Indiana Department of State Revenue v. General Foods Corp.

” However, finding . guilty we credit . . . refers back to the forts to avoid it. sane, ability lay aside extrane- the doctors that the defendant was judges with the verdicts, to the later that the doctors in not statements ous information and arrive and, trials, person found the defendant to be a who did the evidence alone bench acknowledge- not control his emotions or conform his but for the court’s candid ment, be no for our rul- conduct. there would basis

ing. presumption The the court acted interpret Judge I do not Tolen’s remarks however, properly, light cannot stand in the indicating he used the statement of the improperly. of its admission that it acted any way guilt doctors in to find the innocence of the The deprived

The error the defendant of his defendant. indication is, right concerning report to me he used the doctor’s to cross examine the con- allay report proc- of the him his fears that the defendant have tent and denied due guaranteed by ess of law the Fourteenth been insane at the time of the commission Texas, (1965) of the offense. Amendment. Pointer v. 13 L.Ed.2d 923.

U.S. S.Ct. I would not reverse the trial court Further, subjected prejudice by it him to majority. reason stated prior reason of are acts that not relevant to guilt the issue of his or innocence. PIVARNIK, J., concurs. recognize

We also that the record is sub-

ject to an that the court con- report only

sidered the for its exonerative

value, any, if and that the defendant could error, thereby

not have been harmed. The

however, proportion, is of constitutional harmless, say beyond

we cannot that it was

a reasonable doubt. INDIANA DEPARTMENT OF STATE judgment the trial court is re- REVENUE, Appellant

versed, and the cause is remanded for a new (Defendant Below), trial. HUNTER, JJ., DeBRULER and concur. CORPORATION, GENERAL FOODS Appellee (Plaintiff Below). GIVAN, J., opinion dissents with C. PIVARNIK, J., concurs. No. 2-1180A388. Justice, GIVAN, dissenting. Chief Appeals Court respectfully majority I from the Second District. dissent interpret opinion in this case. I do not July Judge quoted Tolen’sremarks on the second Publication Ordered Oct. page majority opinion indicating psychiatrist’s report that he considered guilt

as evidence of of the defendant. interpret Judge

I Tolen’sremarks as indi-

cating a with the manner in dissatisfaction defended,

which the case was and that he as to whether or

entertained some doubt

not the defendant should not have been insanity

defended on the basis of at the

time of the commission of the offense. statement, “Therefore,

I think his

finding of this Court that the Defendant is

Ice, Miller, Ryan, Indianapolis, Donadío & appellee. for BUCHANAN, Judge. Chief CASE SUMMARY Appellant-defendant (Department) appeals of Revenue judgment from a trial court the De- partment wrongfully collected shipments tax on out-of-state plaintiff-appellee Corporation (GFC). Foods We affirm.

FACTS following specifically The facts as deter- mined the trial court under Ind.Rules of Procedure, 52(A), disput- Trial Rule are not ed.

Findings of Fact plaintiff, Corpora- (“General Foods”), tion is a Delaware cor- poration, qualified to do business in the principal and has its Street, office located at 250 North White Plains, New York. Defendant, (“Department”),

of State Revenue is an agency of the of Indiana and ad- ministers the Gross Income Tax Act amended, seq. I.C. 6-2-1—1 et allAt relevant times General Foods engaged has been in the manufacture and marketing comprehensive range of a products, primarily selling food and food chains, wholesalers, grocery institu- users, jobbers. tional At all relevant production times General Foods’ and sales operations through have been conducted divisions, different primarily established according product to the involved. prior April, At all relevant times Pearson, Linley Gen., Atty. E. Ted J. production oper- General Foods’ and sales Gen., Holaday, Deputy Atty. Indianapolis, through ations were conducted its Max- appellant. House, Jell-O, Kool-Aid, Eye, well Birds Betley, Sprunger, Post, Leonard J. Barton T. and Institutional Food Service Divi- Indianapolis, appellee April, sions! Effective the divisions Corp. House, reorganized as the Maxwell Products, Beverage product and other services for Food Breakfast various Foods, Foods, Pet and Institutional Food During period question divisions. October, Divisions. Effective Service such Division maintained a warehouse lo- the name Institutional Food Indianapolis, cated in changed Division was to Food Service shipments made certain to customers in Service Products Division. Ship- central and northeastern Indiana. operating 4. Each of Foods’ di- General portions ments to all other of Indiana visions had its sales and own force sales were made from distribution warehouses responsibility products, for its with the located outside of Indiana. exception Division, of the Pet Foods October, During part 7. the latter which the sales utilized staff of the Bev- Baker, P. John Field for Auditor erage and Breakfast Foods Division. audited General Foods marketing organization geo- Each purposes for Indiana Gross income graphically regions into divided which in years through for the 1963. For turn are divided into districts. Offices years, prior periods, such and for General are maintained General Foods both at reported exempt Foods all sales to region and district levels. With the Indiana customers other than those which exception Indianapolis of a sales office were made from an Indiana stock of which was closed on June none of goods. treated all such the General Foods’ Divisions’ sales of- exempt period sales as both for the audit fices, region whether at or district thereto, periods prior and and did not level, were during located in Indiana any assess General with Foods additional 3, 1971, years April April fiscal ended During period, income tax. March and March 1974. present, and to the General Foods’ activi- 7, 1971, 5. After June all of General respect ties in Indiana with to the sales Foods’ Indiana customers were serviced products and distribution of offices, by three district located at Cincin- substantially customers has remained un- nati, Ohio, Livonia, Michigan, and North- changed. lake, Illinois. Each district office had years ending 8. For each of the fiscal control, responsibility receipt, for credit 3, 1971, April 1, 1972, April March orders, approval, processing and ware- 30, 1974, housing, shipping invoicing, and collec- reported tax, subject income ting preparing and sales and statistical paid tax on all sales to Indiana cus- analyses, performing pro- other data tomers which were made from an Indiana functions, cessing none of which func- goods. stock of with its re- Consistent performed tions were at an Indiana office porting prior years, including for all its Representatives after June reporting years method of which were the three out-of-state district offices who previously audited made calls (1961 1963). through basis, straight on salary worked had no treated sales offices located out- made authority respect with to customer credit side of Indiana to customers located in orders, approval acceptance and had Indiana, pursuant were to orders which inventory no or offices located in Indiana. out-of-state, accepted by General Foods purchase money paid All to General inventory, filled from out-of-state Foods from orders which were payment was made to out-of-state by the branch offices located outside offices, subject as not Indiana were to out-of-state offices tax. of General Foods. During period question April 9. For the fiscal ended 1, 1972, April 31, 1973,

Foods March also had a Distribution-Sales Ser- 30, 1974, provided Department, vice Division which certain sales March follow- functions, accounting warehousing, ing completed an audit on October assessed General Foods with action and served both the Attorney Gen- income tax on all amounts received from eral and the with a summons sales to Indiana customers made of- copy complaint. and a fices of General Foods located outside of genuine 15.There is no issue as to Indiana, pursuant accepted by to orders material fact in the within action. out-of-state offices and the Record at 176-80. The shipped to the Indiana customers from quarrels with these conclusions of law: warehouses or factories located outside of products if the sold were of the Conclusions of Law which, from time to time and in wrongfully and ille- varying quantities, were stored at gally collected income tax from Indianapolis operated by warehouse Gen- General Foods for the fiscal eral Foods’ Distribution-Sales Service Di- vision. 1973, 30, 1974, and March on income re- Department 10. The did not treat sales by ceived General Foods at out-of-state of General Foods’ Institutional Food Ser- offices, (hereinafter attributable to sales vice Division or sales of frozen food lines “Disputed Sales”) by made offices of which were never stored in Indianap- the General Foods located outside of Indiana. subject olis warehouse as to tax for the Pursuant to orders by solicited in Indiana 3, years April 1971, 1, fiscal April ended representatives offices, of out-of-state or 1972, 30, 1974, March and March directly orders sent to the out-of- though such sales were made in the same by customers, state offices manner as the sales para- described in orders were by offices of Gener- graph 9 hereof. al Foods located outside and By 16, 1977, 11. checks dated December goods shipped where the 10, 1978, July and General Foods the offices, warehouses, from or entire deficiency attributable to the addi- factories located outside in that by tional assessment Depart- of tax the income from such sales was not derived years 3, ment for the fiscal April ended activities, business other 1971, 1, 1972, April 31, 1973, March source within the Indiana within 30, March meaning of I.C. 6-2-1-2. 2, April 1979, 12. On Department 4. The wrongfully and ille- timely filed claims for refund with the gally gross collected income tax from years General Foods for the fiscal ended $71,695.19, $68,565.06, $70,- amounts of 3, 1971, April April 1, 1972, 31, March

435.80, $41,716.75 years for the fiscal 1973, 30, 1974, and March on income re- 3, 1971, April 1, 1972, April ended March ceived General Disput- Foods from the 30,1974, respectively, and March ed authority Sales under the Depart- representing Depart- tax collected Treasury ment of v. International Har- ment from General Foods on amounts Co., (1943) vester 221 [47], Ind. 447 received from sales of the set forth hereof, N.E.2d aff’d paragraph U.S. S.Ct. additionally [64 1313], provided claimed interest as L.Ed. by law. By April 23, 1979, letter wrongfully dated and ille- signed by Weil, gally B. J. General Foods’ collected income tax from claims for refund for the fiscal end- General Foods for the fiscal 3, 1971, April ed April 3, 1971, 1, 1972, March 30, 1974, and March were denied. on income re- May 14. On ceived Disput- less than three General Foods from the receiving months after notice from the ed Sales in that the same issue as in the present of the denial of its claims for previously case was resolved refund, General Foods filed the within in favor of General ry Assembly has not taxable as income under Ind. Foods and change exemption and seen fit to Code 6-2-1-2?

levying provisions of the Gross Income Tax der the doctrine of Sales cence N.E.2d 6. The income which of Tax Commissioners v. Carrier tion, (1977) Act as rehearing subsequent and the ^[167] Board of Tax in the ^[266] they authority denied, - Ind. - , to such [App. relate to the previous Ind. Whirlpool Corporation and such is deemed to have legislative acquies [615], 216], resolution. Un Commissioners, herein. determination Disputed Corpora v. Board re- from Indiana warehouses to Indiana cus- cause like tomers. so the applicable state warehouses to Indiana customers be- ment PARTIES’ CONTENTIONS —The houses is incidental to its entire inapplicable goods shipped from out-of-state. al state. CONCLUSION —The General Foods counters that the occasion- shipment contends goods income tax is goods shipped goods shipped are sometimes gross income tax is from Indiana ware- inapplicable income tax is from out-of- from out-of- operation, Depart- Disputed ceived from the Sales was re-

ceived from business conducted in com- DISCUSSION merce between the State of Indiana and 6-2-1-2, which the I.C. § other states of the United States which says applies, reads: prohibited the of Indiana is from State upon hereby imposed There is a tax the taxing under the Indiana Income Gross income, receipt gross of measured the Tax Act of as amended and income, gross or volume of in amount Commerce Clause and the Fourteenth the amount to be determined Amendment of the Constitution of the application gross of rates on such income United States. provided. hereinafter tax as Such shall Department’s imposition of upon receipt be levied of the entire upon income tax General Foods’ income persons of income all resident Disputed contrary from the Sales is to its Indiana, and/or domiciled in the of past practices and the laws of the State except provided; as herein otherwise of Indiana. upon receipt of income derived 8. General Foods is entitled to a refund any from activities or businesses or other income tax in the amounts of Indiana, source within the State of of all $71,695.19, $68,565.06, $70,435.80, and persons who are not residents of the $41,716.75, the fiscal (Emphasis added). of Indiana .... 31,1973, determining taxing In whether a 30, 1974, respectively, plus in- provision applicable, is all doubts are con provided by terest as law. strongly against Department, strued in judg- 9. General Foods is entitled to a taxpayer. Depart favor of the Indiana ment in its favor as a matter of law. ment of In State Revenue Convenient Any Finding may of Fact be deemed America, (1973), dustries of Inc. 157 Ind. a Conclusion of Law and Conclusion 641; App. 299 N.E.2d Gross Income may Finding of Law be deemed (1953), Tax Division v. Klink Fact. 581; Gross Income Tax Division Record 180-182. (1953), Corp. v. Surface Combustion 232 necessary dispose issue ISSUE —The den., Ind. cert. N.E.2d 346 U.S. appeal of this is: 74 S.Ct. 98 L.Ed. 353. And in ascertaining ap

Was the income which GFC earned whether I.C. 6-2-1-2 is § plicable, from orders filled out-of-state invento- must show that the activities within the giving rise to is received.” Indiana of State income, whole, viewed as a are more Revenue v. Convenient Industries of Ameri- than minimal. Indiana ca, Inc., supra, (emphasis 299 N.E.2d at 645 (1980), Penney v. J. State Revenue C. Co. added). Accord, Indiana den., (1981) trfr. State Revenue v. Frank Purcell Walnut (filed Apr. 1981); Depart- Indiana (1972), Ind.App. 122, Lumber Co. ment of State Revenue v. Convenient In- (Indiana resident); N.E.2d 336 De- America, Inc., supra. dustries of partment of State Revenue v. Sohio Petro- (1976), Ind.App. 123, leum Co. unpersuaded We are that GFC’s ac (Indiana resident). N.E.2d 95 tivities within the State of Indiana were more than minimal. GFC is a Delaware We thus conclude that these activities corporation principal with its office in New merely oper- incidental to GFC’s total comprised York. It of divisions which ation and were therefore insufficient largely production conduct distinct to seize attempting operations. sales All orders are apply I.C. In concluding, § 6-2-1-2. so out-of-state, approval all credit is accom agreement we are with Depart- plished out-of-state, goods and all are Co., ment of Penney State Revenue v. J. C. Further, compa out-of-state. (direct sales, supra catalog mail when retail ny representatives which do meet with cus and warehouse facilities within not accept tomers in Indiana do not orders. gross income); taxable and Indiana De- Although operat one GFC sales office was partment of State Revenue v. Convenient portion ed within peri Indiana for a America, Inc., supra (service Industries question, od in paid taxes were on sales advertising fees Kentucky cor- office, made from conceding that poration by Indiana franchises not taxable some orders were filled from a warehouse gross income). paid gross within GFC income tax Inasmuch as we have concluded that es on those sales. GFC’s income does scope not fall within the claims that 6-2-1-2, of I.C. we do not reach the be levied on questions exemption provision whether the shipped from out-of-state to Indiana cus 6-2-l-7(a) of I.C. apply, § would whether tomers if like are sometimes application of I.C. 6-2-1-2 to § GFC’s from an Indiana warehouse to Indiana cus income would violate the United States true, hardly tomers. That can be for to fall Constitution, or whether affirmance would within the ambit of I.C. 6-2-1-2 “the by be mandated legislative the doctrine of derivation of the income must be attribu acquiescence.1 op table to activities within the State posed person to the from whom the income We affirm. legislative acquiescence,

1. As to exemption the doctrine of had claimed the and said claim questioned Then, the trial court found that the was never had the Board. in the Board under audited the new GFC in 1964 for the fiscal 1961- amendment to challenged exemp the statute the claimed 63. Not until after a second audit had been Following hearings tion. a series of completed in 1977 did the claim meetings Whirlpool the Board ruled that was 1971-74, that taxes were owed for the exemption. Thereafter, entitled to the though reporting procedure even had re 1968, Whirlpool claimed the substantially unchanged mained since 1961. exemption ever, without incident. In how deciding Without whether the doctrine would again challenged the Board once Whirl here, apply language by we note this Justice pool’s attempt exemption. to claim the discussing Whirlpool Corp. Pivamik in v. State subject Whirlpool’s appeal was the chal (1975), Board of Tax Commissioners 167 Ind. lenge exemption. to the 1969 denial of the App. 338 N.E.2d 501: Whirlpool’s contention was that the Board Whirlpool The essential facts in are identi 1965, 1966, 1967, its actions in acquiesced and 1968 had surrounding cal to the facts Carrier’s actions. exemption in the and therefore Relying- predecessor on the statute and its estopped deny it in 1969. The Court of involved, Whirlpool, here since Appeals at least (1965) Compton, cited Baker v. SHIELDS, J., ton, (1965) concurs. recognized this: SULLIVAN, J., opinion. concurs with “Although interpretation placed SULLIVAN, Judge, concurring. upon the statute an administrative except I concur to the extent that Foot- agency of the may binding state not be majority opinion implies

note of the interpretation this Court if the is once an agency administrative has con- incorrect, interpretation such as has been statute, strued a it change never its applied made and previous a number of interpretation unless the statute has been adoptions, is entitled to considerable ” amended Assembly. Such weight . . . . implication require agency would an to ad- here to an erroneous

law and await legislative judicial either a my

correction. It is belief that the law encourage governmental

should admission self-generated

of error and solutions to

problems. Accordingly I take issue with following language overbroad LIND, M.D., Appellant John D. Whirlpool Corp. v. State Board of Tax Com- (Plaintiff Below), (1st 1975) missioners Dist.

338 N.E.2d 501 at 507:

“The therefore must be MEDICAL LICENSING BOARD OF IN- deemed to have exemp- in the DIANA, Appellee (Defendant Below). guidance tion and under the of Baker v. No. 2-279A48. Compton, supra, acquiescence is herein.” Appeals Court of Second District. legislative While the acquies- fiction of may provide cence legal problem tool for Oct. solving great persuasive and have effect in courts, it should not be the factor In actuality, considered. the doctrine of

legislative helpful only

when the earlier interpreta- administrative

tion was correct. See State Board of Tax Corp.,

Commissioners v. Carrier applica- 365 N.E.2d 1385. It is not

ble if the earlier was in error. case,

The seminal Comp- Baker v. 211 N.E.2d State Board of Tax State Board of Tax Commissioners v. Carrier Inc., Press, (1969) Corp., (1977) Ind, Commissioners v. Warner 365 N.E.2d Ind.App. 248 N.E.2d and other 1387. See also State Board of Tax Com legislative Inc., (1969) cases to establish the rule of ac missioners v. Warner Ind.App. Press quiescence recognized as a doctrine in this 248 N.E.2d modified on other stated, Whirlpool 621; grounds, state. The court then 258 N.E.2d Wright, (1966) 338 N.E.2d 507: Board of Tax Commissioners v. dispute 57; Ind.App. “[I]n the same as in the case at cf. Indiana Stone, Inc., bar was resolved the Board in favor of Revenue v. Cave Whirlpool. dispute. (1980) Ind.App. (no On the basis of the 1965 409 N.E.2d 690 reliance on permitted Whirlpool’s exemption statute); Board State Board Tax Commissioners v. (1976) Corp., Ind.App. 1967 and 1968. The there- Philco-Ford (doctrine inapplicable); Depart fore must be deemed to have exemption guidance Co., and under the ment of State Revenue v. Sohio Petroleum Compton, supra, (no Baker v. 352 N.E.2d 95 statute). therein. reliance on

Case Details

Case Name: Indiana Department of State Revenue v. General Foods Corp.

Court Name: Indiana Court of Appeals

Date Published: Oct 14, 1981

Citation: 427 N.E.2d 665

Docket Number: 2-1180A388

Court Abbreviation: Ind. Ct. App.