218 Mass. 558 | Mass. | 1914
These are petitions
1. The foreign corporation tax law, St. 1909, c. 490, Part III, §§ 56, et seq., has been upheld as a constitutional exercise of the power of the State after extended argument and thorough deliberation. Attorney General v. Electric Storage Battery Co. 188 Mass. 239. Baltic Mining Co. v. Commonwealth, 207 Mass. 381. Keystone Watch Case Co. v. Commonwealth, 212 Mass. 50. S. S. White Dental Manuf. Co. v. Commonwealth, 212 Mass. 35. On writ of error the judgments in the last two cases were affirmed in 231 U. S. 68. The only question to be determined in the cases at bar is whether under the principles already established the several plaintiffs were subject to the excise laid upon each. The tax sought to be recovered is strictly an excise tax and in no sense a property tax. It is a license fee exacted from foreign corporations for the privilege of doing in this State business other than interstate commerce. So far as any of the plaintiffs’ requests for rulings seek for a re-examination or reversal of the principles established in these decisions, they rightly were denied.
2. The Commonwealth urges that each of the plaintiffs is
3. It was said in the course of the opinion in Attorney General v. Electric Storage Battery Co. 188 Mass. 239, at pages 240, 241, “If the statute before us applied to the maintenance of a place of business solely for the purpose of engaging in interstate commerce it would be unconstitutional. . . . We are of opinion that the Legislature cannot have intended to include in this statute corporations whose usual place of business is established and maintained solely for use in interstate commerce.” After that decision St. 1909, c. 490 was enacted without material change in this respect, from which the inference flows that the Legislature was content with the law as interpreted by 'that decision. In Baltic Mining Co. v. Commonwealth, 207 Mass. 381, at page 390 it was said, referring to the case last cited, “In our former adjudication upon it [the statute now under consideration] we expressed the opinion that it was inapplicable to cases where a foreign corporation had its place of business here only for use in interstate commerce. It is not to be inferred that the Legislature intended the statute to go beyond the constitutional authority of the Commonwealth.” What was said in these two decisions was adverted to and apparently adopted in part as the basis of decision in Baltic Mining Co. v. Massachusetts, 231 U. S. 68, where it was stated at page 84, “and the statute, it is held, does not apply to corporations which have places of business for the transaction solely of interstate commerce.” See also
The contention of the Commonwealth that these sentences were not intended to apply to and do not apply to corporations doing a commercial or trading business, but only to transportation corporations, cannot be supported. The decisions in which they occur did not relate to transportation corporations but to purely business corporations. The statements cannot be treated as dicta, for they are used as essential links in a chain of reasoning by this court upholding the constitutionality of the statute. We regard ourselves as bound by them in interpreting and applying this statute./
The Attorney General has argued in substance that the maintenance of] a local office solely for a purpose connected with interstate commerce is such a doing business within the State as subjects a,corporation to the license fee required by this statute. Reliance in this regard is placed especially upon the words in Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, at page 184, to the effect that the State has a right to exact a license fee of a foreign corporation for maintaining “an office in the Commonwealth for the use of its officers, stockholders, agents, or employees.” But as was explained in McCall v. California, 136 U. S. 104, at page 112, that decision was not intended to impinge upon the equally well settled principle that “the only limitation upon this power of the State to exclude a foreign corporation from doing business within its limits, or hiring offices for that purpose, or to exact conditions for allowing the corporation to do business or hire offices there, arises where the corporation is in the employ of the federal government, or when its business is strictly commerce, interstate or foreign. The control of such commerce, being in the federal government, is not to be restricted by State authority.” Expressions to be found in Horn Silver Mining Co. v. New York, 143 U. S. 305, 317, Wolff Dryer Co. v. Bigler & Co. 192 Penn. St. 466, Davis & Rankin Building & Manuf. Co. v. Dix, 64 Fed. Rep. 406, 413 and Attorney General v. Bay State Mining Co. 99 Mass. 148, 153, relied on by the Attorney General, must be regarded as subject to this limitation. In principle that question is concluded by Norfolk & Western Railroad v. Pennsylvania, 136 U. S. 114, and McCall v. California, 136 U. S.
4. What constitutes "commerce . . . among the several States” within the meaning of those words in the Federal Constitution has been defined by the Supreme Court of the United States. Said Chief Justice Marshall in Gibbons v. Ogden, 9 Wheat. 1, 189, 190, “ Commerce, undoubtedly, is traffic, but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches.” In County of Mobile v. Kimball, 102 U. S. 691, at page 702 occurs this definition: “Commerce with foreign countries and among, the States, strictly considered, consists in intercourse and traffic, including in these terms navigation and the transportation and transit of persons and property, as well as the purchase, sale, and exchange of commodities.” In Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 203, it was said, “Commerce among the States consists of intercourse and traffic between their citizens, and includes the transportation of persons and property, and the navigation of public waters for that purpose, as well as the purchase, sale and exchange of commodities. The power to regulate that commerce, as well as commerce with foreign nations, vested in Congress, is the power to prescribe the rules by which it shall be governed, that is, the conditions upon which it shall be conducted; to determine when it shall be free and when subject to duties or other exactions.” In Robbins v. Shelby County Taxing District, 120 U. S. 489, at page 497, it was said that “the negotiation of sales of goods which are in another State, for the purpose of introducing them into the State in which the negotiation is made, is interstate commerce.” Kidd v. Pearson, 128 U. S. 1, 20. Lottery Case, 188 U. S. 321, 352, 353. Swift & Co. v. United States, 196 U. S. 375. Diamond Match Co. v. Ontonagon, 188 U. S. 82. It is apparent from this review of decisions that the interstate commerce regulation which is under the exclusive control
5. The petitioners have emphasized somewhat in argument the phrase in 231 U. S., at page 86, to the effect “that local and domestic business, for the privilege of doing which the State has imposed a tax, is real and substantial,” and have sought to infer therefrom that a new limitation has been imposed upon the power of the States. This conclusion does not follow. The sentence probably was intended only as a reference to a fact which existed in the cases then before the court, although not one decisive in any respect as to the conclusion reached. But given its full force, it is nothing more than a statement that a shadow cannot be made the basis of an excise tax. But when the local and domestic business exists, then an excise may be levied. There is nothing to indicate that a comparison between the total business of the company and its local business was intended. Such a basis has never before been intimated. It is directly contrary to Ficklen v. Shelby County Taxing District, 145 U. S. 1. See also Flint v. Stone Tracy Co. 220 U. S. 107. If such a principle exists in reference to any facts, it has no relation to any of the cases at bar. The test is whether the foreign corporation transacts domestic business substantial in its essence and not by comparison, and reasonably susceptible of separation from its interstate commerce. If it does, the State can fix its own terms so far as license fee is concerned.
6. The ratio of profits on the domestic business to the license tax is an immaterial circumstance. If the license fee imposed is general in its operation and is in other respects invulnerable, the mere fact, that some foreign corporation may not be able to make
Both upon this point and the one last discussed the petitioners rely on the statement in United States Express Co. v. Minnesota, 223 U. S. 335, 348, to the effect that if the amount of the tax .is “unduly great, having reference to the real value” of the property engaged in the business, and on that in Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 42, referring to a tax “not at all disproportioned to such local business.” See S. S. White Dental Manuf. Co. v. Commonwealth, 212 Mass. 35, 44. These tests well may be used as aids in determining whether the general scheme of an excise statute is an honest attempt to raise legitimate revenue, or whether it is “a mere device to reach and burden the interstate commerce of the company.” But when the general scheme of the statute has been upheld as not out of harmony with the Federal Constitution, then it cannot be stricken down because in a particular instance the excise may seem large. New York v. Roberts, 171 U. S. 658, 661, 663. Pullman Co. v. Kansas, 216 U. S. 56, 66, 67. Ohio Tax Cases, 232 U. S. 576, 592.
It remains to consider the several cases at bar in the light of these governing principles.
7. The Marconi Wireless Telegraph Company of America is organized under the laws of New Jersey. It maintains in Massachusetts near the ocean three wireless stations, each consisting chiefly of a high pole having at the top a wire or wires with bare ends, from which are sent through and taken from the air currents of electricity, whereby messages are transmitted and received. Connected with this apparatus are rooms similar to ordinary telegraph stations, for use of the wireless telegraph operators. At each station it transmits and receives wireless messages for hire to and from ships on the high seas and foreign countries. It neither transmits nor receives any messages whatever over land or in or through this Commonwealth. It has no property in the Commonwealth, except that above described.
8. The Pocahontas Fuel Company is established under the laws of West Virginia. Its business is the buying and selling of coal and coke. At its office in Boston is a manager who has charge of New England business and who is paid by check from New York, a salesman and a stenographer. Records of sales are kept at the Boston office and an average deposit of $1,000 is kept in a local bank for the expenses of this office. Correspondence and telephoning respecting sales is done from this office. Customers do not come to the office, but are called upon by the salesman, who sends all orders to New York, where they must be accepted and approved before the sale takes place. Goods are shipped to customers f. o. b. Norfolk, Virginia. The local office, in making contracts for delivery in Massachusetts, arranges charter parties for boats in the customer’s name. All payments by customers are made by remittances by check to New York. This company has none of its goods or property in the Commonwealth, except office furniture, and there is no treasurer here. The description of business done at the Boston office, as shown by the agreed facts, is somewhat meagre, but it does not appear to include anything more than interstate commerce. No stock of goods is kept here. There is no local shop or store as a general resort for customers and the conduct of the essential details of
9. The Cheney Brothers Company is organized under the laws of Connecticut for the manufacture of silk and other fabrics and for the purpose of trade. It maintains in Boston an office and salesroom with one office salesman and four other salesmen who travel through New England. No bookkeeper is employed, no books are kept except copies and records of orders, and no collections are made. The only deposit of funds is for the expenses of the office, amounting usually to about $250, which is sent from the treasury in New York. The salaries of salesmen and rent of
Five salesmen are attached to these Massachusetts headquarters; one stationed there permanently; while four others also travel throughout New England. New England is a perfectly well understood geographical term which includes Connecticut, the domiciliary State of the corporation. Since the agreed facts show that the travelling salesmen attached to the Boston office “cover” Connecticut as well as the other New England States, it follows that this local domicil is used in part at least for the transaction of business between the Cheney
Some of these circumstances singly are enough to show that the place maintained by Cheney Brothers Company in Boston was not used exclusively for interstate commerce. Combined together, they lead to the conclusion that it is not entitled to prevail in this proceeding. The recognition of the existence of the corporation in Massachusetts to the extent here shown, by permitting it to maintain an office for the general use of its employees, agents and customers and the storage and display of samples of its products, “was a matter dependent on the will of the State,” who could affix to the favorable exercise of its volition the conditions set forth in the corporation excise tax law. Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, 186. New York v. Roberts, 171 U. S. 658. Reymann Brewing Co. v. Brister, 179 U. S. 445. Horn Silver Mining Co. v. New York, 143 U. S. 305. Attorney General v. Bay State Mining Co. 99 Mass. 148. The record reveals nothing to bring this corporation within any of the exceptions to this general rule discussed in McCall v. California, 136 U. S. 104, Norfolk & Western Railroad v. Pennsylvania, 136 U. S. 114 and kindred cases.
10. The Lanston Monotype Machine Company, organized under the laws of Virginia, manufactures machinery at its factory in
11. The Locomobile Company of America, a West Virginia corporation, is authorized to manufacture, buy, sell and deal in automobiles and to carry on general business. Its factory is in Bridgeport, Connecticut, where its business is the manufacture and sale of automobiles. In Boston it occupies an office, salesroom and repair shop for the purpose of repairing cars of its own make and second hand cars taken in exchange for its own make. It occupies a large building and employs thirty persons, ten of whom are in the sales and office department and twenty in the repair department. Its method of conducting its sales of new cars is for orders to be taken by its Boston agent and transmitted to Bridgeport, whence cars are shipped to the Boston agent, who makes deliveries in accordance with orders. It does not appear, moreover, that separation of an- automobile for a particular purchaser is made until the car reaches Boston, although no shipments of cars are made into Massachusetts “except cars used in fulfilment of orders . . . previously given and approved.” In two thirds of the sales of new cars the purchaser pays the entire price in cash on or before the delivery of the car, while in the remaining third “the company accepts, as a part of the consideration, a car of whatever make, previously used by the purchaser.” The company maintains at its place of business in Boston a used-car department, where it sells cars of its own and other makes
12. The Northwestern Consolidated Milling Company is a corporation organized under the laws of Minnesota. It is authorized by its charter among other things to manufacture and sell flour. Its mills are located in Minnesota. It maintains a Boston office which has charge of the business of the company in New England and a part of New York. Sixteen travelling salesmen are connected with the office, seven of whom are devoted to the Massachusetts trade. These salesmen take orders for flour and other grain products from retailers. These orders are turned over to the nearest wholesale dealer, and the petitioner has nothing further to do with them. The situation is that the salesmen in the employ of the manufacturer are soliciting business for the wholesaler by whom they are not employed. The wholesaler fills from his stock the orders given by the retailer through these salesmen and the retailer pays him. These transactions are wholly between the domestic wholesaler and the domestic retailer. The wholesalers buy their stock from the petitioner by order to the Boston office. Such orders are sent to the petitioner in Buffalo or Minneapolis, and the goods are shipped to the wholesaler. In no case is there any approval of orders by the home office. One half of the sales from the Boston office are for delivery in Massachusetts. The petitioner keeps on hand in Boston a small stock from which i't makes sales for delivery in Massachusetts. The major part of the petitioner’s business in Massachusetts is furnishing salesmen to act as agents for the domestic wholesalers in soliciting orders from domestic retailers. This is in substance the business of providing agents for the wholesalers. The business done by the wholesaler and the retailer is a domestic business. The business of the petitioner is chiefly in aid of this domestic business, and partakes in no respect of interstate commerce. The motive which influences the petitioner in undertaking this business is inconsequential in determining whether it constitutes interstate commerce. The fact that a natural result may be to increase the sales of the petitioner to the wholesalers is an immaterial circumstance. It is too remote
In none of the cases considered under paragraphs 9 to 12 both inclusive of this opinion is the intrastate business more intimately connected with interstate commerce than in Allen v. Pullman’s Palace Car Co. 191 U. S. 171, Pullman Co. v. Adams, 189 U. S. 420, Osborne v. Florida, 164 U. S. 650, Pennsylvania Railroad v. Knight, 192 U. S. 21, Browning v. Waycross, 233 U. S. 16, in each of which it was held that the two were separable, for purposes of a State excise on the domestic business.
13. The Copper Range Company is organized under the laws of Michigan. Its articles of association state that “the place where the business office of this corporation is located, without the limits of the State of Michigan, is Boston, Massachusetts.” This petitioner is a “holding company” whose chief asset is stock in a foreign copper mining corporation, and it also holds the stock and bonds of a Michigan railroad and certain mineral lands. It transacts no commerce either here or elsewhere. Its activities in Massachusetts consisted in receiving monthly dividends from its stock in foreign corporations and depositing them in Boston banks, and the payment of these receipts, less officers’ salaries and expenses, to its stockholders by way of dividends. Substantially its entire capital stock is owned by the Copper Range Consolidated Company, whose treasurer is also the treasurer of the petitioner. Its directors’ meetings are held three or four times a year in Boston, and its annual stockholders’ meeting is also held there. It declares and pays dividends several times annually. The president and treasurer are residents of Massachusetts, and it keeps its corporate records and financial books of account here. It does not appear expressly, but it fairly is inferable from the fact that its treasurer’s office is here and its
14. The Champion Copper Company is organized under the laws of Michigan, to mine, smelt and refine copper and other minerals, and to sell the same. Its articles of association state that the “place where the business office of this corporation is located, without the limits of the State of Michigan, is Boston, Massachusetts.” It owns a copper mine in Michigan, where its copper is mined. Its product is sold exclusively through a selling agent in New York which represents the petitioner only with respect to making the contracts of sale and the collections from purchasers and remitting the proceeds to the treasurer of the petitioner. Deliveries under contracts of sale are exclusively under the direction of the petitioner’s treasurer. The petitioner maintains its treasurer’s office in Boston for the purpose of gen
15. The White Company is an Ohio corporation, organized to manufacture and sell automobiles. Its manufactory is in Ohio. It admits that it has a real and substantial local and domestic business. Its petition raises no question under the commerce clause of the Federal Constitution, but it avers that it is denied the equal protection of the laws. Such protection is assured to it, by the Constitutions both of this Commonwealth and of the United States. Its contention rests on these facts. After 1903 (when St. 1903, c. 437, § 75, was in force) and before 1909 it acquired land in Boston, and built thereon a seven story building of steel, brick and concrete. It was especially adapted for use as a garage, and gasoline tanks, elevators and a turntable were installed, the total investment approximating $175,000. Adjoining property was acquired and remodelled and adapted for an automobile service station. This latter estate has not been occupied for several years, nor leased or sold, although it has been for lease or sale. The license fee exacted by the laws of the Commonwealth from foreign corporations has been made more onerous by the statute of 1909. The petitioner contends that these facts bring it within the principle established by Southern Railway v. Greene, 216 U. S. 400.
The real estate acquired by this petitioner is of a kind adapted to a very considerable and increasing business, in which there is general competition. The storage and care of automobiles and the performance of necessary service for their repair, mainte
Moreover, there is nothing to indicate that the purchase of real estate and the construction of a building were indispensable features of its initial admission to do business here. It is common knowledge that business like that of the petitioner often is conducted on leased property. There is a wide difference between
The conclusion here reached seems to be supported also by Hammond Packing Co. v. Arkansas, 212 U. S. 322, Security Mutual Life Ins. Co. v. Prewitt, 202 U. S. 246, and Waters-Pierce Oil Co. v. Texas, 177 U. S. 28.
What has been said disposes of all the cases. It is not necessary to follow in detail the numerous requests for rulings. So far as they apply to any of the cases, the material principles to which they call attention have been discussed. Let entries be made for judgment in the several cases as follows:
Marconi Wireless Telegraph Company of America v. Commonwealth, Decree for the petitioner with costs.
Pocahontas Fuel Company v. Commonwealth,
Decree for the petitioner with costs.
Cheney Brothers Company v. Commonwealth,
Petition dismissed with costs.
Lanston Monotype Machine Company v. Commonwealth,
Petition dismissed with costs.
Locomobile Company of America v. Commonwealth, '
Petition dismissed with costs.
Northwestern Consolidated Milling Company v. Commonwealth, Petition dismissed with costs.
Copper Range Company v. Commonwealth,
Petition dismissed with costs.
Champion Copper Company v. Commonwealth,
Petition dismissed with costs.
White Company v. Commonwealth,
Petition dismissed with costs.
The cases were argued at the bar in March, 1914, before Rugg, C. J., Hammond, Loring, Sheldon, & Crosby, JJ., and afterwards were submitted on briefs to all the justices.
Filed in the Supreme Judicial Court under St. 1909, c. 490, Part III, § 70. All the cases were reported by Crosby, J., for determination by the full court.