Court Opinion

ID: 8195206
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:18:27.479813+00
Date Added: 2024-06-11T16:40:44.852747
License: Public Domain

Eschweiler, J.
There is no dispute as to questions of fact. The trial court found that the income derived by plaintiff from property located or business transacted within the state of Wisconsin during the period in question was from the following items only:
Rentals of shed and typewriter. $1,236 73
On account of materials purchased and sold by plaintiff in Wisconsin.A :. 9,674 60
On account of the brick stacks.:. 10,147 .73
On account of the salary of engineer and expert brickman. 4,784 80
$25,843 86
Uppn such items but $1,450.94 w^s properly chargeable to plaintiff for income tax for the year 1922, under the method of computation agreed to'.by both parties.
The substance of appellants’ contention is that under’ *400sec. 71.01, Stats., the nonresident plaintiff properly had assessed against it, as being income derived from property located or business transacted within this state for said year, the entire contract■ price; that the-entire, tax so paid under protest was due under the theory that the transaction involved was a contract for the construction of an entire engineering project 'in the state of Wisconsin, and that therefore the situs of' the income derived from the entire contract was in the state of Wisconsin rather than, as found by the court and as contended for by- plaintiff (other than the items above specified and not now in dispute), in a transaction of interstate commerce and not subject to income tax assessment.
We are satisfied that the conclusion of the trial court was correct. It was a contract involving the furnishing of materials and parts to be worked into the construction of certain gas or coke ovens of special nature and under and pursuant- to designs covered by letters patent owned and controlled by plaintiff; it involved highly specialized engineering skill; the drawing of many plans by the engineering force of plaintiff at Pittsburgh; constant revision and checking up on the same and on the progress of the work by the same office through reports of the local engineer; it involved the shipping into Milwaukee from outside the state of a large- amount of prepared parts and of materials necessary and essential to be wrought into the construction of the ovens. The actual labor of putting together such parts and material so as to create the superstructure was done by the Milwaukee purchaser and not by the plaintiff.
No question is raised or could well be raised but that the plaintiff and the purchaser had the legal right to apportion between themselves such component parts of that which was necessary to be done to reach the final result.
When, under this contract as carried out, the plaintiff furnished the plans and designs for the erection of this *401particular form of coke ovens,- protected as to exclusiveness by letters patent, and such protection being guaranteed by plaintiff, and then delivered the necessary materials and parts for such ovens from without the state on board cars at Milwaukee, there was involved, up to that point, an interstate transaction. From then,on began that which was to be done in Wisconsin and by the purchaser, subject only to the duty required of the plaintiff of constant technical supervision in order that the carrying out of the construction should follow with special and critical accuracy such plans and designs and the guaranteed result be reached,— it being conceded in this record that work of this kind could only be successfully done under constant supervision and inspection by persons of special skill and experience. Such technical inspection and supervision was a necessary incident to the completion of the interstate commerce shipment;— without it the purpose of such interstate transaction could not be performed in letter or spirit. In such inspection and supervision there was included no power of control or direction over the workmen- employed and paid by the purchaser in doing the construction and erection. That plaintiff contracted as to the efficiency of the ovens when completed did not make it any the less an interstate transaction, or affect that which was required to be done by, and which was done and paid for by, the purchaser and through its own employees and under its own supervision.
The principle here involved is substantially the same as that dwelt upon by-this court in Pfaudler Co. v. Westphal, 190 Wis. 486, 209 N. W. 700, where a number of authorities are considered, many of which are cited in the briefs here. It is also recognized in Kansas City S. S. Co. v. Arkansas, 269 U. S. 148, 46 Sup. Ct. 59.
The conclusions of the trial court are well supported by such cases as Wolf Co. v. Kutch, 147 Wis. 209, 214, 132 N. W. 981; S. F. Bowser & Co. v. Savidusky, 154 Wis. 76, *40279, 80, 142 N. W. 182; and F. A. Patrick & Co. v. Deschamp, 145 Wis. 224, 228, 129 N. W. 1096.
The defendants therefore have no right to complain of the result reached below upder the rule declared in U. S. Glue Co. v. Oak Creek, 161 Wis. 211, 218, 153 N. W. 241 (affirmed, 247 U. S. 321, 38 Sup. Ct. 499), separating income into its component parts, some with a situs for purposes of income tax assessment in this state and the others as being immune from local taxation because having a situs elsewhere.
By the Court. — Judgment affirmed.