Opinion
14635.
OCTOBER 8, 1943.
Petition for injunction. Before Judge A. L. Etheridge. Fulton superior court. May 26, 1943.
Robert H. Jones and Grover Middlebrooks, for plaintiff.
E. H. Sheats, W. S. Northcutt, and Standish Thompson, for defendants.
When a non-resident corporation engaged in business in this State becomes the owner of accounts receivable arising out of the business conducted in this State, such credits or accounts receivable have a tax situs in the county wherein such business is conducted, notwithstanding the orders taken for merchandise sold in this State are filled, the shipments thereof made, the credit of the customers passed upon, and the books of account kept, at a point without the State of Georgia.
No. 14635. OCTOBER 8, 1943.
On November 27, 1942, Colgate-Palmolive-Peet Company, a Delaware corporation with its principal office at Jersey City, New Jersey, filed its equitable petition against the board of tax-assessors, the tax receiver, and the tax-collector of Fulton County, alleging, that the board of tax-assessors over the plaintiff's protest had added to the plaintiff's tax return for the years 1941 and 1942 an assessment of $30,000 each, to cover "notes and accounts receivable," alleged to be located in Fulton County; that on January 1 of the years in question it had no notes in Georgia or elsewhere arising from any sales made in Georgia; and that while it had accounts receivable arising from sales of merchandise to customers residing in Georgia and elsewhere, on orders solicited by salesmen operating out of plaintiff's Atlanta sales office, the accounts receivable had no tax situs in Georgia. The plaintiff prayed for injunction against collection of this tax. The defendants filed a joint answer to the petition, alleging that the accounts receivable were and are taxable in Fulton County, and were properly assessed. On the hearing the court refused to grant an injunction, and the plaintiff excepted.
The evidence and admissions disclosed the following facts: Colgate-Palmolive-Peet Company, a non-resident corporation, maintained in Atlanta, Fulton County, Georgia, a sales office in charge of a "divisional sales manager." Salesmen working out of this office solicited orders for merchandise on behalf of the plaintiff, as to both wholesale and retail trade in and out of Fulton County. The salesmen were required to send all orders to the Atlanta district sales office, and they were in turn forwarded to the Jeffersonville, Indiana, office to be approved and filled. No copies of the orders were retained by the Atlanta sales office. The salesmen's daily reports, kept at the Atlanta office, showed the customer's name, address, and amount of merchandise purchased, but the prices were not shown. The customer made payments directly to the Jeffersonville office. When a customer was in arrears, the salesman in whose territory the customer was located was notified, and he advised the customer that no further order would be accepted until the old account was paid; and it was the duty of the salesman to collect, if possible, the account in arrears. Customers in Fulton County consisted of about seven wholesale dealers, about three national chains, and six or seven hundred retail dealers. The policy of the company was to call on all retail outlets handling soap. When customers paid salesman their delinquent accounts, the salesmen sent the money directly to the Jeffersonville office. The soap products sold by the plaintiff were wrapped with a coupon redeemable by the customer in merchandise of various kinds. A store was maintained in Atlanta where these coupons could be exchanged by the customer for merchandise, a stock of which was kept on hand in the store. The company-owned premium store maintained in Atlanta was the only one in the southeastern territory. Mail-order redemptions were sent to Jersey City, New Jersey. These coupon premiums were offered as an inducement for customers to buy the plaintiff's products, and the salesmen were kept informed as to them. The plaintiff maintained an emergency warehouse in Atlanta, and the stock kept on storage in this warehouse was confined to "industrial items, items not sold to dealers for resale, such as hotel soap." The customer, if there was delay in filling his order, could procure a small emergency supply from this public warehouse, which warehouse was supplied by the Jeffersonville office with an approved list of such emergency accounts. The customers whose names appeared on this list could be supplied with emergency supplies without further authority from Jeffersonville. The Atlanta "sales promotional office" was responsible for hiring, training, and supervising the operation of salesmen and merchandising the products of the company. A bank account was established in Atlanta, for convenience in collecting checks from this territory. No one in Atlanta had authority to draw checks on this account. Salaries were paid by checks drawn at Jeffersonville on Jeffersonville bank accounts; expenses were paid by checks drawn against the Atlanta bank account by the Jeffersonville office. All books of account were kept and all accounting done at the Jeffersonville office. All credits were passed on by the Jeffersonville office, the salesmen furnishing that office with all information available when a new customer was obtained. When a customer's order amounted to a carload, the merchandise was shipped by rail directly to the customer. Orders less than carload lots were packed and marked as to each customer at Jeffersonville. A carload of these separately packed and marked packages was then shipped to one of five points in Georgia, Atlanta, Macon, Augusta, Savannah, and Columbus. All bills of lading were sent to Crackerland Express Inc., in Atlanta, a Georgia corporation. Upon arrival of the car that corporation unloaded it, and with trucks delivered the merchandise to customers at various points in Georgia. The various packages separately packed, and separately billed and marked when loaded at Jeffersonville, were then delivered by Crackerland Express to the customers as called for by the bills of lading received from the Jeffersonville office of Colgate-Palmolive-Peet Company. Signed delivery sheets were returned by Crackerland Express to Jeffersonville. If there were c. o. d. shipments, Crackerland Express collected the money on delivery, deposited the money to its credit, and then forwarded its check to Colgate-Palmolive-Peet Company at Jeffersonville. In case any of the merchandise was refused, Crackerland was obligated to provide warehouse storage for it until otherwise disposed of by Colgate-Palmolive-Peet Company; also "to provide suitable storage for the products between the time of unloading from the car and the time they are loaded on trucks for transportation to dealers." These services were rendered by Crackerland Express in accordance with the terms of a contract, and for the compensation therein stipulated.
It was conceded that all ad valorem tax due by the plaintiff for the years in question, other than this assessment for accounts receivable, had been paid.
The question for determination is the taxability in Fulton County, Georgia, of credits ("accounts receivable") arising in favor of a non-resident corporation by reason of sales of merchandise made to customers on open account upon the basis appearing in the statement of facts, as against the contention of the company to the effect that as to such property there was no business or tax situs in Fulton County. No question is raised as to the right of the proper taxing authorities to legally tax this class of property; likewise no question is raised as to the amount of the assessment. The only question to be determined is whether under the facts in this case this intangible property had such a tax situs in Fulton County, Georgia, that Fulton County could legally assess the same for taxation. The company contended that the tax situs was at the office of the company in Jeffersonville. The general rule in this State is that personalty, as respects its situs for purposes of taxation, follows the domicile of the owner. County of Walton v. County of Morgan, 120 Ga. 548 ( 48 S.E. 243); High Shoals Mfg. Co. v. Penick, 127 Ga. 504 ( 56 S.E. 648); Lewis Holmes Motor Freight Cor. v. Atlanta, 195 Ga. 814 ( 25 S.E.2d 699). The rule before 1868 was that the situs of all property for taxation, whether real or personal, was determined by the residence of the owner. County of Walton v. County of Morgan, supra. This general rule, however, is subject to exceptions recognized by this court in numerous instances. The exception may arise from the manner in which the property is used, how acquired or held. Armour Packing Co. v. Savannah, 115 Ga. 140 ( 41 S.E. 237); Armour Packing Co. v. Augusta, 118 Ga. 552 ( 45 S.E. 424, 98 Am. St. R. 128); Armour Packing Co. v. Clark, 124 Ga. 369 ( 52 S.E. 145). We recognize that the facts in the three cases just cited were in many particulars different from the facts in the case now under consideration. The principles there enunciated, however, are applicable to this case. The rule is now settled in this State, to the effect that intangible property, such as is involved in this case, can be taxed when it is connected substantially with some business transacted in Georgia by the non-resident owner. Suttles v. Northwestern Mutual Life Insurance Co., 193 Ga. 495 ( 19 S.E.2d 396, 143 A.L.R. 343).
Was the plaintiff engaged in business in Fulton County, and, if so, were the intangibles here sought to be taxed connected substantially with such business? In order to determine this question it is necessary to examine the acts performed, and things done in Fulton County with reference to whether or not they were the incidentals or essentials of the business. The sales agency, under the supervision and direction of a "divisional sales manager" was maintained in Fulton County, where the salesmen were trained and supervised. All sales were solicited from this office. The salesmen sent their orders into the Fulton County office and they were then sent to Jeffersonville. The salesmen were required to furnish to the home office at Jeffersonville credit information as to new accounts, and were charged with the duty of attempting to collect delinquent accounts, and they did collect delinquent accounts. An emergency warehouse was maintained in Fulton County; also a company-owned premium store, a bank account for the purpose of depositing local checks, local expenses being paid by checks drawn in Jeffersonville on these local accounts; all bills of lading were sent to Atlanta; and finally all deliveries were made by Crackerland Express Inc., operating out of Atlanta, Fulton County. The deliveries were made by Crackerland Express by means of trucks, all of which operated out of Fulton County, and were dispatched to either Savannah, Augusta, Macon, or Columbus, to make deliveries from carload shipments made by the plaintiff to those points. Crackerland Express collected c. o. d. shipments, deposited the money to its credit, and in turn mailed its check to the plaintiff at Jeffersonville. Warehouse facilities were provided by Crackerland for the storage of the plaintiff's products that were refused by customers. We hold that all of these activities amounted to doing business in Fulton County, and that they were the essentials of the business, and not the incidentals. If under the facts of the case a tax situs did exist in Georgia (and we hold that it did) as to the credits sought to be taxed, it would be immaterial whether they arose in interstate commerce, since the commerce clause does not exempt either tangible or intangible property from a non-discriminatory tax by a State. Suttles v. Northwestern Mutual Life Insurance Co., supra; Virginia v. Imperial Coal Sales Co., 293 U.S. 15 ( 55 Sup. Ct. 12, 79 L. ed. 171). A non-resident should not be permitted to go into another State and engage in the activities detailed in this case, and then escape the burden of taxation which his property ought to bear by invoking the fiction that intangible property has its situs where the owner resides. The credits here sought to be taxed have their real existence as to all practical purposes in Fulton County, Georgia. The owner is dependent upon the laws of this State for the protection of this property, and for the enforcement of its property rights therein. The owner should be required to pay taxes in order to help defray the expenses of the government protecting and enforcing his property rights. This court has repeatedly held that the mere fact of non-resident ownership and management will not avoid taxation in this State. Armour Packing Co. v. Savannah; Armour Packing Co. v. Augusta; Armour Packing Co. v. Clark; Suttles v. Northwestern Mutual Life Insurance Co., supra.
We hold that the property here sought to be taxed did have a tax situs in Fulton County, Georgia; and that the enforcement of the assessments in question would not be contrary to the guaranty of due process as expressed in either the fourteenth amendment to the constitution of the United States or the similar provision in the constitution of this State. Code, § 2-103. The court properly refused to grant an injunction.
Judgment affirmed. All the Justices concur.