Wheeling Steel Corp. v. Fox
Headline: Court upheld West Virginia’s property tax on a company’s accounts receivable and bank deposits, allowing a state to tax intangibles when the company’s business is actually run from a local office, affecting out‑of‑state firms.
Holding: The Court held that West Virginia could constitutionally tax a Delaware corporation’s accounts receivable and bank deposits because the company’s commercial domicile and business control were located in Wheeling, West Virginia.
- Allows states to tax intangibles when business is run locally.
- Makes out‑of‑state corporations taxable where they control contracts and funds.
- Affirms taxing power despite a company’s foreign charter.
Summary
Background
A steel company organized under Delaware law maintained its real business offices, management, and accounting in Wheeling, West Virginia. Manufacturing plants and payroll offices were in other States, and some records and dividend disbursement came from New York. On January 1, 1933, the company had about $2.3 million in bank deposits (about $849,162 in West Virginia) and about $2.23 million in accounts receivable (about $374,410 tied to West Virginia sales). West Virginia assessed an ad valorem tax on those intangibles.
Reasoning
The Court considered whether the tax violated the Fourteenth Amendment’s due process and equal protection guarantees. It found that the company’s “commercial domicile” was Wheeling because management, books, contract acceptance, invoice payment, and control of funds occurred there. The Court explained that intangible property can have a taxable situs where it becomes an integral part of local business. Because the accounts and deposits were created, controlled, and used under Wheeling management, West Virginia could treat them as located there and tax them. The Court also rejected the claim that the state statutes were applied in a discriminatory way.
Real world impact
The ruling lets a State tax a company’s credits and bank deposits when the company’s actual business control and contract acceptance take place in that State, even if the firm is chartered elsewhere. The decision affirms the state court judgment and leaves open adjustments for amounts already taxed by other States.
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