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U.S. Supreme Court

Norton Co. v. Department of Revenue, 340 U.S. 534 (1951)

Norton Co. v. Department of Revenue

No. 133

Argued December 6, 1950

Decided February 26, 1951

340 U.S. 534


Under the Illinois Retailers' Occupation Tax Act of June 28, 1933, Illinois levied a tax on the gross receipts from all sales to persons in Illinois by petitioner, a Massachusetts corporation with its factory and head office in Massachusetts and a branch office in Chicago. At petitioner's head office are its general management, accounting, and credit offices, where it accepts all direct mail orders and orders forwarded by its Chicago office. The Chicago office makes local sales at retail from a limited inventory carried there, receives orders and forwards them to the head office for action there, and acts as an intermediary to reduce freight charges on goods shipped from the head office. The Supreme Court of Illinois found that the presence of petitioner's local retail outlet, in the circumstances of this case, was sufficient to attribute all income derived from Illinois sales to that outlet and render it taxable.

Held: the tax is sustained on all sales to Illinois customers, except on orders sent directly by the customers to the head office and shipped directly to the customers from the head office. Pp. 340 U. S. 535-539.

1. When a foreign corporation has gone into a state to do local business by state permission and has submitted itself to the taxing power of the state, it can avoid taxation on some sales to persons in that state only by sustaining the burden of showing that particular transactions are disassociated from the local business, and interstate in nature. P. 340 U. S. 537.

2. By submitting itself to the taxing power of the state, it likewise submits itself to the state's judicial power to construe and apply its tax laws, insofar as it keeps within constitutional bounds. P. 340 U. S. 538.

3. In the light of all the evidence, the judgment of the Illinois court attributing to petitioner's Chicago branch income from all sales that utilized it either in receiving the orders or distributing the goods was within the realm of permissible judgment. Pp. 340 U. S. 538-539.

4. The only transactions here involved that are so clearly interstate in character that the State could not reasonably attribute their proceeds to the local business are orders sent directly to its chanrobles.com-red

Page 340 U. S. 535

head office by the customers and shipped directly to the customers from the head office, and such transactions are not subject to this tax. P. 340 U. S. 539

405 Ill. 314, 90 N.E.2d 737, judgment vacated and remanded.

The Supreme Court of Illinois sustained a state tax on the gross receipts from all sales by petitioner to persons in Illinois. 405 Ill. 314, 90 N.E.2d 737. This Court granted certiorari. 340 U.S. 807. Judgment vacated and cause remanded, p. 340 U. S. 539.