Opinion
No. G-362.
February 3, 1966. Rehearing Denied March 3, 1966.
Appeal from the Circuit Court of Leon County, Hugh M. Taylor, J.
William Terrell Hodges, of MacFarlane, Ferguson, Allison Kelly, Tampa, for appellant.
Earl Faircloth, Atty. Gen., Fred M. Burns, and Larry Levy, Asst. Attys., Gen., for appellee.
The Circuit Court of Leon County, Taylor, J., entered a declaratory decree in favor of appellee as Comptroller of the State of Florida holding that certain transactions between the appellant, Maas Brothers, Inc., operator of retail department stores, and certain of its customers were taxable under Section 201.08(1), Florida Statutes, F.S.A., but not under Section 201.08(2), Florida statutes, F.S.A., hence this appeal.
The decree appealed was entered solely on the pleadings and motions for summary judgment filed by the respective parties and the facts are undisputed. The sole issue before the circuit court and here is whether a certain printed instrument signed by customers of Maas Brothers, Inc., and identified as "Flexible Charge Account Application — Agreement" is subject to documentary stamp taxes imposed by Section 201.08, Florida Statutes 1963, F.S.A.
As is generally the custom of the learned chancellor who entered the subject decree, he discussed at length the legal principles upon which the decree is based and it would be trite for this court to undertake to elaborate thereon. Finding no error, we adhere to and quote with approval therefrom as follows:
"The plaintiff, Maas Brothers, Inc., seeks a declaratory decree that it is not liable for taxes imposed by Chapter 201, Florida Statutes, 1963 [F.S.A.], and particularly Section 201.08 thereof, by reason of the transactions hereinafter described.
"Plaintiff engages in the retail credit sale of various types of merchandise. In connection with these sales it enters into a formal written contract with each of its customers which is called a `FLEXIBLE CHARGE ACCOUNT AGREEMENT'. This contract contains provisions which insofar as pertinent here are (A) the customer agrees to pay in installments as specified in the contract the purchase price of all merchandise thereafter purchased under this agreement from the plaintiff, (B) the customer agrees to sign a sales slip at the time of each purchase and agrees that if purchases be made by telephone the plaintiff may sign such sales slip as agent for the purchaser, (C) title to all merchandise purchased under the agreement shall remain in the seller until the purchase price has been fully paid.
"The defendant contends that the transactions above described are taxable under subsection (2) of Section 201.08 which reads as follows:
`On promissory notes, non-negotiable notes, written obligations to pay money, or other compensation, made, executed, delivered, sold, transferred, or assigned in the state, in connection with sales made under retail charge account services, incident to sales which are not conditional in character and which are not secured by mortgage or other pledge of purchaser, the tax shall be fifteen cents on each one hundred dollars or fraction thereof of the gross amount of the indebtedness evidenced by said instruments, payable quarterly on such forms and under such rules and regulations as may be promulgated by the comptroller. No documentary stamps shall be required to be attached to instruments under the provisions of this subsection.' (Emphasis Supplied)
The plaintiff insists that the italicized portion of the statute specifically removes from its operation every transaction with respect to which the sale is conditional. The contract in question is patently a conditional sales agreement and the Court must agree that this argument of the plaintiff is supported by the language of the statute.
"However, this does not mean that the plaintiff's way of doing business is exempt from taxation. The Court is of the opinion that the transtions are clearly taxable under subsection (1) of Section 201.08 which provides:
`On promissory notes, non-negotiable notes, written obligations to pay money, assignment of salaries, wages, or other compensation, made, executed, delivered, sold, transferred, or assigned in the state, and for each renewal of the same on each one hundred dollars of the indebtedness or obligation evidenced thereby, the tax shall be fifteen cents on each one hundred dollars or fraction thereof. Mortgages which incorporate the certificate of indebtedness, not otherwise shown in separate instruments, are subject to the same tax at the same rate.'
Plaintiff would avoid the application of this statute by relying upon the decisions in the cases of Bankers Trust Co. v. Florida East Coast Ry. Co., 8 F. Supp. 874 (S.D.Fla. 1934), Lee v. Kenan, 78 F.2d 425 [100 A.L.R. 869] (5th Cir. 1935), cert. denied [ 296 U.S. 637, 56 S.Ct. 170] 80 L.Ed. 453, Metropolis Pub. Co. v. Lee [ 126 Fla. 107], 170 So. 442 (Fla. 1936), DeVore v. Lee [ 158 Fla. 608], 30 So.2d 924 (Fla. 1947), State [ex rel. Weinberg] v. Green [Fla.], 132 So.2d 761 (1961), Gulf American Land Corporation v. Green, 149 So.2d 396 (Fla.App. 1st Dist. 1962).
"These cases establish and reiterate certain principles governing the application of the taxes imposed by Section 201.08(1), Florida Statutes [F.S.A.]. These taxes are upon documents. If the documents involved in any particular inquiry do not meet the requirements of the statute, then those documents are not taxed. Thus it has been held that a contract to pay for advertising to be furnished in the future, with no obligation to pay unless the advertising is ordered and furnished, is not within the statute. A promise to pay in the future for electricity to be furnished in the future although containing an agreement to receive and pay for minimum amounts of this commodity does not create a present obligation to pay and is not taxable. But a present unconditional promise to pay in the future the purchase price of real estate is taxable. If the buyer reserves the right within a specified time to rescind the contract, then, during that time, the promise is not unconditional and the document is not taxable. But when the time within which rescission may be demanded has expired and the contract becomes an unconditional promise to pay it immediately becomes taxable.
"The cases emphasize that the tax is upon the document. If the document is a promise to pay in the future, it is taxable. But if the document standing alone does not constitute such a promise it is not taxable even though performance of the obligations created by the contract gives rise to an obligation to pay.
"The standard adopted by the Court, and a very practical and reasonable one, is that if the holder of the contract could recover a judgment by pleading and proving the contract and non-payment, the contract constitutes such a promise to pay as is within the statute, and is taxable.
"Applying this rule it is quite obvious that the execution of the original contract between the plaintiff and its customer does not create a promise to pay and the original contract, standing alone, is not taxable.
"However, the law is too well settled to require the citation of authority to the effect that a contract may consist of two or more documents which must be construed together to determine the rights and obligations of the parties.
"The FLEXIBLE CHARGE ACCOUNT AGREEMENT requires that the customer sign a sales slip at the time of each purchase and the customer agrees that if the purchase be made by telephone or mail the plaintiff may, as purchaser's agent, sign the sales slip for him. It is quite clear that the parties contemplate that the FLEXIBLE CHARGE ACCOUNT AGREEMENT shall be implemented by the sales slips evidencing purchases and that the sales slips shall be construed in connection with the FLEXIBLE CHARGE ACCOUNT AGREEMENT — in short, that each sales slip shall be construed in connection with the FLEXIBLE CHARGE ACCOUNT AGREEMENT and that the two taken together shall constitute the contract between the parties.
"When this obvious intent is given effect the customer by signing the sales slip enters into a written obligation to pay to the plaintiff the amount of the purchase price of the merchandise described in the sales slip in installments determined from the application of the terms of the FLEXIBLE CHARGE ACCOUNT AGREEMENT. This promise is in writing. It is unconditional. It is a promise to pay specified sums of money at stated intervals. It necessarily follows that the signing of each sales slip creates a separate, distinct and independent written obligation to pay money in the future subject to taxation under Section 201.08(1), Florida Statutes [F.S.A.].
"This conclusion is fortified by the application of the standard outlined above which has been adopted by the Supreme Court. Should a customer default and the plaintiff sue, all that the plaintiff would be required to prove would be the execution of the FLEXIBLE CHARGE ACCOUNT AGREEMENT and the signing of sales slips describing and specifying the prices of the various items of merchandise purchased by the customer. Upon this showing plaintiff would be entitled to judgment — payment being an affirmative defense."
As noted by the chancellor, the original document, signed by the customer, standing alone is a nudum pactum. It acquires efficiency as part of a contract containing a promise to pay money at some time in the future only if and when it is implemented by a sales slip signed by the customer at the time of making a purchase or, with respect to purchases made by telephone, when signed by the seller (Maas Brothers, Inc.) as purchaser's designated agent.
The arrangement here employed has every earmark of a device or "gimmick" by which to circumvent the tax in question. It is interesting to ponder but impossible to discover the practicalities of the title retainer provisions set out in the so-called "Flexible Charge Account Agreement" in relation to purchases of run-of-the-mill expendible items which constitute the bulk of retail credit account sales of a general mercantile business as conducted by appellant. We will not attribute to the legislature an intent to permit wholesale abortion of the tax on the pretext that the transaction in suit is a normal development of such retail merchandising on charge accounts. Inequality in taxation breeds disrespect for all taxes. The courts owe the taxing authorities a duty to support the public revenues in no less degree than the duty not to impose a tax by judicial fiat.
The decree appealed is
Affirmed.
JOHNSON, J., specially concurs.
RAWLS, C.J., dissents.
I concur with Judge Sturgis in affirming, but for the following reasons:
The appellant, Maas Brothers, Inc., proclaimed its retail installment sales credit plan, sub judice, to constitute a "revolving account" within the meaning of Section 2, subsection 8 of Chapter 59-414 Laws of Florida 1959, now appearing as Section 520.31, Florida Statutes, F.S.A. In connection with the effectuation of this plan, the appellant issued what it termed a "Flexible Charge Account Agreement", on the face of which there were, inter alia, the following very material elements:
(1) A promise to pay by the buyer.
(2) A retained title to the merchandise sold under this Agreement.
(3) The signing of a sales slip by the buyer or by the seller as agent for the buyer if the purchase is made by telephone or mail.
The question imposed by the appellant, who was the plaintiff below, in his complaint for declaratory decree was whether or not the installment sales plan supra, and its effectuating documents, were subject to the documentary stamp tax or excise tax imposed by section 201, Florida Statutes 1963, F.S.A., particularly section 201.08 thereof. The complaint also prayed for general relief. Attached to the complaint and made a part thereof was a copy of the Flexible Charge Account Agreement and a copy of a letter from the State Comptroller advising the plaintiff that such flexible charge account was subject to documentary stamp tax under section 201.08 paragraph (2), Florida Statutes, F.S.A.
The complaint was such that it did not require an answer from the defendant, Ray E. Green, as Comptroller of the State of Florida, but an issue on the pleadings was raised by the defendant's motion for summary judgment in the defendant's favor filed on June 22, 1964, and the motion for summary judgment in its favor by the plaintiff on June 30, 1964. On April 23, 1965, the chancellor entered his decree wherein he determined that the business transaction of the plaintiff-appellant described in the plan of plaintiff, was not taxable under section 201.08(2) Florida Statutes, F.S.A., but was taxable under section 201.08(1) Florida Statutes, F.S.A. In his order the chancellor set forth at length his reasons for the conclusions reached by him. I do not disagree with the chancellor's reasoning nor the end result arrived at by him, but I think there should be enumerated some other specific reasons for arriving at such conclusions which the chancellor probably considered but did not include in his findings, inasmuch as this case will probably be of great importance as a future guideline in similar instances and appears to be a case of first impression and interpretation of this particular statute as related to the facts or similar facts herein involved. This I will attempt to do as follows:
Chapter 520, Florida Statutes, F.S.A., relates to installment sales and defines "retail installment transaction" as follows:
" 520.31(6) `Retail installment transaction' or `transaction' means a contract to sell or furnish or the sale of or the furnishing of goods or services by a retail seller to a retail buyer pursuant to a retail installment contract or a revolving account."
And defines the "revolving account" as follows:
" 520.31(8) `Revolving account' or `account' means an instrument or instruments prescribing the terms of retail installment transactions which may be made thereafter from time to time pursuant thereto, under which the buyer's total unpaid balance thereunder, whenever incurred, is payable in installments over a period of time and under the terms of which a time price differential is to be computed in relation to the buyer's unpaid balance from time to time."
And also defines "cash sales price" as follows:
" 520.31(9) `Cash sale price' means the price for which the seller would have sold or furnished to the buyer, and the buyer would have bought or obtained from the seller, the goods or services which are the subject matter of the retail installment transaction, if such sale had been a sale for cash. The cash sale price may include any applicable taxes and charges for delivery, installation, servicing, repairs, alterations, or improvements."
And also defines "time price differential" as follows:
" 520.31(11) `Time price differential' means the amount, however denominated or expressed, paid or payable for the privilege of purchasing goods or services to be paid for by the buyer in installments; it does not include the amounts, if any, charged for insurance premiums, delinquency charges, attorney's fees, court costs, or official fees."
Chapter 520.35, Florida Statutes, F.S.A., sets out the procedure and requirements for a revolving account and this procedure the appellant followed in preparing the forms for its Flexible Charge Account Agreement. It particularly attempted to eliminate this transaction from the tax imposed by virtue of section 201.08(2), Florida Statutes, F.S.A. by making all of the sales thereunder conditional, by retaining title thereto until paid for. The chancellor found and decreed that this transaction being "patently a conditional sales agreement" that it did not come within the operations of section 201.08(2), Florida Statutes, F.S.A. This I agree with, as the instrument clearly shows on its face the retained title to the merchandise.
We are now confronted with the question of whether or not the transaction supra, sub judice, with its written document effectuating the plan comes within the purview of 201.08(1), Florida Statutes, F.S.A., for taxation as decreed by the chancellor.
The Attorney General of Florida has ruled (Op.Atty.Gen. 059-274, December 28, 1959, Biennial Report of Attorney General 1959-1960, p. 435) that "revolving accounts described in 520.35 Florida Statutes [F.S.A.] are not within themselves written obligations for the payment of a sum certain; * * * no one may determine from the face of such contract what amount of money, if any, will be due and payable thereunder at any given time. Should one, at the time of execution, attempt to stamp it, he could not determine the amount of stamps to affix".
The lower court found that the execution of the original Flexible Charge Account Agreement, standing alone, would not create such a promise to pay as would be taxable; but that a contract could consist of two or more documents which could be construed together to determine the rights and obligations of the parties. As a matter of fact, section 520.34(3) expressly provides that a retail installment contract need not be contained in a single document but that the sales slip or other written statement relating to each purchase, when construed with the installment document, should constitute the retail installment contract for each purchase. The appellant contends in his brief that said Flexible Charge Account Agreement does not (1) come within the purview of 201.08(1) because no certain sum of money is due from its customer at the time the agreement is made, and (2) that it is not covered by subsection (2) of the same statute because it is conditional in character. We have disposed of the second contention supra.
As to the first contention, the chancellor did not hold that the Flexible Charge Account Agreement standing alone constituted a taxable contract, but in fact, held exactly to the contrary. The chancellor, did, however, hold that the signing of the sales slip at the time of each purchase was such act on the part of the purchaser to consummate a separate contract between the purchaser and the seller, which constituted an obligation and promise to pay which was taxable under 201.08(1); with this I agree.
I think the point raised by the appellant that said transaction did not come within the purview of the last cited statute needs to be treated further inasmuch as there appears to be some misunderstanding of the interpretation of the Attorney General heretofore made with reference to revolving contracts and revolving accounts as shown in Opinion Attorney General 059-259, December 8, 1959, Biennial Report of the Attorney General, 1959-1960, page 411, and Opinion Attorney General 059-274, December 28, 1959, Biennial Report of the Attorney General 1959-1960, page 435, which indicated that transactions similar to the one in question were not taxable under 201.08(1), but if taxable at all, would have to be under section 201.08(2), unless the sales were conditional. This question becomes further confused by the Attorney General's Opinion 061-23 January 8, 1961, Biennial Report of Attorney General 1961-1962, page 34, holding such installment contracts to come within the purview of 201.08 (2), Florida Statutes, F.S.A. The portions of the Attorney General's Opinion quoted in the appellant's brief and the portion of the last mentioned opinion when considered out of context with the remainder of those opinions and in connection with specifically related facts in each of those opinions, are confusing but not conflicting.
As used in 201.08(1), Florida Statutes, F.S.A., the words "written obligation to pay money", have been construed by the federal court in Karasik et al. v. People's Trust Co., D.C., 252 F. 324, 335 as follows, speaking of the word "obligations" as follows:
"The meaning of the word (obligation) has been gradually enlarged by the courts beyond its original meaning of a bond obligatory, and has come to mean a paper by which some fixed duty is assumed to be performed at a certain time, or an instrument in writing whereby one party contracts with another for the payment of money at a fixed date * * *."
We therefore conclude that the retail installment transaction as defined in section 520.31(6) and which is used in defining the "revolving account" as shown in section 520.31(8) became a completed and consummated transaction or a contract or obligation to pay money the instant the sales slip was signed by the purchaser or by the seller as agent for the purchaser as authorized in said agreement. The amount involved and which is taxable was thereby fixed by the amount of the sales slip. The promise to pay was completed and unconditional although the amount of each installment was to be later determined by a fixed schedule contained in the agreement. The mere fact that a time price differential of one and one-half per cent per month based on the unpaid balance at the end of each month's billing date was to be added to the sums owing by the purchaser, and which he agreed to pay, does not render the taxable obligation or document incomplete when construed in the light of the definition "time price differential" as provided in 520.31(11) wherein it is provided:
"(11) `Time price differential' means the amount, however denominated or expressed, paid or payable for the privilege of purchasing goods or services to be paid for by the buyer in installments; it does not include the amounts, if any, charged for insurance premiums, delinquency charges, attorney's fees, court costs or official fees."
The doctrine of ejusdem generis is not applicable in construing section 201.08, Florida Statutes, F.S.A., because this statute does not stand alone in determining the law of this case. We must necessarily look to the other statutes under which the documents are prepared, as shown on the face thereof, to help determine the true nature of the instruments involved. The terms and definitions used in the statute prescribing the form and substance of this type of transaction, installment sales contracts and revolving accounts, must of necessity be invoked to find the applicable taxing provision.
I therefore conclude that for the foregoing reasons and interpretations of the applicable statutes, the chancellor was correct in determining that the business transactions of the plaintiff-appellant, sub judice, were taxable within the purview of section 201.08(1), Florida Statutes, F.S.A., and said decree should be
Affirmed.
In my opinion, the chancellor and the majority failed to give proper weight to the history of Section 201.08, Florida Statutes, F.S.A., when read in light of pertinent judicial decisions construing same, and by such failure reached an erroneous conclusion.
As stated in the majority opinion affirming the judgment appealed, the chancellor concluded that the instruments utilized by Maas fell within the verbiage of Section 201.08(1). The history of this subsection which was enacted in 1931 is important when read in conjunction with decisions construing same. In 1934, the Federal District Court, Southern District of Florida, construed this statutory enactment in the case of Bankers' Trust Co. v. Florida East Coast Ry. Co., 8 F. Supp. 874. There the comptroller insisted that the tax imposed was applicable to a certain contract between the railroad and the City of Jacksonville by which the city agreed to furnish electricity over a period of years to the railroad in minimum and maximum quantities and the railroad agreed to make payments in accordance with a scheduled rate. The comptroller contended that the contract constituted a "written obligation to pay money" within the meaning of the statute as it existed at that time. Judge Strum, citing United States v. Isham, 17 Wall (84 U.S.) 496, 21 L.Ed. 728, outlined certain cardinal principles of law applicable to the construction of documentary stamp tax acts, viz.: (1) The liability of an instrument for a stamp duty is determined by the form and face of an instrument and cannot be affected by proof of facts outside of the instrument itself. (2) Such taxes are strictly construed in favor of the taxpayer and cannot be imposed without clear and express words for that purpose. (3) Ambiguities must be resolved in favor of the taxpayer. He concluded that the phrase "written obligations to pay money", which follows immediately after "promissory notes, non-negotiable notes," must be construed ejusdem generis, as referring to obligations of the same genus as those specifically named immediately prior to that phrase, which are obligations having for their essential purpose the repayment of money, usually money previously loaned, and that by using the language "any renewal thereof" the legislature did not intend to tax ordinary commercial contracts of the character being considered on appeal. The Fifth Circuit Court of Appeals ( 78 F.2d 425) affirmed the District Court, holding that the contract for electricity was not a written obligation to pay money within the meaning of the statute.
The Florida Supreme Court first construed the controverted statute in the case of Metropolis Publishing Co. v. Lee, 126 Fla. 107, 170 So. 442 (1936). There, the publishing company entered into a contract with purchasers of advertising space for a consideration computed in accordance with a rate schedule set out on the reverse side of the instrument. In reversing judgment of the trial court holding the instrument subject to a documentary tax, the Supreme Court cited with approval the foregoing federal decisions, and in addition observed that:
"Inspection of the body of the act discloses that it was intended to apply to bonds, debentures, certificates of stock, sales of stock, agreements to sell stock, promissory notes, whether negotiable or not, assignments of salary, wages, or other compensation, and deeds and mortgages of any kind. The tax required is 10 cents on each $100 of consideration or indebtedness. It also applies to proxies for voting at any business meeting of a corporation for profit and to powers of attorney granted for a defined purpose. In the latter cases the tax is 10 cents on each proxy or power of attorney executed.
"The agreement brought in question does not come within any of the foregoing documents or instruments.
* * * * * *
"A careful examination of chapter 15787, Acts 1931, Ex.Sess., discloses that it was intended to create a selective tax applicable to a class of instruments recognized by the law merchant as particularly susceptible to the imposition of a documentary tax. We find no indication that it was intended to be all-embracing and cover every kind and grade of commercial instrument. The instruments intended to be covered are set out in the act."
The court concluded that the doctrine of ejusdem generis was applicable and that in this instance the legislature was referring to the class of instruments enumerated preceding the phrase "written obligations to pay money."
In Dundee Corp. v. Lee, 156 Fla. 699, 24 So.2d 234 (1945), the Supreme Court apparently overlooked the Metropolis case and the federal decisions, for there it held that the statute "* * * was intended as a dragnet to catch any kind of an instrument * * *" containing an obligation to pay money, and that the rule of ejusdem generis should not be applied. However, two years later in De Vore v. Lee, 158 Fla. 608, 30 So.2d 924 (1947), the Supreme Court again construed the intent of the subject statute as to its applicability to a lease and held, "The undertaking of a lessee to pay the rental at specified periods is no more a written obligation to pay money than was the contract under study in the case of Metropolis Publishing Co. v. Lee."
To say the least the law was not well settled at the beginning of the Legislative Session in 1953. To summarize, at that time the Supreme Court had construed what now appears as subsection (1) of section 201.08 in the Metropolis case as not reaching general contracts calling for the payment of money, but in Dundee held that said statute was designed to "catch any kind of instrument," and finally in De Vore receded from Dundee and cited with approval the Metropolis case. The stage was thus set for the ensuing action by the legislature when it passed in 1953 subsection (2) of section 201.08 which spells out that the subject tax is levied upon "* * * written obligations to pay money * * * in connection with sales made under retail charge account services * * *." I cannot escape the conclusion that in view of the judicial pronouncements then existing the legislature recognized that such retail charge account sales did not fall within the scope of subsection (1) and one of the primary purposes for enactment of subsection (2) was to herd such instrument into the taxing authority's corral. From the taxing authority's viewpoint, the difficulty encountered is that the legislature left a gate open when it inserted in subsection (2) the language "* * * incident to sales which are not conditional in character * * *", and out of this gate the instrument being reviewed escaped.
The trial judge and the majority opinion have concluded that the instruments involved here were taxable under subsection 201.08(1) as falling within the general classification of a "written obligation to pay money" in spite of the fact that subsection (2) specifically covers "written obligations to pay money * * * in connection with sales made under retail charge account services." Where a statute contains general and specific provisions on the same subject matter, each must be given its legitimate field and scope of operation and the specific provision will prevail as to the particular subject covered. See 30 Fla. Jur., Statutes, Section 115 and cases cited therein. Even without reference to this principle, De Vore has foreclosed the matter by holding that the original statute, Section 201.08, does not contemplate the taxation of instruments when the actual debt or liability thereunder is dependent upon a contingency. No debt could be dependent upon more contingencies than one contemplated by the Flexible Charge Account Agreement involved here.
It is my conclusion that the decision reached by the majority of this court is in direct conflict with the Metropolis and De Vore cases, in that the controversial instruments are no more written obligations to pay money than was the lease in De Vore or the advertising contract in Metropolis.
The gratuitous expression voiced in the last paragraph of the majority opinion relating to a "`gimmick' by which to circumvent the tax in question" is an interesting treatise upon an issue which was not raised, pleaded, or otherwise tried by the chancellor. I do not think that we are in a position to take a safari into the bleak desert of a record which is devoid of essential facts or a joinder of issues relating to "circumvention" of taxes by the appellee. The parties did not set out upon such a journey nor did the chancellor so travel. The theory so expressed is enticing, but in my opinion must await a proper exploration upon issue being made and joined by the parties and ruled upon by the chancellor — not by trial de novo in the appellate court.
I, therefore, dissent.