Oxford v. Tom Huston Peanut Co., 38454

• Decision Date: 13 October 1960
• Docket Number: No. 38454,No. 2,38454,2
• Citation: 102 Ga.App. 714,118 S.E.2d 204
• Parties: Dixon OXFORD, Commissioner, v. TOM HUSTON PEANUT COMPANY
• Court: Georgia Court of Appeals

Page 204

118 S.E.2d 204

102 Ga.App. 714

Dixon OXFORD, Commissioner, v. TOM HUSTON PEANUT COMPANY.

No. 38454.

Court of Appeals of Georgia, Division No. 2.

Oct. 13, 1960.

Rehearing Denied Nov. 21, 1960.

Syllabus by the Court

1. Under the facts stipulated in this case the taxpayer was not doing business outside of Georgia so as to be entitled to apportion its income under the provisions of Code § 92-3113, and the judge of the superior court erred in entering a judgment granting to the taxpayer a refund based on the taxpayer's claim of the right to apportion its income under the three factor ratio.

2. Under the provisions of the Act approved February 27, 1959 (Ga.L.1953, Jan.-Feb. Sess., p. 274 et seq.), as amended by the Act approved June 24, 1955 (Ga.L.1955, Ex.Sess., pp. 27, 32), a corporate taxpayer could deduct from its State income tax due on a return for its fiscal year which began prior to January 1, 1955, an amount actually paid during such fiscal year on its Federal income tax liability for that fiscal year though the amount so paid was not actually due under the Federal income tax law until 75 days after the end of the taxpayer's fiscal year.

Tom Huston Peanut Company filed its petition against T. V. Williams, as State Revenue Commissioner, in the Superior Court of Muscogee County to recover $66,833.55 in alleged overpayments of income tax on its corporate business for the fiscal years 1953, 1954 and 1955. Consolidated with that petition was an appeal from the overruling of its protest to proposed adjustments in its income-tax liability for the same years, which proposed adjustments totaling, with interest, $30,600.24, were made by the commissioner. It was alleged and contended in the petition that the overpayments sued for were made on account of the erroneous collection by the defendant of income taxes on income derived by the plaintiff 'from products shipped and delivered to customers outside of the State of Georgia,' and that the plaintiff is taxable only upon such portion of its business income as is represented by business done within the State of Georgia and that the plaintiff is entitled to apportion its income to Georgia under the provisions of Code § 92-3113, as amended. It was further contended in the petition with respect to the amounts alleged by the Commissioner to be due in the proposed adjustments that so much of said claim as represented the disallowance by the defendant of a deduction of $525,000 paid by the plaintiff on Federal income taxes for its fiscal year ending August 31, 1955, should be abated, since said taxes were properly deductible by the plaintiff, having been paid in a fiscal year which began prior to January 1, 1955.

The defendant answered denying liability to refund the plaintiff the amounts claimed and denying the right of the plaintiff to have his proposed assessment of additional taxes abated. Prior to the trial of the case T. V. Williams was succeeded as Revenue Commissioner by Dixon Oxford and the latter's name was duly substituted as the party defendant.

Upon the trial the parties stipulated the facts, and the trial judge, upon consideration thereof, entered a judgment for the plaintiff allowing a recovery of $88,510.44 principal and interest on the plaintiff's claim for refund and holding that as to $28,875 of the Commissioner's additional assessment made on October 4, 1957, the same was abated and canceled. To the final judgment the Revenue Commissioner excepted and brought the case to this court by a bill of exceptions assigning error thereon on 14 grounds, of which the following are pertinent to the opinion and judgment here rendered:

'(a) To the extent that said final judgment holds that the so-called 'district sales managers,' under the stipulated facts, were employees of plaintiff, and that their activities outside this State were activities of plaintiff outside this State and constituted plaintiff's doing business outside this State so as to entitle plaintiff to use the threefactor formula prescribed in Code Section 92-3113(4) in apportioning its income to this State for income tax purposes, said final judgment is erroneous and contrary to the law and the evidence in the case.

'(b) To the extent that said final judgment holds that the delivery of goods by plaintiff in plaintiff's own trucks to customers outside this State, under the stipulated facts, constituted plaintiff's doing business outside this State so as to entitle plaintiff to use the three-factor formula prescribed in Code Section 92-3113(4) in apportioning its income to this State for income tax purposes, said final judgment is erroneous and contrary to the law and the evidence in the case.

'(c) To the extent that said final judgment holds that the sale of goods on a 'delivered at destination' basis, under the stipulated facts, constituted plaintiff's doing business outside this State so as to entitle plaintiff to use the three-factor formula prescribed in Code Section 92-3113(4) in apportioning its income to this State for income tax purposes, said final judgment is erroneous and contrary to the law and the evidence in the case.

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'(f) Defendant contended that under the stipulated facts, the so-called 'district sales managers' were not the employees of plaintiff, the their offices were not plaintiff's offices, that their activities outside this State were not the activities of plaintiff outside this State, and that plaintiff is not entitled to use the three-factor formula prescribed in Code Section 92-3113(4) in apportioning its income to this State for income-tax purposes; siad final judgment rejected these contentions and in so doing it proceeded erroneously and contrary to the law and the evidence in the case.

'(g) Defendant contended that neither the delivery of goods by plaintiff in plaintiff's own trucks to customers outside this State nor the sale of goods on a 'delivered at destination' basis, under the stipulated facts, constituted plaintiff's doing business outside this State so as to entitle plaintiff to use the three-factor formula prescribed in Code Section 92-3113(4) in apportioning its income to this State for income tax purposes; said final judgment rejected these contentions and in so doing it proceeded erroneously and contrary to the law and the evidence in the case.

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'(j) To the extent that said final judgment holds, for any other reason, that the amounts paid by plaintiff, as alleged, were erroneously and illegally collected under the Georgia Income Tax Act, as amended, said final judgment is erroneous and contrary to the law and the evidence in the case.

'(k) Under the stipulated and agreed facts, judgment for the defendant denying recovery to plaintiff was demanded, and said final judgment in favor of plaintiff is in error and contrary to the law and the evidence in the case.

'(l) Said final judgment, in holding that plaintiff is entitled, for purposes of computing its income tax liability to the State of Georgia, for its fiscal year ended August 27, 1955, to a deduction, under Code Section 92-3109(c) as it was in effect prior to the 1955 amendment (Ga.Laws 1955, Ex.Sess., pp. 28, 32), for $525,000 as an alleged payment of Federal income taxes, under the stipulated facts, is erroneous and contrary to the law and the evidence in the case.

'(m) Defendant contended that the assessment of the State Revenue Commissioner of an additional $28,875.00 in income tax due by plaintiff for said fiscal year on account of the disallowance of such a deduction was a correct and legal assessment; said final judgment, in abating and canceling said assessment, proceeded erroneously and contrary to the law and the evidence in the case.

'(n) Said final judgment proceeded erroneously and contrary to the law and the evidence in the case in not sustaining the aforesaid assessment of the State Revenue Commissioner of an additional $28,875 in income tax due by plaintiff for said fiscal year.'

Upon the trial of the case the parties entered into a stipulation of facts which it was agreed would be all the evidence in the case and that the court would take as true the facts set forth therein and decide all issues of law and fact on the basis of that stipulation. The material parts of this stipulation read as follows:

'1. Plaintiff is a Georgia corporation with its principal office located in Columbus, Muscogee County, Georgia. The business of plaintiff is the processing, manufacture and sale of salted peanuts, sandwiches, candies, fruit and other confections and promoting the sale of similar products manufactured by other manufacturers.

'2. Plaintiff's gross income falls in three categories as follows: (a) gross receipts from products manufactured by plaintiff and sold by plaintiff under its trade name 'Tom's'; * * * (b) commissions from products manufactured by over forty other manufacturers and distributed under the trade name 'Tom's'; and * * * (c) commissions from products manufactured by other manufacturers and distributed under the trade names of such other manufacturers, * * *.

'3. As to the products manufactured and sold by plaintiff under its trade name 'Tom's', such products are manufactured solely at its plant in Columbus, Georgia, and plaintiff has no factory, warehouse, or other place of doing business, outside of Georgia except as hereinafter described.

'4. As to the products manufactured by other manufacturers and distributed under the trade name 'Tom's' and under other trade names of such other manufacturers (both of these are hereinafter referred to as 'affiliated products'), plaintiff never takes possession [of] or title to such goods. Such other manufacturers manufacture and sell the products of their manufacture, including those marketed under the trade name 'Tom's', completely independently of plaintiff except that plaintiff promotes the sale of such products as hereinafter described. As to the products of other...