1. Where a foreign corporation kept a stock of goods in a warehouse in the City of Atlanta, Georgia, orders were received and approved outside the State, which were filled by delivering goods from the warehouse to resident purchasers and to common carriers for delivery to non-resident purchasers, accounts receivable thereon arise out of business conducted in the City of Atlanta, and would have a taxable situs for ad valorem taxation by said municipality, notwithstanding that the orders taken by the non-resident owner for the merchandise sold in the municipality are passed upon as to the credit of customers, and *Page 297 the books of account are kept at a point without the City of Atlanta and the State of Georgia.
2. The act as to the classification and taxation of intangible personal property (Ga. L. 1937-38 Ex. Sess. pp. 156 et seq., as amended; Code (Ann. Supp.), §§ 92-113 et seq.) provides that "accounts receivable . . are hereby classified to be taxed as heretofore provided by law," and are not subject to the provisions of the rate of taxation named for specified intangibles; and such words are clear and unambiguous, needing no construction beyond their ordinary import, which simply means that "accounts receivable" are to be taxed as they were previous to the passage of said act, which was at the uniform ad valorem rate.
(a) Including the word "accounts" in the definition of "intangible personal property" under the intangible tax act, does not necessarily mean a conflict in the terms of the act, where it so plainly appears that "accounts receivable" are specifically stated to be taxed as heretofore provided by law.
(b) It is not an unreasonable and unconstitutional classification for "accounts receivable" and other different classes of intangible personal property to be taxed at different rates.
3. If, under the facts of the case, a tax situs did exist in the municipality seeking to tax the accounts receivable, it would be immaterial whether they arose in interstate commerce, since the commerce clause (U.S. Const. art. 1, sec. 8, cl. 3) does not exempt either tangible or intangible property from a non-discriminatory ad valorem tax by a municipality. Hence there would be no burden upon interstate commerce for the accounts receivable to be taxed as sought by the municipality, under the facts stated in the petition.
4. Where a non-resident corporation became the owner of accounts receivable arising out of business conducted in a municipality in this State, such credits had a tax situs in the municipality where such business was conducted, so that the enforcement of a tax upon the credits would not be contrary to the guaranty of the due process or equal protection of the law as expressed in the fourteenth amendment of the Constitution of the United States, or paragraphs 2 and 3 of section 1 in article 1 of the Constitution of Georgia, notwithstanding that the credit of the customers may have been passed upon and the books of account kept by the corporation at a point without the State.
5. The trial judge did not err in sustaining the defendant's general demurrer to the petition as originally filed and subsequently amended, or in dismissing the suit upon the ground that it did not state a cause of action.
No. 15354. JANUARY 17, 1946. Parke, Davis Company filed suit in Fulton Superior Court against the City of Atlanta, and Leo Suddeth, J. Sid Tiller, and W. N. Blankenship, tax assessors and receivers of the City of Atlanta, *Page 298 seeking an injunction and a declaratory judgment, and making substantially the following allegations: The plaintiff is a corporation of the State of Michigan, with a general sales office in the City of Detroit, and a branch in the City of Baltimore, Maryland, from which sales are made in Georgia, and other southeastern States. It is engaged in foreign commerce and commerce among the States, manufacturing its goods in Michigan and outside the State of Georgia, and selling such goods to foreign countries and to all the States of the United States. The defendant, Atlanta, is a municipal corporation in Fulton County, Georgia, and the named tax assessors and receivers are officers and agents of the City of Atlanta, all of whom reside in said State and county. This is a suit for a declaratory judgment, in which an actual controversy exists between the parties, and in which it is sought to have rights and other legal relations declared, and further relief granted, by a temporary and permanent injunction. The plaintiff sells all of its commodities through salesmen, employed by and working under the supervision of its sales manager, known as the general sales manager, located in Detroit, and under him are "branch sales managers." Salesmen are not authorized to make contracts, but they take orders and forward them to the more convenient shipping point, the branch or the depot. The stockkeeper in Atlanta may ship the goods only after approval to do so has been received from the credit manager in Baltimore. When an order is accepted, and a contract or purchase and sale thus results, shipment is made to the purchaser from the most convenient storage warehouse. The plaintiff maintains a stock of manufactured goods in a storage warehouse at Atlanta, Georgia. The stockkeeper in charge of this warehouse has no authority to accept orders for goods, and does not receive or accept such orders. The accounts of customers are payable at Detroit, and the stockkeeper at the Atlanta warehouse makes no collections, and has no possession of or control over said accounts receivable which are kept in Detroit. The Atlanta depot is a part of the Baltimore Branch, as an extension of the Baltimore shipping department, and the stockkeeper at Atlanta reports to his superior, the Baltimore branch sales manager. Accounts receivable are taxed in Detroit, Michigan, at 1/10 percent of their value. The plaintiff, for the year 1944 and previous years, has paid its ad valorem taxes *Page 299 on its warehouse in Atlanta and on the tangible goods therein on the taxable date. No issue is here made as to such payment. All goods sold in Georgia or shipped from the Atlanta warehouse are shipped only upon instructions from the Baltimore office, and in Georgia there is no agent of the plaintiff who has any authority to make or consummate sales or collect the consideration therefor. The stockkeeper in charge, and his employees engaged in unloading and loading goods from and to such warehouse, are not agents with authority to solicit, make, or confirm sales, or to collect the consideration of sales made by the plaintiff. The defendants claim, by letter of March 19, 1945, a copy of which, marked "Exhibit A," is made a part of the petition, that the plaintiff is liable for ad valorem taxes on the accounts receivable which grew out of shipments delivered from the Atlanta warehouse, wheresoever such shipments were delivered, notwithstanding the fact that accounts receivable here sought to be taxed arose from business not done through the Atlanta branch, from which shipments are made on order from the Baltimore office of the plaintiff. The letter referred to reads as follows: "City of Atlanta, Office of Tax Assessors and Receivers, Atlanta 3, Georgia. March 19, 1945. Parke, Davis Co., Detroit, Michigan. Attention, Mr. W. M. Hawkins. Gentlemen: This will acknowledge receipt of the tax return tendered the City of Atlanta for the year 1945. We cannot accept the return, as submitted, as you have failed to indicate any accounts receivables as being taxable by this City. All notes and accounts receivables, which arose from business done through your Atlanta Branch, acquire a taxable situs in Atlanta, and are taxable by this City. We, therefore, respectfully request that you furnish this office, within 10 days, the full amount of notes and accounts receivables, outstanding as of January 31, 1945, which arose from business done through your Atlanta Branch. This must include all accounts, not only arising from merchandise sold within the City of Atlanta, but in all territory covered by your local branch. Your co-operation will be appreciated, and we will withhold preparation of your return pending receipt of this information. Very truly yours, Tax Assessors and Receivers, City of Atlanta — By W. N. Blankenship, Tax Investigator." On the tax date in 1945, the plaintiff owned accounts receivable on goods shipped from the Atlanta warehouse during the year 1944, in the sum of *Page 300 $77,968. Of this amount, $37,910 were for goods shipped to points other than in the State of Georgia, and $40,058 for goods shipped to points in the State of Georgia. Such accounts receivable were kept by the plaintiff at its general sales office in Detroit, and were never seen by or in possession of the stockkeeper in charge of the Atlanta warehouse. The plaintiff's salesmen through whom and by whom said sales, both to points in Georgia and points in other States, were made, operated out of and were under the control of the plaintiff's Baltimore office, were employed by and paid from sales offices outside of Georgia, and had no connection with the Atlanta warehouse; and the plaintiff has not, and has not had, any Atlanta sales office or any divisional sales manager located in Atlanta or the State of Georgia. The Atlanta warehouse did not, through its employees, have anything to do with hiring, training, or supervising the operation of salesmen of any products of the plaintiff. The defendants have given notice of an assessment of the plaintiff on the above described accounts receivable, which they value at $54,580, and require the payment of an ad valorem tax thereon as though such accounts were tangible personal property. Unless enjoined, the defendants will undertake to collect a tax thereon, to the injury, loss, and damage of the plaintiff, by levying on and selling its property in Fulton County, Georgia, on which the city claims there is due $873.28, the ad valorem tax on the accounts receivable of the plaintiff as valued by the defendants at the rate of $1.60 per hundred dollars of value. Unless the court declares otherwise, similar sums will be assessed and collected against the plaintiff so long as it has a warehouse in Atlanta. There is an actual controversy between the plaintiff and the defendant, involving rights and legal relations of the parties, and further relief is prayed.
Paragraph 14 of the petition contained subparagraphs (a) to (f), inclusive, each and all of which were specially demurred to by the defendants; and, as alleged by the plaintiff, "in order to comply with the rulings of the court made on special demurrer of defendants," without the general demurrers being ruled on at the time, the plaintiff amended its petition, which was allowed subject to demurrer, by striking all of said paragraph 14, and inserting in lieu thereof separately numbered paragraphs 14, 15, 16, 17, 18, 19, and 20. The remainder of said petition, as amended subject *Page 301 to demurrer, alleged in substance the following: A controversy exists between the plaintiff and the defendants, arising from the claim of the City of Atlanta to the right to tax the plaintiff on its intangible accounts receivable as though such receivables were tangible property, and the denial by the plaintiff of such right. The plaintiff contends that in the amendment to the Constitution of the State of Georgia, contained in Georgia Laws 1937, page 39, and following, accounts receivable are defined as intangible property, and can not be, under the law or Constitution, taxed as the defendants contend at the rate applicable to tangible property. The plaintiff contends that, under the statute of Georgia, approved December 27, 1937 (Ga. L. Ex. Sess. 1937-38, p. 158 and following), no tax can be collected by the City of Atlanta, and that any tax collectible from the plaintiff on its accounts receivable in excess of $3 on each $1000 of the fair market value of such accounts is in violation of said statute; and that no ad valorem tax is collectible by the City of Atlanta or any other authority on such accounts receivable. The defendants deny this contention, and are seeking to tax the plaintiff's property as though it was tangible property, and at the ad valorem rate thereon. The plaintiff contends, and the city denies the correctness of the contention, that, under the act of December 27, 1937, section 3, subparagraph c, the city was prohibited from taxing intangible personal property. Thus, the contention of the plaintiff and the denial of such contention by the defendants constitutes a controversy, that section 2 of the act of December 27, 1937, is ambiguous and in conflict with other parts of said act; that, properly construed, section 2 does not authorize the taxation of accounts receivable, as heretofore, unless such accounts receivable are owned, or in the hands of Georgia citizens who come into competition with the business of national banks; and that paragraph b of section 3 of said act is the only law authorizing the taxation of accounts receivable. All of the accounts receivable sought in this case to be taxed by the City of Atlanta grew out of shipments of goods from and manufactured in States other than Georgia; and the plaintiff contends that it is engaged in interstate and foreign commerce, that its accounts receivable grew out of transactions therein, and that to tax such would violate the clause of the Constitution of the United States, article 1, section 8, paragraph 3, known as the "commerce *Page 302 clause," because the tax which the defendants are claiming the right to levy would constitute a burden upon commerce among the States. Notwithstanding plaintiff's contentions, the defendants raise a controversy by claiming that commerce among the States is not involved. The defendants seek to tax the intangible accounts receivable of the plaintiff at $16 for each $1000 of value, while it taxes money at 10 cents on each $1000, and all notes or other obligations insured by the Federal Housing Administration, and all notes or other obligations representing loans secured by real estate, made by certain named businesses, and with certain exceptions, at the rate of $1.50 on each $1000, and all other intangible personal property at the rate of $3 on each $1000. (See section 3 of said act, paragraphs 2 (aa), and (b)). The plaintiff contends that these different taxes on different kinds of intangible property deny the plaintiff due process of law and equal protection of the law, in violation of the 14th amendment to the Constitution of the United States, and of article 1, paragraphs 1, 2, and 3 of the Constitution of Georgia. The defendants dispute all of the rights contended for by the plaintiff, as hereinabove alleged, and thus a justiciable controversy exists between the plaintiff and the defendants.
The petition as amended prays for a citation, a hearing, a temporary restraining order, an injunction, a declaratory judgment, and other meet and proper relief.
The defendants demurred to the original petition on the ground that no cause of action was set out. They specially demurred to paragraph 14 and all the subdivisions thereof on the ground that the allegations should be properly paragraphed and clarified, and in addition thereto specially demurred on the grounds: That it was not alleged that an actual controversy exists between the parties; that the petition did not allege that the plaintiff had complied with, followed, or exhausted any or all of the administrative remedies; and that the petition nowhere shows or states that the court has jurisdiction of the alleged controversy. The general and special demurrers were renewed against the petition as amended.
After hearing argument, the trial court entered the following judgment: "The general demurrer to plaintiff's petition as originally filed and subsequently amended is hereby sustained and the suit is dismissed for want of a cause of action." *Page 303
The case is before this court on a bill of exceptions brought by the plaintiff, as follows: (1) The court erred in sustaining the demurrer and dismissing the petition, and erred in not overruling the demurrer upon each and every ground thereof; (2) the court erred in holding that the plaintiff's accounts receivable are taxable under the Code (Ann. Supp.), § 92-115 (Ga. L. 1937-1938, Ex. Sess., p. 156), and under § 92-6208; (3) the court erred in holding that the plaintiff's accounts receivable are taxable at the ad valorem rate; (4) the court erred in not holding that the plaintiff's accounts receivable taxable under the Code (Ann. Supp.), § 92-118; (5) the court erred in arose out of transactions in interstate commerce, and to tax such commerce violates article 1, section 8, clause 3 of the Constitution of the United States; (6) the court erred in holding the plaintiff's accounts receivable taxable at the ad valorem rate, for to tax money, notes, and intangible property at one rate, and the plaintiff's accounts receivable at another and higher rate, denies to the plaintiff due process of law and equal protection of the law, and violates the fourteenth amendment of the Constitution of the United States, and article I, paragraphs II and III of the Constitution of Georgia. 1. The reasons prompting the trial judge to dismiss the amended petition on demurrer are not set out in his judgment or elsewhere in the record. However, the plaintiff in error lists four questions as being involved in the appeal, as follows: "Is the declaratory judgment law applicable to tax controversies between municipal corporations and taxpayers? Are accounts receivable taxable at the ad valorem rate under Code Section 92-115 [The mentioned section being that number of the Supplement to the Annotated Code]? Is the assessed tax a burden on interstate commerce in violation of the commerce clause of the Constitution of the United States? Does the assessed tax deny plaintiff due process of law *Page 304 and equal protection of the law, in violation of the 14th amendment to the Constitution of the United States and article 1 of the Constitution of Georgia?"
We consider first whether or not the accounts receivable as set out in the petition have a situs for taxation by the City of Atlanta. The recent case of Parke, Davis Co. v. Cook,198 Ga. 457 (31 S.E.2d 728, 156 A.L.R. 1360), involved facts identical with those in the present case insofar as the manner of handling the property owned or business conducted is concerned, although in the cited case the main question raised and decided related to income tax to the State of Georgia upon the formula method provided by the income tax act. Code, § 92-3113, as amended. In the mentioned decision it was held that, where a foreign corporation kept a stock of goods in a warehouse within the State, orders were received and approved outside the State, which were filled by delivering goods from the warehouse directly to residents of the State and to common carriers for delivery to non-resident purchasers, title passed in the State as to both classes of purchasers as respects computation of income tax. And in the opinion it was said: "By numerous decisions, this court is committed to the proposition that a corporation may not escape the payment of taxes on personal or tangible property located within the State of Georgia by maintaining a non-resident home office, and thereby creating a fiction of non-resident tax situs for such property." In several cases this court has upheld the right of a municipality to tax accounts receivable of a non-resident corporation engaged in business in this State where such accounts receivable arise out of the business in this State where such accounts receivable arise out of the business conducted in this State. Armour Packing Co. v. Savannah,115 Ga. 140 (41 S.E. 237); Armour Packing Co. v. Augusta,118 Ga. 552 (45 S.E. 424, 98 Am. St. R. 128); Armour Packing Co. v. Clark, 124 Ga. 369 (52 S.E. 145). Accounts receivable are taxable in this State if they are connected substantially with some business transacted in the State by the non-resident owner, notwithstanding that the orders taken by the non-resident owner for the merchandise sold in this State are filled, the shipments thereof made, the credit of customers passed upon, and the books of account kept, at a point without the State of Georgia.Colgate-Palmolive-Peet Co. v. Davis, 196 Ga. 681 (27 S.E.2d 326). We can see no reason for any difference between the conclusion *Page 305 reached in the decision of the case of Parke, Davis Co. v.Cook, supra, holding the transaction there taxable for income, and the conclusion that ought to be reached here as to the taxable situs of the accounts receivable. The basic principles of taxable situs are the same. We hold that, insofar as the question of tax situs is concerned, the City of Atlanta had a right to assess the accounts receivable which the plaintiff in its petition sought to have declared otherwise.
2. It is insisted by the plaintiff in error that the accounts receivable described in its petition as sought to be taxed by the municipality are not taxable by such municipality under a proper construction of the Constitution of Georgia or of statutes relating to taxation of intangibles, but that, if taxable at all, the rate for intangibles should be applied. The pertinent provision of the Constitution of Georgia is paragraph 1 of section 2 of article 7, which is paragraph 3 of section 1 of article 7 as amended on August 7, 1945 (Code, Ann. Supp., § 2-5403), and reads as follows: "All taxes shall be levied and collected under general laws and for public purposes only. All taxation shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax. Classes of subjects for taxation of property shall consist of tangible property, and one or more classes of intangible personal property including money. The General Assembly shall have the power to classify property including money for taxation, and to adopt different rates and different methods for different classes of such property." Following the adoption of the classification portion of said constitutional provision (Ga. L. 1937, p. 39, ratified June 8, 1937), the legislature provided by an act (Ga. L. Ex. Sess., 1937-38, pp. 156 et seq.) for the taxation of intangibles, and this statute as amended is now contained in the Annotated Code Supplement as §§ 92-113 et seq. Section 92-113 gives definitions, among which is the following: "`Intangible personal property' is defined for the purposes of this law as capital stock of all corporations, money, notes, bonds, accounts, or other credits, secured or unsecured, patent rights, copyrights, franchises, and all other classes and kinds of property defined by law as intangible personal property whether or not enumerated in this definition and whether or not similar to those classes enumerated." Section 92-114 reads: "Real property (including *Page 306 leaseholds which are hereby classified as real property) and tangible personal property shall be taxed as now provided by law. All intangible personal property is hereby classified, in keeping with the constitutional amendment adopted in 1937." Section 92-115 provides: "Franchises and all shares of building and loan associations and all shares of banks or banking associations, including Federal Land Banks, together with all money capital in the hands of individual citizens of Georgia coming into competition with the business of national banks, and accounts receivable and all notes except those representing credits secured by real estate are hereby classified to be taxed as heretofore provided by law and shall not be subject to the provisions of the following sections of this law." (That is: §§ 92-116 to 92-159, 92-9946.) Section 92-116 taxes money at 10 cents on each $1000. Section 92-117 fixes a rate of $1.50 on each $1000 of all notes or other obligations insured by certain agencies up to $5000, and provides that the excess shall be taxed as provided in § 92-118. Section 92-117a fixes a rate of 50 cents upon each $1000 of loans held by a broker representing credits extended in connection with the purchase or sale of stocks, bonds, or other securities of like character held as collateral security. Section 92-117b fixes a rate of $1 upon each $1000 of all stocks of foreign and foreign-domesticated corporations with certain enumerated exceptions. Section 92-118 reads: "A property tax is also levied . . annually . . at the rate of $3 on each $1000 of the fair market value of all other intangible personal property as of the first day of January (than that subject to tax under sections 92-116 and 92-117), without deduction of any indebtedness or liability of the taxpayer: Provided, however, that this tax shall not apply to those classes of intangible personal property explicitly excluded under the terms of sections 92-114 and 92-115." Section 92-119 reads: "The taxes imposed herein shall be in lieu of all other State, county, municipal, and district property taxes on intangible personal property classified for taxation at the rates specified in sections 92-116 to 92-122."
We think that the provisions of that portion of the intangible tax act which appears as § 92-115 of the Annotated Code Supplement, stating that "accounts receivable and all notes except those representing credits secured by real estate are hereby classified to be taxed as heretofore provided by law and shall not be subject to the provisions of the following sections of this law *Page 307 [Ann. Supp. §§ 92-116 to 92-159, 92-9946]" are clear and unambiguous and need no other construction than the words import. "To be taxed as heretofore provided by law," can only mean that "accounts receivable" are not to be taxed at the reduced rates of the specified intangibles set out in the various classifications, but they are to be taxed as accounts receivable were taxed previous to the passage of the intangible tax act, which was the uniform ad valorem rate. Including the word "accounts" in the definition of "intangible personal property" under the intangible tax act, does not necessarily mean a conflict in the terms of the act, where it so plainly appears that "accounts receivable" are specifically stated to be taxed as heretofore provided by law. It is not an unreasonable and unconstitutional classification for "accounts receivable" and other different classes of intangible personal property to be taxed at different rates. The amendment to the Constitution of Georgia, adopted June 8, 1937, and quoted above, authorizes the General Assembly to classify property for taxation, and to adopt different rates and different methods for different classes of such property. See par. III, section I, article VII of the rearrangement of the Constitution of Georgia as amended August 7, 1945. The action of the General Assembly in leaving "accounts receivable" and other enumerated kinds of property to be taxed as heretofore, and in placing separately enumerated classifications of property within the more favorably rated sphere of the intangible tax act, is not unreasonable or unconstitutional for any of the reasons urged in the briefs of the plaintiff in error.
3. If, under the facts of the case, a tax situs did exist in the municipality seeking to tax the accounts receivable, it would be immaterial whether they arose in interstate commerce, since the commerce clause (U.S. Const., art. 1, sec. 8, cl. 3) does not exempt either tangible or intangible property from a nondiscriminatory ad valorem tax by a municipality. Virginia v. Imperial Coal Sales Company, 293 U.S. 15 (55 Sup. Ct. 12,79 L.ed. 171); Suttles v. Northwestern Mutual Life Ins. Co.,193 Ga. 495 (19 S.E.2d 396, 143 A.L.R. 343); Parke, Davis Co. v. Cook, supra; Colgate-Palmolive-Peet Co. v. Davis, supra. Under the foregoing authorities there would be no burden upon interstate commerce, under the facts stated in the petition, for the accounts receivable to be taxed as sought by the municipality. *Page 308
4. Where a non-resident corporation became the owner of accounts receivable arising out of business conducted in a municipality in this State, such credits had a tax situs in the municipality where such business was conducted, so that the enforcement of a tax upon the credits would not be contrary to the guaranty of the due process or equal protection of the law as expressed in the fourteenth amendment of the Constitution of the United States or paragraphs 2 and 3 of section 1 of article 1 of the Constitution of Georgia, notwithstanding that the credit of the customers may have been passed upon and the books of account kept by the corporation at a point without the State.Colgate-Palmolive-Peet Co. v. Davis, supra; Suttles v.Northwestern Mutual Life Insurance Co., supra; Parke, Davis Co. v. Cook, supra.
5. Having reached the conclusion that the plaintiff's contentions with respect to tax situs and liability are without merit, we need not deal with the other questions, since in any view of them, the petition as amended did not state a cause of action, and was properly dismissed on general demurrer.
Judgment affirmed. All the Justices concur, except Head, J.,disqualified.