Lawton Spinning Co. v. Commonwealth

• Decision Date: 09 January 1919
• Parties: LAWTON SPINNING CO. v. COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

232 Mass. 28

121 N.E. 518

LAWTON SPINNING CO.

v.COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

Jan. 9, 1919.

Case Reserved from Supreme Judicial Court, Suffolk County.

Proceeding by the Lawton Spinning Company against the Commonwealth to recover illegal excise taxes. On reservation by a single justice of the Supreme Judicial Court for the determination of the full court. Petition dismissed.

Wm. M. Richardson, of Boston, for petitioner.

Wm. Harold Hitchcock, Asst. Atty. Gen., for the Commonwealth.

RUGG, C. J.

This petition by a foreign corporation organized under the laws of Rhode Island is brought under St. 1909, c. 490, part 3, § 70, to recover excise taxes alleged to have been illegally exacted and paid in the years 1915, 1916, 1917 and 1918. It was reserved for our consideration on the petition and demurrer. The allegations of fact in the petition must be accepted as true for the purposes of this decision. The petitioner, a manufacturer of cotton yarn in Woonsocket, in Rhode Island, is engaged in this commonwealth in both interstate and intrastate business by maintaining agencies and by selling the products of its manufacture. It conducts within this commonwealth a purely local or domestic business of the ordinary mercantile character as well as interstate business. Manifestly, therefore, it is subject to a legal excise tax for doing that intrastate or local business in this commonwealth. The only questions presented and argued relate to the constitutionality of the law under which the excise has been exacted.

1. The petitioner is precluded from recovering all such payments of excise except that made in 1918, because it has not complied with the provisions of said section 70 by bringing its petition within six months after the payment of the excise. That point is concluded against the petitioner by Lever Brothers Co. v. Com., 121 N. E. 516, just decided.

2. The chief controversy centers on the excise levied and paid in 1918. It was agreed both by counsel for the petitioner and by the attorney general in open court that the allegations of the petition as to the excise of 1918 should be construed to mean that the tax was assessed and levied on the day on which it was paid, namely, March 19, 1918. Therefore, the case is to be considered on that footing. The petition was filed seasonably respecting that payment.

It was provided by St. 1909, c. 490, part 3, § 56, that an excise tax of one-fiftieth of 1 per cent, upon the par value of its authorized capital stock, but in no event to exceed $2,000 for any one year, should be levied upon all foreign corporations maintaining places of business within the commonwealth not used exclusively for interstate commerce. The statute has been upheld as valid by this court. Attorney General v. Electric Storage Battery Co., 188 Mass. 239, 74 N. E. 467,3 Ann. Cas. 631;Baltic Mining Co. v. Com., 207 Mass. 381, 93 N. E. 831;S. S. White Dental Mfg. Co. v. Com., 212 Mass. 35, 98 N. E. 1056, Ann. Cas. 1913C, 805. That statute was held to be not in conflict with any provision of the Constitution of the United States as applied to such corporations as the petitioner before the enactment of St. 1914, c. 724. Baltic Mining Co. v. Mass., 231 U. S. 68, 34 Sup. Ct. 15, 58 L. Ed. 127;Cheney Bros. Co. v. Mass., 246 U. S. 147, 38 Sup. Ct. 295, 62 L. Ed. 632. In substance and effect the limitation of that statute as matter of computation subjected such foreign corporations, having an authorized capital stock of $10,000,000 and more than that sum, to a maximum excise of $2,000. Then St. 1914, c. 724, was enacted. It was not in terms an amendment of said section 56. It was an entirely separate and independent statute in form, substance and time of enactment. It referred to said section 56 only for a description of the class of corporations included within its scope and of the machinery for the assessment and collection of the excise, and to say that the excise it imposed was in addition to that there imposed. It provided in section 1 that all such foreign corporations having an authorized capital stock in excess of $10,000,000 should be subject to an excise tax of one one-hundredth of 1 per cent. on its excess of capital stock above $10,000,000 in addition to the tax to be levied under said section 56. We thought that the conjoint operation of these two statutes upon such a foreign corporation having an authorized capital stock in excess of $10,000,000, and thus within the direct sweep of both statutes, was not obnoxious to any provision of the Constitution of the United States. International Paper Co. v. Com., 228 Mass. 101, 117 N. E. 246. But we were in error and our judgment was reversed in International Paper Co. v. Mass., 246 U. S. 135, 38 Sup. Ct. 292, 62 L. Ed. 624, Ann. Cas. 1918C, 617. We also thought that section 56 in its operation upon such foreign corporations with an authorizedcapital stock of less than $10,000,000 was wholly unaffected by said chapter 724 and was valid regardless of the terms of the latter act. We expressed that view in Locomobile Company of America v. Commonwealth, 228 Mass. 117, 117 N. E. 5. But we were in error on that point also, as was held in Locomobile Co. of America v. Mass., 246 U. S. 146, 38 Sup. Ct. 298, 62 L. Ed. 631. In substance and effect that decision, as we understand it, was that an excise, assessed while both statutes were in force, upon a corporation within the direct effect of said section 56 alone, because having a capital stock of less than $10,000,000, was invalid under the United States Constitution. Since the announcement of these decisions by the United States Supreme Court, the Legislature of this commonwealth has repealed St. 1914, c. 724, by the enactment of St. 1918, c. 76, which is directed solely to that end without any reference to said section 56, and which took effect on March 18, 1918, the day before the excise here in question was levied and paid. The capital stock of the petitioner was $2,400,000, so that, in any event, the amount of its excise would not have been directly affected by said chapter 724, because that act related specifically only to corporations whose capital stock was in excess of $10,000,000.

The excise here in issue was computed solely pursuant to the terms of section 56 of the general tax act, St. 1909, c. 490, part 3, which was the only statute authorizing the levy of an excise on foreign corporations not repealed by express enactment on the date when the tax here in question was assessed. It was the only act which can possibly be contended to have been in force when that excise was levied and collected.

The precise question, therefore, is whether said section 56 is still in force and is valid as not being in conflict with any provision of either state or federal Constitution, or whether it has been wholly annulled because of its temporary association respecting the subject of excises with said chapter 724.

We are of opinion that said section 56 was at the time of the assessment and payment of the excise here in question a valid statute not in violation of the Constitution of this commonwealth or of the United States. We rest that opinion upon two separate and independent grounds, each quite distinct and apart from the other.

[5][6] A. So far as the meaning and effect of these two statutes are matters for this court to determine, we hold now as we have hitherto held that said section 56 is valid and does not violate any right secured to the petitioner under either the Constitution of this commonwealth or of the United States. That section, up to the time of the payment of the tax here sought to be recovered, never had been expressly amended. The only invalidity wrought in our system of excise taxation of foreign corporations was caused by the enactment of St. 1914, c. 724. That was a distinct piece of legislation. It is a principle firmly inbedded in the jurisprudence of this commonwealth that in the consideration of a statute where one part is unconstitutional, which is in its nature separable from other parts so that they well may stand independently of it, and there is no such connection between the valid and the invalid parts that the general court would not be expected to enact the valid part without the other, the parts of the statute not in conflict with the Constitution will be held good. That was early decided by this court and was amplified by Chief Justice Shaw in Warren v. Mayor and Aldermen of Charlestown, 2 Gray, 84, 98, 99. That case often has been cited with approval by the Supreme Court of the United States. That principle has been steadily adhered to by this court. Jones v. Robbins, 8 Gray, 329, 338;Ashley v. Three Justices of Superior Court, 228 Mass. 63, 81,116 N. E. 861, and cases there collected. Com. v. Slocum, 230 Mass. 180, 191, 119 N. E. 687. To the same point is International Text-Book Co. v. Pigg, 217 U. S. 91, 113, 30 Sup. Ct. 481, 54 L. Ed. 678,27 L. R. A. (N. S.) 493,18 Ann. Cas. 1103. That principle is applicable to the two statutes here in question. St. 1914, c. 724, is a distinct act, entirely separable in its form, in its terms, in its practical operation and in the date of passage from said section 56. The latter was in fact enacted first as a distinct statute. Upon it was ingrafted chapter 724 at a later time by a different Legislature. It can be declared unconstitutional without in any way affecting the validity of said section 56. It is not necessary to resort to speculation to determine whether the Legislature would have enacted one statute without the other because it did in fact enact section 56 as a separate provision and suffered it to remain at least six years without change before it undertook to enact the supplemental provision of said chapter 724. The presumption under these circumstances is far stronger than in the case of the ordinary statute that it was not the intent of the Legislature to work the ruin of a...