Opposition Brief — Wisconsin v. Minnesota Mining & Mfg. Co.

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: : 7 HARLES ELMORE COPLEY

Supreme Court of te ——— sen

United States |

OCTOBER TERM, 1939

‘yolllll = 4.

STaTH OF WISCONSIN and ExmMgr E. BARLOW, as Commis-

sioner of Taxation of the State of Wisconsin,

Petitioners,

V8.

MINNESOTA MINING AND MANUFACTURING COMPANY, a Déla-

e Es . &

ware corporation. | | 3

BRIEF IN OPPOSITION TO PETITION FOR WRIT OF

‘CERTIORARI TO THE SUPREME COURT OF

_ « THE STATE OF WISCONSIN.

a fi a J. MILLER,

‘Ryan Block, |

Little Falls, Minnesota,

JOHN L. CONNOLLY,

791 Forest Street,

St. Paul, Minnesota,

/ @. BURGESS ELA,

1 West Main Street,

Madison, Wisconsin,

| Attorneys for Respondent.

Review Publishing Co., 141 E. Fifth St.; St. Paul, Minn.

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INDEX. |

SUBJECT INDEX.

Brief in opposition to petition for writ of certiorari |

. to the Supreme Court of ae State of Wisconsin. .

. Opinions Below

J urisdiction

- . e%

SOGOMPCS CEE CHO CHEECH OHH C HCCC HOODS

dit ee ee Oe oe ee on ee ee oe oP eee ee

. :

_I. The decision was based upon-an inde-

pendent ground of state law .......... '

“II. The Federal question was decided by the.

Supreme Court of Wisconsin in accord

with the applicable decisions of this court

* Conclusion

ti ee eee eee a ee i ee ee ee

TABLE OF CASES a

American Manufacturing Co. v. St. ini (1919), 250

U. 8S. 459, 63 L. Ed. 1084, 39S. Ct. 522

Atlantic Lun:ber Co. v. Commissioner of Corporations

€ Tagation (1936), 298 U. 8. 553,,80 L. Ed. 1328,

ee Oe oo a ee ak

Barnes v. The Railroads (1873), 17 Wall. (84 U: 8. )

294, 21 L. Ed. 544

. Beidler, et al. v. South Carolina Tax Commission 4

(1930), 282 U. S. 1, 51 S. Ct. Ee ere eto

Cannon Manufacturing Co. »v. Cudahy Packing Co.

(1925), 267 U. 8. 333, 45 8. Ct. SDE

City of New York v. Central Savings Bank: in the City

of New York (1939), 306 U. 8. 661, 59 8. Ct. 790..

Page

——_

Compania Several. De Pikioe De Filipinas v. Col-

lector (1927), 275 U. 8. 87, 48 S. Ct. 100........ a ee

Concordia Fire Ins. Co. v. Illinois (1934), 292 U.S.

535, 54 S. Ct. 880 2... cece reer eee e cece reece “9

: Connecticut General Life Ins. Co. v. Seine (1938) )s

803 U. 8. 77, BB S. Ct 496 0. .:......0620- + 8, 10,11

Des Moines National Bank v. hus hac coraataed (1923),

263 U.S. 108, 44. 8, Ct. 23 0.5... eeaeeeees | x

Bigner v. Macomber (1920), 252 U. 8. 189, 40 8. Ct.

(EE is So Se ee ee 14

Estate of Shepard (1924), 184 Wis. 88, 197 N. W. 344 15

Farmers’ Loan & Trust Co. v. Minnesota (1930), 280

U.S. 204, 74 L: Ed. 271, 65 A. L. R. 1000, 50 8S. Ct.

SR Ass 30h engl sob ve PEI hay rhees Xe 12°

First, National Bank of Boston v: Maine (1932), 284

U. 8. 312, 52 8. Ct. ee ey ge wes « ‘ee eran

First- National Bank v. Chehalis (1897), 166 U. S. te

NO SEIN EE ETT ae |

Heiner v. Donnan (1982), 285 U. 8. 312, 52 8. Ct. 358 15

"Home Savings Bank v. Des Moines’ (1907), 205 U. 8...

503, 27. .Ct. 571 eee eee eee cece eg ee reece teens 5

Honeyman v. Hanan (1937), 300 U.-8. “14, 57 8. Ct.

2: >) nnn ree 7

Hopkins v. Southern California Tel. Co. Bere 275

U.S. 393, 48 8. Ct. 180 «........ Ae Werte ee e.:

- James v. Dravo Contracting Co. (1987), 302 U. 8.

134, 58 8. Ct. 208 -......- sees ee ee aes css se ae

Klein v. Boar of Supervisors (1980), 282 U. 8. 19, ;

ee ee ee er oor er eee eee 8, 15

Louisville Gas é Electric Co. v. Coleman (1928), 277

U. 8. 32, 48 8S. Ct. 423 '

panes ¢ J. Ferry Oo. v. Kentucky 1008), . 188 U.

S. 885, 23 B. Ct. 468 ......°... weddeaae vane ae on 12

' Lynch wv. Pierson (1934), 293 U. S. 52, 55 8. Ct. 16.. 6

Merchants’ & Manufacturers’ National Bank of Pitts.

burgh v..Commonwealth of Penneytoonia (1897),

167 U. B. 461; 17. B. Ot. BBO oie. sie veocs ereer 15

Miller v. Milwaukee (1927), 272 U. 8. 713, 71 L. | eee

487, 47 8. Ct. OH Dp RPP Meo te gg hte 13

- Newport Company v. Wisconsin Tax Commission

DR eet is erecta vt Seat, ae . 42

_ Railroad Co. v. Collector (1879), X Otto (100 U. S.)°

595, 25 L. Ed. 647 aiatibcie Mepanian nak: ou urs io

Rhode Island Hospital Trust Co. v. Doughton (1926},

270 U. 8. 69, 46 8. Ct. en Nae 8, 9, 12,14.

St. Louis Coiton Compress. Co. v. snemenene (1922},

260 U. 8. 346, 43 8. Ct. 125 .... AS SOT TES ee - 10

' Schlesinger v. Wisconsin (1926), 270 Uz S. "230, 46

ee ee cae cues | Y PSEA see ac eo ae

; wane

, (1935), 219 Wis. 293, 261 N. W.-884 ............ 8.

peri York, Lake Erie & Western R. Co. v. Pennsyl-

vania (1894), 153 U. S. 628, 14 8. Ct. 952....... 6.

Olwer v. Washington Mins (Mass. ( 1865), 11 Allen

sgn SENT Oe ee Poon pe ekeees 1...

| Dwthetnetss National Bank v. Owensboro (1508), aged

U. S. 664, 19 8. eee we¥ enteeuns Per rrr ry 2 «15

J. CO. Penney Co. v. Wisconsin Pax Commission, 289

Me WR A eae ee a sy 5s 6, 9,10:

Peoples Tobacco Co. v. American Tobacco Co.-"( 1918),

246 -U. 8. 79, 38 8. Ct. 233 . Dae ewes. seav aes 9

Provident Savings Life Assurance Society v: Kentucky

(1915), 239 U. 8. 103, 36 8. Ct. 34, 1916C L. RL A.

° Ned

° a

“ Hed

. g

. a

» ;

2 &§

. Ye

;

e '

A Si

’ i

Shaffer v. Carter (1920), 252 U. 8. 37, 64 L. Ed, 445,

40 SB. Ch. 221... sre seierwecrcrcecececerereveues 13 .

State ew rel: Froedtert G. & M, Oo., Ine., v. ‘Tan Com.

mission (1936), 221 Wis. 225, 265 N. W. 672, 267

N: W. 52, 104 A. L. R. 1478 ..... ee ues eu bts 4 8, 9,10

“State of Minnesota v. National Tea- Co. (1940), 60

S. Ct. 676 ....... hg Hew US Gane cle wen bas COUN Stee wees a.

U. S.) 323 eet lA eet aaa dee ee CARR N Ee EOE OS 15

Underwood Typewriter Co. v. Chamberlain (1920),

"254 0. 8. 113, 65 L. Ed. 165, 41 S. Ct. 45..... Cee

United States v. Commissioners of Sinking: Fund

- (1898), 169 U. 8. 249, 18 B. Ct. 358:..........: eee:

United States v. Railroad Co. (1873), 17 Wall. —

U. 8.) 322, 0 8 RON onal wgyviiesntusues 15

Wachovia Bank & Trust Co. v. Doughiton (1926), 272 ?

"OSB. 567, 47 8. Ct. 202 ......... Say a kas ae a

_ F. W. Woolworth: & ‘Co... Wisconsin Tax Commis."

Py ee Be = puetees sia cea vigia aaah 2

~ (ABLE OF STATUTES crrED.

Section 3 of Chapter 505, ‘Laws of Wisconsin, 1935,

as ‘amended by Chapter 552, Laws of ‘Wisconsin,

gehen -peeies rane seen een rican cee) 2,16

: _ Supreme Court of the | ee

United States |

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OCTOBER TERM, 1939

No. 894

Sara OF WISCONSIN and. eof E. BARLOW, as Commis- ae ;

sioner of Taxation of the State’of Wisconsin, 7

Petitioners, :

VS. | fe :

| MiRwpsoTa MrnING AND MANUFACTURING Company, a Daa. a

ware corporation.. ; i ‘

, BRIEF IN OPPOSITION TO PETITION FOR WRIT OF 1

CERTIORARI TO THE SUPREME COURT OF ie oi

| THE STATE OF WISCONSIN. ae ll :

OPINIONS BELOW.

The decision of the Supreme Court of Wisconsin is-re- _ |

ported in 289 N. W. Rep. page 686, but not as yet reported — yaet Sia :

in the official state reports. This decision reverses the — \

judgment of the Circuit Court for Dane County, Wisconsin | a

in fay r the appellant and remands the case to the Cir-

cuit Court ‘ef Dane County with directions’ to enter judg-

ment. setting aside the absessment.

The instant case and thé case’ of F. W. Woolworth & Co.

v. Wisconsin Tax Commission, reported in 289 N: W. 685,

and the case of J. C. Penney ‘Company v. Wisconsin Taag

Commission, reported in 289 N. W, 677, but not as yet re-

ported’ in. the ‘official state reports, were argued together:

in the’Supreme Court of Wisconsin and decided popmner ree.

by the Supreme; Court of Wisconsin. —

¢ a

: JURISDICTION.

‘The judgment of the Supreme Court of Wisconsin in the

instant case, ‘dated January 16, 1940, ‘holding that as to.

the respondent, @ tax imposed under Chapter 505, Section 3,

of the Session Laws of the State of Wisconsin for 1935,

as. amended by. Chapter 552 of. the. Laws of 1935, was invalid

because in conflict with the due process clause of the Four-

- teenth Amendment of the Constitution of the United States,

and Article VIII, section 1, of the Constitution of the.

_ State of Wisconsin; and reversing a judgment of the Cir-—

cuit Court of Dane “County confirming an assessment of

| privilege dividend tax under said act against the Minnesota —

Mining and, Manufacturing, Company as confirmed by a

3 decision and order of .the Wisconsin. Tax. Commission, dated’

December 19, 1938.

_ The petition. for a writ of certiorari was filed on April

_ 10, 1940, and a copy thereof served upon ‘counsel for re-

* spondent on _ 17, 1940.

Petitioner urges ‘in its brief a. substantial federal ques- .

tion as the only reason for granting a writ of certiorari.

This question is whether the state tax involved as applied

to the respondent, violates the due process clause of the _ Aad

‘Fourteenth Amendment of the Federal Constitution. mea

_ Respondent contests this ground. Its position is that nara a

the decision below (1) proceeded upon an independent state — i

ground broad enough to maintain the judgment ; namely,

that it violated the due ‘process clause of the State Con-.

stitution; and (2) that the state court deciding a question,

which insofar-as it is a federal question, was decided by

the Supreme Court of Wisconsin exactly in accordance

with the applicable decisions of this court. :

ARGUMENT.

- The Decision Was Based Upon An ig erg Ground |

of wane Law. .

The appellant ignores the fact that in the instant case

the respondent raised the question of the validity of the

tax under the Wisconsin Constitution.

‘In its appeal from the decision of the Tax Commission

to the Circuit Court of Dane County the respondent. con-

tended among other things as follows ; Record p. 18, f. 107:

: “(1) Section 3 of Chapter 505 of the Wisconsin 7

Session Laws of 1935.and amendments thereto is un- 1

constitutiorial. under Section 1 of the Fourteenth — if

Amendment of the Constitution of the United States Boo

of America and Article I, Section 1 of the Constitu- _

tion of the State of Wisconsin; in that it deprives the

Minnesota Mining and Manufacturing Company and/or i

its stockholders of property without due process of ee

law bethuse it attempts to levy an excise tix upon the

privilege of paying and receiving dividends out of in-

come derived from property located and business trans-

acted in Wisconsin, when no act in connection with

the payment and receipt of such dividends took place

within the State of Wisconsin, except the receipt of

| such dividends as were paid to Wisconsin stockholders.”

Recor, Pp. 19, . 108:

' “That even if said law witghi! be held to be constitu-

_tional from a jurisdictional standpoint insofar as. it

levies a. tax upon dividends of foreign corporations —

paid to and received by Wisconsin residents within the

state and/or to dividends paid by Wisconsin corpora-

tions, said act so applied would be contrary. to Sec-

-tion 1 of the Fourteenth Amendment. of’ the Constitu-

_tion of. the United States of America and Article VIII, es,

Section 1, of the Constitution of the State of Wis- _

consin, since it would be a denial of equal protection

of the laws to residents of Wisconsin and as to Wis-

consin corporations it would not be uamurs and, would

: contain unreasonable ——pe ? |

Record, p. 21, f. 110:

_ “(3) That said Section 3 af Chapter 305 of the

Wisconsin Session Laws of 1935 and amendments -

thereto is unconstitutional under , Section 1 of the

Fourteenth Amendment to the Constitution of the

United States of America“ind Article I, Section 1, of

the Constitution of the State of Wisconsin, in that it

‘deprives the Minnesota Mining and Manufacturing

‘Company of liberty and property without process of

law, in that it requires it to file returns, keep detailed

figures and accounts, to collect the tax by making de. .

ductions from Aividends paid and to perform numerous ~

_ other acts within the State of Minnesota. That the

State of Wisconsin hag no. jurisdiction to require the.

Minnesota Mining and Manufacturing Company -to do

_such acts within the State of Minnesota in order to |

assist it in collecting said tax levied by said section

and the amendments thereto.” 3 .

In the case of J. C. Penney Company v. Wisconsin Tax

Commission, 289 N. W. 677, 679, on the authority of which

the instant case was decided, ithe Supreme Court of. Wis- .

consin stated :.

“The plaintiff contends that this law as sieitiad to a

foreign corporation doing business as plaintiff does

business is invalid for the reason that it deprives the

plaintiff of its property without due process of law .

in contravention of the Fourteenth Amendment to the

constitution of the United States, U. 8. C. A, and

Art.. VITI, sec. 1, of the constitution of the ine ‘of .

Wisconsin. = ..h oF

The fact that the provisions of ‘the state and federal con- 7

stitutions may be similar does.not justify this court in-

disturbing a judgment of a state court which adequately

rests its application upon thé provisions of its own .con-

stitution. That the state court may have been influenced |

by the decisions or reasoning of this court makes no differ.

ence. The judgment of the state court upon its constitu-—

tion remains a judgment which this’ court is without juris-

diction to review; it would be immaterial whether in the

instant case the tax was repugnant to or consistent with

the .Federal Constitution if repugnant to the Wisconsin

Constitution. If the judgment of the ‘Supreme Court of

Wisconsin is that the tax violated the Wisconsin Constitu-

‘tion it should stand. Nowhere in ‘its decision in J. C.

‘

Penney Company v. Wisconsin Tax Commission, 289 N. W.

677, does the Supreme ‘Court of Wisconsin affirmatively.

state it is holding the tax. invalid ‘because it violates the

ate process clause of the Federal Constitution.

In Lynch v. Pierson 1198), 293 U. 8. 52, 55 S.Ct. 16,

there was involved. a validity of including income from real

‘property in\ Ohio as part of the income of a resident of

computing her income tax return, and the

New York i

Court stated (p. 53):

om fF ..? \ The relator sought review by the Supreme

Court of New York, invoking rights under the Con-

stitution and laws of the state of New York and under

the Fourteenth Amendment of the Constitution of the

United States. The Appellate Division of the Supreme

Court, Third Department, annulled the determination

- of the state tax commission, Pierson v. Lynch, 237

- App. Div. 763, 263 N. Y. 8. 250. That court, while

‘citing decisions. of this Court under the Fourteenth

Amendment, did not, state that its decision rested. upon

_ the application of the Constitution of the United

States. The Court of Appeals of the state’ affirmed

the order of the “Appellate Division, but without opin-

ion (263 N. Y. 533, 189 N.. E. 684), and the grounds |

of its decision are left to conjecture. It may be sur-

- mised, from the quotations in its opinion, that the Ap-

pellate _ Division ‘intendedi to rest its decision: upon a

determination of the application of the Fourteenth

’ Amendment, and that the affirmance by the Court of .

Appeals went upon the same ground, and not upon the

nonfederal ground of the application of the Constitu-

tion and laws of the state. .But jurisdiction cannot be

‘founded upon surmise. Nor can claim of jurisdiction —

be sustained by reference to briefs and statements

which | are not part of the record..: r

“It is essential to the jurisdiction of this Court in

reviewing a decision of a court of a state that it must

appear affirmatively from the record, not only that a

federal question was presented for decision to the

highest court of the state having jurisdiction, but that

its decision of the federal question was necessary to

the determination of the cause, and that it was actu-

ally decided or that the judgment: as pammeree could

not have been given without deciding it. - —_

There were similar holdings in Honeyman v. Hanan,

(1937), 300 U.S. 14, 57 8. Ct. 350, and City of New York

v. Central Savings Bank in the City of New York, —

306 U. 8. 661, 59 S. Ct. 790.

Since the Supreme Court of Wisconsin has not: affirma-

' tively determined the instant case under the due process

clause of the Federal Constitution and the court had be-

fore it precisely the same question under the State Con-

stitution and determined against the validity of the stat-. .

ute in question, there is nothing for this court to do in

“any event but affirm the judgment. State of Minnesota v. |

_ National Tea Company, (1940), 60 S. Ct. 676. The state

ground of decision was independent and controlling. and

review by this court would be moot, and no proper occa- -

sion: for certiorari is presented.

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- 2 The , Federal Question Was Decided by the peptone

Court. of Wisconsin in Accord With the » Apyliceble :

Decisions of this Court.

Even if the decisions Nelow were not based. upon an in-

dependent ground of state law; the federal question in-

volved here has been settled by the Supreme Court of ,Wis-

consin in accord with the applicable. decisions of this court. 7

In State. ex rel. Froedtert oii and Malting Ciel 33

Inc., v. Taw Commission, (1936), 221 Wis. 225, 265 N. W.

672, 267 N. W. 52, 104 A. L. R. 1478, the Supreme Court

' of Wisconsin was passing on the validity of an excise tax

imposed upon the stockholders of a domestic corporation

‘ for declaring and paying a dividend within the state of

Wisconsin, and what it said in reference to the stockholders

of a foreign corporation was mere dicta. ys

In the Froedtert case the court in its dicta as to foreign -

corporations and its stockholders, therein disregarded. the

corporate entity, and laid down rules not in. accord with

the decisions of this court in Rhode Island Hospital Com-

pany v. Doughton, (1926), 270 U. 8..69, 46 8. Ct. 256,

First National Bank of Boston v. Maine, (1932), 284 U. 8.

312, 52 8. Ct. 174, and Klein v. Board of rr

" (1930), 282 U. 8. 19, 51,8. Ct. 15..

In the Froedtert case the court in its dicta as to foreign 7

corporations and its stockholders laid down rules as to

constructive situs not in accord with the decisions of this

court in Connecticut General Life Inswrance Company v.

“Johnson, (1938), 303 D. S. 77, 58 8. Ct. 436, Newport Com--

- pany ®. Wisconsin Tae Commission, (1935), 219 Wis. 298, :

_ 261 N. W. 884 ( enetrerent denied by United States Su-

preme Court, 56-8. Ct. 598), Rhode Island Hospital Trust

Company v. Doughton, (1926),-270 U. 8. 69, 46 8. Ct. 256,

Peoples Tobacco Company v. American Tobacco Company,

(1918), 246 U. 8. 79, 38'S. Ct. 233, and Cannon Manufac-

turing Company v. Cudahy Packing site ei (2986), 267

U. 8. 333, 45 8. Ct. 250.

In the Froedtert case the court in its. iets as to foreign

corporations and its stockholders laid down rules on the

theory of. devolution of income not in accord with decisions _ |

of. this court in Louisville Gas‘ Electrie Company v. Cole-

man, (1928), 277 U. S. 32, 48 S. Ct. 423, Hopkins v. South-

; ern California Tel. Company, (1928), 275 U. 8. 393, 48 |

S. Ct. 180, and Concordia Fire Insurance Company v. Illi-

nois, (1934), 292 U. S. 535, 54 S. Ct. 830.

In the Froedtert case the court laid down rules as to.

‘the immateriality of upon whom the tax falis not being

in accord with the decision of this court in Heiner v. Don-

nan, (1932), 285 U. 8. 312, 52 8. Ct. 358, and Schlesinger ©

v. Wiséonsin, (1926), 270 U: S. 230, 46 S: Ct. 260.

_ In the Froedtert case, in its dicta as to foreign: corpora-

tiuns and its stockholders as to’ a trust in favor of the

state upon income lawfully removetl from Wisconsin for :

” the payment ‘of taxes, the court laid down rules not in

_ accord with the decision of this court in. Connecticut Life

Insurance Company v. Johnson, (1988), 303 U. S. 77, 58

8. Ct. 436. 7

In the case of J. C. Penney Company v. Wisconsin Tax

Commission, 289 N. W. 677, and in the instant case, when

- called upon to squarely pass upon the power of the State

‘of Wisconsin to levy an excise tax upon the act of declar-

ing a dividend by a foreign corporation to its stockholders

in a foreign state, after a re- -consideration of the foregoing-

questions, the Supreme Court of Wisconsin modified. its,

position in the case of State e: ex rel. Froedtert G. & M. Com- |

— pany,’ Inc. v. Tax Commission, (1936), 221 Wis. 225, 265

'N. W. 672, 267 N. W. 52, 104 A. L. R. 1478, so as to be™

in. accord with the applicable irimone of this court. |

> ele

_ . In the case of a ©. Peaney pn ee v. Wisconsin Tax

“Commission, 289 N. W. 677, (680), the Supreme Court of

_ Wisconsin stated:

CN It is agreed on all sides that the tax in

question is an’ excise tax and this court has so held .

-in, the i a

In the instant case the Minnesota Mining and Manv- ©

facturing Company exercised the right and privilege to de-

¢lare dividends ‘in Minnesota to its stockholders. who exer-

cised their contractual rights to receive dividends by reason

of its charter and the laws of. the state of its incorpora-

_ tion, Delaware. Wisconsin had the power only to impose

an excise tax upon a privilege granted by it or a _ power

exercised - within its borders.

_In st. Lowis Cotton Compress Company’ ®. Arkansas,

(1922), 260 U. 8. 346, 43 8. Ct: 125, -where. property in-

' gured was within state and foreign corporation was author-

ized to do business therein, in a suit to coHect tax on the

insurance, the court stated at p. 349 of the U. 8. Reporter:

“e * * This case is stronger than that: of Allgeyer

in that heré no act was done within the State, * = *

. It is true that the State may regulate, the activities

. of foreign corporations within the State but -.it cannot \

regulate or interfere with what they do outside. * * *”

. a

In New. York, Lake Erie and Western Railroad Company

v. Pennsylvania, (1894), 153 U. 8. 628, 14 S. Ct. 952, there

was involved a Pennsylvania statute which attempted to

* impose upon a foreign corporation the duty, when paying

interest upon bonds held by residents of Pennsylvania of

deducting a certain portion of the interest and paying the

same into the state treasury.. ‘The interest on the bonds,

_was by their terms payable in the State of New York.

: As to the power of the state to make svch requirement, :

the court said at p. 646 of the U. S. Reporter : a.

“The New York, Lake Erie and Western Railroad

Company is not subject to. regulations established by

# — Pennsylvania in respect to the mode im which ‘it shall |

transact its business in the State of New York. The

-money-in the hands of the company in New York to be

applied by it im the payment of interest, which by the

terms of the contract is payable in New York and not’:

elsewhere, is | property beyond ‘the jurisdiction of Penn-

* — gylvania, aid Pennsylvania is without. power to- say:

‘ /* 3 “how the | corporation holding such. money, in another |

state,. shall -apply it, and to inflict a penalty upon at

for not ‘applying it as directed by its ‘statutes ; esfie-

i” >

cially. may not Pennsylvania, directly. or indirertly, in-- -.

‘s terpose between the corporationgamd its creditors,’ and -

forbid it to perform its contract: ‘with creditors accord- :

‘ * ing to its terms and according -. thé ental of the place

of performance. sail ~

In Connecticut General Life Insurance Company v. J ohn-

son, (1938), 303 U. 8. 77,,58 8. Ct. 436, the United States

Supreme Court stated :

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eee Hence it is that a state which controls the

aah property and activities within its boundaries of a for-

eign corporation admitted to do business. there may

«tax them.. But the due process clause denies to the

state power to tax or regulate the corporation’s prop- -

erty and activities elsewhere. * * * it follows that

such a tay, otherwise unconstitutional, is not converted

into a valid exaction merely because the corporation

enjoys outside the state economic benefits from. trans-

ge - Hoaae it, which the state might but does not

tax because ‘the | tate ‘might. tax the transactions

ee ‘corporation carries on outside the state if

At were induced to: carry them on within. ROP a oN

. igs.

There are simiivie holdings in Louisville & J. Ferry Com- —

pany v. Kentuck y, (1903), 188 U. ‘8. 385, 23. 8. Ct. 463,

: “Compania General: De Tabacos De Filipinas v.. Collector,

(1927 ), 275 U. S. 87, 48 S. Ct. 100, Farmers’ Loan & Trust -

“Company v. Minnesota, _ (1930), 280 U. 8.204, 74 Li Ed.”

271, 65 A. L: R. 1000, 50 S. Ct..98, James v. Dravo Con- ~

tracting Company, (1987), 302 U. Si 134, 58 8. Ct. 208, a

Provident Savings‘ Life Assurance Society v.. Kentucky;

(1915),. 239 U. §. 103, 36 S; Ct: 34, 1916C L. R. A. 572, -..

_ Rhode Island Hospital Trust Company v. Doughton, (1926),.

270 U.'S. 69,46 S. Ct.. 256, and Wachovia, Bank & Trust.

Company v. ‘Doughton, (1926), 272 U. S. 567, 47 $. Ct. 202.

‘Since the Supreme Court of Wisconsin has deciaed the

court, no proper occasion for’ ceftiorgri is presented.

In the instant case the State of

: ~ instant case in accord with the ig decisions of this

isconsin is seeking to"

‘impose an excise tax upon the Minnesota. Mining and Manu-

facturing Company, at Delaware corporation, for the. right

and privilege of performing the act of declaring dividends

©.

, or upon its stockholders for the privilege of reteiving divi-

” dends defJared in the State of Minnesota. All of the’

cases of this court, cited ‘by the petitioner can be readily

distinguished from the instant case.

° . §

In the case of American Manufacturing Company v. St:

Louis, (1919), 250 U. 8S. 459, 63 L, ed. 1084, 39 8. Ct. 522,

this court held that an excise tax upon the act of manu-

total value f the goods manufactured, was valid, although.

moved in interstate commerce, |

~" Dhis is n authority ‘for taxing an’ act performed without -

the taxing state. -

hh the case of t Atlantic Lumber Company v. Commissionsr 3 |

of Corporations and Tawation, (1936), 298 U. 8. 553, 80 !

LL. ed, 1328, 56 8. Ct. 887, this court. sustained as valid

_ an excise tax upon the privilege. dr, act of doing an intra- ie

~ state business in the State of Massachusetts measured by —

_ . the fair value of the assets. employed ed in, Massachijsetts-to——

the tothl-assets, less certain Aeductions. . This is no author. -

ity for _— sete salpicraniaa outside of the State of Wis.

consin. rN bg

» In-the case of Shaffer v. Carter, ( 1920), 263.0. 8. $7,04.:. f

L. Ed. °445, 40 8. Ct. 221, this court sustained a state in- =

come tax upon the act of earning an income in Oklahoma

by a,resident of. Illinois. This is no authority for Wis-

consin taxing and act performed by a foreign corporation

in tke-Btate of Minnesota.

ies AE ee |

In‘the case of Underwood Typewriter Company v. Cham. .

berlain, (1920) 254 U. 8. 113, 65 L. Ed. 165, 41 8. Ct. 45,

this court sustained as valid a state franchise tax upon a.

foreign corporation upon the act of earning an income in _

- the Btate of Connecticut. Clearly this is no authority for .

| Wisconsin having extra- territorial power ‘to tax acts per-

foriaed outside its borders.

The case of Miller v. ‘Milwaukee, (1927), 272 U. §. 713,.

71 L. Ed. 487, 47 8. Ct. 280, is cited in support of the _

proposition that the corporate entity can be pierced and

disregarded. The court in this case was dealing with an

attempt by the State of Wisconsin to tax‘dividends from

Wisconsin corporations where the Wisconsin law exempted

dividends from income tax if the corporatipn had paid a a

tax upon the income, and taxed the dividends if the in-

come to the corporation was exempt—obviously an attempt _

~ to tax federal sécurities in violation of the Constitution

of the United States. Juilge Holmes stated :.

“There is no doubt that in general a corporation is

a noncénductor that, cuts off connection between divi-

dends to its stockholders and the corporate funds from

which the dividends are paid.. Des Moines. National

Bank v. Fairweather, 263 U. 8. 103, 44 S. Ct. .23, 68

L. Ed. mm ¢:* *

Bee Paid! Eiener v. “Macomber, (1920), 252 U. 8. 189,

40 8. Ct. 189; First National Bank of Boston v. Maine}

_ (1982), 284 U. 8. 312, 52 8. Ct.°174; Rhode Island Hos; —

pital Trust Company v. Doughton, (1926), 270 U.

_' +46 8. Ct. 256; Beidler, et al. v. South Carolina Tar Com.

mission, (1930), 282 U. 8. 1, 51.8. Ct. 54; Klein v. Board

« ¥ a Pe 15 ie

of Supervisors, (1930), 282 U. 8.19, 51 8. Ct. 15; Owens. |

..boro National Bank v.. Owensboro, (1899), 173 U. S. 664,

19 8. Ct: 537; and Estate of Shepard, (1924), 184 Wis. 88,

— 197 N. W. 344 ; wherein this court has definitely taken the

position that the corporate entity cannot be pierced.

The petitioner cites Barnes v. The Railroads, (1873) 17

Wall. (84 U. 8.) 294, 21 L. Ed. 544, and Railroad Com-

pany v. Collector, (1879),- x Otto (100. U. 8S.) 595, 25

L. Ed. 647, as authority for’ ithe view that the tax imposed

by Section 3, Chapter 505 of the Wisconsin Session Laws

6f 1935, and amendments thereto, was laid upon the cor-

poration and not upon the stockholders, and the petitioner

concedes that in the eases of the United States v. Railroad

Company, (1873), 17 Wall. (84° U. 8.) 322, 21 L. Ed. 597,

and Stockdale v. Atlantic Insurance Company, (1874), 20

- Wall. (87 U. 8.). 323, this court questioned such interpre-

* tation. Such view is not in accord with the following de-

' cisions of this: court: Home Savings Bank v. Des Moines,

(1907), 205 U. 8, 503, 27 8. Ct. 571, Merchants’ € Manu- —

-facturers’ National Bank of Pittsburgh v. Commonwealth

of Pennsylvania, (1897), 167 U. S. 461, 17 8. Ct. 829;

Des Moines National Bank v. Fairweather, (1923), 263

U. 8. 103, 44.8. Ct. 23; United States v. Commissioners of

Sinking Fund, (1898), 169 U. 8. 249; 18 S. Ct. 358; Heiner

v. Donnan, (1932), 285 U. 8..812, 52 8. Ct. 358; and First

National Bank v. Chehalis, (1897), 166 U. 8. 440, ay S. Ct.

629; and Oliver v. Wie seine Mills, =, (1865); 11

Allen 268.

The Federal Treasury. Department, Bureau of Internal

Revenue, I, T. 3602 XV-35-8264 (p. 4), held that the Wis- ay

‘consin privilege dividend tax is an excise tax imposed upon

the stockholder receiving the dividend. Mats

Assuming for the sake of argument, without-conceding,

* that the instant tax was upen the corporation and not

upon its ‘stockholders, the cases: cifed are not in accord

with the view of ‘he petitioner that Wisconsin can tax

the Minnesota Mining and Manufacturing Company for its

acts performed in Minnesota. ,

CONCLUSION.” S

The’ Wisconsin court held that. a tax assessed under

Section 3, Chapter 505 of the Laws of 1935, as amended

by Chapter 552 of the Laws of 1935, was invalid in the |

instant case as imposing a tax upon the Minnesota Mining

and Manufacturing Company, a Delaware corporation, for

the right and privilege of performing an act, to-wit: the

declaration of a dividend in Minnesota. |

The Wisconsin court called attention to the fact that —

it was considering the validity of this tax under ihe due

process clause of the Wisconsin Constitution and the Fed-

eral Constitution. It does not affirmatively, appear that

this decision was not predicated upon an independent

ground of state law adequate to maintain the judgment..

Accordingly this court will not ‘take ae.

sion of the Wisconsin court is in harmony .and accord with

the applicable decisions of this court. There is no occasion

for this court to reconsider its former rulings. It is re-

spectfully submitted that the petition for certiorari should

. be denied..

Respectfully submitted,

-FREDERICK.J. MILLER,»

‘Ryan Block, |

Little Falls, Minnesota,

JOHN. L.. CONNOLLY,

791 Forest Street,

; St. Paul, Minnesota, |

G. BURGESS ELA,

1 West®Main Street, Ss

Madiffon, Wisconsin,

— for Respondent,

Even were ‘the Federal question controlling, the deci-.

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