Carlos Ruggles Lumber Co. v. Commonwealth
| Decision Date | 30 November 1927 |
| Citation | 261 Mass. 445 |
| Parties | CARLOS RUGGLES LUMBER COMPANY v. COMMONWEALTH. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
March 8, 1927.
Present: RUGG, C.
J., BRALEY, PIERCE CARROLL, & WAIT, JJ.
Tax, Excise on corporation. Corporation, Taxation. Statute, Construction. Constitutional Law, Taxation, Equal protection of law Interstate commerce. Interstate Commerce. Words "Situated."
A Massachusetts corporation, engaged solely in buying lumber and lumber products in States other than Massachusetts and selling the same in other States and in Massachusetts, and having no lumber yard and no lumber or lumber products on hand in Massachusetts or elsewhere for sale, is not entitled, in the computation of the value of its corporate excess forming the basis of the excise tax to be assessed under G.L.c.
63, Section 32, to have deducted as "merchandise" or "tangible property situated in another State or country," under Section 30, cl. 3 (c), the value of lumber which, having been purchased in another State, was not physically in
Massachusetts but was in transit in interstate commerce to the purchasers, some in this Commonwealth and some elsewhere.
In a petition under G.L.c. 63, Section 77, for the abatement of the whole or a part of an excise tax assessed upon a domestic corporation under
Section 32, the burden is on the petitioner to show that it is entitled to the deduction.
G.L.c. 63, Section 30, cl. 3 (c), as above interpreted, does not violate the petitioner's rights under the Federal Constitution in that thereby property outside the jurisdiction of this Commonwealth is taxed; nor does it throw a discriminatory burden on interstate commerce.
PETITION, filed in the Supreme Judicial Court for the county of Suffolk on January 29, 1925, under G.L.c. 63, Section 77, seeking that $1,839.88 of a tax of $5,598.99 assessed upon the petitioner in 1924 be adjudged to have been assessed illegally.
The petition was reserved by Wait, J., for determination by the full court upon the petition, the answer, and an agreed statement of facts. Material facts are stated in the opinion.
P. Nichols, for the petitioner. A.K. Reading, Attorney General, for the Commonwealth, submitted a brief.
This is a petition under G.L.c. 63, Section 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, Section 32. The decision of the issue between the parties depends upon the correct interpretation of that part of G.L.c. 63, Section 30, which, so far as material, is in these words:
This method of computing the corporation excise tax first was established by St. 1919, c. 355, Sections 1, 2. Prior to that enactment the method of computing that excise tax was found in St. 1909, c. 490, Part III, Section 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 . It was there said in substance that, while in earlier statutes imposing an excise tax on the franchise of domestic corporations 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. 313 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 meaning of 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. Loring v. Young, 239 Mass. 349, 368, 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. 469. Champlain Realty Co. v. Brattleboro, 260 U.S. 366. These decisions of the United States Supreme Court rest on the principle that property in movement in interstate commerce is not...
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