Fore River Shipbuilding Corp. v. CommonWealth

248 Mass. 137 | Mass. | 1924

Rugg, C.J.

This is a petition under G. L. c. 63, §§ 77, 78, to recover a corporation excise tax assessed under St. 1919, c. 355, Part I, § 2, as amended by St. 1920, c. 549, § 1, now G. L. c. 63, § 32, and alleged to have been exacted illegally. The question is, whether the petitioner was at the time carrying on or doing business within the meaning of the words of the statute, which provided, with exceptions not here material, that every domestic business corporation shall be subject to pay annually, with respect to the carrying on or doing of business ” an excise tax to be computed as set forth in the act. The relevant facts are that the petitioner was organized' as a corporation under the laws of this Commonwealth in 1913 for the purpose of building ships and for other kindred and incidental purposes. In 1917 substantially all its stock was owned by a Pennsylvania corporation. To the end that numerous corporations, owned directly or indirectly by that Pennsylvania corporation, might be consolidated into one, a new corporation known as the Bethlehem Shipbuilding Corporation, Ltd., was organized under the laws of Delaware. In November, 1917, *139the petitioner leased its real estate and plant at Quincy to the Bethlehem corporation for a term of three years from November, 1917, and sold and conveyed to that corporation all its remaining assets, excepting only (as alleged in the petition) certain contracts with the United States Government which were not assignable ” and a railroad not material to the present case. Under an agreement bearing the same date the petitioner entered into a contract with the Bethlehem corporation, which recited that the former had sold to the latter all its current assets except (1) its corporate franchise, (2) its contracts with a New Jersey corporation for the construction of submarines, (3) its contracts with the United States, (4) its contracts with others, which, or the ships, vessels or boats being constructed pursuant to the terms of which, have been requisitioned by the United States of America, and (5) its claims against the United States of America. The contract then provided that the petitioner employs, constitutes and appoints the Bethlehem corporation as its agent “ but not in any way as the assignee thereof or of any interest therein, to perform and complete ” its submarine contracts and all its ship contracts. In a schedule forming a part of that contract, thirty-five different craft are specified, and other work in connection with submarines and destroyers. The Bethlehem corporation agreed to complete the contracts as required by their terms, and the petitioner agreed to pay to the Bethlehem corporation all moneys as and when received by it on such contracts. Other provisions of the agency agreement need not be re-, cited. All the remaining property of the petitioner, including the real estate and property previously leased to the Bethlehem corporation, but excepting said contracts, was conveyed to the Bethlehem corporation by deed executed late in 1920 but dated December 31,1918. It has been found that from and after November, 1917, it was the purpose and endeavor of the petitioner to cease from doing any business whatsoever, and within the meaning of the governing statute it did no business during the period for which the excise is assessed unless the carrying out of its nonassignable contracts with the government of the United States by the *140Bethlehem corporation pursuant to the agency contract is the doing of business.

The governing statute imposes an excise only upon corporations which are carrying on or doing business. Mere possession of the franchise to be a corporation is not made subject to this tax. In this respect the present law differs from some earlier statutes. Compare Attorney General v. Massachusetts Pipe Line Gas Co. 179 Mass. 15, 19. It is the carrying on and doing of business alone upon which is levied the present excise. It may be assumed that, when a corporation has leased all its property and assets and does nothing more than to receive and distribute the rental among its stockholders, it is not carrying on or doing business. Attorney General v. Boston & Albany Railroad, 233 Mass. 460. McCoach v. Minehill & Schuylkill Haven Railroad, 228 U. S. 295. United States v. Emery, Bird, Thayer Realty Co. 237 U. S. 28. Von Baumbach v. Sargent Land Co. 242 U. S. 503. The petitioner was doing much more. It was the principal in its contracts with the government of the United States. The United States of America recognized it and it alone as under obligation to complete government contracts to which it was a party. In order to secure continuity of liability of the petitioner from the beginning to the completion of all such contracts, the government provided that the petitioner could in no way assign such contracts. See U. S. Rev. Sts. § 3737. Doubtless performance of these contracts by an agent was permissible. Hardaway v. National Surety Co. 211 U. S. 552. All payments under the contracts were due and were made to the petitioner alone. This is acknowledged and provided for in the agency contract by the petitioner with the Bethlehem corporation. Performance of the contracts as between the petitioner and the government was the business of the petitioner. A contract of agency with respect to business imports from its essential nature the business of the principal. Any other conception involves a contradiction of terms. Whatever one does by another, he does by himself so far as concerns legal responsibility. That thought is expressed in the Latin, Qui facit per alium, facit per se. It is an underlying maxim *141of the law of agency and is of almost universal application. It extends even into the criminal law. Commonwealth v. White, 123 Mass. 430, 434. The circumstance that the mechanical and physical execution of the contracts was done by the Bethlehem corporation under the agency agreement is in this connection of slight consequence. The contract's still were the contracts of the petitioner. The act of the agent' was the act of the principal. A foreign corporation may be treated as doing business within this Commonwealth when all its activities are conducted solely by an agent holding no corporate office. Reynolds v. Missouri, Kansas & Texas Railway, 224 Mass. 379, affirmed in Missouri, Kansas & Texas Railway v. Reynolds, 255 U. S. 565. There would be a palpable inconsistency in treating the petitioner with respect to the United States of America as the single person responsible for the execution of these contracts without power of assignment and in holding at the same time that the actual performance of those contracts was not its business because done by the hand of its agent. The factor that it was the intent and design of the petitioner to do no new business is not decisive. It is none the less carrying on or doing of business to complete contracts in hand but unfinished with the purpose of doing no more business. Intent and design are in many connections of great significance. But they cannot prevail in the face of decisive conduct of an opposite character. Performance of live contracts, the obligation of which is to build ships by the instrumentality of an agent, is conduct of unmistakable meaning. It is the doing of business. It overcomes the most solemn asseverations of an intent and design to do no business.

It follows as an irresistible result of the facts of this case that the petitioner in causing the performance of these contracts for shipbuilding made by it with the United States through the Bethlehem corporation as its agent was carrying on or doing of business.”

Petition dismissed with costs.