Rexall Drug Co. v. Peterson

Rexall Drug Company, a corporation, owns all of the stock of 10 subsidiary corporations. These subsidiary corporations engage principally in the manufacture and sale of articles commonly sold by drugstores.

Rexall administers the whole business enterprise, maintains a head office in Los Angeles, and furnishes accounting, financial, personnel, legal, executive managerial, and directive services to its subsidiaries. For these services Rexall charges each subsidiary its proportionate cost thereof. No profit is charged.

The city of Los Angeles claimed that these charges were subject to business…