Am. Barge Line Co. v. Bd. Sup'Rs Tax Jeff. Cty.

• Decision Date: 16 December 1932
• Citation: Am. Barge Line Co. v. Bd. Sup'Rs Tax Jeff. Cty., 246 Ky. 573, 55 S.W.2d 416 (Ky. 1932)
• Parties: American Barge Line Co. v. Board of Sup'rs of Tax of Jefferson County et al.
• Court: Supreme Court of Kentucky

246 Ky. 573

American Barge Line Co. v.Board of Sup'rs of Tax of Jefferson County et al.

Court of Appeals of Kentucky. Common Pleas Branch, First Division.

Decided December 16, 1932.

1. Taxation. — Notwithstanding state's power to fix within its borders place where corporation's property shall be taxed, corporation's domicile is state wherein it was incorporated, and it cannot migrate.

2. Taxation. — Delaware corporation's operation of its barges from Pittsburgh to New Orleans did not fix taxable situs of company's property away from corporation's domicile, notwithstanding business was principally managed and all accounts were received in Louisville.

Facts disclosed that the barge company maintained offices in Pittsburgh, Cincinnati, Louisville, Memphis, New Orleans, and Chicago; that all the business was cleared or accounted for through the Louisville office, and payment of bills due it was received, but not kept, there; that Louisville was the chief executive office of the company; and that the company's property consisted of boats, barges, and accounts receivable, arising from services originating from territory where various offices were maintained; but that the places where the credits were

earned were not shown and nothing appeared to localize the accounts.

3. Taxation. — Rule that choses in action may acquire taxable situs apart from owner's domicile if they become integral part of local business held inapplicable to accounts receivable arising from far-flung business.

Such rule has no application to accounts receivable arising from far-flung business, as distinguished from a local activity which involves the investment, reinvestment, and management of capital assets and earnings at some permanent place; the mere presence of account records and collection of charges for services performed elsewhere being insufficient to create business situs for purpose of local taxation.

Appeal from Jefferson Circuit Court.

BLAKEY, DAVIS & LEWIS, and TRABUE, DOOLAN, HELM & HELM, and JAMES W. STITES for appellant.

HARRIS W. COLEMAN, and S.L. GREENBAUM, BAILEY P. WOOTTON, Attorney General, and S.H. BROWN, Assistant Attorney General, for appellees.

OPINION OF THE COURT BY JUDGE WILLIS.

Reversing.

The American Barge Line Company was incorported in the state of Delaware.Its business consisted in the transportation of heavy freight by barges on the waters of the Mississippi and Ohio rivers.The barges and the steamers by which they were towed were owned by the company.They moved from place to place, as business required, along the navigable waters from the vicinity of Pittsburgh to New Orleans.As compensation for services rendered in the transportation of freight, the company had on its books uncollected accounts against its customers.The value of the boats and barges owned on July 1, 1928, was $250,000, and the face value of the open accounts was $30,000.The company had offices in Pittsburgh, Cincinnati, Louisville, Memphis, New Orleans, and Chicago.All the business was cleared or accounted for through the Louisville office in charge of a vice president, and payment of bills due it were received, but not kept, there.Louisville was the place where the business was principally managed, and may be regarded as the chief executive office of the company.But the character of the business was such that the other offices had important functions to perform.The property consisted of boats, barges, and accounts receivable, arising from the services rendered by the boats and barges, and originating from the territory where the various offices were maintained.The board of tax supervisors of Jefferson county assessed all the property for taxation upon the values already stated.The assessment was affirmed on appeal to the quarterly court, and again on appeal to the circuit court.The company has prosecuted an appeal to this court, insisting that the property is not taxable in Kentucky.

The theory of the commonwealth is that the actual, as distinguished from the corporate, domicile, is in Louisville, Jefferson county, because the business of the corporation is mainly managed and conducted from that point; and that as a consequence all of its personal property, tangible and intangible, which has not acquired a situs elsewhere, is taxable in Jefferson county, Ky.Notwithstanding the power of a state to fix within its borders the place where the property of a corporation shall be taxed, the domicile of a corporation is in the state where it was incorporated, and it has no power to migrate.1 Thompson on Cor.(2d Ed.) sec. 490 et seq.;1 Cook on Cor. (2d)sec. 1; 1 Cyclopedia of Corporations, 9293;Newport & Cin. Clark & Marshall, PrivateCor. sec. 114; 8 Fletcher, Bridge Co. v. Woolley, 78 Ky. 523;Commonwealth v. Consolidated Casualty Co., 170 Ky. 103, 185 S.W. 508;Commonwealth v. Southern Pacific Co., 134 Ky. 417, 120 S.W. 311, 20 Ann. Cas. 965;Boyer v. Northern Pacific R. Co., 8 Idaho, 74, 66 P. 826, 70 L.R.A. 691;New York Life Ins. Co. v. Pike, 51 Colo. 238, 117 P. 899;Cook v. Hager, 3 Colo. 386;Boston I. Co. v. Boston, 158 Mass. 461, 33 N.E. 580;Bergner, etc., Co. v. Dreyfus, 172 Mass. 154, 51 N.E. 531, 70 Am. St. Rep. 251;Merrick v. Van Santvoord, 34 N.Y. 208;Bank of Augusta v. Earle, 13 Pet. 521, 10 L. Ed. 274;Southern Pacific Co. v. Kentucky, 222 U.S. 63, 32 S. Ct. 13, 56 L. Ed. 96;Shaw v. Quincy M. Co., 145 U.S. 444, 12 S. Ct. 935, 36 L. Ed. 768;Seaboard Rice Milling Co. v. Chicago, R.I. & P. Ry. Co., 270 U.S. 363, 46 S. Ct. 247, 70 L. Ed. 633;Southern R. Co. v. Allison, 190 U.S. 326, 23 S. Ct. 713, 47 L. Ed. 1078;St. Louis & S.F. Ry. Co. v. James, 161 U.S. 545, 16 S. Ct. 621, 40 L. Ed. 802.The operation of boats and barges over a large territory, transporting property on navigable streams, did not fix or establish a taxable situs of the water craft at any particular point away from the domicile of the owner.It is not shown when or where any of the barges were in Kentucky, or that they did more than move along the streams stopping to pick up or to unload freight at various points.No attempt was made to bring the case within the principle of the decisions which authorize the local taxation of property engaged even in interstate commerce in so far as the property employed has acquired an actual permanent situs within the local jurisdiction.City of Covington v. Pullman Co., 121 Ky. 218, 89 S.W. 116, 28 Ky. Law Rep. 199;Baltimore & O.S.W. Ry. Co. v. Com., 177 Ky. 566, 198 S.W. 35;Ayer & Lord Tie Co. v. Kentucky, 202 U.S. 409, 26 S. Ct. 679, 50 L. Ed. 1082, 6 Ann. Cas. 205.

The commonwealth planted its claim solely on the supposed change of domicile from Delaware to Louisville, and sought to apply the mobilia maxim by taxing the boats and barges at the assumed domicile in Louisville instead of at the corporate domicile in Delaware.But since the domicile of the corporation was not changed, the whole theory of the commonwealth falls to the ground.Ayer & Lord Tie Co. v. Keown, Sheriff, 122 Ky. 580, 93 S.W. 588, 29LawRep. 110, 400;Commonwealth v. Consolidated Casualty Co., 170 Ky. 103, 185 S.W. 508;Southern Pacific Co. v. Kentucky, 222 U.S. 63, 32 S. Ct. 13, 56 L. Ed. 96.In considering and applying the older authorities (Bingham's Adm'r v. Com., 199 Ky. 402, 251 S.W. 936;Commonwealth v. West India Oil Co., 138 Ky. 828, 129 S.W. 301, 36 L. R.A.(N.S.) 295;Fidelity & Col. Trust Co., Ex'r, v. City of Louisville, 245 U.S. 54, 38 S. Ct. 40, 62 L. Ed. 145, L.R.A. 1918C, 124;Commonwealth v. Avery & Sons, 163 Ky. 828, 174 S.W. 518), attention must be directed to the later decisions of the Supreme Court of the United States which radically modify the reasoning and results of the earlier opinions.Farmers' Loan & Trust Co. v....