Southern Cotton Oil Co. v. Wemple

• Decision Date: 14 November 1890
• Citation: 44 F. 24
• Parties: SOUTHERN COTTON OIL CO. v. WEMPLE.
• Court: U.S. District Court — Northern District of New York

44 F. 24

SOUTHERN COTTON OIL CO. v. WEMPLE.

United States Circuit Court, N.D. New York.

November 14, 1890

W. W MacFarland, for complainant.

Chas F. Tabor, Atty. Gen., for defendant.

WALLACE J.

This suit is brought by complainant to restrain the collection of a tax assessed against it by the comptroller of the state of New York for the years 1887, 1888, and 1889, under a statute which enacts that 'every corporation, joint-stock company, or association whatever, now or hereafter incorporated or organized under any law of this state, or now or hereafter incorporated or organized by or under the laws of any other state or country, and doing business in this state, shall be subject to pay a tax upon its corporate franchise or business. ' Laws N.Y. 1885, c. 359. The statute provides that 'the amount of capital stock, which shall be the basis for tax, * * * shall be the amount of capital stock employed within this state. ' Id. c. 501. Complaint is not made of any excessive or irregular assessment, but the bill avers that the complainant is not subject to taxation, and that the assessment is void. The complainant is a manufacturing corporation, organized under the laws of New Jersey, and having its principal place of business in that state. Its factories and plant are all situate outside the state of New York. It sells its products in various states and in foreign countries, and for that purpose, during the years 1887, 1888, and 1889, it maintained a sales agency and office at New York city, and kept a bank account there for the convenience of its local transactions. Its corporate meetings have always been held either at its principal office in New Jersey, or in Philadelphia, where it has a branch office, and where its books of account are kept and its general financial business is done. The president of the corporation deposes as follows:

'Since about October, 1887, the company has had a sales agent in the city of New York, whose duty it has been to make sales of the products of the company's mills. These products are not regularly kept on store at any place in the state of New York, but the sales agent receives orders, which he transmits to the company's officers and managers, and the goods are then forwarded from the company's mills for delivery to the purchaser. Such deliveries are, and always have been made in the same barrels, tanks, or packages in which the products have been brought from the mills into the state, and without opening or breaking any of the tanks, barrels, or packages, except that in certain instances, in 1888, purchasers having ordered refined oil, some crude oil was brought to New York and refined by certain refiners, under contract with the complainant, and when so refined was delivered to the purchasers. Occasionally a small amount of oil or other product of the company's mills in excess of actual sales has been sent to New York, and placed in store until sold. Such products have always been stored, and subsequently sold and delivered in the barrels or packages in which they have been brought into the state. The total amount of such sales from store during the years 1887, 1888, and 1889 has not exceeded 5 per cent. of the total sales made by the New York sales agent. The proceeds of all sales made by the New York agent were either sent to the Philadelphia office or deposited in bank, subject to the drafts of that office, as hereinafter stated. During the year 1888 the company, in the state of New York, had an average deposit of about $15,000, and in the year 1889 about $88,000. These deposits were subject only to the draft of the Pennsylvania office. The sales agent had a small bank account, never exceeding $2,500, for payment of office expenses. Except as above stated, the complainant has done no business of any kind whatever in the state of New York, and all the sales and transactions of its sales agent have been conducted in the manner above stated.'

The tax authorized by the statute is upon the privilege of foreign corporations to do business within this state, and is not one upon property. People v. Trust Co., 96 N.Y. 387; People v. Mining Co., 105 N.Y. 76, 11 N.E. 155; Home Ins. Co. v. New York, 134 U.S. 594, 10 S.Ct 593. Such a tax has no reference to the character of the property in which the capital of the corporation is invested or used, and its legality is not affected by the nature of the property upon which it operates. Whether the property upon which it may incidentally operate is taxable or not, is immaterial. Wallace v. Myers, 38 F. 184; Society v. Coite, 6 Wall. 594; Institution v. Massachusetts, Id. 631; Home Ins. Co. v. New York, 119 U.S. 129, 8 S.Ct. 1385. The real question, and the only question, in the case concerning the legality of the tax is whether, upon the facts shown, the complainant was doing business in this state. If it was not, within the meaning of this statute, there was no statutory authority for the tax which has been assessed against it. This question is one of the interpretation of a state statute. It is one which it is peculiarly the province of the state courts to decide, and one as to which their decisions, and not those of this court, are authoritative. It has been somewhat considered by the court of appeals in People...