State v. American Refrigerator Transit Company

• Citation: 237 S.W. 78,151 Ark. 581
• Decision Date: 06 February 1922
• Docket Number: 133
• Parties: STATE v. AMERICAN REFRIGERATOR TRANSIT COMPANY
• Court: Supreme Court of Arkansas

237 S.W. 78

151 Ark. 581

STATE v. AMERICAN REFRIGERATOR TRANSIT COMPANY

No. 133

Supreme Court of Arkansas

February 6, 1922

Appeal from Pulaski Chancery Court, J. E. Martineau, Chancellor affirmed.

STATEMENT OF FACTS.

The Attorney General of the State of Arkansas, proceeding under §§ 9823-30 Crawford & Moses' Digest providing for the assessment and collection of an excise or privilege tax on private car companies doing business in this State brought this suit in the chancery court against the American Refrigerator Transit Company, a foreign corporation, to recover a privilege tax levied against it by the said Tax Commission under the provisions of the act for the years 1918, 1919, and 1920.

The defense to the suit is that the American Refrigerator Transit Company was not doing business in the State during the year's named, and therefore was not liable for the tax provided by the statute.

The parties have agreed upon the facts. The American Refrigerator Transit Company is a foreign corporation incorporated under the laws of the State of New Jersey, and has its principal office in the city of St. Louis, Mo. The company owns and controls 5,000 refrigerator cars which are used by the various railroads of the United States, and for the use of which the railroads pay the company one cent per mile for each mile traveled by its cars, both empty and loaded, over the lines of the respective railroads. We copy from the agreed statement of facts the following:

"The gross receipts tax assessed by the State of Arkansas for the years in question is based upon the aforesaid mileage allowance paid the American Refrigerator Transit Company by the railroads for all of the mileage made by the said A. R T. cars within the State of Arkansas without distinction as between intrastate and interstate movements.

"The defendant company has nothing whatever to dc with the transportation of the freight shipped in its cars, but, as heretofore stated, simply rents or leases its cars to the railroads for a mileage allowance of one cent per mile, and in order that this mileage may be calculated, it receives from the railroad companies way-bills showing the movements of its cars and the freight transported therein.

"For each of the three years hereinafter mentioned, the American Refrigerator Transit Company has paid to the State of Arkansas a property tax assessed pursuant to act 224 of Acts of 1915 of the State of Arkansas."

The records of the company show that the mileage paid it for the use of cars where the points of origin and the destination are both within the State of Arkansas, aggregate for the period of time named in this lawsuit, the sum of $ 356.06 and the company tenders to the State of Arkansas the sum of $ 17.80, the amount due on this basis. The remainder of the amount claimed is for cars moving from points without the State of Arkansas to points within the State, or vice versa, or where the cars are moved from a point without the State through the State of Arkansas to a destination outside the State of Arkansas.

The chancellor found the issues in favor of the defendant, the American Refrigerator Transit Company, and it was decreed that the plaintiff should not recover of the defendant any sum except the sum of $ 17.80, which the defendant tendered in court to the plaintiff.

To reverse that decree this appeal has been prosecuted.

Decree affirmed.

J. S. Utley, Attorney General, A. L. Rotenberry and J. C. Marshall, for appellant.

Appellee is not engaged either in State or Interstate commerce, but in leasing cars to be run on railroads in this State, and such a business is taxable. The owner of such cars is not a carrier nor subject to the Interstate Commerce Commission. 237 U.S. 434. The Commission cannot require the owner to furnish such cars to carriers. 242 U.S. 208.

The tax sought to be imposed under the statute, based on rentals received by the owners of the cars, does not affect the commerce in which the carriers are engaged, and is not a burden upon interstate commerce, as it is only indirectly and remotely affected thereby. 169 U.S. 264; 171 U.S. 578, 592, 594; 158 U.S. 431; 154 U.S. 204.

The chancellor in holding that the appellee was not engaged in business in this State was guided by the opinion in the case of Pickard v. Pullman Co., 171 U.S. 34; but in that case the Pullman Company was itself engaged in interstate business as a comomn carrier, and was not required to file its articles in Tennessee or have a situs there to do business. Here, the appellee has filed its articles in this State, and engaged in the business there specified, i. e., leasing its cars to be run over the railroad tracks in the State. It was therefore doing business in this State within the franchise tax law. 231 S.W. 184; C. & M. Digest, § 9809.

The fact that the railroads operating the leased cars were under Federal control during two years of the time in question does not affect the right of the State to collect the tax nor exonerate the appellee from the payment thereof. Act March 21, 1918 (ch. 25, § 15; Comp. Statutes 1918, § 3115 3-4; 41 S.Ct. 489.

E. B. Kinsworthy and B. S. Kinsworthy, for appellee.

1. The pleadings do not show, nor does the evidence show, that during the period of time in question the appellee was doing business in this State. It could not, therefore, be held liable for the privilege tax. 117 U.S. 34, 29 L.Ed. 785.

2. The statute, C. & M. Digest, §§ 9823-9, inclusive, limits the privilege tax therein mentioned to business done wholly within this State. Cars operated into and out of the State being vehicles of commerce and therefore engaged in interstate commerce, the proceeds on these cannot be taxed by State law. Fed. Statutes, Annotated, vol. 4, p. 351; 44 F. 310, 142 U.S. 339, 35 L.Ed. 1035; 132 U.S. 473; 25 L. R. A. 120, 164 U.S. 650, 41. L.Ed. 586. See also 75 Ark. 126; 56 Id. 495; 58 Id. 438.

3. A tax on the proceeds of cars operated into and out of the State would be a tax on interstate commerce, and a State law authorizing such tax would be void, and in violation of the commerce clause of the Constitution of the United States. Const. U. S. § 8, art. 1; Interstate Commerce Act of February 4, 1887, and amendments thereto. None of the cases cited in support of appellant's contention holds that cars handled by a railroad company from one State to another for the purpose of carrying merchandise are not engaged in interstate commerce. The fact is, the car itself, when being handled from one State to another, is merchandise engaged in interstate commerce. 22 U.S. 1; 157 S.W. 917. Interstate commerce includes instrumentalities and agencies by which it is conducted, and the power of Congress extends to the regulation of such instrumentalities. 78 S.E. 489; 86 S.E. 748; 63 So. 693; 268 F. 662; 149 F. 486; 236 U.S. 439, 59 L.Ed. 661; 168 F. 987. See also 121 U.S. 230, 30 L.Ed. 889; 122 U.S. 326, 30 L.Ed. 1200; 210 U.S. 217, 52 L.Ed. 1031; 117 U.S. 34, 29 L.Ed. 785. For further authorities on the meaning of commerce, see 22 U.S. 1; 154 U.S. 204, 38 L.Ed. 962, 969; 19 F. 679-709; 102 U.S. 691-702, 26 L.Ed. 238; 48 U.S. 283-401, 12 L.Ed. 702; 38 Cal. 492-497; 73 U.S. 35, 18 L.Ed. 745; 172 F. 545-560; 151 F. 608; 91 U.S. 280; 96 F. 353; Pomeroy, Const. Law, § 378.

4. Appellee cannot be held liable for the privilege tax during the period of Federal control, if liable at all. 41 S.Ct. 593; 250 U.S. 135; 254 F. 880; 267 F. 171.

OPINION

HART, J. (after stating the facts).

As above stated, this suit is based upon §§ 9823-30 of Crawford & Moses' Digest, providing a method for the assessment and collection of an exercise or privilege tax on private cars doing business in this State. Under the provisions of the act, the State can not collect an excise or privilege tax unless the private car companies are doing business within the State during the period of time for which it is sought to assess and collect the privilege tax.

The defendant company is a private car company created by the laws of the State of New Jersey, with its principal office in the city of St. Louis, Mo. It owns the cars sought to be taxed. It made a contract in St. Louis, Mo., with the railroad companies operating out of said city for the use of its cars at one cent for each mile traveled by the cars over the lines of the railroad companies. The routes are at the will of the railroad companies, and the defendant has nothing to do with the transportation of the freight hauled in its cars. The cars pass through the State both ways, hauling freight, or go from a point in the State to a point without the State or come from a point without the State to a point within the State.

It is the contention of counsel for the State that the act was intended to tax as a privilege the using of cars for profit by the owner other than the railroad company which may be actually running them. The act in express terms...