National Leather Co. v. Massachusetts, 277 U.S. 413 (1928)

National Leather Company v. Massachusetts

No. 205

Argued February 23, 1928
Decided May 28, 1928
277 U.S. 413

ERROR TO THE SUPREME JUDICIAL COURT OF MASSACHUSETTS

Syllabus

A law of Massachusetts (G.L., 1921, c. 63) imposes an excise on foreign corporations for the privilege of carrying on or doing business in the state at a fixed rate per thousand dollars upon such proportion of the fair cash value of all the shares constituting the capital stock of the corporation taxed, as the value of the assets, real and personal, employed in business within the state bears to the value of its total assets. Petitioner, a Maine corporation, had its offices and transacted its business wholly in Massachusetts, the business comprising the buying of hides and skins, having them tanned by others, and selling the leather through the tanners. It operated no tanneries itself. It owned all the stock of two subsidiary Maine corporations, both having tanneries and engaged in tanning in Massachusetts, one of which did tanning for petitioner alone, and the other chiefly so, though it also had selling branches in other states. In assessing petitioner’s excise, the value of the stocks of the subsidiaries was included as part of its assets employed by it in business within Massachusetts.

Held:

1. That the finding that the subsidiary stocks were so employed was justifiable, and that their inclusion in computing the excise was not to tax property beyond the state’s jurisdiction in violation of the due process clause of the Fourteenth Amendment, even assuming that they had no situs in Massachusetts for the purpose of imposing a direct property tax. Pp. 422-423.

2. The question whether the value of the stock of one of the subsidiaries attributable to its business in other states should have been deducted is not presented, inasmuch as its decision was left open by the court below as dependent on a different statutory remedy from the one invoked in this case. P. 424.

3. Whether the subsidiaries would be subject to similar excises, and the constitutional propriety of so taxing them, either independently or in connection with the excise against petitioner, is not considered. Id.

256 Mass. 419, affirmed.

Error to a decree of the Supreme Judicial Court of Massachusetts dismissing petitions for the recovery of excise taxes levied upon a foreign corporation for the privilege of doing business in Massachusetts. The judgment was entered in the Supreme Judicial Court in Suffolk County on a rescript from the full court.