Stone v. General Electric Contracts Corporation

• Decision Date: 27 April 1942
• Docket Number: 34987.
• Citation: 193 Miss. 317,7 So.2d 811
• Court: Mississippi Supreme Court
• Parties: STONE, Chairman of State Tax Commission, v. GENERAL ELECTRIC CONTRACTS CORPORATION.

7 So.2d 811

193 Miss. 317

STONE, Chairman of State Tax Commission, v. GENERAL ELECTRIC CONTRACTS CORPORATION.

No. 34987.

Supreme Court of Mississippi

April 27, 1942

J H. Sumrall, of Jackson, Geo. H. Ethridge, Asst. Atty. Gen and R. W. Heidelberg, of Hattiesburg, for appellant.

Watkins & Eager, of Jackson, for appellee.

McGEHEE Justice.

This suit is brought to test the constitutionality of Chapter 110 Laws of 1940, and to recover from the appellant certain taxes paid under protest by the appellee pursuant thereto. The case is controlled in all of its essential features by the decision rendered on this day in Cause No. 34958, A. H Stone, Chairman of State Tax Commission v. General Contract Purchase Corporation, Miss., 7 So.2d 806; and this is true notwithstanding the fact that the appellee in the case at bar has not filed its corporate charter nor qualified to do business in the State of Mississippi within the meaning of Section 4140, Code of 1930, as a foreign corporation, and is not doing business in this state within the construction given that term as found in said statute and construed in the cases of North American Mortgage Co. v. Hudson, 176 Miss. 266, 168 So. 79; C. I. T. Corporation v. Stuart, 185 Miss. 140, 187 So. 204; Refrigeration Discount Corp. v. Turley, 189 Miss. 880, 198 So. 731, and the very recent case of Yellow Mfg. Acceptance Corporation v. American Oil Co., 191 Miss. 757, 2 So.2d 834; and this is likewise true without regard to the fact that appellee neither maintains an office nor has an agent in its employ in Mississippi who is vested with executive authority to finally consummate the purchase, discount or other acquisition of the notes, trust receipts, installment sales contracts, and other forms of indebtedness, whereby title is retained as security for the unpaid purchase price of tangible personal property located in this state, in connection with the business in which said appellee "finance company" is engaged, and which the Legislature has defined as "doing business" in this state in Chapter 110, Laws of 1940, wherein the tax here involved is levied for the privilege of conducting such a business, applicable alike to finance companies acquiring such securities through their offices and agents located and residing in the state and to those with offices and agents outside the state who acquire the ownership and come into possession of such securities under similar terms and conditions through local dealers in the state in the manner hereinafter mentioned.

In addition to what is said in the companion case of A. H. Stone, Chairman, etc., v. General Contract Purchase Corporation, supra, as grounds for upholding the validity of said Chapter 110, Laws of 1940, and the constitutional right of the Legislature to impose the tax upon the privilege of engaging in the activities therein defined, as "doing business" in the state without regard to whether the securities which constitute the measure of the tax are acquired by a finance company which has an office and agent in Mississippi to receive them or on the other hand are sent to or delivered and accepted at the New Orleans or Memphis office of a finance company having no office in this state, as in the case here under consideration, it should perhaps be stated that the proof in the present case discloses that in accordance with the general plan substantially followed by each of the several finance companies involved in the different appeals now pending before the Court for decision, as discussed in the briefs presented by the various counsel, a dealer in Mississippi engaged in selling at retail the kind of tangible personal property designated in the statute, and who desires to avail himself of the facilities offered by the appellee, makes written application for the privilege of doing so, on a form furnished by such finance company for that purpose, and which is executed in some instances at the personal solicitation of a field representative of the company; that thereupon the financial standing, business ability and credit of the dealer is investigated by the finance company, and, if approved, the dealer is furnished with printed forms of the notes, installment sales contracts or other evidences of indebtedness which are to be executed by the purchaser of such tangible personal property for any unpaid portion of the purchase price thereof in compliance with a rate chart and terms of payment theretofore prescribed and approved by the finance company, one copy of which installment sales contract, retaining title until the purchase price is fully paid, is printed so as to read "For General Electric Contracts Corporation", the duplicate delivered to the buyer and the triplicate retained by the dealer; that the original contract, bearing the endorsement of the dealer, is then mailed or otherwise delivered by the dealer to the out of state office of the finance company, as contemplated by the parties when the business relationship was previously established between the dealer and the finance company as the result of his application to be allowed the use of its facilities in that behalf and the approval of his credit and financial ability, in advance of the sale, to comply with his agreement to repurchase the paper in the event of default in payment by the customer; and that the appellee upon acquiring the possession of such retain title installment sales contracts in the manner and under the terms and conditions prescribed by it before the sale, pays for the same from the out of state office to which the same was sent. And, although it was shown that the Memphis or New Orleans office of the finance company had the right to reject such a contract and decline to pay for the same upon its arrival, the proof fails to mention any instance of this being done in regard to any retail installment sales contract executed on the forms prescribed by appellee and covering the class of property contemplated under the business relationship established between the parties in advance as hereinbefore mentioned. At any rate, it was shown that during the period from May 30, 1940, to June 1, 1941, for which the privilege tax is here claimed, the appellee purchased installment sales contracts on tangible personal property located in Mississippi amounting to $668,723.18, and paid under protest a total of only $1,320.03 in taxes of any kind or character to the state for the support of the government which sustains the value of such securities and affords protection to the enormous business in which appellee and the other finance companies are engaged, amounting to many million dollars annually.

Included in the amount of business done by the appellee during the period in question, it frequently financed purchases made by dealers in General Electric products who desired shipments thereof on the wholesale or "floor plan" whereby the manufacturer or distributor procures for the finance company at the time of the delivery of the shipment to the dealer a "trust receipt", executed by the dealer on a printed form furnished by the finance company, stating that the dealer has received from the factory or distributor "acting for the General Electric Contracts Corporation, the Entruster, the following described products" (describing them) and that "the undersigned hereby acknowledges that the above products are the property of the General Electric Contracts Corporation * * *", and that the dealer may "sell said property for account of General Electric Contracts Corporation, to a bona fide purchaser at retail for cash, for not less than the sum indicated in column 6 on the reverse side hereof as to each product covered hereby, and immediately after such sale, the undersigned shall deliver the proceeds thereof to General Electric Contracts Corporation * * *". The original of this trust receipt is printed so as to read "For General Electric Contracts Corporation", the duplicate is for filing, and the triplicate is retained by the dealer. After this instrument is acquired from the dealer in Mississippi at the instance of the factory or distributor "acting for the General Electric Contracts Corporation" as aforesaid, and is then sent to the said finance company, the purchase price of the wholesale shipment is paid to the factory or distributor by the finance company. Under the terms of the trust receipt above mentioned, the finance company may at any time examine the property and the books and records of the dealer with reference thereto, and may take possession of the property without notice or demand, and for such purposes, it or its representatives may enter the premises of the dealer at any time without legal process in order to repossess the property described in such trust receipt, which stipulates that the property has been shipped and delivered to the dealer by or pursuant to instructions from the finance company to be held in trust for sale as its property.

The proof also discloses that the appellee has in its employ a representative, B. G. Grant, who lives at Jackson, Mississippi, and whose primary duty is that of making delinquent collections in Mississippi from the retail purchasers under these installment sales contracts, but he is also authorized to call upon dealers "for the purpose of soliciting additional business" from them. And it also appears from the proof that the dealers themselves are authorized to receive payments and make remittances to the out-of-state office of the finance company on these retail installments sales contracts, and they are furnished printed forms by the finance company for use in making such remittances although not specifically required to collect any of the installments due under the contracts.

It is further shown that pursuant to the authority...