Title: IND. DEPT. OF REVENUE v. Kimberly-Clark Corp.

State: indiana

Issuer: Indiana Supreme Court

Document:

416 N.E.2d 1264 (1981)
INDIANA DEPARTMENT OF REVENUE, Appellant (Defendant below),
v.
KIMBERLY-CLARK CORPORATION, Appellee (Plaintiff below).
No. 381S67.

Supreme Court of Indiana.
March 6, 1981.
*1265 Theodore L. Sendak, Atty. Gen. of Ind., Anthony J. Metz, III, Deputy Atty. Gen., Indianapolis, for appellant.
Robert E. Johnson, Francis S. Connelly, Krieg, DeVault, Alexander & Capehart, Indianapolis, for appellee.
PRENTICE, Justice.
This cause is before us upon the petition of the Plaintiff (Appellee), Kimberly-Clark Corporation, to transfer the cause from the Court of Appeals, First District, that Court having reversed the trial court's judgment in the plaintiff's favor. The Court of Appeals' opinion is reported at 375 N.E.2d 1146.
Transfer is hereby granted pursuant to Ind.R.App.P. 11(B)(2)(b) in that the Court of Appeals has erroneously decided a new question of law, i.e. the interpretation to be placed upon the term "business activities" as used in Public Law 86-272 (15 U.S.C.A. § 381). Specifically, the Court of Appeals decided that by reason of the very limited activities conducted within Indiana by the plaintiff, which arguably could be said were not, in and of themselves, "solicitations," it was not entitled to the exemption provided by the statute.
Public Law 86-272 (15 U.S.C.A. § 381), in pertinent part is as follows:
The statement of the case and the relevant facts were set forth by Judge Lowdermilk of the Court of Appeals as follows:
Courts of other jurisdictions have passed upon very similar questions arising under the same statute, but with opposite results.[1] Two cases, in our viewpoint, are fairly representative of those cases. Miles Laboratories, Inc. v. Department of Revenue, (1976) 274 Or. 395, 546 P.2d 1081 and United States Tobacco Co. v. Commonwealth, (1978) 478 Pa. 125, 386 A.2d 471, cert. denied, 439 U.S. 880, 99 S. Ct. 217, 58 L. Ed. 2d 193.
The Supreme Court of Pennsylvania held in United States Tobacco Co. v. Commonwealth, supra, that a corporation is engaged in "solicitation" alone when its only activities within a particular state consist of informing customers of new products, assisting in the display of those products and taking orders. The court stated that such activities are "inextricably related to solicitation" and that it was the intent of Congress, in enacting Pub.Law 86-272, to exempt such activities. Id. at 140, 142, 386 A.2d  at 478-79. In reaching its decision, the Pennsylvania court relied in part upon the decision in Gillette Co. v. State Tax Commission, (1977) 56 A.D.2d 475, 393 N.Y.S.2d 186, aff'd., (1978) 45 N.Y.2d 846, 382 N.E.2d 764, 410 N.Y.S.2d 65. In Gillette, it was held that the purpose of Public Law 86-272 would be frustrated if a tax could be imposed upon a corporation which neither owns property within a particular state, nor makes repairs within that state after sale. Under such circumstances, advising retailers on the art of displaying goods constitutes "solicitation" alone. Id. at 482, 393 N.Y.S.2d  at 191.
On the other hand, the Supreme Court of Oregon held a corporation to be taxable when its in-state representatives arrange advertising displays and replace damaged goods after sale. Miles Laboratories, Inc. v. Department of Revenue, (1976) 274 Or. 395, 400, 546 P.2d 1081, 1083. The court in Miles enumerated the following activities as being of a "nonsolicitous" nature:
Id. at 400, 546 P.2d  at 1083 (citations omitted).
In the case at bar, the crucial activities of the petitioner are: 1) conveying information to customers concerning inventory conditions or delays in shipments, 2) verifying destruction of damaged merchandise and 3) coordinating the delivery of merchandise for special promotions.
It can be seen that the circumstances of the Oregon case differed from those of the Pennsylvania case, and those of the case *1268 before us are similar to both but not the same as either. The activities of Plaintiff within Indiana appear to be more closely identified with those related in the Pennsylvania case than with the Oregon case, but we decide the case as we do upon the rationale expressed in the former and not because of a compelling similarity of facts.
We agree with the Supreme Court of Pennsylvania that it is not possible to state a general rule demarcating solicitation from merchandising. United States Tobacco Co., 478 Pa. at 135, 386 A.2d  at 476 (quoting Gillette Co., 56 A.D.2d  at 482, 393 N.Y.S.2d at 191). Rather, each case must be judged upon its own merits, with particular emphasis placed upon the totality of a corporation's activities within a state. United States Tobacco Co., 478 Pa. at 136-37, 386 A.2d  at 477. No one or two corporate activities performed in a casual or infrequent manner should operate to remove the exemption provided by Public Law 86-272. Such activities are indicative of the extent of a corporation's activities within a state, but it is the entire operation which must be examined.
We also believe that Congress perceived "solicitation" as embodying "sundry activities so long as those activities [are] closely related to the eventual sale of a product." Id. at 139, 386 A.2d  at 478. Finally, when a corporate representative performs an "act of courtesy" in order to accommodate a customer, he has not ventured beyond the realm of "solicitation." Id.
The aforementioned activities of the petitioner in this case may be properly categorized as "inextricably related to solicitation," or as "acts of courtesy." As such, the exemption provided by Public Law 86-272 is applicable. Accordingly, the decision and opinion of the Court of Appeals are ordered vacated and the judgment of the trial court is affirmed.
GIVAN, C.J., and DeBRULER, HUNTER and PIVARNIK, JJ., concur.
[1]  Compare, e.g., Coors Porcelain Co. v. State, (1973) 183 Colo. 325, 517 P.2d 838, cert. denied, (1974) 419 U.S. 874, 95 S. Ct. 136, 42 L. Ed. 2d 113; Ciba Pharmaceutical Products, Inc. v. State Tax Commission, (1964) Mo., 382 S.W.2d 645; Gillette Co. v. State Tax Commission, (1977) 56 A.D.2d 475, 393 N.Y.S.2d 186, aff'd., (1978) 45 N.Y.2d 846, 382 N.E.2d 764, 410 N.Y.S.2d 65; Oklahoma Tax Commission v. Brown-Forman Distillers Corp., (1966) Okl., 420 P.2d 894; United States Tobacco Co. v. Commonwealth, (1978) 478 Pa. 125, 386 A.2d 471, cert. denied, 439 U.S. 880, 99 S. Ct. 217, 58 L. Ed. 2d 193, with, e.g., Hervey v. AMF Beaird, Inc., (1971) 250 Ark. 147, 464 S.W.2d 557; Jantzen, Inc. v. District of Columbia, (1978) D.C., 395 A.2d 29; Chattanooga Glass Co. v. Strickland, (1979) 244 Ga. 603, 261 S.E.2d 599; Clairol, Inc. v. Kingsley, (1970) 109 N.J. Super. 22, 262 A.2d 213, aff'd., 57 N.J. 199, 270 A.2d 702, appeal dismissed, (1971) 402 U.S. 902, 91 S. Ct. 1377, 28 L. Ed. 2d 643; Miles Laboratories, Inc. v. Department of Revenue, (1976) 274 Or. 395, 546 P.2d 1081.