Fore River Shipbuilding Corp. v. Commonwealth
| Decision Date | 29 February 1924 |
| Parties | FORE RIVER SHIPBUILDING CORPORATION v. COMMONWEALTH. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Report from Supreme Judicial Court, Suffolk County.
Petition by the Fore River Shipbuilding Corporation against the Commonwealth of Massachusetts, to recover a corporation excise tax alleged to have been exacted illegally. On report by a single justice, who ruled that petitioner was entitled to recover. Petition dismissed.
F. B. Greenhalge, of Boston, for petitioner.
Alexander Lincoln, Asst. Atty. Gen., for the Commonwealth.
This is a petition under G. L. c. 63, §§ 77, 78, to recover a corporation excise tax assessed under St. 1919, c. 355, pt. 1, § 2, St. 1920, c. 549, § 1 (now G. L. c. 63, § 32), and alleged to have been exacted illegally. The question is whether the petitioner was at the time carrying on or doing business within the meaning of the words of the statute, which provided, with exceptions not here material, that ‘every domestic business corporation shall be subject to pay annually with respect to the carrying on or doing of business' an excise tax to be computed as set forth in the act. The relevant facts are that the petitioner was organized as a corporation under the laws of this commonwealth in 1913 for the purpose of building ships and for other kindred and incidental purposes. In 1917 substantially all its stock was owned by a Pennsylvania corporation. To the end that numerous corporations owned directly or indirectly by that Pennsylvania corporation might be consolidated into one, a new corporation known as the Bethlehem Shipbuilding Corporation, Limited, was organized under the laws of Delaware. In November, 1917, the petitioner leased its real estate and plant at Quincy to the Bethlehem Corporation for a term of three years from November, 1917, and sold and conveyed to that corporation all its remaining assets, excepting only (as alleged in the bill of complaint) ‘certain contracts with the United States government which were not assignable’ and a railroad not material to the present case. Under an agreement bearing the same date the petitioner entered into a contract with the Bethlehem Corporation, which recited that the former had sold to the latter all its current assets except (1) its corporate franchise, and (2) its contracts with a New Jersey corporation for the construction of submarines, (3) its contracts with the United States, (4) its contracts with others, which, or the ships, vessels or boats being constructed pursuant to the terms of which, have been requisitioned by the United States of America, and (5) its claims against the United States of America. The contract then provided that the petitioner employs, constitutes and appoints the Bethlehem Corporation as its agent ‘but not in any way as the assignee thereof or of any interest therein to perform and complete’ its submarine contracts and all its ship contracts. In a schedule forming a part of that contract 35 different craft are specified, and other work in connection with submarines and destroyers. The Bethlehem Corporation agreed to complete the contracts as required by their terms, and the petitioner agreed to pay to the Bethlehem Corporation all moneys as and when received by it on such contracts. Other provisions of the agency agreement need not be recited. All the remaining property of the petitioner, including the real estate and property previously leased to the Bethlehem Corporation, but excepting said contracts, was conveyed to the Bethlehem Corporation by deed executed late in 1920, but dated December 31, 1918. It has been found that from and after November, 1917, it was the purpose and endeavor of the petitioner to cease from doing any business whatsoever, and within the meaning of the governing statute it did no business during the period for which the excise is assessed unless the carrying out of its nonassignable contracts with the government of the United States by the Bethlehem Corporation pursuant to the agency contract is the doing of business.
[1][2] The governing statute imposes an excise only upon corporations which are carrying on or doing business. Mere possession of the franchise to be a corporation is not made subject to this tax. In this respect the present law differs from some earlier statutes. Compar...
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...of business.' Springdale Finishing Co. v. Commonwealth, 242 Mass. 37, 40-41, 136 N.E. 250, 251. See Fore River Shipbuilding Corp. v. Commonwealth, 248 Mass. 137, 140-141, 142 N.E. 812; Frothingham Buildings v. Commonwealth, 249 Mass. 290, 292-293, 144 N.E. 229; Carlos Ruggles Lumber Co. v. ......
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...and is collectible only when the corporation has in fact been so engaged during the taxable year. See Fore River Shipbuilding Corp. v. Commonwealth, 248 Mass. 137, 140, 142 N. E. 812; Attorney General v. Boston & Albany R. R. Co., 233 Mass. 460, 124 N. E. 257. It is measured by the value of......
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