DPERAL REPORTER, vol. 44.
SOUTHERN COTTON OIL CO. V. 'VEMPLE.
(Circuit Court, N. D. New York. November 14. 1890.)
. rAliTIOJf-FOREIGN CORPORATIONS DOING BUSINESS WITHIN THE STA.TE.
A foreign manufacturing company which maintains an established location and an agent in New York city for the purpose of selling its products or facilitating their sale, and which keeps funds in New York city to maintain its place of business and to enable its agent to carryon his operations, is "doing business within the state" within the meaning of Laws N. Y, 1885. cc. 359, 501, which prOVide that every foreign corporation "doing busineSll within this lltate" shall be subject to a tax on its corporate franchise or business, to be computed on the basis of the amount of capital.stock employed within the state. .
On bill for injunction.
W.. W. MacFarland. for complainant. ' Ohaa. F. Tabor, Atty. Gen., for defendant.
WALLACE, J. This suit is brought by complainant to restrain the colledion of a tax assessed against it by the comptroller of the state of New York for the years 1887, 1888, and 1889, which "every corporation, joint-stock company, or association Whatever; hereafter incorporat.ed or organized under any law of this state, or now or hereafter incorporated or organized by or under the laws of any other state or country, and doing business in this state, shall be subject to pay a tax upon its corporate franchise or business." La wi! N. Y. --1885, c. 359. The statute provides that "the amount of capital stoek, which shall be the basis for tax, * * * shall be the amount of capital stock employed within this state." Id. c. 501. Complaint ·is not made of any excessive or irregular assessment, but the bill avers that tbecomplaitlant is not subject to taxation, and that the assessmerit is void. '1'he complainant is a manufacturing corporation, organized under the lawB of New Jersey, and having its principal place of business in that state. Its factories and plant are all situate outside the state of New York. It sells its products in various states and in foreign countries, and for that purpose, during the years 1887, 1888, and 1889, it maintained Baales agency and office at New York city, and kept a bank account-there for the convenience of its local transactions. Its corporate meetings have always been held either at its principal office-in New ·Jersey; orin Philadelphia, where it has a branch office, and where its books:ofaccount are kept and its general financial business is done. The president of the corporation deposes as follows: "Since about October; 1887, the company has had a sales agent in the city of New York, whose duty it has been to make sales of the pl'oducts of the company's mills. These products are not kept 011 store at any place in the state of New York. bnt the sales agent receives orders, which he transmits to the company's officers and managers, and the goods are then forwarded from the company's milia for delivery to the purchaser. Such deliveries are, and always have been, made in the same barrels, tanks, or packages in which the products have been brought from the mills into the state, and without opening or breaking any of the tanks, bal'l'els, or packages, ex-
SOUTHERN COTTON OIL CO. 11. WEMPLE.
cept that in certain instances, in 1888, purchasers having ordered refin-ed oil, some crude oil was brought to New York and refined by certain refiners, under contract with the complainant, and when so refined was delivered to the purchasers. Occasionally a small amount of oil or other product of the company's mills in excess of actual sales has been sent to New York, and placed in store until sold. Such products have always bl'en stored, and Bubsequently sold and delivered in the barrels or packages in which they have been brought into the state. The total llmount of such sales from store during the years 1887, 1888, and 1889 has not exceeded 5 per cent. of the totAl sales made by the New York sales agent. The proceeds of all sales made by the New York' agent were either sent to the Philadelphia office or deposited in bank, subject to the drafts of that office, as hereinafter stated. During the year 18tl8 the company, in the state of New York, had an average deposit of about $15.000, and in the year 1tl89 about $88,000. These deposits were subject only to the draft of the Pennsylvaniaolllce. The sales agent had a small bank account, never exceeding $2,500, for payment of office expenses. Except as above stated, the complainant has done no business of any kind whatever in the state of New York, and alIthe sales and transactions of its sales agent have been conducted in the mannerabove stated." The authorized by the statute is upon the privilege of foreign porations to do business within this state, and is not one upon property. People v. Trust Co., 96 N.Y. 387; People v. Mining Go., 105 N. Y. 76, 11 N.-E. Rep. 155; Home Ins. Co. v. New York, 134 U. S; 594,10 Sup. Ct. Rep. 593. Such a tax has no reference to the character of the propertyin which the capital of the corporation is invested or used, andJts legality is not affected by the nature of the property upon which it o-perntes.' Whether the property upon which it may incidentally operate is taxable or not, is immaterial. Wallace v. Myers, 38 Fed. Rep, 184; Societyv. Coite, 6 Wall. 594; Institution v. Massachusetts, Id. 631j Home Ins. Co.. v. Nfl» York, 119 U. S. 129, 8 Sup. Ct. Rep. 1385. The real tion, and the only question, in the case concerning the legality of the tax is whether, upon the facts shown, the complainant was doing business in this state·. If it was not, within the meaning of this statute, there was no statutory authority for the tax which has been assessed against it. This question is one of the ipterpretation of a state statute. It is one which it is peculiarly the province of the state courts to decide, and one as to which their decisions, and not those of this court, are authoritative. It has been somewhat considered by the court of appeals in People v. Trust Co. and People v. Mining Co., supra, but in no other adjudications which have been brought to the attention of this court. The case of People v. Commissioners of Taus, 23 N. Y. 242, is also relied upon by the complainant as throwing some light upon the meaning of the statute; but that judgment seems to, be of but little value here, because the tax under conSideration was a tax upon property, and the question was as to the character of the property or investments subject to the tax. In People v. Tru8t Co. the quef:ltion of the meaning of the term "doing business" or "corporate business" was not involved; but EARL, J., after ing that the inquiry was not presented, used this language: "Does it mean occasional or incidental corporate business, or continuous 'businessssubStantially through the year?" " " Does not the statute,
tal stock; mean by,' its corporate business 'substantially the wh<;>le or tbe mainit was chartered to transact? These questiolls we leave unanswered." 'Since ,that case wns. decided the statute has been amended so that the measure: of the tax is no longer the ,amount of dividends earned by the enth:'ebusiness oftheoorporation, or the entire cash value of its capital is "the amount of capi:tll.1stock employed within this state." In. Qther words, the present act the tax, and measurf\S it as to, thfilbu!linessdone within this sta.te by the amount of capital employed here,in doing it. In Pe<rple v. Mining 00. the meaning of the term was necessarily involved, but the decision falls short of solving the present <lues,tion. In that caSe the corporation taxed was a Utah mining comp'anii,,: ,of its businesswa's in Utah Chicago, its SlIver bulhon was all sent to New York City, and sold there. The proceeds were deposited there. andinpartloaned and in part paid ounor the company's business there, the balance being sent to and Chicago for use in the business. The president, secretary, and tre,asurer of the corporatiOn, had their offices in New York city, it,S directors held theit annual ,meetings there, and all its dividends were paid there. Referring,to these facts, the court said: " ' "There, was thus very substatltiill pOrtion of its business done in the city of New York. 'The busintlss did not 'consist of an occasional transaction. but an office there, and the businl'sscontinuously tl'ansacted there during whole year. We cannot construE!, the wOl'ds' doing business in this state' whole business of the corporation within this state, and are not, prepare(l to hold tha.t an occasional business transaction. tbat'kfil6pi"g.an office where meetings of the directors RI't' held, transfer-book kept, dividends declared and paid; and other business merely incidental to the regula:rbuiliness of the corporation is done,.wollid bring a corporation within tM act,y6twhen. as ih this case, all these things are done, and in addition thereto a,substantial part of the regUlar business of the corporation was carried gD: tIleD weare unal.lle to say tha,t the corporation was not brought ,within the ae,t one' doing business within the state.' .. ACC()l'dingtothe viewilthl1s expressed,'doing business within the state does not consist of occasional transactions, or the keeping of an office wherettansactions tf1,ke place whioh are merely incidental to the regular busiMsllofthe cOff)oration. Applying them to the present case,the occasiorlalrretining of oil in New York and the occasional storage of prod. uctsin,s.dvance of sales there by complainant, without more, would not constitbtEl:d6iI1g business here. In constrning the statute regard must 'unquestionablybehadt() the nature of the transactions which it is competent for the state tOl'egulate, and it should not receive a constrllCtion which, would 'defeat its, validity by rortenrling its operation to subjects which i are beyond the taxing power of the state. The state could not lay a tax up6n the mere ,privilege of soliciting orders here for goods in behalf of sellers dQingb\lsiness other states, because it would be one upon interstate Qommerce,and amountto a regulation of commerce which
bytbe entire bllsiness' of: the corporation. or the entire cash ,v"lue of its
wherift'provfdps as the, measure of the tax: the amount of diJ\';idends earned,
JU.NN ,t'. TACOMA. LAND OO.l
belongs solely to congress. Robbin8 v. Taxing-District, 120 U.S. 489, 7 Sup. Ct. Rep',: 592; A$her v. Te-JXl,8, 128U. S. 129, 9 Sup. Ct. Rep. 1. The statute ought not to be interpreted as taxing a privilege of that description. But a foreign corporation, which establishes a business domicile here, and brings its property within this jurisdiction, and mingles it with the general mass of commercial capital, is taxable here; and the power of the state is ample to tax its property directly or to lay a tltX upon its privilege of doing bU3iness, whether the property consists Qf funds deposited in bank or of goods sent here from other states, not in transit merely, but to remain here till used or sold. The principle of the present statute is that such corporations shall contribute according to the value of their capital" employed within the state." It lays the tax upon the privilege, and measures the amount by the amount of erty which is protected here. Reasonably interpreted, the statute means by "doing business within this state" using this state as a business domicile for transacting any substantial part, even though a comparatively small P81t, of the business which the company is organized to carryon, and in which its capital is embarked. It would seem that a manufacturing company which maintains an established location here, and an agent, for the purpose. of selling its products or facilitating their sale, carries on a part of its ordinary business. here, and has a business domicile here; and if it keeps funds here for maintaining its place of business, and to enable it to carry on the operations of its agent, such a foreign company would seem to be taxable under the statute. Certainly it cannot matter that the volume of business done is small, or that the 10eation, instead of being a warehouse or a shop, is an office or a sampleroom. The c,ase made by the complainant is not free from doubt, but, after as forcible and persuasive a presentation in its behalf as the facts can warrant, the conclusion is reached that it is subject to the tax authorized by the statute. The question whether a court of equity has jurisdiction to restrain the collection of a tax, under the circumstances of this case, does not require decision in view of the conclusion reached. The injunction is denied.
MANN 'V. TACOMA LAND
(otrcutt Court, D. Washington, W. D. October 22, 1890.)
SURVEYS OF PUBLIC LANDS.
Under the land laws of the United States, tbe line of ordinary bigh tide on the sbore of an arm of tbe sea. is the-bounda.ry between the land and the water at which tbe surveys of tbe public lands of the United States terminate.
The act of congress, providIng for the issuance of Valentine scrip, and for its location upon unoccupied Sind unappropriated public land, cannot be so construed as to entry with said scrip of mud flats bare at low tide, but subject to daily overflow, situated in one of the barbors of a territory, and which has been omitted from the surveys made of public lands sUl'1'OuDding lluch barbor. 'BuUabm b'II the. Court.)
PUBLIO LANDS-LOCATION OF SCRIP.