Department of Treasury v. Ice Service
| Decision Date | 27 April 1942 |
| Docket Number | 27696. |
| Citation | 41 N.E.2d 201,220 Ind. 64 |
| Parties | DEPARTMENT OF TREASURY v. ICE SERVICE, Inc. |
| Court | Indiana Supreme Court |
Appeal from Vanderburgh Circuit Court; John W. Spencer Judge.
George N. Beamer, Atty. Gen., and Jos. P. McNamara and Charles W Grubb, Deputy Attys. Gen., for appellant.
Isidor Kahn, Harry P. Dees, and Edward O. Craft, all of Evansville for appellee.
This is an appeal from a judgment which the appellee recovered against the Department of Treasury of Indiana for $7,433.36 representing sums paid as gross income tax on amounts received by the appellee during the years 1933 to 1936, both inclusive.
The appellant relies for reversal on the assigned error that the court erred in overruling the appellant's motion for a new trial, which motion was on the grounds that the decision of the court was not sustained by sufficient evidence and was contrary to law.
The sole question presented by this appeal is the question as to whether the amounts, on which the tax in question was paid, were received by the appellee as an agent.
The evidence discloses that the appellee was organized as a corporation under the laws of the State of Indiana, on May 22, 1930, by four companies which were then engaged in the business of manufacturing, selling and distributing ice in Vanderburgh County, Indiana. These four companies entered into a verbal agreement by the terms of which it was agreed that the appellee company should thereafter sell and distribute the ice manufactured by the four manufacturing companies. Pursuant to the agreement an audit was made of the business done by the four companies during the years 1927 and 1928, and it was thereby determined what proportion of the total business of the four companies each company had done during those two years. It was agreed that each of the four manufacturing companies should annually furnish to the appellee company ice for sale in the same proportion its sales during the two years bore to the total sales of the four companies for that period; and that each company should share in the distribution of the proceeds from the sale of ice by the appellee in the same proportion.
Each of the manufacturing companies, on the organization of the appellee company subscribed for stock in, and furnished capital to, the appellee company. The operating expense of the appellee company, in the sale and distribution of the ice, was deducted from the gross receipts from the sale of the ice and the balance of the proceeds then distributed proportionately as above indicated to the four manufacturing companies. Each of the manufacturing companies carried on its books the gross receipts from the appellee from the sale of its (the manufacturing company's) proportionate share of the ice sold by the appellee and also carried on its books, as an expense of its business, its proportionate share of the sales and distribution costs of the appellee company. The appellee carried the proceeds from the sale of ice on its books in the same manner.
Each of the manufacturing companies paid gross income tax on its proportionate share of the total amount received from the sale of ice by the appellee without deduction of the expense of the sale and distribution of said ice. Such gross income taxes paid by the manufacturing companies were at the proper rate for each company's proportionate share of the wholesale and retail sales made by the appellee company.
The appellee company, in addition to the sale of ice, was also engaged in the sale of refrigerators, but on the receipts from these sales the appellee company does not question its liability to pay gross income tax. The record contains evidence to sustain a finding of all of the above facts.
'Agency' has been defined by the American Law Institute as follows: 'Agency is the relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.' Restatement of the Law of Agency, § 1.
The agency relationship arises from the consent of the parties, out of a contractual agreement between the parties, but it is not necessary that the contract or the authority of the agent to act be in writing.
The question of whether the agency exists is ordinarily a question of fact which may be established as any other fact, either by direct or by circumstantial evidence. Jasper County Farms Company v. Holden, 1923, 79 Ind.App. 214, 137 N.E. 618.
The creation of the relationship depends upon the intention of the parties. The principal must intend the appointment of the agent and the agent must intend to accept the appointment and act upon it. 2 C.J.S., Agency, § 17, p. 1041.
In the instant case the appellant does not contend that the manufacturing companies could not have appointed the appellee corporation as a sales and distribution agency for the four manufacturing companies, but contends that there is no evidence to support the finding of the court that such agency existed. To support its contention the appellant points out that the appellee made federal net income tax returns in which it reported receipts from the sale of ice under the item 'Cost of Goods Sold' and similar amounts under the item 'Material or Merchandise Bought for Manufacture or Sale'. The appellant insists that this fact shows conclusively that the appellee believed it was buying the ice from the ice manufacturers and was selling it for its own account and not as agent. At the most this fact amounts only to evidence tending to support the contention of the appellant, but in determining the sufficiency of the evidence to sustain the...
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