Nelson v. Montgomery Ward & Company/Opinion of the Court

The issue in this case is identical with that in Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. --, No. 255, decided this day. Respondent is an Illinois corporation authorized to do business in Iowa. Respondent operates retail stores and mail order houses throughout the United States. It has 29 retail stores and several order offices in Iowa. It collects the Iowa tax on sales made at the retail stores and on sales handled by those order offices. But it has refused to collect the tax on orders sent directly from Iowa customers to its out of state mail order houses and filled by direct shipments through the mails or a common carrier to the purchasers in Iowa. Respondent, in seeking an affirmance of the judgment of the Iowa Supreme Court (Montgomery Ward & Co. v. Roddewig, 228 Iowa, 1273, 292 N.W. 142) which held that the Iowa Use Tax, Code Iowa 1939, § 6943.102 et seq., as applied to these mail orders is unconstitutional, makes substantially the same arguments as were advanced in Nelson v. Sears, Roebuck & Co., supra. Distribution of catalogues in Iowa apparently involves no act of respondent or its agents within the state. There was testimony that no employee of the mail order houses lives in Iowa; that there are no acts of respondent in Iowa in regard to any of the orders sent to the out of state mail order houses; and that respondent has no machinery for collecting sums due from Iowa customers by individuals within the state, it not being the practice of respondent to refer its delinquent mail order accounts to its retail stores in Iowa for collection. Those facts are immaterial. Some of respondent's employees are in Iowa representing it in the course of business which it is conducting pursuant to its permit to do business in that state. The fact that other of its employees who work in the mail order houses and handle the mail orders here involved are not in Iowa is wholly irrelevant. It does not permit respondent to escape the burden which Iowa has exacted as a price of enjoying the full benefits flowing from its aggregate Iowa business. Nelson v. Sears, Roebuck & Co., supra.

There is a further fact in this record which makes a reversal of this judgment necessary. It was stipulated that 'advertisements have been caused to be printed by the retail stores of the petitioner (Montgomery Ward and Co.) in the State of Iowa, advertising not only retail merchandise, but the ability to complete service through the use of the catalog.' This stipulation clearly means that respondent has solicited mail order sales in Iowa. The fact that that solicitation was done through local advertisements rather than directly by local agents as in Felt & tarrant Mfg. Co. v. Gallagher, 306 U.S. 62, 59 S.Ct. 376, 83 L.Ed. 488, is immaterial. Nor is it material that the orders were filled by direct shipments from points outside the state to purchasers within the state. For that method of delivery also obtained in case of some of the orders involved in Felt & Tarrant Mfg. Co. v. Gallagher, supra.

The effect of admitted facts is a question of law. Swift & Co. v. Hocking Valley Ry. Co., 243 U.S. 281, 37 S.Ct. 287, 61 L.Ed. 722; Estate of Sanford v. Commissioner, 308 U.S. 39, 51, 60 S.Ct. 51, 59, 84 L.Ed. 20.

Reversed.

Mr. Justice STONE took no part in the consideration or disposition of this case.

The CHIEF JUSTICE and Mr. Justice ROBERTS dissent for the reasons stated in the dissenting opinion in No. 255, Nelson v. Sears, Roebuck & Co., 312 U.S. 359, 61 S.Ct. 586, 85 L.Ed. --, decided this day.