Court Opinion

ID: 9535291
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:47:45.408357+00
Date Added: 2024-06-11T13:33:12.677779
License: Public Domain

Flanagan, J.
The question presented is whether appellee is engaged in interstate commerce. If so engaged, and the tax sought to be imposed is a direct burden upon that commerce, its receipts are not subject to the Indiana Gross Income Tax.
Appellee is a New York corporation iicensed to do business in the State of Indiana. It maintains branch offices, called film exchanges, in the principal cities throughout the country, for the purpose of distributing its motion picture films to exhibitors who sign license agreements with the corporation. One such office is located in Indianapolis and serves those licensees of the appellee in the central and southern counties of Indiana. *347Another such office is located in Chicago and serves licensees in Illinois, part of Iowa, and the northern counties of Indiana. The right of the State to impose a tax on the gross receipts of the Indianapolis office is not here in issue. It is a tax on the gross receipts from Indiana licensees of the Chicago office with which we are concerned.
The business of the Chicago office is carried on by traveling salesmen who call upon the Indiana exhibitors and receive from them applications for licenses to show certain films. These salesmen submit the applications to their Chicago office, which, in turn, forwards them to the New York office of appellee for acceptance or rejection. Notification of acceptance or rejection is sent to the Chicago office and from there relayed to the exhibitor. In cases of acceptance the film contracted for is shipped to the Chicago office and then to the exhibitor. The exhibitor, after showing the film, in most cases, sends it back to the Chicago office. In all cases the exhibitor assumes the cost of the transportation as well as the risk of damage to the film in transit. All payments under the license agreements are received by the appellee at its Chicago office.
As we understand it, the State relies for reversal on the contention that appellee’s film has reached its final destination at the exhibitor’s place of business; that appellee is there engaged in a local Indiana business; that at this place the film of the appellee loses its interstate character and acquires a purely local one. With this contention we cannot agree.
In the case of Paramount Pictures Dist. Co. v. Henneford (1935), 184 Wash. 376, 51 P. 2d 385, it was held, under circumstances more favorable to appellant than in thé instant case, that similar transactions in the rental of films do constitute interstate commerce. See, *348also, State v. Paramount Publix Corporation (1934), 178 La. 818, 152 So. 534.
In the case of Gross Income Tax Division v. Surface Combustion Corp. (1953), 232 Ind. 100, 111 N. E. 2d 50, 66, this court said:
“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.”
We cannot see that appellee in the instant case, by reserving to itself the right of visitation on the exhibitor for purposes of determining its rightful license fee, has thus become engaged in the local exhibition of the film which it has licensed to the exhibitor. Nor can we see that the license agreement, providing for a percentage of the exhibitor’s admission price as the license fee, changes the character of the transaction.
Judgment affirmed.
Draper, C. J., and Emmert and Gilkison, JJ., concur.
Bobbitt, J., dissents with opinion.