CONSTITUTIONAL LAW-COMMERCE CLAUSE-STATE TAXATION OF COMMERCE

Plaintiff, a Massachusetts manufacturing corporation operating on a mail order-f.o.b. delivery basis, maintained a branch office and warehouse in Chicago. While some over-the-counter sales were consummated in Chicago, this office acted mainly as a headquarters for an engineering staff maintained as a service to customers, and as a conduit for orders placed by Illinois customers with the company. Orders received at the branch office were forwarded to Massachusetts for acceptance or rejection, and some filled orders were shipped to customers by way of the local outlet as a means of reducing freight costs. Although the Chicago office did not solicit orders, and often had no connection whatsoever with sales made by the home office to Illinois customers, the plaintiff was compelled to pay, under protest, a state occupation tax measured by the entire gross receipts of the company from sales to persons in the state. On certiorari from the decision of the Illinois Supreme Court upholding the tax over federal constitutional objections, held, that sales channeled through the local office are taxable, but transactions directly between the home office and Illinois customers are interstate sales beyond the taxing power of the state. Norton Co. v. Dept. of Revenue of Illinois, 340 U.S. 534, 71 S. Ct. 377 (1951)