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provision seemingly concludes the whole matter by exempting the personal property and capital of all business corporations taxed under Article 9 (a) of the tax law.

Administration.-Administration of the law and collection of the tax are vested in the State Tax Commission, which consists of three commissioners, one of whom is president.

Tax imposed on domestic and foreign corporations.

Law. Section 209. For the privilege of exercising its franchise in this state in a corporate or organized capacity every domestic corporation, and for the privilege of doing business in this state, every foreign corporation, except corporations specified in the next section, shall annually pay in advance for the year beginning November first next preceding an annual franchise tax, ....

Section 208. . . . . 1. The term “corporation" includes a jointstock company or association;

What constitutes “doing business” in the state?-It is sometimes hard to determine whether or not the acts or transactions of a non-resident individual, foreign corporation or partnership within the boundaries of a state constitute “doing business" within such state. Individuals or partnerships may do business in another state, may sue or be sued within such state and cannot be required to register or take out a license. Non-resident corporations, however, must register in order to maintain an action at law. The distinction does not affect taxation on net income arising from the doing of business; therefore where the word "corporation” is used in this discussion it should be regarded as including individuals, partnerships, corporations and associations.

A foreign corporation may be doing business in a state so as to subject it to the process of its courts, and yet not be liable to taxes imposed by such state. In such a case the corporation would be engaged in doing business wholly of an interstate character. The state cannot, of course, place restrictions upon interstate commerce, and the courts have held

*Article 8, section 170 of the tax laws.

that the subjecting of such corporations to the process of state courts is a "long way" from restricting interstate commerce.

The New York Court of Appeals has declared :

Decision. . . . . to be doing business in this state implies corporate continuity of conduct in that respect: such as might be evidenced by the investment of capital here, with the maintenance of an office for the transaction of its business, and those incidental circumstances which attest the corporate intent to avail itself of the privilege to carry on a business. (Penn. Collieries Co. v. McKeeter, 183 N. Y. 98.)

Generally speaking, if a corporation conducts and concludes in New York a series of transactions or regularly renders services in such state, constituting a substantial portion of its regular business, such corporation is doing business in the state. Occasional business transactions or rendering of services is not sufficient to subject it to the franchise tax law.

The transactions must be completed within the state. The mere employment of traveling agents to solicit orders and send them to the home office for approval and filling does not constitute doing business in the state, so far as the franchise tax is concerned.* The fact that an office is maintained in the state for the convenience of the agents soliciting orders to be executed in other states is not sufficient to bring such corporations within the purview of the law.

If a corporation maintains no sales office in New York but keeps a supply of replacement parts in storage in New York from which sales are made, this would constitute doing business in this state so far as the part business is concerned. Likewise, the sending of machines into this state, to sell, try, rent; keeping a mechanic to make repairs, is doing business within the state. Activities such as the above would require the corporation to make a return of its entire business to this state in order to determine the portion of its entire net income that would be subject to the franchise tax. In case such a line of

'International Harvester Co. v. Kentucky, 234 U. S. 579; International Text Book Co. v. Tone, 220 N. Y. 313; and Tauza v. Susquehanna Coal Co., 220 N. Y. 259.

"Dalton Adding Machine Co. v. Virginia, 246 U. S. 498; 118 Va. 563. business is to be conducted, the foreign corporation must organize a separate corporation in this state if it does not wish to make reports here as to its entire business.

In case such a corporation is organized, the relationship of “sale” and not "agency” should be created between the two companies. In other words, the parent company should sell the goods outright and not upon consignment or commission, and all collections for goods sold from the storehouse would have to be received by the subsidiary company.

These are general principles that should be observed in determining whether or not a corporation is doing business in the state. As the Supreme Court of the United States held in the International Harvester case (234 U. S. 579), each case must depend upon its own facts to show that a corporation is doing business within a particular state.

Two comparatively recent decisions of the Court of Appeals of the state of New York afford a good illustration of the legal and business points upon which the court based its opinion. Although the facts in the cases were practically the same and the same judge rendered both decisions, in one case it was held that the facts did not constitute doing business in the state and in the other that such facts did constitute doing business in the state. Both cases, however, bear out the principle stated above.

INTERNATIONAL Text Book Co. v. TONE (220 N. Y. 313).

DECISION. The plaintiff, a foreign corporation, has its principal place of business in Scranton, Pennsylvania. From there it gives instruction by correspondence. It has agencies in New York in charge of division superintendents and assistants. Their sole duty is to solicit pupils, whose applications for membership must be sent to the home office for acceptance. No contracts are closed here. No instruction is given in New York. No books are sold in New York. The subscribers receive their instructions through text books and papers mailed from Scranton, Pennsylvania. They send their reports for examination or correction to the same place. .....

In this school the defendant became a pupil under a written contract. He signed in New York his application for membership, and the plaintiff accepted it in Scranton. He promised monthly payments, which he failed to make. His defense was that the plaintiff has not complied with section 15 of the General Corporation Laws

(Cons. Laws, Ch. 23) or with section 181 of the Tax Law (Cons. Laws, Ch. 60) and is, therefore, unable to maintain this action. .... The trial judge sustained the defense and the Appellate Division affirmed his ruling.

In that judgment we are unable to concur. The plaintiff was engaged in interstate commerce. .... It did nothing in New York except in furtherance of that commerce. It solicited orders, which did not ripen into contracts until accepted in Pennsylvania. It fulfilled its contracts by the transmission of information through the medium of the mails. Section 15 of the General Corporation Law and section 181 of the Tax Law are not aimed at such activities. .... Business may be sufficient to subject the foreign corporation that does it to the service of process, and yet insufficient to require it to take out a license. In Tauza v. Susquehanna Coal Co. (220 N. Y. 259), decided herewith, this distinction is emphasized. ....

.... If section 181 of the Tax Law were a tax upon property, and not a license tax, or if the plaintiff's activities were not those of interstate commerce, exclusively, a different situation would be before us. .... The distinction between the license taxes and taxes upon property is sometimes a close one. This tax, however, though measured by the amount of capital employed within the state, is by its very terms a license tax. In this it differs from the franchise tax imposed by section 182. It supplements the license scheme of the General Corporation Law, and is limited to corporations authorized to do business under the law. . "Its enforcement" is not "left to the ordinary means devised for the collection of taxes." (Postal Tel. Cable Co. v. Adams, 155 U. S. 688, 695; St. Louis S. W. Ry. Co. v. Arkansas, 235 U. S. 350, 365) but the forfeiture of the right to sue is the penalty of non-payment (Sioux Remedy Co. v. Cope, supra) The transactions of interstate commerce are not subject to such restrictions.

Tauza V. SUSQUEHANNA COAL Co. (220 N. Y. 259).

Decision. The plaintiff, a resident of this state, has brought suit against the Susquehanna Coal Co., a Pennsylvania corporation. The defendant's principal office is in Philadelphia, but it has a branch office in New York which is in charge of one Peterson. Peterson's duties are described by the defendant as those of a general sales agent. He has eight salesmen under him who are subject to his orders. A suite of offices is maintained in the Equitable Building in the city of New York, and there the sales agent and his subordinates make their headquarters. The sign on the door is “Susquehanna Coal Co., Walter Peterson, Sales Agent.” The office contains eleven desks and other suitable equipment. In addition to the salesmen ? there are other employees, presumably stenographers and clerks. The salesmen meet daily and receive instructions from their superior. All sales in New York are subject, however, to confirmation by the home office in Philadelphia. The duty of Peterson and his subordinates is to procure orders which are not binding until approved. All payments are made by customers to the treasurer in Philadelphia; the salesmen are without authority to receive or indorse checks. A bank account in the name of the company is kept in New York and is subject to Peterson's control, but the payments made from it are for the salaries of employees and for petty cash disbursements in- . cidental to the maintenance of the office. The defendant's coal yards are in Pennsylvania and from there its shipments are made. They are made not on isolated occasions but as part of an established course of business. ....

To do these things is to do business within this state in such a sense and in such a degree as to subject the corporation doing them to the jurisdiction of our courts. The decision of the Supreme Court in International Harvester Co. v. Kentucky (234 U. S. 579) is precisely applicable. There, sales agents in Kentucky solicited orders subject to approval of a general agent in the home state. They did this, not casually and occasionally, but systematically and regularly. Unlike the defendant's agents, they did not have an office to give to their activities a fixed and local habitation. The finding was that travelers negotiating sales were not to have any headquarters or place of business in that state, though they were permitted to reside there (234 U. S. at p. 584). Yet because their activities were systematic and regular the corporation was held to have been brought within Kentucky, and, therefore, to be subject to process of the Kentucky courts. “Here," said the court (p. 585), "was a continuous course of business in the solicitation of orders which were sent to another state and in response to which the machines of the Harvester Company were delivered within the state of Kentucky. This was a course of business, not a single transaction." .

.... Activities insufficient to make out the transaction of business, within the meaning of the statutes, may yet be sufficient to bring the corporation within the state so as to render it amenable to process (International Text Book Co. v. Tone, decided herewith [220 N. Y. 313]). In construing statutes which license foreign corporations to do business within our borders we are to avoid unlawful interference by the state with interstate commerce. The question in such cases is not merely whether the corporation is here, but whether its activities are so related to interstate commerce that it, by a denial of a license, be prevented from being here (International Text Book Co. v. Pigg, 217 U. S. 91). .... To hold that a state can not burden interstate commerce or pass laws which regulate it "is

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