Baltic Mining Company v. Commonwealth of Massachusetts No 30 White Dental Manufacturing Company v. Commonwealth of Massachusetts No 353
| Decision Date | 03 November 1913 |
| Docket Number | Nos. 30 and 353,s. 30 and 353 |
| Parties | BALTIC MINING COMPANY, Plff. in Err., v. COMMONWEALTH OF MASSACHUSETTS. NO 30. S. S. WHITE DENTAL MANUFACTURING COMPANY, Plff. in Err., v. COMMONWEALTH OF MASSACHUSETTS. NO 353 |
| Court | U.S. Supreme Court |
Messrs. William P. Everts and Charles A. Snow for plaintiffs in error.
[Argument of Counsel from pages 69-73 intentionally omitted] Mr. James M. Swift, Attorney General of Massachusetts, and Mr. Andrew Marshall for the state of Massachusetts.
[Argument of Counsel from pages 73-78 intentionally omitted]
These cases present the question of the constitutional validity of an act of the commonwealth of Massachusetts (Stat. 1909, chap. 490, pt. 3, §§ 54 et seq.), undertaking to impose a tax on foreign corporations within the commonwealth. While the cases are not in all respects parallel,
they were argued together, and present the same questions, and we shall accordingly dispose of them as one.
The cases were heard upon agreed statements of fact, which show:
The Baltic Mining Company, a Michigan corporation, organized for the purpose of mining, producing, and selling copper, with a total authorized capital stock of $2,500,000, consisting of 100,000 shares of the par value of $25 each, all of which have been issued and are outstanding, $18 having been paid on each share, owns a copper mine with equipment in Michigan, and has its principal place of business in that state. It has an office in the city of Boston, for the use of its president and treasurer, residing in Boston, for the general financial management and direction of its affairs, and for the meetings of its board of directors and the transfer of its stock. The Copper Range Consolidated Company, a New Jersey corporation, owns and holds 99,659 shares of its stock, and also has an office and place of business in Boston. The Baltic Mining Company was admitted to do business in Massachusetts, and complied with the foreign corporation laws of that state. Its total property and assets amount to $10,776,000, but none of the property is in Massachusetts except current bank deposits and a certificate for $80,000 of stock in another Michigan corporation. It is engaged in the mining and refining of copper in Michigan, which is sold for delivery in the several states of the United States and in foreign countries. The United Metals Selling Company, a New Jersey corporation, with its principal office in New York city, and with no office in Massachusetts, has the exclusive agency for marketing the Baltic Mining Company's copper, it making no sales directly itself. Considerable quantities of the copper are sold for delivery in Massachusetts, as well as in other states, and transported from the Michigan smelter to the purchaser. In exceptional instances sales are made in Massachusetts
for delivery there, but this is out of the usual course of business, not more than 5 per cent of the total sales being made, the larger part being regularly consummated in New York city. The petition was brought to recover an excise tax of $500 imposed by the commonwealth, pursuant to § 56 of the act, and paid by the company, and was dismissed by the supreme judicial court of Massachusetts. 207 Mass. 381, 93 N. E. 831.
The S. S. White Dental Manufacturing Company is a Pennsylvania corporation, engaged in manufacturing and buying and selling artificial teeth and dental supplies, with an authorized capital stock of $1,000,000, and with its principal office in Philadelphia. Its assets aggregate $5,711,718.29. It has a usual place of business in Boston, consisting of large salesrooms, stockrooms, offices, and storerooms, occupied under lease, where it keeps a supply of goods displayed for sale and in stock. Books are kept here, a New England sales agent is in charge, and fifty-four persons are employed, twelve being salesmen who travel through the New England states, except Connecticut and the maritime provinces; but no manufacturing is done in Massachusetts. It sells goods over the counter from its Boston store and also for delivery in Massachusetts by messenger, mail, and express, 50 per cent of the sales made at that store being to persons residing in Massachusetts, and 50 per cent for delivery to persons residing outside of the state. Goods sold from the Boston stock for delivery other than over the counter or by mail or messenger are billed from the Boston salesrooms directly to the purchaser as consignee, from the company as consignor. Orders are also accepted at the Boston salesrooms for delivery from the New York and Pennsylvania factories, such orders being sent to the principal office in Pennsylvania, and filled either in New York or in Pennsylvania, and the goods being billed directly to the purchaser. Except in intrastate deliveries by messenger,
the company uses public carriers in the transportation of the goods, and a large percentage of the total sales require transportation from the New York or Pennsylvania factories into other states. The stock on hand in the Boston store, the Fixtures and the current bank deposits, represent the tangible property in Massachusetts, and amount to about $100,000. The company maintains fourteen places of business other than the ones in Pennsylvania and Massachusetts, located in New York and other states. Ten per cent of the sales are made in Massachusetts, of which approximately one half are for delivery in that state. The company complied with the requirement of the laws relating to foreign corporations for ten years, and seeks to recover an excise tax of $200, levied pursuant to the statute, and paid by it. The supreme judicial court of Massachusetts held that the act was valid, and dismissed the petition. 212 Mass. 35, 98 N. E. 1056, Ann. Cas. 1913 C, 805.
The act provides (§ 54) for the filing of a certificate annually by foreign corporations, showing their authorized capital stock and assets and liabilities, and (§ 55) that such certificate shall be accompanied by an auditor's sworn statement, and shall be submitted to the commissioner of corporations, who shall assess an excise tax upon the corporation, in accordance with the provisions of § 56 of the act, and that the certificate shall not be filed until approved by him and the tax paid.
Section 56 reads:
'Every foreign corporation shall, in each year, at the time of filing its annual certificate of condition, pay to the treasurer and receiver general, for the use of the commonwealth, an excise tax, to be assessed by the tax commissioner, of 1/50 of 1 per cent of the par value of its authorized capital stock as stated in its annual certificate of condition; but the amount of such excise tax shall not in any one year exceed the sum of $2,000.'
It is further provided (§ 58) for notice to foreign corporations failing to file their proper certificates, and thereafter for the forfeiture and collection of penalties, and for the issuance of injunctions until the payment of such penalties and the filing of such certificates.
The specific objections of the plaintiffs in error to the imposition of this tax under the facts shown in the records are threefold: First, the tax is a regulation of interstate commerce, in that it imposes a direct burden upon that portion of the business and capital of the plaintiffs in error which is devoted to interstate commerce; second, the tax is in violation of the due process of law clause, because it attempts to impose taxes upon property beyond the jurisdiction of the commonwealth of Massachusetts; and third, the tax denies to the plaintiffs in error the equal protection of the law.
It is well settled and requires no review of the decisions of this court to that effect that the power of Congress over interstate commerce is supreme under the Federal Constitution, and that the states may not burden such commerce, it being the purpose of the Constitution of the United States to bring commerce of this character under one supreme control, and to vest the exercise of authority over it in the general government. It is equally well settled that forms of regulation prohibited to the state by the Constitution may consist of efforts to tax the carrying on of such commerce, and of attempted levies of taxes upon the receipts of interstate commerce as such. Galveston, H. & S. A. R. Co. v. Texas, 210 U. S. 217, 52 L. ed. 1031, 28 Sup. Ct. Rep. 638; Western U. Teleg. Co. v. Kansas, 216 U. S. 1, 54 L. ed. 355, 30 Sup. Ct. Rep. 190; Pullman Co. v. Kansas, 216 U. S. 56, 54 L. ed. 378, 30 Sup. Ct. Rep. 232; Minnesota Rate Cases (Simpson v. Shepard) 230 U. S. 352, 400, 57 L. ed. 1151, 33 Sup. Ct. Rep. 729, and previous cases in this court therein cited.
While this is true, other equally well-established principles must be borne in mind in considering the validity of a state tax attacked upon grounds of unconstitutionality. The mere fact that a corporation is engaged in
interstate commerce does not exempt its property from state taxation. United States Exp. Co. v. Minnesota, 223 U. S. 335, 344, 56 L. ed. 459, 464, 32 Sup. Ct. Rep. 211. It is the commerce itself which must not be burdened by state exactions which interfere with the exclusive Federal authority over it. A resort to the receipts of property or capital employed in part, at least, in interstate commerce, when such receipts or capital are not taxed as such, but are taken as a mere measure of a tax of lawful authority within the state, has been sustained. Maine v. Grand Trunk R. Co. 142 U. S. 217, 35 L. ed. 994, 3 Inters. Com. Rep. 807, 12 Sup. Ct. Rep. 121, 163; Provident Inst. v. Massachusetts, 6 Wall. 611, 18 L. ed. 907; Hamilton Mfg. Co. v. Massachusetts, 6 Wall. 632, 18 L. ed. 904; Flint v. Stone Tracy Co. 220 U. S. 107, 162-165, 55 L. ed. 389, 417-419, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912 B, 1312; United States Exp. Co. v....
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