Supreme Court of the United States
SCRIPTO, INC., Etc., Appellant,
v.
Dale CARSON, as Sheriff of Duval County, Florida, et al.
No. 80.
Argued Feb. 24, 1960.
Decided March 21, 1960.
Suit by Georgia corporation to test validity
of imposition on it by Florida of a use tax liability in connection with sales
to Florida residents. From adverse
judgment of the Circuit Court, Duval County, corporation appealed. The Supreme Court of Florida, 105 So.2d 775, affirmed and corporation again appealed. The Supreme Court, Mr. Justice Clark, held
that where Georgia corporation failed to collect use tax on sales to Florida
residents, even though orders for its products were solicited by Florida
wholesalers who were not full-time salesmen for corporation which maintained no
office or regular employees in Florida and which accepted orders in its Georgia
office from which products were shipped, there was sufficient nexus between
Florida and activities of Georgia corporation to enable Florida to collect use
tax from corporation, under Florida statute
imposing use tax on purchaser and rendering dealer liable if he fails to
collect the same.
Affirmed.
Mr. Justice Whittaker dissented.
West Headnotes
[1] Federal Courts 
512
(Formerly 106k399(1))
Application
by Supreme Court of Florida of its local laws and the facts on which it founded
its judgment were, on appeal therefrom, controlling upon United States Supreme
Court.
[2] Taxation 2005
(Formerly 371k4)
In order
that a state may be entitled to levy a tax there must be some definite link,
some minimum connection between a state and the person, property or transaction it seeks to tax.
[3] Taxation 3670
(Formerly 371k1270, 83k63)
Where
Georgia corporation failed to collect use tax on sales of products to Florida
residents, even though orders for its products were solicited by Florida
wholesalers who were not full-time salesmen for corporation which maintained no
office or regular employees in Florida and which accepted orders in its Georgia
office from where products were shipped, there was sufficient nexus between
Florida and activities of Georgia corporation to enable Florida to collect use
tax from corporation under Florida statute imposing use tax on purchaser and
rendering dealer liable if he fails to collect the same. F.S.A.
§ 212.06; U.S.C.A.Const.
Amend. 14.
[4] Commerce 63.5
(Formerly 83k63)
No state
can tax privilege of doing interstate business which is within the Commerce Clause and subject to the power of
Congress. U.S.C.A.
Const. Art. 1, § 8, cl. 3.
[5] Commerce 62.71
(Formerly 83k62.70, 83k63)
Mere fact
that property is used for interstate commerce or has come into owner's
possession as a result of interstate commerce does not diminish protection he
may draw from a state to upkeep of which he may be asked to bear his fair
share.
[6] Commerce 74.5(2)
(Formerly 83k63)
Test of
whether Florida could collect from Georgia corporation use tax on corporation's
sales to Florida residents under statute imposing tax on purchaser but
rendering dealer liable if it fails to collect tax from purchaser, was the
nature and extent of corporation's activities in Florida. F.S.A.
§ 212.06; U.S.C.A.Const.
Amend. 14.
[7] Commerce 74.5(2)
(Formerly 83k63)
[7]
Constitutional Law 4145
(Formerly 92k285.4, 92k287)
[7] Taxation 3626
(Formerly 371k1212.1, 371k1212,
238k7(1))
Where
orders for Georgia corporation's products were solicited by Florida wholesalers
who were not full time salesmen for corporation which maintained no office or
regular employees in Florida and which accepted its orders in Georgia office
from where products were shipped, collection by State of Florida from Georgia
corporation of use tax under Florida statute rendering dealer liable for use
tax imposed on purchaser if dealer fails to collect same from purchaser, did
not constitute a burden upon interstate commerce or violate the due process of
the Fourteenth Amendment, even though it required that corporation be the tax collector on orders from
Florida residents. F.S.A.
§ 212.06; U.S.C.A.Const.
Amend. 14.
**620 Mr. *207 George B. Haley, Jr.,
Atlanta, Ga., for appellant.
Mr. Joseph C. Jacobs, Tallahassee, Fla., for
appellees.
Mr. Justice CLARK delivered the opinion of the
Court.
Florida, by statute, [FN1] required
appellant, a Georgia corporation, to be responsible for the collection of a use
tax on certain mechanical writing instruments which appellant *208 sells
and ships from its place of business in Atlanta to residents of Florida for use
and enjoyment there. Upon Scripto's
failure to collect the tax, the appellee Comptroller levied a use tax liability
of $5,150.66 against it. Appellant then
brought this suit to test the validity of the imposition, contending that the
requirement of Florida's statute places a burden on interstate commerce and
violates the Due Process Clause of the Fourteenth Amendment to the
Constitution. It claimed, in effect,
that the nature of its operations in Florida does not form a sufficient nexus
to subject it to the statute's exactions.
Both the trial court and the Supreme Court of Florida held that
appellant does have sufficient jurisdictional contacts in Florida and,
therefore, must register as a dealer under the statute and collect and remit to
the State the use tax imposed on its aforesaid sales. 105
So.2d 775. We noted probable
jurisdiction. 361
U.S. 806, 80 S.Ct. 52, 4 L.Ed.2d 54. We agree with the result reached by Florida's
courts.
FN1. The pertinent
provisions of this statute are:
'212.06 Same; collectible from dealers; dealers defined;
dealers to collect from purchasers; legislative intent as to scope of tax
'(1) The aforesaid tax at the rate of three per cent of the
retail sales price, as of the moment of sale, or three per cent of the cost
price, as of the moment of purchase, as the case may be, shall be collectible
from all dealers as herein defined on the sale at retail, the use, the
consumption, the distribution and the storage for use or consumption in this
state, of tangible personal property.
'(2) * * * (g) 'Dealer' also means and includes every
person who solicits business either by representatives or by the distribution
of catalogs or other advertising matter and by reason thereof receives and
accepts orders from consumers in the state, and such dealer shall collect the
tax imposed by this chapter from the purchaser and no action either in law or
in equity on a sale or transaction as provided by the terms of this chapter may
be had in this state by any such dealer unless it be affirmatively shown that
the provisions of this chapter have been fully complied with.'
Appellant operates in Atlanta an advertising
speciality division trading under the name of Adgif Company. Through it, appellant is engaged in the
business of selling mechanical writing instruments which are adapted to
advertising purposes by the placing of printed material thereon. In its Adgif operation, appellant does not *209
(1) own, lease, or maintain any office distributing house, warehouse or other
place of business in Florida, or (2) have any regular employee or agent there. [FN2] Nor does it
own or maintain any bank account or stock of merchandise in the State. Orders for its products are solicited by
advertising specialty brokers or, as the Supreme Court of Florida called them,
wholesalers or jobbers, who are residents of Florida. At the time of suit, there were 10 such
brokers--each having a written contract and a specific territory. The somewhat detailed contract provides,
inter alia, that all compensation is to be on a commission basis on the sales
made, provided they are accepted by appellant; repeat orders, even if not
solicited, also carry a commission if **621 the salesman has not become
inactive through failure to secure acceptable orders during the previous 60
days. The contract specifically provides
that it is the intention of the parties 'to create the relationship * * * of
independent contractor.' Each order is
to be signed by the solicitor as a 'salesman'; however, he has no authority to
make collections or incur debts involving appellant. Each salesman is furnished catalogs, samples,
and advertising material, and is actively engaged in Florida as a representative 'of Scripto for the purpose of
attracting, soliciting and obtaining Florida customers' for its mechanical
advertising specialties. Orders for such products are sent by these salesmen
directly to the Atlanta office for acceptance or refusal. If accepted, the sale is consummated there
and the salesman is paid his commission directly. No money passes between the purchaser and the
salesman--although *210 the latter does occasionally accept a check
payable to the appellant, in which event he is required to forward it to
appellant with the order.
FN2. Appellant
Scripto does employ one salesman but he handles its regular line of products
and has no connection with Adgif. The
Florida courts found that his presence was not relevant to the determination of
whether appellant was included within the terms of the statute.
[1] As construed by Florida's highest court, the impost levied
by the statute is a tax 'on the privilege of using personal property * * *
which has come to rest * * * and has become a part of the mass of property'
within the State. 105
So.2d at page 781. It is not a sales tax, but 'was developed as
a device to complement (such a tax) in order to prevent evasion * * * by the
completion of purchases in a non-taxing state and shipment by interstate
commerce into a taxing forum.' Id.,
at page 779.
The tax is collectible from 'dealers'
and is to be added to the purchase price of the merchandise 'as far as
practicable.' In the event that a dealer
fails to collect the tax, he himself is liable for its payment. The statute has the customary use tax
provisions 'against duplication of the tax, an allowance to the dealer for
making the collection, and a reciprocal credit arrangement which credits against
the Florida tax any amount up to the amount of the Florida tax which might have
been paid to another state.' Id.,
at page 782.
Florida held appellant to be a dealer under its statute. 'The application by that Court of its local
laws and the facts on which it founded its judgment are of course controlling
here.' General
Trading Co. v. State Tax Comm., 1944, 322 U.S. 335, 337, 64 S.Ct. 1028, 1029,
88 L.Ed. 1309.
The question remaining is whether Florida, in
the light of appellant's operations there, may collect the State's use tax from
it on the basis of property bought from appellant and shipped from its home
office to purchasers in Florida for use there.
[2][3][4][5][6] Florida has well stated the course of this Court's
decisions governing such levies, and we need but drive home its clear
understanding. There must be, as our
Brother Jackson stated in Miller
Bros. Co. v. State of Maryland, 1954, 347 U.S. 340, 344--345, 74 S.Ct. 535,
539, 98 L.Ed. 744, 'some definite link, some
minimum *211 connection, between a state and the person, property or
transaction it seeks to tax.' We believe
that such a nexus is present here. First, the tax is a nondiscriminatory
exaction levied for the use and enjoyment of property which has been purchased
by Florida residents and which has actually entered into and become a part of
the mass of property in that State. The
burden of the tax is placed on the ultimate purchaser in Florida and it is he
who enjoys the use of the property, regardless of its source. We note that the appellant is charged with no
tax-- save when, as here, he fails or refuses to collect it from the Florida
customer. Next, as Florida points out,
appellant has 10 wholesalers, jobbers, or 'salesmen' conducting continuous
local solicitation in Florida and forwarding the resulting orders from that
State to Atlanta for shipment of the ordered goods. The only incidence of this sales transaction
that is nonlocal is the acceptance of the order. True, the 'salesmen' are not regular
employees of appellant devoting full time to its service, but we conclude that
such a fine distinction is without constitutional significance. The formal shift in the contractual tagging
of the salesman **622 as 'independent' neither results in changing his
local function of solicitation nor bears upon its effectiveness in securing a
substantial flow of goods into Florida.
This is evidenced by the amount assessed against appellant on the
statute's 3% basis over a period of but four years. To permit such formal 'contractual shifts' to
make a constitutional difference would open the gates to a stampede of tax
avoidance. See Thomas Reed Powell, Sales
and Use Taxes: Collection from Absentee
Vendors, 57 Harv.L.Rev. 1086, 1090.
Moreover, we cannot see, from a constitutional standpoint, 'that it was
important that the agent worked for several principals.' Chief Judge Learned Hand, in Bomze
v. Nardis Sportswear, 2 Cir., 165 F.2d 33, 36. The test is simply the nature and extent of
the activities of the appellant *212 in Florida. In short, we conclude that this case is
controlled by General Trading Co., supra.
As was said there, 'All these differentiations are without
constitutional significance. Of course,
no State can tax the privilege of doing interstate business. See Western
Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823. That is within the
protection of the Commerce Clause and subject to the power of Congress. On the other hand, the mere fact that
property is used for interstate commerce or has come into an owner's possession
as a result of interstate commerce does not diminish the protection which he
may draw from a State to the upkeep of which he may be asked to bear his fair
share.' 322
U.S. at page 338, 64 S.Ct. at page 1029.
[7] Nor do we believe that Florida's requirement that
appellant be its tax collector on such orders from its residents changes the
situation. As was pointed out in General
Trading Co., this is 'a familiar and sanctioned device.' Ibid. Moreover, we note that Florida reimburses
appellant for its service in this regard.
Appellant earnestly contends that Miller Bros.
Co. v. State of Maryland, supra, is to the
contrary. We think not. Miller had no solicitors in Maryland; there
was no 'exploitation of the consumer market'; no regular, systematic displaying
of its products by catalogs, samples or the like. But, on the contrary, the goods on which
Maryland sought to force Miller to collect its tax were sold to residents of
Maryland when personally present at Miller's store in Delaware. True, there was an 'occasional' delivery of
such purchases by Miller into Maryland, and it did occasionally mail notices of
special sales to former customers; but Marylanders went to Delaware to make
purchases--Miller did not go to Maryland for sales. Moreover, it was impossible for Miller to
determine that goods sold for cash to a customer over the counter at its store
in Delaware were to be used and enjoyed in Maryland. This led the Court to conclude *213
that Miller would be made 'more vulnerable to liability for another's tax than
to a tax on itself.' 347
U.S. at page 346, 74 S.Ct. at page 539. In view of these considerations, we conclude
that the 'minimum connections' not present in Miller are more than sufficient
here.
The judgment is therefore affirmed.
Affirmed.
Mr. Justice FRANKFURTER, deeming this case to
be nearer to General
Trading Co. v. State Tax Commission, 322 U.S. 335, 64 S.Ct. 1028, 88 L.Ed.
1309, than it
is to Miller
Bros. Co. v. State of Maryland, 347 U.S. 340, 74 S.Ct. 535, 98 L.Ed. 744, concurs in the result.
Mr. Justice WHITTAKER, believing that
Florida's action denies to appellant due process of law and also directly
burdens interstate commerce as held in Miller
Bros. Co. v. State of Maryland, 347 U.S. 340, 74 S.Ct. 535, 98 L.Ed. 744, and in McLeod
v. J. E. Dilworth Co., 322 U.S. 327, 64 S.Ct. 1023, 88 L.Ed. 1304, and adhering to his views expressed in Northwestern
States Portland Cement Co. v. State of Minnesota, 358 U.S. 450, 477, 79 S.Ct.
357, 368, 3 L.Ed.2d 421, would reverse the
judgment.
362 U.S. 207, 80 S.Ct. 619, 4 L.Ed.2d 660
END OF
DOCUMENT