*1 NORTON COMPANY DEPARTMENT OF REVENUE OF ILLINOIS. Argued
No. February 26, 133. December 1950. Decided *2 petitioner. argued the cause Joseph B. Brennan Towle, Mac Asbill him were Roland With on the brief A.W. Sutherland. of Illi- Wines, Attorney General C. Assistant
William him on the With nois, argued respondent. the cause for Ray- Elliott, General, and Attorney A. brief were Ivan Attor- Murray, and James C. Assistant mond S. Sarnow neys General. opinion of the delivered the
Mr. Jackson Court. corporation, manufactures a Massachusetts
Petitioner, supplies. Under consent sells abrasive machines and therein, operates it of Illinois to do business State which branch office and warehouse admittedly sales it makes local sales at retail. These “upon persons Tax Occupation it to an Illinois personal prop- selling tangible business of engaged computation The at State.” base erty retail 120, c. receipts. Stat., Ill. Rev. gross is §441. petitioner’s
Not all to Illinois customers pro- collected, under over-the-counter, the State but gross company income of test, the tax on entire specifically from sales to its inhabitants. statute required exempts “business in interstate commerce” as Constitution, question whether range State has exceeded the of its constitutional power by derived income. taxing Massachusetts, petitioner
In manufactures Worcester, 225,000 items, some carries 18,000 usually which general management, accounting, stock. There are its offices, accepts rejects where credit or all direct mail and orders forwarded office. If specially an order calls for built machines, it is there and accepted rejected. studied or Orders are filled f. o. either b. Worcester the customer the Chicago via office. Chicago place performs of business several func- It an inventory 3,000 tions. carries of about fre- most *3 purchased quently From these cus- items. it serves cash and tomers those whose credit home has the office approved, by consummating direct sales. from Income petitioner these sales admits to be constitutionally taxable. But performs office also useful functions for other classes customers. credit, For those of no established those stock, who order items not in local and those who special want equipment, it receives order for- their and it to wards the home for many office action there. For of these Illinois customers also an intermediary acts as to reduce freight charges. packages Worcester and marks each goods customer’s but accumulates a them until car- load lot can consigned be the Chicago office. the breaks carload and reconsigns separate orders in original their package to customers. The Chicago office thus intervenes between vendor and Illinois vendees and performs helpful service petitioner’s competition trade except Illinois sales when buyer directly orders Worcester, shipped are directly buyer. there to the Supreme The Illinois recognized Court that it was deal- ing with interstate commerce. It reiterated its former no tax on solicitation
holdings “that there could work no solicitors But only” in State.1 or the the home office of either territory out engineering supply will although branch, pres- held that The Illinois court technical advice. outlet, in the circumstances local retail ence derived all income to attribute case, was sufficient it all taxable. and render that outlet from Illinois sales to in all re- at home stay corporation a chooses Where or advertising drummers except abroad spects to send home are to the sent solicit orders which buyer, delivery back filling, acceptance, grip buyer no local has the State of the is obvious suffi- incident occurs some local Unless the seller. taxing power, the within its bring transaction cient to Dilworth 322 U. McLeod v. not vendor is taxable. use tax can imposing sales or course, Of state those impact of burden, because the easily meet this more involving them user. Cases buyer is on the local taxes vendor.2 falls on the controlling here, for this tax corporation gone into when, But and has permission state to do local business State it can of the submitted itself only by showing taxation Illinois sales avoid on some busi- from the local particular transactions are dissociated rule, applica- general nature. ness *4 a tax claiming taxpayer immunity that ble is establishing exemption.3 his of has the burden a fair merely by met showing is This burden never original might an matter of which as opinion difference 314, 320, 90 737, 741. E. 2d 1 405Ill. N. 373; v. v. Montgomery Co., 312 U.
2 Cf. Nelson S. Ward & Nelson 359; v. Berwind-White Co., 312 U. Sears, McGoldrick Roebuck & v. Co., supra. 33; 309 U. S. McLeod Dilworth 3 310; Collector, v. 279 U. S. Compañia York New General 308, 316. v. Graves, 300 U. S. ex rel. Cohn 538 differently. corporation, by submitting
decided This it- taxing power Illinois, to submitted self likewise power itself to judicial apply to construe and its keeps statute insofar as within constitutional bounds. course, Of in constitutional cases, we have to exam- ine an independent judgment the whole record to arrive at as to rights whether constitutional have been invaded, but not mean that we will re-examine, does as court instance, supported by of first of fact findings substantial evidence.4 corporation mingled
This has so business with taxable requires that which it is not ad- contends taxable judicial separate ministrative the two. that, light We conclude in the the evidence, judgment attributing branch income from all sales that it either in receiving utilized the orders distributing goods permissible within the realm judgment. Petitioner has not established that such serv- ices were rendered were not deci- in establishing holding sive factors market. On no record, other source the customer relationship shown. could, corporation approached
This have the Illinois through market solicitors and it would have been entitled immunity of interstate commerce as set the Dilworth out But, competitive point case. from a system of view, disadvantages. may The trade view seller as remote and He inaccessible. cannot process be reached with of local courts for breach of or for if contract, service defective or in need of replacement. Petitioner elected to localize itself in the advantages market of a retail keep outlet in trade, supply close 635, 638; Bank v. Richmond, Merchants’ National Carl Curtiss, 103, 106. U. S. son *5 and to others, and many items take locally Although local consumers. freight costs to reduce within the business not, by engaging concern does immunity, business with to interstate lose its do right Telegraph States Cooney v. Mountain gain to a local outlet through business it cannot channel hold the immu- and also of a local business advantage business. interstate nities an in char- clearly interstate The items that are so their reasonably not attribute could acter that the State orders sent proceeds the local business are to shipped directly to the by the customer Worcester think Income from those we customer Worcester. was not is vacated and cause remanded judgment below proceedings not inconsistent herewith.
for further
It is so ordered. part. dissenting in Reed, Mr. Justice opinion Court’s Reed concurs Mr. as a base permits Illinois to use except as it sales, consummated computation the tax of orders forwarded acceptance Massachusetts filled Massa- office, Illinois branch there directly, shipped from Massachusetts chusetts, and branch, transhipment through the in Massachu- passes buyer In those buyer. sales title above facts Illinois concedes in its brief the setts. that, facts I conclude to this class of sales. From those buyer’s at the nothing appearing, else cost risk. recognizes
The Illinois statute interstate above is not to transactions described be taxed. business. *6 by gross tax pull permit each to measure its state receipts slight from sales with some relation to the puts strong. Constitution, however, state hands of regulation the of interstate commerce in the the interpretation gone Federal Government. have far in We of money, the a state tax Constitution to allow to collect in but view of the Federal Government delegation the of the over in more one commerce carried on than state, preserve we itself should interstate commerce it directly taxes levied on unapportioned gross the receipts Greyhound of that Mealey, commerce. Lines v. 334 653; Joseph Stevedoring Co., U. S. & Carter Weekes 422; Stone, 330 S. Pipe dissent, U. Interstate Line Co. v. 676. 662, approach Our closest tax on to the the above interstate business was the tax on DuGrenier, Inc., in McGoldrick v. Felt Mfg. Co., & Tarrant Despite 309 70, U. S. marked differences between the DuGrenier transactions and all others considered in McGoldrick v. Berwind-White Co., 309 analysis without U. of the effect those and in differences upon “possession” reliance the fact that transportation transferred New York the company buyer, upheld by we If the the language used say was meant to that the seller delivered the buyer, were, the we said, transactions “controlled” Berwind-White.
A years few later, however, McLeod v. Dilworth 327, an opinion U. S. in which writer of the opinion, DuGrenier Chief Justice Stone, joined, we made it clear a tax cannot be buyer’s collected state on orders in one state, accepted solicited in another, and shipped purchaser’s at risk. That later clarifying holding to me seems to state the true applicable rule here. I can see difference, no constitutionally, between solicita- tion in a by salesmen branch office or on road. Such sales, consummated direct buyers Illinois free are interstate from out of state Court Supreme far as levied. So Illinois taxable, should transactions Illinois holds those reversed. Clark, dissenting part.
Me. Justice all of attributed reasonably respondent I believe the the com- Illinois proceeds agree I therefore local activities. pany’s shipments circumstances that under the Supreme Court on orders sent customers directly to Illinois sent *7 were to Worcester taxation petitioner can avoid points out,
As the Court are [they] . . . showing that only "by its direct from the local dissociated [are] a is that general rule, applicable in nature. The a the burden immunity from tax has taxpayer claiming failed Petitioner exemption.” his establishing peti- In fact Illinois has shown meet this burden. rela- customer Chicago tioner’s office is source Illinois; provides in tionship with petitioner can be reached through which sole means ag- a courts the event customer process to machines local grieved; office affords service which replacement as as machines sale, after well complaints ready to receive defective; that it stands these advice; and that engineering to offer and technical a local char- give multitudinous activities operations. helpful in its Illinois acter which is most Surely conclusion, that “Petitioner has the Court’s rendered that such services were established establishing decisive factors office were not validity market,” applies equal holding this direct sales. magnitude, maintaining
In establishment of such local adopted merchant. petitioner has the label of home-town After it has received manifold advantages of that label, we should not give our sanction to its claim made at taxpaying time respect that with to direct sales it is only an itinerant drummer. For foregoing and other reasons which need not be I stated, would affirm its entirety below. Douglas
Mb. Justice Black and Mb. join this opinion.