Opinion
No. 34026.
March 4, 1940. Suggestion of Error Overruled June 10, 1940.
1. LICENSES.
Under gasoline tax statute providing that where gasoline is sold to federal government or any of its agencies, the distributor shall file written report accompanied by a United States government form or such other form as may be substituted for such form, where form prepared by attorney general of state for use as to gasoline sold to Federal Land Bank was approved by Federal Farm Loan Board as a branch of the federal government having supervision of the Federal Land Bank and was acted on by state auditor allowing exemption from gasoline tax, the state statute was substantially complied with (Laws 1932, chap. 93, secs. 6(a), 7; Laws 1936, chap. 162, secs. 8(a), 31).
2. LICENSES.
The requirement of gasoline tax statute that form for allowance of exemption as to gasoline sold to agency of United States should be signed by an officer, agent or other employee of the federal government was complied with where forms were signed by employees of Federal Land Bank, since the bank was an "agent of the federal government" and as such agent could not sign the form except through one of its own agents and employees (Laws 1932, chap. 93, secs. 6(a), 7; Laws 1936, chap. 162, secs. 8(a), 31).
3. LICENSES.
The federal land bank is an "agency" or "instrumentality of the federal government" within meaning of statutory provision exempting agencies or instrumentalities of the federal government from gasoline tax (Laws 1932, chap. 93, secs. 6(a), 7; Laws 1936, chap. 162, secs. 8(a), 31).
4. LICENSES.
In construing statutory provision exempting agencies and instrumentalities of federal government from gasoline tax, Supreme Court assumed that Legislature had in mind decisions of courts holding that Federal Land Bank was such an agency or instrumentality (Laws 1932, chap. 93, secs. 6(a), 7; Laws 1936, chap. 162, secs. 8(a), 31).
APPEAL from the chancery court of Hinds county; HON. V.J. STRICKER, Chancellor.
W.E. Gore, of Jackson, T.N. Gore, of Marks, and Forrest B. Jackson, of Jackson, for appellant.
This suit involves taxes for the use and sale of gasoline from October, 1932, to October, 1937. Therefore, Chapter 93, Laws of 1932, and Chapter 162, Laws of 1936, govern. The case presents no controversy as to the fact that each of the defendants is a distributor of gasoline, as defined by Section 1(c), Chapter 93, and Section 5(e), Chapter 162, supra. This forecloses the question that they are taxable, under Section 6, Chapter 93, and Section 8, Chapter 162, at the rate of six cents per gallon. Liability for its payment is established, unless the defendants are exempt from its payment.
The statutes relied on to sustain an exemption by express grant are parts of Section 7, Chapter 93, Laws of 1932, and Section 31, Chapter 162, Laws of 1936.
The pertinent part of Section 7 reads as follows: "Where gasoline or other petroleum products on which the tax has been paid is sold to the federal government, or any of its departments, agencies, or instrumentalities, the distributor shall file a written report thereof with the auditor, accompanied by a United States Government Form No. 44 or 1066, or such other form as may be substituted for said form, which report shall be duly signed by the officer, agent or other employee of the federal government, making such purchase, to the effect that such gasoline was purchased for the use of the federal government, or some one or more of its departments, agencies, or instrumentalities."
The principle is well settled that the power of exemption, as well as the power of taxation, is an essential element of sovereignty and can only be surrendered or diminished in plain and explicit terms.
2 Sutherland on Statutory Construction 1002, sec. 539; Knoxville Ohio R.R. Co. v. Harris, 99 Tenn. 684, 43 S.W. 115; Adams v. R.R. Co., 75 Miss. 275; Currie-Finch Brick Lbr. Co. v. Miller, 123 Miss. 850; Barnes v. Jones, 139 Miss. 575; State v. Simmons, 70 Miss. 485, 12 So. 477; Greenville Ice Coal Co. v. Greenville, 69 Miss. 86, 10 So. 574; Gulfport Bldg. Loan Assn. v. Gulfport, 155 Miss. 498, 124 So. 658; Magnolia Bldg. Loan Assn. v. Miller, 128 So. 585, appeal dismissed 282 U.S. 805, 51 Sup. Ct. 86; Bd. of Sup'rs of Bolivar County v. Merck Alston, 120 So. 839, 153 Miss. 346; Bailey v. Maguire, 22 Wall. 215; Vicksburg, Shreveport Pacific R.R. Co. v. Dennis, 116 U.S. 665; 2 Cooley on Taxation (4 Ed.), 1407; New Standard Club v. McGowan, 111 Miss. 92, 71 So. 289, Ann. Cas., 1918E, 274; Adams County v. National Box Co., 125 Miss. 598, 88 So. 168; Y. M.V. R.R. Co. v. Thomas, 65 Miss. 553, 132 U.S. 174, 10 S.Ct. 68, 33 L.Ed. 302; Frantz v. Dobson, 64 Miss. 631; Teche Lines v. Forrest County, 165 Miss. 594, 142 So. 24, 143 So. 486; Leaf Hotel Corp. v. City of Hattiesburg, 168 Miss. 304, 150 So. 779; Hollandale Ice Co. v. Washington County, 171 Miss. 515, 157 So. 689; Jackson Fertilizer Co. v. Stone, 173 Miss. 183, 162 So. 170; Chapman v. State, 179 Miss. 507, 176 So. 391; Parker v. State Tax Com., 178 Miss. 680, 174 So. 567, certiorari denied 302 U.S. 742, 82 L.Ed. 574, 58 Sup. Ct. 144; Y. M.V.R.R. Co. v Adams, 180 U.S. 1, 45 L.Ed. 395, 21 Sup. Ct. 240; Morris Ice Co. v. Adams, 22 So. 944, 75 Miss. 410; State v. Simmons, 70 Miss. 485, 12 So. 477; 26 R.C.L., Sec. 274, note 20; New Colonial Ice Co. v. Helvering, 292 U.S. 435, 54 S.Ct. 788, 78 L.Ed. 1348; Botany Worsted Mills v. U.S., 278 U.S. 282, 73 L.Ed. 378; 8 R.C.L. 5750, Perm. Supp., and 1939 pocket part, pp. 1901, 1902.
When the legislature adopted the statutes and referred to these forms by numbers, the forms, the restrictions, the limitations and conditions embodied therein and in the regulations of officers of the United States became a part of the statute.
The statutes limit the exemption to those who use, by authority, of course, Forms 44 and 1066, by literally designating them, and 1094, because it was substituted for them, all being, in all material provisions, identical, and the use of all being restricted to employees of the government itself, exercising governmental, as distinguished from public, functions, that is to say, those whose connection with, and duty to, the government are direct, with no intermediate agency, such as the land bank.
The statute further provides that the receipt "shall be duly signed by the officer, agent or other employee of the federal government making such purchase."
Elaborate argument is made to the effect that the land bank is a federal instrumentality. We admit this. There never has been any controversy in this case about it. Our position, as it has been throughout this suit is that it is not of the kind of instrumentality which the legislature had in mind when the exemption was granted. The bank is not entitled to use the forms which are an indispensable prerequisite to credit, and that they were not used by the oil company defendant has never been denied. Substitute forms were used but they were based on an opinion of General Lauderdale, which was planted on his erroneous interpretation of the federal constitution, that it prohibited taxation of the land bank, because such taxation encroached upon, burdened, impeded and interfered with the government in the exertion of federal power.
Lyell Lyell, of Jackson, and E.F. Steiner and Beverly C. Adams, both of New Orleans, La., for appellees.
Rule of strict construction is not applicable where statute is not ambiguous.
61 C.J. 395, Sec. 396; State v. Leuch, 144 N.W. 290, 156 Wis. 121; South Carolina Produce Assn. v. Com'r of Internal Revenue, (C.C.A.), 50 F.2d 742; Flannagan v. Providence Life and Acc. Ins. Co. (C.C.A.), 22 F.2d 136; Ruggles v. Ill., 108 U.S. 536, 27 L.Ed. 812; Hamilton v. Rathbone, 175 U.S. 414, 44 L.Ed. 219.
The law plainly exempts federal agencies and instrumentalities.
Sec. 7, Chap. 93, Laws of 1932; Sec. 31, Chap. 162, Laws of 1936.
The Federal Land Bank is an agency and instrumentality of the federal government.
Fed. Land Bank of N.O. v. Tatum, 163 So. 319, 174 Miss. 264; Fed. Land Bank of Columbia v. State Highway Dept., 173 S.E. 284, 172 S.C. 174; M.G. West Co. v. Johnson (Cal.), 66 P.2d 1211; Smith v. Kansas City Title and Trust Co., 255 U.S. 180, 41 Sup. Ct. 243, 65 L.Ed. 577; Fed. Land Bank of N.O. v. Crosland, 261 U.S. 374, 43 Sup. Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1; Fed. Land Bank of Columbia v. Gaines, 290 U.S. 247, 54 Sup. Ct. 168, 78 L.Ed. 298; Fed. Land Bank of St. Louis v. Priddy, 295 U.S. 229, 79 L.Ed. 1408; Knox Nat. Farm Loan Assn. v. Phillips, 300 U.S. 194, 57 Sup. Ct. 418, 81 L.Ed. 599, 108 A.L.R. 738.
It is a well settled rule that the practical interpretation of a statute by the executive department charged with its administration or enforcement is entitled to the highest respect and, though not controlling, will not be disturbed except for very cogent and persuasive reasons.
Attorney General's Opinions, 1931-33, page 92; 25 R.C.L. 1043, Sec. 274; I.C.R.R. Co. v. Middleton, 68 So. 146, 109 Miss. 199; State v. Wheatley, 74 So. 427, 113 Miss. 555; Robertson v. Tex. Co., 106 So. 449, 141 Miss. 356; Briscoe v. Buzbee, 143 So. 407, 887, 163 Miss. 574; Conrad Furniture Co. v. Miss. State Tax Com., 133 So. 652, 160 Miss. 185; Gully v. Jackson International Co., 145 So. 905, 165 Miss. 103.
Legislative intent will be ascertained and enforced.
City of Holly Springs v. Marshall, 61 So. 703, 104 Miss. 752; Abbott v. State, 63 So. 667, 106 Miss. 340; Roseberry v. Norsworthy, 100 So. 514, 135 Miss. 845; Canal Bank and Trust Co. v. Brewer, 114 So. 127, 147 Miss. 885; Money v. Wood, 118 So. 357, 152 Miss. 17; Sartin v. Prentiss Cty., 125 So. 563, 156 Miss. 46; Gift v. Love, 144 So. 562, 164 Miss. 442, 86 A.L.R. 63; Rawlings v. Ladner, 165 So. 427, 174 Miss. 611; Alexander v. Graves, 173 So. 417, 178 Miss. 583; Maris v. Lindsey, 87 So. 12, 124 Miss. 742; In re Validation of Road Protection Bonds of Hancock Cty. (Miss.), 184 So. 815; Gandy v. Public Service Corp., 140 So. 687, 163 Miss. 187.
Rule of strict construction of tax exemption yields to legislative intent.
25 R.C.L. 1093, Sec. 309; 26 R.C.L. 314, Sec. 274; Adams Cty. v. Catholic Diocese of Natchez, 71 So. 17, 110 Miss. 890; Bd. of Sup'rs of Warren Cty. v. Vicksburg Hospital, 162 So. 382, 173 Miss. 805; Leaf Hotel Corp. v. City of Hattiesburg, 150 So. 779, 168 Miss. 304; 61 C.J. 395, Sec. 396; Ritchie v. City of Green Bay (Wis.), 254 N.W. 113, 95 A.L.R. 1081; Y.M.C.A. of Lincoln v. Lancaster Cty., 106 Neb. 105, 182 N.W. 593, 34 A.L.R. 1060; Trotter v. State of Tenn., 290 U.S. 354, 54 Sup. Ct. 138, 78 L.Ed. 358; Bistline v. Bassett (Idaho), 272 P. 696, 62 A.L.R. 323; Pan American Petroleum Co. v. Miller, State Tax Collector, 122 So. 393, 154 Miss. 565; St. Paul's Church v. Concord, 75 N.H. 420, 75 A. 531, 27 L.R.A. (N.S.) 910; Bottum v. Knudtson (N.D.), 276 N.W. 150.
The gasoline tax of Mississippi is a direct tax on the bank and as such is an unauthorized tax on a federal instrumentality.
Panhandle Oil Co. v. State of Miss., 277 U.S. 218, 72 L.Ed. 857; McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579; Indian Motorcycle Co. v. U.S., 283 U.S. 570, 75 L.Ed. 1277; Graves v. Texas Co., 298 U.S. 393, 80 L.Ed. 1236.
A certificate in proper form and properly executed was used by bank.
Sec. 7, Chap. 93, Laws of 1932; Sec. 31, Chap. 162, Laws of 1936; 12 U.S.C.A., Sec. 831(i); Fed. Land Bank of New Orleans v. Tatum, 163 So. 319, 174 Miss. 264.
Argued orally by W.E. Gore, for appellant, and by Beverly C. Adams, for appellees.
The State Tax Collector seeks to obtain a decree against both of the appellees in the sum of $26,056.50, for what is commonly known as "gasoline taxes," the amount of recovery sought being six cents per gallon tax on 434,275.10 gallons of gasoline purchased by the appellee Federal Land Bank of New Orleans from the appellee Standard Oil Company of Kentucky, during a period beginning in the year 1932 and ending in September, 1937, and used by the bank for propelling automobiles owned by it on the highways of this state in the transaction of the bank's business.
Exemption from the payment of the tax is claimed by appellees on three grounds: (1) That the state legislature by Chapter 93 of the Laws of 1932, and Chapter 162 of the Laws of 1936, regular sessions, expressly exempted the payment of such tax where the gasoline is sold to the federal government, or to any of its departments, agencies or instrumentalities: (2) That the attempt to impose and collect the tax violates Section 26 of the Federal Farm Loan Act, Title 12 U.S.C.A., Sec. 931, and Article VI; clause 2 of the Federal Constitution, U.S.C.A., providing that the Acts of Congress shall be the supreme law of the land, and (3) That it was beyond the power of the legislature to tax its sale or use, because the Federal Constitution impliedly prohibits such taxation, when it is sold for use or used by a Federal Land Bank.
The tax collector's position is that under the well settled principle of statutory construction to be applied in the interpretation of statutes under which tax exemptions are claimed, and which requires that the exemption be denied unless the intent and purpose of the legislature to grant the same is clear and unmistakable, the state statutes here under consideration did not grant the exemption claimed; and that neither did the federal statute invoked by the appellees withhold from the state the right to levy the tax in question, nor does the federal constitution prohibit such taxation.
The trial court held that the provisions of said Chapter 93 of the Laws of 1932, and Chapter 162 of the Laws of 1936, supra, expressly exempted the appellees from payment of the tax for the reason that the gasoline was sold by the appellee oil company to the appellee Federal Land Bank, as an agency or instrumentality of the Federal Government, for use in its own automobiles, and in the transaction of its business; and hence the chancellor dismissed the bill of complaint without passing on the other two grounds invoked by the appellees. This appeal is from that decree.
Section 6, subsection (a), of Chapter 93, Laws of 1932, supra, levied the six cents per gallon tax here in question, and Section 7 of the said act provides among other things that:
"Where gasoline or other petroleum products on which the tax has been paid is sold to the Federal Government, or any of its departments, agencies, or instrumentalities, the distributor shall file a written report thereof with the Auditor, accompanied by a United States Government form No. 44 or 1066, or such other form as may be substituted for said form, which report shall be duly signed by the officer, agent or other employee of the Federal Government, making such purchase, to the effect that such gasoline was purchased for the use of the Federal Government, or some one or more of its departments, agencies or instrumentalities.
"And such distributor, upon filing such report and certificate, accompanied by said forms, as above provided, and upon furnishing such additional evidence of such sale as the Auditor may require, may after first deducting from such gasoline the two per cent (2%) allowed for evaporation and wastage, and other losses, deduct from his next monthly report and payment the net amount of tax paid on such gasoline."
Section 8, subsection (a), of Chapter 162 of the Laws of 1936, supra, likewise levies such tax, and Section 31 thereof provides that there shall not be included in the measure of the tax levied under the statute any gasoline sold to the Federal Government or any of its departments, agencies, or instrumentalities, and contains other provisions substantially the same as those hereinbefore quoted from the 1932 statute aforesaid.
In the cases of Smith v. Kansas City Title Trust Co., et al., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577; Federal Land Bank of St. Louis v. Priddy, 295 U.S. 229, 55 S.Ct. 705, 79 L.Ed. 1408; Federal Land Bank of Columbia, etc. v. Gaines, 290 U.S. 247, 54 S.Ct. 168, 78 L.Ed. 298, the Supreme Court of the United States held that the Federal Land Banks are agencies and instrumentalities of the Federal Government. Pursuant to those decisions the attorney-general of Mississippi, who was charged with the duty of rendering legal opinions to the department of state having in charge the administration of these gasoline tax laws, advised the state auditor on April 13, 1932, that an exemption should be allowed from the payment of the tax on all gasoline sold to employees of a Federal Land Bank when the same was to be used in automobiles owned by such bank. In view of the fact, however, that the statute required that the distributor in order to obtain the exemption should file a written report of the sale, accompanied by U.S. form No. 44 or 1066, or such other form as may be substituted for said form, duly signed by the officer, agent or other employee of the Federal Government making such purchase to the effect that such gasoline was purchased for the use of the Federal Government, or some one or more of its departments, agencies, or instrumentalities, it was deemed necessary by the attorney general that some other form should be substituted for the form above mentioned so that the same could state that the gasoline sold was "for use on business of the Federal Land Bank of New Orleans" instead of reciting that the same had been sold "to the Federal Government" for its use. Such a form was accordingly substituted and used throughout the period in question. The facts are stipulated in the record, and among other things it is agreed that the averments of paragraph 35 of the answer of the appellee Federal Land Bank are true and correct. That paragraph alleges that the exemption certificates and indentification cards so used "were approved by the Federal Farm Loan Board, which was a branch of the Federal Government having supervision of the Federal Land Banks at the time the said certificate was adopted." It is contended by the appellant tax collector that the state legislature in requiring the report which was to be made as a condition precedent to obtaining the exemption should be accompanied by U.S. Form No. 44 or 1066 and to be signed by an "officer, agent, or other employee of the Federal Government," evidenced an intention not to allow the exemption except where the agency or instrumentality of the Federal Government was in position to execute the prescribed form aforesaid through one of the officers, agents, or employees of the Federal Government itself, and that there was no authority for the attorney-general or anyone else other than the Federal Government to substitute a form in lieu of those above mentioned. It is doubtless true that the legislature using the term "or such other form as may be substituted for said forms" had in mind a form to be substituted by the Federal Government rather than one substituted by the department of state administering the gasoline tax statutes. However, since the form prepared by the attorney-general of the state is agreed to have been approved by the Federal Farm Loan Board, as a branch of the Federal Government having supervision of the Federal Land Banks, and which was acted on by the state auditor allowing the exemption, we are of the opinion that this constituted a substantial compliance with the state statute and that the form used was substantially of the same purport as those required by the statute itself. Also, that the requirement that the same should be signed by an "officer, agent or other employee of the Federal Government" was complied with for the reason that under our view of the statute the Federal Land Bank is an agent of the Federal Government and as such agent could not sign the form except through one of its own agents and employees. Moreover, we think that any other construction of these statutes would defeat the manifest purpose of the legislature to grant the exemption in favor of an agency or instrumentality of the Federal Government, since it would be impracticable to require a commissioned officer or some agent or employee of the Federal Government itself in a more literal sense to be present at such sales of gasoline and certify that the gasoline sold was for use in automobiles owned by a Federal Land Bank in the transaction of its business.
Not only has the Supreme Court of the United States in the decisions hereinbefore cited held that a Federal Land Bank was an agency or instrumentality of the Federal Government, but our own Court has so held in the case of the Federal Land Bank of New Orleans v. Tatum, 174 Miss. 264, 164 So. 319, 320, wherein the Court said: "While it is alleged in the bill that the Federal Land Bank was not a government agency, we are of the opinion that whether it is an agency or not is determined by a consideration of the law and Federal decisions, construing the Federal Farm Loan Act. . . . We think these decisions of the United States Supreme Court construing the Federal Farm Loan Act [citing cases] hold that the Federal Land Bank . . . is an agent of the Federal Government, and being such, the Mississippi Moratorium Law, Chapter 247, Laws of 1934, does not apply under the express provisions of section 14 of said chapter above quoted."
It seems clear to us that if the Federal Land Bank is an agency or instrumentality of the Federal Government within the meaning of the Moratorium Law referred to in the Tatum case, the same is equally true under the provisions of the said Chapter 93 of the Laws of 1932, and Chapter 162 of the Laws of 1936, supra, now under consideration. While it is true, as stated by appellant, that the Moratorium Law is not at all similar to these tax statutes, nevertheless the holding of the Court as to the status of a Federal Land Bank as an agency or instrumentality of the Federal Government would apply in each instance. We must assume that the legislature in undertaking to exempt agencies and instrumentalities of the Federal Government had in mind the decisions of the courts which had held that a Federal Land Bank was such an agency or instrumentality.
It is unnecessary that we consider the question as to whether or not the state was prohibited by the federal statute referred to and the constitution of the United States from levying the tax in question, for the reason that the legislature has not undertaken to exercise such a power, but has refrained from so doing. Therefore, as to whether or not the state has the right to levy the tax here in controversy without violating Section 26 of the Federal Farm Loan Act, Title 12, U.S.C.A., Sec. 931, we express no opinion. In other words, in the language of Mr. Justice Frankfurter, in discussing the principle thus involved in the case of Graves v. New York, 306 U.S. 466, 59 S.Ct. 595, 604, 83 L.Ed. 927, 120 A.L.R. 1466, the issue of whether Congress may, by express legislation, relieve its functionaries from this alleged civic obligation to the state for the privilege of using its highways "is matter for another day." Our state statute having granted the tax exemptions claimed for the period in question, the decree of the chancellor dismissing the suit must be affirmed.
Affirmed.