Dennison Mfg. Co v. Wright, (No. 3802.)

Decision Date17 November 1923
Docket Number(No. 3802.)
PartiesDENNISON MFG. CO. et al. v. WRIGHT.
CourtGeorgia Supreme Court

(Syllabus by the Court.)

Error from Superior Court, Fulton County; Geo. L. Bell, Judge.

Action by the Dennison Manufacturing Company and another against William A. Wright. Judgment for defendant on demurrer, and plaintiffs bring error. Reversed.

Harry F. Christie and the Dennison Manufacturing Company brought suit against "William A. Wright, who is comptroller general of the state of Georgia, " and made this case: The Dennison Manufacturing Company, a Massachusetts corporation with an authorized capital of $7,000, 000, maintains its principal office and place of business and operates its factory in Framingham, Mass., being engaged principally in the business of manufacturing tags and other specialties, and selling articles to dealers in Georgia and throughout the United States. In 1919 this company conducted its entire business and effected all sales at its said principal office. In so doing it employs sales agents, representatives, and traveling salesmen, who solicit and take orders for its products throughout the United States. Each sales agent and representative travels and conducts his employment in a limited territory. The company determined all its sales policies and prices; employed all its sales agents and representatives; defined their duties; received and accepted or rejected all orders for its products secured by them or otherwise from dealers in Georgia and elsewhere in the United States; made all shipments of its products from said factory directly to buyers; sent out all invoices directed to them; and col-lected all accounts and received all moneys due from sales directly from buyers; and kept all original records relating to sales to Georgia buyers at its said principal office. The company conducted no business in 1919 in Georgia through the agency of Christie other than herein set forth. The company was engaged in interstate commerce alone in 1919 in Georgia. It did not then and does not now operate a factory or manufacturing plant, manufacture any of its products, or own any real estate in Georgia. Christie was employed exclusively by the company as sales agent and representative at an annual salary of $5,000. Christie was engaged in no occupation and was conducting no business in Georgia other than that of soliciting and taking orders for its products, with and without the use of samples, for this company from dealers residing in Georgia, South Carolina, Florida, Alabama, and Mississippi, and forthwith transmitting such orders directly to the company at its said principal office for acceptance or rejection, and conducted said business subject to the supervision and control of the company at said office.

The company maintained an office in the city of Atlanta in its name, from which Christie so conducted his said employment in said state. In making sales of its products to dealers in said states, the company employed six additional sales agents and representatives who conducted their employment under the immediate supervision and direction of Christie, the district manager. None of said additional representatives had a place of business or office in Georgia. They conducted no business in Georgia other than that of soliciting and taking orders for its products with and without the use of samples, which were forthwith transmitted directly to the company at its principal office for acceptance or rejection. In the event of the acceptance thereof, shipments were made by the company directly to the Georgia buyers from without to within the state of Georgia. Of the orders taken by and under the direction of Christie during 1919 from dealers residing in said states in the course of his employment, approximately 70 per cent. were from dealers in South Carolina, Florida, Alabama, and Mississippi, and approximately 30 per cent. were dealers in Georgia. Christie employs one stenographer and one filing clerk in his office. All expense incurred in maintaining said office, including rent, salaries, postage, incidental and traveling expenses incurred by him, and said additional sales agents and representatives, are paid by Christie from a fund provided for that purpose by the company and deposited in a bank in Atlanta, with the exception that the salary of said additional agents and representatives exceeding $1,200 per annum are paid by the company directly from its principal office. Christie's salary is likewise so paid. Chris tie, in conducting his said office and employment, keeps no books, renders no invoices to buyers, collects no accounts, and receives no money due from sales to Georgia buyers, and maintains no bank account in Georgia as hereinbefore set forth in the name of the company. He keeps on file in said office letters received and copies of letters written by him, a record of orders taken under his direction, and other papers and records necessary to the conduct of his employment. No stock of the products of the company is kept or carried in Georgia in anticipation of future orders and for immediate delivery pursuant thereto. Christie keeps on hand in said office a few salesmen's samples which are not intended or offered for sale or sold, but are used solely in soliciting orders. The company ships no products in Georgia except from its factory directly to Georgia buyers in original packages upon orders therefor received from such buyers, either directly or through the agency of Christie, or otherwise, and accepted at its said principal office.

The Act of August 20, 1918 (Acts 1918, p. 43), known as the General Tax Act, effective January 1, 1919, as amended by the Act of August 19, 1919 (Acts 1919, p. 45), imposes "upon every agent or representative of any foreign or non-resident corporation, said agent or representative having a place of business or office in this state in addition to all other taxes now required of them by law, * * * an annual license or occupation tax fixed in accordance with the capital stock of corporation represented by them, " this statute imposing an occupation tax of $600 upon a corporation having a capital of over $2,000, 000. It requires every sales agent or representative to go before the ordinary of the county in which he proposes to conduct said business and register his name, the business in which he proposes to engage, the place where it is to be conducted, and to pay in advance said occupation tax. Failure to register and pay said tax is a misdemeanor, and subjects such agent or representative, upon conviction, to the payment of a fine of not less than $1,200, or to imprisonment as prescribed by section 1065 of the Penal Code, or to both. As applied and of force, said act requires this company to likewise register, and in effect pay in advance said occupation tax of $600. To require Christie to register and pay said tax as a condition precedent to his right to engage in said business would necessarily result in depriving him of a lawful right to engage in such business, the same constituting interstate commerce free from taxation and burdensome regulations, and would necessarily result in depriving said company of its lawful right to engage in such interstate commerce in Georgia. Said tax act attempts to tax interstate commerce by imposing upon. Christie" a tax payable in advance for the privilege of engaging in and conducting saidbusiness in this state as the agent and representative of this company; and undertakes and attempts to impose a condition upon his lawful right to engage in interstate commerce by requiring him to register. For this reason said provisions of said act are unconstitutional and void, because they burden and regulate interstate commerce, contrary to the Interstate commerce clause of the federal Constitution.

William A. Wright, who was and is the comptroller general of Georgia, demanded that Christie, as the agent of said company, pay said license and occupation tax for 1919 of $600, or be subject to prosecution for a misdemeanor for failure so to do and doing business without registering and paying said tax. In order to avoid trouble, payment was made of said amount under protest. The exaction of the $600 by the defendant was without legal authority, as said tax act as applied to said Christie or said company is unconstitutional, null and void.

"This suit is accordingly brought for the recovery of said $600 of and from the defendant, which, with interest thereon from April 25, 1919, at the legal rate, constitutes the damages which plaintiffs are entitled to recover herein

from the defendant."

Attached to the petition was a letter from the Dennison Manufacturing Company and Christie to the comptroller general of Georgia, inclosing a check of the company for $600 to pay said occupation tax. This letter recites that "the payment of this tax is made only by virtue of the demand made by your office that this tax must be paid either by said agent or by this company, and is made under protest, " because neither the company nor said agent is liable therefor, as they are engaged solely in the transaction of interstate commerce in this state.

To this petition the defendant demurred on the ground, among others, that no cause of action is set out therein. The court sustained that ground of demurrer, and dismissed the petition. To this judgment the plaintiffs excepted.

Smith, Hammond & Smith, of Atlanta, for plaintiffs in error.

Geo. M. Napier, Atty. Gen., and Seward M. Smith, Asst. Atty. Gen., both of Atlanta, for defendant in error.

HINES, J. (after stating the facts as above). [1] 1. It is urged by the Attorney General that this action is against the comptroller general of the state in his official capacity, to enforce a liability against the state, and is for this reason; in effect, one against the state, which cannot be maintained without its consent. We do not construe this action as one brought against the defendant in his official...

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    ... ... of the Bureau of Labor, Appellant ... No. A7710-14092; CA 9686 ... Court of Appeals of Oregon ... v. Wood, 167 Conn. 334, 355 A.2d 307 (1974); Dennison Mfg. Co. v. Wright, 156 Ga. 789, 120 S.E. 120 (1923); ... ...
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