Hump Hairpin Mfg. Co. v. Emmerson

• Citation: 293 Ill. 387,127 N.E. 746
• Decision Date: 16 June 1920
• Docket Number: No. 13315.,13315.
• Parties: HUMP HAIRPIN MFG. CO. v. EMMERSON, Secretary of State.
• Court: Supreme Court of Illinois

293 Ill. 387

127 N.E. 746

HUMP HAIRPIN MFG. CO.

v.EMMERSON, Secretary of State.

No. 13315.

Supreme Court of Illinois.

June 16, 1920.

Bill by the Hump Hairpin Manufacturing Company against Louis L. Emmerson, Secretary of State. From a decree dismissing the bill, complainant appeals.

Affirmed.

Appeal from Circuit Court, Sangamon County; E. S. Smith, judge.

Allen & Converse, for appellant.

Edward J. Brundage, Atty. Gen. (Clarence N. Boord and James W. Gullett, both of Springfield, of counsel), for appellee.

STONE, J.

Appellant, a foreign corporation, filed a bill in the circuit court of Sangamon county to restrain the secretary of state of Illinois from revoking its license to do business in this state. The chancellor heard the cause on the bill, answer, replication, and stipulation of facts and entered a decree dismissing the bill for want of equity.

Appellant was organized in 1914 under the laws of West Virginia with an authorized capital stock of $6,000,000, of which amount $5,500,000 had been issued at the time interrogatories were propounded to it by the appellee, secretary of state, under section 5b of the Foreign Corporation Act (Hurd's Rev. St. 1917, c. 32, § 67fb). It was licensed by the secretary of state to do business in this state on November 17, 1914, and at that time paid a license fee of $70 and has since transacted business in the state of Illinois. It manufactures its products in the city of Chicago, where it employs a large number of employés, and in addition thereto maintains a force of traveling salesmen, who travel in the various states soliciting orders from wholesalers and jobbers. These orders are mailed to appellant at its offices in Chicago, and upon acceptance its products are shipped by express, freight, or mail from Chicago to the purchasers in the states from which the orders are received. In answer to interrogatories submitted by the secretary of state appellant stated that its total annual business for the year 1917 was $260,334.96, all of which was transacted through its office in Chicago; that the amount of sales made to residents of Illinois in said year was $25,814. It is stipulated that up to the time of filing the bill of complaint the appellant did not have or maintain any other factory or manufacturing establishment or maintain any other office or place for the transaction of said business, and that all orders for its products were received, accepted at, and filled from its office, factory, and storeroom in the city of Chicago.

It is contended by the appellant that in determining the amount of license fee to be paid by it under the Foreign Corporation Act (Hurd's Rev. St. 1917, c. 32 §§ 67b-67j), all, or 100 per cent., of its tangible property (all being located in Illinois) should be averaged with 9.9 per cent. of its total business, for the reason that only that part of its total business is transacted in this state, thereby making the fee payable on 54.95 per cent. of the capital stock represented in Illinois, or $3,297,000 of capital stock, and amounting to a fee of $3,342, less the credit of $70 previously paid. It is also urged that a fee based on a greater amount of capital stock would burden interstate commerce, which a state has no power to do. It is contended by the appellee that the total business transacted by the appellant is transacted in Illinois within the terms of the act in question, and that, as all its tangible property is located in this state, it should pay a fee on its authorized capital stock of $6,000,000, or $6,045, less $70 previously paid in 1914, leaving a balance due of $5,975.

This case arises under the same section of the Foreign Corporation Act as was under consideration in American Can Co. v. Emmerson, 288 Ill. 289, 123 N. E. 581, and as to all questions arising here which were there treated that case is controlling, and those questions need not be further discussed. The distinction between that case and the instant case is that the license fee in the former case was fixed on a basis of less than the entire capital stock; it being there shown that the appellant was engaged in the transaction of business in other states aside from Illinois, while in the instant case the fee required by appellee is computed on the entire capital stock of the appellant, on the ground that all its tangible property is located and all its capital stock is represented by its business transacted in this state.

Section 5b of the Foreign Corporation Act, under which corporation fees are assessed, is as follows:

‘It shall be the duty of the secretary of state to propound interrogatoriesfrom time to time to officers of such foreign corporations doing business in this state to ascertain the proportion of capital stock actually being represented by property located and business transacted in the state of Illinois, which proportion shall be determined by averaging the percentage of the total business of the corporation transacted in Illinois with the percentage of the total tangible property located in this state. If no tangible property is used in the business of the corporation, the proportion of capital stock represented shall be determined with reference only to the percentage of the total business of the corporation transacted in Illinois. In the event that the foreign corporation making application for license has capital stock of no par value, its shares for the purpose of fixing the license fee shall be considered to be of the par value of one hundred dollars ($100) per share.’ Hurd's Stat. 1917, p. 719.

In American Can Co. v. Emmerson, supra, it was held that, while the state has no right to burden interstate commerce by taxing it, yet the state is authorized to levy a license fee within its authority, measured by the capital stock, though a part of such capital stock may be represented in the conduct of interstate commerce, where the circumstances are such as to indicate no purpose or necessary effect in the tax imposed to burden commerce of that character. That is likewise the rule adopted by the United States Supreme Court in Kansas...