235 Mass. 572 | Mass. | 1920
This is a bill in equity for the abatement of a tax assessed under St. 1918, c. 253. It is brought under St. 1918, c. 255, § 7, which is made applicable to taxes imposed under said c. 253, by § 4 thereof.
The plaintiff is a corporation organized under the laws of the State of Maine and having a usual place of business in Boston within this Commonwealth. Its principal business is the buying of milk in the country from farmers who make daily deliveries, the transportation of that milk to Boston and the sale of most of it there by daily deliveries to regular customers, who are either consumers or retail dealers. About ninety per cent of the milk so purchased originates in New York and in New England States other than Massachusetts. “In the great majority of instances the farmer delivers the milk either to the employee at the train which transports it to Boston” or to the plaintiff’s milk station near the railroad station. The milk is shipped in cans belonging to the plaintiff, by whom the freight charges are paid, and is carried by railroad day after day on the same train. At Boston the milk is removed from the cans, pasteurized, put in other cans or bottles, and distributed forthwith
It is not contended that the method by which the tax was assessed was correct. Any error in this particular is said to have been due to insufficient information furnished to the tax commissioner by the plaintiff. But, however that may be, no controversy is made concerning the method of assessment, because it is agreed that if the plaintiff is made liable by St. 1918, c. 253, to a tax on the remaining portion of its net income after deducting said fifteen and seven tenths per cent, the bill is to be dismissed. Therefore, it must be assumed that the tax actually levied is at least not in excess of the amount justly due if the plaintiff is liable to taxation for the net income derived from that portion of its business which ends in selling from its stock in Massachusetts to customers receiving deliveries in Massachusetts, excluding all net income derived from sales outside Massachusetts and within Massachusetts by direct shipment to customers from other States.
The plaintiff contends that its income on which the tax is levied was derived from interstate commerce and hence is not taxable under the statute.
The title of St. 1918, c. 253, is “An Act imposing an additional tax upon the net incomes of foreign corporations.” It is provided by § 5 that the tax “shall be construed as a temporary emergency tax levied in addition to all other taxes imposed on foreign corporations, and not to any extent as a part of the system of taxation established by sections fifty-four to fifty-six, inclusive, of Part III” of the general tax act providing for an excise measured by authorized capital but limited to $2,000. The excise imposed by these last sections is not here involved. See Cheney Brothers Co. v. Massachusetts, 246 U. S. 147; Lawton Spinning Co. v.
The present tax is not discriminatory against foreign corporations. An additional tax on domestic corporations quite as onerous in its terms was imposed by St. 1918, c. 255, taking effect on the same day as the statute here in question. See American Printing Co. v. Commonwealth, 231 Mass. 237.
The statute in imposing the additional tax expressly exempts from its scope interstate commerce and property outside the Commonwealth. It avoids the provisions which caused the statute under review in International Paper Co. v. Massachusetts, 246 U. S. 135, to be stricken down. It is indubitable that that part of the plaintiff’s business which consists of transporting the milk bought outside this Commonwealth to Boston is interstate commerce. Interstate commerce comes to an end, however, when the milk thus transported in interstate commerce is delivered in Boston. The plaintiff then undertakes a new and distinct method of dealing with the milk, utterly different from interstate commerce. It removes the milk from the cans in which it has been the subject of interstate commerce and makes it a part of the common stock of merchandise within this Commonwealth. It then pasteurizes the milk, which is a subjection of it to heat for the purpose of inducing certain chemical changes. See Commonwealth v. Boston White Cross Milk Co. 209 Mass. 30. That process closely resembles manufacture as that word is applied to fabricated articles. It then puts the milk into other receptacles for purposes of sale and sells and delivers it chiefly from its own wagons or stores to retail customers and also to other retail dealers in or near Boston. The net income is derived wholly, so far as measured in cash receipts, from these retail or wholesale sales from the stock, which previously has become a part of the com
The case at bar upon this point is indistinguishable from numerous decisions. United States v. E. C. Knight Co. 156 U. S. 1. Cornell v. Coyne, 192 U. S. 418. Bacon v. Illinois, 227 U. S. 504, and cases there cited. Cheney Brothers Co. v. Massachusetts, 246 U. S. 147. Arkadelphia Milling Co. v. St. Louis Southwestern Railway, 249 U. S. 134. Wagner v. Covington, 251 U. S. 95. Marconi Wireless Telegraph Co. of America v. Commonwealth, 218 Mass. 558. As matter of statutory interpretation the net profits here taxed were within the terms of the taxing act and not within its exception.
The statute as thus construed violates no right secured to the plaintiff by the Federal Constitution. It does not impose a direct burden upon interstate commerce. The case upon this point appears to be within the authority of United States Glue Co. v. Oak Creek, 247 U. S. 321. In that case a general tax was laid
The contention that there is any valid distinction in this particular between a foreign and domestic corporation. appears to us to be disposed of adversely to the contention of the plaintiff by Shaffer v. Carter, 252 U. S. 37, 57, decided since the argument of the case at bar. In that case a tax was imposed upon the net income of a non-resident individual derived from conducting business within the State of Oklahoma. It there was said: “It is-urged that, regarding the tax as imposed upon the business conducted within the State, it amounts in the case of appellant’s business to a burden upon interstate commerce, because the products of his oil operations are shipped out of the State. Assuming that it fairly appears that his method of business constitutes interstate commerce, it is sufficient to say that the tax is imposed not upon the gross receipts, as in Crew Levick Co. v. Pennsylvania, 245 U. S. 292, but only upon the net proceeds, and is plainly sustainable even if it includes net gains from interstate commerce. U. S. Glue Co. v. Oak Creek, 247 U. S. 321.” No rational line of demarcation can be drawn in this particular in our opinion between a non-resident individual and a foreign corporation.
Decree dismissing hill affirmed with costs.