Commissioner of Corporations and Taxation v. Ford Motor Co.
| Decision Date | 04 April 1941 |
| Citation | 33 N.E.2d 318,308 Mass. 558 |
| Parties | COMMISSIONER OF CORPORATIONS AND TAXATION v. FORD MOTOR COMPANY. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
November 16, 1939.
Present: FIELD, C.
J., DONAHUE LUMMUS, DOLAN, & RONAN, JJ.
Interstate Commerce. Tax, Excise on corporation. Corporation, Taxation Foreign. Good Will. Appellate Tax Board.
A foreign corporation, engaged in assembling automobiles at a branch in this Commonwealth and delivering the completed automobiles to dealers, was not subject to an excise, under either Section 39 or Section 39C of
G. L. (Ter.
Ed.) c. 63 computed upon the amount of sales by the branch to out-of-State dealers at the branch for out-of-State transportation; or of sales made by an out-of-State branch to out-of-State dealers on orders filled by the branch here; or of sales made by the branch here to out-of-State dealers on orders filled by out-of-State branches, since all of such sales were in interstate commerce.
Sales made by an out-of-State branch of a foreign corporation to such branch's dealers located in Massachusetts and attributable to the activities of that branch within G. L (Ter. Ed.) c. 63, Section 38, cl.
6, should be excluded in assessing an excise under Section 39C, although the orders were filled by a Massachusetts branch of the corporation.
Computation of an excise under Section 39C of G. L. (Ter. Ed.) c. 63 upon sales made by a foreign corporation to purchasers in this Commonwealth who had placed their orders with a branch of the corporation here was proper although the orders were filled by deliveries from branches located in other States, such sales being intrastate commerce.
The mere fact that a foreign corporation, in making in good faith a return to the commissioner of corporations and taxation, set forth the several items of "gross receipts assignable to" this Commonwealth, did not estop it, upon an appeal from an assessment based on such gross receipts, from showing that several of the items were interstate sales which should not be considered in computing the excise.
A finding by the Appellate Tax Board upon an appeal from an assessment of an excise upon a corporation, that the corporation had no good will value, was a finding of fact and was final in the absence of a report of the evidence heard by the board.
APPEAL from a decision by the Appellate Tax Board. J. Burke Sullivan, Assistant Attorney General, for the Commissioner of Corporations and Taxation.
A. J. Santry, (R.
Bancroft with him,) for the taxpayer.
This is an appeal by the commissioner of corporations and taxation from a decision of the Appellate Tax Board granting a partial abatement of a corporate excise tax, which had been assessed and paid by the taxpayer, a foreign corporation having a place of business in Somerville, in this Commonwealth.
The facts have been found by the Appellate Tax Board. The Ford Motor Company, a foreign corporation with its principal place of business in the State of Michigan, conducts a plant at Somerville, in this Commonwealth, where automobiles are assembled and completed from parts shipped from points outside this Commonwealth, principally from the company's main plant in Michigan, and are then sold to Ford dealers. Substantially all the income of the Somerville branch is derived from sales of automobiles and parts to these dealers, who are located in the territory assigned by the company to this branch, which comprises the greater part of this Commonwealth, a part of Connecticut, and all of Maine, New Hampshire and Rhode Island. The company also owns and maintains another plant in Troy, New York, known as the Green Island branch, where springs, radiators and bolts are manufactured, and where automobiles are supplied to dealers in the western part of this Commonwealth and in districts in other States. The Somerville branch has frequently received and filled orders from the Green Island branch, and other Ford branches located outside the Commonwealth, for delivery of automobiles to dealers located within the territory served by this branch or to dealers located in the districts of other branches, some of these districts being within and others being without the Commonwealth. The orders from the Green Island branch that were filled by the Somerville branch were negotiated through the Green Island branch and were attributable to the activities of that branch.
Ford dealers in the territory served by the Somerville branch submit a monthly estimate of the automobiles they will need during the coming months, specifying the types or models desired. These estimates are filled if there are automobiles available, and if full compliance with the estimate cannot be made, the dealer is supplied with such automobiles as are in stock that are nearest to the types or models he requires. The dealer, however, is not required to accept automobiles that do not correspond with those described in the estimate given by him to the company.
The sales by the Somerville branch were for cash, or upon open account to dealers who had credit for money paid in advance, or by a down payment collected upon delivery together with a note for the balance. This note was then discounted by the company with a finance company with whom the dealer had arranged to take up the note. The Somerville branch in every instance received payment before it parted with title to its goods.
The general practice of the Somerville branch was to make deliveries to the dealers' places of business by an independent company, called a convoy company, whom it selected and paid. Some automobiles were shipped by freight with a bill of lading attached to a sight draft, and some were shipped by express "C. O. D." In some instances, dealers called for and accepted delivery at the branch and drove away with the automobiles. Such deliveries as were made to out-of-State dealers for transportation out of the Commonwealth were referred to by the board as "drive-aways." Automobile parts were sold by this branch for cash or upon open account.
The commissioner in September, 1936, assessed a corporate excise tax upon the company, amounting to $32,372.10. This tax purported to be imposed in accordance with G. L. (Ter. Ed.) c. 63, Section 39, and St. 1936, c. 397. Thereafter, he granted an abatement of $14,239.97, leaving a net tax in the principal sum of $18,132.13, which the company paid with interest on February 18, 1937. The amount of the abatement was determined by the commissioner by computing the tax under G. L. (Ter. Ed.) c. 63, Section 39C, and basing it upon a percentage of the gross receipts from business which he considered assignable to this Commonwealth, using the sum of $32,967,492.26 which the company set forth in its return as "gross receipts assignable to Mass" and in addition three small items amounting in all to
$5,291.35 for rent received from real estate, miscellaneous earnings, and sales of capital asset equipment items. The schedule of all sales of both automobiles and parts of the Somerville branch in 1935 was as follows:
The board found that the items 2, 3, 4, 5, 6 in the foregoing schedule were sales in interstate commerce, and ruled that no tax should be assessed upon the gross receipts from these sales. It found that the gross receipts from sales as set forth in item 1, plus the said sum of $5,291.35, were the only gross receipts upon which a tax, if computed under G. L. (Ter. Ed.) c. 63, Section 39C, could be based and that, if assessed under this section, the tax would amount to $10,564.35.
A tax computed under G. L. (Ter. Ed.) c. 63, Section 39, upon the corporate excess employed within the Commonwealth and a percentage of the net income with the additional tax provided for by St. 1936, c. 397, was found by the board to amount to $11,987.97. The board ruled that the tax should not be reduced below the amount that would be due if it was computed upon the basis of corporate excess and the net income in accordance with G. L. (Ter. Ed.) c. 63, Section 39, and that the amount last mentioned was the amount for which the tax should have been assessed. It found that the company was entitled to an abatement of $6,114,16 together with interest on the amount abated.
A foreign corporation carrying on or doing business within the Commonwealth is required by G. L. (Ter. Ed.) c. 63, Section 39, to pay an excise tax which may be computed under this section by any one of three methods, i.e., (a) $5 per $1,000 upon the value of the corporate excess employed by it within the Commonwealth plus two and one half per cent of its net income allocable to this Commonwealth; (b) $5 per $1,000 upon the value of its tangible property situated in this Commonwealth and not locally taxable, plus two and one half per cent of its net income allocable to this Commonwealth; or (c) one twentieth of one per cent of such proportion of the fair value...
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