Crane Co. v. Carson

• Citation: 191 Tenn. 353,234 S.W.2d 644,27 Beeler 353,71 S.Ct. 282
• Parties: CRANE CO. v. CARSON, Commissioner of Finance and Taxation. 27 Beeler 353, 191 Tenn. 353, 234 S.W.2d 644
• Decision Date: 15 July 1950
• Court: Supreme Court of Tennessee

Page 644

234 S.W.2d 644 CRANE CO.
v.
CARSON, Commissioner of Finance and Taxation. 27 Beeler 353, 191 Tenn. 353, 234 S.W.2d 644 Supreme Court of Tennessee. July 15, 1950.
Certiorari Denied Dec. 11, 1950.
See 71 S.Ct. 282.

[191 TENN 354] Taber, Chambliss, Swafford & Claunch, Chattanooga, for appellant.

Roy H. Beeler, Atty. Gen., William F. Barry, Sol. Gen., Nashville, and Harry Phillips, Asst. Atty. Gen., for appellee.

GAILOR, Justice.

The bills in these three consolidated causes were filed by Crane Company, an Illinois corporation, against the Commissioner of Finance and Taxation, to recover alleged[191 TENN 355] overpayment of franchise and excise taxes for the years 1945, 1946, and 1947. The first suit seeks a recovery of $35,951.92, overpayment of excise tax for the years 1945 and 1946. The second suit seeks recovery of $6,055.28, representing franchise tax paid under protest for the year 1947. The third suit seeks recovery of excise tax paid under protest for the year 1947 in the sum of $46,253.05.

Defendant Commissioner filed answers to the bills, depositions were taken, and after hearing the cause and writing an excellent opinion which has come up with the record, the Chancellor entered a decree dismissing the bills. The complainant has appealed. The three bills were consolidated and heard together, both in the Chancery Court and in argument before us.

The case is controlled by the recent opinion of this Court in American Bemberg

Page 645

Corporation v. Carson, 188 Tenn. 263, 219 S.W.2d 169, unless on account of the peculiar system of accounting presented by the complainant for the first time in this case, the business operation of the complainant is to be distinguished from that considered in the American Bemberg case, supra.

The pertinent facts are these: The complainant is an Illinois corporation, engaged both in manufacturing and selling in Tennessee. It has a factory at Chattanooga, and retails sales outlets at Knoxville, Chattanooga, Nashville and Memphis. In addition to the factory at Chattanooga, complainant has a factory in Illinois and another in New Jersey. In addition to the retail outlets in Tennessee, complainant has sales branches in 130 cities throughout this country. It also does some international business. Products of its manufacture and sale are valves, pipes, cast iron, enamelware, heating and plumbing fixtures and equipment. In addition[191 TENN 356] to manufacturing and selling its own products, complainant distributes and markets products of other manufacturers in the same field.

The principal business office of the corporation is in Chicago, and that office exercises control over all factories and sales outlets. Under the direction of its Chicago office, Crane Company pursues a system of accounting whereby the Chattanooga manufacturing plant is treated as a separate entity, its other two factories are treated as separate entities, and each of its 130 retail sales outlets is so treated. Under its system of accounting, complainant treated its Chattanooga plant operation as though it did not maintain any retail sales organization. During the war years appellant's Chattanooga factory was devoted to manufacturing material for war. And after the war, instead of merely converting that to peace-time use, the Chattanooga factory was much improved and enlarged. The factories of complainant theretofore operated at Bridgeport...