Graybar Electric Co., Inc. v. Curry

• Decision Date: 25 May 1939
• Docket Number: 3 Div. 291.
• Citation: 238 Ala. 116,189 So. 186
• Court: Alabama Supreme Court
• Parties: GRAYBAR ELECTRIC CO., INC., v. CURRY, COM'R OF REVENUE, ET AL.

189 So. 186

238 Ala. 116

GRAYBAR ELECTRIC CO., INC., v. CURRY, COM'R OF REVENUE, ET AL.

3 Div. 291.

Supreme Court of Alabama

May 25, 1939

Rehearing Denied June 8, 1939.

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Bill for declaratory Judgment by the Graybar Electric Company Inc., against John C. Curry, as Commissioner of Revenue, and Thos. S. Lawson, as Attorney General. From a decree favorable to respondents, complainant appeals.

Affirmed.

Cabaniss & Johnston and Gerry Cabaniss, all of Birmingham, for appellant.

Thos S. Lawson, Atty. Gen., John W. Lapsley, Counsel, Dept. of Revenue, of Montgomery, and J. Edw. Thornton, Asst. Counsel, of Birmingham, for appellees.

KNIGHT Justice.

Bill for declaratory judgment to determine whether certain sales for which the state, through its tax authorities, has attempted to assess against the complainant a tax of two per cent, under the provisions of an Act of the Legislature of Alabama, Gen.Acts 1936-37, Sp.Sess., p. 125, entitled An Act to amend an Act, entitled "An Act to provide for the general revenue of the State of Alabama, approved July 10, 1935," are taxable under said Act, or whether said sales fall within, and are protected by, the Commerce Clause of the Federal Constitution. If the sales, under the facts shown by the record, were in interstate commerce, the tax attempted to be imposed thereon would be illegal and void.

The complainant took the position in the lower court, and renews its contention here, that it was not taxable because, (a) the transactions in which it had engaged were not sales within the meaning of said act, and (b) even if said transactions constituted "selling at retail" within the meaning of the act, such sales were made in interstate commerce and under the Commerce Clause of the Federal Constitution, the state was powerless to tax them.

The complainant's principal or head office is in the City of New York, N.Y. It maintains division headquarters for the southeastern states in Atlanta, Georgia, and it also has an office and stock of goods consisting of a small quantity of standard articles of electrical supplies suitable for storage in its Birmingham, Alabama, warehouse.

The cause was tried upon the pleadings and an agreed statement of facts, in which it was admitted that facts stated in the complaint, with certain exceptions not here important to be stated, were true. The lower court sustained the state's contention that the sales were taxable under its sales tax law.

From the record it appears: When orders are received by the complainant for large quantities of goods, it is now the practice of complainant, and it has been its practice for a number of years, to order such goods from manufacturing companies located outside of the State of Alabama, and direct that shipment of the goods so ordered be made by the manufacturer direct to complainant's customer within the State of Alabama. When orders are received by complainant for goods to be manufactured to the purchaser's specifications and when orders are received by complainant for goods not carried in the Birmingham Warehouse, it is now and has been for a long time complainant's practice to order such goods from the factory manufacturing the same, located outside the State of Alabama, with directions to the manufacturer to ship the goods direct to the customer within the State of Alabama.

It further appears that the sum of money--$2,636.93--which the respondents claim to be due the state constitutes two per cent of gross receipts received by the complainant totaling $131,846.33, said sum being complainant's gross receipts from four classes of transactions as follows:

Class A. During the year 1937 sales were made aggregating $32,689.11 under the following circumstances: Each sale within this class was made after an order had been received from complainants, said order being in substantially the following form:

"Graybar Electric Company, 1529 First Avenue North, Birmingham, Alabama. Please furnish us the following articles, 204--1000 Watt, 260 Volt, Mazda Lamps at $4.75 each. It is agreed that the material covered by this contract shall be manufactured at the plant of the General Electric Company located in the State of Ohio and shipped in interstate movement from said plant to destination, shipped via freight to Tennessee, Coal, Iron and Railroad Company, Construction Stores, Fairfield, Alabama. (signed). Tennessee Coal Iron and Railroad Company, by Richard Shively, Purchasing Agent."

Complainant on receipt of such order would then order the specified articles from General Electric Company, located in Ohio, and instruct said company to ship the same f. o. b. factory in Ohio, consigned to the customer at Fairfield, Alabama. General Electric Company would then ship the goods f. o. b. factory to complainant's customer in Alabama. After each such shipment the General Electric Company would send its invoices to the complainant, and complainant would send its invoices to the respective customers. The goods were billed by the General Electric Company to complainant, and the latter paid the same. The complainant rendered its bills to its customers and the same were paid by them to the complainant. Of the sales mentioned in this class which aggregate $32,689.11, $27,785.74 were for goods not carried in complainant's stock in Alabama, and could not have been purchased by complainant in Alabama, except from a competitor, and if complainant had purchased them from a resident competitor, it could have realized no profit on the transaction. That $4,903.37 was received for goods shipped from the out-of-state manufacturer to complainant's resident customer by direction of complainant, although complainant at the time had goods of the identical kind as those so sold in its stock in Alabama.

Class B. During the said year 1937, sales were made aggregating $88,684.80. Each sale within this class was made in the same manner and under same circumstances as sales referred to in Class A, except that the orders received by complainant did not specify that the goods should be manufactured at a plant outside of the State of Alabama. However, none of the goods so ordered were carried by complainant in stock within the State of Alabama, and none of the goods could have been purchased in Alabama, except from a competitor of complainant, and if purchased from a resident competitor, complainant could not have made a profit on such transactions. Upon receipt of orders covering the goods sold, and falling within this classification, the complainant ordered the manufacturer, located outside of the State of Alabama, to ship the goods consigned to its Alabama customer f. o. b.

Class C. During the said year 1937, sales aggregating $2,680.62 were made. Each sale within this class was made in the following manner: Complainant maintains a warehouse in Atlanta, Georgia, and when complainant received in Birmingham, Alabama, from an Alabama customer an order for goods which are not stocked by complainant in Birmingham, Alabama, but which are stocked in complainant's warehouse in Atlanta, Georgia, the goods so ordered by the Alabama customers are shipped direct to such customers from the Atlanta Warehouse on instructions by the Birmingham, Alabama, office of complainant. None of the goods included in the sales under this classification were carried by complainant in its stock in Alabama, and could not have been purchased by complainant in Alabama, except from a competitor, and on a purchase from a resident purchaser complainant could have made no profit.

Class D. During said year 1937, sales were made to customers in the further aggregate sum of $7,792.30. Each of said sales included within this classification consisted of large quantities of goods (100 1bs. or more) and were made in the same manner and under the same circumstances as the sales referred to in Class B, all goods so sold having been shipped, by direction of complainant, by manufacturers outside the State of Alabama to complainant's customers in Alabama, in the same manner as described in Class B. However, it is admitted that complainant carried in stock in Birmingham goods of the same kind as those included in sales under this classification D. In this connection it is alleged in substance: It is now...