Appellant, a Georgia corporation, has no office or place of
business in Florida and no property or regular full-time employees
there; but it does have in Florida ten brokers, wholesalers or
jobbers who solicit sales of appellant's products on a commission
basis and forward orders to Georgia, where they are accepted and
whence the goods are shipped to Florida residents.
Held: a Florida statute which levies a tax on the use
of such products in Florida and makes appellant responsible for its
collection from Florida purchasers is not repugnant either to the
Commerce Clause of the Constitution or to the Due Process Clause of
the Fourteenth Amendment.
General Trading Co. v. State Tax
Comm'n, 322 U. S. 335,
followed.
Miller Bros. Co. v. Maryland, 347 U.
S. 340, distinguished. Pp.
362 U. S.
207-213.
105
So. 2d 775 affirmed.
MR. JUSTICE CLARK delivered the opinion of the Court.
Florida, by statute, [
Footnote
1] required appellant, a Georgia corporation, to be responsible
for the collection of a use tax on certain mechanical writing
instruments which appellant
Page 362 U. S. 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. We
agree with the result reached by Florida's courts.
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
Page 362 U. S. 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. [
Footnote 2] 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 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
Page 362 U. S. 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.
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 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
nontaxing state and shipment by interstate commerce into a taxing
forum."
Id. at 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 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'n, 322 U. S. 335,
322 U. S. 337
(1944).
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.
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. Maryland, 347 U.
S. 340, 344�345 (1954),
"some definite link, some minimum
Page 362 U. S. 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 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, 165 F.2d 33, 36. The test is
simply the nature and extent of the activities of the appellant
Page 362 U. S. 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. 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
322 U. S.
338.
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.
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
Page 362 U. S. 213
that Miller would be made "more vulnerable to liability for
another's tax than to a tax on itself." 347 U.S. at
347 U. S. 346.
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.
MR. JUSTICE FRANKFURTER, deeming this case to be nearer to
General Trading Co. v. State Tax Commission, 322 U.
S. 335, than it is to
Miller Bros. Co. v.
Maryland, 347 U. S. 340,
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. Maryland,
347 U. S. 340, and
in
McLeod v. J. E. Dilworth Co., 322 U.
S. 327, and adhering to his views expressed in
Northwestern States Portland Cement Co. v. Minnesota,
358 U. S. 450,
358 U. S. 477,
would reverse the judgment.
[
Footnote 1]
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 percent of the
retail sales price, as of the moment of sale, or three percent 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."
[
Footnote 2]
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.