Atlas Powder Co. v. Goodloe

• Decision Date: 17 April 1915
• Citation: 175 S.W. 547
• Parties: ATLAS POWDER CO. v. GOODLOE, Secretary of State.
• Court: Tennessee Supreme Court

175 S.W. 547

ATLAS POWDER CO. v. GOODLOE, Secretary of State.

Supreme Court of Tennessee.

April 17, 1915.

Appeal from Chancery Court, Davidson County; Jno. Allison, Chancellor.

Suit by the Atlas Powder Company against Hallum W. Goodloe, Secretary of State. From a decree of the chancellor sustaining the defendant's demurrer and dismissing the bill, the complainant appeals. Affirmed.

Harry S. Stokes, of Nashville, for appellant. F. M. Thompson, Atty. Gen., for appellee.

FANCHER, J.

The bill in this cause was filed February 14, 1913, to recover of defendant, as secretary of state, the sum of $1,500, paid by complainant to the secretary of state under and in accordance with chapter 504 of the Acts of 1909, which statute declares the coming into this state of any corporation, association, or joint-stock company chartered or incorporated under the laws of another state or country for the doing of business here a privilege, and exacts of every such corporation the payment of a tax upon its authorized capital stock.

Complainant is a foreign corporation, organized under the laws of the state of Delaware, with its main office in the city of Wilmington, Del. It averred that it was engaged in the business of manufacturing and selling powder, dynamite, and other explosives; that it has plants for the manufacture of dynamite located at Hopatcong, N. J., Center, Mich., Atlas, Mo., Vigorit, Cal., and plants for the manufacture of blasting powder at Riker, Pa. Shenandoah, Pa., Ooltewah, Tenn., Belleville, Ill,, Pittsburg, Kan., and Patterson, Okl.; that it had a large number of storage or distributing magazines located in Arkansas, Kentucky, California, Illinois, Kansas, Maine, Missouri, Michigan, New Jersey, Oklahoma, Pennsylvania, Tennessee, and Texas; that it maintained general sales offices at Philadelphia, Pa., Houghton, Mich., Joplin and St. Louis, Mo., and Nashville, Tenn.; and that the home office at Wilmington, Del., had general supervision over the sales. Complainant further averred that the authorized capital stock of the Atlas Powder Company is $5,000,000, $3,000,000 of which has been issued, and that it has storage magazines located near Bristol, Chattanooga, Jellico, Johnson City, Knoxville, Memphis, and Nashville, in which were stored dynamite, black powder, and blasting supplies from which a portion of the company's trade in Tennessee and surrounding states is supplied; that all orders which involve car load lots of dynamite are supplied from factories operated by the company and located outside of Tennessee, the less than car load lot orders received from points in Tennessee being filled partly from storage magazines in Tennessee and partly from magazines in Kentucky; that orders for certain car load lots of black powder and less than car load lots of both black powder and dynamite emanating from points in states bordering on Tennessee are filled from the black powder factory at Ooltewah, Tenn., and from the magazines of the company located in other points in Tennessee; that all collections are made from the company's office in Wilmington, Del., with the exception of a small amount of cash sales. Complainant further averred that at the time the company commenced business in the state of Tennessee the proportion of its capital stock employed therein, represented by its property, consisting of a black powder factory at Ooltewah and magazines and magazine equipment at the above-mentioned points, including raw material at the said plant and the finished product at the plant and magazines, amounted to $305,945.11, while the entire assets of the company, located except as above indicated and outside of the state of Tennessee, amounted to $6,000,000; that a very large proportion of the business conducted and carried on at the Nashville office consists of strictly interstate commerce, and that this office is maintained quite as much for the purpose of handling this interstate commerce as for the carrying on of business within the state; that no discrimination, distinction, or apportionment is made between the orders originating in Tennessee, filled at the Nashville office, and other transactions passing through that office; that such domestic transactions are carried on merely as incidental and auxiliary to the more strictly interstate business of complainant, and are so closely interwoven and connected with such interstate portion of complainant's business that such domestic business could not be given up or abandoned without imposing an additional burden upon, or without serious detriment to, the strictly interstate commerce portion of complainant's business; that complainant, on the 28th day of January, 1913, applied to the secretary of state of Tennessee for admission to the state as a foreign corporation to do intrastate business in Tennessee, and that complainant tendered to the secretary of state a duly certified copy of its certificate of incorporation, together with the filing fee of $20 required under the law of this state, and asked for a certificate of authority to do business in Tennessee; that the secretary of state declined to issue this certificate, and refused to accept said filing fee or the copy of the certificate of incorporation until complainant should pay the additional sum of $1,500, being the alleged amount of an entrance tax under and in accordance with chapter 504 of the Acts of 1909; that thereupon complainant protested, and insisted that said demand of payment was illegal and wrongful, and that said law was unconstitutional, and yet, to prevent a heavy loss to its business, it paid to the secretary of state the required sum of $1,500, said payment being made under protest, and reserving the right to sue to recover the same, and to have said law declared unconstitutional, and was so received by the secretary of state on January 28, 1913, under protest of complainant. Thereupon said certificate of authority was issued.

Complainant charged that Acts 1909, c. 504, was unconstitutional and void; that under the classification of this act complainant upon its capital stock, which is in excess of $5,000,000, was taxed, and wrongfully forced to pay, the sum of $1,500; that said act arbitrarily fixes the entrance fee of a foreign corporation upon the amount of its capital stock without any reference to the amount or extent of its business, intrastate or interstate; that the imposition of this tax is a hindrance to its interstate business; that this act lays a burden upon interstate commerce, and is therefore in conflict with article 1, § 8, of the Constitution of the United States; that this statute imposes a tax upon complainant's capital stock representing property outside the state of Tennessee, and thereby deprives complainant of property without due process of law, and in conflict with the fourteenth amendment to the Constitution of the United States; that the principal function of complainant's business is interstate commerce; and that it was engaged in intrastate commerce only as incidental or auxiliary thereto.

Defendant demurred to the bill as follows:

First, that the bill shows that the fees or taxes required by the state of Tennessee as a condition precedent to the admission of complainant to do business in this state were paid by complainant voluntarily, and not under duress in fact or law, so that complainant has no right to recover said fees or taxes.

Second, Acts 1909, c. 504, pursuant to the provisions of which complainant paid to defendant the fees or taxes referred to in the bill, is a valid and constitutional statute of this state, enacted according to her lawful and constitutional authority to impose upon foreign corporations conditions for their admission to do business in the state, and is not in contravention of the federal Constitution in any of the particulars alleged in the bill.

Third, the bill shows that complainant is principally engaged in the manufacture of powder, and the principal business for which it sought and received admission to do business in Tennessee was and is the manufacture of powder, which is not in any sense "commerce," and the fees named in said Acts 1909, c. 504, as a condition precedent to complainant's carrying on its said business in this state, do not infringe any legal right of complainant, and were enacted by the General Assembly of the state of Tennessee under its lawful and constitutional authority.

The chancellor sustained the demurrer and dismissed the bill.

Upon the argument of the case counsel for complainant asked leave of the court to so amend the bill by filing as Exhibit A thereto a copy of the original receipt executed by the secretary of state, showing that the payment was made under protest and without waiver of any rights of the Atlas Powder Company to seek to have the act under which said payment was exacted declared unconstitutional. Said amendment was made.

At the conclusion of the argument of the Attorney General, complainant made application to further amend the bill by filing as Exhibit B thereto a copy of the decree of the District Court of the United States for the District of Delaware, which amendment was also allowed.

This decree adjudged that a combination existed among certain defendants in restraint of interstate commerce in powder and other explosives, and had monopolized a part of such commerce, and enjoined the continuance of said combination and monopoly, and that same be dissolved, and provided that certain plants owned by the various defendants therein, including the plant at Ooltewah, Tenn., be transferred to a corporation to be organized for that purpose, and other plants were to be transferred to other concerns in order to dissolve the combination. It appears that, in pursuance of this federal decree, the plant at Ooltewah was transferred to the Atlas Powder Company.

After the chancellor had rendered his decree in the present case, complainant made application through a petition for...