Case Title: Gross Income Tax Div. v. Surface Comb. Corp.

Citation: 111 N.E.2d 50, 232 Ind. 100

Docket Number: 28,834, 28,835

State: indiana

Court: Indiana Supreme Court

Date: 1953-03-19T00:00:00Z

Document:
232 Ind. 100 (1953)
111 N.E.2d 50
INDIANA DEPARTMENT OF STATE REVENUE, GROSS INCOME TAX DIVISION, ETC., ET AL.
v.
SURFACE COMBUSTION CORPORATION.
Nos. 28,834 and 28,835 consolidated.

Supreme Court of Indiana.
Filed March 19, 1953.
Rehearing denied April 21, 1953.
Certiorari denied October 12, 1953.
*103 J. Emmett McManamon, former Attorney General, and Edwin K. Steers, Jr., Attorney General, John J. McShane, Lloyd C. Hutchinson, Joseph E. Nowak, Robert F. Wallace, Earl E. Schmadal and George B. *104 Hall, Deputy Attorneys General, all of Indianapolis, for appellant.
Arthur L. Gilliom, Robert D. Armstrong, Elbert R. Gilliom and Richard L. Gilliom, all of Indianapolis, for appellee.
Certiorari denied U.S. Supreme Court October 12, 1953.
BOBBITT, J.
These cases were consolidated for briefing and oral argument and are so treated in this opinion.
Whenever appellee is referred to herein it shall mean the appellee and it predecessors in interest, or whichever of them is appropriate under the circumstances.
The action in No. 28,834 was commenced in 1944 by the filing of a complaint in three paragraphs by appellee's predecessors in interest, under the provisions of Acts of 1933, ch. 50, § 14, p. 388, as amended, being § 64-2614, Burns' 1951 Replacement, to recover the sum of $14,503.79 as gross income tax, and $6,315.57 as interest, which it is alleged was improperly collected for the tax years of 1934 to 1941, inclusive, and to recover interest on the total amount at three per cent per annum from the date of the alleged improper collection.
Paragraph 1 of the complaint presents the question whether the tax collected was a tax on interstate commerce in violation of the commerce clause, par. 3 of § 8 of Art. 1 of the Constitution of the United States.
The action in No. 28,835 was commenced in 1948 by the filing of a complaint in five paragraphs by appellee to recover the sum of $55,380.53 as gross income tax, and $4,030.11 as interest, which it is alleged was improperly collected for the tax years 1942 to 1945, inclusive, and to recover interest at the rate of three per cent per annum on the total amount from the date of the alleged improper collection.
*105 Except for the tax years and amounts involved, paragraph one in this case presents the same question as does paragraph one in the other case.
Among the errors assigned are:
An abuse of discretion under the circumstances here would be ground for a new trial and hence assignment numbered one, as an independent assignment of error, presents no question in this court. Noblesville, etc. Assn. v. Capital Furn. Mfg. Co. (1914), 57 Ind. App. 368, 370, 107 N.E. 85, and cases there cited.
In considering alleged error in a conclusion of law based upon special findings of fact, we accept such facts as correctly found. Hutchens, Admr. v. Hutchens (1950), 120 Ind. App. 192, 198, 91 N.E.2d 182; Kerfoot v. Kessener (1949), 227 Ind. 58, 73, 84 N.E.2d 190.
A summary of the facts relative to conclusion of law numbered one as specially found by the court discloses the following:
Appellants contend that all of the income of appellee here involved was derived from the erection and installation in Indiana of one of its manufactured products; that the sources of the gross receipts upon which the tax here in question was levied were indivisible installment contracts for the fabrication, erection and installation of heat treating furnaces "within the respective plants of customers in Indiana"; and that no part of such income could have been derived from an activity connected with interstate commerce.
Appellee contends that all of said receipts were derived from the sale of personal property in interstate commerce and that the taxes herein, and each *110 part thereof, were, and are, an unreasonable burden on interstate commerce in violation of Art. 1, § 8 of the Constitution of the United States.
The first question thus presented is:
To sustain their position appellants rely upon the following authorities:
The contract in the York case not only provided for adjusting and testing but the installation of a complete air-conditioning system in two hotels in Jackson, Mississippi, and a meat curing plant at Natchez. It required five months to complete the installation of one, three months for the other, and three months for the meat curing plant.
*111 The purchasers in Mississippi did not contract for a completely fabricated air-conditioning system or meat curing plant to be shipped, as such, from the factory of York Ice Machinery Corporation, but the primary consideration of the contract was the building and installing of air-conditioning systems in the hotels, the construction of a meat curing plant, and the furnishing of the necessary labor, equipment, and materials therefor. The air-conditioning systems were built into and became a part of the buildings in which they were installed. They were not standard machines which could be removed, resold and used by other customers of the trade with only minor adjustments as were the furnaces in the case at bar. The facts in that case fall within the rule in Browning v. Waycross (1914), 233 U.S. 16, 58 L. Ed. 828, 34 S. Ct. 578, which involved the violation of a city ordinance that imposed an occupation tax of $25 per year upon lightning rod agents or dealers engaged in "putting up or erecting" lightning rods within the city limits, as constituting a local activity for which a license fee or privilege tax was imposed, and the facts there were of such a nature as to fall within this class of activities so as to fall within the ordinance there applied.
No such situation exists in the case at bar and the rule applied in the York Ice Machinery Corporation case has no application to the facts now before us.
The court there held that the tax was laid upon the business of contracting conducted in West Virginia, and that income derived from that business was properly subject to taxation by that state. It is clear that the contracts involved in the case at bar have no similarity to those of the contracts for locks and dams in the Dravo Contracting Co. case.
There is a vast difference between a contract to furnish the necessary machinery and material therefor and construct locks and dams in rivers within a state, and a contract to furnish heat treating furnaces constructed and fabricated at the company's factory and shipped f.o.b. the point of shipment, with nothing to be done in the state to which they *115 were shipped except, in the case of the small furnaces, to fasten them on the base prepared by the customer, and adjust them to a satisfactory working condition, and to reassemble the large furnaces where required.
There, again, the tax was imposed upon the taxpayer for the privilege of engaging in the business of contracting within the state. Courts have repeatedly held that a tax of this nature does not violate the commerce clause of the Constitution.
*116 The court, at page 161, 82 L.Ed., further said:
The court held that the company's activities consisting of construction work at the dam sites were local and not in interstate commerce. The work required in the construction of locks and dams in a river is clearly distinguishable from that required in the installation of a heat treating furnace or other fabricated machines, and the fact that the construction of locks and dams in the James case was held to constitute the performance of local activities in the State of West Virginia is not authority for holding that the installation of the furnaces, under the circumstances in the case at bar, was a local activity performed in the State of Indiana.
(7) Holland Furnace Co. v. Department of Treasury (1943), 133 F.2d 212, (cert. denied 320 U.S. 746, 88 L. Ed. 443, 64 S.Ct. 49) covered three different suits, separately brought. One of these involved the Holland Furnace Company with its principal place of business and manufacturing plant at Holland, Michigan. It was duly qualified to do business in Indiana and maintained sales offices at various cities within the state where its employees, as agents, solicited written contracts. These contracts provided that Holland Furnace Company furnish and install at the customer's premises a particular heating system for a stipulated amount, payable at Holland's office in Michigan, Holland retaining the title until the contract was paid in full. A specified portion of the price was in payment of the cost of installation, registers, regulators and fittings.
The second suit involved Interstate Roofing and Supply Company, an Illinois corporation, with its principal place of business at Chicago. It also was qualified to do business in Indiana but maintained no place of business within the state, obtaining its business through salesmen from Illinois who solicited contracts from the owners of buildings in Indiana requiring asphalt or composition shingles to be applied to roofs and sides of houses. The shingles were purchased by Interstate from jobbers outside of Indiana and transported to its customers in Indiana. The purchase price was paid in Illinois. The shingles could be applied by any experienced workman but were put on the buildings by Interstate trained employees.
*118 The other suit involved Great Lakes Dredge & Dock Company and Fitz Simons & Connell Dredge & Dock Company, New Jersey and Illinois corporations, respectively, with their principal place of business at Chicago, Illinois. Both were qualified to do business in Indiana and the contracts in question called for the construction of breakwaters, lighthouses, mooring piles and other work, and the furnishing of materials in connection therewith.
The Circuit Court of Appeals, Seventh Circuit, held that the tax arose "from the delivery and installation in Indiana by Holland and Interstate of furnaces, equipment, and shingles to customers in that state, and from work performed and materials furnished by Great Lakes and Fitz Simons at construction sites in Indiana, in performance of which, the appellants engaged in a local business, exactly as any other contractors, without discrimination against them in favor of purely local trade."
These cases are all clearly distinguished from the case at bar. In the Holland case, the contract was for the installation of heating systems in buildings already constructed or in the course of construction and the work included, not only the installation of a furnace, but of pipes, ducts, registers, vents and other materials necessary to the system. The installation here could have been done by any workman familiar with this type of work. The contract in the Holland case was clearly one for the installation of a heating system, including the placing of the furnace and the furnishing and installation of other equipment and materials necessary to constitute a complete heating system for the building. The customers of the Holland Furnace Company were not, as were the customers in the case at bar, buying a completely fabricated and assembled *119 heating system. The furnace, ducts, pipes, vents and other materials which became a part of the heating system when installed in the building, and the work of installation did not require the services of a specially trained factory supervisor. The Holland case is further distinguished from the one at bar by the fact that Holland maintained several places of business within the state of Indiana and was actively engaged in doing business within the state while such is not the case with appellee herein.
The Interstate contract was clearly one to furnish labor and materials and perform the work necessary to apply shingles to buildings located in Indiana. The primary purpose of the contract was not the purchase of shingles, but the covering of the house  a new roof or siding, and the shingles were incidental to the main purpose of the contract. The work could have been done by any carpenter. That situation differs materially from that of the installation of furnaces in the case at bar.
The Dredge & Dock Company contracts were clearly contracts for construction and the furnishing of materials in connection therewith. The fact that the various activities covered in the Holland Furnace case were held to be subject to the Indiana Gross Income tax, because of the material difference in the type of contracts and the ultimate purpose to be accomplished by each, is not authority for the levying of such a tax on the activities involved in the case at bar.
The principles which we believe are applicable here are set forth in the following cases which although they did not involve the taxing power of the state, they did consider whether certain transactions were sales in interstate commerce or the performance of service contracts within the state. The facts in these cases are *120 strikingly similar to those in the case at bar, and these authorities are persuasive, if not controlling, on the question of whether appellee's activities were sales in interstate commerce, or the performance of contracts within the state of Indiana.
(1) The leading case on this subject is York Mfg. Co. v. Colley (1918), 247 U.S. 21, 62 L. Ed. 963, 38 S. Ct. 430, 11 A.L.R. 611. This was a suit to collect an amount due upon a contract for the purchase of ice manufacturing machinery, and the principal question was whether the company was doing business within the State of Texas. Appellee alleged that appellant was a foreign corporation which maintained an office and transacted business in the state of Texas without having obtained a permit therefor. Appellant contended that its activities were in interstate commerce. The contract in question was for the delivery and installation of an ice plant consisting of gas compression pumps, compressor, condensers, freezing tanks, coils and other accessories, including apparatus for making distilled water. The machines were shipped to the point of delivery in Texas, "knocked down" or disassembled, and they were re-assembled and installed at the place of delivery under the supervision of an engineer furnished by appellant. Local labor furnished by the purchaser was employed to assist the supervising engineer and machines were not only to be erected and assembled at the place of delivery, but they were to be given a practical test in operation before the purchaser was obligated to accept the machine.
At page 965, 62 L.Ed., the Supreme Court said:
And further, at page 966,
Appellant contended that the contract did not constitute a sale in interstate commerce but the principal and essential thing contracted for was the installation of the organ in the theatre in Iowa, and that the installation was not such a part of the delivery of the organ as to be embraced within an interstate sale. Upon this question the Circuit Court of Appeals, Eighth Circuit, at page 752, 46 F.2d, said:
The Hess Company had its office and principal place of business in Chicago. It was not licensed to do business in Missouri and had never maintained an office or place of business in that state.
The contract was prepared in the office of Hess Company at Chicago and after it was signed for Hess Company, by its president, it was sent to the Grain Company in St. Louis for its signature. The materials for the drier were made and prepared in Chicago and shipped by rail to St. Louis. An expert from the factory in Chicago was sent to St. Louis where he hired men to assist in the installation of the machine, under his supervision. The drier consisted of grain racks, fans, and steam coils, resting upon steel beams in the drier building. These various parts were placed in position and bolted together by the local labor under the supervision of the factory supervisor. The court there held that the Hess Co. had a right under the commerce clause of the federal Constitution to send its skilled supervisor into the state, at the expense of the Grain Company and erect and install the grain drier, and instruct the purchaser in the manner of its use without taking out a license to do business in the state of Missouri.
The court at page 656, 236 P., said:
and the court so held.
Where it was necessary for appellee herein to ship furnaces partly "knocked down" because they were too large to be transported on a railroad car or truck, when completely assembled, the work of assembling or installing them at the plant of the customer was as much an inherent and essential part of the contract for the sale of a complete and functioning furnace as was the erection and assembling of the compressors in the Vilter Mfg. Co. v. Evans, Rec., supra, case.
The assembling of these furnaces required specially trained persons possessing a mechanical knowledge of *128 the furnace and a thorough understanding of the methods and manner of assembly employed by the manufacturer. This was work which the appellee was required to do in order to make and complete the sale of the larger furnaces, and is not work performed under a local contract, but is intrinsically related to and inherently a part of the sale.
The agreement of appellee to install furnaces which were shipped completely assembled and to assemble and install those which were shipped in sections  "knocked down"  is not only related to the sale of such furnaces, and a necessary incident thereto, but is essential if the furnaces are to be sold. The thing which the customer in Indiana purchased from appellee in Toledo, Ohio, was a heat treating furnace complete in one functional unit. The "knocked down" and unassembled sections of the large furnaces which were shipped from appellee's factory in Toledo were not the subject matter of the sale  the customer did not buy the parts of a furnace and contract with appellee to construct and install a furnace with parts which had been individually purchased. The sales here involved were not completed until the furnaces were reassembled and adjusted at the purchaser's plant so they would perform the functions for which they were purchased.
As was said by the Indiana Appellate Court in Vilter Mfg. Co. v. Evans, Rec. (1927), 86 Ind. App. 144, 154 N.E. 677, supra, concerning the ammonia compressor, the local laborers were employed by appellee herein only in the reassembling and installing of the furnaces which had been purchased in the State of Ohio and taken apart for the convenience of shipment.
There is a clear line of distinction between those cases which follow Browning v. Waycross (1914), *129 233 U.S. 16, 58 L. Ed. 828, 34 S. Ct. 578, supra, and those which follow York Mfg. Co. v. Colley (1918), 247 U.S. 21, 62 L. Ed. 963, 38 S. Ct. 430, 11 A.L.R. 611, supra, which is whether, as in Browning v. Waycross, supra, the transaction or activity was strictly local in character and particularly within the exclusive control of state authority, separate from interstate commerce and involving machines, apparatus or equipment which did not require a factory trained expert or engineer to supervise installation, construction or operation, but were of such character that these functions could be performed by local workmen skilled in the trade, or whether, as in York Mfg. Co. v. Colley, supra, the work required to be done by the contract is intrinsically related to and inherently connected with interstate commerce, and whether the installation was, because of some peculiar quality or complexity, essential to the making of the sale.
The case at bar clearly falls within the last classification. The installing of all sizes of furnaces and the assembling of the large ones when required was, under the special findings of the trial court, intrinsically related to and inherently a part of the sale; and because of their complexity their installation and testing was essential to the making of the sale.
The facts as found by the trial court show that the only work performed in Indiana was the putting together of the parts of the furnaces, and the installation and adjustment thereof. There is no evidence that the furnaces were made, built, fabricated, created or brought into existence in Indiana. For the reasons above stated, the transactions here involved are clearly sales of personal chattels in interstate commerce and the installation and reassembling where required, were inherently a part of, and a necessary incident to, the sale.
*130 See also to the same effect as York Mfg. Co. v. Colley (1918), 247 U.S. 21, 62 L. Ed. 963, 38 S. Ct. 430, 11 A.L.R. 611, supra; J.C. Boss Engineering Co. v. Gunderson Brick & Tile Co. (1926), 168 Minn. 183, 209 N.W. 876; Koppers Co. v. City of Milwaukee (1926), 191 Wis. 397, 211 N.W. 147; Creamery Package Mfg. Co. v. Cheyenne Ice Cream Co. (1940), 55 Wyo. 277, 100 P.2d 116; Chuse Engine & Mfg. Co. v. Vromania Apt. Co. (1911), 154 Mo. App. 139, 133 S.W. 624; Stafford v. Wallace (1922), 258 U.S. 495, 66 L. Ed. 735, 42 Sup. Ct. Rep. 397, 23 A.L.R. 229; Samper v. Indiana Department of State Revenue (1952), 231 Ind. 26, 106 N.E.2d 797, 809; 11 A.L.R. Anno., p. 614; 101 A.L.R. Anno., p. 356; Cf: 55 A.L.R. Anno., p. 726.
Fourth: Having concluded that the transactions herein were sales of personal chattel in interstate commerce, we now proceed to consider whether the tax imposed by the State of Indiana upon the gross amount received from such sales is a burden upon interstate commerce within the meaning of Section 8 of Art. 1 of the Constitution of the United States.
The fact that the transactions herein constitute interstate commerce does not, of itself, determine whether the tax levied thereon offends the commerce clause of the Constitution, Central Greyhound Lines v. Mealey (1948), 334 U.S. 653, 655, 92 L. Ed. 1633, 68 S. Ct. 1260; and whether such transactions are in interstate commerce to such an extent as to forbid the State of Indiana to levy a tax upon the gross receipts therefrom, will be determined by the particular set of facts here before us. Gross Income Tax Div. v. J.L. Cox and Son (1949), 227 Ind. 468, 475, 86 N.E.2d 693, 10 A.L.R.2d 642.
As was stated by Justice Holmes in Swift & Co. v. *131 United States (1905), 196 U.S. 375, 399, 49 L. Ed. 518, 526, 25 S. Ct. 276, 280:
It is said in Freeman v. Hewit (1947), 329 U.S. 249, 91 L. Ed. 265, 272, 67 S. Ct. 274, 277:
In case of doubt as to the meaning or applicability of the gross income tax statute, it will be construed more strongly against the state and in favor of the taxpayer. R.L. Shirmeyer, Inc. v. Ind. Revenue Bd. (1951), 229 Ind. 586, 99 N.E.2d 847, 849, and authorities there cited.
In support of their position that the tax herein is not a burden on interstate commerce, appellants rely upon the following authorities:
And at page 522, 95 L.Ed., in a concurring opinion, Justice Reed said: "Such sales, consummated by direct shipment to Illinois buyers from out of the state are interstate business and free of the tax Illinois has levied."
The foregoing cases, as do others cited and relied upon by appellants, involve the taxing of a purely local activity such as a sale within the state, the performance of a construction contract wholly within the state, or a tax or a license for the privilege of doing business within the state, and all are clearly distinguished from a tax on gross receipts from the sale of personal property by residents of a state outside of Indiana to a resident within this state. Other cases cited by appellants are not applicable to the factual situation before us and we do not deem it necessary to further extend this opinion by discussing them.
Appellants assert that we should follow the Supreme Court of Illinois and the Mississippi Supreme Court in their projection of the theory that if a tax does nothing more than place interstate commerce upon the same footing with local commerce, a tax levied thereon is valid. This argument was answered by the United States Supreme Court in Freeman v. Hewit (1947), 329 U.S. 249, 91 L. Ed. 265, 67 S. Ct. 274, supra, at page 273. when the court said:
This doctrine was recently affirmed in Spector Motor Service v. O'Connor (1951), 340 U.S. 602, 95 L. Ed. 573, 71 S. Ct. 508, and at pages 578, 579, 95 L.Ed., the court said:
It has been suggested that because, "The increasing social burdens assumed by our governments, both State and national, will require increasing and more searching taxation for their support."[1], we should follow the present trend of some of our courts and steer our course by principle, rather than *137 by precedent, in order to sustain questionable taxes when imposed and extended in an effort to secure additional revenue. We are not impressed with this suggestion, nor are we disposed to cut loose the moorings of the past and embark upon an uncharted sea without regard to precedent and with only the wavering compass of ever-shifting needs to guide us into uncharted seas, in order to meet the expense of increased burdens being assumed from year to year by our state and national governments. Principles never change, but their application may be varied to meet the needs of an advancing society. However, this does not require, or permit, a distortion of principles and time-honored precedents merely to satisfy the lust of a greedy and overindulgent, benevolent government.
The United States Supreme Court has consistently held that a tax on gross income from transactions in interstate commerce is an unconstitutional burden upon, or interference with, commerce among the states. The effect of taxing gross receipts from interstate commerce is the same as a direct tax upon the commerce itself.
The principles upon which this rule is based were enunciated by Chief Justice Marshall and have been elaborated upon in later decisions.[2]
Philadelphia etc. Mail Steamship Co. v. Pennsylvania (1887), 122 U.S. 326, 30 L. Ed. 1200, 7 S. Ct. 1118, involved the question of whether a state can constitutionally impose upon a steamship company a tax upon *138 its gross receipts derived from the transportation of persons and property by sea, between different states, and to and from foreign countries. At page 1203, 30 L.Ed., the court said:
Galveston, H. & S.A.R. Co. v. Texas (1908), 210 U.S. 217, 52 L. Ed. 1031, 28 S. Ct. 638, was an action against a railroad to recover taxes equal to one per cent on its gross receipts, where a part, and in some instances the greater part, of such receipts were derived from the carriage of passengers and freight coming from, or destined to, points without the state. At page 1037, 52 L.Ed., the court said:
Meyer v. Wells, Fargo, & Co. (1912), 223 U.S. 298, 56 L. Ed. 445, 32 S. Ct. 218, involved a gross revenue tax upon the property and assets of corporations equal to three per cent of the gross receipts "from every source whatsoever." At page 447, 56 L.Ed., the court said:
And further, at page 448:
Alpha Portland Cement Co. v. Massachusetts (1925), 268 U.S. 203, 69 L. Ed. 916, 45 S. Ct. 477, 44 A.L.R. 1219, involved an excise tax which the State of Massachusetts attempted to impose upon a foreign corporation doing an interstate business within the state measured by the proportion of capital shares and net income attributed to such transactions. It was conceded by the Attorney General of Massachusetts that the company was engaged in Massachusetts exclusively in interstate commerce and the Supreme Court so held. While that case involved the tax upon the entire net income of the corporation, the principle there applied may be equally applied to the facts in the case at bar. At page 924, 69 L.Ed., the court quoted from St. Louis Southwestern R. Co. v. Arkansas, 235 U.S. 350, 364, 59 L. Ed. 265, 272, 35 Sup. Ct. 99, as follows:
New Jersey Bell Teleph. Co. v. State Bd. of T. and A. (1930), 280 U.S. 338, 74 L. Ed. 463, 50 S. Ct. 111, involved an act of the State of New Jersey imposing a tax on all the property and franchises of persons, corporations, etc. using or occupying public streets, highways, roads or public places based upon a proportion of the gross receipts of the taxpayer to be determined according to the provisions of the act. Appellant operated a telephone business in the State of New Jersey and all of its lines and property were within that state. A large part of the company's receipts were for transmission and receipt of messages over connecting lines between places in New Jersey and in other states and countries. The act required appellant's gross receipts in New Jersey to be included for the calculation of the franchise tax assessed. At page 467, 74 L.Ed., the court said:
*141 Puget Sound Stevedoring Co. v. Tax Commission (1937), 302 U.S. 90, 82 L. Ed. 68, 58 S. Ct. 72, involved a tax of the State of Washington for the privilege of engaging in business activities within the state based upon a percentage of the value of the products or the gross receipts of sales on certain classes of business, in this case the business of a stevedoring company, which rate was one-half of one per cent of the gross income of the business. At page 72, 82 L.Ed., the court said:
Western Live Stock v. Bureau of Revenue (1938), 303 U.S. 250, 82 L. Ed. 823, 58 S. Ct. 546, 115 A.L.R. 944, supra, involved a privilege tax imposed by the State of New Mexico upon the gross receipts of those engaged in certain specified businesses. The question there before the court was whether the tax laid under this statute on the gross income of appellants received from advertisers for space in a journal which was published in New Mexico and circulated to subscribers within and without the state imposed a constitutional burden on interstate commerce. Following a lengthy discussion of the various types of taxes which might be lawfully imposed upon interstate commerce, including property taxes, use tax, net income tax, and franchise taxes of various kinds, the court, at pages 827, 828, 82 L.Ed., said:
Gwin, White & Prince v. Henneford (1939), 305 U.S. 434, 83 L. Ed. 272, 59 S. Ct. 325, involved the question of whether a tax imposed by the State of Washington and measured by the gross receipts of appellant from its business of marketing fruit shipped from Washington to the place of sale in various states and foreign countries was a burden on interstate and foreign commerce. At page 275, 83 L.Ed., the court said:
*143 And further, at page 276,
Mr. Justice Butler and Mr. Justice McReynolds, in a concurring opinion, said, at page 278, 83 L.Ed.:
The Supreme Court has twice declared the Indiana Gross Income Tax to be a burden on interstate commerce when levied upon the gross receipts derived from such commerce and when so levied it violates Art. 1, § 8 of the Constitution of the United States.
In J.D. Adams Mfg. Co. v. Storen (1938), 304 U.S. 307, 82 L. Ed. 1365, 58 S. Ct. 913, 117 A.L.R. 429, the question of the threatened imposition of the tax on the gross income from appellant's sales in interstate commerce was presented.
The Supreme Court in this opinion ably distinguished *144 this tax from those which may be lawfully imposed for the privilege of doing business, as charter fees, franchise taxes or fees, excise property taxes, and those of like nature and defined the Indiana Gross Income Tax as "a tax upon gross receipts from commerce." The tax there was sought to be imposed upon the gross receipts derived from appellant's sales to customers in other states and in foreign countries. At page 1369, 82 L.Ed., the court said:
Another phase of the Indiana Gross Income Tax Act was before the United States Supreme Court in Freeman v. Hewit (1947), 329 U.S. 249, 91 L. Ed. 265, 67 S. Ct. 274, supra, and involved the sale of securities on the New York Stock Exchange by brokers in New York. At page 273, 91 L.Ed., the court said:
And further, at page 274:
See to the same effect as the foregoing:[3]Gross Income Tax Div. v. Strauss (1948), 226 Ind. 329, 331, 79 N.E.2d 103, (Cert. denied 335 U.S. 860, 93 L. Ed. 406, 69 S.Ct. 135); Fargo v. Stevens (1887), 121 U.S. 230, 30 L. Ed. 888, 7 S. Ct. 857; Norton Co. v. Department of Rev. (1951), 340 U.S. 534, 95 L. Ed. 517, 71 S. Ct. 377, supra; Spector Motor Service v. O'Connor (1951), 340 U.S. 602, 95 L. Ed. 573, 71 S. Ct. 508, supra; Nashville C. & St. L.R. Co. v. Wallace (1933), 288 U.S. 249, 77 L. Ed. 730, 738, 53 S. Ct. 345, 87 A.L.R. 1191; Commissioner of Corp. & Tax'n. v. Ford Motor Co. (1941), 308 Mass. 558, 33 N.E.2d 318, 139 A.L.R. 936, 947; 44 A.L.R. Anno. p. 1228; 154 A.L.R. Anno. p. 629 (2).
In the case at bar the tax sought to be recovered was levied upon the gross receipts of appellee from interstate commerce transactions within and without the State of Indiana. A tax upon the gross receipts from such commerce is, in effect, a tax upon the commerce itself and, as such, interferes with and burdens such commerce in proportion to the amount of the tax levied. If Indiana can tax the gross receipts derived from the commerce here in question, simply because they are income from activities which are in interstate commerce, then the State of Ohio may also tax the same receipts for the same reason.
The free flow of commerce across state lines is a *146 vital and indispensable part of the economic life and political existence of our country. A tax upon the gross receipts derived from activities in interstate commerce affects each transaction in proportion to its size and without regard to whether or not it is profitable. It is entirely possible that such a tax may be sufficient to make the difference between profit and loss, or to so reduce the profit as to impede or discourage the conduct of commerce.
The tax levied against appellee herein is a direct tax upon the gross income (receipts) derived from sales in interstate commerce and, as such, directly burdens, and interferes with, the free flow of such commerce between the State of Ohio and the State of Indiana and is invalid as being in conflict with Article I, of § 8 of the Constitution of the United States.
It is argued that a different situation maintains than that present in the J.D. Adams Mfg. Co. v. Storen (1938), 304 U.S. 307, 82 L. Ed. 1365, 58 S. Ct. 913, 117 A.L.R. 429, supra, and Freeman v. Hewit (1947), 329 U.S. 249, 91 L. Ed. 265, 67 S. Ct. 274, supra, cases because the goods in this case were shipped into Indiana instead of being shipped from Indiana to another state.
When goods or chattels are shipped from one state to another, it is interstate commerce and the direction of the flow does not change that characteristic. The imposition of a tax on the gross receipts of such commerce is no less a burden thereon, or interference therewith, because such receipts are taxed by the state into which the commerce flows rather than by the state of its source. Fargo v. Stevens (1887), 121 U.S. 230, 30 L. Ed. 888, 892, 7 S. Ct. 857, supra; Philadelphia etc. Mail Steamship Co. v. Pennsylvania (1887), 122 U.S. 326, 30 L. Ed. 1200, 1202, 7 S. Ct. 1118, supra.
*147 The transactions herein being interstate commerce and a tax upon the gross receipts therefrom being an unconstitutional burden upon such commerce, the judgment of the lower court should be affirmed.
Having reached this conclusion it is not necessary to consider the other questions raised by the briefs, or to consider appellee's cross-errors.
Judgment affirmed.
Emmert, C.J., not participating.
NOTE.  Reported in 111 N.E.2d 50.
[1]  Stone v. York Ice Machinery Corporation (1942), 193 Miss. 638, 10 So. 2d 380, supra.
[2]  See: Brown v. Maryland (1827), 12 Wheat. 419 U.S. 1827, 6 L. Ed. 678, 687; Philadelphia etc. Mail Steamship Co. v. Pennsylvania (1887), 122 U.S. 326, 30 L. Ed. 1200, 7 S. Ct. 1118; United States Glue Co. v. Oak Creek (1917), 247 U.S. 321, 62 L. Ed. 1135, 1141, 38 S. Ct. 499; Western Live Stock v. Bureau of Revenue (1938), 303 U.S. 250, 82 L. Ed. 823, 58 S. Ct. 546, 115 A.L.R. 944; Freeman v. Hewit (1947), 329 U.S. 249, 91 L. Ed. 265, 67 S. Ct. 274, supra.
[3]  For discussions of state taxation of Interstate Commerce, See: 27 Cal. L. Rev. 336; 40 Col. L. Rev. 653; 56 Yale L.J. 898; Vand. L. Rev., Vol. 4, No. 3, p. 496.