Opinion
No. 37236.
November 28, 1949.
1. Taxation — privilege taxes — tobacco stores.
A grocery company operated in the same building two stores separated by a partition, under two different names with separate street entrances, one doing a credit business and the other strictly for cash, under the immediate direction of different managers: Held that under Sec. 1017 Code 1942 an application, permit and payment of a tobacco privilege tax was required for each of said places of business.
Headnote as approved by Hall, J.
APPEAL from the circuit court of Hinds County; H.B. Gillespie, Judge.
Lotterhos Dunn, for appellant.
The significant phrase in the statute is "each place of business". The agreed statement recognizes that "separate places" must exist in order to require separate permits and a double tax.
Must these "separate places" be in different localities, different neighborhoods, different vicinities or different communities?
In Lukens Steel Company v. Perkins, 107 F.2d 627, the court observed that: "In ordinary and common usage locality is synonymous in meaning with such words as place, vicinity, neighborhood and community." See also: Connally v. General Construction Company, 269 U.S. 385, 70 L.Ed. 323.
In the case at bar, there was but one building in a single locality in one vicinity, in one neighborhood and in one community. Thus situated appellant served the community as a single wholesale grocery on both a cash and credit basis. It had but one place of business in one locality at which it served the same customers. The same customers were served with the same kind of merchandise at the same time and upon either a cash or credit basis, depending upon the customer's choice.
What must separate a business in order to make two places out of one? Must there be separate buildings? Must these be in different localities, vicinities, or neighborhoods so as to serve different groups of customers? What is the effect of a partition wall in a single building? Suppose that instead of a wall, the cash and credit departments are divided only by a rope or merely an imaginary line.
The above are some of the questions left open by the use in the statute of uncertain and indefinite terminology. Appellee lays much stress upon the difference in trade names and the difference in street numbers and telephone numbers but these are not shown to be merely signs for convenience. The statute does not purport to tax appearances or conveniences. The only thing taxed is the business of selling tobacco. This is without distinction as to whether sales are for cash or on credit. The State does not tax street numbers, names, signs or telephone numbers.
As against these surface appearances, the hard and cold business facts are that the taxpayers' business was operated as a single unit in a single building and in the same locality. The same customers were served. The tobacco all came from the same warehouse and out of the same stock. The only difference was that a customer went on one side of the wall for a credit purchase and on the other side for a cash purchase. In any case, the customer was served by appellant's employees under the same roof.
The so-called State Cash Wholesale Company is repeatedly referred to in the agreed statement as the cash and carry department of the taxpayer. As shown by the agreed statement, this is true in point of actual fact.
The statute does not tax separate departments of the same business. Some businesses have many departments separated by walls and even floors. One convenient example is Kennington's Department Store. Certainly, we submit no one would contend that this business is in separate taxable places. The taxpayer's business is no different in practice or unity of the space occupied from the cited example. The taxpayer cannot, we submit, be separated for tax purposes by a mere name or street number or telephone listing.
The term "place" is at best of uncertain meaning. It can be a shelf, a counter, a building, a community or a country.
We think that it is used in the statute as referring to business establishments in different localities and not to the conduct of a single business in a single locality as in the case at bar. There are good business reasons and taxing reasons for this conclusion. Separate establishments in different localities of necessity broaden territorial service and attract different and more customers seeking the same or similar merchandise and service.
Thus, two grocery stores in separate localities in a community may be expected to sell twice as much tobacco as a single store and hence should pay for two permits. A chain of stores should pay a privilege tax in proportion to the number of stores in the various localities in the same or different communities. But no business, whether it be a chain or a single establishment is taxed on cash sales and again on credit sales. The statute makes no such distinction.
Since the meaning of the phrase "place of business" is uncertain, the statute is to this extent ambiguous. This being so, it must be interpreted most favorably to the taxpayer and against the attempt in this case to impose a double tax burden.
It is a fundamental principle established in this state by a long line of decisions that revenue laws are to be strictly construed against the taxing power. All doubts must be resolved in favor of the taxpayer.
Stone v. Rogers, 186 Miss. 53, 189 So. 810, states the rule as follows:
"The tax here sought to be imposed is a privilege or excise tax. Such `Laws are to be strictly construed against the taxing power. The power cannot be implied. All doubts must be resolved in favor of the taxpayer. Miller v. Illinois Cent, R. Co., 146 Miss. 422, 111 So. 558; State ex rel. Collins v. Grenada Cotton Compress Co., 123 Miss. 191, 85 So. 137; Board of Levee Commissioners v. Howze Merchantile Co., 149 Miss. 843, 116 So. 92'. See also, Wilby v. State, 93 Miss. 767, 47 So. 485, 23 L.R.A., N.S., 677; and State ex rel. Rice v. Louisiana Oil Corporation, 174 Miss. 585, 165 So. 423."
A number of the decisions are reviewed and discussed in Pan-American Petroleum Corp v. Miller, 154 Miss. 565, 122 So. 393.
In Craig v. Walker, 191 Miss. 424, 2 So.2d 806, it was pointed out that where the court cannot confidently determine what is meant by a taxing statute, "We, therefore, resolve the doubt in favor of the taxpayer — taxation is never to be allowed under a statute of doubtful interpretation."
In the case of laws imposing privilege taxes, the construction against the taxing authority and in favor of the taxpayer is especially strict since such laws approximate an abridgment of the liberty of the citizen as guaranteed to him by the Fourteenth Amendment of the Constitution of the United States. See Wilby v. State, 93 Miss. 767, 47 So. 465; and Pan-American Petroleum Corporation v. Miller, supra; Thompson v. McLeod, 112 Miss. 383, 73 So. 193, LRA 1918 C 893, Ann. Cas. 1918 A, 674.
Without exception, wherever the court has dealt with a taxing statute which uses terms that may be given either a broad or restricted meaning, our court has invariably adopted the construction which would give the term a restricted meaning, having recourse in each case to the rule of strict construction. Vicksburg Meridian R. v. State, 62 Miss. 105; Wilby v. State, 93 Miss. 767, 47 So. 465, 23 L.R.A. (N.S.) 677; State v. Grenada Compress Company, 123 Miss. 191, 85 So. 137; Sperry Hutchinson Co. v. Harbinson, Sheriff, 123 Miss. 674, 86 So. 455; Board of Levee Commissioners for Yazoo-Mississippi Delta v. Howze Merchantile Company, 149 Miss. 843, 116 So. 92; Gully v. Jackson International Company, 165 Miss. 103, 145 So. 905. A recent case is that of J.C. Coats, City Tax Collector v. L.B. Price Mercantile Company, 30 So.2d 75.
J.H. Sumrall, for appellee.
Plain in the provisions of the statute is the provision that "a permit must be obtained for each place of business, owned or operated by each distributor, or wholesaler". And it is definitely shown by the agreed statement of facts that in order to separate credit sales from cash sales, and create the impression in the minds of the buying public that merchandise could be bought on credit at A.J. Lyon Company, whereas, if they wanted to get the advantage of a lower price by trading at a place which did business only as "cash and carry" then they were directed to the State Cash Wholesale Company, the same as though it had been situated at some remote distance from A.J. Lyon Company, and as though it were owned by people entirely different and distinct from the owner of A.J. Lyon Company. And the only claim relied on by the appellant, as plaintiff in the court below, was the fact that because the two places of business were situated in the same building and that the stockholders of A.J. Lyon Company, a corporation, owned a separate place of business, then that both places of business could be operated under one license, notwithstanding the fact that the statute definitely stated that a separate license should be obtained for each place of business, even though owned and operated by the same person.
The provision in the statute that "the permit shall at all times be publicly displayed by the dealer in his place of business so as to be seen easily by the public" had some significance and should be given the proper emphasis in the construction of said law. I suggest that there is a parallel between this provision of the law and the "Sign Statute" in the Statute of Frauds. Section 273 of the Code of 1942.
On the question of whether or not this is a separate place of business, I direct the court's attention to the fact disclosed by the record, that while A.J. Lyon Company has maintained a place of business in Meridian for a number of years and is well known to the general public, and its place of business is definitely designated not only by a sign in front of the entrance to said business, as required by the Statute of Frauds, but is identified in the telephone directory of Meridian at the same street address and with a telephone number having to do only with A.J. Lyon Company, as a place of business, and that the identity of A.J. Lyon Company is further established by reference thereto in the City Directory of the City of Meridian, which not only lists A.J. Lyon Company as a wholesale store, giving its street address, its telephone number, and even the name of the manager of said business. And thus, A.J. Lyon Company is definitely identified and advertised to the public.
The declaration states that for the purpose of giving to the purchasing public the advantage of a differential in price which is justified by the fact that all purchases made are cash and carry, and the owners of said business seeing fit to establish such a place of business, designated as State Cash Wholesale Company, thus indicating the advantage of purchasing from a place where the payment of cash would cause a reduction in price, which place was no doubt determined to be necessary in order to meet competition of other places of business where the payment of cash and dispensing with the necessity of carrying large charge accounts, and making deliveries would justify a reduction in price, this separate place of business was established, which, so far as the public is concerned, is as separate and distinct as though the business were conducted in any other name that might be adopted as a trade name to establish this place of business.
As added evidence to the fact that the State Cash Wholesale Company was regarded as a separate place of business, even by the appellant herein, it will be noted in the agreed statement of facts that a charge was made by A.J. Lyon Company to the State Cash Wholesale Company for all merchandise supplied just as a sale made to any other different business institution. And, as admitted in the agreed statement of facts, in dealing with the public, the State Cash Wholesale Company issued its separate invoices, in its own name, which did not disclose any relation with, or ownership of A.J. Lyon Company, the plaintiff in this case.
Appellee assessed $100.00 delinquent tobacco tax, plus $50.00 penalty, against appellant for the annual period ending September 30, 1947, and $100.00 for the succeeding annual period, and the total amount was paid under protest by appellant, no penalty being due for the second year because the tax was paid before it became delinquent. The assessment was made pursuant to the law levying a special tobacco tax upon each place of business operated by a distributor, wholesaler, etc., Section 10168 et seq., Mississippi Code of 1942. Appellant brought suit to recover the taxes so paid by it and the case was tried by the court upon an agreed statement of facts, a jury trial having been waived, and from a judgment denying the relief sought this appeal is prosecuted.
The agreed statement of facts shows that appellant is a Mississippi corporation, domiciled in Meridian, Mississippi, and engaged in business as a wholesale grocer; that it had already paid one tobacco tax and the above assessment was for a second tax for the same period, based upon the theory that appellant was operating two separate places of business from both of which tobacco and other products are sold; that appellant rents one side of a building in the City of Meridian from G.M. O. Ry. Co., where its business as a wholesaler is conducted; that in one portion of the building so rented it conducts a credit wholesale business under the name of A.J. Lyon Company, with a front entrance upon a public street, and a sign so indicating, the street number being 14 So. 22nd Avenue, and it is so listed in the telephone directory and also in the city directory; that in an adjoining portion of the same building, separated by a partition wall, the appellant operates a "cash and carry" wholesale business under the trade name of State Cash Wholesale Company, which has an entirely separate street entrance, where a sign is maintained identifying that entrance as being the business of said last named company; the street number of this entrance is 12 So. 22nd Avenue; both the telephone directory and the city directory list State Cash Wholesale company at the last named street address, and it has a telephone number different from A.J. Lyon Company; the city directory lists E.E. Fortenberry as manager of the business of A.J. Lyon Company, and lists Alf L. Davis as manager of State Cash Wholesale Company, and said Davis is in fact in actual charge of that business but is under the supervision of Fortenberry. In the rear of the partition wall there is a door entering into a common warehouse from which all merchandise is drawn for both businesses; all merchandise drawn by State Cash Wholesale Company from this warehouse is charged by A.J. Lyon Company to State Cash Wholesale Company; the receipts from all sales made by State Cash Wholesale Company are turned into the office of A.J. Lyon Company each day and these funds are made available for use by it and all sales of both places are reported each month, for sales tax purposes, by and as the sales of A.J. Lyon Company. All employees of both places are paid by the latter company. All credit sales are made from 14 So. 22nd Avenue upon invoices bearing the name of A.J. Lyon Company; all cash sales are made from 12 So. 22nd Avenue upon invoices bearing the name of State Cash Wholesale Company. The sole question presented for decision is whether appellant, under the foregoing facts, was operating two places of business within the meaning of the tobacco tax law; if it was, it owed taxes on each place and is not entitled to recover; if it was not, then it did not owe the tax and should prevail in this suit for recovery thereof.
Section 10170 of the 1942 Code requires that each distributor, wholesaler, etc., engaged in the sale or use of cigars, cigarettes or smoking tobacco, shall file an application for a permit allowing him to engage in such business. It then provides that "An application shall be filed, and a permit obtained for each place of business owned or operated by each distributor . . ." It then provides that upon receipt of the application and fee the commissioner may issue to the distributor or wholesaler "for the place of business designated" a nonassignable permit authorizing the sale of such products; it also provides that if the permit is revoked or suspended the holder thereof shall not sell any of such products "from such place of business". It further prohibits the transfer of the permit and requires that the "permit shall at all times be publicly displayed by the dealer . . . so as to be seen easily by the public". Said section also requires that the application for the permit shall, among other things, show "the location of the place of business to which the permit shall apply".
From all the foregoing it is quite clear that (Hn 1) the appellant was operating two separate places of business for the sale of tobacco products, under two different names, at two different street locations, one being a credit business and the other, as distinguished therefrom, being a strictly cash business, and that the statute contemplates and requires an application and permit and the payment of a tax for each of these places of business. Consequently, the judgment of the lower court is affirmed.
Affirmed.