State v. Paramount Publix Corporation

• Decision Date: 27 November 1933
• Docket Number: 32600
• Citation: 152 So. 534,178 La. 818
• Court: Louisiana Supreme Court
• Parties: STATE v. PARAMOUNT PUBLIX CORPORATION

152 So. 534

178 La. 818

STATE v. PARAMOUNT PUBLIX CORPORATION

No. 32600

Supreme Court of Louisiana

November 27, 1933

Rehearing Denied January 2, 1934

Appeal from Civil District Court, Parish of Orleans; Hugh C. Cage Judge.

Suit by the State of Louisiana against the Paramount Publix Corporation. Judgment for plaintiff, and defendant appeals.

Reversed in part and reduced in amount.

Rosen Kammer, Wolff & Farrar, of New Orleans, for appellant.

Charles J. Rivet, of New Orleans, for appellee George Montgomery, State Tax Collector for Parish of Orleans.

OPINION

O'NIELL, Chief Justice.

This is a suit to collect from the Paramount Publix Corporation, domiciled in New York, a license tax for the business of leasing and distributing motion picture films, at a branch office, called an exchange, in New Orleans, during the years 1930, 1931 and 1932. The defendant pleaded that the business which the state was seeking to tax was interstate commerce, and therefore exempt from state taxation, by the commerce clause in the Constitution of the United States, article 1, § 8, cl. 3, reserving to the Congress the power to regulate commerce among the several states. The judge who tried the case, deciding that the business, for which the state is seeking to collect the license tax, was not interstate commerce, gave judgment in favor of the state. The defendant has appealed from the decision.

The only question is whether the defendant's business, for which the state is seeking to collect the license tax, is interstate commerce. The method of conducting the business is not disputed. Paramount Publix Corporation is, as we have said, a New York corporation, and has its domicile and principal business establishment in New York City, and a branch office, called a film exchange, in New Orleans, in charge of a local manager, employed by the corporation. The local exchange solicits from the proprietors of motion picture theaters, called exhibitors, in an area which includes Louisiana and a part of Mississippi, a part of Alabama and a part of Florida, applications for leases of motion picture films produced by the Paramount Publix Corporation. In some instances the applications are for films already produced, but in most instances the applications are for films to be produced. The printed applications, signed by the exhibitors, are forwarded to the New York office for acceptance. When an application is rejected by the New York office, the exhibitor who made the application is so notified; and that ends the transaction. When an application is accepted by the New York office, it becomes a contract, termed a "lease," between Paramount Publix Corporation and the exhibitor who made the application, and a signed copy of the contract is sent to the exhibitor, and an unsigned copy is sent to the exchange in New Orleans. The Paramount Publix Corporation is then under obligation, as lessor, to deliver the motion picture film or films to the exhibitor, as lessee. The films or photoplays are produced by the Paramount Publix Corporation in Hollywood, Cal., or in New York -- some in each city -- none elsewhere. In compliance with the terms of the contract, the Paramount Publix Corporaton ships the picture films, either by parcel post or by express, to the exchange in New Orleans, and the manager of the exchange delivers them, respectively, to the lessees, throughout the territory including Louisiana, part of Mississippi, part of Alabama and part of Florida. The films that are leased to exhibitors outside of New Orleans are sent to them by the exchange either by parcel post or by express, with instructions whether to return them to the exchange or to forward them to another exhibitor at the end of the term of the lease. In every instance the film is returned to the New Orleans exchange by the exhibitor who last exhibited it, and is sent back to New York by the exchange.

The printed applications, which are signed first by the exhibitors and forwarded to New York for acceptance, contain the stipulation that the instrument shall be deemed an application for a license to exhibit the photoplay and shall not become binding until accepted in writing, without alteration or change, by an officer of the corporation, called the distributor, or by a person duly authorized by the distributor, and until notice of acceptance is sent to the exhibitor.

The license tax is claimed under section 8 of Act No. 205 of 1924, p. 333, and under section 25, as amended by section 3 of Act No. 241 of 1928, p. 350, and is graduated according to the gross annual receipts from the business. In calculating the amount of the license tax sued for, the state made allowance for the amount of the gross receipts from leases of films that were sent by the New Orleans exchange to exhibitors in Mississippi, Alabama and Florida. The state made an allowance also of $ 68,456.88 of gross receipts from leases for which the invoices or billings were sent from New York directly to lessees in Louisiana. The state made allowance also for the license taxes paid by the defendant for the three years. The judgment rendered in the case, amounting to $ 3,371, plus interest, attorney's fees and costs, includes $ 95 for license taxes on the business of selling advertising matter in Louisiana -- $ 50 being for such business done in 1930, $25 for such business done in 1931 and $ 20 for such business done in 1932. It is conceded by the defendant, appellant, that these items, amounting to $ 95, for license taxes on the advertising business, are correct, and that the business was intrastate business, and therefore subject to the license tax. The only license taxes that are in dispute are those which are based upon the gross receipts from the leases of films that were delivered by the New Orleans exchange to lessees in Louisiana, in compliance with the contracts which we have described, and in pursuance of the method of the business, which we have described.

The short question in the case is whether the interstate transaction ended when the films, which were shipped from New York or California, arrived at the exchange in New Orleans. It could not be disputed that, if these films had been shipped from New York or California direct to the lessees in Louisiana, the transactions would have been interstate commerce. Our opinion is that the shipping of the films to the shipper's exchange in New Orleans, to be delivered to the lessees in Louisiana, pursuant to the contract made in New York, did not put an end to the interstate character of the transaction, because it was not a completion of the transaction, but was merely a convenient method of delivering the films to the lessees in Louisiana. The state does not levy the license tax upon, or attempt to impose it upon, the mere delivering or distributing of the films by the exchange in New Orleans to the lessees in Louisiana. The tax is said to be levied, and is sought to be imposed, upon, "the business of leasing and distributing of motion picture films" in Louisiana. The distributing or delivering which the New Orleans exchange did in Louisiana was not an independent transaction, but was merely an essential part of the performance of the lessor's obligation under the contract of lease, made in New York.

In the case of Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.Ct. 96, 99, 68 L.Ed. 308, it was held that the business of leasing and distributing photoplays, or motion picture films -- the method of conducting the business in that case being described exactly as it is described here -- was interstate commerce. The court, after disposing of a motion to dismiss the writ of error, depending upon a question of jurisdiction, in that case, said:

"We come, then, to consider whether the averments of the complaint are sufficient to constitute a cause of action under the Anti-Trust Act, and this inquiry involves two questions: (1) Are the alleged transactions in which the exhibitor was engaged matters of interstate commerce? And (2) Do the alleged acts of the defendants in error constitute a combination or conspiracy in restraint thereof?

"1. The film contracts were between residents of different states, and contemplated the leasing by one to the other of a commodity manufactured in one state and transported and to be transported to and used in another. The business of the distributors of which the arrangement with the exhibitor here was an instance was clearly interstate. It consisted of manufacturing the commodity in one state, finding customers for it in other states, making contracts of lease with them and transporting the commodity leased from the state of manufacture into the states of the lessees. If the commodity were consigned directly to the lessees, the interstate character of the commerce throughout would not be disputed. Does the circumstance that in the course of the process the commodity is consigned to a local agency of the distributors, to be by that agency held until delivery to the lessee in the same state, put an end to the interstate character of the transaction and transform it into one purely intrastate? We think not. The intermediate delivery to the agency did not end and was not intended to end the movement of the commodity. It was merely halted as a convenient step in the process of getting it to its final destination. The general rule is that where transportation has acquired an interstate character 'it continues at least until the load reaches the point where the parties originally intended that the movement should finally end.' Illinois Cent. R. Co. v. De Fuentes, 236 U.S. 157, 163, 59 L.Ed. 517, 519, P. U. R. 1915A, 840, 35 S.Ct. 275, 276. And see, Western Union Tel. Co. v. Foster, 247 U.S. 105, 113, 62 L.Ed. 1006, 1015, 1 A. L. R. 1278, P. U....