United Shoe Machinery Corp. v. Gale Shoe Mfg. Co.
| Decision Date | 28 June 1943 |
| Citation | 314 Mass. 142,49 N.E.2d 913 |
| Parties | UNITED SHOE MACHINERY CORPORATION v. GALE SHOE MANUFACTURING COMPANY. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
May 1, 1939.
Present: FIELD, C.
J., QUA, DOLAN & RONAN, JJ.
Landlord and Tenant, Covenant to pay taxes, Construction of lease. Taxation, Corporate excise. De Minimis non curat Lex. Words "Tax," "Excise."
This court considered a case although the amount in controversy was but fifty-five cents, where the question involved was the construction of a contract between the plaintiff and the defendant and counsel for the plaintiff asserted the existence of numerous similar contracts between the plaintiff and others giving rise to the same question.
The pecuniary burden imposed on a foreign corporation by G. L. (Ter. Ed.) c. 63, Section 39, as amended, is an excise and is too remote from the property of the corporation to constitute a tax "upon or in respect to" its property.
The language of a provision of a lease of machinery drawn by the lessor, a foreign corporation doing business in Massachusetts, that the lessee should "pay all taxes and assessments which shall be assessed upon or in respect to the leased machinery or any interest therein or the rights to payments thereunder upon whomsoever the same shall be assessed," did not require the lessee to pay any part of the excise imposed on the lessor by G. L. (Ter. Ed.) c. 63, Section 39, as amended after the enactment of St. 1936, c. 362, had exempted the machinery from the local tax theretofore assessed upon it and paid by the lessee and thus had increased such excise upon the lessor by depriving it of the right to deduct the value of the machinery in computing the corporate excess.
CONTRACT. Writ in the Superior Court dated June 1, 1938. The case was heard by Hanify, J.
P. Nichols, for the plaintiff. J. N. Clark, for the defendant.
This action of contract brought in the Superior Court to recover the sum of fifty-five cents and interest thereon was heard upon a demurrer to the declaration. The demurrer stated five grounds of demurrer including the ground that the declaration "fails to state substantive facts necessary to constitute the cause of action alleged." The demurrer was sustained and the plaintiff appealed. G. L (Ter. Ed.) c. 231, Section 96.
The amount in controversy would not warrant consideration of the plaintiff's appeal if no substantial right was at stake. Feeney v. Eastern Racing Association, Inc. 303 Mass. 602 , 603, and cases cited. See A. Doykos & T. Pappas, Inc. v. Leventhal, 290 Mass. 375 , 376-377. The defendant, however, does not raise the point. And counsel for the plaintiff assures us that the question involved in the present case is a matter of substantial interest to the plaintiff by reason of the existence of numerous agreements to which it is a party similar in form and effect to the agreement upon which the action is brought. Consequently we consider the case.
The plaintiff's declaration alleges that "it is a manufacturing corporation duly organized under the laws of the State of New Jersey and at all times hereinafter mentioned was engaged in manufacture in this Commonwealth and had a principal place of business in Boston in the County of Suffolk and Commonwealth of Massachusetts, and that the defendant is a manufacturing corporation duly organized under the laws of the Commonwealth of Massachusetts and at all times hereinafter mentioned was engaged in manufacture in this Commonwealth and had a principal place of business in North Adams in the County of Berkshire and Commonwealth of Massachusetts; that the plaintiff for many years prior to 1936 paid to the Commonwealth of Massachusetts, under the provisions of G. L., Chap. 63, a tax on corporate excess and that in calculating its corporate excess it was allowed a deduction for machinery owned by it and leased to divers corporations including the defendant for use in manufacturing in this Commonwealth; that the machinery so leased was taxed under the provisions of G. L. Chap. 59 by the Massachusetts city or town in which the same was located and that under the provisions of the leases relating to such machinery the taxes locally assessed thereon were paid by the respective corporate lessees including defendant; that by the enactment of Chap. 362 of the Acts of 1936 such machinery ceased to be subject to taxation under the provisions of G. L., Chap. 59, and also ceased to be deductible in calculating the corporate excess under the provisions of Chap. 63; that by the provisions of Chap. 397 of the Acts of 1936 there was added to the tax on corporate excess imposed by G. L., Chap. 63 Secs. 6 and 7 of Chap. 362 of the Acts of 1936, an additional tax equal to 10% of the amount of said tax on corporate excess; that as a result of the enactment of Chaps. 362 and 397 of the Acts of 1936 the plaintiff, in the calculation of its corporate excess under the provisions of G. L., Chap. 63 as amended by said Acts, no longer received a deduction for its leased machinery with the result that its total tax on corporate excess in 1936 was thereby higher to the extent of $5.50 for each thousand dollars of value of leased machinery than it would have been had Chaps. 362 and 397 of the Acts of 1936 not been enacted, but no tax was assessed to the defendant or otherwise upon or in respect to the leased machinery or interest therein as such; that on December 4, 1930, the plaintiff entered into an agreement with the defendant for consideration in writing and under seal . . . under the terms of which the plaintiff leased to, and licensed the defendant under its patents to use, a Universal Slugging Machine, No. 5202, the property of the plaintiff, having a value of $100, which machine the defendant in 1936 used in the Commonwealth for manufacturing purposes; that under said lease the defendant covenanted and agreed among other things `at all times until redelivery of the leased machinery to the United Corporation (meaning thereby the plaintiff the Licensee (meaning thereby the defendant) shall pay all taxes and assessments which shall be assessed upon or in respect to the leased machinery or any interest therein or the rights to payments thereunder upon whomsoever the same shall be assessed'; that said machine was included by the plaintiff in its 1936 tax return filed with the Commissioner of Corporations and Taxation of the Commonwealth of Massachusetts at a valuation of $100 in its schedule of assets upon the basis of which its corporate excess was computed; that the plaintiff has performed all of its covenants in said lease contained but that the defendant has failed to perform its covenant to pay all taxes and assessments which shall be assessed upon or in respect to the leased machinery in that it has neglected and refused (though requested so to do) to reimburse the plaintiff to the extent of fifty-five cents, said sum being the amount [by] which on account of the value of said machine the plaintiff's tax on corporate excess was in 1936, under the provisions of G. L., Chap. 63 Secs. 6 and 7 of Chap. 362 of the Acts of 1936 and as amended by Secs. 1 and 5 of Chap. 397 of the Acts of 1936, greater than such tax on corporate excess would have been under the provisions of G. L., Chap. 63 if the same had not been amended by Chaps. 362 and 397 of the Acts of 1936; and which sum the plaintiff has paid to the Commonwealth. WHEREFORE the defendant owed the plaintiff the sum of fifty-five cents with interest from October 20, 1936, the date on which interest on said tax on corporate excess began to run against the plaintiff in favor of the Commonwealth of Massachusetts."
The demurrer admits only facts well pleaded and does not admit inferences from those facts unless they are necessary inferences, nor does it admit conclusions of law from facts averred. Johnson v. East Boston Savings Bank, 290 Mass. 441 , 446-447.
Fundamental facts alleged by the declaration and admitted by the demurrer are that the plaintiff is a foreign manufacturing corporation; that during the year 1936 it was engaged in manufacturing within the Commonwealth; that the plaintiff was then the owner of a machine of the value of $100 which by an agreement for a consideration and under seal it had leased in 1930 to the defendant, a domestic manufacturing corporation engaged in manufacturing in this Commonwealth, and which was being used in 1936 by the defendant for manufacturing within the Commonwealth; and that by the lease the defendant covenanted and agreed, among other things, that "at all times until redelivery of the leased machinery to the . . . [plaintiff] the . . . [defendant] shall pay all taxes and assessments which shall be assessed upon or in respect to the leased machinery or any interest therein or the rights to payments thereunder upon whomsoever the same shall be assessed."
On the facts above stated the plaintiff was subject in the year 1936 to the excise imposed by G. L. (Ter. Ed.) c. 63, Section 39, as amended by St. 1936, c. 362, Section 6, which, so far as material, is as follows: ...
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