Opinion
May 23, 1949.
1. Statutes — head or lead lines.
The head or lead lines of a statute are a part thereof, and may be resorted to when the meaning of the act would otherwise be incomplete and uncertain; hence the head or lead line to Section 9432, Code 1942, "advertising agency — commercial", may be looked to on the question whether a privilege tax was imposed upon telephone company in the matter of its telephone directories.
2. Taxation — statutes imposing taxes — construction of.
Laws imposing privilege taxes are liberally construed in favor of the person sought to be charged with such taxes and are strictly construed against the taxing powers.
3. Taxation — privilege taxes — telephone directories — advertising agency.
The classified advertising for its business subscribers carried in telephone directories delivered to telephone subscribers only as an aid to the efficiency of the telephone service and as an incident to the business in which the telephone company is mainly engaged is not such as to constitute the company an advertising agency within the meaning of Section 9432, Code 1942.
Headnotes as approved by McGehee, C.J.
APPEAL from the chancery court of Hinds County, V.J. STRICKER, Chancellor.
Russell Wright, for appellant.
Let us examine the statute carefully to see what activities are supposed to be taxed. The statute lists three different kinds of activities, to-wit: Engaged in the business of (1) commercial advertising; (2) preparing commercial advertisements; (3) negotiating and making advertising contracts for profit. The use of the word "or" shows that any one or more of the three activities are included within the statute.
If the contention advanced by the appellee is correct, then there would have been no necessity for the exclusion of newspapers or printers. No newspaper is an advertising agency, nor is a printer, under the definition given by Mr. Cooper and by Mr. Wynne, who testified. But it is common knowledge that newspapers do negotiate and make advertising contracts for profit, and so do printers. In fact, weekly newspapers, unless licensed as job printers under Section 9596, would be taxable because no license is authorized under Section 9597 for any but daily newspapers.
And this brings into play the rule which is set out in 59 C.J. 1093, which reads as follows: "Another generally accepted rule of construction is that an exception of a particular thing from general words shows that, in the opinion of the lawgiver, the thing excepted would be within the general provision had the exception not been made."
Applying this rule, the entire contention, that only commercial advertising agencies which were those of the type testified to by Mr. Cooper were included, falls. Newspapers solicit advertising, they negotiate and make advertising contracts. Applying the rule, the Legislature must have thought that the statute could cover any person operating a newspaper and making and negotiating advertising contracts, and preparing commercial advertisements was covered unless specifically excepted. In other words, if the newspapers are advertising media, instead of advertising agencies, they would still be covered by the statute unless exempt.
Thus, if the words "advertising agency — commercial" being the lead line in the statute was intended to show what type of business was intended to be taxed, it is defined by the body of the statute. We do not have here a case wherein the title limits the body of the statute, as was the case in Gully v. Jackson Int. Co., 165 Miss. 103, 145 So. 905. In that statute the lead line was "Road Machinery Dealers." The tax was levied upon each person selling "tractors and/or road machinery." This court followed the Illinois court in approving the statement that the symbol "and/or" was not a part of the English language, and the statute was doubtful.
It is our contention, however, that in using the words "Advertising Agency — Commercial" as the lead line of the statute, the Legislature had the power to define what was covered by such term, which it did in the body of the statute, and included all of the three activities heretofore set out, any one of which would require the license; and that such definition would outweigh all the definitions of the witnesses Cooper and Wynne. The appellee admittedly comes within such definition by preparing commercial advertisements and negotiating and making advertising contracts, and did in all of the seventy two counties throughout the period for which suit is brought except one, and that one for two years.
As to the authority of the Legislature to define for itself the meaning of words, see Mathiston v. Brister, 166 Miss. 67, 145 So. 358, wherein it is stated that the Legislature has the power to define words for itself, and its definition outweighs the dictum of lexicographers.
Appellee further contends that the publication of this advertising is an integral and incidental part of its telephone business, and designed to improve its service. No complaint is made that telephone directories listing alphabetically the customers or subscribers and their numbers is not essential and necessary Nor is any complaint made of the free listing by business classification of the telephone users in business. We agree that this is a fine idea, and helpful. It is the money making angle, totally disconnected with the business of operating telephone service, which renders the appellee liable. It sells advertising space in directories to make money when it does not even give a classified listing by business, as shown by the "non-classified directories" exhibited. There is not one word of testimony that any survey ever made by the appellee disclosed that such advertising was even helpful. Suppose the Mississippi Power and Light Company put out for its customers a magazine once each eight or ten months, and went around selling advertising space therein to make money. Would this court hold that even though such magazine only contained matter helpful to the customers of such company relative to the use of electrical equipment, that it could sell advertising space in such magazine for profit without being liable for the tax.
If this business was merely incidental, it was a bigger incidental business than a lot of independent businesses in the State of Mississippi, wherein a business big enough to have eight employees is big enough to be under the Unemployment Compensation Law. Mere size in comparison to the remaining employees is no criterion.
Butler Snow, for appellee.
The appellee Telephone Company was not engaged in the business of commercial advertising within the meaning of the Privilege Tax Law. Ex Parte Taylor, 58 Miss. 482; Mitchell v. City of Meridian, 67 Miss. 644; Carney v. Hamilton, 89 Miss. 747, 42 So. 378; Levee Commissioners v. Oil Company, 91 Miss. 480, 44 So. 828; Revenue Agent v. Texas Oil Co., 141 Miss. 356, 106 So. 449; Planters Lumber Co. v. Wells, 147 Miss. 279, 112 So. 9; Gully v. Goyer, 165 Miss. 279, 147 So. 327.
The business of a commercial advertising agency was a well-known and established business at the time of the enactment of the statute in question, and the lead line of the statute disclosed the legislative intention to impose the tax only upon commercial advertising agencies. The activities of the defendant Telephone Company did not constitute the business of a commercial advertising agency within the meaning of the statute. Gully v. Jackson International Company, 165 Miss. 103, 145 So. 905; 50 Am. Jur. Statutes, Sec. 245, p. 240; 59 C.J. Statutes, p. 1093; Batcheller-Durkee v. Batcheller, 97 A. 378, 39 R.I. 45, L.R.A. 1916E, 545; 50 Am. Jur. Statutes, Sec. 337; Coats v. L.B. Price Mercantile Co., 201 Miss. 871, 30 So.2d 75; Singing River Tire Shop v. Stone, 21 So.2d 580; The Encyclopedia Americana (1946 Edition), p. 169; Encyclopedia Britannica, Vol. 1, 14th Edition p. 205; The World Book (1943 Edition), Vol. 1 page 65.
Privileges are taxed with reference to the well-known course of business, and for many years advertising in telephone directories was a well-known, established, necessary, reasonable, usual and ordinary incident of the telephone business as conducted in this state, and the payment of the privilege taxes imposed for engaging in a telephone business carried with it the authority to engage in the telephone business and all usual and ordinary incidents thereof and adjuncts thereto. Ex Parte Taylor, 58 Miss. 478; Gully v. Goyer, 165 Miss. 279, 147 So. 327; Planters Lumber Co. v. Wells, 147 Miss. 279, 112 So. 9; 62 C.J., Telegraphs and Telephones, p. 283; California Fire Proof Storage Co. v. Harley W. Brundige, et al, Members of Railroad Commission of the State of California, et al., 248 P. 669, 47 A.L.R. 811; Subscribers v. New York Telephone Company, (1937) 20 Pub. Utility Reports (NS) 223.
The long continued departmental construction by the officials charged with enforcement of the tax, indicates that the tax did not cover advertising in telephone directories. 42 Am. Jur. p. 392; L.H. Conard Furniture Co. v. Mississippi State Tax Commission (1931), 160 Miss. 185, 133 So. 652; Briscoe v. Buzbee (1932) 163 Miss. 574, 143 So. 887; State Teachers' College v. Morris (1932) 165 Miss. 758, 144 So. 374; Gully v. Jackson International Co. (1933) 165 Miss. 103, 145 So. 905; Trahan v. State Highway Commission, (1934) 169 Miss. 732, 151 So. 178; Mississippi Cottonseed Products Co. v. Stone, (1938) 184 Miss. 409, 184 So. 428 (writ of certiorari denied in 1939) 306 U.S. 656, 83 L.Ed. 1054, 59 S.Ct. 774); Illinois C.R. Co. v. Middleton, (1915) 109 Miss. 199, 68 So. 146; State ex rel. Foreman v. Wheatley, (1917) 113 Miss. 555, 74 So. 427; State ex rel. Collins v. Grenada Cotton Compress Co. (1920) 123 Miss. 191, 85 So. 137; Robertson v. Texas Oil Co. (1926) 141 Miss. 356, 106 So. 449; Federal Trade Commission v. Bunte Bros., 312 U.S. 349, 85 L.Ed. 881; Richmond v. Drewry Hughes Co., 122 Va. 178, 94 S.E. 989; Miller v. Y. M.V.R.R. Co., 160 Miss. 603, 132 So. 597; White v. Miller, 160 Miss. 734, 133 So. 146; Planters Lumber Co. v. Wells, 147 Miss. 279, 112 So. 9; Gully v. Gulfport Loan Brokerage Co., 168 Miss. 449, 151 So. 721; Pan-American Petroleum Corporation v. Miller, 154 Miss. 565, 122 So. 393; Town of Utica v. State ex rel. 166 Miss. 565, 148 So. 635; Stone v. Rogers, 186 Miss. 53, 189 So. 810.
This suit was originally brought by the predecessor in office of the appellant, State Tax Collector, to recover of the appellee, Southern Bell Telephone Telegraph Company, the sum of $12,300 alleged to be due in privilege taxes and penalties for the privilege of conducting a commercial advertising agency in each of the eighty-two counties of the State for the period from January 1, 1941, through June 30, 1944. The case was heard on its merits, and a final decree rendered dismissing the suit, and from which decree this appeal was taken.
The basis of the claim of the State Tax Collector is that by the publication and distribution of telephone directories carrying certain advertising matter for the business subscribers of the telephone company, the appellee was engaged during the aforesaid period in the business of conducting a commercial advertising agency within the meaning of Chapter 120, Laws of 1940, Section 9432, Code of 1942, which reads in full as follows:
"Advertising agency — commercial. — Upon each person, other than a licensed newspaper or printer, engaged in the business of commercial advertising, preparing commercial advertisements, or negotiating and making advertising contracts for profit, a state tax . . . $25.00."
Other privilege taxes are levied by the next succeeding sections of the said Code, Sections 9433-34-35 on "Advertising, commercial outdoor"; "Advertising, motion pictures"; "Advertising, street cars, taxicabs, buses or trucks"; respectively.
It is contended by the State Tax Collector under Section 9432 that the telephone company is liable for the taxes sued for herein, for carrying advertisements in its telephone directory, for the reason that the company is not a licensed newspaper or printer; that the maxim expressio unius est exclusio alterius applies.
However, the first question to be determined is whether or not the telephone company, when carrying advertisements in its telephone directory, is an advertising agency within the meaning of the statute here involved, when the head or the lead line of the statute is considered as a part thereof.
The facts of the case were either agreed upon and stipulated or established by undisputed evidence. The record discloses that the telephone company carries no advertising matter in its directories for anyone other than a subscriber for a business telephone, and that the directories are delivered only to the subscribers for personal and business telephones. That no prices are permitted to be quoted therein. The advertising is classified, and they feature the telephone number and address of the advertiser in order to facilitate telephone service. It is stipulated in the record that the alphabetical directory "is absolutely necessary to enable said company to render efficient and satisfactory telephone service." They refresh the memory of the telephone users as to the name of the business concern which they may have momentarily forgotten, and they enable such users to obtain a particular service or commodity where they may not otherwise know which individual or firm to telephone.
It is shown that there are more than thirty-seven hundred employees of the telephone company in this State, and that only eight of them were engaged in connection with the work of the advertising which is carried in the telephone directory. In other words, the advertising is merely incidental to the main business in which the company was engaged.
If the maxim, expressio unius est exclusio alterius, which is a mere aid to construction and not a rule of law, should be deemed controlling here in the construction of Section 9432, Code of 1942, hereinbefore fully quoted, then there would have been no purpose to be served by the enactment of Sections 9433-34-35, hereinbefore mentioned. Moreover, restaurants, hotels and other places of business posting advertisements for profit would come within the meaning of the term "Advertising agency-commercial."
It is shown that the Cumberland Telephone and Telegraph Company which operated in Kentucky, Tennessee, Mississippi and Louisiana, prior to the time when it was purchased by the appellee, had carried advertising matter for profit in its telephone directories, and that the appellee had likewise done so in this State from June 30, 1926, after purchasing the Cumberland Telephone System, and this fact was necessarily known to the Legislature when the first statute that imposed a privilege tax on commercial advertising agencies in this State, Section 6, Chapter 89, Laws of 1932, was enacted. Such fact was likewise known to the Legislature when it enacted Chapter 120 of the Laws of 1940, Sections 9432-35 inclusive, Code of 1942, levying privilege taxes upon advertising agencies, commercial outdoor advertising, motion picture advertising, and advertising in street cars, taxicabs, buses or trucks.
These head or lead lines to the statutes above mentioned were held in the case of Gulley v. Jackson International Company, 165 Miss. 103 145 So. 905, 906, by a direct analogy, to be a part of what immediately follows in each section of the privilege tax code. In that case the statute involved was Section 171 of Chapter 88, Laws of 1930, imposing a tax on "Road Machinery Dealers", and there followed as the body of the statute the words "Upon each person engaged in the business of selling tractors and/or road machinery, a state wide tax of . . . $200." And the Court, in holding that dealers in farm tractors were not included, said: "Appellant's contention is that the body of the statute needs no interpretation; that it is plain and unambiguous, and imposes the license upon each person engaged in the business of selling tractors, regardless of the kind or character of tractors and the use for which they are intended; while appellee contends that the statute is ambiguous, and therefore, in order to ascertain its meaning, resort must be had to its head lines or caption. `Road Machinery Dealers.' We are of the opinion that appellee's contention is well founded."
And the court further said: "The Legislature, in the enactment of the privilege tax statute, undertook to comply with the Constitution by adopting a title in general terms preceding the enacting clause, followed, at the beginning of each section, by subtitles which are more in the nature of lead lines than titles. (Hn 1) We think it apparent that these lead lines constitute a part of the statute; they are not ordinary titles. Without them some of the sections of the act would be incomplete and uncertain in meaning. The words `Road Machinery Dealers' were intended by the Legislature to qualify what followed. In other words, the Legislature intended to impose a privilege tax alone on the business of selling tractors and other machinery used for road construction or maintenance."
We are of the opinion that the cases of Gully v. Jackson International Campany, supra, and Gully v. Gulfport Loan and Brokerage Company, 168 Miss. 449, 151 So. 721, are controlling here in favor of the appellee. Moreover, (Hn 2) it is well-settled that laws imposing privilege taxes are liberally construed in favor of the person sought to be charged with such taxes and are strictly construed against the taxing powers. Planters' Lumber Company v. Wells, 147 Miss. 279, 112 So. 9; Pan American Petroleum Corporation v. Miller, 154 Miss. 565, 122 So. 393; Town of Utica v. State ex rel., 166 Miss. 565, 148 So. 635; Stone v. Rogers, 186 Miss. 53, 189 So. 810; and other decisions too numerous for citation here.
Examples of advertising agencies are such well-known advertisers as "Hurt Advertising Agency; Marks Neese Advertising, Inc.; or Dixie Advertisers," — concerns which were known at the time of the enactment of the statute in question to be engaged in the commercial advertising business. And Mr. W.L. Cooper, Production Manager of the Dixie Advertisers, an advertising agency located in the City of Jackson, Mississippi, testified as to the nature and functions of commercial advertising agencies, and said in substance that an advertising agency is an organization with a staff created for the placing of advertising for clients, and receives a standard agency commission of fifteen percent from advertising media in which it places the advertising matter of its clients. He testified, and it is undisputed by other testimony, that the activities of the appellee telephone company in accepting advertising material from its subscribers and publishing that material in its directory for an agreed rate does not engage in the operation of an advertising agency within the usual and customary meaning of that term. It acted as a principal.
The telephone company has paid all privilege taxes imposed upon it by law for the privilege of carrying on and conducting its telephone business, and all other taxes required by law in connection therewith. The funds received for carrying advertising matter in its telephone directory have been reported to the Federal Communications Commission and the State Public Service Commission as "operating revenues and expenses", and as part of the gross receipts from its telephone business in this State. The company has never heretofore been called upon by the taxing authorities to pay privilege taxes as an advertising agency.
At any rate, (Hn 3) we are of the opinion that the Legislature has specified in Sections 9433-34-35 the character of advertising upon which it desired to levy a privilege tax, other than the advertising conducted by a commercial advertising agency, and we do not think that the classified advertising carried in telephone directories of the appellee, as an aid to the efficiency of the telephone service and as an incident to the business in which it is mainly engaged, is such as to constitute a telephone company an advertising agency within the meaning of Section 9432 of the Code of 1942, here under consideration. The judgment of the trial court will therefore be affirmed.
Affirmed.