204 P. 396 | Cal. | 1922
This is an action to recover taxes paid under protest by the Oceanic Steamship Company to the *28 state of California. After answer plaintiff moved for a judgment upon the pleadings, which was denied. At the trial plaintiff submitted the case upon the admission in the pleadings, without offering any evidence upon the issues, and judgment was rendered in favor of the defendant. Plaintiff appeals.
The Oceanic Steamship Company is a corporation organized under the laws of the state of California and engaged exclusively in the business of transporting freight and passengers between San Francisco and the Hawaiian Islands and certain foreign countries. The company has maintained offices in San Francisco for the transaction of its interstate and foreign business, but has conducted no other business in this state except the purchase of its fuel and supplies used in its transportation business.
The state board of equalization assessed the franchise of the company, or its "corporate excess" (Miller Lux, Incorporated
v. Richardson,
It is contended by appellant that as the state has imposed a property tax upon the tangible property of the corporation within the state, this tax upon the intangible property of the corporation is in effect a tax upon interstate commerce, and, therefore, violative of the interstate commerce clause of the constitution of the United States (U.S. Const., art.
The decision of that court in Cream of Wheat Co. v. County ofGrand Forks (N.D.),
"Its manufacturing, commercial and financial business was conducted wholly without the state; and it had not at any time during any of those years within the state either any tangible property real or personal or any papers by which intangible property is customarily evidenced. Its property, as distinguished from its franchise, is alleged to have been taxed in states other than North Dakota. . . .
"The company was confessedly domiciled in North Dakota; for it was incorporated under the laws of that state. *30
As said by Mr. Chief Justice Taney, 'It must dwell in the place of its creation, and cannot migrate to another sovereignty.' (Bank of Augusta v. Earle, 13 Pet. 519, 588 [
The power of the state to make this assessment is fully sustained in Underwood Typewriter Co. v. Chamberlain,
"A tax is not obnoxious to the commerce clause merely because imposed upon property used in interstate commerce, even if it takes the form of a tax for the privilege of exercising its franchise within the state. (Postal Tel. Cable Co. v. Adams,
On the question of the alleged violation of the
"But this showing wholly fails to sustain the objection. The profits of the corporation were largely earned by a series of transactions beginning with manufacturing in Connecticut and ending with sale in other states. In this *32 it was typical of a large part of the manufacturing business conducted in the state. The legislature, in attempting to put upon this business its fair share of the burden of taxation, was faced with the impossibility of allocating specifically the profits earned by the processes conducted within its borders. It, therefore, adopted a method of apportionment which, for all that appears in this record, reached, and was meant to reach, only the profits earned within the state."
It was also held that the taxpayer had the burden of proving that forty-seven per cent of its profits was not reasonably attributable to the business within the state. (UnderwoodTypewriter Co. v. Chamberlain, supra.) This principle would lead to the conclusion in the case at bar that the admission of the plaintiff that fifteen per cent of its intangible property was located within the state was fatal to its recovery, because there is not only no proof of an unreasonable or unjust application of the law to the facts, but, on the contrary, an express admission of its just application.
The fact that the corporation involved is engaged in interstate commerce does not deprive the state of the power to tax the franchise of a domestic corporation even though the privilege of being a corporation derived its value in part from interstate commerce. (Kansas City etc. Ry. Co. v. Botkin,
The case of Looney v. Crane Co.,
From the foregoing decisions it is clear that the state had authority to tax the intangible property of the Oceanic Steamship Company within the state, and that such tax was not a burden upon interstate or foreign commerce prohibited by the federal constitution.
Judgment affirmed.
Sloane, J, Shurtleff, J., Lennon, J., Shaw, C. J., and Lawlor, J., concurred.
Rehearing denied.
All the Justices concurred.