Opinion
1 Div. 372.
June 25, 1940. Rehearing Denied August 6, 1940.
Appeal from Circuit Court, Mobile County; J. Blocker Thornton, Judge.
Action to recover license or privilege tax by the State of Alabama against W. M. Meador Co., Inc. From a judgment for defendant, plaintiff appeals.
Reversed and rendered.
Certiorari denied by Supreme Court in State v. W. M. Meador Co., 198 So. 166.
The agreed statement of facts is (omitting exhibits) as follows:
W. M. Meador and Company, Inc., hereinafter referred to as the defendant, is a corporation organized under the laws of the State of Alabama; during the month of March, 1926, and since that time has been qualified to do and has been doing business in the State of Alabama. The defendant is engaged in business at 104 North Commerce Street in the City of Mobile, Alabama, a city of over 50,000 population, renting the premises from W. M. Meador, who is the owner thereof. W. M. Meador is the principal stockholder in the defendant. The defendant has been engaged in business at the above address since the year 1936, and prior to that time was engaged in business in the City of Mobile as far back as March, 1926. On the front of the above-described premises there appears a sign designating the occupant thereof as "W. M. Meador and Company, Inc., Merchandise Brokers."
Defendant is engaged in business negotiating contracts for the purchase of staple groceries, canned goods, and a general line of foodstuff between purchasers in Mobile, Alabama, and sellers, hereinafter referred to as principals, located both within and without the State of Alabama, as more fully appears from examples set out hereinafter.
The defendant holds itself open as negotiating contracts only with bona fide wholesale grocers, and the principals so represented by it. The defendant represents definite and certain principals and a list of those principals, together with the products which they manufacture or process, is hereinafter set out.
The defendant does not hold itself open as willing to represent any principals unconditionally, but will only represent such principals as are satisfactory to it and, as a matter of fact, constantly refuses to represent new principals.
Any order for merchandise secured by the defendant is subject to approval by the principal. The orders secured by the defendant are secured without the use of samples, except when samples are demanded by customer.
The remuneration received by defendant for its services is a commission based on the sales price, which is paid to it by the principal and remitted during the month after the sale and shipment of the merchandise was made. The defendant receives no remuneration other than these commissions.
If defendant procures an order or orders for less than a carload lot of a commodity, on which the freight rate would be lessened by the shipment of a carload lot, the defendant will send in an order for a carload shipment of the particular commodity and the carload will be shipped to the particular jobber who has the largest portion of such car, or to the defendant. The defendant attempts to dispose of the unsold portion of the carload prior to the arrival of the shipment, and in the majority of cases is able to do so. If an order is not procured for the unsold portion of the merchandise by the defendant prior to its arrival, it will be stored by it and subsequently sold.
In all cases the merchandise ordered is shipped from the plant of the principal to the purchaser.
Defendant procures from persons, firms or corporations, located in Mobile County, Alabama, orders for the merchandise manufactured and distributed by its principals, a list of said principals, together with the merchandise manufactured or distributed by them and the location of their plant being attached hereto, marked "Exhibit X", and made a part hereof. The orders so secured are directed to these principals and are forwarded by the defendant to such principals. If the order is accepted, the principal will then ship the merchandise so ordered directly to the purchaser and bill the purchaser therefor. The defendant is paid a commission on all orders accepted by its principals and as a general rule is paid such commission during the month following the sale and shipment. The following is an example of the nature of the business engaged in by the defendant:
Heretofore defendant called on Delchamps Grocery Company, a corporation, doing a wholesale grocery business in the City of Mobile, Alabama, and secured an order from it for pickles. A copy of said order is hereto attached, marked "Exhibit A", and by reference made a part hereof as though the same were set out herein. This order was then sent directly to W W Pickle Canning Company, a principal, located in the City of Montgomery, Montgomery County, Alabama. The said pickles so ordered were then shipped directly to said Delchamps Grocery Company and an invoice was sent to said Delchamps Grocery Company, a copy of which invoice is hereto attached, marked "Exhibit B", and by reference made a part hereof as though the same were set out herein. For these services, defendant was paid a commission by said W W Pickle Canning Company. The amount of the commission was ascertained and remitted at the end of the month following the sale and shipment, along with the other commissions due defendant for other sales made by it for said principal during said month. Defendant receives no fixed salary from W W Pickle Canning Company, nor is it paid any remuneration other than the commissions earned by it for sales made for said principal.
The above procedure is also followed by defendant doing business for the principals located without the State of Alabama, as illustrated by the copy of the order and a copy of the invoice which are attached hereto and marked Exhibits C and D, respectively.
That the defendant is engaged in business in Mobile County, Alabama, and that if it is subject to the license claimed in the complaint, it is liable for a license for the year beginning October 1, 1934, and for each year thereafter, ending with the year October 1, 1938, at the rate of $75 per year with interest; and that if it is subject to the license claimed in the complaint, it is liable for a penalty of $11.25 as to each of the years above mentioned; and that if it is subject to the license claimed in the complaint, it is liable for the additional sum of $7.50 due from it for citation fees claimed in count six of the complaint; and that if it is subject to the license claimed in the complaint, it is liable for an additional sum of $3 for the issuance of the license in question.
Thos. S. Lawson, Atty. Gen., and John W. Lapsley and J. Edw. Thornton, Asst. Attys. Gen., for appellant.
One engaged in business negotiating contracts for the sale and purchase of commodities is a commission merchant or merchandise broker. Rev. Code 1935, § 348, schedule 29, Gen.Acts 1935, pp. 256, 450; Stratford v. Montgomery, 110 Ala. 619, 20 So. 127; Portsmouth C. O. Co. v. Madrid C. O. Co., 195 Ala. 256, 71 So. 111; Perkins v. State, 50 Ala. 154; 12 C.J.S., Brokers, pages 5, 9, §§ 1, 4; 8 Am.Jur. 989, § 2. Non-discriminatory licenses imposed in the buyer's state are not inconsistent with the congressional power to regulate commerce among the several states. Hinson v. Lott, 8 Wall. 148, 19 L.Ed. 387; Western Live Stock v. Bureau, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944; McGoldrick v. Berwind-White C. M. Co., 309 U.S. 33, 60 S.Ct. 388, 84 L.Ed. 565, 128 A.L.R. 876; Graybar Elec. Co. v. Curry, 238 Ala. 116, 189 So. 186, affirmed 308 U.S. 513, 60 S.Ct. 139, 84 L.Ed. 437, 308 U.S. 638, 60 S.Ct. 259, 84 L.Ed. 530; Curry v. Feld, 238 Ala. 255, 190 So. 88. General statutes should not be construed in such a way as to render the statute unconstitutional. Lee v. Cunningham, 234 Ala. 639, 176 So. 477; Clark v. State, 4 Ala. App. 202, 59 So. 236; Ex parte State, 180 Ala. 529, 61 So. 901; Singer S. M. Co. v. Brickell, 233 U.S. 304, 34 S.Ct. 493, 58 L.Ed. 974, 975; Kehrer v. Stewart, 197 U.S. 60, 25 S.Ct. 403, 49 L.Ed. 663; Raley Bros. v. Richardson, 264 U.S. 157, 44 S.Ct. 256, 68 L.Ed. 615; Armour Pkg. Co. v. Lacy, 200 U.S. 226, 26 S.Ct. 232, 50 L.Ed. 451.
Marion R. Vickers, of Mobile, for appellee.
Appellee was not engaged in business as a commission merchant or merchandise broker, and is, therefore, not liable for the license levied by Section 348, schedule 29 of the Revenue Code of 1935 (Gen.Acts 1935, pp. 256, 450). Stratford v. Montgomery, 110 Ala. 619, 20 So. 127. Appellee is engaged in both interstate and intrastate commerce, and the license tax is levied indiscriminately on both. It is, therefore, unconstitutional and void, being in violation of Article 1, section 8 of the United States Constitution which, in effect, prohibits the various states from interfering with interstate commerce. Stratford v. Montgomery, supra; Robbins v. Taxing District, 120 U.S. 489, 502, 7 S.Ct. 592, 30 L.Ed. 694; Stockard v. Morgan, 185 U.S. 27, 22 S.Ct. 576, 46 L.Ed. 785; Leloup v. Port of Mobile, 127 U.S. 640, 8 S.Ct. 1380, 32 L.Ed. 311; Williams v Talladega, 226 U.S. 404, 33 S.Ct. 116, 57 L.Ed. 275; Pennsylvania R. Co. v. Clark Bros. Coal Co., 238 U.S. 456, 35 S.Ct. 896, 59 L.Ed. 1406.
This was a suit by the State — unsuccessful in the court below — seeking to recover of defendant, appellee, the privilege license levied by Section 348, Schedule 29, of the Revenue Code of 1935. Gen.Acts Ala. 1935 pp. 256, 450.
The case was tried upon an agreed statement of facts, incorporated in the bill of exceptions sent up here.
From this statement of facts, it is plain enough that appellee is a "merchandise broker" within the meaning of the language of the above Schedule 29 of Section 348 of the Revenue Code of 1935. Stratford v. City Council of Montgomery, 110 Ala. 619, 20 So. 127.
Of course if it is a "merchandise broker" engaged solely in interstate commerce no license may be exacted of it by the State. Stratford v. City Council of Montgomery, supra; Stockard v. Morgan, 185 U.S. 27, 22 S.Ct. 576, 46 L.Ed. 785; Art. 1, Section 8, clause 3, Constitution of the United States. And our Revenue Code, above cited, will not be construed as undertaking to do so. Hill v. State, 27 Ala. App. 573, 176 So. 805, certiorari denied by Supreme Court in 235 Ala. 8, 176 So. 806.
But appellee, admittedly, was engaged as a "merchandise broker" in intrastate business, as well as in interstate business. And the law that governs, applicable in all respects under the facts agreed upon, is correctly epitomized in the second and third headnotes — fully supported by the opinion — to the report in 14 So. 588, of the case of Osborne v. State, 33 Fla. 162, 14 So. 588, 25 L.R.A. 120, 39 Am. St. Rep. 99, decided by the Supreme Court of Florida. They follow, to-wit:
"A state statute which imposes a tax, in general terms, on the doing of specified kinds of business, or the pursuit of designated occupations, in the state, and requires that a license shall be taken out before any such business or avocation shall be done or engaged in, should not be construed to apply to any business of the kind that may constitute interstate commerce, but only to business that is domestic or state commerce, and to persons engaged, or intending to engage, in such domestic or state business.
"Although interstate commerce cannot be taxed or regulated by state legislation, and the commerce clause of the federal constitution exempts all such commerce from regulation or taxation by state authority, yet the doing of business that constitutes interstate commerce, by a person who is also, at the same time, engaged in business of the same kind that constitutes state or local commerce, cannot be made a bar or exemption of the local or state commerce business from taxation or regulation by state authority."
And see, as confirming the matter quoted, F. R. Osborne, Plff. in Err., v. State of Florida, 164 U.S. 650, 17 S.Ct. 214, 215, 41 L.Ed. 586.
Approvingly, Mr. Justice Peckham, speaking for the Supreme Court of the United States, in the case last next above cited, said of the quoted matter under consideration: "The supreme court of Florida has construed the ninth section of this act, and has held in express terms that it does not apply to, or affect in any manner, the business of this company, which is interstate in its character; that it applies to and affects only its business which is done within the state, or is, as is termed, 'local' in its character; and it has held that under that statute, so long as the express company confines its operations to express business that consists of interstate or foreign commerce, it is wholly exempt from the legislation in question. It has added, however, that under the provisions of the statute, if the company engage in business within the state of a local nature, as distinguished from an interstate or foreign kind of commerce, it becomes subject to the statute so far only as concerns its local business, notwithstanding it may at the same time engage in interstate or foreign commerce. In other words, this statute, as construed by the supreme court of Florida, does not exempt the express company from taxation upon its business which is solely within the state, even though at the same time the same company may do a business which is interstate in its character, and that as to the latter kind of business the statute does not apply to or affect it. As thus construed, we have no doubt as to the correctness of the decision that the act does not in any manner violate the federal constitution."
The above illustrates the situation here. And there appears no reason why the State should not recover the privilege license in question.
The judgment of the lower court is reversed; and one is here entered in favor of the State for the amount claimed.
Reversed and rendered.