Opinion
No. 29310
Decided November 17, 1943.
Liquor Control Act — Bond of permit holder — Section 6064-18, General Code — Surety not liable for retail sales tax upon beverages or merchandise.
When a bond is furnished under the requirements of Section 6064-18, General Code, a section of the Ohio Liquor Control Act, the surety is not liable thereunder for retail sales taxes upon beverages or other merchandise sold by the holder of a. permit.
APPEAL from the Court of Appeals of Franklin county.
The relator, as Attorney General of Ohio, instituted. this action in the Municipal Court of the city of Columbus to recover from the respondent surety company the amount of a deficiency assessed by the state department of taxation against Esther D'Errico, a restaurant owner, for the nonpayment of retail sales taxes on her sales of merchandise from January 1, 1937, through June 14, 1937.
To the relator's petition the respondent surety company filed an answer admitting the execution of a bond by Esther D'Errico with itself as surety thereon but denying liability for any part of the amount of retail sales taxes and penalty claimed thereunder.
To this answer the relator filed a demurrer on the ground that "the matters and things therein contained are insufficient in law to constitute a defense."
The trial court sustained the demurrer and rendered judgment for the relator for $95.23, the full amount asked.
Upon an appeal on questions of law the Court of Appeals modified the judgment by holding that the respondent surety company is liable for that part of the unpaid retail sales taxes assessed on beverages but not for that part assessed on merchandise other than beverages; and therefore the amount of the judgment was reduced to $80.90.
The case is in this court for review by reason of the allowance of the respondent's motion and the relator's cross-motion to certify the record.
Mr. Thomas J. Herbert, attorney general, and Mr. David M. Spriggs, for appellee.
Messrs. Garfield, Baldwin Vrooman and Mr. Hugh M. Bennett, for appellant.
The surety bond here involved was furnished under the requirements of Section 6064-18, General Code, which reads in part as follows:
"No permit other than a class C-1, class D-1, and class F permit shall be issued unless and until the applicant therefor shall have furnished a bond to the state of Ohio, with surety to the satisfaction of the commission, conditioned on the faithful observance of the terms of the particular class of permit and compliance with all laws of the state of Ohio and rules, regulations, and orders of the department of liquor control and the tax commission of Ohio with respect thereto, and the payment of all permit fees, taxes and penalties levied under the provisions of the liquor control act, and amendments and supplements thereto, upon sales made by him of any kind of nonintoxicating or intoxicating beverages or liquor, whether under authority of such permit or otherwise."
The wording of the bond is not quite the same as the statute. However, counsel have simplified the controversy by agreeing, first, that the surety's liability is fixed by the provisions of the statute, and, second, that the surety is liable for either all or none of the amount of retail sales taxes and penalty claimed in the petition.
Possibly it should be observed that this action involves no claim for any fee, tax or penalty imposed by the so-called Ohio Liquor Control Act alone; nor does it involve any question of liability on the part of Esther D'Errico, the restaurant owner, inasmuch as she admittedly owes the amount of retail sales taxes claimed. Reduced to its lowest terms, the single question here. presented is whether the provisions of Section 6064-18, General Code, a section of the Ohio Liquor Control Act, impliedly impose additional liability upon the surety for the retail sales taxes levied generally upon sales of merchandise in Ohio.
Part of the above-quoted statutory language requires that the bond shall be "conditioned on the faithful observance of the terms of the particular class of permit and compliance with all laws of the state of Ohio and rules, regulations, and orders of the department of liquor control and the tax commission of Ohio with respect thereto, * * *." The chief source of difficulty is the phrase "with respect thereto." Correctly viewing it as a problem in plain, old-fashioned grammar, the relator applies the general rule of "last antecedent" and contends that this phrase modifies the earlier phrase "all the laws of the state of Ohio." He insists that this language is all-inclusive and therefore connotes also the laws relating to taxes on retail sales. But the respondent disagrees with this and urges instead that the phrase "with respect thereto" modifies the still earlier word "permit." Although any sentence containing as many as ten "ands" is almost certain to be confusing, a close study of these provisions discloses that the General Assembly has gone no farther than to require a bond covering compliance with the terms of the permit and compliance with all laws with respect to the permit. The laws relating to the permit are silent as to the retail sales tax.
The last part of the above-quoted statutory language of Section 6064-18 requires further that the bond shall be conditioned also upon "the payment of all permit fees, taxes and penalties levied under the provisions of the liquor control act, and amendments and supplements thereto, upon sales made by him of any kind of nonintoxicating or intoxicating beverages or liquor, whether under authority of such permit or otherwise." This language was added to the statute in the year 1935 and specifically enumerates "fees, taxes and penalties levied under the provisions of the liquor control act" alone.
This court is therefore of the opinion that this statute imposes no liability upon the respondent surety for retail sales taxes. The judgment of the Court of Appeals must be reversed accordingly and final judgment entered for the respondent.
Judgment reversed.
MATTHIAS, HART, ZIMMERMAN, BELL, WILLIAMS and TURNER, JJ., concur.