Gross Income Tax Division v. J. L. Cox & Son
| Decision Date | 30 June 1949 |
| Docket Number | 28480. |
| Court | Indiana Supreme Court |
| Parties | GROSS INCOME TAX DIVISION v. J. L. COX & SON. |
Appeal from Marion Superior Court; Ralph Hamill Judge.
J Emmett McManamon, Atty. Gen., John J. McShane, Lloyd C Hutchinson, Deputy Attys. Gen., for appellant.
Carll V. Kretsinger, Kansas City, Mo., Claude H. Anderson, H Nathan Swaim, Indianapolis, for appellees.
Appellees brought this action to recover from appellant the sum of $3911.76 which appellant had required appellees to pay as gross income tax and interest, on March 1, 1945.
The issues consisted of the complaint and an answer under the rules.
The cause was tried by the court resulting in a finding and judgment for appellees in the sum of $3911.76 plus interest at the rate of 3% per annum from March 1, 1945. Appellant's motion for new trial, on the grounds: (1) That the decision of the court is not sustained by sufficient evidence, and (2) the decision of the court is contrary to law, was overruled, and this appeal was taken.
The record shows that while the cause was pending in the court below, plaintiff, J. L. Cox died July 4, 1946, and Leroy Cox as surviving partner was authorized to proceed with the action.
The evidence was by stipulation, except that given by a witness for appellees, named Morris Stout.
Among other things the stipulation and evidence show that appellees are a partnership, composed of Joseph L. and Leroy Cox, with their home office at Raytown, Missouri, and that the partners are residents of Missouri. That during the year 1943 there was constructed for Defense Plant Corporation two pipe lines, one a 24-inch line and the other a 20-inch line. The 20-inch line was located parallel and adjacent to the 24-inch line across Indiana. Both lines were built at the expense of the United States Government. A corporate entity, War Emergency Pipe Lines, Inc., acted for and on behalf of Defense Plant Corporation in supervising and in the construction of said lines. All the pipe and material used in the construction of these lines were manufactured outside of the state of Indiana. Engineers for the construction corporations selected convenient transfer points in Indiana to which the pipe and material concerned in this case, could be shipped by rail, which points are referred to as 'railheads.' From certain of these railheads, appellees were engaged to unload the pipe and material from the railroad cars, and then by trucks and tractors to haul it to, and string it along the pipe lines right of way in Indiana. This engagement was by letter as follows:
'War Emergency Pipelines, Inc.
'By (Sgd.) A. N. Horne.
Appellees were selected and accepted by War Emergency Pipe Lines, Inc., one of the common carriers by Motor Vehicle, and were directed to unload the material from the railroad cars at the railheads in Indiana and to place it in temporary storage when necessary, at appellees' expense and to transport it to and string it along the pipelines right of way to be used in the construction of certain portions of the pipelines in Indiana, agreeable with the foregoing letter.
The gross income tax in question was taxed against the income derived by appellees from the service they rendered in unloading and transporting and stringing the materials used in the construction of portions of the pipelines located entirely within the confines of the state of Indiana from railheads located in Indiana.
Appellees held a certificate of public convenience and necessity issued to them February 4, 1942, by the Interstate Commerce Commission.
Upon completion of its contract in hauling materials from each railhead to the pipelines right of way, appellees submitted invoices to War Emergency Pipelines, Inc., based upon the weight of all materials transported, and after approval of such inventories, War Emergency Pipelines, Inc. attached same to its remittance statements and forwarded them to the Federal Reserve Bank at Cincinnati, Ohio, with instructions to issue a check to appellees. Checks in payment were then sent to appellees at Raytown, Missouri by the bank.
For all their services, in so unloading, picking up, transporting and stringing such materials to that portion of the pipelines right of way located in Indiana from railheads in Indiana, appellees were paid during 1943, the gross sum of $359,376.84. The gross income tax assessed by appellant against appellees thereon was $3588.77 with interest of $322.99, a total of $3911.76 which appellees paid under protest on March 1, 1945. Appellees filed a claim for refund of this money with interest on May 31, 1945, which was denied by appellant.
Authority in the nature of a permit was received from the state of Indiana, in addition to the Certificate of Public Convenience and Necessity issued by the Interstate Commerce Commission to appellees. All bills-of-lading were issued to Defense Plant Corporation or War Emergency Pipelines, Inc., as consignee. The consignor was either the various pipe companies that made the pipe, or War Emergency Pipelines, Inc. in each instance. Charges for the local transportation were based on weight plus appellees regularly filed tariff with Interstate Commerce Commission.
Appellees were not required to pay gross income tax to the state of Indiana for any hauling service from railheads outside the state of Indiana. Appellees had no resident agent representing them in Indiana, except as required by Interstate Commerce Commission.
Appellant contends that since all of the receipts of gross income of appellees, upon which the gross income tax was assessed and collected, were derived from activities, businesses and sources within the state of Indiana, occurring after the complete termination of the interstate transportation, that the right and duty of the state to impose the gross income tax is definitely fixed and established by the Indiana Income Tax Law.
Burns' 1943 Replacement, § 64-2602, provides as follows:
(Our italics.)
It is appellees' contention that they were residents of the state of Missouri, and that during the time involved in this case, their activities, transactions and business, and their income received therefrom, were all from their engagements in interstate commerce in Indiana and that their income so received may not be taxed by appellant.
We think it is undoubtedly true that if appellees' transactions from which they received the income upon which the tax was assessed, were transactions in interstate commerce which it was the duty of Congress alone to regulate no gross income tax could lawfully be assessed thereon. If they were not such transactions in interstate commerce, the tax was properly assessed. That is true because the states have surrendered to the United States Government the right and duty to regulate commerce among the several states. Se...
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