Stone v. Reichman-Crosby Co.

• Court: Mississippi Supreme Court
• Writing for the Court: SMITH; HALL; MONTGOMERY
• Citation: Stone v. Reichman-Crosby Co., 43 So.2d 184 (Miss. 1949)
• Decision Date: 28 November 1949
• Docket Number: REICHMAN-CROSBY,No. 37524,37524
• Parties: STONE v.CO.

Page 184

43 So.2d 184

STONE v. REICHMAN-CROSBY CO.

No. 37524.

Supreme Court of Mississippi, in Banc.

Nov. 28, 1949.

J. H. Sumrall, Jackson, for appellant.

Creekmore & Creekmore, Jackson, for appellee.

SMITH, Justice.

This litigation started on March 10, 1947, when appellee filed its declaration against appellant, whereby the former sought to recover from the latter the sum of $75 paid under protest as Use Taxes collected during the period from December 15, 1945, to December 15, 1946, by the appellee. The statutes involved are Chapter 120, Laws 1942, Sections 10146 to 10167, inclusive, Code 1942; as amended by Chapter 457, Laws 1948. By the latter Act, effective April 12, 1948, the Legislature amended Sections 1, 2, 3, and 4 of the 1942 Act, being Sections 10146, 10147, 10148, and 10149 of the 1942 Code.

This case has been before us previously. Reichman-Crosby Co. v. Stone, 204 Miss. 122, 37 So.2d 22, decided October 11, 1948. At the first trial in the Circuit Court of the First Judicial District of Hinds County, the appellant here, the appellee there, demurred to the declaration of the appellant there, who is appellee here. This demurrer was sustained, and upon failure to amend, the suit was dismissed and judgment was entered denying the recovery sought. On appeal, we reversed and remanded the cause for a trial on the merits.

Thereupon, the case was tried anew, and resulted in a judgment granting the recovery sought, whereupon appellant, Stone, Chairman of the Mississippi State Tax Commission, brought the case here on appeal.

In the former appeal, we held that since Reichman-Crosby Company was a non-domesticated foreign corporation, having no place of business or any agent in this State, its only intra-state activity being the sending into the State of non-resident solicitors to take orders effective only when approved at the home office, it could not be made a collecting agent for the use tax on goods sold by the corporation on orders taken as stated, when the sales had been completed by the delivery of the goods to a common carrier in the foreign state, the statute being unconstitutional in its requirement that the foreign seller must collect and pay the tax under such circumstances. Sections 10146-10167, Code 1942.

It is to be remembered that the original bill did contain this allegation: '* * * that its method of doing business was and is that it has traveling representatives, non-residents of the State of Mississippi, whose sole function and authority is to solicit and obtain from prospective customers in Mississippi orders for goods, which said orders are sent to the Memphis office of plaintiff for acceptance or rejection and which are in nowise binding upon plaintiff until accepted; that upon acceptance, the goods and merchandise are not delivered by plaintiff to the purchaser in Mississippi, but are delivered to a common carrier in Memphis, Tennessee, for transmission to purchasers.' The demurrer admitted, of course, all of this allegation, including that the salesmen were non-residents of Mississippi. In the agreed statement of facts, however, on this point, it was stipulated: '* * * two of the traveling salesmen representing plaintiff reside in Mississippi. * * * The Reichmen-Crosby Company has six men altogether, traveling in the State of Mississippi for the purpose of soliciting orders from residents of Mississippi for merchandise. Only two reside in Mississippi. The Reichman-Crosby Company does not require these two traveling salesmen, or any of its salesmen, to live in the State of Mississippi. These two salesmen live in the State solely of their own volition and not by reason of any requirement of the Reichman-Crosby Company. These two salesmen get the same compensation they would get if they lived outside of the State of Mississippi. Their residence in Mississippi is a matter of their own convenience and not for the convenience or benefit of plaintiff.'

The statement of facts aforesaid also agreed that appellee here was a non-resident merchant in Memphis, Tennessee, selling, as stated supra, to purchasers in Mississippi, on orders taken as shown, prior to and since December 15, 1945. Furthermore, appellee '* * * has no office, distribution house, salesroom, house or warehouse of any kind in Mississippi, and the duties and authority of all of said salesmen traveling in Mississippi are limited to taking orders and mailing them to the home office of plaintiff in Memphis for acceptance or rejection. In other words, no traveling salesman has the right to make an outright sale of any of plaintiff's merchandise in the State of Mississippi. When orders are accepted by plaintiff the merchandise is delivered to a common carrier in Memphis, consigned to purchasers in Mississippi, F.O.B. Memphis.'

It was further stipulated that there is a continuous flow of business by way of purchasers of Mississippi of the commodities sold by plaintiff in its regular course of business. 'During the month of August, 1947, the total sales to Mississippi purchasers of plaintiff's merchandise amounted to $39,764.27 and for the month of February, 1948, the total amount of plaintiff's merchandise sold to Mississippi purchasers was $18,122.03, or a total of sales for said two months of $57,886.30. The month of August, 1947, was selected as being the highest amount of sales during that year and the month of February, 1948, the lowest amount of sales during that year. The two salesmen who resided in Mississippi sold 34.43 per cent of said total sales.' Other sales were made by the other four non-resident salesmen traveling in Mississippi, orders received direct from customers through the mails, or by telephone, or in person, at the place of business in Memphis, Tennessee. 'Fifty-five (55) per cent of said sales were exempt from taxation under express provisions of the Mississippi Use Tax Statute.'

It was agreed that the two per cent Use Tax for August 1947, if due from appellee, was $370.09, and for February 1948, $134.90; that during the last six months of 1947 the two per cent of invoice prices of all merchandise sold customers in Mississippi not exempt from the Mississippi Use Tax amounted to $1,850.24. This two per cent was added to each invoice covering said sales, for plaintiff's protection, if plaintiff should be held liable therefor. The 'plaintiff' is the 'appellee' here.

By the agreement, it appears that appellee prepaid transportation charges on merchandise, both exempt and non-exempt from the Use Tax, shipped by it from Memphis, Tennessee, to purchasers in Mississippi all of which was sold F.O.B. Memphis, Tennessee, the transportation charges being charged to the purchasers of the merchandise. Shipment was either by common carrier or United States parcel post service. None was shipped F.O.B. destination in Mississippi. Approximately all of the merchandise sold by appellee to its Mississippi customers, including the merchandise referred to in the stipulation, was sold on thirty days credit terms.

It was expressly stipulated that '* * * subject to objection solely on the ground of incompetency, irrelevancy or immateriality, the following facts (as above) are agreed to be true and correct; and the same as hereinafter set forth, together with all admissions of the defendant's (A. H. Stone, Chairman, Tax Commission) answer herein, may be accepted by the court as fully as though proven by evidence offered in this cause, * * *'. It was agreed that the case be tried by the judge without a jury.

Pursuant to the right of objection to the evidence, appellee objected to certain portions thereof, whereupon the following self-explanatory order was entered: 'The plaintiff having moved the court to exclude and not to consider on the hearing and trial of this case all facts set forth in the stipulation herein filed, which relate to transactions occurring after the 31st day of December, 1946, on the ground that all such transactions occurred after the date the taxes involved in this present suit accrued, and, therefore, the same are incompetent, irrelevant, and immaterial on the trial of said cause: It is by the court ordered that said motion be and the same is hereby sustained.' The effect of this was to eliminate from the case there and here all consideration of the data, statistics, and two per cent collections by appellee in August 1947, February 1948, and during the year 1947. Appellant assigns this exclusion as error, but does not argue that it was error, or point out why it was erroneous, but, argues the case in his brief as if the evidence so excluded had not been excluded. However, it was excluded, and properly so, the period involved being December 15, 1945, to and including December 15, 1946.

The agreement was, as shown ante, that all admissions in appellant's answer be also taken as proven. Briefly, those admissions were: (Where not specifically also embraced in the agreed statement of facts) (1) That appellee is a corporation chartered under the laws of Tennessee, with its principal place of business in Memphis, Tennessee, and has never been domesticated or admitted to do business in the State of Mississippi as a foreign corporation, and has not appointed a resident agent as required by Section 5319, Code 1942. (2) That Alfred H. Stone, as Chairman of the Mississippi State Tax Commission, is charged with the duty, and clothed with the authority, to administer Chapter 120, Laws 1942, commonly known as the Use or Compensating Tax Law of Mississippi, and in the performance of this duty he made demand on appellee for payment of taxes accrued on account of sales made to purchasers in Mississippi, through orders solicited by representatives traveling through Mississippi for said purpose. (3) That appellee is engaged in selling machinery supplies, iron and steel products and material for various types of construction to purchasers in Mississippi. (4) That between December 15, 1945, and December 15, 1946, ...