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Sinclair Pipe Line Co. v. Carpentier

OPINION FILED JANUARY 24, 1957.

SINCLAIR PIPE LINE COMPANY, APPELLANT,

v.

CHARLES F. CARPENTIER, SECRETARY OF STATE, ET AL., APPELLEES.



APPEAL from the Circuit Court of Sangamon County; the Hon. DEWITT S. CROW, Judge, presiding.

MR. JUSTICE DAILY DELIVERED THE OPINION OF THE COURT:

This appeal, taken from a decree of the circuit court of Sangamon County, involves the revenue and questions both the construction and constitutionality of certain provisions of the Business Corporation Act which served as the basis for an annual franchise tax and increased license fee assessed in 1955 by the State of Illinois against appellant, the Sinclair Pipe Line Company, a foreign corporation engaged exclusively in interstate commerce activities within the State.

The facts are either stipulated or admitted by the pleadings and disclose that appellant is a Delaware corporation whose principal business office is in Kansas. On May 14, 1952, it qualified to do business in Illinois as a foreign corporation upon an application for certificate of authority which recited the following:

"Sixth — The purpose or purposes for which it was organized which it proposes to pursue in the transaction of business in this State are:

"Generally to build, own and operate pipe lines, storage facilities, pump stations and all other necessary or desirable facilities, equipment and appurtenances, including telephone, telegraph and radio communication systems, for the receipt, gathering, transportation, carriage, conveyance, storage of crude petroleum and the products and byproducts thereof and all other rights and privileges necessary or appurtenant to such business; to acquire by purchase, lease, condemnation or other appropriate proceedings interest in such lands, rights of way, easements or other property as may be necessary, useful or proper in the conduct of said business; and generally to do all other and further acts and to own, acquire, hold, use and dispose of real and personal property as may be necessary or convenient in the conduct of such business."

It is conceded that this language is broad enough to permit appellant to engage both in interstate and intrastate business in Illinois.

Following its qualification, appellant set about to acquire land and easements to accomplish its purpose and in some instances, all prior to 1955, its acquisitions were made through eminent domain proceedings initiated in Illinois courts. The stipulation sets forth that appellant has at all times paid all ad valorem and property taxes assessed against its holdings by the taxing authorities of the taxing districts in which they are located. By January, 1955, appellant owned and operated three pipeline systems, originating in or traversing Illinois, which were used solely in the transportation of crude oil or oil products either through Illinois or from Illinois into the State of Missouri. As an adjunct to its pipelines appellant maintains and operates communication systems by wire or radio along routes roughly paralleling the pipelines, and also has seven pumping stations at various sites along the three lines. These facilities are operated and maintained by seventy-three employees, all of whom are paid from the Kansas office. It is stipulated that appellant engages in no intrastate business and that all its activities and property in Illinois are devoted exclusively to its business of transporting oil or oil products in interstate commerce.

As it existed in 1955, section 138 of the Business Corporation Act, (Ill. Rev. Stat. 1955, chap. 32, par. 157.138,) imposed franchise taxes on foreign corporations authorized to do business in Illinois in the following terms:

"Each foreign corporation authorized to transact business in this State shall pay to the Secretary of State the following franchise taxes, computed on the basis, at the rates and for the periods prescribed in this Act:

"(a) An initial franchise tax at the time of filing its application for a certificate of authority to transact business in this State.

"(d) An annual franchise tax during the month of July of each year in which the corporation is required by this Act to file an annual report."

The annual report referred to is covered by section 115 of the act, (par. 157.115,) which directs each "foreign corporation authorized to transact business in this State" to file, within the time prescribed by the act, an annual report containing specific data and such other information as may be necessary or appropriate to enable the Secretary of State to determine and assess the amount of fees and franchise taxes payable by such corporation. Section 116, in turn, provides that the annual report of a foreign corporation shall be filed between January 15 and the last day of February in each year, while section 139 contains provisions which permit such a corporation to elect to file a subsequent annual report on or before June 25 and before the payment of its annual tax. See: Ill. Rev. Stat. 1955, chap. 32, pars. 157.116 and 157.139.

In addition to the annual franchise tax, license fees are required to be paid by foreign corporations in accordance with the following provisions of section 135 of the Business Corporation Act:

"The Secretary of State shall charge and collect from each foreign corporation authorized to transact business in this State the following license fees, computed on the basis and at the rates prescribed in this Act:

"(a) An initial license fee at the time of filing its application for a certificate of authority to ...


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