Com. v. Olan Mills, Inc.

• Decision Date: 07 March 1955
• Docket Number: No. 4314,4314
• Parties: COMMONWEALTH OF VIRGINIA v. OLAN MILLS, INCORPORATED, ET AL. Record
• Court: Virginia Supreme Court

Page 27

86 S.E.2d 27

196 Va. 898

COMMONWEALTH OF VIRGINIA v. OLAN MILLS, INCORPORATED, ET AL.

Record No. 4314.

Supreme Court of Appeals of Virginia

March 7, 1955.

J. Lindsay Almond, Jr., Attorney General and Francis C. Lee, Assistant Attorney General, for the Commonwealth.

Williams, Mullen, Pollard & Rogers and Hunt & Ingle, for the appellees.

JUDGE: BUCHANAN

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

Olan Mills, Incorporated, a Tennessee corporation, and P. W. McCarter, its agent, were tried on warrants charging them with operating a photographer's business without a license in violation of § 58-393 of the Code, ¹ constituting a misdemeanor punishable by fine. Code § 58-251. On their trial to the court without a jury, the facts being stipulated, they were acquitted and the Commonwealth appeals. Code § 19-255.

Section 58-393 is a revenue measure and does not rest upon the principles applicable to the exercise of the police powers of the State. Moore v. Sutton, 185 Va. 481, 39 S.E. (2d) 348.

The agreed facts are as follows:

Olan Mills is a Tennessee corporation with its principal office in Chattanooga in that State, but qualified to do business in Virginia (Code § 13-211). In its operations an advance sales unit, composed of from two to five persons, employed by and under the supervision of Olan Mills, solicits orders for photographs in a municipality in Virginia. All orders are accepted for future delivery, to be manufactured, processed and finished in Chattanooga. At the time the order is accepted the customer is notified when and where to appear to have a 'sitting' or 'exposure' made, and at the same time a fifty-cent deposit is collected. These sittings or exposures are made at a hotel or other location rented on a temporary basis. The corporation reserves the right to accept or reject the order given its salesman.

At the appointed time and place a cameraman, also employed by and under the supervision of the Chattanooga office of the corporation, takes the sitting or exposure and an additional deposit of fifty cents is then collected. The negatives so taken are forwarded by mail to the corporation's plant in Chattanooga and are there developed, processed and proofs manufactured. The proofs are then sent by mail to another agent of the corporation at the place where the order was taken. The customer is notified by mail as to the time and place to select the proof and order any additional pictures desired. For the one dollar previously deposited the customer receives one 8 X 10 unmounted photograph, and orders for additional photographs are sent by mail to the corporation's plant in Chattanooga where the finished photographs are processed or developed, and mailed directly to the customer. Any amount due for the additional photographs, mountings, tinting, &c., all of which is done in Chattanooga, is paid in cash on delivery.

No part of the processing or manufacturing is done within the State of Virginia.

The warrant against McCarter was issued by reason of his soliciting an order for a photograph and performing the duties of his employment by Olan Mills as a member of an advance sales unit in the city of Danville, Virginia.

The warrant against Olan Mills was issued to cover the corporation's criminal liability for the acts of McCarter and its other employees in the city of Danville, including its cameraman, who took sittings or exposures as an employee of the corporation and under the supervision of its principal office in Chattanooga.

The two defendants will be herein referred to collectively as the defendant.

The trial court held that if the statute be construed to cover the defendant's operations, then it is invalid because it imposes an undue burden on interstate commerce in violation of the Commerce Clause, Article 1, Section 8, of the Constitution of the United States.

The Commonwealth contends that interstate commerce is not involved but that the statute taxes simply the defendant's business of taking the photograph, not the subsequent sale; that the case involves not the validity of a license to engage in interstate business of selling photographs or photographic supplies, but a license which must be procured in order to do the essential act which makes possible the subsequent sale.

Olan Mills insists, on the other hand, that it is the complete photographer's business upon which the legislature has imposed the tax, and that if the statute is construed so as to apply to the business carried on by Olan Mills it is invalid because it imposes a tax on interstate commerce and is discriminatory in its operation.

Section 58-393 lays the tax on 'every photographer'. A photographer is defined as 'one who practices, or is skilled in, photography'; and photography is 'the art or process of producing images on sensitized surfaces by the action of light or more generally, of any form of radiant energy. The images produced may be either visible, in which case they must be fixed by the removal of the unchanged sensitive material, or invisible when by further chemical treatment, known as development, a visible image is produced.' Webster's New Int. Dict., 2 ed., p. 1847.

The second paragraph of the statute provides that it shall not apply to amateur photographers 'who expose, develop and finish their own work' and not for compensation.

It seems clear, not only from the definition of the word, but from the language of the statute itself, that the person who is taxed as a photographer is one who produces a completed picture, not each individual who performs one of the essential acts, or takes one of the essential steps, toward that result. One who merely operates a camera and takes an exposure from which no picture is developed would not be required to have a license for that specific act. McCarter, the individual here charged, was not even a cameraman; he was a solicitor.

Here the negatives produced by the cameraman are sent to the defendant's plant in Tennessee where they are developed, processed and proofs manufactured. The customer in Virginia orders from these proofs and the finished photographs are then processed and manufactured in Tennessee and mailed to the customer in Virginia. What the defendant sells and what the customer buys is not the negative taken in Virginia but the finished picture which comes to him by mail from Tennessee, where it was made into a salable article. Clearly the transaction which was the basis for the charge that the defendant engaged in the business of a photographer without having the license required by § 58-393 involved interstate commerce. The resulting question is whether the statute when applied to the defendant's activities imposed an unlawful burden on that commerce, or whether the part that was done in Virginia was a local incident sufficiently separate and distinct from the commerce as to be subject to State taxation.

In McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.ed. 565, it was held that there was no infringement of the Commerce Clause by a sales tax levied by New York city on coal sold there and delivered after being transported from mines in Pennsylvania. The court said that State taxation whose tendency is to prohibit interstate commerce or place it at a disadvantage, in competition with intrastate commerce, or which discriminates against interstate commerce, is an unconstitutional exercise of State taxing power. But it was held that the New York sales tax did not aim at or discriminate against interstate commerce but was laid on every purchaser within the State of goods for consumption regardless of whether they had been transported in interstate commerce, and that the only relation of the tax to the commerce 'arises from the fact that immediately preceding transfer of possession to the purchaser within the state, which is the taxable event regardless of the time and place of passing title, the merchandise has been transported in interstate commerce and brought to its journey's end.' 309 U.S. at p. 49, 60 S.Ct. at p. 394, 84 L.ed. at p. 572. The tax was upon an activity, said the court, 'which, apart from its effect on the commerce, is subject to the state taxing power.' 309 U.S. at p. 58, 60 S.Ct. at p. 398, 84 L.ed. at p. 577.

However, in Nippert v. City of Richmond, 327 U.S. 416, 66 S.Ct. 586, 90 L.ed. 760, it was held that a license tax laid by an ordinance of the city of Richmond upon engaging in business as a solicitor would run afoul of the Commerce Clause if applied to Nippert, an employee of a garment company in Washington, D.C., who took orders in Richmond for ladies' garments to be afterwards shipped into the State and paid for on delivery. The court rejected the theory that the tax imposed was on a local event, soliciting, separate and distinct from interstate...