Opinion
No. 40415.
March 18, 1957.
1. Executors and administrators — demurrer of personal representative of deceased former Chairman of State Tax Commission — properly sustained.
In action by corporation against Chairman of the State Tax Commission and the personal representative and sole heir at law of deceased former Chairman to recover sales taxes paid by corporation to the Commission as result of additional assessments, Trial Court properly sustained demurrer of the personal representative and sole heir of the deceased former Chairman in view of fact that statutes make ample provision for payment of judgments for a taxpayer in a suit to recover illegal taxes. Secs. 10123, 10124, Code 1942.
2. Sales taxes — statutes — manufacturer not exempt from sales taxes on sales of uniforms to linen supply company.
Linen supply company, which was engaged in the business of renting uniforms and other items to customers, was not a "licensed retailer" within meaning of statute providing that manufacturer selling manufactured products to "licensed retailers" shall not be required to pay sales tax, and therefore manufacturer was not exempt from sales taxes on sales of uniforms to linen supply company. Chap. 529, Laws 1950; Secs. 10104(5, 8), 10105, Code 1942.
3. Sales taxes — exemptions — burden of proof.
In action by manufacturer against Chairman of the State Tax Commission to recover sales taxes paid by manufacturer to the Commission as a result of two additional assessments, burden of proving that manufacturer was exempt from taxes was on manufacturer. Chap. 529, Laws 1950; Secs. 10104(5, 8), 10105, Code 1942.
4. Taxation — exemption statutes — strictly construed.
Tax emption statutes should be strictly construed, and, when any doubt arises as to whether or not an exemption is granted by such statute, doubt must be resolved against the exemption.
5. Sales taxes — statutes — manufacturer not exempt from sales taxes on sales of uniforms to linen supply company.
Linen supply company which was engaged in business of renting uniforms and other items to customers, was not a "manufacturer, wholesaler, or jobber" within meaning of provision of statute exempting manufacturer from payment of sales tax on sale of manufactured products to "manufacturers, wholesalers, or jobbers", and therefore manufacturer which sold uniforms to the linen supply company, was not exempt from sales tax. Chap. 529, Laws 1950; Secs. 10104(5, 8), 10105, Code 1942.
Headnotes as approved by Arrington, J.
APPEAL from the Circuit Court of Hinds County; M.M. McGOWAN, Judge.
Watkins, Edwards Ludlam, Marvin A. Cohen, Jackson, for appellant.
I. This action is maintainable against the personal representative of the Commissioner in office at the time of the acts complained of. State Tax Commission v. Dunn Brothers, Inc., 224 Miss. 762, 81 So.2d 712; Stone v. Intrastate Natural Gas Co., 103 F.2d 544, affirmed 60 S.Ct. 381, 308 U.S. 522, 84 L.Ed. 422, rehearing denied 60 S.Ct. 381, 308 U.S. 639, 84 L.Ed. 530; Secs. 609, 10123, 10124, Code 1942.
II. N. W., under Section 2(c) of the Sales Tax Law then in effect (Chapter 529, Laws 1950), was not liable for sales tax, either at the wholesale or retail rate, for the sales of uniforms to Independent Linen Service Company here involved.
A. The sales here involved were sales by a "manufacturer" to a licensed "retailer" under said Section 2(c). Cody v. State Tax Comm., 235 Ala. 47, 177 So. 146; Garlock Packing Co. v. Glander, 80 N.E.2d 718; State v. Scampini, 77 Vt. 92, 59 A. 201; Chap. 119, Laws 1934; Chap. 529 Sec. 2(c), Laws 1950; 37A Words and Phrases (Perm. Ed.) 171, et seq.
B. It being the intent of the Sales Tax Law then in effect not to tax sales by "manufacturers" except as to sales to consumers, the last paragraph of Section 2(c) must be construed to apply to the sales here involved so as to render them not taxable. Chap. 119 Sec. 2(b), Laws 1934; Chaps. 272, 343, Laws 1946.
III. If the meaning of Section 2(c) as applied to the facts in this case is not clear, then the application of well-known rules of statutory construction show that the taxes in question were improperly collected. Beard v. Stanley, 205 Miss. 723, 39 So.2d 317; Bedford, State Treasurer v. Colorado Fuel and Iron Corp., 81 P.2d 752; Gambrill v. Gulf States Creosoting Co., 216 Miss. 505, 62 So.2d 772; Independent Linen Service Co. v. Stone, 192 Miss. 832, 6 So.2d 110; M.L. Virden Lbr. Co. v. Stone, 203 Miss. 251, 33 So.2d 841; McCullen v. State, 217 Miss. 256, 63 So.2d 856; Southern Pacific Co. v. Gallagher, 306 U.S. 167; State v. Necaise, 228 Miss. 542, 87 So.2d 922; Stone v. W.G. Nelson Exploration Co., 211 Miss. 199, 51 So.2d 279; Stone v. M.L. Virden Lbr. Co., 205 Miss. 841, 39 So.2d 498; Chap. 120 Sec. 4, Laws 1942; 30 A.L.R. 2d 1442; Crawford, The Constitution of Statutes, Secs. 168, 227, 231, 232, 257, 359; Sutherland, statutory Construction, Secs. 4815, 5201, 5202, 5901, 6701, 6710.
IV. If these sales were not sales to a "retailer" under the last paragraph of Section 2(c), then they were sales by a "wholesaler" under the first paragraph of Section 2(c). Haynie v. Hogue Lbr. Supply Co. of Gulfport, 96 F. Supp. 214; Chap. 119, Laws 1934; Chap. 120 Sec. 2, Laws 1942; Chap. 529 Sec. 1(5), (7) Laws 1950; 20 Words Phrases (Perm. Ed.) 448, et seq.; Vol. I, Mississippi State Tax Commission Administrative Decisions, p. 59.
John E. Stone, Jackson, for appellee.
I. Demurrer of Mrs. A.H. Stone was correctly sustained. Barnett v. Lollar, 197 Miss. 574, 19 So.2d 748; Copes v. Mathews, 10 S. M. 398; Murphy v. Panther Oil Grease Mfg. Co., 181 Miss. 882, 179 So. 879; Paxton v. Baum, 59 Miss. 531; Smietanka v. Indiana Steel Co., 257 U.S. 1, 42 S.Ct. 1, 66 L.Ed. 99; State ex rel Kyle, Atty. Gen., v. Dear, 209 Miss. 268, 46 So.2d 100; Stone v. Interstate Natural Gas Co., 103 F.2d 544; United States v. Lee, 27 L.Ed. 171; Secs. 10123, 10124, Code 1942; Chap. 520, Laws 1950.
II. One engaged in the business of renting uniforms is not a retailer. Adams v. National Box Co., 125 Miss. 598, 88 So. 168; Alcorn v. State, 71 Miss. 464, 15 So. 37; Currie-Finch Brick Lbr. Co. v. Miller, 123 Miss. 850, 86 So. 579; Folkes v. State, 63 Miss. 81; Kantor Son v. Stone, 203 Miss. 260, 34 So.2d 492; Leaf Hotel Corp. v. City of Hattiesburg, 168 Miss. 304, 150 So. 779; New Standard Club v. McGowen, 111 Miss. 92, 71 So. 289; Stone v. Dunn Bros. Inc., 224 Miss. 762, 81 So.2d 712; Stone v. General Contract Purchase Corp., 193 Miss. 301, 7 So.2d 806; Stone v. Interstate Natural Gas Co., 193 Miss. 301, 7 So.2d 806; Texas Co. v. Wheeless, 185 Miss. 799, 187 So. 880; Secs. 10104(8), 10105, Code 1942; Chaps. 529, 530, Laws 1950.
III. Rules of statutory construction favor tax here. Hamner v. Yazoo Delta Lbr. Co., 100 Miss. 349, 56 So. 466; Lawrence v. State Tax Comm., 286 U.S. 276, 76 L.Ed. 1102; Maxwell v. Bugbee, 250 U.S. 525, 63 L.Ed. 1124; McLeod v. Dilworth, 322 U.S. 327, 88 L.Ed. 1304; Saloman v. State Tax Comm., 278 U.S. 464, 73 L.Ed. 464; Yerger v. State, 91 Miss. 802, 45 So. 849; Sec. 61 Constitution 1890.
IV. Sales made by N. W. Industries, Inc., were sales made by a manufacturer. Alexander v. Graves, 178 Miss. 583, 173 So. 417; Dresser v. Hawthorne, 144 Miss. 24, 109 So. 23; Nicholson v. Board of Mississippi Levee Com'rs., 203 Miss. 71, 33 So.2d 604; Robertson v. Texas Oil Co., 141 Miss. 356, 106 So. 449; State v. J.J. Newman Lbr. Co., 102 Miss. 802, 59 So. 923; Sec. 10104 (5), (7), Code 1942.
N. W. Industries, Inc., a corporation, appellant here, filed suit in the Circuit Court of the First Judicial District of Hinds County against Alex McKeigney, Chairman of the State Tax Commission, and Mrs. A.H. Stone, the personal representative and sole heir at law of A.H. Stone, deceased, former chairman of the State Tax Commission, and which cause was revived in the name of Noel Monaghan, Chairman of the State Tax Commission after the resignation of the said Alex McKeigney, seeking the recovery of $2,554.75, sales taxes paid to the said State Tax Commission as a result of two additional assessments. The cause was submitted to the circuit judge without a jury upon the pleadings and stipulation as to the facts and upon a demurrer of Mrs. Stone. The demurrer was sustained, and judgment was rendered for the appellee, and the appellant appeals.
The appellant is engaged in the business of manufacturing overalls, uniforms and work clothing, etc., in the City of Jackson, Mississippi. The additional assessments were made under Section 10105, Vol. 7A, Mississippi Code of 1942, for the years 1951 and 1952, and were for sales of uniforms by the appellant to the Independent Linen Company in Jackson. The Independent Linen Company was at the time of the assessment engaged in the business of renting uniforms and other items to its customers. The appellant bases its grounds for recovery on Chapter 529 of the Mississippi Laws of 1950, which provides, in part, as follows:
"But notwithstanding the repeal of said Section 2b of said Chapter 119 by said House Bill 311, of the regular session of the Legislature, any person engaging in this state in the business of manufacturing, compounding, or preparing for sale, profit, or commercial use, either directly or through the activity of others, in whole or in part, any article or articles, substance or substances, commodity or commodities, and engaging in the business of selling his manufactured products to manufacturers, wholesalers, jobbers, or licensed retailers, shall not be required to pay the tax imposed in said Section 2-c of said Chapter 119 for the privilege of selling such manufactured products at wholesale. Nor shall such person be required to pay the tax imposed in said Section 2-c of said Chapter 119 for the privilege of selling his manufactured products for delivery outside of this State."
(Hn 1) The appellant contends that the lower court erred in sustaining the demurrer of Mrs. A.H. Stone. We are of the opinion that the demurrer was properly sustained. Sections 10123 and 10124, Vol. 7A, Mississippi Code of 1942, makes ample provision for the payment of judgments for a taxpayer, as follows: "In the event a final judgment is rendered in favor of the taxpayer in a suit to recover illegal taxes, it shall be the duty of the state auditor upon receipt of a certified copy of the final judgment to issue a warrant directed to the state treasurer, in favor of the taxpayer, to pay the part of the illegal tax as was paid into the state treasury. . . ." Rigby v. Stone, 194 Miss. 775, 11 So.2d 823; Barnett v. Lollar, 197 Miss. 574, 19 So.2d 748.
The appellant next contends that the Independent Linen Company is a "licensed retailer" under the statute cited above for the reason that it paid sales taxes at the retail rate on the renting of its uniforms. Appellant also makes the further contention, among others, that the Independent Linen Company is a manufacturer, wholesaler, or jobber within the meaning and intent of the sales tax law. It is admitted that the Independent Linen Company did not sell the uniforms which it purchased from the appellant, but rented them. We need only look at the sales tax law to ascertain the intent from the definitions. Section 10104, Vol. 7A, Mississippi Code of 1942, provides, in part, as follows:
"(5) The term `sale' or `sales' includes the barter or exchange of properties as well as the sale thereof for money, every closed transaction by which the title to taxable property passes shall constitute a taxable event whether the compensation is by money or service, or other thing of value, constituting a sale. . . . .
"(8) The classification of `retail merchant' shall apply only to a person doing a regularly organized retail business known to the trade as such and who maintains a store, open at reasonable hours, or who operates as a transient vendor, as defined in the privilege tax law, for sale to the public of such goods, wares or merchandise as may be handled."
(Hn 2) Under these definitions, since there was no sale of property by Independent Linen Company, we are of the opinion that it was not a licensed retailer within the meaning of the act. (Hn 3) Furthermore, since appellant contends that it is exempted from paying the sales tax under Chapter 529, Laws of 1950, supra, the burden of proof is upon the appellant. (Hn 4) It is well settled that tax exemption statutes should be strictly construed and that when any doubt arises as to whether or not an exemption is granted by such statute, the doubt must be resolved against the exemption. Interstate Oil Pipeline Co. v. Stone, 203 Miss. 715, 35 So.2d 73; Stone v. Dunn Bros., 81 So.2d 712. (Hn 5) We are also of the opinion that the Independent Linen Company is not a manufacturer, wholesaler, or jobber within the meaning and intent of the sales tax law.
We have examined the other assignments and find them to be without merit. The judgment of the lower court is therefore affirmed.
Affirmed.
Roberds, P.J., and Lee, Ethridge and Gillespie, JJ., concur.