Carlos Ruggles Lumber Co. v. Commonwealth

• Decision Date: 30 November 1927
• Citation: 158 N.E. 897,261 Mass. 445
• Parties: CARLOS RUGGLES LUMBER CO. v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

261 Mass. 445

158 N.E. 897

CARLOS RUGGLES LUMBER CO.

v.COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

Nov. 30, 1927.

Case Reserved from Supreme Judicial Court, Suffolk County.

Petition by the Carlos Ruggles Lumber Company against the Commonwealth for the abatement of an excise tax. On reservation, pleadings, and agreed statement of facts. Petition dismissed.

See, also, 158 N. E. 899.

P. Nichols, of Boston (C. E. Bell, of Springfield, of counsel), for petitioner.

A. K. Reading, Atty. Gen. (Alexander Lincoln, of Boston, of counsel), for the Commonwealth.

RUGG, C. J.

This is a petition under G. L. c. 63, § 77, by a domestic corporation having its principal place of business at Springfield in this commonwealth for the abatement of an excise tax assessed upon it for the year 1924. The case is reserved for our determination on the petition, answer, and an agreed statement of facts. The pertinent facts are that the petitioner during the year in question was engaged solely in buying lumber and lumber products in states other than Massachusetts and selling the same in other states including Massachusetts. It had no lumber yard, and no lumber or lumber products on hand in Massachusetts or elsewhere for sale. On April 1, 1924, the petitioner owned a large amount of lumber not physically in this commonwealth, which had been shipped from the state of its origin to the state of its destination and was in transit in interstate or foreign commerce. About one-fourth of it was destined for this commonwealth but had not arrived, and the remainder to other localities. The commissioner of corporations and taxation refused to deduct the value of this lumber from the value of the ‘corporate excess' of the petitioner in order to determine the excise tax to be assessed on the petitioner under G. L. c. 63, § 32. The decision of the issue between the parties depends upon the correct interpretation of that part of G. L. c. 63, § 30, which, so far as material, is in these words:

‘When used in this section and sections thirty-one to fifty-two, inclusive, the following terms shall have the following meanings: * * * 3. ‘Corporate excess,’ in the case of a domestic business corporation, the fair cash value of all the shares constituting the capital stock of a corporation on the first day of April * * * less the value of the following: * * * (c) Its real estate, machinery, merchandise and other tangible property situated in another state or country. * * *'

[2] This method of computing the corporation excise tax first was established by St. 1919, c. 355, §§ 1, 2. Prior to that enactment the method of computing that excise tax was found in St. 1909, c. 490, pt. 3, § 41, third, where the deduction was required to be of ‘the value of its property situated in another state * * * and subject to taxation therein.’ That statute was considered in American Manuf. Co. v. Commonwealth, 251 Mass. 329, 146 N. E. 801. It was there said in substance that, which in earlier statutes imposing an excise tax on the franchise of domestic corporation, few deductions were allowed for property owned by it and situated outside the commonwealth, the history of the development of the corporation franchise tax law indicated a progressive purpose to avoid double taxation by authorizing successive deduction of such property in ascertaining the value of the corporate franchise. This progressive purpose was recognized by the report to the General Court of the Joint special committee on taxation (Senate Document No. 1313 of 1919) appointed in 1918, which formed the basis of St. 1919, c. 355, now embodied in G. L. c. 63. It is pointed out in that report that methods of other states for taxation of foreign corporations were in process of change from direct property tax to an excise on the privilege of doing business measured in some other way, and that hence the deductions there allowed by our law were not quite adequate. Of course the clear meaningof the present tax statute cannot be changed by examination of its legislative history, but it is permissible to look to that history for understanding the conditions under which it came into existence. Old South Association v. Boston, 212 Mass. 299, 304, 305, 99 N. E. 235;Loring v. Young, 239 Mass. 349, 368, 132 N. E. 65, and cases collected.

It is plain that the lumber here in question, although tangible property, was not so ‘situated in another state or country’ as to have acquired a situs sufficient to become subject to taxation there. Hughes Brothers Timber Co. v. Minnesota, 272 U. S. 542,46 S. Ct. 22, 70 L. Ed. 402;Champlain Realty Co. v. Brattleboro, 260 U. S. 366, 43 S. Ct. 146, 67 L. Ed. 309, 25 A. L. R. 1195. These decisions of the United States Supreme Court rest on the principle that property in movement in interstate commerce is not situated in the particular jurisdiction where it may happen to be in a state of transportation. It is not at rest and hence not situated, but is in transitory movement. Whether the timber here in question was taxed or subject to taxation in another jurisdiction is not material under the words of the present governing statute as it was under St. 1903, c. 437, § 72, and St. 1909, c. 490, pt. 3, § 41, third, under consideration in American Manuf. Co. v. Commonwealth, 251 Mass. 329, 146 N. E. 801. But it is material to know from these authoritative federal adjudications that it was not even so situated in such other jurisdiction as to be by any possibility taxable there. It would be difficult to determine where the property here in question actually was situated.

Certain personal property is made subject to taxation where ‘situated.’ G. L. c. 59, § 18, second. It has been held that this implies some degree of...