Judson Freight Forwarding Co. v. Commonwealth

• Decision Date: 01 July 1922
• Parties: JUDSON FREIGHT FORWARDING CO. v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

242 Mass. 47

136 N.E. 375

JUDSON FREIGHT FORWARDING CO.

v.COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

July 1, 1922.

Case Reserved from Supreme Judicial Court, Suffolk County.

Proceeding by the Judson Freight Forwarding Company against the Commonwealth for abatement of a tax imposed on it as a foreign corporation. Reserved by a single justice for determination by the full court. Petition dismissed.Littlefield & Tilden, George S. Littlefield, and Calvin S. Tilden, all of Boston, for petitioner.

J. Weston Allen, Atty. Gen., and Alexander Lincoln, Asst. Atty. Gen., for the Commonwealth.

R. G. Dodge and H. S. Davis, both of Boston, for United Fruit Co. and Fruit Dispatch Co.

RUGG, C. J.

This is a petition under G. L. c. 63, § 77, for abatement of a tax paid under protest by a corporation organized under the laws of the state of Illinois. The petitioner has offices in Boston and other leading cities in the United States. It maintains in Boston an office with a manager and necessary employees. It has a bank account in Boston subject to check of the local manager. It has no warehouse or transportation facilities and does not itself cart or store goods. The business done at the Boston office is the shipment of goods to and the distribution of goods received from its other offices. Some goods received for shipment are delivered to it packed. The petitioner, if desired by its customers, also arranges with independent contractors to pack, collect and deliver goods to a warehouse to be stored in the name of the petitioner. When a carload of goods has been accumulated the petitioner ships the carload to its office in the city where the goods are to be delivered. On arrival there the goods are delivered upon presentation of a receipt previously issued by the petitioner and payment of charges. In like manner delivery is made in Boston of goods shipped to the petitioner there from its other offices. In the collection and distribution of goods in Boston the petitioner pays the bills for the shipper of packing, delivery, insurance, storage and cartage when this is not done by the shipper, acting in this particular as the agent of the shipper, securing independent contractors to do the work, making no direct profit on the transaction and collecting from the shipper the exact amount paid. This is done as matter of accommodation to its customer to secure the business. The petitioner makes its profit from the substantial difference in freight rate obtained by shipping in carload lots, being able thus to give a lower rate to its several customers than they could obtain shipping separately, and at the same time having a margin for profit. The petitioner issues to each of its customers a receipt for goods delivered to it for shipment, which is the contract between the two. One of its conditions is:

‘That to enable the Judson Company to make reduced rate for the shipper, goods may be held at Judson Company's assembling station to complete carload lot to distribution or distributing point, but that no charge for storage is to be made against shipper during that time.’

Another condition of the contract is:

‘That the Judson Company is to act only as agent for the shipper and not as a common carrier.’

The plaintiff in two other places in this contract is described as ‘shipper's agent’ and in still other clauses as ‘agent for shipper.’ Upon the receipt issued by the petitioner to its customer, beside the blank for ‘freight charges' are separate headings left blank for charges as follows:

‘Freight to Judson F. F. Co.'s Loading Point;’ ‘Cartage;’ ‘Storage;’ ‘Insurance;’ ‘Other Charges.’

The petitioner makes no shipment of goods from one place to another within the commonwealth, except and unless as above described.

Every corporation chartered under laws other than those of this commonwealth for the purposes for which domestic corporations may be organized under our laws, not including public service and other excepted classes of corporations, ‘which has a usual place of business in this commonwealth or is engaged here permanently or temporarily’ in construction work, comes within the definition of foreign corporation in the act and is made subject to the excise, conforming in this particular to the provisions of earlier foreign corporation tax laws. St. 1919, c. 355, part 2, § 14; G. L. c. 63, § 30, subsec. 2. See St. 1903, c. 437, §§ 56, 57; St. 1905, c. 242; St. 1909, c. 490, part 3, § 39; Baltic Mining Co. v. Commonwealth, 207 Mass. 381, 386, 93 N. E. 831.

[2] The tax here in question was levied under St. 1919, c. 355, §§ 14 to 22, as amended by St. 1920, c. 549, now G. L. c. 63, §§ 39 to 43. This tax in its nature is an excise and not a property tax. It is named an ‘excise’ in the statute. The declared purpose of the Legislature is accepted unless inconsistent with the meaning and effect of the enactment. S. S. White Dental Manuf. Co. v. Commonwealth, 212 Mass. 35, 40, 98 N. E. 1056, Ann. Cas. 1913C, 805. It is levied in ‘respect to the carrying on or doing of business by it within the commonwealth.’ It is an excise for the commodity or privilege of having a place of business in Massachusetts with the protection of our laws and the financial, commercial and other advantages appertaining thereto. Attorney General v. Electric Storage Battery Co., 188 Mass. 239, 240, 74 N. E. 467,3 Ann. Cas. 631.

The amount of the excise is measured by the sum of a percentage on ‘the value of the corporate excess employed by it in the commonwealth’ and a percentage on its ‘net income’ derived from business carried on within the commonwealth. The ‘corporate excess' employed by the foreign corporation within the commonwealthmeans ‘such proportion of the value of the issued capital stock as the assets both real and personal employed in any business within the commonwealth on the first day of April following the close of the taxable year bear to the total of such assets of the corporation on said date,’ less deductions for the value, in general, of real estate within the commonwealth subject to local taxation and the value of securities the income of which would not be liable to taxation if owned by a natural person resident in the commonwealth. St. 1919, c. 355, § 15, now G. L. c. 63, § 30, subsec. 4. Tangible personal property, aside from machinery used in manufacture, is exempt from taxation. St. 1919, c. 355, § 27, now G. L. c. 59, § 5, Sixteenth. ‘Net income’ means the net income for the taxable year as required to be reported by the corporation in its last prior return to the federal government. St. 1919, c. 355, § 16, now G. L. c. 63, § 30, subsec. 5.

In a general way it may be said that this statute, which is a considerable departure from earlier corporation tax laws of this commonwealth, measures the excise required of foreign corporations by a combination of two percentages, one based on the portion of its property fairly attributable to Massachusetts business, except real estate and machinery, which alone are subject to a local property tax, and the other on the proportion of its net income attributable to Massachusetts business. In its essentials the present statute puts foreign and domestic corporations upon the same footing in respect to a tax upon the privilege of doing business. Compare part 1 with part 2 of St. 1919, c. 355, and G. L. c. 63, §§ 32 to 38, with sections 39 to 43. It is a legislative attempt to avoid preferences hitherto existing in favor of foreign corporations. See S. S. White Dental Manuf. Co. v. Commonwealth, 212 Mass. 35, 48-49, 98 N. E. 1056, Ann. Cas. 1913C, 805. As stated in the report of the Joint Special Committee on Taxation of 1919 (whose report formed the basis of the statute here under consideration and to which resort may be had concerning its meaning, Old South Association v. Boston, 212 Mass. 299, 99 N. E. 235):

‘We believe that so far as possible foreign corporations should be taxed like domestic.’ Senate Document No. 313 for 1919, p. 39.

It seems to us to require no discussion to demonstrate that this act, in its general operation as to foreign corporations subject to an excise tax, violates no guaranty of the federal Constitution. The act manifestly is an attempt by the General Court to measure the excise solely by the property and net income of the foreign corporation fairly attributable to the business done within the commonwealth. If the foreign corporation can be subjected to an excise tax in respect to its business within this commonwealth, this appears to be a fair and practicable method of calculating the excise. It is protected in principle, in our opinion, by decisions of the Supreme Court of the United States concerning our earlier foreign corporation excise tax laws. Baltic Mining Co. v. Massachusetts, 231 U. S. 68, 34 Sup. Ct. 15, 58 L. Ed. 127;Cheney Bros. Co. v. Massachusetts, 246 U. S. 147, 38 Sup. Ct. 295, 62 L. Ed. 632. It avoids any attempt to tax property outside the commonwealth which was held fatal to the statute under consideration in International Paper Co. v. Massachusetts, 246 U. S. 135, 38 Sup. Ct. 292, 62 L. Ed. 624, Ann. Cas. 1918C, 617.

The statute here assailed seems to us indistinguishable in its essential characteristics as to constitutionality from those upheld in United States Glue Co. v. Oak Creek, 247 U. S. 321, 38 Sup. Ct. 499, 62 L. Ed. 1135, Ann. Cas. 1918E, 748, and Shaffer v. Carter, 252 U. S. 37, 40 Sup. Ct. 221, 64 L. Ed. 445, and Underwood Typewriter Co. v. Chamberlain, 254 U. S. 113, 41 Sup. Ct. 45, 65 L. Ed. 165. In the first of these decisions it was said (247 U. S. at page 328, 329, 38 Sup. Ct. at page 501 [62 L. Ed. 1135, Ann. Cas. 1918E, 748]):

‘The correct line of distinction is so well illustrated in two cases decided at the present term that we hardly need go further. In Crew Levick Co. v. Pennsylvania, 245 U. S. 292, we held that a state tax upon the business of selling goods in foreign commerce, measured by a...