In State v. J. Watts Kearny Sons, 181 La. 554, 160 So. 77, 78, the taxpayers contended that under the Louisiana Retail Sales Act sales to contractors were wholesale in character.Summary of this case from Albuquerque Lumber Co. v. Bureau of Revenue
Nos. 33136, 33139.
November 26, 1934. Dissenting Opinion December 14, 1934. On Rehearing March 4, 1935.
Appeal from Civil District Court, Parish of Orleans; Wm. H. Byrnes, Jr., Judge.
Actions by the State against J. Watts Kearny Sons and against the J.J. Clark Company, Incorporated. Judgments for plaintiff, and defendants appeal.
Monroe Lemann and Nicholas Callan, all of New Orleans, for appellant J. Watts Kearny Sons.
Dart Dart and Leo L. Dubourg, all of New Orleans, for appellant J.J. Clark Co., Inc.
Charles J. Rivet, of New Orleans, for the State.
These cases have been consolidated for trial, as the issues involved in each are the same.
The state has proceeded by rule in each case to collect from defendants, appellants, a retail license tax for the years 1929, 1930, 1931, and 1932, together with 2 per cent. per month interest on the amount claimed for each year from March 1st, and 10 per cent. attorney's fees on the total amount of principal and interest.
The defense in each case is a denial that defendant is liable for a retail license tax. Defendants aver that they are engaged in the business of selling building materials at wholesale; that the sales classified by the state as retail sales for these years were merely incidental to the business carried on by defendants; and that these sales average only a small percentage of the total sales for the years in question.
Judgments were rendered in the court below against defendants for a retail license tax for the years 1929, 1930, 1931, and 1932, and the correctness of these judgments, as to amount, is admitted by defendants, if it should be held that they are liable for such tax.
Defendants sell, first, to dealers; second, to contractors and subcontractors; third, to municipalities and public boards; and, fourth, to consumers.
Sales are made to all comers, without inquiry as to what the purchaser is going to do with the material. Anybody can give defendants an order that will be filled and delivered at domicile.
The state contends that such operations require an occupational license tax both as wholesaler and as retailer, under section 30 of Act No. 205 of 1924, and which provides: "That when any two or more kinds of business are combined, except as herein expressly provided for, there shall be a separate license required for each kind of business."
In City of New Orleans v. U. Koen Co., 38 La. Ann. 328, 330, it is said: "As the law reaches dealers who transact operations, either as wholesale or as retail merchants, separately, it undoubtedly affects them when they do both indiscriminately."
Section 7 of Act No. 205 of 1924, as amended by Act No. 132 of 1928, imposes the tax on "wholesalers" and defines "wholesaler" as follows:
"Provided, that no person or persons shall be deemed wholesale dealers unless he or they sell by the original or unbroken package or barrel only; and provided further, that no person or persons shall be deemed wholesale dealers unless he or they sell to dealers for re-sale. If they sell in less quantities than original unbroken package or barrel, they shall be considered retail dealers and pay license as such." (Italics ours.)
It is clear from the language of this section that, to constitute a "wholesaler," he must not only sell "by the original or unbroken package," but that he must sell also "to dealers for re-sale." (Italics ours.)
In construing section 7, above quoted, in State v. Milam Grain Milling Company, 176 La. 541, 146 So. 47, 48, this court said: "In our opinion, the provision of section 7 of the license act of 1924, quoted supra, admits of but one interpretation, viz., that a wholesaler who sells in unbroken packages direct to consumers, on one who sells in broken packages to dealers, for resale, is subject to the payment of a retail license."
It is not left to the discretion of this court to define a "wholesaler," as the Legislature of this state, in clear and unambiguous language, has declared that the "wholesaler" is one who must sell in unbroken packages to "dealers for re-sale."
It follows, necessarily, that if the contractors and subcontractors, and the municipalities and public boards to which defendants sell in unbroken packages, are not "dealers for re-sale," then defendants are not wholesalers in such transactions, but must pay the state a retail license on such sales.
The word "dealer" is defined in Words and Phrases, Vol. 1 (Second Series) pp. 1222 and 1223 as follows:
"`Dealers' are the middlemen between the manufacturers or producers and consumers. Commonwealth v. Vetterlein, 63 A. 192, 193, 214 Pa. 21 (quoting Commonwealth v. Campbell, 33 Pa. 380).
"A `dealer' is one whose business it is to buy and sell merchandise, goods, and chattels, as a merchant, storekeeper, or broker; the term being synonymous with `trader.' State v. Rosenbaum, 68 A. 250, 251, 80 Conn. 327, 15 L.R.A. (N.S.) 288, 125 Am. St. Rep. 121. * * *
"`Dealer,' in the popular and therefore the statutory sense of the word, is not one who buys to keep or makes to sell but one who buys to sell again. He stands immediately between the producer and the customer and depends for his profit, not upon the labor he bestows upon his commodities, but upon the skill and foresight with which he watches the markets. Commonwealth v. Vetterlein, 63 A. 192, 193, 214 Pa. 21 (quoting Norris v. Commonwealth, 27 Pa. 494)."
A contractor who buys building material is not one who buys and sells — a trader. He is not a "dealer," or one who habitually and constantly, as a business, deals in and sells any given commodity. He does not sell lime and cement and nails and lumber.
His undertaking is to deliver to his obligee some work or edifice or structure, the construction of which requires the application of skill and labor to these materials so that, when he finishes his task, the materials purchased are no longer to be distinguished, but something different has been wrought from their use and union. The contractor has not resold but has consumed the materials. Sales to contractors are sales to consumers, and, for this very reason, the Legislature did not include contractors and subcontractors in the term "dealers for re-sale," as used in section 7 of Act No. 205 of 1924, but has placed them in an entirely different classification in section 24 of that act. Consequently, contractors and subcontractors are not licensed at all as wholesale or retail dealers.
Municipalities and public boards make no resale of the commodities they buy, and cannot be classed as "dealers" in such articles.
A wholesaler who sells in unbroken packages direct to consumers is subject to the payment of a retail license, as held in State v. Milam Grain Milling Co., cited supra.
In holding in that case that the definition of "wholesaler" in section 7 of Act No. 205 of 1924 "admitted of but one construction," the court necessarily concluded that this section was couched in language clear and free from ambiguity or doubt.
In such a case, the doctrine of contemporaneous construction invoked by defendants has no application, as there is no room for construction and, consequently, no need to give it aid. Houghton v. Payne, 194 U.S. 88, 24 S. Ct. 590, 48 L. Ed. 888.
Judgment appealed from in each of these cases is affirmed.
O'NIELL, C.J., dissents and hands down reasons.
Act No. 205 of 1924, under which the state tax collector for the parish of Orleans instituted these proceedings, is of general application throughout the state. Section 39 directs the appointment by the Governor of an attorney for each parish to aid the various tax collectors in the collection of the license taxes levied by the act.
There is no evidence in the record of these cases establishing that the several attorneys in the sixty-three other parishes of this state either conferred with or concurred in the opinion of the attorney for the tax collector of the parish of Orleans, who testified in these cases. Nor does the record contain evidence to show that no vendors of building materials in any part of the state have paid, or been called upon to pay, a retail dealer's tax.
Even as to the parish of Orleans the question seems to have been limited to two or three taxpayers and to the opinion of a single attorney.
The witness Voekel, testifying on behalf of the two defendants, says: "Myself and two other building supply dealers had a conference. I don't remember who the attorney of the State Tax Collector was at that time. And after considerable talk, we convinced him that we were wholesale dealers and not retail dealers, and based on that conference we further assumed that we were wholesalers and continued to pay license as such." (Tr. 27, Kearny Case.)
The witness Kearny, after positively stating that he was present and formed part of presumably the same conference, finally was forced to admit that there was no joint conference and that he was not present at any such conference. The occurrence on which he would pitch a contemporaneous construction in favor of his firm was a conversation which he had in his place of business with an unnamed individual who said that he represented the tax collector. (Tr. 23, 24, Kearny Case.)
No public officer was summoned or testified in support of the alleged contemporaneous construction. No officer charged with the administration of the statute has been shown to have ever given a written or a fixed opinion which could serve as a basis for the construction contended for by the defendants.
A reading of the testimony of the single attorney who once represented the tax collector for the parish of Orleans is sufficient to convince us, as it did the district judge, that the opinion expressed by him was not founded upon such considerations as would justify this court to adopt it in the face of the plain language of the statute. (Tr. 32-35, Kearny Case.)
The testimony of this attorney establishes clearly, in contradiction to the positive declarations of the defendants' other witnesses, that these defendants were called upon to pay a retail dealer's license each time that there was an inspection by the representatives of the supervisor of public accounts. (Tr. 36, foot of page, Kearny Case.)
(The testimony is the same in both cases, on this question, but the transcript pages do not bear the same numbers.)
"The mere failure of public officers charged with a public duty to enforce statutory and constitutional provisions in respect to the levy and collection of taxes, or the acquiescence of public officers in conditions that exempted certain property from its fair share of the burdens of taxation, should not be permitted to stand in the way of the correct administration of the law, or be construed to estop more diligent and efficient public officers when they attempt to perform their duty by bringing in to the revenue proper subjects of taxation that had theretofore been allowed to escape the payment of taxes." Louisville v. Louisville Bd. of Education, 157 S.W. 379, 380, 154 Ky. 316.
The foregoing language is particularly applicable in view of the provisions of section 1 of Act No. 148 of 1906 that "no action or inaction of the State * * * shall stop or prescribe or debar its right to proceed for licenses or additional licenses before the day of prescription shall begin."
We are, therefore, of the opinion that the evidence in the record fails to establish that any contemporaneous construction was ever placed upon the statute to the effect that dealers who sell to contractors, municipalities, and public boards were wholesalers and not subject to the payment of a retail dealer's license.
We find no error in the original opinion handed down in this case.
It is, therefore, ordered that our original decree be reinstated and made the final judgment of this court.
O'NIELL, C.J., and ROGERS and ODOM, JJ., dissent.