Transfer Company, in connection with complainant’s products, is confined to their transfer to the warehouses, their assortment in the warehouses, the keeping of them in storage, and their subsequent delivery to the customers of the complainant, under its general or special orders, as below indicated.
The goods of complainant are manufactured at different points, and it is convenient and useful, from a business point of vieiv, to mass them at some place at which they can be assorted, and from which they can be distributed to complainant’s customers. It is impracticable to assort the goods either at the river landing or at the railroad depots when they reach Memphis, and, in order to facilitate the work, the Patterson Transfer Company has rented three warehouses in which the goods are stored for the purpose of assortment and distribution, and for other purposes below indicated., These warehouses are rented exclusively for this purpose, and the manufactured products of complainant, and no other goods, are stored therein.
The evidence further shows that, as a general rule, prior to the time the goods are shipped to Memphis, sales agents of the complainant canvass the Southwestern country, and make contracts, exclusively with jobbers;
As above indicated, it is shown in the evidence that there are many different kinds of nails, as well as different kinds of barbed and smooth, wire, and it is expressly stipulated in the contract that the customer shall have the privilege of specifying, during the life of the contract, the kind of wire, or kind of nails or staples, he desires delivered to him under the contract. These contracts also specify from 60 to 90 days as the time within
These contracts are made, usually, before the goods arrive at Memphis, their point of destination, and generally the contracts .are made in advance of the production of the goods at the complainant’s factory.
Usually the sale agents of the complainant, not only in advance of the shipment of the goods, but in advance of. their production, canvass the Southwestern country in the manner above stated, visiting the various jobbers, ascertaining the amount of goods they will require within 60 or 90 days, and the contract is prepared, to the purport above indicated, in which the complainant obligates itself to deliver, at the prices stated, as above mentioned, the amount of goods contracted for therein, and the customer agrees to receive and pay for that quantity upon the goods being delivered to Mm after he shall have made, and according to, his specification, which he may make during the life of the contract, the customer reserving the right, in the face of the contract, to specify the exact grade or quality of goods he desires delivered under it. He does this after the making of the contract, and at any time he desires to do so, within the life of the contract, by writing out his specification showing precisely what grade of goods he desires, and forwards this specification to the office of complainant in Chicago, and then the goods, under an order from the
This method of transacting the business is modified, in practice, in so for as the fulfillment of the contracts made with the jobbers at Memphis is concerned. For the convenience of the Memphis trade, complainant advises the Patterson Transfer Company of the names of its customers at Memphis, and that company is instructed to deliver the goods embraced in the contracts with the Memphis jobbers, in the following manner: The Memphis jobber makes out his specification in duplicate, and addresses a letter to complainant, as in any other case; but, instead of forwarding this letter and his specification directly to complainant, he delivers the letter to the Patterson Transfer Company, and the Patterson Transfer Company at once delivers the goods
Another variation is made, in the course of the business, in favor of the Memphis jobbers, to the following-effect : Any jobber in Memphis who is a recognized customer of the complainant can, without any previous written contract or other special agreement, make out a specification of the goods he desires, and hand this, in duplicate form to the Patterson Transfer Company. Upon this being done, it is the duty of the Patterson Transfer Company, under its general instructions from the complainant, to select, out of the mass of goods in the warehouses, goods corresponding to those contained in the specification, and deliver them to such jobber, this, delivery being usually made by the next day, or, at most, within two or three days. Other deliveries on specifications sent direct to the Chicago office are not usually made within less than six or eight days, and sometimes a longer period is required. When the Patterson Transfer Company receives from Memphis jobbers the specifications which are the special subject of this paragraph, one copy is kept by it, and the other copy is forwarded to the office at Chicago, where, upon its arrival and reception, the customer is charged with the goods specified, at current prices.
The testimony shows that, of the mass of goods kept
No one but an agreed or recognized customer of the complainant can make out a specification, or have goods delivered from the storehouses of the Patterson Transfer Company; and no goods are ever delivered or distributed to any one bv the Patterson Transfer Company except under the express directions of complainant, or under general directions given by complainant to the said Patterson Transfer Company in favor of recognized and approved customers of the complainant, whose names are furnished by it to the Patterson Transfer Company.
The testimony further shows that the quantity of goods which the complainant keeps on hand at Memphis fluctuates considerably, owing to the state of trade, from time to time. Sometimes the stock is as low in value as $30,000, and sometimes the complainant has on hand a stock of the value of more than $100,000.
Some of the goods, a very small amount, are shipped to Memphis by rail. Nearly all of these goods which come to the hands of the Patterson Transfer Company from this complainant are transported to Memphis on
The testimony shows that when goods are shipped from complainant’s mills, consigned to Memphis-, the Patterson Transfer Company is notified by the Chicago office that a certain quantity of complainant’s products were shipped at a certain time on barges to the port at Memphis. These barges are met at the river landing by the Patterson Transfer Company, which receives the goods, transfers them to its warehouses, and assorts them. Then from time to time it ships the goods on specifications as before explained. On receiving the goods, they are credited to the complainant on the books of the Patterson Transfer Company, and, on being shipped out, they are charged on the same books to the complainant. When the goods reach Memphis they are always consigned to the complainant, in care of the Patterson Transfer Company.
All of the goods forwarded to Memphis are products of the factories of complainant. No part of them are ever purchased by it. Its sale agents are exclusively en
Some of complainant’s goods are produced at one factory and some at another, and consequently, when a purchaser contracts for the delivery to him, within 60 or 90 days, of a certain number of packages, it frequently turns out that some of goods desired are the product of one factory and some of another, and it is accordingly most convenient, in the conduct of complainant’s business, that goods from complainant’s various factories should be massed at some point where they can be dealt with in the manner before explained.
Complainant’s goods are put up in the following original packages. The nails and staples are put up in kegs, each keg weighing 100 pounds; the smooth wire in coils tied by wires, and each coil weighing 100 pounds; the barbed wire on reels, the wire on each reel weighing 100 pounds. Each package is separately and distinctly made up at the factories for convenience of transporta.
The testimony shows that Memphis has within recent years become, by reason of its accessibility to railway and river transportation, a great distributing point, and it was selected as the basis of the operations which are the subject of the present controversy, by reason of these exceptional advantages.
Other facts proven by the complainant are as follows: The testimony of Mr. Young, the. tax assessor, shows that
There is also an agreement of counsel to the effect that there are large iron deposits in Tennessee, and a number of furnaces in this State engaged in the manufacture of iron from the iron ore deposits in this State.
The bill alleges, and the answer admits, that complainant was assessed by the defendant clerk as a merchant, and was required to pay to the State a merchant’s tax for the years 1901 and 1902, amounting to $1,031.44. On appeal .to the State Board of Equalizers, this assessment was affirmed, and thereupon, within the time required by law, to wit, on the 18th day of October, 1902, complainant paid these taxes under protest. This suit was instituted by complainant, within the time prescribed by the statute, to recover the taxes so paid, on the ground that the assessment was illegal and void for the following reasons: (1) Because complainant was never at any time a merchant doing business at Memphis (2) That the assessment was in violation of article 1, section 8, subsection 3, of the constitution of the United States, which empowers Congress “to regulate commerce with foreign nations, and among the several States, and among the Indian tribes.”
We shall now briefly consider the points raised in .argument in this court.
Under the facts proven in this case, the complainant was “dealing” in nails, staples, and wire, in the city of Memphis, at the time it was assessed for taxes, and had been since February, 1900, and for a short time prior ■thereto. It- is immaterial that its agent at Memphis, the Patterson Transfer Company, had no authority to fix prices, but only kept the stock and delivered the goods -on contracts made with the office at Chicago, said deliveries being made under orders issued from Chicago, either special, or to be inferred from the general course ■of business. The vital fact is that the goods were not sold from their place of manufacture, but were kept in stock at Memphis, and this stock was drawn on from time to time to fill contracts of sale made by the company’s salesmen, or to fill contracts made by means of intending purchasers depositing specifications of goods desired with the Patterson Transfer Company, and in that manner obtaining the goods.
It is insisted that complainant was only a manufac
There is an earlier case (State v. Smith, 5 Humph., 394) construing Acts 1835-36, p. 61, c. 13, sec. 5, which takes the contrary view, but this is not controlling under
It is next insisted that the act taxing the goods was a violation of the provisions of the federal constitution above referred to, because the goods were in course of transit from one State to another at the time the tax was levied. We do not think that this position is well taken. Linder the method of business pursued by the complainant, these goods had been sold to no one, nor were they in course of transit for the purpose of being put directly upon the market. The warehouse of the Patterson Transfer Company was in the nature of a permanent place of deposit, where complainant’s goods were gathered together and were left to await the orders of customers, and from the mass so created goods were from time to time draAvn to meet the wants of customers, and as called for by them; It is true than an effort was generally made to get agreements from intending purchasers that they would take the output of complainant’s mills before the goods were manufactured, and that usually enough of these contracts were in existence, and calling for a sufficient quantity of goods, to cover the expected output for 60 or 90 days, the time during which these contracts usually ran; but these contracts did not constitute sales. They were only agreements to the effect that, during the 60 or 90 days next ensuing their date, such intending purchasers would take such and such a quantity of complainant’s goods, say 1,000 kegs of nails, or 1,000 kegs of staples, or 500 coils of
Any customer of the complainant who had contracted to take a given quantity of complainant’s nails, as 1,000-kegs, had the right to select, at any time within the 60' or 90 days covered by his contract, the kind of nails he-would take. He might, if he chose, call for and receive-all of one kind, or some of each kind, or in any proportion, as respects the several kinds, that he desired. So-with the staples. And so of the wire. He might specify, during the 60 or 90 days, so many coils of smooth wire galvanized, so many coils not galvanized,, so many reels of barbed wire two-point, and so many reels of barbed wire three-point. At the time these contracts or agreements were entered into, neither the complainant nor its customers knew how much of any kind of complainant’s goods would be called for. Hence there was no meeting of the minds of the parties as to an essential term of the contract. These contracts were nothing more than options extended to complainant’s customers to select from complainant’s stock of goods, within a given time, such articles as they might desire, up to
The substance of the contract, agreement, or arrangement between the complainant and any given customer may be thus expressed: On his part, the customer said: Luring the next 60 days, I will take from you 1,000 kegs of nails, or 1,000 kegs of staples, and 1,000 coils of wire, reserving to myself the right to select from the mass of your goods such and so much of the many different kinds of goods which you have of the classes referred to as I may desire, provided I do not go beyond the aggregate quantity of each general class (nails, staples, and wire) above indicated; the price for each of the several grades and kinds of the several classes of goods to be thus and thus.
Or, to state the matter from the complainant’s point
As appears from the statement of facts above, complainant has all the time a large number of such contracts running in this State, and in Arkansas, Texas, and other States in the Southwest, and keeps on hand its stock of goods to meet them, that is, to fill such orders or “specifications” as its customers may from time to time make, the orders, in general, being sent to complainant’s Chicago office, and from that office the directions being sent, in the manner set forth in the statement of facts, to the Memphis branch, to fill the orders by shipping the goods to the customer so ordering or-“specifying.”
The goods kept on hand at Memphis in the stock referred to must be regarded as kept on hand for this purpose also.
And it is important at this juncture to note, as shown in the statement of facts, that the fact last stated is not the only evidence that the goods are not massed at Memphis merely for the purpose of meeting the general contracts, above referred to, previously made in and through the Southwest; on the contrary, as previously stated, it appears that the complainant takes advantage of the stages of the water, in the rivers over which it ships its goods in barges, to float down large quantities of its goods in anticipation of sales, and to have them ready against a time when the waters may be so low that shipments cannot be made by that means, but only by the more expensive method of railroad transportation.
We do not think that under these circumstances it can
It is next said that the complainant was not liable to taxation on its goods, because they were sold in the original packages. We do not think that this is a sound view, because the facts above stated show that complainant’s goods were put up for sale in Memphis, and were so dealt with as to make them a part of the common mass of property in the State. Brown v. Houston, 114 U. S., 622, 5 Sup. Ct., 1091, 29 L. Ed., 257; Pittsburgh, etc., Co. v. Bates, 156 U. S., 577, 15 Sup. Ct., 415, 39 L. Ed., 538; Woodruff v. Parham, 8 Wall., 123, 19 L. Ed., 382; Hinson v. Lott, 8 Wall., 148, 19 L. Ed., 387; Coe v. Town of Errol, 116 U. S., 517, 6 Sup. Ct., 475, 29 L. Ed., 715. And see Emert v. Missouri, 156 U. S., 296, 15 Sup. Ct., 367, 39 L. Ed., 430.
Much stress is laid by complainant’s counsel upon Brown v. Maryland, 12 Wheat., 436, 6 L. Ed., 678; Leisy v. Hardin, 135 U. S., 100, 10 Sup. Ct., 681, 34 L. Ed., 128; Lyng v. Michigan, 135 U. S., 161, 10 Sup. Ct., 725, 34 L. Ed., 150; Welton v. Missouri, 91 U. S., 275, 23 L. Ed., 347; Robbins v. Shelby County Taxing District, 120 U. S., 489, 7 Sup. Ct., 592, 30 L. Ed., 694; Leloup v. The Port of Mobile, 127 U. S., 641, 8 Sup. Ct., 1380, 32 L. Ed., 311; and the case of Asher v. Texas, 128 U. S., 129, 9 Sup. Ct., 1, 32 L. Ed., 368. We do not think there is any real conflict between any of these cases and those which we have cited in support , of our conclusion, nor have the cases which we have cited ever been overruled by the
From some of the evidence which was introduced by the complainant, and which we have referred to in the last part of the statement of facts, it would seem that the complainant intended to support the contention that the tax assessed against it was a discriminative one in favor of goods manufactured out of the produce of this State, and against those manufactured out of the produce of other States. There was such a contention made in the bill, but it is unnecessary now to go into this question at all, because the complainant concedes that if it is to be or rather can lawfully be, treated as a merchant, then the objection could not apply, because there is no discrimination in this State in respect of the origin of goods when they are in the hands of merchants. Jenkins v. Ewin, 8 Heisk., 456, 484. Complainant concedes that such contention could be raised only against a direct tax, and there is no such tax involved in this case. The tax assessed must stand or fall as a merchant’s tax. Hence the question of a discriminative tax does not arise in this case, and need not be considered. The tax which is under consideration in the present case has no element of discrimination against the complainant as a
It results that the decree of the chancellor must be reversed, and the bill dismissed, with costs.