Atlantic Ref. Co. v. Commonwealth

• Decision Date: 16 January 1936
• Citation: 165 Va. 492
• Court: Virginia Supreme Court
• Parties: THE ATLANTIC REFINING COMPANY v. COMMONWEALTH OF VIRGINIA.

Page 492

165 Va. 492

THE ATLANTIC REFINING COMPANY v. COMMONWEALTH OF VIRGINIA.

Supreme Court of Virginia, Richmond.

January 16, 1936.

Present, All the Justices.

1. FOREIGN CORPORATIONS — License — Validity Not Affected by Subsequent Proceedings. — If the entrance fee required of a non-resident commercial corporation as a condition precedent to the privilege of doing domestic business in Virginia was a proper charge when paid, it is not invalidated by subsequent proceedings, nor can such proceedings make good that which was once void.

2. FOREIGN CORPORATIONS — Conditions Precedent to Doing Business — State May Not Impinge on Constitutional Rights. — A State many arbitratrily refuse entrance to a foreign corporation, although it can not, as a condition for admission, impinge upon rights guaranteed by the Federal Constitution.

3. FOREIGN CORPORATIONS — License — Section 207 of the Tax Code — Tax Must Be One on Property to Be Invalid as Imposing Burden on Interstate Commerce. — If section 207 of the Tax Code, requiring every foreign corporation, when it obtains a certificate of authority to do business in the State, to pay an entrance fee measured by its authorized capital, imposes any direct burden upon interstate commerce, however small, it must fail, but the tax must in some form be a tax on property and not on privilege.

4. STATUTES — Repeal by Implication. — Repeal by implication is not favored.

5. CONSTITUTIONAL LAW — Annulment of Statutes. — Statutes are not lightly held to be unconstitutional.

6. FOREIGN CORPORATIONS — License — Section 207 of the Tax Code — Validity — Case at Bar. — In the instant case appellant, a foreign corporation which had previously done directly an interstate business in its own name and both interstate and intra-state business through other corporations, paid under protest the entrance fee, measured by authorized capital, required by section 207 of the Tax Code, in order to do business in the State in its own name, and claimed that the statute was unconstitutional on the ground, among others, that it imposed a direct burden on interstate commerce. Relief was sought before the State Corporation Commission and refused.

Held: No error. This tax was twice assailed and twice sustained in General Railway Signal Co. Commonwealth of Virginia, 118 Va. 301, 87 S.E. 598, affirmed 246 U.S. 500, and Western Gas Construction Co. Commonwealth of Virginia, 147 Va. 235, 136 S.E. 646, 55 A.L.R. 717, affirmed 276 U.S. 597.

Appeal from the State Corporation Commission.

The opinion states the case.

Hunton, Williams, Anderson, Gay & Moore and Lewis F. Powell, Jr., for the appellant.

Abram P. Staples, Attorney-General, and W. W. Martin, Assistant Attorney-General, and C. M. Chichester, for the Commonwealth.

HOLT, J., delivered the opinion of the court.

The petitioner, a non-resident commercial corporation, has been assessed with an entrance fee as a condition precedent to the privilege of doing domestic business in Virginia. This entrance fee it paid under protest and claims that the statute imposing it is unconstitutional. In proper proceedings relief was sought before the State Corporation Commission and refused. Hence, this appeal.

In the opinion of the Corporation Commission is a full and satisfactory statement of facts, which we might with confidence adopt as written, but for brevity we shall restate those matters which in our judgment are of major importance and upon which this case turns.

Necessarily, we look to conditions as they were when this fee was paid. If it was then a proper charge it is not invalidated by subsequent proceedings, nor can such proceedings make good that which was once void.

Indeed if this entrance fee had not been paid at the time of entry it might never be paid. Insolvency might intervene. The petitioner might complete its work and withdraw before an assessment or levy could be made.

The Atlantic Refining Company is a Pennsylvania corporation and was chartered there in 1870. It refines petroleum and sells its products in forty-seven States, and in fourteen of them, Virginia now included, it maintains local stations for the sale of its own products and of automobile accessories.

On January 7, 1930, petitioner gave notice to the Commission of its intention to do a general business in Virginia without first paying any entrance fee, suggesting, however, that it be permitted to pay this fee under protest. On January 13, 1930, the Commission replied that that company was at liberty to adopt its own procedure, but that domestic business done in Virginia without payment of an entrance fee would be at its peril. Payment was made under protest on January 17, 1930, and on January 22, 1930, the desired permit issued.

This litigation was properly begun on April 26, 1930, by petition addressed to the State Corporation Commission. It concludes with this prayer:

"Wherefore, your petitioner prays that this Honorable Body may certify to the Comptroller of the State of Virginia that petitioner has paid into the State treasury an amount in excess of that required by law, to-wit: $5,000 on account of the entrance fee paid by the petitioner upon the granting of the certificate of authority to do business in the State of Virginia, and that the amount so paid may be refunded to petitioner, and that it may have all such other relief as to which it may be entitled."

Relief was refused.

Previous to the permit of January 22, 1930, this oil company had directly and indirectly for six years or more done an interstate business in Virginia. This the State did not undertake to hamper. It was not seeking permission to do something which it was already doing but permission to do something in addition, namely, to do directly and in its own name an intra-state business.

Mr. Serven, Assistant Comptroller in charge of domestic marketing, was asked and replied:

"Q. In other words, the primary purpose in handling gas and oil products in Virginia is to supply what we might call the local Virginia business?

"A. That is correct."

Before January 22, 1930, this Pennsylvania corporation had done directly an interstate business in its own name. It had done through the Red "C" Oil Company, a subsidiary Maryland corporation, which included the business of the Richmond Oil Company, an interstate and intra-state business, and it had done through the Atlantic Refining Company, a New York corporation, an intrastate business. Its volume in 1929 was:

                (TABLE OMITTED)
                

This is its statement of its business on January 1, 1930:

"The only business in which petitioner was interested in the State of Virginia was the business, interstate and intra-state, of the Red "C" Oil Company and the interstate business conducted by petitioner in its own name; and the only property in Virginia in which petitioner was interested was the above described property belonging to Red "C" Oil Company having a value of approximately $262,580."

As of January 22, 1930, the total authorized capital of petitioner was $100,000,000. And there were outstanding shares having a par value of $67,049.500. As of January 1, 1930, its total invested capital was $132,196,275, and the volume of its business in 1929 was $153,530,041.

This is the statute in controversy, sec. 207 of the Tax Code of Virginia (Code 1930, appendix, p. 2185):

"Every foreign corporation, when it obtains from the State Corporation Commission a certificate of authority to do business in this State, shall pay an entrance fee into the treasury of Virginia to be ascertained and fixed as follows:

"For a company whose maximum capital stock is fifty thousand dollars or less, thirty dollars;

"For a company whose capital stock is over fifty thousand dollars and not to exceed one million dollars, sixty cents for each one thousand dollars or fraction thereof;

"Over one million dollars, and not to exceed ten million dollars, one thousand dollars;

"Over ten million dollars, and not to exceed twenty million dollars, one thousand, two hundred and fifty dollars;

"Over twenty million dollars, and not to exceed thirty million dollars, one thousand, five hundred dollars;

"Over thirty million dollars, and not to exceed forty million dollars, one thousand, seven hundred and fifty dollars;

"Over forty million dollars, and not to exceed fifty million dollars, two thousand dollars;

"Over fifty million dollars, and not to exceed sixty million dollars, two thousand, two hundred and fifty dollars;

"Over sixty million dollars, and not to exceed seventy million dollars, two thousand, five hundred dollars;

"Over seventy million dollars, and not to exceed eighty million dollars, two thousand, seven hundred and fifty dollars;

"Over eighty million dollars, and not to exceed ninety million dollars, three thousand dollars;

"Over ninety million dollars, five thousand dollars.

"But foreign corporations without capital stock shall pay fifty dollars only for such certificate of authority to do business in this State.

"For the purpose of this section the amount to which the company is authorized by the terms of its charter to increase its capital stock shall be considered its maximum capital stock." (Tax bill, sec. 38a; 1910, p. 77).

This system of taxation has been in force in Virginia for more than thirty years. It has been twice assailed and twice sustained. General Railway Signal Co. Commonwealth of Virginia, 118 Va. 301, 87 S.E. 598, affirmed 246 U.S. 500, 38 S.Ct. 360, 62 L.Ed. 854, and Western Gas Construction Co. Commonwealth of Virginia, 147 Va. 235, 136 S.E. 646, 55 A.L.R. 717, affirmed 276 U.S. 597, 48 S.Ct. 319, 72 L.Ed. 723 (Mem.).

Charter fees for domestic corporations are assessed in substantially the same way, Tax Code, sec. 206 (Code 1930, appendix, p. 2185) — smaller it is true than those charged foreign corporations for doing a domestic business. As might be expected, the State favors its own instrumentalities.

"In subjecting a law of the State which imposes...