City of Atlanta v. York Mfg. Co.

• Citation: 116 S.E. 195,155 Ga. 33
• Decision Date: 13 February 1923
• Docket Number: 3208.
• Parties: CITY OF ATLANTA ET AL. v. YORK MFG. CO.
• Court: Supreme Court of Georgia

116 S.E. 195

155 Ga. 33

CITY OF ATLANTA ET AL. v. YORK MFG. CO.

No. 3208.

Supreme Court of Georgia

February 13, 1923

Syllabus by the Court.

The Congress of the United States has exclusive power to regulate commerce among the several states; and any attempt by a municipality of a given state to place a burden upon such commerce, in the shape of municipal taxes or otherwise, is illegal.

A foreign corporation, which has no warehouse, office, or place of business in this state, and which neither incurs nor pays any of the expenses of receiving, handling, storing, or selling its goods in this state, to which it consigns them to its factor, who conducts all the business here, assumes and pays all the expenses of receiving, selling, handling, and storing the goods, and becomes responsible to the foreign corporation for the price of the goods when sold by him, is not "doing business" in this state, within the true meaning of the municipal ordinances of the city of Atlanta levying a license tax of $30 on "agencies, or other business not specially mentioned," etc.; and $30 on "machinery, dealers in or agents for," etc.

Where a foreign corporation ships goods to a person within this state on consignment, for sale in his own name, the latter is not the representative nor agent of the foreign corporation; nor is his place of business, which he rents and where he pays all the expenses, and sells such goods in his own name, the place of business of the foreign corporation. Such transaction does not constitute "doing business" within the state by the foreign corporation.

The court did not err in granting the interlocutory injunction.

Additional Syllabus by Editorial Staff.

Where a factor takes orders for machinery and apparatus in the name of its principal, a foreign corporation, which furnishes a person to supervise the erection of the plant, the transaction is interstate business and not subject to municipal taxation.

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Suit by the York Manufacturing Company against the City of Atlanta and others. An interlocutory injunction was granted, and defendants bring error. Affirmed.

Foreign corporation, having no warehouse, office, or place of business in the state, but consigning goods to factor, who conducts business at its own expense and becomes responsible to the foreign corporation for the price of goods when sold held not doing business within ordinances levying a license tax.

The city of Atlanta issued an execution against the York Manufacturing Company, a corporation organized and existing under the laws of the state of Pennsylvania, and having its principal office and place of business in the city of York Pa., for the sum of $7.50, as for an unpaid license or occupation tax. The York Manufacturing Company brought a petition against the city of Atlanta and W. E. Harwell, city marshal, to enjoin the enforcement of this execution. On interlocutory hearing an injunction was granted as prayed; whereupon the city of Atlanta and the marshal excepted. It appears from the record that the city of Atlanta has tax ordinances imposing a business or occupation tax, among others, upon--

"agencies, or other business not especially mentioned, except such licenses as may hereafter be charged by the mayor and general council, * * * $30.00. Machinery, dealers in or agents for, where annual sales are less than $25,000, * * * $30.00."

The tax was not paid; and the execution was issued for one-fourth of the annual tax which the city requires to be paid quarterly. The York Manufacturing Company alleges as follows: It is a foreign corporation and has no business located within the city of Atlanta; it is engaged in the manufacture of ice-making and refrigerating machinery and apparatus and fittings therefor; and its place of business and its factory are located in the city of York, Pa. The Southern Construction & Supply Company, hereafter referred to as the Southern Company, is a corporation under the laws of the state of Georgia, and is engaged in the business of selling ice-making and refrigerating machinery and fittings therefor in Georgia and other states, and has and maintains its principal office and place of business at 116 and 118 Central avenue in the city of Atlanta. In the year 1912 the plaintiff entered into a contract with the Southern Company, a copy of which is attached to the petition. This contract is now in force, and the parties thereto are acting under it. From time to time, as ordered by the Southern Company, the plaintiff ships on consignment to the latter company ice-making and refrigerating machinery and apparatus and fittings therefor, and the Southern Company holds the goods and sells them in Georgia and elsewhere on a commission basis, as provided in the contract. The Southern Company maintains an office and place of business and warehouse at the above-mentioned place in the city of Atlanta, for the purpose of selling the goods, and it has complete charge thereof and pays all expenses, and plaintiff has no connection with the business of that company. The latter company maintains its office and place of business for its own purposes and in the conduct of its own business. Plaintiff has no general office and no branch office and no business proper located within the city of Atlanta. Plaintiff has been notified that in the event it fails to pay the amount of the tax at once, it will be required to appear before the city of Atlanta on the charge of conducting business without a license. It is not liable for the tax under the ordinances of the city of Atlanta, and it does not come within the operation of the ordinances; and the effort of the city of Atlanta and its marshal to collect the tax is illegal and contrary to law. That the ordinances of the city of Atlanta provide that any person whose duty it shall be to register their business and who fail or refuse to do so may be arrested and brought before the recorder's court, and on conviction be fined a sum not exceeding $100 and costs, or be imprisoned not exceeding 30 days, or both, in the discretion of the court, for each day such business has been done without registering the same, etc. The Southern Company has already paid the general business license of occupation tax to the city of Atlanta, and neither that company nor its officers, agents, or employees are liable to pay the tax sought to be imposed upon plaintiff. Neither the Southern Company nor its officers, agents, or employees are subject to prosecution on account of the failure to pay the tax so imposed upon plaintiff; and any effort to enforce collection of the tax by prosecution in the recorder's court of any of these parties would be contrary to law. In the event that the plaintiff fails to pay the tax, the marshal of the city of Atlanta will levy upon and sell enough of the plaintiff's property in the hands of the Southern Company to pay the illegal tax, together with all costs involved in the proceeding; and such levy and sale would be illegal and without authority of law, and would constitute a trespass and an illegal taking of the property of plaintiff.

The contract between the plaintiff and the Southern Company, above referred to, was executed in the year 1912, whereby the latter company is designated as selling agent for the plaintiff. Under this contract plaintiff agrees to sell to the Southern Company certain ice-making and refrigerating machinery and apparatus and fittings therefor at market prices, and, as requested, to ship to the Southern Company on consignment such a stock of machinery as the principal may deem necessary, and to pay the freight and charges thereon "to the store of the agent"; to keep said stock replenished from time to time; to take back such of it as may be found unsalable, and to replace the same with other stock suitable for the market; to keep the stock properly insured, and fill directly from its factory such orders as it may receive from the agent (and as are approved) for such machinery or apparatus as the agent may not have in stock. The principal agrees to pay the agent a commission of 5 per cent. on the net price of all sales made by it of such machinery to be erected and operated in its territory, etc.

J. L. Mayson and J. M. Wood, both of Atlanta, for plaintiffs in error.

Dorsey, Brewster, Howell & Heyman and Mark Bolding, all of Atlanta, for defendant in error.

HILL, J. (after stating the facts as above).

The question to be considered is whether or not the York Manufacturing Company, a corporation under the laws of Pennsylvania, and having its home office in that state, has under section 21 of the tax ordinances of the city of Atlanta for the years 1921-1922 either its business proper or its general or branch offices located within the corporate limits of the city of Atlanta, and is represented by officers or any agent for the purpose of soliciting patronage for the same or for the transaction of any business pertaining thereto. The question presented is one more of fact than of law. Of course, if the transactions, if any, of the plaintiff are purely interstate, Congress alone has power, under the federal Constitution, to regulate such commerce. Article 1, § 8, par. 3, of the Constitution of the United States; Civil Code of 1910, § 6644. But, under the view we take of this case and the evidence introduced on the interlocutory hearing, which was uncontradicted, the York Manufacturing Company has no office or place of business in the city of Atlanta, so as to subject it to the municipal tax sought to be enforced in the present case. Under the evidence in the record, it has no officers or employees in the city of Atlanta or in the state of Georgia. The evidence discloses that the Southern...