Cheney Bros Co v. Commonwealth of Massachusetts

• Decision Date: 20 April 1916
• Docket Number: No. 12,12
• Citation: 38 S.Ct. 295,246 U.S. 147,62 L.Ed. 632
• Parties: CHENEY BROS. CO. et al. v. COMMONWEALTH OF MASSACHUSETTS
• Court: U.S. Supreme Court

246 U.S. 147

38 S.Ct. 295

62 L.Ed. 632

CHENEY BROS. CO. et al.

v COMMONWEALTH OF MASSACHUSETTS.

No. 12.

Argued April 20, 1916.

Restored to Docket for Reargument May 21, 1917.

Reargued Oct. 19, 1917.

Decided March 4, 1918.

[Syllabus from pages 147-149 intentionally omitted] Messrs. Charles A. Snow and William P. Evarts, both of Boston, Mass., for plaintiffs in error.

[Argument of Counsel from pages 149-152 intentionally omitted] Mr. William Harold Hitchcock, of Boston, Mass., for the Commonwealth of Massachusetts.

Mr. Justice VAN DEVANTER delivered the opinion of the Court.

We here are concerned with an excise tax imposed by Massachusetts in 1913 on each of seven foreign corporations on the ground that each was doing a local business in the state. Objections to the tax based on the commerce clause of the Constitution (article 1, § 8, cl. 3), and the due process and equal protection clauses of the Fourteenth Amendment were overruled by the state court. 218 Mass. 558, 106 N. E. 310. The tax was imposed under St. 1909, c. 490. pt. 3, § 56, before the maximum limit was removed by St. 1914, c. 724, § 1, and in that respect the case is like Baltic Mining Co. v. Massachusetts, 231 U. S. 68, 34 Sup. Ct. 15, 58 L. Ed. 127, and unlike International Paper Co. v. Massachusetts, 246 U. S. 135, 38 Sup. Ct. 292, 62 L. Ed. ——. Whether in other respects it is like Baltic Mining Co. v. Massachusetts is the matter to be determined, and this requires that the business done by each of the seven corporations be considered.

Cheney Brothers Company.

This is a Connecticut corporation whose general business is manufacturing and selling silk fabrics. It maintains in Boston a selling office with one office salesman and four other salesmen who travel through New England. The salesmen solicit and take orders, subject to approval by the home office in Connecticut, and it ships directly to the purchasers. No stock of goods is kept in the Boston office, but only samples used in soliciting and taking orders. Copies and records of orders are retained, but no bookkeeping is done, and the office makes no collections. The salesmen and the office rent are paid directly from Connecticut and the other expenses of the office are paid from a small deposit kept in Boston for the purpose. No other business is done in the state.

We do not perceive anything in this that can be regarded as a local business as distinguished from interstate commerce. The maintenance of the Boston office and the display therein of a supply of samples are in furtherance of the company's interstate business and have no other purpose. Like the employment of the salesmen, they are among the means by which that business is carried on and share its immunity from state taxation. McCall v. California, 136 U. S. 104, 10 Sup. Ct. 881, 34 L. Ed. 391; Norfolk & Western R. R. Co. v. Pennsylvania, 136 U. S. 114, 10 Sup. Ct. 958, 34 L. Ed. 394; Crenshaw v. Arkansas, 227 U. S. 389, 33 Sup. Ct. 294, 57 L. Ed. 565; Rogers v. Arkansas, 227 U. S. 401, 33 Sup. Ct. 298, 57 L. Ed. 569. Nor is the situation changed by inferring, as the state court did, that orders from customers in Connecticut sometimes are taken by salesmen connected with the Boston office and, after transmission to and approval by the home office, are filled by shipments from the company's mill in Connecticut to such customers. In such cases it doubtless is true that the resulting sale is local to Connecticut, but the action of the Boston office in receiving the order and transmitting it to the home office partakes more of the nature of interstate intercourse than of business local to Massachusetts and affords no basis for an excise tax in that state. International Text Book Co. v. Pigg, 217 U. S. 91, 106, 107, 30 Sup. Ct. 481, 54 L. Ed. 678, 27 L. . A. (N. S.) 493, 18 Ann. Cas. 1103. We think the tax on this company was essentially a tax on doing an interstate business and therefore repugnant to the commerce clause.

Lanston Monotype Company.

This is a Virginia corporation which makes typesetting machines in Philadelphia and sells them in interstate commerce. It has a place of business in Massachusetts where it keeps on hand a stock of the several parts of its machines likely to be required for purposes of repair. The stock is replenished weekly and the parts are sold extensively to those who use the machines in that and adjacent states.

It is apparent, as we think, that a considerable portion of the business of selling and supplying the repair parts is purely local and subject to local taxation.

Locomobile Company of America.

This West Virginia corporation conducts an automobile factory in Connecticut and sells its automobiles in interstate commerce. It does an extensive local business in Massachusetts in repairing cars of its own make after they are sold and in use, and also in selling secondhand cars taken in partial exchange for new ones. This local business has some influence on the volume of interstate business done by the company in the state, and its abandonment would tend to reduce the purchases there of the company's automobiles. But this does not make it any the less a local business. It must be judged by what it is rather than by its influence on another business. See Delaware, Lackawanna & Western R. R. Co. v. Yurkonis, 238 U. S. 439, 444, 445, 35 Sup. Ct. 902, 59 L. Ed. 1397.

Northwestern Consolidated Milling Company.

This company was incorporated under the laws of Minnesota, operates flour mills there, and sells the flour to wholesale dealers throughout the county. It has an office in Massachusetts where it employs several salesmen for the...