14. COMMERCE (3 69*)-INTERSTATE COMMERCE | of the Pocahontas Fuel Company and the A foreign flour manufacturing corporation, which maintained a local office from whence salesmen were sent through the country to secure retail orders for flour, which were delivered to the wholesale patrons of the company, is not wholly engaged in interstate commerce, particularly where a small stock was kept on hand for local sales, and is subject to Foreign Corporation Tax Law of 1909 (St. 1909, c. 490, pt. 3). [Ed. Note. For other cases, see Commerce, Cent. Dig. 88 100, 113-119; Dec. Dig. § 69.*] 15. COMMERCE (§ 69*)-INTERSTATE COMMERCE -WHAT CONSTITUTES. - A foreign holding company whose articles of association named Boston as its business office without the state of its domicile, and which maintained a Boston office, where dividends from the stock it held for the benefit of its shareholders were received and were paid, is not engaged wholly in interstate commerce, and is subject to the Foreign Corporation Tax Law of 1909 (St. 1909, c. 490, pt. 3), particularly where its officers were citizens of the state of Massachusetts, and all of its records and accounts were kept in that state. [Ed. Note. For other cases, see Commerce, Cent. Dig. §§ 100, 113-119; Dec. Dig. § 69.*1 16. COMMERCE (§ 69*)-INTERSTATE COMMERCE -WHAT CONSTITUTES. Chas. A. Snow and Wm. P. Evarts, both of Boston, for petitioners. Thos. J. Boynton, Atty. Gen., and Roger Sherman Hoar, Asst. Atty. Gen., for the Commonwealth. RUGG, C. J. These are petitions brought by corporations organized under the laws of other states to recover excise taxes paid by each for the privilege of transacting business within the commonwealth. [1] 1. The foreign corporation tax law, St. 1909, c. 490, part 3, § 56 et seq., has been upheld as a constitutional exercise of the power of the state after extended argument and thorough deliberation. Atty. Genl. v. Electric Storage Battery Co., 188 Mass. 239, 74 N. E. 467, 3 Ann. Cas. 631; Keystone Watch Case Co. v. Cem., 212 Mass. 50, 98 N. E. 1063; Baltic Mining Co. v. Com., 207 Mass. 381, 93 N. E. 831; S. S. White Dental Co. v. Com., 212 Mass. 35, 98 N. E. 1056, Ann. Cas. 1913C, 805. On writ of error the judgments in the last two cases were affirmed A foreign mining company whose property in 231 U. S. 68, 34 Sup. Ct. 15, 58 L. Ed. 127. was located in another state, but which was authorized to maintain a Boston office, at which The only question to be determined in the its directors' meetings were held, its policies cases at bar is whether under the principles shaped, and selling orders given, is not en- already established the several plaintiffs were gaged in interstate commerce, although it had a general manager in charge of its mining busi- subject to the excise laid upon each. ness in the foreign state, and hence it is sub- tax sought to be recovered is strictly an exject to the excise prescribed by Foreign Cor-cise tax and in no sense a property tax. It poration Tax Law of 1909 (St. 1909, c. 490, is a license fee exacted from foreign corporapt. 3). tions for the privilege of doing in this state The So business other than interstate commerce. [Ed. Note. For other cases, see Commerce, Cent. Dig. §§ 100, 113-119; Dec. Dig. § 69.*] 17. CONSTITUTIONAL LAW (§ 230*) EQUAL PROTECTION OF LAWS-DENIAL. Where a foreign corporation engaged in the automobile business purchased real estate and erected a substantial building for the carrying on of its repair trade, and trade in used cars, [2] 2. The commonwealth urges that each as well as a selling agency, Foreign Corporation of the plaintiffs is estopped now from denyTax Law of 1909 (St. 1909, c. 490, pt. 3), ing that it is within the scope and purview which greatly increased the license taxes upon foreign corporations, does not deprive such of this law. The ground for this contention corporation of equal protection of the laws; it is that each seasonably, voluntarily and withnot appearing that its real property was ex-out protest filed with the secretary of the clusively adapted to use for automobile business, that it was necessary for it to have pur- Commonwealth the certificate of its condition chased such property to carry on its business, as a foreign corporation required by section or that the property could not be sold for a reasonable price. [Ed. Note. For other cases, see Constitutional Law, Cent. Dig. § 687; Dec. Dig. § 230.*] Report from Supreme Judicial Court, Suffolk County. 54, and likewise appointed the commissioner of corporations its agent for the service of process in accordance with St. 1903, c. 437, § 58, and hence has acknowledged itself to be subject to the law. The principle invoked is that where one of his own volition Separate petitions by the Cheney Bros. asks for a privilege or license, he cannot Company, by the Lanston Monotype Machine be heard to say afterward that his payment Company, by the Locomobile Company of of the fee exacted was illegal and on that America, by the Northwestern Consolidated account seek to recover it. It relies upon Milling Company, by the Copper Range Com- Cook v. Boston, 9 Allen, 393, 394, Emery v. pany, by the White Company, by the Cham- Lowell, 127 Mass. 138, 141, and like cases, pion Copper Company, by the Pocahontas and especially upon Ficklen v. Shelby Co., Fuel Company, and by the Marconi Wireless 145 U. S. 1, 24, 12 Sup. Ct. 810, 36 L. Ed. Telegraph Company of America, against the 601. But all these were cases where a fee Commonwealth, to recover excise taxes paid was exacted in advance for a license issued for the privilege of transacting business for the transaction of a particular branch of therein. On report. All petitions, save those business. In the Ficklen Case the precise For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep'r Indexes After that decision St. 1909, c. 490, was enacted without material change in this respect, from which the inference flows that the Legislature was content with the law as interpreted by that decision. In Baltic Mining Co. v. Com., 207 Mass. 381, at page 390, 93 N. E. 831, at page 834, it was said, referring to the case last cited: point decided was that a resident commis- and maintained solely for use in interstate comsion broker, who, after paying the required merce.' fee, had taken out a general license to do all kinds of commission brokerage for both foreign and domestic correspondents for 1887 and also had given a bond to pay in addition a percentage on all sales during that year, could not resort to the courts to compel the issuance to him of a license for the ensuing year by municipal authorities who refused because he had not complied with the bond of the earlier year on the ground that as the event had proved business had been done only for nonresident principals. The cases at bar in this respect come within the principle applied to a somewhat similar state of facts in Atchison, Topeka & Santa Fé Railway v. O'Connor, 223 U. S. 280, 32 "In our former adjudication upon it [the statute now under consideration] we expressed the opinion that it was inapplicable to cases where a foreign corporation had its place of business here only for use in interstate_commerce. It is not to be inferred that the Legislature intended the statute to go beyond the constitutional authority of the commonwealth." What was said in these two decisions was adverted to and apparently adopted in part as the basis of decision in Baltic Mining Co. v. Mass., 231 U. S. 68, where it was stated, at page 84, 34 Sup. Ct. 15, at page 18 (58 L. Ed. 127): to corporations which have places of business "And the statute, it is held, does not apply for the transaction solely of interstate commerce." See, also, S. S. White Dental Mfg. Co. v. Com., 212 Mass. 35, at page 46, 98 N. E. 1056, Ann. Cas. 1913C, 805. Sup. Ct. 216, 56 L. Ed. 436, Ann. Cas. 1913C, 1050, where it was held that a foreign corporation paying an excise tax was not acting voluntarily in a legal sense but was under implied duress when it was put to a serious disadvantage against the sovereignty by reason of liability to heavy penalties if in the end its contention for exemption should not be sustained. Severe penalties are provided by section 73 for each day's delay in filing returns, and by section 74 the business of the corporation may be enjoined, The contention of the commonwealth that while by St. 1903, c. 437, § 60, the delinquent these sentences were not intended to apply corporation is denied the privilege of main- to and do not apply to corporations doing a taining actions in our courts. Somewhat commercial or trading business, but only to summary remedies are given in the event of transportation corporations cannot be supa failure to pay the tax. See St. 1909, c. ported. The decisions in which they occur 490, part 3, §§ 58, 62, 69. The provision of did not relate to transportation corporations section 70 under which these petitions are but to purely business corporations. The brought is that relief may be had by any statements cannot be treated as dicta, for corporation within six months after paying they are used as essential links in a chain the tax, which shall be the exclusive rem- of reasoning by this court upholding the conedy. It does not require any preliminary stitutionality of the statute. We regard ourprotest or statement of objection before fil- selves as bound by them in interpreting and ing the petition. From all these considera- applying this statute. The Attorney General tions the conclusion follows that the several has argued in substance that the maintenance plaintiffs are not prevented from maintaining of a local office solely for a purpose conthese petitions because they complied with the nected with interstate commerce is such a requirements of the law as its scope was con- doing business within the state as subjects a tended to be by the officers of the common- corporation to the license fee required by this wealth, in order to avoid the consequences statute. Reliance in this regard is placed esof being mistaken in their own interpreta-pecially upon the words in Pembina Mining tion of it. The provisions of St. 1903, c. 437, Co. v. Penn., 125 U. S. 181, at page 184, 8 §§ 58, 60, may apply in whole or in part to Sup. Ct. 737, at page 738 (31 L. Ed. 650), to corporations engaged exclusively in interstate the effect that the state has a right to exact commerce. International Harvester Co. v. a license fee of a foreign corporation for Ky., 234 U. S. 579, 34 Sup. Ct. 944, 58 L. Ed. maintaining "an office in the commonwealth 1479. But that question is not now before for the use of its officers, stockholders, us and does not affect the point here decided. agents, or employés." But as was explained [3, 4] 3. It was said in the course of the in McCall v. California, 136 U. S. 104, at opinion in Attorney General v. Electric Stor- page 112, 10 Sup. Ct. 881, at page 883 (34 L age Battery Co., 188 Mass. 239, at pages 240- Ed. 391), that decision was not intended to 241, 74 N. E. 467, at page 468 (3 Ann. Cas. impinge upon the equally well-settled princi631): ple that: "If the statute before us applied to the maintenance of a place of business solely for the purpose of engaging in interstate commerce it would be unconstitutional. * We are of opinion that the Legislature cannot have intended to include in this statute corporations "The only limitation upon this power of the state to exclude a foreign corporation from doing business within its limits, or hiring offices for that purpose, or to exact conditions for allowing the corporation to do business or hire oflices there, arises where the corporation is in its business is strictly commerce, interstate or foreign. The control of such commerce, being in the federal government, is not to be restricted by state authority." Kidd v. is made, is interstate commerce." Expressions to be found in Horn Silver Mining Co. v. N. Y., 143 U. S. 305, 317, 12 Sup. Ct. 403, 36 L. Ed. 164; Wolff Dryer Co. v. Bigler, 192 Pa. 466, 43 Atl. 1092; Davis v. Dix (C. C.) 64 Fed. 406, 413, and Atty. Gen. v. Bay State Mining Co., 99 Mass. 148, 153, 96 Am. Dec. 717, relied on by the Attor-gress and which cannot be affected by any ney General, must be regarded as subject to this limitation. In principle that question is concluded by Norfolk & Western R. R. v. Penn., 136 U. S. 114, 10 Sup. Ct. 958, 34 L. Ed. 394, and McCall v. California, 136 U. S. 104, 10 Sup. Ct. 881, 34 L. Ed. 391, when read in the light of the numerous definitions (presently to be examined) given by that court of commerce between the states. Such a place of business in common with all others, whether of citizens or aliens, perhaps might be required to pay a license fee, but that question is not presented. The conclusion is that the maintenance by a foreign corporation of a local office solely for use in interstate commerce does not render it liable to the excise tax of the statute under consideration. 4. What constitutes "commerce among the several states" within the meaning of those words in the federal Constitution has been defined by the Supreme Court of the United States. Said Chief Justice Marshall in Gibbons v. Ogden, 9 Wheat. 189, 210 (6 L. Ed. 23): "Commerce, undoubtedly, is traffic: but it is something more: it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches." In County of Mobile v. Kimball, 102 U. S. 691, at page 702 (26 L. Ed. 238), occurs this definition: "Commerce with foreign countries and among the states, strictly considered, consists in intercourse and traffic, including in these terms nav igation and the transportation and transit of persons and property, as well as the purchase, sale and exchange of commodities." In Gloucester Ferry Co. v. Penn., 114 U. S. 196, 203, 5 Sup. Ct. 826, 828 (29 L. Ed. 158), it was said: "Commerce among the states consists of intercourse and traffic between their citizens, and includes the transportation of persons and property, and the navigation of public waters for that purpose, as well as the purchase, sale and exchange of commodities. The power to regulate that commerce, as well as commerce with foreign nations, vested in Congress, is the power to prescribe the rules by which it shall be gov. erned, that is, the conditions upon which it should be conducted; to determine when it shall be free and when subject to duties or other exactions." discriminatory state law, includes not merely [5] 5. The plaintiffs have emphasized somewhat in argument the phrase in 231 U. S. at page 86, 34 Sup. Ct. 15, at page 19 (58 L. Ed. 127), to the effect "that local and domestic business, for the privilege of doing which the state has imposed a tax, is real and substantial" and have sought to infer therefrom that a new limitation has been imposed upon the power of the states. This conclusion does not follow. The sentence probably was intended only as a reference to a fact which existed in the cases then before the court, although not one decisive in any respect as to the conclusion reached. But given its full force, it is nothing more than a statement that a shadow cannot be made the basis of an excise tax. But when the local and domestic business exists, then an excise may be levied. There is nothing to indicate that a comparison between the total business of the company and its local business was intended. Such a basis has never before been intimated. It is directly contrary to Ficklen v. Shelby County, 145 U. S. 1, 12 Sup. Ct. 810, 36 L. Ed. 601. See, also, Flint v. Stone, 220 U. S. 107, 31 Sup. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312. If such a principle exists in In Robbins v. Shelby Taxing District, 120 reference to any facts, it has no relation to U. S. 489, at page 497, 7 Sup. Ct. 592, at page any of the cases at bar. The test is whether 596 (30 L. Ed. 694), it was said that "the ne- the foreign corporation transacts domestic gotiation of sales of goods which are in an- business substantial in its essence and not other state, for the purpose of introducing by comparison, and reasonably susceptible of them into the state in which the negotiation separation from its interstate commerce. If it does, the state can fix its own terms so far on the high seas and foreign countries. It as license fee is concerned. neither transmits nor receives any messages [6] 6. The ratio of profits on the domestic whatever over land or in or through this business to the license tax is an immaterial commonwealth. It has no property in the circumstance. If the license fee imposed is general in its operation and is in other respects invulnerable, the mere fact that some foreign corporation may not be able to make profits enough to meet it does not render the law unconstitutional as to that corporation. The opportunity to do business, subject to the protection of our laws and with all the advantages which arise from our markets and our financial and other resources, is the thing which is made the subject of the excise. U. S. v. Singer, 15 Wall. 111, 21 L. Ed. 49; Flint v. Stone Tracy Co., 220 U. S. 107, 166, 167, 31 Sup. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312. commonwealth, except that above described. It is plain that this plaintiff is engaged exclusively in foreign commerce. Transmission of intelligence by means of the electric telegraph has been held to be commerce. Pensacola Telegraph Co. v. Western Union Telegraph Co., 96 U. S. 1, 24 L. Ed. 708; Telegraph Co. v. Texas, 105 U. S. 460, 26 L. Ed. 1067; Leloup v. Mobile, 127 U. S. 640, 645, 8 Sup. Ct. 1383, 32 L. Ed. 311; Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 30 Sup. Ct. 190, 54 L. Ed. 355. The sending of the means of education by correspondence through the mails also is commerce. International Text-Book Co. v. Pigg, 217 U. S. 91, 30 Sup. Ct. 481, 54 L. Ed. 678, 27 L. Both upon this point and the one last discussed the plaintiffs rely on the statement | R. A. (N. S.) 493, 18 Ann. Cas. 1103. The in U. S. Express Co. v. Minn., 223 U. S. 335, 348, 32 Sup. Ct. 211, 216 (56 L. Ed. 459), to the effect that if the amount of the tax is "unduly great having reference to the real value" of the property engaged in the business, and on that in Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 42, 30 Sup. Ct. 190, 203 (54 L. Ed. 355), referring to a tax "not at all disproportioned to such local business." See S. S. White Co. v. Com., 212 Mass. 35, 44, 98 N. E. 1056, Ann. Cas. 1913C, 805. These tests well may be used as aids in determining whether the general scheme of an excise statute is an honest attempt to raise legitimate revenue, or whether it is "a mere device to reach and burden the interstate commerce of the company." But when the general scheme of the statute has been upheld as not out of harmony with the federal Constitution, then it cannot be stricken down because in a particular instance the excise may seem large. N. Y. v. Roberts, 171 U. S. 658, 661, 662, 19 Sup. Ct. 70, 43 L. Ed. 323; Pullman Co. v. Kansas, 216 U. S. 66, 67, 30 Sup. Ct. 232, 54 L. Ed. 378; Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 30 Sup. Ct. 190, 54 L. Ed. 355; Ohio Tax Cases, 232 U. S. 576, 592, 34 Sup. Ct. 372, 58 L. Ed. 737. It remains to consider the several cases at bar in the light of these governing principles. [7, 8] 7. The Marconi Wireless Telegraph Company of America is organized under the laws of New Jersey. It maintains in Massachusetts near the ocean three wireless stations, each consisting chiefly of a high pole having at the top a wire or wires with bare ends from which are sent through and taken from the air currents of electricity, whereby messages are transmitted and received. Connected with this apparatus are rooms similar to ordinary telegraph stations, for use of the wireless telegraph operators. At each station it transmits and receives [9] 8. The Pocahontas Fuel Company is established under the laws of West Virginia. Its business is the buying and selling of coal and coke. At its office in Boston is a manager who has charge of New England business and who is paid by check from New York, a salesman and a stenographer. Records of sales are kept at the Boston office and an average deposit of $1,000 is kept in a local bank for the expenses of this office. Correspondence and telephoning respecting sales is done from this office. Customers do not come to the office, but are called upon by the salesman, who sends all orders to New York, where they must be accepted and approved before the sale takes place. Goods are shipped to customers f. o. b. Norfolk, Virginia. The local office, in making contracts for delivery in Massachusetts, arranges charter parties for boats in the customer's name. All payments by customers are made by remittances by check to New York. This company has none of its goods or property in the commonwealth, except office furniture, and there is no treasurer here. The description of business done at the Boston office, as shown by the agreed facts, is somewhat meager, but it does not appear to include anything more than interstate commerce. No stock of goods is kept here. There is no local shop or store as a general resort for customers and the conduct of the essential in Connecticut, where the title passes. This description of the place maintained by the corporation in Boston, and the character of business transacted there shows something outside interstate commerce. A fixed abode has been established, which is used as the headquarters for its New England business. It is almost a necessary inference from the maintenance of an "office and salesroom" with one permanent salesman, that customers resort thither in considerable numbers for the purpose of examining samples and placing orders. It reasonably may be assumed that here also are fixed all the terms of a very substantial number of sales, and that the only thing required to complete the mine but buys its stock from other companies and, although not distinctly stated, it may be inferred that such purchases do not occur in Massachusetts. Its business, so far as this commonwealth is concerned, consists of selling by contracts made in New York coal bought in other states, to customers in the New England states and arranging for its transportation to them over the high seas or by rail from Virginia, solely through the medium of a manager and a salesman who travels to see prospective purchasers or communicates with them by telephone or letter from its Boston office. That which this company does in Massachusetts seems to be rationally connected with interstate commerce. The sole business which this com- transaction is the bald approval by the company appears to carry on is "commerce pany at its home office. It is not only a per• among the several states" as that manent home for the corporation for the phrase has been defined in judgments by carrying on of its New England sales busiwhich we are bound. The keeping of an of-ness, but it has many of the characteristics fice and a local bank account and the employment of a stenographer are incidental instrumentalities reasonably necessary to the conduct of this interstate commerce, and hence inseparable from it. This is not a case where the corporation by the form of its contracts or the details adopted for the doing of its business has attempted to convert into a form resembling interstate commerce that which in its intrinsic substance is local business subject to state control. Hence, Browning v. Waycross, 233 U. S. 16, 34 Sup. Ct. 578, 58 L. Ed. 828, where that thing was essayed, is not in point. This case seems to be covered in principle by McCall v. Calif., 136 U. S. 104, 10 Sup. Ct. 881, 34 L. Ed. 391; Norfolk & Western R. R. v. Penn., 136 U. S. 114, 10 Sup. Ct. 958, 34 L. Ed. 394; Crenshaw v. Ark., 227 U. S. 389, 33 Sup. Ct. 294, 57 L. Ed. 565; Rogers v. Ark., 227 U. S. 401, 33 Sup. Ct. 298, 57 L. Ed. 569; Stewart v. Mich., 232 U. S. 665, 34 Sup. Ct. 476, 58 L. Ed. 786; Singer Sewing Machine Co. v. Ala., 233 U. S. 304, 34 Sup. Ct. 493, 58 L. Ed. 974. It follows that it is entitled to prevail in this proceeding. of a local salesroom. The stock of samples kept on hand is large enough apparently to require the constant attendance of one salesman. It was said by Mr. Chief Justice Waite in Robbins v. Shelby Taxing District, 120 U. S. 489, at page 500, 7 Sup. Ct. 592, at page 598 (30 L. Ed. 694), "I cannot believe that if Dr. Robbins had opened an office for his business within the taxing district, at which he kept and exhibited his samples, it would be held that he would not be liable to the tax, and this whether he stayed there all the time or came only at intervals." These words were used in a dissenting opinion. But they embody a thought by way of hypothesis which evidently was regarded as too plain to be challenged. Five salesmen are attached to these Massachusetts headquarters; one stationed there permanently; while four others also travel throughout New England. "New England" is a perfectly well-understood geographical term which includes Connecticut, the domiciliary state of the corporation. Since the agreed facts show that the traveling salesmen attached to the Boston office "cover" Connecticut as well as the other New England states, it follows that this local domicile is used in part at least for the transaction of business between the Cheney Bros. Company, domiciled in Connecticut and other residents of Connecticut. Apparently, the orders from residents of Connecticut are [10, 11] 9. The Cheney Bros. Company is organized under the laws of Connecticut for the manufacture of silk and other fabrics and for the purpose of trade. It maintains in Boston an office and salesroom with one office salesman and four other salesmen who travel through New England. No bookkeep er is employed, no books are kept except | registered, copied and forwarded to the Concopies and records of orders, and no collec- necticut office of the corporation through tions are made. The only deposit of funds is the Boston office. Such orders may be taken for the expenses of the office, amounting usu- by the traveling salesmen from purchasers in ally to about $250, which is sent from the Connecticut or at the salesroom directly from treasury in New York. The salaries of sales-Connecticut customers who go there in permen and rent of office are paid directly from son. Plainly, the sale and delivery of goods the Connecticut office. A stock of samples by a Connecticut corporation to a citizen of is kept, but no other goods. The salesmen Connecticut does not become interstate comtake orders, which are subject to approval by merce merely because the order may have the home office in Connecticut, and the goods been transmitted through a sales agency of are shipped directly from Connecticut to the the corporation located in Massachusetts. customer. The contract of sale is completed This especially is true where the sale is con |