Ford Motor Co. v. Department of Treasury

• Decision Date: 04 March 1944
• Docket Number: No. 8417.,8417.
• Citation: 141 F.2d 24
• Parties: FORD MOTOR CO. v. DEPARTMENT OF TREASURY OF STATE OF INDIANA et al.
• Court: U.S. Court of Appeals — Seventh Circuit

141 F.2d 24 (1944)

FORD MOTOR CO. v. DEPARTMENT OF TREASURY OF STATE OF INDIANA et al.

No. 8417.

Circuit Court of Appeals, Seventh Circuit.

March 4, 1944.

James A. Ross, Robert D. McCord, and Merle H. Miller, all of Indianapolis, Ind. (Ross, McCord, Ice & Miller, of Indianapolis, Ind., of counsel), for appellant.

Winslow Van Horne, John J. McShane, and James A. Emmert, all of Indianapolis, Ind., for appellees.

Before KERNER and MINTON, Circuit Judges, and LINDLEY, District Judge.

MINTON, Circuit Judge.

Only one question is presented here: Whether the plaintiff-appellant, the Ford Motor Company, a non-resident of Indiana, must pay to the State of Indiana a tax on its gross income from a certain type of transaction designated in the record as "Class A sales." The years in question are 1935, 1936, and 1937.

The plaintiff paid the tax and brought suit in the District Court to recover against the defendants-appellees, the Department of Treasury of the State of Indiana and the officials constituting the Board of that Department. The District Court made findings of fact and stated its conclusions of law thereon in favor of the defendants. From a judgment in favor of the defendants, the plaintiff has appealed.

The plaintiff, as stated in its brief, relied solely upon errors arising out of the court's conclusions of law. The evidence is not before us. The record consists only of pleadings, findings of fact, which are unchallenged, and conclusions of law.

For a description of Class A sales, we look to Finding No. Ten:

"The major cause of the additional assessment asserted by the department was due to the imposition of a tax upon gross receipts by plaintiff from sales where cars, trucks or parts were shipped directly from the plaintiff's factory at Dearborn, or from plaintiff's assembly plants at Chicago, Cincinnati, and Louisville, to dealers in Indiana who were assigned to such branches, and (1) where such products were paid for by such Indiana dealers in cash upon the delivery thereof at such dealers' place of business in Indiana, such payments having been made by such dealers to the employees of the truck-away or convoy companies upon delivery, and (2) where such products were paid for by such Indiana dealers with finance papers, or a combination of finance papers, and cash, upon delivery thereof at the dealers' place of business in Indiana, such payments having been made by such dealers to the employees of the truck-away or convoy companies upon making such delivery, and in both instances the collections so received by the truck-away or convoy companies were by them taken and delivered in due course to the respective branches of the plaintiff aforesaid entitled to receive the same, were deposited by such branches in their regular depository as hereinbefore found, and were thereupon subject to the further order and disposition by the plaintiff as its property; these may be properly referred to as `Class A' sales."

The District Court made further relevant findings concerning the nature of Class A sales in Finding No. Seventeen:

"* * *

"(b) All of the gross receipts from the sale of cars, trucks and parts by plaintiff to dealers in Indiana, upon which the taxes and interest were assessed and collected as shown in Finding No. Sixteen,¹ were received by plaintiff while it was engaged in business in Indiana, and derived from sources within Indiana, from the sale and transfer of plaintiff's property which was thus transported to its Indiana dealers as aforesaid, and paid for by such Indiana dealers in cash upon arrival at their places of business in Indiana, or were paid for upon arrival at the place of business of such dealers in Indiana with finance papers executed as aforesaid, or a combination of cash and finance papers, collection having been made in both instances by the employees of said truck-away or convoy companies acting as the agent for the plaintiff in the making of such collections, and who, thereafter, in due course transmitted such receipts and collections to the respective branches of plaintiff entitled to receive the same."

From these findings, it is clear that Class A sales were sales of merchandise manufactured and assembled outside of Indiana but that every transaction in the sales, with the exception of the shipment of the goods and the receipt of some orders, took place in Indiana.

As the Gross Income Tax Law of Indiana was originally enacted in 1933, Chapter 50, Acts of 1933, Burns Indiana Revised Statutes Annotated (1933) § 64-2602, it provided:

"Sec. 2. * * * Such tax shall be levied upon the entire gross income of all residents of the state of Indiana, and upon the gross income derived from sources within the state of Indiana, of all persons and/or companies, including banks, who are not residents of the state of Indiana, but are engaged in business in this state or who derive gross income from sources within this state * * *."

This statute was limited by the holding of the Supreme Court in J. D. Adams Manufacturing Co. v. Storen, 304 U.S. 307, 58 S.Ct. 913, 83 L.Ed. 1365, 117 A.L.R. 429, so as to exclude from its scope sales made outside the State by a domestic corporation of Indiana, although the goods were manufactured in Indiana and shipped therefrom. In accordance with this holding, the Gross Income Tax Law was amended in 1937, Chapter 117, Acts of 1937, Burns Indiana Revised Statutes Annotated (1943) § 64-2602, to read:

"Sec. 2. * * * Such tax shall be levied upon the receipt of the entire gross income of all persons resident and/or domiciled in the state of Indiana, except as herein otherwise provided; and upon the receipt of gross income derived from activities or businesses or any other source within the state of Indiana, of all persons who are not...