Pekao Trading Corp. v. Bragalini

Proceeding pursuant to section 2-35 of the Tax Law and article 78 of the Civil Practice Act to review a determination of the State Tax Commission. The petitioner Pekao Trading Corporation is engaged in the business of soliciting orders for gift parcels to be delivered in Poland and in executing those orders. This is accomplished by direction given by the petitioner to correspondents in Poland to fill orders from material in Poland and by transmitting necessary credits to the correspondents to effect this process. The State Tax Commission has assessed a franchise tax against petitioner under article 9-A of the Tax Law. The commission argues that petitioner is not engaged in interstate or foreign commerce; but we are of the opinion that the form of business carried on is essentially foreign commerce which is not a term limited merely to the physical shipment of goods. (Cf. United States v. Underwriters Assn., 322 U. S. 533; United States v. Shubert, 348 U. S. 222.) But the activity of the petitioner is not shown in the record to be entirely foreign commerce; it is substantially engaged in such local business activity in New York as to justify the imposition of a franchise tax which is levied against a privilege. Petitioner maintains an office in New York and all its 32 employees are employed in New York; orders for shipments are received only in the New York office. It has dealers also in other States; but a substantial part of its business arises from solicitation by dealers or agents in New York from its New York office. Of total orders from dealers of $2,800,000 in 1954, $630,000 were from New York dealers, and of a total of $600,000 orders received directly by petitioner, $124,000 were received from persons in New York. It conducts substantial advertising and promotional activities in New York. We think the assessment valid. (Berkshire Fine Spinning Associates V. City of New York, 5 N Y 2d 347; Matter of New Yorker Mag. *560v. Gerosa, 3 N Y 2d 362; Norton Go. v. Department of Revenue, 340 U. S. 534; Field Enterprises v. State of Washington, 352 U. S. 806.) Determination unanimously confirmed, with $50 costs. Present — Bergan, J. P., Coon, Gibson, Herlihy and Reynolds, JJ.