Opinion
17070.
MAY 8, 1950.
Injunction, etc. Before Judge Whitman. Fulton Superior Court. January 28, 1950.
Durwood T. Pye, E. A. Wright, James W. Dorsey, and W. S. Northcutt, for plaintiff in error.
MacDougald, Troutman, Sams Schroder, and John L. Gushman, contra.
Alston, Foster, Sibley Miller, and Francis Shackelford, for persons at interest.
Where the undisputed evidence shows that accounts receivable owned and held by a non-resident corporation arose out of sales of goods made to residents of this State on orders taken by agents of the seller who maintained offices within this State, but which orders expressly provided that they were subject to approval by the home office, that title to any goods sold thereunder would pass to the purchaser upon delivery to the common carrier outside of Georgia, and that no business was conducted in this State, a verdict in favor of the owner, seeking to enjoin the collection of the tax on such accounts, was demanded.
No. 17070. MAY 8, 1950.
This is a suit by Owens-Illinois Glass Company to enjoin T. E. Suttles, Tax Collector of Fulton County, Georgia, from collecting 1941 State and County taxes assessed against its accounts receivable.
On the trial the undisputed evidence was as follows: The company is engaged in the manufacture and sale of glass products, and has manufacturing plants in eight or more States, but none in Georgia. The Home Office is at Toledo, Ohio. There the directors meet, dividends are declared, the corporate records are kept, and other general corporate functions are performed. General policies regarding sales and all contracts of sales are made at the Home Office, and all orders are subject to acceptance or rejection there. It is necessary that such decisions be made alone by the Home Office, for the various glass furnaces must be kept running twenty-four hours per day, and to do this one authority must be empowered to reject or accept offers to buy, since the orders must be of such design, quantity, and color in order to keep the different furnaces on full production. In addition, the Toledo Office has various departments such as the Credit and Traffic Departments. The Credit Department procures its information and passes upon all credit sales. The sales agents are not allowed to collect accounts, nor are they consulted about the customer's credit. Purchasers are requested by the invoices to remit to Toledo, and salesmen are not allowed to accept payments. The Traffic Department routes all shipments. The company pays freight only at carload rates and, where there are less than carload orders, it combines them in pool-car shipments in order to save the buyer freight costs. In Atlanta these pool-car shipments are consigned to Southern Transfer Company, which opens the cars, notifies the local customers, and checks out the merchandise to the buyers; and for this service the company pays Southern Transfer. But all deliveries made by Southern Transfer of the merchandise to the buyer's place of business is done under private contract between the transfer company and the buyer, for which the buyer pays and the seller has no connection. The petitioner maintained two offices in Atlanta — a Sales Office of the Container Division, and an office of the Insulux Products Division. The function of the Sales Office was to solicit orders throughout the territory, obtain information with respect to the design of glassware desired by the customer, the quantity and colors of that particular design, and pass this on to Toledo for acceptance or rejection. Seasonal contracts to make definite deliveries on an estimated quantity of beverage bottles, dairy containers, or other groups of specialized merchandise were also solicited by the Sales Office, but all contracts were subject to acceptance at the Home Office in Toledo. The Office of the Insulux Products Division was in the charge of a Southeastern representative, whose duties were: to select distributors of the company's building merchandise in the territory, submitting distribution contracts to the Toledo Office for approval of local distributors; to call upon local architects, engineers, and builders to educate them in the use of glass products; and to promote otherwise the products of this division of the company. One of the local distributors, The Warren Company, a Fulton County corporation, at all times carried adequate stocks of Insulux glass block and accessories, in accordance with its contract with the company, for the purpose of giving prompt and efficient service to dealers, contractors, and owners who purchased within its territory.
At the trial of the case, several witnesses were called to outline the business activities of the company, and numerous exhibits in the form of blank order and contract forms were submitted in evidence. The evidence as given was similar to the brief outline stated above, with particular explanation of the conduct of the business in Toledo, the operation of the two Atlanta offices, the handling of freight by Southern Transfer Company in Atlanta, and the method of distribution of the glass products of the company through one of its local distributors, The Warren Company. This evidence was undisputed, and there was no conflict in the testimony of the various witnesses.
After the introduction of all the evidence, the jury, at the direction of the court, returned a verdict in favor of the plaintiff. Thereupon the defendant filed a motion for new trial, which was later amended by adding several additional grounds, and thereafter overruled; and the exception is to that judgment.
While tangible property is taxable in the State where it is located, and generally intangibles are taxable in the State where the owner resides, yet there is an exception to this general rule regarding intangibles. That exception is that a debt of a citizen of this State owned by a nonresident and held at his domicile outside of this State is taxable in this State if it accrues out of or is an incident to property owned or a business conducted by the non-resident or his agent in this State. Armour Packing Co. v. Savannah, 115 Ga. 140 ( 41 S.E. 237); Armour Packing Co. v. Augusta, 118 Ga. 552 ( 45 S.E. 424); Armour Packing Co. v. Clark, 124 Ga. 369 ( 52 S.E. 145); Columbus Mutual Life Insurance Co. v. Gullatt, 189 Ga. 747 ( 8 S.E.2d 38); Suttles v. Associated Mortgage Cos., 193 Ga. 78 ( 17 S.E.2d 272); National Mortgage Co. v. Suttles, 194 Ga. 768 ( 22 S.E.2d 386); Davis v. Metropolitan Life Insurance Co., 196 Ga. 304 ( 26 S.E.2d 618); Davis v. Penn Mutual Life Insurance Co., 198 Ga. 550 ( 32 S.E.2d 180); Northwestern Mutual Life Insurance Co. v. Suttles, 201 Ga. 84 ( 38 S.E.2d 786); Davis v. Penn Mutual Life Insurance Co., 201 Ga. 821 ( 41 S.E.2d 406). These decisions of this court should put at rest any question as to the tax situs of intangible property. The same rule applies in the Federal jurisdiction. Wheeling Steel Corp. v. Fox, 298 U.S. 193 ( 56 Sup. Ct. 773, 80 L. ed. 1143). It was also recognized and applied in the following cases by State courts: Tax Commission v. Kelly-Springfield Tire Co., 38 Ohio App. 109 ( 175 N.E. 700); W. W. Kimball Co. v. Board of Comm'rs, Shawnee County, 99 Kansas 302 (161 P. 644); Manufacturers' Trust Co. v. Hackett, 118 Conn. 101 ( 170 A. 792); State ex rel Automobile Ins. Co. v. Gehner, 320 Mo. 702 ( 8 S.W.2d 1057). It was held in Wheeling Steel Corp. v. Fox, supra, that to tax intangibles contrary to the tax-situs rule stated above would constitute a denial of due process and would offend the Fourteenth Amendment. In Montag Bros. v. State Revenue Commission, 50 Ga. App. 660 ( 179 S.E. 563), that court, applying the rule, held that the tax situs of intangibles owned by a Georgia corporation was in this State, where all decisions were made and sales consummated, notwithstanding the fact that the owner maintained agents and an office in the State of New York, where orders were taken subject to approval by the home office in Georgia. That decision is important here on the question as to what constitutes doing business from which the intangibles sought to be taxed arose. In reverse order it is a dead parallel to the facts in the instant case. Here the owner maintained its main office in another State, had agents and offices in this State, where orders were taken by those agents subject to approval at the main office, but no sales were concluded in this State. All goods were shipped under directions from the main office from points without this State and, by express terms of the sale, title passed to the purchasers when the goods were delivered to the common carrier and before reaching this State. If we are to follow the decision of the Court of Appeals, it would require a holding that the accounts receivable arising from such sales were not subject to taxation in Georgia, but were subject to taxation in the State where the main office of the company is located and where the sales were made.
The Tax Collector cites, in support of his position, Suttles v. Northwestern Mut. Life Ins. Co., 193 Ga. 495 ( 19 S.E.2d 396, 143 A.L.R. 343), Colgate-Palmolive-Peet Co. v. Davis, 196 Ga. 681 ( 27 S.E.2d 326), and Northwestern Mutual Life Ins. Co. v. Suttles, supra. An examination of these decisions shows that in each case this court fully recognized this rule of law, but reached the conclusion that the property there was subject to taxation in this State because the facts were construed to constitute doing business within the State out of which the intangibles involved arose. It was held in the Northwestern Mutual case, on both appearances, that the maintenance of offices and agents within this State that procured applicants for the loans and delivered the checks to the borrowers constituted consummation of the transaction and, hence, doing business within the State as required by the rule. In the Colgate-Palmolive-Peet case, the non-resident maintained agents and a warehouse within this State, and goods stored in the warehouse were used for the purpose of filling orders from which the intangibles there involved arose. Thus it is seen that in each of the three cases this court found that deliveries were made within this State. The plain language of the contract of sale in the present case, which expressly states that title passes to the purchaser upon delivery to the carrier outside this State, is enough within itself to show the inapplicability of those decisions.
Counsel for the Tax Collector also cite, in support of their position, McGoldrick v. Berwind-White Co., 309 U.S. 33 ( 60 Sup. Ct. 388, 84 L. ed. 565). There it was held that accounts receivable arising from the sale of coal by a non-resident were subject to tax in the State of New York. It is stated in the opinion that the sales there were made in the State of New York, and, while that was not an intangible-tax case but one of a tax on sales, the facts as stated by the court would have been sufficient to have authorized the State of New York to subject the accounts receivable to the payment of intangible taxes under the rule which this court has uniformly applied. In Wheeling Steel Corp. v. Fox, supra, the right of the taxing authorities in West Virginia to subject intangible property belonging to a Delaware corporation to the payment of taxes was upheld. In that case an office was maintained in the State of Delaware, in accord with provisions to that effect in the bylaws, and duplicate copies of orders and sales were kept on file in the Delaware office. But an office was also maintained in West Virginia, and it was in that office that the business was directed, all decisions as to sales were made, and the directors and stockholders held their meetings. None of the sales from which the intangibles involved arose were made without the approval of the West Virginia office.
Since the above decisions are sufficient to settle the question as to the taxability of the intangibles here involved, we deem it unnecessary to consider or discuss numerous decisions cited by counsel which involve sales taxes, unemployment-compensation taxes, venue of suits, and, perhaps, other subjects. We have examined all such cases and find nothing in any of them that conflicts with or militates against our holding that the property involved in this case was not subject to the tax claimed. The evidence demanded the verdict in favor of the petitioner, and, since all of the purported amended grounds are merely arguments and elaborations of the general grounds, the court did not err in overruling the motion for new trial as amended.
Judgment affirmed. All the Justices concur.