Ficklen v. Taxing District of Shelby County

[Syllabus from pages 1-2 intentionally omitted]

STATEMENT BY MR. CHIEF JUSTICE FULLER.

Bill by Charles L. Ficklen and Charles Cooper and Edward M. Cooper, partners under the style of Cooper & Co., against the taxing district of Shelby county, Tenn., and Andrew J. Harris, as trustee thereof, to enjoin the collection of taxes. Decree for complainants, which was reversed in the state supreme court. Defendants bring error. Affirmed.

This was a bill filed in the chancery brokers, to the trustee $50.25 each, as Ficklen and Cooper & Co. against the taxing district of Shelby county and Andrew J. Harris, county trustee.

The bill alleged that complainants were 'commercial agents or merchandise brokers, located within the taxing district of Shelby county, where their respective firms rent a room for the purpose of keeping, and, at times, exhibiting their samples, and carrying on their correspondence with their respective principals. That they use no capital in their business. That they handle or deal in no merchandise, and are neither buyers nor sellers; they only engage in negotiating sales for their respective principals. They do precisely the same business that commercial drummers do; the only difference being that they are stationary, while the commercial drummers are transitory, and go from place to place, and secure a temporary room at each town or city in which to exhibit their samples. That each solicits orders for the sales of the merchandise of their respective principals, and forwards the same to them, when such orders are filled by shipping the goods direct to the purchasers thereof in the county of Shelby.'

It was then averred that all of the sales negotiated by complainant Ficklen were exclusively for nonresident firms, who resided and carried on business in other states than Tennessee, and all the merchandise so sold was in other states than Tennessee, where the sales were made, and was shipped into Tennessee, when the orders were forwarded and filled.

That at least nine tenths of the sales negotiated and effected by complainants Cooper & Co., and at least nine tenths of their gross commissions, were derived from merchandise of nonresident firms or persons, and which merchandise was shipped into Tennessee from other states after the sales were effected.

That section 9, c. 96, of the Act of 1881, of Tennessee, (made subsection 17 of section 22 of the Taxing District Acts, Taxing District Digest 50,) provides:

'Every person or firm dealing in cotton, or any other article whatever, whether as factor, broker, buyer, or seller on commission or otherwise, ($50) fifty dollars per annum, and, in addition, every such person or firm shall be taxed ad valorem (10 cts.) ten cents on every one hundred dollars of amount of capital invested or used in such business: provided, however, that, if such person or firm carry on the cotton or other business in connection with the grocery or any other business, the capital invested in both shall only be taxed once; but such person or firm must pay the privilege tax for both occupations: and provided, further, that if the persons taxed in this subsection have no capital invested, they shall pay 2 1/2 per cent. on their gross yearly commissions, charges, or compensations for said business, and at the time of taking out their said license they shall give bond to return said gross commissions, charges, or compensation to the trustee at the end of the year, and at the end of the year they shall make return to said trustee accordingly, and pay to him the said 2 1/2 per cent.'

Complainants charged that, as they were neither dealers, buyers, nor sellers, but only engaged in negotiating sales for buyers, they were not embraced within the meaning of said section, and further stated that they had each heretofore paid the privilege tax and the income tax, except for the year 1887, and had tendered the privilege tax of $50 and costs of issuing license for the year 1888, to the trustee, who refused to accept the same unless complainants would also pay the income tax for the year 1887.

From the bill and exhibits attached it appeared that complainants, in January, 1887, each paid the sum of $50 for the use of the taxing district, and executed bonds agreeably to the requirements of the law in that behalf, and received licenses as merchandise brokers within the limits of the district for the year 1887, and that in January, 1888, they tendered, as commercial brokers, to the trustee $50.25 each, as their privilege tax and charges for the year 1888, which he refused to accept because they refused to pay for the year 1887 2 1/2 per cent. upon their gross commissions derived from their business for the year 1887, although they executed bonds in January, 1887, to report said gross commissions.

Complainants charged that the law in question was in violation of the commerce clause of the constitution of the United States, and also of the constitution of Tennessee, and prayed as follows:

'That an injunction issue to restrain the defendants, or either of them, from instituting any suit or proceeding against them, or either of them, for the collection of said 2 1/2 per cent tax upon their respective gross commissions from their said business, or from issuing any warrant for their arrest for their failure to pay the same for the year 1887, and that defendants be also restrained from in any way interfering with them in the carrying on their said business for the year 1888; and upon final hearing they (the defendants) be restrained perpetually from collecting from them, or either of them, said 2 1/2 per cent. tax upon their said gross commissions from their said business, and from collecting said privilege tax of $50, and they pray for general relief, and will ever pray,' etc.

To this bill the defendants filed a demurrer, which was overruled by the chancellor, and, the defendants electing to stand by it, a final decree was entered, making the injunction perpetual in behalf of Ficklen as to the entire tax, including the $50; and, as to Cooper & Co., adjudging that they were legally bound to pay the sum of $50 and the tax of 2 and 1/2 per cent on their commissions, to the extent that those commissions were upon sales of property owned by residents of Tennessee, and perpetuating the injunction in all other respects.

From this decree the defendants prayed an appeal to the supreme court of the state, and that court decided that the act of the legislature in question was not in violation of the state constitution, and, further, that, 'inasmuch as it appears from the bill that the complainants at the beginning of the year 1887 applied for and received, respectively, license to carry on the business of commission brokers without qualification, and that they, the complainants, held said license throughout the year 1887, complainants were chargeable with the privilege tax, as fixed by the act aforesaid, without regard to the amount or character of the business carried on under said licenses or the places of residence of their principals, and that complainants must have reported and paid 2 1/2 per cent. on the gross commissions received by them during the year 1887 before they could have become entitled to licenses for the year 1888. * * * That when, at the beginning of the year 1888, the complainants applied for license as merchandise brokers, they were rightfully required (1) to report and pay 2 1/2 per cent. on their commissions received during 1887, and (2) to pay the fixed charge of $50, and give bond to report their gross commissions at the end of the year 1888. * * * That the said act is not, as to these complainants, violative of article 1, § 8, of the constitution of the United States, by which the power to regulate commerce between the states is conferred upon the congress of the United States; and * * * that complainants, having applied for, accepted, and held for and during the year 1887 unqualified license as commission brokers, and having applied for the same unqualified license for the year 1888, cannot question the validity of the said act as being in conflict with said provisions of the constitution of the United States, for that the said complainants were not entitled to the said license upon the facts stated in the bill, whether the business actually done and theretofore conducted by them was or was not exonerated from said privilege tax under the said provision of the federal constitution.'

The decree of the chancellor was accordingly reversed, and the demurrer sustained, and the bill dismissed, whereupon a writ of error was taken out from this court.

[Argument of Counsel from pages 7-14 intentionally omitted]

Henry Craft and W. Hallett Phillips, for plaintiff in error.

S. P. Walker, for defendants in error.

[Argument of Counsel from Pages 14-19 intentionally omitted]

Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.