Great Atl. & Pac. Tea Co v. City Of Richmond

• Decision Date: 23 April 1945
• Citation: 33 S.E.2d. 795,183 Va. 031
• Court: Virginia Supreme Court
• Parties: GREAT ATLANTIC & PACIFIC TEA CO. v. CITY OF RICHMOND.

33 S.E.2d. 795

183 Va. 031

GREAT ATLANTIC & PACIFIC TEA CO.

v.CITY OF RICHMOND.

Supreme Court of Appeals of Virginia.

April 23, 1945.

CAMPBELL, C J., and BROWNING, J, dissenting.

Error to Law and Equity Court of City of Richmond; R. T. Wilson, Judge.

Proceeding by the Great Atlantic & Pacific Tea Company against the City of Richmond for relief from an additional assessment of license taxes imposed under an ordinance of such city. Judgment upholding the constitutionality of the ordinance and construing it as including most of the merchandise covered by the assessment, and petitioner brings error.

Affirmed.

Before CAMPBELL, C. J, and HOLT, HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

W. W. Beverley and R. Carter Scott, Jr., both of Richmond, for plaintiff in error.

Horace H. Edwards, J. E. Drinard, and William S. Cudlipp, Jr., all of Richmond, for defendant in error.

W. C. Pender, of Norfolk, amicus curiae.

SPRATLEY, Justice.

This is a proceeding instituted by the Great Atlantic and Pacific Tea Company, a corporation, hereinafter called the Com-pany, for relief from an additional assessment of license taxes for the year 1939, amounting to $9,032.02, imposed upon it under an ordinance of the city of Richmond, hereinafter called the City. From an order denying full relief this writ of error was granted.

The facts are not in dispute. A correct determination depends upon a proper construction of the city ordinance and its application to the facts. The pertinent provisions of the ordinance are as follows:

"For each distributing house or place in this city (other than the house or place of manufacture) operated by any person, firm or corporation engaged in the business of a merchant in this city, for the purpose of distributing goods, wares and merchandise among his or its retail stores, a separate merchant's license shall be required, and the goods, wares and merchandise distributed through such distributing house or place shall be regarded as purchases for the purpose of measuring the license tax, which tax shall be the same as the license tax imposed by this section on a wholesale merchant".

In another section the license tax of a wholesale merchant is measured by the amount of purchases made by him during the preceding year. The City also levied a license tax on retail stores based on the amount of their sales.

A somewhat lengthy statement of the facts is necessary to a comprehensive understanding of the case.

The Great Atlantic and Pacific Tea Company is a chain store corporation organized under the laws of Arizona. Its business is purchasing, distributing and selling food supplies and other merchandise and also manufacturing and processing some merchandise. It has offices and warehouses for the distribution of its goods and products, which it sells through many retail grocery stores owned and operated by it in Virginia and in other States. It is not engaged in business as a wholesaler nor does it distribute its merchandise other than to its own retail stores.

In 1938 and 1939, the Company operated approximately 21 retail grocery stores in the city of Richmond and approximately 100 similar stores in the State of Virginia, whose records of sales and purchases were kept in the office of the Company at Richmond. During the same years it operated two warehouses in the City, closely ad joining each other, an office and purchasing department on the second floor of one of the warehouses and a traffic department in the other. The warehouses were situated on the main line and side tracks of a railroad and were used for the receipt and storage of merchandise shipped to the Company by railroad cars and motor trucks. The merchandise so received and stored was delivered or shipped from the warehouse to the Company's retail stores upon orders from the managers of those stores. At its office, and in its purchasing and traffic departments there were handled, kept and prepared all the records relating to the distribution and delivery of merchandise from warehouse stock or otherwise, to its retail stores in the city, in the State, and beyond the borders of the State.

In 1938, the Company received and physically stored in its warehouses and distributed therefrom to its retail stores in the City and State merchandise costing it $4,-360, 857. In the year 1939, it paid to the City a distributors license tax for that privilege based on the above amount. It also paid the city license taxes on its retail stores.

In 1938, the Company also distributed among, or caused to be delivered to its retail stores additional merchandise of the cost value of $4,101, 369, by the six following methods:

(1) It received and physically stored in its warehouses and distributed therefrom among its stores outside of the State of Virginia merchandise which cost $281,080.

(2) It caused to be distributed by direct shipments to its retail stores merchandise of the value of $575,000 from its various subsidiary corporations located outside of Virginia. This merchandise consisted of Quaker-Maid products and coffee, of which 90% was shipped and delivered to retail stores located outside of Richmond. The method used in distributing this merchandise, as described in the brief of the City, was as follows: "Letters were sent from the Richmond office addressed to the managers of the retail stores requesting them to order merchandise needed by them for sale to customers. The store managers sent to the Richmond office orders for such merchandise and at the office the orders were assembled and a determination made whether or not the orders were sufficient in quantity to make up a minimum or maximum carload. When that was determined the orders were sentby.the office to subsidiary plants of the Company situated outside of the State. The merchandise was shipped by the subsidiaries and upon its arrival at the place of destination in the City or the State, the Richmond office arranged with transportation companies to take the merchandise from the railroad cars in which it was shipped and to deliver it to the retail stores ordering it. No payment was made by the Richmond office for this merchandise. The subsidiaries billed the Richmond office on a 'warehouse contract', or 'memorandum invoice', which the subsidiaries issued to charge Company's account and credit their merchandise account, and which the Company used to credit its subsidiaries' account and to charge its merchandise account. The Richmond office handled all of these transactions and kept all records pertaining thereto".

(3) It caused to be distributed among its retail stores in the City and State sugar of the value of $606,877, approximately 80% of which was shipped and delivered to retail stores outside of the city of Richmond. This merchandise was delivered in the following manner: "Pursuant to arrangements made by the Richmond office sugar refineries located outside of the State maintained at several points in the State stocks of sugar in warehouses engaged by the refineries for the convenience of the Company. The retail store managers sent orders for sugar as needed to the Richmond office. Company's traffic department sent the orders to transportation companies engaged by its Richmond office for the purpose with written authority to take the sugar from the refineries' warehouses and to deliver it to the retail stores. This merchandise was billed to the Company by the refineries and paid for by its New York office which in turn billed its Richmond office by 'memorandum invoice'. The Richmond office, with the exception of paying for the sugar, handled all of these transactions and kept the records pertaining thereto".

(4) It distributed or caused to be delivered to its retail stores in the City and State canned goods of the value of $798,-000, 80% of which was delivered to stores outside of the City. The following method wa9 used for this distribution: "The Richmond office requested the retail store managers for orders for such merchandise. The orders were sent by the managers to the Richmond office where they were assembled and it was determined whether or not there was a sufficient quantity in the aggregate to make up a carload. The Richmond office, when a sufficient quantity was ordered by the retail store managers, placed orders with manufacturers or producers for the merchandise to be shipped to designated points in the City and in the State. Company's traffic department engaged transportation companies to unload the cars upon reaching the points of destination and the orders assembled by the Richmond office were delivered to the transportation companies with directions to deliver the merchandise to its retail stores. This merchandise was paid for by the Richmond office by checks drawn on Richmond banks. When freight was a part of the contract of purchase of the merchandise it was also paid by the Richmond office by checks drawn on Richmond banks. The Richmond office handled all of these transactions and kept all records pertaining thereto".

(5) It caused to be delivered to its retail stores in the City and State merchandise of the value of $1,680, 000. The method adopted was as follows: "Salesman representing manufacturers, or producers of foodstuffs authorized and approved by Company's Richmond office called on the managers of its retail stores soliciting orders for their products. The retail store managers ordered whatever of this class of merchandise was needed and it was delivered to the retail stores by the vendors. The Richmond office had nothing to do with the procurement of this merchandise. Bills therefor were sent to the Richmond office by the vendors for payment and payment was made therefor by the office by checks drawn on Richmond banks".

(6) It caused to be delivered to its stores in the State, but outside of the City, merchandise of the value of $160,412 under the following method: "Representatives of or producers themselves called on the managers of the Company's retail stores...