Opinion
No. 13657.
1948-04-16
GARLOCK PACKING CO. v. GLANDER.
Joseph S. Gill, Asst. Atty. Gen., for appellee.
Proceeding in the matter of claims for refund of taxes previously paid by the Garlock Packing Company opposed by C. Emory Glander, Tax Commissioner of Ohio. From an order denying the claims, claimant appeals.
Reversed and remanded.Joseph S. Gill, Asst. Atty. Gen., for appellee.
BY THE BOARD.
On October 15, 1947, appellee denied appellant's three claims for refund of use taxes previously paid. The first claim covers the third quarter of 1946 and is in the amount of $3.08; the second covers the fourth quarter of the same year and is in the sum of $17.65; the third covers the first quarter of 1947 and involves the sum of $123.78. A hearing has been had before an attorney examiner and the appeal is now before this Board for final determination upon the transcript, record and briefs of counsel.
Appellant, a New York corporation, has its factory located at Palmyra, New York. It manufactures and sells various kinds of mechanical packing, which may be generally described as materials and devices for preventing leakage of gases and liquids in machinery and equipment of all types. It maintains sales offices in the cities of Cleveland and Cincinnati. In the course of its business Garlock purchases and uses packing and shipping supplies, printed office, salesmen's and purchaser's forms and advertising matter. This material is purchased and delivered to its Palmyra plant and from there distributed to its sales offices. A portion thereof was delivered to its two Ohio branch offices. Supplementary sheets attached to the taxpayer's claims for refund disclose that all materials therein listed upon which use tax was paid and claim for refund is made as exempt from taxation, fall within these three classes of items.
Appellee denied the claimant's request for refund. The reason assigned therefor is as stated in his final order from which we quote:
‘The contention of the taxpayer that the Ohio Use Tax should not apply to various purchases of advertising material as said material is used directly in making retail sales is not well taken. It is specifically found that the greater part of the vendor's sales are not sales at retail as defined in Section 5546-1 of the General Code of the State of Ohio.’
At the hearing had before this Board's examiner, appellant's Cleveland office manager testified that he had selected at random two days' billings. They represent sales of October 22nd and 23rd. These are said to be typical business days. Analysis thereof establishes that 39.7% of this business consisted of sales to consumers, and that 60.3% thereof consisted of sales to fabricators and manufacturers for resale. This witness was then asked whether these percentages were fairly accurate. That question produced the following reply:
The Witness: ‘Personally I think it would run higher than 39%, this was an average of two days, one was 27% and the other 53%. I think on an average it would run closer to 50% * * *. I would say it would run between forty and fifty percent of our sales of our own consumption.’
Appellee appears willing to abide by these percentages, and therefrom draws the conclusions, that inasmuch as the far greater portion of Garlock's sales are either excepted items not subject to sales or use taxation, and not included within the definition of ‘retail sales' as defined in G.C. Sec. 5546-1, or are exempted from such taxation by the terms of G.C. Sec. 5546-2, that only about 10% of appellant's total sales are actually taxable sales. Hence it is urged and argued that G.C. Sec. 5546-25, the first section of the Ohio Use Tax Act, must be read in conjunction with G.C. Sec. 5546-1, the first section of the Ohio Sales Tax Act. In other words it is insisted that the Use Tax Law was passed to plug up the holes in the Sales Tax Act, and that appellant cannot prevail in its claims for refund because refunds are permissible only when use tax has been paid on items used or consumed directly in making retail sales which are considered to be such under the definition found in G.C. Sec. 5546-1. Appellant asserts the contrary and insists that inasmuch as the Use Tax Act, 5546-25 et seq. uses the term ‘retail sales' without defining it, that in a use tax refund matter like here encountered, the term must be given its general accepted meaning, and that if such course is followed it is entitled to have its claims allowed. In pursuing the former course it is said the Tax Commissioner erred.
G.C. Sec. 5546-1 as it now stands, defines a dozen terms. That portion thereof pertinent to retail sales, we herewith set forth with such comment by injection therein as we deem wise:
“ Retail sale' and ‘sales at retail’ include all sales excepting those in which the purpose of the consumer is (a) to resell the thing transferred in the form in which the same is, or is to be, received by him (Appellant engages in such transactions); or (b) to incorporate the thing transferred as a material or a part, into tangible personal property to be produced for sale by manufacturing, assembling, processing or refining, or to use or consume the thing transferred directly in the production of tangible personal property for sale by manufacturing, processing, * * *; or directly in making retail sales or directly in the rendition of a public utility service (Appellant engages in sales in all four branches of this exception) * * *.'
G.C. Sec. 5546-25 as it now stands defines seven terms. It does not define ‘retail sale or sales at retail’. It is employed however, in listing exceptions on the meaning of the word ‘Use’. The language thereof does not indicate what meaning it is to be understood to have. The Use and Storage Act, G.C. Sections 5546-25 to 5546-50, inclusive, at numerous places throughout makes reference to provisions of the Sales Tax Act, which was enacted about a year prior to the Use Tax Act. Among the provisions of the latter is found G.C. Sec. 5546-26e, which reads:
‘ The definitions contained in section 5546-1 of the General Code shall apply to the provisions of this act relating or referring to the tax levied by section 5546-2 of the General Code unless the context indicates otherwise. The definitions contained in section 5546-25 of the General Code shall apply to the provisions of this act relating or referring to the tax levied by section 5546-26 of the General Code unless the context indicates otherwise.’
It is significant that G.C. Sections 5546-1 and 5546-25 both define the terms ‘Person’, ‘Consumer’ and ‘Price’. The term ‘Person’ is defined in identical language. ‘Consumer’ and ‘Price’ bear different meanings. So stand the statutes which have immediate bearing upon determination of the seemingly simple query: How are the words ‘retail sales' to be interpreted that appear in G.C. Sec. 5546-25? Its solution however, is far from simple.
A cursory examination of the Use Tax statutes as they appear in the annotated code would lead one to believe that G.C. Sec. 5546-26e settles the matter. But when one turns to the act of which it is a part, 118 O.L. 40, it appears that it only applies to the matter of redemption of prepaid tax receipts (G.C.Sections 5546-26a to 5546-26e, inclusive). This is an emergency measure enacted subsequent to the enactment of the Use Tax Act, which it supplements. Sec. 5546-26e reads that the definitions ‘shall apply to the provisions of this act’, which is the emergency measure (Amended Substitute Senate Bill No. 58) and not the previously existing Use Tax Act. This being true, it follows that the only part which G.C. Sec. 5546-26e plays, lies within the legislative purpose to create a workable set of laws relating to the redemption of prepaid tax receipts cancelled and issued in connection with the sale, use and storage of tangible personal property, and intended to be a consistent and harmonious whole in their several parts and provisions.
This leads us to the question whether this difficulty can be solved by application of the rule of construction found in the doctrine of pari materia. True, the term as used in G.C. Sec. 5546-25 is ambiguous and of doubtful significance and susceptible of two well established meanings. Do the statutes relate to the same subject matter? Generally they do. Independently they do not, because the prior taxes sales, the latter taxes use and storage which the sales act did not embrace. The latter is not amendatory of the former, but covers a further field of tangible personal property. An answer to the last question is therefore debatable. This Board is mindful of three other matters.
First, it is remembered that the rule of pari materia is not one of universal application, but is only resorted to in search of legislative intent.
Second, that statutes imposing taxes are to be strictly construed against the taxing authority and in favor of the taxpayer.
Third, that if the rule be here applied, it must be done in conflict with a further like aid to statutory construction, which is that of expressio unius est exclusio alterius. It is held that it is always invoked with caution. It is only used in search of legislative intent. If the mention of one thing implies exclusion of another, then it ought to follow that the general assembly in the defining of terms in G.C. Sec. 5546-25 put all therein that it chose to define. It redefined ‘Person’. It gave ‘Consumer’ and ‘Price’ different meaning. It could have reconsidered ‘retail sales'. It did not do so.
It would appear reasonable and proper that when two conflicting presumptions are reasonably inferable from the same situation as aids to determine legislative intent, that one counterbalances the other and neither ought to be indulged.
If this course of reasoning be sound, as we think it is, then this Board finds itself opportuned by the appellee to write into a statute that which is not there. We think the rule ought to be and is, as stated in the 8th syllabus of State ex rel. Foster v. Evatt, 144 Ohio St. 65, 56 N.E.2d 265, 267:
‘There is no authority under any rule of statutory construction to add to, enlarge, supply, expand, extend or improve the provisions of the statute to meet a situation not provided for.’
In State ex rel. Mooney v. Ferguson, Aud., 142 Ohio St. 279, 286, 51 N.E.2d 731, 733, this statement is found:
‘In attempting to discover the purpose and intent of the General Assembly * * *, we must look to the language actually employed in the act. To adopt the interpretation urged by the relator it is necessary to supply language which the legislative body did not see fit to use. Had it been the intention * * * it might readily have been done * * *.’
Ex rel. Foster, supra, adopts the following found in Cassidy v. Ellerhorst, 110 Ohio St. 535, 539, 144 N.E. 252, 253,43 A.L.R. 372:
‘In approaching the interpretation of statutes imposing taxes, it should be recognized at the outset that the rule of strict construction should be followed, and that, where there is ambiguity or doubt as to legislative intent, the doubt should be resolved in favor of the person upon whom the burden of taxation is sought to be imposed, and that language employed in a taxation statute should not be extended by implication beyond its clear import, or to enlarge its operation so as to embrace subjects of taxation not specifically named.’
It is the judgment of the Board that the order appealed from must be reversed and the term ‘retail sale’ appearing in Sec. 5546-25, General Code, be held to mean any sale made to the ultimate consumer or user. It appearing that there may be some question as to the exact amount of refund due appellant, the cause is remanded to the Tax Commissioner for further consideration in accordance with the veiws herein expressed.