Opinion
October 11, 1948.
1. Constitutional law — taxation — foreign corporation — use tax on sales made outside state by non-resident.
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, cannot be made a collecting agent for the use tax on goods sold by the corporation on orders taken as stated, when the sales have 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 shall collect and pay the tax under such circumstances. Sections 10146-10167, Code 1942.
Headnote as approved by McGehee, J.
APPEAL from the circuit court of Hinds County; H.B. GILLESPIE, J.
W.W. Venable and Creekmore Creekmore, for appellant.
The statute as applied to appellant is so unreasonable as to amount to deprivation of property without due process of law.
It is submitted that aside from all other objections and unconnected therewith, the duty imposed by the statute to collect the tax at the time of sale, when by the very provisions of the statute no tax is due and owing by the purchaser, is such an unreasonable and unfair regulation as to amount to deprivation of property without due process of law and as denying to appellant the equal protection of the law.
The statute by its terms makes the tax which is levied upon the buyer a debt also of the seller, as being a person required to collect it. In effect, as we see it, it makes the foreign seller a surety for the payment of a debt, which the buyer will not owe until some time in the future and in fact may never owe. The foreign seller is made a debtor to the state before the buyer upon whom the tax is levied becomes a debtor, which buyer may never become such, because he may change his mind about using the property in the state. The duties imposed on the buyer to pay the use tax is for the privilege of using the property in Mississippi, but the obligation imposed on the seller as his surety is different and broader than the obligation of the principal, the buyer. The buyer's obligation is to pay the tax when transportation into Mississippi has ended and the goods have become commingled with the general mass of property within the state. The obligation of the seller is imposed at the time of the sale.
The obligation sought to be imposed on appellant cannot be upheld as a tax because interstate commerce cannot be taxed by the state. Richardson v. State, 11 So. 934; Overton v. State, 70 Miss. 558; Miller v. Illinois Central R. Co., 146 Miss. 422; Adams Mfg. Co. v. Storen, 304 U.S. 307; Robbins v. Shelby County Taxing District, 120 U.S. 489.
If the regulation that the seller shall collect the tax is to be upheld at all, it must be upheld as being a reasonable regulation incidental to the collection of the state's revenues.
Realistically, the statute is but a declaration of the obligation of the seller to pay the state the money it has collected, if it has collected it from the buyer, or it is in substance an obligation or penalty imposed for failure to collect or to remit if collected. If the buyer himself pays, there is no liability on the seller, though he did not collect from the buyer. If the buyer does not pay and the seller does not collect, the seller becomes liable to pay what is primarily the buyer's debt.
It seems to us that this situation presents two questions. If construed as a penalty, can a person be penalized for failing to do that which he has no legal right or authority to do?
Looked at as creating the relationship of principal and surety, can the surety be held to a larger and wider obligation than the principal and can the imposition of a liability upon a person as surety be fixed before there is any obligation existing as to the principal?
Can such be considered reasonable?
Under cases heretofore decided the test of due process as to statutes requiring one person to pay the tax due by and levied against another has been whether or not the person required to collect the tax had property of the taxpayer in its control out of which reimbursement could be made or could protect itself or himself by collecting the tax at the time of the sale. Citizens National Bank et al. v. Kentucky, 217 U.S. 443; First National Bank of Louisville v. Kentucky, 9 Wall. 353; Pierce Oil Company v. Hopkins, 264 U.S. 137.
This is an entirely different situation from the case at bar. In the case at bar, there is no tax due by the buyer at the time he purchases by the specific terms of the statute. He is under neither legal nor moral obligation to pay the tax and the seller cannot legally demand the payment of the tax when no tax is due. It is true, he could refuse to make the sale to the buyer and might be able to save himself from any obligation of the tax by so doing, but the seller is placed in the situation where it must lose the sale or extend credit, when he has no right to demand payment of the tax and no power to collect it, producing this result, that this sale in interstate commerce is burdened by an illegal exaction by the requirement of the doing of something, which the seller has no right to do and which he cannot do with legal right and authority, as a condition precedent to transacting interstate business.
If he does make the sale and credits the buyer, if the buyer should refuse to pay it, he takes upon himself the onerous obligation of finding out whether or not the goods were actually shipped in Mississippi and became part of the mass of the property of the state, going to Mississippi and getting payment, or if there is refusal to pay, instituting legal proceedings to recover the money, which might or might not be efficacious.
The seller must lose the sale or if he does not collect the tax, he is subject to all sorts of pains and penalties, fines, imprisonment, injuries, ex parte levies, attachments of goods, etc.
Under the statutes where the tax is due at the time of sale, the seller can protect himself or itself by refusing sale if the tax is not paid. He has the choice of doing so or not as he sees fit. If he extends credit to the buyer he does so voluntarily and free from legal coercion. Under the Mississippi statute he must demand payment of that which is not legally due, lose the sale if payment is not made, or else in many instances extend credit that he does not wish to extend and take upon himself the payment of the tax or the coming into Mississippi for purposes of collection.
The statute of Mississippi is to be sharply distinguished from the Iowa statute involved in the case of General Trading Co. v. State Tax Commission, 332 U.S. 355, 88 L.Ed. 1309.
Under the Iowa statute, the tax was due at the time of sale. It did not contain the provisions that it should not be due until the goods had been received in and become part of the mass of the property in the state.
If the statute is unreasonable, it is a direct and hampering burden on interstate commerce. Public Utilities Commission v. Attleboro Steam and Electric Co., 273 U.S. 83.
To impose on the seller as a condition for a sale of goods in interstate commerce a debt not due and that he has no legal right to demand or collect, in effect amounts to a tax on interstate commerce. Henderson v. Mayor of the City of New York, 92 U.S. 259.
To impose a liability on the privilege of carrying on interstate commerce is a tax on it and is invalid. Southern Pacific Company v. Gallagher, 306 U.S. 167; Dixie Ohio Express Company v. State Revenue Commission of Georgia, 306 U.S. 72; Weeks v. United States, 245 U.S. 618, 62 L.Ed. 513; Sonneborn Bros. v. Cureton, 262 U.S. 506, 67 L.Ed. 1095; Doll Implement Lumber Co. v. Campbell, 45 N.D. 239, 178 N.W. 197; Dahnke-Walker Mill Co. v. Bondurant, 257 U.S. 282, 66 L.Ed. 239; Federal Trade Commission v. Pacific States Paper Trade Association, 273 U.S. 52, 71 L.Ed. 537; Cooney v. Mountain States Telephone Telegraph Company, 294 U.S. 384, 79 L.Ed. 934; Baldwyn v. G.A.F. Seelig, Inc., 294 U.S. 511, 79 L.Ed. 1032.
It is respectfully submitted that waiving all other considerations in this case, the statute is invalid and unconstitutional, as applied to appellant.
As applied to appellant, appellant was not transacting business within Mississippi and, therefore, the state lacked jurisdiction to impose a personal liability under the facts of the case.
Legislative jurisdiction is confined to the territory of the sovereign enacting the law. Since the power of a state is supreme within its own territory, no other state can exercise power there and, of course, the state can confer upon its legislature no greater power than it has. Rose v. Himely, 4 Cranch 421, 279; St. Louis v. The Ferry Co., 11 Wall. 423, 430; Schooner Exchange v. McFadden. 7 Cranch 116; The Appollon, 9 Wheat. 362, 370.
For the legislature to impose a personal obligation upon a person, it must have jurisdiction of the person. It appears that jurisdiction over a person may be based upon the actual presence of the person within the territorial limits of the state, domicile within the state, because of allegiance which the person owes thereto, or consent to the jurisdiction. Jurisdiction in certain instances may be based upon the nature of the activity of the person in a given state in relation to the fair and orderly administration of the laws, which it was the purpose of the due process clause to insure. However, that clause of the constitution does not contemplate that a state may make binding a judgment in personnam against an individual or corporation with which the state has no contacts, ties or relations.
It has been uniformly held that casual acts of a non-resident or isolated acts do not confer jurisdiction. It remains to inquire what is the test of the substantiality of the activity of the foreign corporation or foreign citizen with reference to establishing jurisdiction. With respect to a foreign corporation, of which appellant is one, the test seems to be whether or not the activities of the foreign corporation are of such a character as to warrant the inference that the corporation is present in the state. International Harvester Co. v. Kentucky, 234 U.S. 579; Philadelphia and Reading R. Co. v. McKibbin, 243 U.S. 264; Rosenberg Bros. Co. v. Curtis Bros. Mfg. Co., 260 U.S. 516; Bank of America v. Whitney National Bank, 261 U.S. 171. Mr. Justice Brandeis in Philadelphia and Reading Railroad Company v. McKibbin, 243 U.S. 264, summarized the doctrine as follows:
"A foreign corporation is amenable to enforcing a personal liability, in the absence of consent, only if it is doing business within the state in such a manner and to such extent as to warrant the inference that it is present there."
While this act relates to jurisdiction of courts, it would appear to be equally true that if the court could not get personal service by service on an agent, because the corporation is not considered within the state, the legislature would equally lack jurisdiction for the same reason, in seeking to impose a personal liability over a person not within its territorial jurisdiction. In either case, the foreign corporation is not within the jurisdiction of the state.
As applied to a foreign corporation or person whose only activity was the solicitation of orders through solicitors who did not live in the taxing state and which orders did not ripen into contracts until accepted at the home office of the foreign corporation, the question would appear to be whether or not this activity is of such a nature and character as to manifest the presence of the corporation in the state.
This court has uniformly held that such activities did not confer jurisdiction and it appears to the writer that if this rule is to be departed from in the case at bar, the following and other cases will have to be overruled. First National Bank v. Mississippi Cotton Seed Products Co., 171 Miss. 282; Item Co. v. Shipp et al., 140 Miss. 699; Smith et al. v. Seaburg Corporation, 192 Miss. 563; Lee v. Memphis Publishing Co., 195 Miss. 264; Knower et al. v. Baldwyn, 195 Miss. 166; Yellow Manufacturing Acceptance Corporation v. American Oil Company, 191 Miss. 757; C.I.T. Corporation v. Stewart, 185 Miss. 140; Electric Company v. Electric Storage and Battery Company, 167 Miss. 842; Saxony Mills v. Wagner, 94 Miss. 233; Hart v. Foundry Co., 72 Miss. 809; Refrigeration Discount Corporation v. Turley, 189 Miss. 880.
It may be said that this has been the overwhelming weight of authority both in the Supreme Court of the United States and in other states.
It is respectfully submitted that our cases should not be overruled. If it should be held contrary to what has been held heretofore that the mere solicitation of orders by travelling salesmen is such activity by a foreign corporation in a state as to confer jurisdiction upon that state to impose a personal liability, no one can tell what the effect upon American business generally will be. Much of that business is conducted by corporations, both large and small, and if they are permitted to be sued away from home in 48 different jurisdictions, with all of the expense incident to such a burden, the cost of business will be enormously increased, all of which would result in higher prices, the burden falling upon the consuming public. In many instances, a very large legal staff would have to be employed to look after litigation scattered over a tremendously wide area. It seems to the writer that there is no justification for holding to any such doctrine, either according to precedent or sound policy. James v. United Artists Corp., 305 U.S. 414, 83 L.Ed. 256; Grimm v. Chicago, etc., Co., 205 U.S. 530, 51 L.Ed. 916; see cases compiled in notes, 46 A.L.R. 573.
There is only one case in the decisions of the Supreme Court of the United States that we have been able to find that apparently departs from this rule, the General Trading Company v. State Tax Commission, 332 U.S. 355, 88 L.Ed. 1309, where the use tax of the State of Iowa was upheld as against the General Trading Company, which did not have any place of business in Iowa and no activity there other than that of soliciting agents or travelling representatives. The Iowa statute contains the same provisions as that of Mississippi relative to who was a retailer maintaining a place of business in the state. The statute was attacked under the facts of the particular case on the ground that it deprived the defendant of property without due process and violated the commerce clause, etc.
Mr. Justice Frankfurter, speaking for the majority, there being strong dissent, upheld the statute as applying to the liability of the General Trading Company, a Minnesota corporation, on the authority of the cases of Felt Tarrant Manufacturing Company v. Gallagher, 396 U.S. 62; Nelson v. Sears-Roebuck Company, 312 U.S. 259; and Nelson v. Montgomery-Ward Company, 213 U.S. 373, basing decision on the ground that the Iowa Supreme Court had decided that having soliciting agents in the state was doing business in the state and held, "The application by that court of its local laws and the facts on which it founded its judgment are, of course, controlling here." He also stated that the case was not distinguishable from the cases where the seller had retail stores in Iowa and that this fact was constitutionally irrelevant. Mr. Justice Jackson and Mr. Justice Roberts dissented on the ground that there was no jurisdiction.
We state frankly, but with deference, that we do not understand what is meant by stating that the decision of the Iowa court that the mere solicitation of orders constituted doing business in the state was binding on the Supreme Court of the United States. We can see how a finding by the Iowa Supreme Court as to the facts relative to the activities of the foreign seller would be binding. We do not see how a finding of the Iowa Supreme Court that this constituted doing business within the state so as to confer jurisdiction could be binding. How the Iowa Supreme Court by its judgment could declare that a certain set of facts conferred jurisdiction and due process would preclude the Supreme Court from passing on a constitutional question, we confess we do not see. Southern Pacific Company v. Schuyer, 227 U.S. 601.
To seek to impose liability upon a person beyond the jurisdiction of a state would be an attempt to deprive that person of property without due process of law.
Mr. Justice Jackson and Mr. Justice Roberts dissented and pointed out that in the cases cited, in Mr. Justice Frankfurter's opinion, that the state could make tax collectors of those who came in and did business within its jurisdiction, for thereby they submitted themselves to its power and that such was the situation in the cases cited by Mr. Justice Frankfurter, and, therefore, could not be precedents to sustain the opinion of the majority.
The dissenting Justices pointed out that the incongruity of the holding that a state would have power to impose a liability by making a tax collector of one that it had no power to tax. They pointed out that a state would have no constitutional warrant for making a tax collector of anyone as the price or the privilege of doing interstate commerce. They declared there was no principle of states' rights or states' comity which could justify what has been done.
As we construe it, the judgment of the majority proceeds on the theory that the Supreme Court of Iowa decided a fact question, namely, that the Minnesota corporation was transacting business in Iowa, because it had travelling, soliciting agents there. If this is the basis of the decision, it is distinguishable from the case at bar, because this court has uniformly held that this is not doing business in the State of Mississippi and all of its cases held that under such facts, there is no business being done.
Conceding purely for the sake of argument that this finding of the Iowa Court was binding on the Supreme Court of the United States and that the decision was correct on that assumption, it is not a precedent against the contention of appellant, because this court has never so held, but has held directly to the contrary.
As stated, jurisdiction over the person, it appears may be based upon the presence of that person within a state as long as it is there. With respect to foreign corporations, a substitute for such presence is the doing of business in the state. No such ground exists as to appellant, unless we wish to abandon all of our precedents. Jurisdiction may be based upon consent of one to be subject to the jurisdiction of the state. No such ground exists as to appellant. No consent can be implied from the solicitation of orders by travelling salesmen, because the state could not prohibit appellant from doing this nor exclude appellant from this activity. It is interstate commerce. Jurisdiction may be based upon consent implied from the doing of an act which the state has the right to prohibit, except under such condition. Pennsylvania Fire Insurance Company v. Gold Issue Mining and Milling Company, 243 U.S. 93, 96; Realsilk Hosiery Mills v. City of Portland, 268 U.S. 325.
Jurisdiction to impose a personal liability may arise out of an activity in the state so substantially related to the obligation sought to be imposed that it may be said that the obligation grows out of the activity, as a reasonable incident thereof. International Shoe Co. v. Washington, 326 U.S. 310.
It is respectfully submitted that none of these grounds exists insofar as the application of the Mississippi Use Tax Statute to appellant is concerned.
If appellant by its activities is not now and has never been present in the state, it would seem clear that to give the Mississippi statute effect beyond its territorial borders, would be to exceed its territorial jurisdiction.
But it is said that the legislature has the power to define as a retailer "doing business in the State," one whose sole activity is the solicitation of orders in interstate commerce, and in support of this argument a number of cases are cited and discussed, as deemed to be analogous. It is, of course, true that a state, in the exercise of its sovereign power, may artificially define anything or any activity subject to its jurisdiction. It may declare that which is white to be black; but if "white" be beyond the territorial boundaries of the state, due process will void the definition; and if that which is interstate commerce be defined as a local activity, then such definition is voided by the commerce clause of the Federal Constitution. We think that when the cases are properly analyzed none of them will support the contention which is here urged by the appellee.
Stone v. Interstate Natural Gas Co., 103 F.2d 344; and Stone v. Memphis Natural Gas Co., 29 So.2d 268, affirmed 92 L.Ed. 1409, involved the Mississippi franchise tax law wherein the statute defined the term "doing business" as including "every act, power or privilege exercised or enjoyed in this state as an incident to or by virtue of the powers and privileges acquired by the nature of such organization."
In the first of these cases the Company had qualified to do business in the State, and by reason thereof enjoyed all of the rights and privileges given, and protection afforded to foreign corporations who had so been admitted to do business in the state. In the second case the Company had not so qualified, but it carried on extensive local activities in the maintenance, keeping in repair, and otherwise manning its 135 miles of pipe line and pipe line facilities in the State. And, so, although the statutory definition of "doing business" was an artificial one, yet the legislature in so defining the term, did not transcend its constitutional powers because no effect was made to tax except on account of rights and privileges conferred by the state, and protection afforded by it. As Mr. Justice Reed said in the Memphis Natural Gas Company case, this was a tax "on activities for which the state, not the United States gives protection."
Stone v. General Contract Purchase Corporation, 193 Miss. 301, 7 So.2d 806, and Stone v. General Electric Contracts Corporation, 193 Miss. 317, 7 So.2d 811, involved a statute levying a privilege tax upon those engaged in the business of purchasing evidences of indebetedness secured by liens on personal property in the State; the statute defining the words "doing business" as including "any and every act, power or privilege exercised or enjoyed in this State as an incident to or in connection with the lending of money, acquiring or owning notes or other forms of indebtedness secured aforesaid by liens on tangible personal property located in the State of Mississippi, which liens may be enforced or indebtedness collected under the laws and the government of this state."
In the General Electric Contracts Corporation case the company had no local office in Mississippi and the contracts for the purchase of the securities were consumated outside of the State; but its representatives checked the floor stocks of merchandise in the hands of the local dealers which were covered by its conditional sales contracts; its dealers were authorized to receive payments on installment accounts; and it had an agent, resident of the state, whose primary duty it was to make delinquent collections; and finally the lien, which gave the security its value, was on property located in the State, was protected by the laws of the State and could be enforced only in the courts of the State. The General Contract Purchase Corporation case disclosed facts of a substantially similar nature, and in addition, it maintained local offices in the State from which it carried on a distinctly local business. The court in each of these cases concluded that these local activities, so carried on, and so protected by the state, were of such a substantial nature as to obviate any constitutional objections, and justified the levying of a tax which was "enacted in return for something substantial given by the state and bears fiscal relation to protection, opportunities and benefits given by the State." (193 Miss. at 313).
International Shoe Co. v. Washington, 326 U.S. 310, 90 L.Ed. 95, presented primarily the question of whether, consistent with due process, the Shoe Company, by reason of its activities within the State, had rendered itself subject to suit therein for the recovery of State Unemployment Compensation taxes; and secondarily whether, consistent with due process, the state could levy those taxes. Any question as to interstate commerce was deemed disposed of by act of Congress authorizing the states to impose such unemployment taxes, although the employees involved might be engaged in interstate commerce.
The Shoe Company had no offices in Washington, maintained no stocks of merchandise in that state and no contracts for the sale or purchase of merchandise were consumated there, but all of its sales were in interstate commerce. However, for many years it had employed from eleven to thirteen resident salesmen, whose principal activities were confined to that state, and who, as a result of regular and systematic solicitation in the state over a long period of years caused a large and continuous flow of the Shoe Company's products into the State. In addition to the above the salesmen, on occasions, would rent permanent sample rooms at various places in the state for the purpose of exhibiting samples, and the rentals for such samplerooms were paid by the Company. Under these circumstances it was held that these activities were sufficient to establish the presence of the corporation within the state so as to subject it to suit, particularly since the tax obligation for which the suit was brought was incurred within the state by reason of those same activities.
The case is distinguishable from that at bar, for here the salesmen are not residents of Mississippi, their principal activities are not confined to that state, their solicitation was not systematic and continuous throughout a long period of years, and did not result in a large volume of business flowing into the state. Absent also are those additional local activities, as for example, furnishing by the company of permanent display rooms in the state, where the samples or merchandise were exhibited.
We submit that this case is not authority to sustain appellee's position; but if it is to be considered as authority then the case of Lee v. Memphis Publishing Co., 195 Miss., 264, 14 So.2d 351, must be overruled.
J.H. Sumrall, for appellee.
Since the attorney for the appellant in the opening statement in his brief positively states that the object of the suit is to challenge the constitutionality of the Mississippi Law, as same applied to the appellant, on the grounds of lack of due process of law and equal protection of the law imposing direct protection on Interstate Commerce contrary to the commerce clause of the Federal Constitution, I desire to call this court's attention to the following cases which foreclose the question as to the right of a sovereign state to impose certain obligations on non-residents deriving benefits from protection which the laws of the State give to its operations conducted within the State.
In the case of Stone v. Interstate Natural Gas Company, reported in 103 F.2d 544, the Circuit Court of Appeals of the Fifth Circuit, had under consideration the franchise tax law of Mississippi in which it was provided what activities by a foreign corporation Mississippi, would constitute "doing business" in contemplation of said law.
The term "doing business" was defined in said law, as follows: "When the term 'doing business' is used in this act, it shall mean and include each and every act, power, or privilege exercised or enjoyed in this state, as an incident to, or by virtue of the powers and privileges acquired by the nature of such organization, whether the form of existence be corporate, associate, joint stock company or common law trust."
In construing said definition, the court used the following language, after quoting that part of the law just quoted: "We come thus to interpret the Act of 1934 and to determine whether it may be applied to this Gas Company. The Supreme Court of Mississippi has not construed it or its predecessor of 1930; so we must make our own construction. . . . Under the common and natural meaning of these words a commercial activity would be understood, but the Legislature assigns a very artificial meaning to them, which includes not only any and every corporate act, but the exercise or enjoyment in the State of any power or privilege acquired by virtue of being so organized."
After further discussion by the Court of the various reasons why a sovereign should not be deprived of its rights to finance its necessary governmental functions, and to emphasize the right of the legislature body to define the activities by statute which should be regarded as subjecting the person so engaged to liability to the government, whose protection it could claim in support of its activities; and especially to positively declare the necessity for changing the old rule, on which immunity from taxation had been claimed, used the following language announcing the modern trend of the decisions of the courts on the subject: "The increasing social burdens assumed by our governments, both State and National, will require increasing and more searching taxation for their support. Any immunity from equal general taxation appears more and more inconvenient and unjust. The recent re-examination of the basis for such immunities has resulted in upheaval. The current of authority has been turned. For the judicial navigator the cases are no longer the beacons marking out a fixed if tortuous channel. He must for awhile fix his eyes anew upon the Constitution as the pole star of his firmament and steer his course rather by principle than by precedent."
The case of Stone v. Interstate Natural Gas Company, supra, was appealed to the Supreme Court of the United States and affirmed by that Court without an opinion, 308 U.S. 522.
In recognition of the principle announced in that case, this Court adopted the same rule as to the right of the Legislature to define the term "doing business," in contemplation of a statute imposing taxes upon activities it sought to tax, even by non-residents, in the case of Stone v. General Contract Purchase Corporation, 193 Miss. 301.
In upholding the right of the Legislature to define the term "doing business" as contemplated by an act imposing a tax on a non-resident for activities conducted in this state by agent, or otherwise, in construing a similar provision in Chapter 110, Laws of 1940, used the following language:
"All of the things necessary for the prosecution of a business need not take place within the state imposing a privilege tax thereon before the tax can be exacted. All that is necessary is that something be done or take place within the taxing state that is incident to or substantially connected with the prosecution of the business. State of Wisconsin v. J.C. Penney Co., 311 U.S. 435, 61 S.Ct. 346, 85 L.Ed. 267, 130 A.L.R. 1229. Neither the common law definition of what constitutes doing business nor that of former decisions of this court control here, for the legislature, as it had the right to do (Mathison v. Brister, 166 Miss. 67, 145 So. 358, 59 C.J. 1036), has set forth in the statute what is meant by the words 'doing business' and 'doing a business' and has said that they 'shall mean and include any and every act, power or privilege exercised or enjoyed in this state as an incident to, or in connection with, the lending of money, acquiring or owning notes or other form of indebtedness secured as aforesaid by liens on tangible personal property located in the State of Mississippi, which liens may be enforced or indebtedness collected under the laws and government of this state; and the enjoyment of any and every right or privilege as owner of such securities on account of which said act, right, power or privilege so exercised or enjoyed, the State of Mississippi can lawfully levy and collect a privilege tax.'"
This Court again subscribed to the same rule, that the legislature could define what constituted "doing business" in contemplation of a statute imposing taxes on any activity it saw fit to tax within the state, in the case of Stone v. General Electric Contract Purchase Corporation, 193 Miss. 317, the language of the court being as follows: "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, 193 Miss. 301, 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 Sec. 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 consumate 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."
A more recent case in which this Court has upheld the right of the state to impose a tax upon a non-resident based upon such activity within the state as it selects to constitute "doing business" in the sense contemplated by their terms of statute, and without reference to the meaning of that term as usually construed, when not defined by the terms of the statute under consideration, the case being that of A.H. Stone v. Memphis Natural Gas Company appealed from the Circuit Court of Hinds County and decided by this Court on February 24, 1947, in which this Court used the following language: "This statutory definition was first approved in the connection here involved as within the power of the State in Stone v. International Natural Gas Co., 103 F.2d 544, affirmed 308 U.S. 522. Subsequently, in a connection equally pertinent in principle, it was approved and sustained by this Court in Stone v. General Contract Purchase Corp., 193 Miss. 301, 312, and in Stone v. General Electric Contracts Corp., 193 Miss. 317; it being further held in the latter case that when the incidental local activities come within the definition, it would be immaterial that foreign corporation had no local agents, and has no office, and is not qualified to do any intrastate business in this State."
This case was appealed to the United States Supreme Court, and affirmed by that Court on June 21, 1948.
When this question is settled by our own court, then even the Supreme Court of the United States is bound by that conclusion, as announced by the Supreme Court of the United States in the case of General Trading Co. v. Tax Commission, 322 U.S. 335. The language of the Supreme Court on that question being: "Adjustment in favor of the Tax Commission by one of the lower courts was affirmed by the Supreme Court of Iowa, 233 Iowa 877; 10 N.W.2d 659. The application by that court of its local laws and the facts on which it founded its judgment are of course controlling here. From these it appears that General Trading Company had never qualified to do business as a foreign corporation in Iowa nor does it maintain there any office, branch or warehouse. The property on which the use tax was laid was sent to Iowa as a result of orders solicited by traveling salesmen sent into Iowa from their Minnesota headquarters. The orders were always subject to acceptance in Minnesota whence the goods were shipped into Iowa by common carriers or the post. Upon these facts and its holding that Trading Company was a 'retailer maintaining a place of business in this state' within the meaning of the Iowa statute, the Iowa Supreme Court held that Iowa had not exceeded its powers in the imposition of this use tax on Iowa purchasers, and that collection could validly be made through the Trading Company."
There are many cases in the books which might be added to the foregoing citations in which the various courts, including the Supreme Court of the United States, have upheld the right of a state to have jurisdiction over non-residents for certain purposes contemplated by a law having reference only to specific activities within such state.
One of the most recent cases, and a leading case on this subject is the case of International Shoe Company v. State of Washington, reported in 326 U.S. at page 310. The pertinent part of the decision of the Court in this case is set out in the following excerpts from the opinion, as follows:
"The questions for decision are (1) whether, within the limitations of the due process clause of the Fourteenth Amendment, appellant, a Delaware Corporation, has by its activities in the State of Washington rendered itself amenable to proceedings in the courts of that state to recover unpaid contributions to the state unemployment compensation fund exacted by state statutes, Washington Unemployment Compensation Act, Washington Revised Statutes, Sec. 9998-103a through Sec. 9998-123a, 1941 Supp., and (2) whether the state can exact those contributions consistently with the due process clause of the Fourteenth Amendment."
"The facts as found by the appeal tribunal and accepted by the State Superior Court and Supreme Court, are not in dispute. Appellant is a Delaware corporation, having its principal place of business in St. Louis, Missouri, and is engaged in the manufacture and sale of shoes and other footwear. It maintains places of business in several states, other than Washington, at which its manufacturing is carried on and from which its merchandise is distributed interstate through several sales units or branches located outside the State of Washington.
"Appellant has no office in Washington and makes no contracts either for sale or purchase of merchandise there. It maintains no stock of merchandise in that state and makes there no deliveries of goods in intrastate commerce. During the years from 1937 to 1940, now in question, appellant employed eleven to thirty salesmen under direct supervision and control of sales managers located in St. Louis."
"The authority of the salesmen is limited to exhibiting their samples and soliciting orders from prospective buyers, at prices and on terms fixed by appellant. The salesmen transmit the orders to appellant's office in St. Louis for acceptance or rejection, and when accepted the merchandise for filling the orders is shipped f.o.b. from points outside Washington to the purchasers within the state. All the merchandise shipped into Washington is invoiced at the place of shipment from which collections are made. No salesman has authority to enter into contracts or to make collections."
"The Supreme Court of Washington was of the opinion that the regular and systematic solicitation of orders in the state by appellant's salesmen, resulting in a continuous flow of the appellant's product into the state, was sufficient to constitute doing business in the state so as to make appellant amenable suit in its courts."
"It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. The test is not merely, as has sometimes been suggested, whether the activity which the corporation has seen fit to procure through its agents in another state, is a little more or a little less. St. Louis S.W.R. Co. v. Alexander, supra, 228; International Harvester Co. v. Kentucky, supra, 587."
"But to the extent that a corporation exercises the privileges of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. Compare International Harvester Co. v. Kentucky, supra, with Green v. Chicago, B. Q.R. Co. supra, and People's Tobacco Co. v. American Tobacco Co., supra. Compare Connecticut Mutual Co. v. Spratley, supra, 619, 620, and Commercial Mutual Co. v. Davis, supra, with Old Wayne Life Assn. v. McDonough, supra. See 29 Columbia Law Review, 187-195."
"Appellant having rendered itself amenable to suit upon obligations arising out of the activities of its salesmen in Washington, the state may maintain the present suit in personam to collect the tax laid upon the exercise of the privilege of employing appellant's salesmen within the state. For Washington has made one of those activities, which taken together establish appellant's 'presence' there for purposes of suit, the taxable event by which the state brings appellant within the reach of its taxing power. The state thus has constitutional power to lay the tax and to subject appellant to a suit to recover it. The activities which establish its 'presence' subject it alike to taxation by the state and to suit to recover the tax. Equitable Life Society v. Pennsylvania, 238 U.S. 143, 146; cf. International Harvester Co. v. Department of Taxation, 322 U.S. 435, 442 et seq.; Hoopeston Canning Co. v. Cullen, supra, 316-319; see General Trading Co. v. Tax Commission, 322 U.S. 335."
Under the authority of the language just quoted, and other cases cited, the legislature of Mississippi had the authority to designate "the taxable event by which the state brings appellant within reach of its taxing powers."
This is a suit to recover, in the manner provided by law, the sum of seventy-five dollars in Use Taxes paid, under protest, to the appellee, A.H. Stone, Chairman of the Tax Commission of Mississippi, by the appellant, Reichman-Crosby Company, non-resident corporation of Tennessee. A demurrer filed by the Tax Commission was sustained by the trial court to the declaration of the appellant, and upon failure of the plaintiff to amend, the suit was dismissed and final judgment was entered denying the recovery sought.
On this appeal the constitutional power and authority of the state to levy tax against the user of the tangible personal property purchased by residents of this state upon orders taken by the non-resident seller's travelling salesmen, who resided in Memphis where the orders were sent for acceptance or rejection, is not questioned.
The appellant challenges only the right of this state to require such a non-resident seller of tangible personal property to collect from its purchasers and pay the tax to the appellee "at the time of making sales," which are consumated at Memphis, Tennessee by delivery of the property to a common carrier for transportation to the purchasers in this state, since, according to the provisions of our Use Tax Law, it is declared that the tax "shall not apply with respect to the . . . use . . . of any article of tangible personal property sold . . . outside of this state until the transportation thereof has finally ended and such article has become commingled with the general mass of property within this state." Code 1942, Sec. 10148.
The power of the state to require the non-resident seller to act as its tax collector in the premises is further challenged on the ground that such seller in the case at bar is not doing business in this state under the principles announced by any prior decision of this Court where the seller has no office, place of business or resident agent in this state, and has not qualified to do business here under our laws, and has not appointed a resident agent for the service of process here, and is engaged in no local activity in Mississippi within the meaning of our previous decisions as to what constitutes doing business in this state; that is to say, the appellant questions the constitutional power and authority of the state to make a tax collector out of a non-resident seller over which it has no territorial jurisdiction, since the seller is not present here within the contemplation of our own legal jurisprudence and within the meaning of all the decisions of the Supreme Court of the United States, except that which was rendered in the case of General Trading Company, doing business as Minneapolis Iron Store v. State Tax Commission of the State of Iowa, 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309, which is deemed not to be controlling in the instant case for the reasons to be hereinafter stated.
The property for the use of which the tax was demanded and paid by the appellant is alleged in the declaration to have been sold on orders taken by the non-resident salesman, who were soliciting agents of the appellant, and which had been delivered to a common carrier at Memphis for transportation to purchasers residing in Mississippi, resulting in the completion of such sales in Tennessee.
The tax is levied against the user of the property in Mississippi, and our Use Tax Law, Chapter 120, Laws of 1942, Secs. 10146 to 10167, both inclusive, Code of 1942, provides that the same "shall not apply with respect to the . . . use . . . of any article of tangible personal property sold . . . outside of this state until the transportation thereof is finally ended and such article has become commingled with the general mass of property within the state . . ."
The act further provides that "Every person maintaining a place of business in this state and making sales of tangible personal property for use in this state, . . . shall at the time of making the sales . . . whether within or without the state, collect the tax imposed by this act from the purchaser . . . [and] receipt therefor in the manner and in the form prescribed by the commissioner if the commissioner shall, by regulation, require such receipt;" that "the term 'retailer maintaining a place of business in this state' or any similar term, shall mean and include any retailer, distributor, wholesaler or manufacturer . . . having or maintaining within this state . . . an office, distribution house, salesroom or house, warehouse or other place of business, or any agent operating within this state under the authority of the retailer, distributor, wholesaler or manufacturer . . ., irrespective of whether such place of business or agent is located within this state permanently or temporarily, or whether such retailer, distributor, wholesaler or manufacturer . . ., is admitted to do business within this state under its general laws." (Italics ours.)
The act assesses and levies by a general provision a tax upon "any person who uses, . . . any property upon which a tax, is herein imposed . . . upon which the tax has not been paid to the commissioner, as herein provided," and declares that such person shall be liable therefor and shall pay the tax upon notice and demand by the commissioner as therein provided.
The act also provides that, "The tax herein imposed, . . . in addition to being a tax against the property, business, trade or occupation, it shall constitute a debt due the state by the person owing the tax, or the person required or authorized to collect it." (Italics ours.)
It is further provided in the act that, "It shall be unlawful for any person subject to the provisions of this act to fail or refuse . . . to pay the tax herein imposed . . .;" and that "any person violating any of the provisions of this act shall be guilty of a misdemeanor, and on conviction thereof shall be fined not more than five hundred dollars ($500.00) or if he be an individual, imprisoned not exceeding six months in the county jail, or punished by both such fine and imprisonment, at the discretion of the court;" and it is further provided that anyone failing or refusing to comply with provisions of the act "may be proceeded against by injunction to prevent the continuance of his business in this state."
The use tax imposed is equal to two per cent of the purchase price of the property, and it does not apply where the property has already been included in the measure of our Two Per Cent Sales Tax Law or the sales tax imposed by some other state in an amount equal to or greater than such Use Tax.
It is declared that the primary purpose of the tax is "to protect, insofar as may be proved practicable the merchants, dealers, manufacturers . . . who meet the requirements of the Mississippi sales tax laws, against the unfair competition of importations of goods . . . into Mississippi without the payment of the retail sales tax imposed for the sale of goods, wares or merchandise usually carried for sale in this state . . ."
As hereinbefore stated, it is not contended that the tax is unconstitutional as against the user of tangible personal property purchased outside of the state over whom the state has jurisdiction and who enjoys the protection of its laws in the use and enjoyment thereof, but that as to the seller it is unconstitutional (1) for the reason that it violates the commerce clause as a burden on interstate commerce, in that the non-resident seller is required to become a surety or be responsible for the collection of the tax before any liability therefor has become fixed against the purchaser, and is not in a position to protect himself in the manner available to a local retail merchant in the state, who is able to collect the tax when the sale is being consummated by placing the goods back on the shelf if the purchaser fails to pay a two per cent sales tax; that is to say, that he must credit the purchaser and run the risk as to being reimbursed after the property comes to rest in this state and the liability of the user accrues, or he must forego making the sale; and (2) that he is denied the equal protection of the laws guaranteed by the Federal Constitution for the reasons stated under numeral No. one; and (3) that the requirement as to him violates the due process clause of the Federal Constitution, Amendment 14, in that although he is not present in the taxing state subject to its jurisdiction, he is required to take notice of the statutes of a foreign state at the time of making a sale in his own state and collect the proper amount imposed by the Use Tax Law, notwithstanding that such taxing state has not conferred upon him the right to engage in interstate commerce — a right guaranteed by the federal government, and which the state government is prevented from withholding, in the exercise of which right the law of the state affords no protection as a local activity.
It is unnecessary that we emphasize these contentions, because to merely state them is to show their correctness, unless their force is negatived by decisions of the Supreme Court of the United States, since under our own decisions a non-resident seller engaged exclusively in interstate commerce in the manner hereinbefore mentioned is neither subject to the state's taxing power nor to the state's jurisdiction to subject it to personal liability for failure to collect and pay a tax levied against the citizens of this state.
The right of a state to assess a Use Tax against a resident thereof for the use therein of property which has been transported to him in interstate commerce is clearly upheld by the Federal Supreme Court in the following cases:
Monamotor Oil Co. v. Johnson, 292 U.S. 86, 54 S.Ct. 575, 78 L.Ed. 1141; Henneford v. Silas Mason Co., 300 U.S. 577, 57 S.Ct. 524, 81 L.Ed. 814; Felt v. Tarrant Co. v. Gallagher, 306 U.S. 62, 59 S.Ct. 376, 83 L.Ed. 488; Nelson v. Sears, Roebuck Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. 888, 132 A.L.R. 475; Nelson v. Montgomery Ward Co., 312 U.S. 373, 61 S.Ct. 593, 85 L.Ed. 897; McLeod v. J.E. Dilworth Co., 320 U.S. 728, 64 S.Ct. 87, 88 L.Ed. 430; and General Trading Company v. Tax Commission, 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309. The above enumerated cases were cited in the majority opinion rendered in the General Trading Co. v. State Tax Commission, supra, to support the decision therein rendered.
In some of the cases above mentioned, the right of the state to require the Use Tax to be collected by the non-resident seller was not involved. In the case of Monamotor Oil Co. v. Johnson, supra, the oil distributor, who was required to collect the tax, had itself received the oil in the taxing state for distribution there, and the state, of course, had territorial jurisdiction to require it to collect and pay the tax. In Henneford v. Silas Mason Co., supra, the right to require the seller to collect and pay the tax was not involved. In Felt Tarrant Co. v. Gallagher, supra, the right to require the seller to collect the Use Tax was involved, but the non-resident seller had two general agents in two separate areas of the taxing state for whom it rented offices under leases in its own name, paying the rent therefor, and to which agents it shipped its comptometers for delivery to the respective purchasers there, and into which state it sent demonstrators for the machines; and the seller was therefore held to have maintained places of business within the state and to be doing business there.
In the cases of Nelson v. Sears, Roebuck Co., and Nelson v. Montgomery Ward Co., supra, the non-resident sellers were maintaining retail stores in the taxing state, and the precise question involved, was whether the sellers were required to collect and pay the Use Tax on its mail order business from customers throughout the state who did not purchase through the local stores. The right to require the seller to collect and pay the Use Tax was upheld (1) for the reason that the court considered that the mail order business was a part of the general business being done as a whole through its local stores and otherwise in the state; and (2) for the obvious reason that since the sellers were doing business in the state, they were subject to its territorial jurisdiction.
In McLeod v. J.E. Dilworth Co., supra, the Arkansas sales tax was held not to be collectible from a non-resident seller, on the ground that the sale made in Memphis on orders received from Arkansas was not taxable on account of the commerce clause. No Use Tax was involved, but the court distinguished a sales tax from a use tax by saying that the former is a tax on the freedom of purchase, while the Use Tax is a tax on the enjoyment of that which is purchased.
This review of these cases, which we think are clearly distinguishable from the case at bar, brings us to a consideration of the only case in the decisions of the Supreme Court of the United States which upheld the right of a state to require a Use Tax to be paid by a non-resident seller which was only shipping goods into the taxing state on orders taken by its travelling salesmen there and later filled by delivery of the articles to a common carrier at Minneapolis to be shipped to the purchasers in Iowa, and where the seller was not doing business in the taxing state within the meaning of the Mississippi decisions, but was doing business in Iowa according to a decision of the Supreme Court in that state. State Tax Commission of the State of Iowa v. General Trading Co., 233 Iowa 877, 10 N.W.2d 659, 153 A.L.R. 602; General Trading Co. v. State Tax Comm., 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309. Therein the state court had held that the General Trading Company was a "retailer" maintaining a place of business in Iowa under the same facts and circumstances as are present in the case at bar in regard to its method of conducting its interstate business. It had evidently so held on the sole ground that the legislature of Iowa had declared by statute that the term "'retailer maintaining a place of business in this state,' or any like term, shall mean and include any retailer having or maintaining within this state, . . ., an office, distribution house, sales house, warehouse or other places of business, or any agent operating within this state under the authority of the retailer . . ., irrespective of whether such place of business or agent is located here permanently or temporarily, or whether such retailer . . . is admitted to do business within this state." (Italics ours.) Code 1939, Sec. 6943.102, subd. 6. The distinction here is that the Supreme Court of the State of Mississippi has never held that a non-resident is a "retailer maintaining a place of business in this state" from the mere fact that it may have a soliciting agent operating within the state for the purpose of taking orders to be sent to his non-resident principal for acceptance or rejection and to be filled by shipments in interstate commerce where such non-resident seller maintains no office or other place of business here, and where such seller is engaged in no local activity under the protection of our laws, and where it is not qualified to do business within the state by appointing an agent for the service of process; that is to say, where it is not in fact doing business in this state in such a manner as to be present here. All of our decisions are directly to the contrary.
The provisions of our Use Tax Statute and those of the state of Iowa are substantially the same in all material respects, except that the Iowa statute does not contain the provision that the tax "shall not apply with respect to the . . . use . . . of any article of tangible personal property sold . . . outside of this state until the transportation thereof has finally ended and such article has become commingled with the general mass of property within this state . . ."
In the case of General Trading Company v. State Tax Commission, etc., supra [ 322 U.S. 335, 64 S.Ct. 1029], the majority opinion by the United States Supreme Court appears to have been influenced by the fact noted therein that "The application by that Court (Iowa) of its local laws and the facts on which it founded its judgment are of course controlling here. . . . Upon these facts and its holding that Trading Company was a 'retailer maintaining a place of business in this state' within the meaning of the Iowa Statute, the Iowa Supreme Court held that Iowa had not exceeded its powers in the imposition of this use tax on Iowa purchases, and that collection could validly be made through the Trading Company." (Italics ours.) The Supreme Court of Mississippi would not have held, as did the Iowa Court, that the state could require the trading company to collect and pay the taxes, since to do so would be contrary to all of the previous decisions of this Court as to what constitutes maintaining a place of business, or doing business in this state. Our decisions would have required that we should hold the question as what constitutes doing business in the state, territorial jurisdiction, and due process of law to be a judicial one, and that we were not bound by a legislative declaration or definition as to what would constitute doing business, territorial jurisdiction or due process of law, unless such declaration or definition was sanctioned or authorized by constitutional limitations.
In the case of Philadelphia Reading R.R. Co. v. McKibbin, 243 U.S. 264, 37 S.Ct. 280, 61 L.Ed. 710, the Court, speaking through Mr. Justice Brandeis, announced the rule to be as follows: "A foreign corporation is amenable to process to enforce a personal liability, in the absence of consent, only if it is doing business within the state in such manner and to such extent as to warrant the inference that it is present there."
The appellant in the case at bar was not doing business in this state and was not present here within the principles announced by this Court in the following cases: First National Bank v. Mississippi Cotton Seed Products Co., 171 Miss. 282, 157 So. 349; Item Co. v. Shipp et al., 140 Miss. 699, 106 So. 437; Smith et al. v. J.P. Seeburg Corporation, 129 Miss. 563, 6 So.2d 591; Stone v. General Contract Purchase Corporation, 193 Miss. 301, 7 So.2d 806, 140 A.L.R. 1029; Stone v. General Electric Contracts Corporation, 193 Miss. 317, 7 So.2d 811; A.H. Stone v. Memphis Natural Gas Co., 201 Miss. 670, 29 So.2d 268, affirmed 335 U.S. 80, 68 S.Ct. 1475; and the very recent case of Craig v. Mills, Miss., 33 So.2d 801. In the last four of the above cited cases, this Court upheld the right to collect an excise tax on the sole ground that the non-residents involved were engaged in local activities in this state and were enjoying rights here under our laws which were conferred and protected by the state. However, a non-resident does not get from the state its right to engage exclusively in interstate commerce.
It is true, of course, that a state in the exercise of its sovereign power may artificially define anything or any activity which is subject to its jurisdiction. But this Court held in the case of Lee v. Memphis Publishing Co., 195 Miss. 264, 14 So.2d 351, 152 A.L.R. 1428, that the defendant was not doing business in this state in such a manner as to be present and amenable to process and suit here, even though the legislature had declared that any corporation which "shall do any business or perform any character of work or service in the state shall by the doing of such business or the performance of such work or service" (italics ours) be deemed to have appointed the secretary of state as its agent for the service of process in any action growing out the doing of such business or the performance of such work. The said publishing company was engaged in distributing about forty thousand copies of its daily Commercial Appeals in this state, and even though its activities were immeasurably greater than those involved in the instant case, we held that it was not doing business here, notwithstanding the artificial definition given by the legislature and that to subject it to suit in the State of Mississippi would be denying due process of law.
If the courts of the state have no jurisdiction over the appellant, Reichman-Crosby Company, in the case at bar, then how can it be said that the legislature would have jurisdiction over it to require the performance of the duties sought to be imposed by our Use Tax statute? Tax statutes are enacted upon the theory that the taxing authorities may invoke the aid of the courts to enforce compliance therewith, if need be, but in the instant case if the appellant had declined to pay the tax on demand, we know of no power vested in the courts of this state to enforce collection thereof, together with the penalties sought to be imposed for such default.
The remedy provided by the Use Tax Law of enjoining the seller from continuing in business in this state is not available because it is not doing business here according to our decisions; nor can its agents be prevented from soliciting orders for the purchase and transportation of goods exclusively in interstate commerce, since the Commerce Clause of the Federal Constitution, article 1, Sec. 8, cl. 3, forbids the state taking such action. Moreover, the seller is not shown to have any property, or liens on property, located in this state that are protected by our laws for their enforcement, as in the cases of Stone v. General Contract Purchase Corporation, supra, and other like cases; and being engaged in no local activity here, the seller is not present within the jurisdiction of either the courts or the Legislature of this state.
The dissenting opinion of Mr. Justice Jackson, concurred in by Mr. Justice Roberts, in the case of General Trading Company v. State Tax Commission, supra, is at least a correct pronouncement of the law as applied to the case at bar where the Supreme Court of Mississippi has not construed its local laws in the manner in which the Iowa Supreme Court had construed its laws — a factor which the majority opinion in the General Trading Company case seems to have recognized as controlling there.
(Hn 1) We are, therefore, of the opinion that while our Use Tax Law is constitutionally valid as applied to the user in this state of tangible personal property purchased outside of the state, it is unconstitutional as to its requirement that the non-resident seller shall collect and pay the tax under the facts and circumstances of this case; and that, therefore, the trial court was in error in sustaining the demurrer which admitted the facts alleged in the declaration as to the appellant's sole method of doing business with its Mississippi customers, which was only in interstate commerce and involved no local activities, or its presence, such as to constitute doing business in this state, and that the case must therefore be reversed and remanded.
Reversed and remanded.
So far as I can see there is no substantial difference between this case and State Tax Comm. v. General Trading Co. (Iowa), and although I think that case was incorrectly decided, it does remove any federal impediment to the legislative definition which we have here before us; and there being no impediment to it in the State Constitution, I concur in what Judge Montgomery has said in his dissent.
This Court, in the decisions listed in the majority opinion, has heretofore, decided what does and does not constitute doing business in this State. In none of these cases had the Legislature defined what constituted doing business within the meaning of the act in question, and no decision was upon any such legislative definition.
In the case before us, the Legislature has, under Section 2 of Chapter 120, Laws of 1942, defined the term "retailer maintaining a place of business in this state" as follows:
"The term 'retailer maintaining a place of business in this state' . . . shall mean and include any retailer . . . having or maintaining within this state, directly or by a subsidiary . . . any agent operating within this state under the authority of the retailer . . . irrespective of whether such . . . agent is located within this state permanently or temporarily, or whether such retailer . . . is admitted to do business within this state under its general laws."
This legislative definition is contrary to the former holdings of this Court on what constitutes doing business within the State. What the Legislature says, as above set out, shall constitute doing business within the State, would not, under the former decisions of this Court, come within the meaning of that term.
Is the Legislature bound by the decisions of this Court as to what shall constitute doing business in the State, and is its power limited to the definitions prescribed by this Court? With all deference to my brethren, I think not.
The state Constitution is not a grant but a limitation on legislative power. The Legislature may enact any law not expressly or inferentially prohibited by the Constitution of the State or Nation. State v. Edwards, 93 Miss. 704, 46 So. 964; St. Louis S.F. Ry. Co. v. Benton County, 132 Miss. 325, 96 So. 689. Hence, the State Legislature has all political power not withheld by the State Constitution, or in conflict with the Constitution of the United States. Hinton v. Board of Supervisors of Perry County, 84 Miss. 536, 36 So. 565. Constitutional restriction by implication of the State's sovereign power to enact unlimited legislation for the public good is not favored, and the inhibition must appear plain and certain before it will be implied by the courts. Miller v. State, 130 Miss. 564, 94 So. 706; State v. Board of Supervisors of Grenada County, 141 Miss. 701, 105 So. 541. Where, as here, the State Constitution is silent on the subject of legislation, the Legislature is supreme so long as the act is not in conflict with the Constitution of the United States. State v. Speakes, 144 Miss. 125, 109 So. 129.
The majority opinion does not hold that there is any conflict between the act and any section of the State Constitution. It holds that the provision conflicts with the Federal Constitution. But in construing an identical act, the Supreme Court of the United States has held to the contrary in the case of State Tax Commission of the State of Iowa v. General Trading Co., 233 Iowa 877, 10 N.W.2d 659, 153 A.L.R. 602; General Trading Co. v. State Tax Comm., 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed. 1309, where it holds that such an act does not conflict with the Federal Constitution.
Where a question is Federal in its nature, the decisions of the Supreme Court of the United States are absolutely binding on the various state courts, and must be followed, regardless of the views of the latter courts, and even though such decisions are inconsistent with prior decisions of the state courts. 21 C.J. S, Courts, Sec. 206, p. 365; Chesapeake O. Ry. Company v. Martin, 283 U.S. 209, 51 S.Ct. 453, 75 L.Ed. 983. So the decisions of the Federal Court are binding as to the construction of the Federal Constitution. State of South Carolina v. Bailey, 289 U.S. 412, 53 S.Ct. 667, 77 L.Ed. 1292; 21 C.J.S., Courts, Sec. 206, p. 366, and cases there cited under Note 32.
There is nothing in the State Constitution to limit the power of the Legislature to act in this matter in the manner in which it has acted, and the Supreme Court of the United States has held in General Trading Company, etc., v. State Tax Commission of the State of Iowa, supra, that there is nothing in the Federal Constitution to restrict the power of the Iowa Legislature to so act and, it seems to me, therefore that the power of the Mississippi Legislature, as exercised, is supreme.
The effect of the majority opinion, in my humble judgment, amounts to a rejection of the decision of the Supreme Court of the United States in General Trading Company, etc., v. State Tax Commission of the State of Iowa, supra, and, as I comprehend the law, this Court does not have that power on a question of the construction of the Federal Constitution.