Eaton, Crane & Pike Co. v. Commonwealth

Decision Date03 March 1921
Citation130 N.E. 99,237 Mass. 523
PartiesEATON, CRANE & PIKE CO. v. COMMONWEALTH. U. S. ENVELOPE CO. v. SAME.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

OPINION TEXT STARTS HERE

Case Reserved from Supreme Judicial Court, Suffolk County.

Petitions for abatement of taxes by the United States Envelope Company and the Eaton, Crane & Pike Company against the Commonwealth of Massachusetts. On reservation by a single justice of the Supreme Judicial Court on the pleadings and agreed statement of facts for the determination of the full court. Decree ordered entered for each petitioner in accordance with the amount found on remand as that to which each petitioner is entitled.Felix Rackemann and Harrison M. Davis, both of Boston (Charles L. Long, of Springfield, of counsel), for petitioners.

J. Weston Allen, Atty. Gen., and Maynard C. Teall, Asst. Atty. Gen., for the Commonwealth.

RUGG, C. J.

These are petitioners for the abatement of the war bonus taxes, so called, levied under St. 1919, c. 342, whereby St. 1918, cc. 253 and 255, each operative according to its terms for one year only, were revived and extended for a further period. By the words of chapter 253 and chapter 255 certain foreign and domestic corporations were required to pay ‘a tax * * * computed upon * * * net income.’

[3][5] Question is raised as to the nature of the taxes thus imposed. The language of these several acts is not as plain as might be desired in designating whether a property or an excise tax is intended. Nevertheless, construing the acts in the light of the system of corporate taxation established for many years in this Commonwealth, it must be deemed that an excise and not a property tax is thereby established. The revenue derived by the state from both domestic and foreign corporations has for many years been chiefly by the exaction of excise taxes. Farr Alpaca Co. v. Commonwealth, 212 Mass. 156, 98 N. E. 1078;S. S. White Dental Mfg. Co. v. Commonwealth, 212 Mass. 35, 98 N. E. 1056, Ann. Cas. 1913C, 805. A departure by the Legislature from that tried system of taxation will not be presumed in the absence of explicit words expressive of such purpose. Several cases already have been before us involving these acts. It never hitherto has been suggested that the taxes were property taxes rather than excises. American Printing Co. v. Commonwealth, 231 Mass. 237, 120 N. E. 686;H. P. Hood & Sons v. Commonwealth, 235 Mass. 572, 127 N. E. 497. If the taxes here assailed were found to be income taxes rather than excises, difficult questions would arise as to their conformity to the requirements of article 44 of the Amendments to the Constitution, to the effect that the rate of taxation upon incomes derived from the same class of property must be uniform. The rate named in these acts is different from that in St. 1916, c. 269, §§ 2, 5, which is confessedly an act levying taxes upon incomes. Every rational intendment is made in favor of the validity of an act of the General Court and no statute is denied enforcement unless its conflict with the fundamental law admits of no rational doubt. Perkins v. Westwood, 226 Mass. 268, 115 N. E. 411. The tax is not named in these acts an excise, as it is in St. 1909, c. 490, pt. 3, § 56, imposing the general excise tax upon foreign corporations doing a domestic business in this Commonwealth. The same nomenclature is used in these acts as is found in St. 1918, c. 252, which imposed an additional tax upon incomes of individuals and partnerships. That tax is a property and not an excise tax. Maguire v. Tax Commissioner, 230 Mass. 503, 512, 120 N. E. 162;Opinion of Justices, 220 Mass. 613, 623-627, 108 N. E. 570, affirmed in Tax Commissioner v. Putnam, 227 Mass. 522, 532, 116 N. E. 904, L. R. A. 1917F, 806. But the purpose of the Legislature must be gathered not only from the words used but the powers possessed by it. It must be presumed to have intended to act within the limits imposed on it by the Constitution. ‘Tax’ in some connections is a word of comprehensive meaning and may include excises as well as a pecuniary burden laid directly on property. The Legislature has sometimes designated an excise as a tax and nothing more. For example, the franchise tax imposed on domestic corporations is an excise. Yet it is termed simply a ‘tax’ in St. 1909, c. 490, pt. 3, § 43. Many of the revenue exactions made by the Commonwealth from corporations, which have been upheld as excises, were named in the statutes a tax and not an excise. See, for example, St. 1862, c. 224; Commonwealth v. People's Five Cents Savings Bank, 5 Allen, 428; St. 1864, c. 208, §§ 1, 5; Commonwealth v. Hamilton Manuf. Co., 12 Allen, 298; St. 1865, c. 283, § 8; Attorney General v. Bay State Mining Co., 99 Mass. 148, 96 Am. Dec. 717. The discussions in those decisions are conclusive of the issue here raised. The word used is not decisive, when a term of sufficiently broad import is employed to cover the substance of the thing which is within the authority of the Legislature. The real character of the monetary exaction is the determining factor. There was authority in the General Court to levy an additional excise of such nature as not to exceed constitutional bounds. The net income of the foreign corporation and the rate constitute, as defined in these acts, the measure by which to calculate the extent of the special additional excise levied upon the corporation in addition to those imposed by St. 1909, c. 490, pt. 3, § 56. It follows that the effect of these statutes is to impose an additional, special and temporary excise upon the corporate franchise in the case of domestic corporations and upon the privilege of conducting intrastate business within our borders in the case of foreign corporations, and not to impose a property or strict income tax. These statutes were enacted pursuant to the power granted by chapter 1, § 1, art. 4, of the Constitution, to ‘impose and levy reasonable duties and excises' and not to that conferred by article 44 of the Amendments (see St. 1918, p. 51), to impose a tax on incomes. They do not contravene any provision of the Constitution of this Commonwealth.

The excise thus authorized is not violative of the Constitution of the United States. H. P. Hood & Sons v. Commonwealth, 235 Mass. 572, 127 N. E. 497. The tax here attacked falls far short of those upheld in Shaffer v. Carter, 252 U. S. 37, 40 Sup. Ct. 221, 64 L. Ed. 445;Travis v. Yale & Towne Manuf. Co., 252 U. S. 60, 40 Sup. Ct. 228, 64 L. Ed. 460;Maxwell v. Bugbee, 250 U. S. 525-539, 40 Sup. Ct. 2, 63 L. Ed. 1124;United States Glue Co. v. Oak Creek, 247 U. S. 321, 38 Sup. Ct. 499, 62 L. Ed. 1135, Ann. Cas. 1918E, 748, and is well within the authority of those decisions.

Since this is an excise and not a property tax there is nothing in Royster Guano Co. v. Virginia, 253 U. S. 412, 40 Sup. Ct. 560, 64 L. Ed. 989, at variance with the conclusion here reached.

Both petitioners are corporations organized under the laws of Maine. Each maintains a factory or factories, warehouses and sales offices in this Commonwealth, has property and conducts business in other states, and engages in interstate commerce. It was provided by St. 1918, c. 253 (which relates wholly to foreign corporations), in section 1 that every foreign corporation shall pay ‘a tax * * * computed upon the net income for its fiscal or calendar year next preceding * * * upon which income such corporation is required to pay a tax to the United States.’ By section 3 of the act it was provided that--

‘If any such corporation carries on business outside of this Commonwealth, or owns property beyond its jurisdiction, or is to any extent engaged in interstate or foreign commerce, that portion only of its net income which is not derived from the said sources shall be apportioned to this Commonwealth and taxed hereunder.’

The tax is at the rate of one per cent. on such net income. By St. 1918, c. 255, there was imposed a like tax upon the net income of domestic corporations. In section 3 of the latter act is found the rule for ascertaining the portion of the net income of such corporations as carry on business outside of this Commonwealth upon which the tax is to be laid. Both those chapters were operative for one year only. By St. 1919, c. 342, § 1, it was provided that both those chapters were ‘revived and reenacted and...

To continue reading

Request your trial
54 cases
  • State Tax Commission v. John H. Breck, Inc.
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • July 3, 1957
    ...162, 98 N.E. 1078, at page 1079. See, for example, R.L. c. 14, §§ 37-40; St.1909, c. 490, Part III, § 43; Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523, 526-529, 130 N.E. 99.Since the 1933 revision, the excise, imposed by § 32 with respect to a domestic corporation, has been discus......
  • Andover Sav. Bank v. Commissioner of Revenue
    • United States
    • United States State Supreme Judicial Court of Massachusetts Supreme Court
    • August 25, 1982
    ...of validity and is not to be found void unless its invalidity is established beyond a rational doubt. Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523, 527, 130 N.E. 99 (1921); Commonwealth v. People's Five Cents Sav. Bank, supra at 431-432. See Johnson v. Martignetti, 374 Mass. 784, ......
  • Diefendorf v. Gallet
    • United States
    • Idaho Supreme Court
    • March 11, 1932
    ... ... ( ... Maguire v. Tax Commr. , 230 Mass. 503, 120 N.E. 162; ... Eaton, Crane & Pike Co. v. Commonwealth , 237 Mass ... 523, 130 N.E. 99; ... ...
  • Macallen Co v. Commonwealth of Massachusetts, 578
    • United States
    • U.S. Supreme Court
    • May 27, 1929
    ...Institution, 12 Allen (94 Mass.) 312; Commonwealth v. Hamilton Mfg. Co., 12 Allen (94 Mass.) 298, 306; Eaton, Crane & Pike Co. v. Commonwealth, 237 Mass. 523, 527, 130 N. E. 99; Alpha Portland Cement Co. v. Commonwealth, 244 Mass. 547, 139 N. E. 158. This interpretation of the nature of the......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT