Armstrong v. Ford Motor Co.
| Decision Date | 09 March 1942 |
| Docket Number | 14851. |
| Parties | ARMSTRONG, State Treasurer, v. FORD MOTOR CO. |
| Court | Colorado Supreme Court |
Error to District Court, City and County of Denver; Henry A. Hicks Judge.
Suit by Ford Motor Company against Charles M. Armstrong, as State Treasurer of the State of Colorado, for a declaration of nonliability for chain store license taxes on its dealer establishments, wherein defendant cross-complained for declaration that plaintiff's dealer establishments were taxable as chain stores. To review a judgment for plaintiff defendant brings error.
Affirmed.
Byron G. Rogers, Atty. Gen., Henry E. Lutz, Deputy Atty. Gen., James W. Creamer, Sp. Asst. Atty. Gen., Gail L Ireland, Atty. Gen., H. Lawrence Hinkley, Deputy Atty. Gen., and Duke Dunbar, Asst. Atty. Gen., for plaintiff in error.
W. W. Grant and Morrison Shafroth, both of Denver, for defendant in error.
The defendant in error, Ford Motor Company, a Delaware corporation, alleging that a controversy existed between it and plaintiff in error, hereinafter mentioned as the state, as to the application and effect of chapter 161, '35 C.S.A. (chapter 216, S.L.1935), an initiated law commonly designated as the 'Colorado Chain Store License Law,' instituted a declaratory judgment action in the district court praying for an adjudication that the Ford Company was not liable for the payment of chain store license taxes on Ford dealers, associate dealers and subdealers doing business in this state. The state filed an answer and cross-complaint seeking a declaration that such dealer establishments were operated, directed and controlled by the Ford Company as chain stores within the meaning of the act and asked for judgment against the Ford Company in the principal sum of $199,363.50 for license taxes computed upon a multiple store basis allegedly accruing in the years 1935 to 1940 inclusive. After a trial in which much evidence was received, the district court found all issues of fact against the state and concluded as a matter of law and fact that the questioned dealer operations were not within the act nor the company liable for the multiple store tax. To review the judgment so declaring the state prosecutes this proceeding in error.
In so far as is here pertinent the act provides:
Section 5. Every person, firm, corporation, association or co-partnership opening, establishing, operating or maintaining one or more stores or mercantile establishments within this state, under the same general management, supervision or ownership, shall pay the license fees hereinafter described for the privilege of opening, establishing, operating or maintaining such stores or mercantile establishments.'
The state concedes, as is undisputed, that the establishments in question are directly owned and operated by the individual dealers and not by the Ford Company, but contends primarily that by the terms of the contracts employed, the dealers are ultimately controlled and directed by the company within the meaning of section 7, supra, whereby the company is made amenable to the law. As supporting this contention the state cites the cases of Gulf Refining Co. v. Fox, D.C., 11 F.Supp. 425, affirmed 297 U.S. 381, 56 S.Ct. 510, 80 L.Ed. 731; Ashland Refining Co. v. Fox, D.C., 11 F.Supp. 431, affirmed 297 U.S. 381, 56 S.Ct. 510, 80 L.Ed. 731; Maxwell v. Shell Eastern Petroleum Products, 4 Cir., 90 F.2d 39, certiorari denied by the United States Supreme Court, October 11, 1937, 302 U.S. 715, 58 S.Ct. 34, 82 L.Ed. 552; Standard Oil Company v. State Board of Equalization, 110 Mont. 5, 99 P.2d 229; Midwestern Petroleum Corp. v. State Board, 206 Ind. 688, 187 N.E. 882, 191 N.E. 153; Standard Oil Company of Texas v. State, Tex.Civ.App., 142 S.W.2d 519, wherein it was held that the contracts therein considered conferred upon the various companies involved, a sufficient modicum of control over agency or dealer operated filling stations handling the petroleum products of the respective companies at retail, as to make such companies liable, under statutes similar to ours, for a multiple chain store tax on all such filling stations.
Upon this point the state also places reliance on the case of Bedford v. Gamble-Skogmo, Inc., 104 Colo. 424, 91 P.2d 475, 480, in which we held that the form of the contracts between Gamble-Skogmo, Inc. and the individual operators of 'Gamble Store Agencies,' in the light of the method of operation as disclosed by the evidence, made 'irresistible the conclusion that the purpose of the contract was to initiate a system from which both parties could reap all the advantages of chain store operation with immunity from the burdens thereof, and further assuring to the company the special advantages of a chain without the necessity of its advancing or investing capital or assuming financial responsibility in the operation of the agency stores.'
To demonstrate the pertinency and controlling effect of the foregoing authorities here, counsel for the state, by a painstaking comparison of the contracts herein and therein implicated, argue that the very contractual factors and elements which in the cited cases were held to import ultimate control to the companies within the meaning of the statute, cf. § 7, supra, are paralleled by certain provisions in Ford deal contracts.
Secondarily, in the language of the attorney general (italics ours), the state attributes liability to the Ford Company because 'Ford dealerships are operated as if they were members of an integrated chain organization.' Counsel further argue that such status arises from the effective coordinated contractual control of the dealers by the company, as claimed, and the benefits accruing through such relationship to the dealer outlets from Ford national advertising, the facilities of centrally located Ford warehouses and assembly plants, the general sales policy and the standard and efficient merchandising and accounting methods promulgated by the Ford Company.
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