Opinion
No. 33749.
June 12, 1939. Suggestion of Error Overruled July 8, 1939.
1. LICENSES.
Statutes imposing privilege or excise taxes are to be strictly construed against the taxing power; the power cannot be implied and all doubts must be resolved in favor of taxpayer.
2. LICENSES.
Whether a profit is made as a result of a transaction is immaterial in determining whether transaction is subject to privilege tax measured by gross proceeds of sales (Laws 1934, chap. 119, secs. 1, 2).
3. LICENSES.
Where ginner of cotton issued receipts to farmers for their cottonseed, which was then commingled with other cottonseed and subsequently consigned to cotton oil mill from which ginner received cottonseed meal to be delivered to farmers upon presentation of their receipts, fact that exchange of cottonseed for cottonseed meal was not immediately consummated did not prevent transaction from being a "barter" within privilege tax statute imposing privilege taxes measured by gross proceeds of sales, and defining a sale so as to include barter or exchange of property (Laws 1934, chap. 119, secs. 1, 2, 2-c.).
4. LICENSES.
The transaction between farmers and ginner of cotton by which receipts were given to farmers for their cottonseed, which was consigned by ginner to cotton oil mill from which ginner obtained cottonseed meal to be delivered to farmers upon presentation of their receipts, constituted a "barter" of cottonseed for cottonseed meal within statute imposing privilege taxes measured by gross proceeds of sales, and defining a sale as including barter or exchange of property, as against contention that ginner was mere agent of farmers in procuring value of cottonseed in cottonseed meal (Laws 1934, chap. 119, secs. 1, 2, 2-c.).
5. EXCHANGE OF PROPERTY.
The word "barter" means to traffic or trade by exchanging one commodity for another, as distinguished from selling one commodity and purchasing another through the use of money or some other medium of exchange.
6. LICENSES.
Where ginner of cotton issued receipts to farmers for cottonseed, which ginner then consigned to cotton oil mill from which it received cottonseed meal for delivery to farmers upon presentation of their receipts, fact that sales tax act exempted farmer from tax on his produce under certain conditions did not relieve ginner of liability for privilege tax based upon those transactions by which farmers obtained cottonseed meal for cottonseed (Laws 1934, chap. 119, as amended).
APPEAL from the circuit court of Union county; HON. T.H. McELROY, J.
J.A. Lauderdale, Assistant Attorney-General, for appellant.
My contention is that under the definition of the term "sale" or "sales" as given by section 1 of chapter 119, Laws of 1934, and the provisions of section 2-c of said chapter, that the tax levied by said statute is levied upon a person who sells, barters or exchanges property. In other words, the tax applies to a person who is bartering or exchanging property for other property the same as if he were making a sale of the property exchanged.
Webster's International Dictionary, Second Edition, defines the word "barter" as follows: "To traffic or trade by exchanging one commodity for another as distinguished from selling one commodity and purchasing another through the use of money or some other medium of exchange."
In Coker v. State, 8 So. 874, the Supreme Court of Alabama held that a barter is an exchange of goods of one character for goods of another; any sale of one character of merchandise where any transfer of merchandise is taken in exchange instead of money.
In Meyer v. Rosseau, 2 S.W. 112, 47 Ark. 460, the Supreme Court of Arkansas held that "barter" and "exchange" are of about the same meaning. "Barter," the exchange of one commodity or article of property for another; exchange of goods, a commutation, transmutation or transfer of goods for other goods as distinguished from "sale," which is a transfer of goods for money.
The record in this case shows that when a farmer delivered seed to the appellee and desired cotton seed meal in exchange therefor that the appellee treated such seed as his own, put them in his own seed house and commingled them with other seed that he had purchased, shipped and sold them for cash, and when he had sufficient orders for cotton seed meal he ordered a car of meal in his own name and received same in his own name. Under this statement of fact, I do not see how it could be contended otherwise than that the appellee swapped, bartered or exchanged cotton seed meal for cotton seed.
Under the provisions of said act a barter or exchange is taxed the same as a sale, and the ginner was liable in this case for the tax the same as if he had sold the cotton seed for a cash consideration.
It is contended that the appellee makes no profit on said exchange but that he makes the exchange because other ginners in the county do the same thing. It is clear that even though this exchange is made without profit, it is made in order to meet competition. However, the tax levied by said chapter 119 does not depend upon profit. The tax is levied upon gross income or gross proceeds of sale regardless of whether or not a profit is made.
Hugh N. Clayton, of New Albany, for appellee.
Privilege tax laws are liberally construed in favor of the citizen sought to be taxed.
Wilby v. State, 93 Miss. 767, 47 So. 465, 23 L.R.A. (N.S.) 677; Bd. of Levee Comrs., Yazoo Miss. Delta v. Howze Mercantile Co., 149 Miss. 843, 116 So. 92; Gully v. Jackson International Co., 165 Miss. 103, 145 So. 905; State ex rel. Rice v. Louisiana Oil Corp., 174 Miss. 585, 165 So. 423.
The liberal construction of tax laws even protects an unlawful business from doubtful assessments.
Scott v. Hossley, 142 Miss. 611, 107 So. 760.
Laws imposing taxes are not to be construed beyond natural import of the language and to impose burdens upon doubtful interpretations.
State v. Grenada Cotton Compress Co., 123 Miss. 191, 85 So. 137; Sperry Hutchinson Co. v. Harbison, 123 Miss. 674, 86 So. 455.
In construing statutes, the court should ascertain and enforce the intent of the Legislature.
Sartin v. Prentiss County, 156 Miss. 46, 125 So. 563.
In construing a statute the consequences of a particular construction should be considered, whether they be good or bad.
Robertson v. Texas Oil Co., 141 Miss. 356, 106 So. 449; Ziegler v. Ziegler, 174 Miss. 302, 164 So. 768.
In construing a statute, the court will assume the Legislature employed the words of the statute in their usual and most common sense.
State v. J.J. Newman Lbr. Co., 103 Miss. 263, 60 So. 215.
Unless letter and context of law otherwise require, statutes must be so construed that their operation will be consistent and practical.
Miers v. Miers, 160 Miss. 746, 133 So. 133.
In construing a statute, not only the language but the purpose and policy the Legislature had in view must be considered.
Smith v. Chickasaw County, 156 Miss. 171, 125 So. 96.
The definition of the word "sale" is found in section 1 of chapter 119 in these words "the term `sale' or `sales' includes the barter or exchange of properties as well as the sale thereof for money, every closed transaction constituting a sale."
It is my position that the appellee is not engaged in "barter" or "exchange" within the meaning of the above definition and that he acts as a medium of exchange and agent for the particular farmer whose cotton seed he receives and to whom he delivers subsequently cotton seed meal. There is no question but that he does not make a profit out of the transaction or that the custom of taking cotton seed by ginners and subsequently delivering cotton seed meal is universal in Union County.
The custom or system does not work to the advantage of any particular ginner in the county since every ginner follows the custom or system. Since they do not make any profit in these transactions, the farmers and the cotton oil mills are the only two groups of individuals who profit by the transaction. I realize that a just claim for the payment of sales tax cannot be defeated solely on the ground that the person against whom the claim is propounded has made no profit but I mention the lack of profit in the appellee to show that he is acting for and on behalf of the farmers who have previously deposited cotton seed with him.
It is alleged and it is the position of the appellee that he was merely a medium of exchange between the farmer and the cotton oil mills and that he acted as agent for the farmers in making the exchange of seed for meal. The fact that he might have owned certain cotton seed in a particular box car load wherein were cotton seed of the farmers, does not alter the situation in any particular. He only ordered, and this is not denied, such cotton seed meal from the mill as was necessary to deliver to farmers for cotton seed previously deposited for meal. Since this fact is true I cannot see that the situation is changed in any particular because he happened to buy some cotton seed for cash which he sold for cash. Those transactions are not connected with the transactions where he receives seed for meal.
It is the position of the appellee that this is a system devised and originated by the county agent for the sole use and benefit of the farmers of Union County; that, applying all the rules of statutory construction listed in this brief, no taxes should be required of him and he should recover the amount paid the appellant; that the Legislature did not intend to tax him for his actions in this particular and that it is against the public policy of the Legislature that such actions as he has done should be penalized and taxed; that he has made no profit from the transactions and that his services to the farmers have not increased the patronage of his gin because every other ginner in the county follows the same system; that the collection of tax was not proper and that the judgment of the lower court should be affirmed with interest thereon from the date of said payment to the appellant to the present time.
Argued orally by J.A. Lauderdale, for appellant, and by Hugh N. Clayton, for appellee.
Under the provisions of chapter 119, Laws of 1934, and acts amendatory, the appellant demanded certain taxes from the appellee. Rogers paid said taxes under protest, and filed his suit at law to recover said taxes.
The cause was tried on the declaration, plea and agreed statement of facts by the Circuit Judge, who found that Rogers was not liable for the taxes assessed and collected, and entered judgment for the amount thereof in favor of appellee against the appellant, from which judgment this appeal is taken.
"It is further agreed that the facts are as follows:
"That the facts alleged in the declaration are true and correct as stated therein except in so far as they may be in conflict with facts hereinafter stated.
"That when a farmer had his cotton ginned by the plaintiff and wished to exchange the cottonseed for cottonseed meal, the plaintiff would have this farmer's cottonseed blown into a same seed house owned by plaintiff and he would give the farmer a ticket on which was indicated the amount of seed so received and its value; that the farmer to whom said ticket was issued then had the right to receive cash to the amount stated therein, or subsequent thereto, had the right to receive therefor cottonseed meal of the same value as the value of the cottonseed stated therein, or cottonseed to the amount stated therein, if there was no cottonseed meal available at that time; that the plaintiff also bought cottonseed from farmers and that he had the cottonseed which he bought outright blown into the same common seed house; that, when he had received a sufficient amount of cottonseed from both of these sources to make up a railroad box car load, he would then ship the cottonseed to a cotton oil mill which paid him cash for the entire car of cottonseed; that the bill of lading contained the plaintiff's name as consignor and the cotton oil mill as consignee.
"That the plaintiff would order in his own name and pay for cottonseed meal from the cotton oil mill; that this meal, when received, was held subject to the order of the farmers who had previously deposited cottonseed to be exchanged for cottonseed meal and that it was delivered to them in accordance with the provisions on their tickets showing the amount and value of the seed previously deposited; that the plaintiff did not receive or purchase cotton seed meal in exchange for the cotton seed that he had purchased and shipped to the cotton oil mill but that he received cash from the cotton oil mill for the seed; that the only meal purchased was the meal which was exchanged for the cottonseed previously deposited in the manner aforesaid.
"That this method of handling the exchange of cottonseed for cottonseed meal was devised by the plaintiff as the simplest way, from a bookkeeping standpoint, to carry out the transaction; that by this arrangement, the only records required to be kept by the plaintiff were those relating to the deposit of cottonseed by the farmers and the receipts for cottonseed meal; that the farmers had a complete right to call for their cottonseed meal, whenever they wished after they had deposited their cottonseed so due them, and if the plaintiff did not have the said cottonseed meal available, it was the right and sometimes the practice of the farmers to remove from the cottonseed house the same amount of cottonseed they had deposited which they would take and deal with as they wished.
"That plaintiff made no profit in exchanging cottonseed for cottonseed meal, but the exchange was made by him because it was the universal custom of all cotton gins in Union County to do so.
"A copy of a cottonseed ticket, marked Exhibit `A,' and a copy of a receipt for cottonseed meal, marked Exhibit `B,' are hereto attached and made a part hereof as if fully copied herein."
The declaration alleged in substance that prior to 1936 the County Agricultural Agent had, as agent for the farmers of the county, requested the growers to ship the cottonseed of farmers to the oil mills and receive therefor cottonseed meal which, when received, was delivered to the farmers as their interest appeared by the county agent. The county agent took no part in the operation involved in this suit.
The declaration further alleged as a conclusion on the facts that Rogers was "merely a medium of and agent for the exchange of said cottonseed for cottonseed meal for said farmer."
The tickets issued by Rogers showed the date the cotton was ginned, the gross weight, the weight of the lint cotton, the tare, the weight of the seed, and then appeared: "Seed Sold (pounds of seed) at $ ____ (Meal)." Then when the meal was delivered to the farmer, a notation was made on his ticket showing the number of whole sacks of seed and the amount of cash paid to effect the deal for less cottonseed than would equal a whole sack of meal.
Section 2 of chapter 119, Laws of 1934, is in part as follows:
"There is hereby levied and shall be collected annual privilege taxes, measured by the amount or volume of business done, against the persons, on account of the business activities, and in the amounts to be determined by the application of rates against values, or gross income, or gross proceeds of sales, as the case may be, as follows:
"Upon whom levied. . . .
"Sec. 2-c. Upon every person engaging or continuing within this state in the business of selling any tangible property whatsoever, real or personal (not including, however, bonds or other evidence of indebtedness or stocks), there is likewise hereby levied, and shall be collected, a tax equivalent to two per cent of the gross proceeds of sales of the business; . . ."
In section 1 of chapter 119, the following definitions were enacted:
"Definitions. . . .
"The term `sale' or `sales' includes the barter or exchange of properties as well as the sale thereof for money, every closed transaction constituting a sale.
"The word `taxpayer' means any person liable for any tax hereunder.
"The term `gross income' means the gross receipts of a taxpayer received as compensation for personal services for the exercise of which a privilege tax is imposed in this state and the gross receipts of the taxpayer derived from trades, business, commerce or sales and the value proceeding or accruing from the sale of tangible property (real or personal), or service, or both. . . .
"The term `gross proceeds of sales' means the value proceeding or accruing from the sale of tangible property without any deduction on account of the cost of property sold, expenses of any kind, or losses; provided, however, that cash discounts allowed and taken on sales shall not be included as gross income. . . ."
From the statement of facts, we deduce the following inescapable conclusions: That when Rogers ginned cotton for a farmer, the separated seed were blown into the ginners seed house, and a ticket issued therefor. The farmer's compensation was an equal value of meal, the title to the cottonseed being vested in the appellee. Such cottonseed was commingled with the seed he had purchased, and for which he paid cash. The ginner, as consignor, when he had a car-load, shipped the cottonseed to the consignee; and from the latter he collected the value thereof in cash. The ginner then bought cottonseed meal by the car-load and paid therefor, and had same shipped to him. Thereupon, he, the appellee, paid to the farmer in cottonseed meal the value of his cottonseed.
The farmer was thus enabled to get his cottonseed meal at wholesale prices, and appellee made no profit on the transaction.
It is the precise contention of the Attorney-General on behalf of the Chairman of the State Tax Commission that the transaction between the ginner and the customer constitutes simply a barter of cottonseed for cottonseed meal, and that therefore the excise tax is imposed upon the appellee under the definition of "sale" set forth in the act here involved.
It is the precise contention of the appellant that Rogers, the ginner, simply acted as agent for the farmer in procuring for him the value of his cottonseed in cottonseed meal, which contention he insists is reinforced by the fact that the appellee made no profit on the transaction, and that the parties benefited were the farmers with whom the exchange was made by the appellee, and the oil-mills to whom the cottonseed was sold, and from whom the cottonseed meal was purchased. It seems to be argued that when the farmer delivered the cottonseed to the ginner he did not simultaneously receive in exchange therefor an equal value in cottonseed meal; but that an interval of time elapsed between the delivery of the cottonseed and the receipt of its value in cottonseed meal.
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 Mercantile Co., 149 Miss. 843, 116 So. 92." See, also, Wilby v. State, 93 Miss. 767, 47 So. 465, 23 L.R.A. (N.S.), 677; and State ex rel. Rice v. Louisiana Oil Corporation, 174 Miss. 585, 165 So. 423.
The definition of "gross proceeds of sale" clearly demonstrates that the fact of profit or not does not enter into the taxing of the gross proceeds of sale under this act. The tax is levied without regard to profit.
Nor can it be said that because the exchange of cottonseed for cottonseed meal was not immediately consummated that the transaction did not constitute a barter, for the reason that the term "sale" includes the barter or exchange of properties as well as the sale thereof for money, every closed transaction constituting a sale.
If it be said that the barter was not a simultaneous one, the Legislature by this definition having declared that the word "sale" in the act here involved includes the barter, also, at the same time determined that every closed transaction constitutes a sale.
We are of opinion, therefore, that the transaction detailed by the facts here disclosed that when the farmer received the ticket showing the amount of meal he was to receive for his cotton seed, after the cottonseed had been blown into the seed room of the ginner and there commingled with seed which he had purchased for cash, constituted a complete delivery of the cottonseed and invested the ginner thereof with title without reservation, expressed or implied. In fact, the seed ticket shows no reservation. Thereupon, the ginner, dealing with his own property, sold the cottonseed as and when he pleased, and received the cash therefor from the purchaser thereof. The ginner, with his money, bought the cottonseed meal, and complied with his contract by delivering value in cottonseed meal to the farmer who held the ticket showing the value of his cottonseed. There is not disclosed in this record any control of the cottonseed after delivery to the ginner and acceptance of the ticket; and, under the definition of "sale," the barter was certainly a complete transaction when the cottonseed meal was delivered to the farmer in discharge of the obligation shown by the ticket issued to him. This is a simple case of barter. In other words, the farmer swapped his cottonseed to the ginner, Rogers, for the latter's cottonseed meal.
Webster's International Dictionary (2 Ed.), defines the word "barter" as follows: "To traffic or trade by exchanging one commodity for another as distinguished from selling one commodity and purchasing another through the use of money or some other medium of exchange." We therefore find no room for doubt that the transaction, as detailed in the agreed statement of facts and in the declaration, was simply a barter of one commodity for another, fully consummated; and under the controlling act such a barter is a sale. The argument that the ginner, Rogers, was the agent of the farmer to get cottonseed meal in exchange for his cottonseed cannot be applied to the facts here in construing this statute. The argument is ingenious, but the language of the act applied to the facts leaves no question of doubtful construction.
Whatever may have been the relation of the County Agent to the farmers, we are not called upon here to say, but certain it is that the facts here disclosed no agency of any kind but the same kind of barter which occurs when two men exchange horses, one delivered at the time and the one received in exchange delivered on a subsequent day; or, to illustrate further, a farmer carries his eggs to a third person, the value is placed thereon, the farmer does not desire cash for his produce but desires to receive the value of his produce in coal-oil; the merchant is expecting coal-oil to come in on a later date, gives the farmer a ticket for his eggs to be paid for in coal-oil, and on a subsequent day the farmer presents his ticket and gets his value in coal-oil. That is a barter, and the facts of this case reveal just such a transaction. However, as much sympathy as we may have for the ginners of the county who have indulged in this custom, the barter is taxable as a sale, and the parties have not dealt in such manner as to relieve the ginner from the tax.
Our attention is called in argument to the many provisions of the Sales Tax Act, chapter 119, Laws of 1934, which exempted the farmer from tax on his produce under certain conditions, but it does not follow that the party who barters with the farmer and gives him commodity for his produce commodity is thereby relieved from the tax. Legally, the effect is the same as any other barter that can be imagined, and the fact that the Legislature in this act defined a barter as a sale demonstrates that the Legislature, in its wisdom, designed to tax the barterer and not the farmer who sold his produce. In other words, the tax is levied upon the amount received in value for the goods. In the case at bar, cottonseed meal delivered for the cottonseed. The appellant, in our opinion, properly levied and collected the tax in this case; and under the views here expressed, the appellee was not entitled to recover from him the amount of said tax legally imposed.
Reversed and judgment here for the appellant.