Scripto, Inc. v. Carson

• Decision Date: 17 October 1958
• Citation: 105 So.2d 775
• Parties: SCRIPTO, INC., a corporation organized and existing under the laws of the State of Georgia, Appellant, v. Dale CARSON, as Sheriff of Duval County, Florida, and Ray E. Green, asComptroller of the State of Florida, Appellees.
• Court: Florida Supreme Court

Page 775

105 So.2d 775

SCRIPTO, INC., a corporation organized and existing under the laws of the State of Georgia, Appellant, v. Dale CARSON, as Sheriff of Duval County, Florida, and Ray E. Green, asComptroller of the State of Florida, Appellees.

Supreme Court of Florida.

Oct. 17, 1958.

Rehearing Denied Dec. 3, 1958.

Davisson F. Dunlap (of Adair, Ulmer, Murchison, Kent & Ashby), Jacksonville, and George B. Haley, Jr. (of Smith, Kilpatrick, Cody, Rogers & McClatchey), Atlanta, for appellant.

Barnes, Barnes, Naughton & Slater, Jacksonville, for appellees.

THORNAL, Justice.

Appellant Scripto, Inc., which was plaintiff below, seeks reversal of a final decree adjudging it to be responsible for the collection of a Florida use tax on certain personal property. Appellees Green and Carson, who were defendants below, by crossassignment of error challenge the correctness of the same decree relieving appellant of the responsibility for collecting the use tax on another class of personal property.

Numerous points are discussed but the major question on which our ultimate judgment turns is whether by the nature of its operation in Florida the appellant Scripto, Inc., has established such jurisdictional contacts as to subject it to certain provisions of Chapter 212, Florida Statutes, F.S.A. the Sales and Use Tax Act.

The problems presented to the Chancellor below and tendered for disposition here arose out of two separate and distinct types of transactions. Scripto, Inc., is a Georgia corporation with is principal place of business in Atlanta. It is not qualified to do business in Florida as a non-resident corporation. It manufactures in Georgia certain writing instruments. It sells these instruments to independent jobbers and wholesalers in Florida, who in turn sell them to retail stores. Scripto employs one Florida salesman who resides in Jacksonville. He solicits orders from the wholesalers primarily by personal contact. The authority of this salesman is to solicit the orders for sale to Florida wholesalers. He forwards the orders to Scripto in Atlanta where they are reviewed for various purposes. The orders are consumated by shipment via interstate commerce f. o. b. Atlanta by common carrier or post. By this means the writing instruments are delivered to the Florida wholesalers who in turn sell them to Florida retailers for retail sales to the ultimate consumer. Scripto maintains no distributing office or other business establishment in Florida. It has no bank account or stock of merchandise or other property in Florida except the accounts owed to it by the wholesalers. In connection with sales by Scripto to Florida wholesalers for ultimate sale at retail, Scripto distributes to such jobbers metal merchandise display containers which contain the mechanical writing instruments sold to the jobbers. These containers subsequently serve to display the writing instruments on the counters of the Florida retailers. No separate charge is made by Scripto for these metal display containers. The price of an assortment of mechanical writing instruments includes the display container 'free'. The containers are not used or consumed by the wholesaler but rather are re-distributed by him, likewise without additional charge to the ultimate retailer. Scripto retains no title to the display containers nor does it in any fashion require either the wholesaler or the retail dealer to return such containers to it.

The foregoing is a summary of the factual situation which gave rise to one of the problems considered by the Chancellor. The appellee Green, as Comptroller, demanded that Scripto register as an out-of-state dealer under Section 212.06, Florida Statutes, F.S.A. He also demanded that Scripto collect and remit to him the three percent Florida use tax which he contended was due upon the metal display containers which Scripto furnished to the Florida wholesalers when the latter purchased an assortment of mechanical writing instruments for resale.

In order to avoid confusion we mention that we are not here concerned with any matter involving the collection of a Florida sales or use tax on these particular mechanical writing instruments. The sole question is whether under the circumstances above summarized Scripto would be required to register as a dealer and collect and remit the Florida use tax on the metal containters.

We next proceed to summarize the factual situation giving rise to the other problem considered by the Chancellor. It is this second situation which produces the major issue before us. As an entirely separate operation Scripto in Atlanta maintains a wholly owned and controlled division or department known as Adgif. Although for purposes of distinguishing the transaction which we now outline from the one summarized above we refer to Adgif as such, it is in actuality merely Scripto, Inc., functioning through one of its own divisions. Adgif with its headquarters in Atlanta, Georgia, is in the business of selling mechanical writing instruments directly to Florida consumers. These instruments contain advertising lettering printed thereon. Adgif, of course, obtains the instruments from Scripto and ships them through interstate commerce direct to Florida customers. These customers do not purchase the writing instruments for resale but rather distribute them free of charge as a means of advertising their respective businesses. Adgif employs no salesman in Flroida. The one Scripto salesman in Florida mentioned in the forepart of this opinion renders no service whatever to Adgif. He does not solicit business for them and makes no Florida contacts for them. Adgif products are solicited by some ten independent Florida brokers and commission merchants who sell the products of other manufacturers as well as those of Scripto, via Adgif. Orders for the Adgif products are solicited by these independent Florida jobbers and are mailed directly to the home office of Adgif in Atlanta for acceptance or refusal. If the order is accepted, payment therefor is made by the Florida customer directly to Adgif in Atlanta. In some instances the Florida jobber accepts a check from the customer but this check is also payable to Adgif and is forwarded with the order. The Florida independent jobbers are paid an agreed commission by Adgif for soliciting and obtaining the orders. Like its parent Scripto, Adgif maintains no salesroom or other business establishment in Florida. It has no Florida bank account or stock of merchandise or any other property in Florida except the accounts owed to it by its Florida customers. The 'Adgif situation' resulted in the second problem considered by the Chancellor when the appellee Green demanded that Scripto register as an out-of-state dealer under Section 212.06, Florida Statutes, F.S.A. He demanded that Scripto collect and remit to him the Florida use tax on the merchandise sold to Florida customers by Adgif pursuant to the orders taken for Adgif by Florida commission merchants.

The instant case arose when the appellee Comptroller assessed against Scripto a use tax liability in the amount of $5,150.66, including interest and penalties for the years 1953 through 1956. Simultaneously with the assessment the appellee Comptroller issued a distress warrant in the stated amount and delivered the same to the appellee Sheriff of Duval County, Florida for execution against the property of the appellant Scripto. The appellant Scripto promptly filed its complaint in the circuit court seeking a decree of the Chancellor declaring the entire assessment illegal and praying for an injunction against the enforcement of the distress warrant. A stipulation between the parties was submitted to the Chancellor. This stipulation reflected agreement on the facts summarized above.

By his final decree the Chancellor concluded: (1) Scripto is not responsible for the collection and remission of the Florida use tax on the metal display containers in which the mechanical writing instruments were delivered to Florida wholesalers for ultimate delivery to Florida retailers, and (2) Scripto was liable as an out-of-state dealer to collect and remit the Florida use tax on the mechanical writing instruments sold to Florida customers by Adgif through interstate commerce but pursuant to the solicitations and orders taken by Florida commission jobbers in behalf of Adgif.

Scripto has appealed from that aspect of the final decree imposing upon it the duty of collecting the use tax on the Adgif sales. The appellee Green, joined by the sheriff, has cross-assigned error from that part of the final decree holding Scripto not responsible for collecting the use tax on the metal display containers.

Appellant Scripto here contends, as it did in the lower court, that it is not responsible for the collection and remission of the Florida use tax on metal display containers because these containers are furnished to the Florida jobbers without charge; that the transaction constitutes a gift and not a purchase or else the sale is for resale in which the price of the display containers is included in the price of the assortment of writing instruments which it accompanies.

Scripto also contends that neither it nor its subsidiary Adgif is a 'dealer' as to Adgif sales within the meaning of Section 212.06(2)(g), Florida Statutes, F.S.A., since in their view they do not solicit Adgif business by 'representatives' in the State of Florida. They buttress this contention with the further proposition that if the cited Florida Statute should be construed as comprehending Scripto under the circumstances, then it violates Article I, Section 8 (the commerce clause) and the Fourteenth Amendment of the Constitution of the United States, as well as Section 12 of the Declaration of Rights of the Florida Constitution, F.S.A.

The appellees here contend that the Chancellor committed error in holding Scripto not liable for the collection and remission of the Florida use tax...