American Exchange Nat. Bank v. Lacy

• Decision Date: 21 June 1924
• Docket Number: 391.
• Citation: 123 S.E. 475,188 N.C. 25
• Parties: AMERICAN EXCH. NAT. BANK v. LACY, STATE TREASURER, ET AL.
• Court: North Carolina Supreme Court

123 S.E. 475

188 N.C. 25

AMERICAN EXCH. NAT. BANK v. LACY, STATE TREASURER, ET AL.

No. 391.

Supreme Court of North Carolina

June 21, 1924

Appeal from Superior Court, Guilford County; Shaw, Judge.

Action by the American Exchange National Bank against B. R. Lacy State Treasurer, and another. From a judgment continuing a temporary restraining order, defendants appeal. Reversed.

Appeal by defendants from a judgment continuing to the hearing a temporary order restraining the collection of a license or privilege tax for the sale of automobiles. The facts appear in the judgment, which is as follows:

"This cause coming on to be heard upon notice to the defendants to show cause why the preliminary restraining order heretofore granted in said cause should not be continued in full force until final judgment and decree in this suit and it being admitted by counsel for the plaintiff and defendants that the pertinent facts are as follows:

The plaintiff is a corporation engaged in the banking business in Greensboro, and prior to December 31, 1920, in the course of its business. loaned to J. M. Waynick, who was a dealer in Jackson automobiles and trucks, large sums of money, and on the said 31st day of December, 1920, said Waynick was indebted to the plaintiff in the sum of $25,246.05, and on said day, as collateral security for said debt, executed a bill of sale to said plaintiff in words and figures as follows:

'December 31, 1920.

'North Carolina, Guilford County.

'This bill of sale made this the thirty-first day of December, 1920, by and between Mr. J. M. Waynick, of Greensboro, N. C., party of the first part, and the American Exchange National Bank, party of the second part, witnesseth:

'That in consideration of $1.00 and other good and valuable consideration paid by the party of the second part to the party of the first part, the receipt of which is hereby acknowledged, the said party of the first part does hereby sell and assign to the said party of the second part, the following automobiles:

1 model 638 semisport No. 25910

1 model 638 semisport No. 24916

1 model 638 touring No. 25392

1 model 638 touring No. 25905

1 model 638 touring No. 25712

1 model 638 touring No. 25417

1 model 638 touring No. 25638

1 model 638 sport model No. 25380

1 model 638 sport model No. 25809

1 model D truck 215

and with standard equipment.

'I agree to sell and collect for the said cars above described in trust for the said bank, and to account to the bank, and settle in full for each car immediately upon sale.

'J. M. Waynick Motor Company.

'By J. M. Waynick.'

During the fiscal year 1921-22 J. M. Waynick abandoned his business, and the plaintiff took possession of said automobiles and trucks and sold all of said automobiles during the fiscal year 1921-22, and applied the proceeds of said sales to the payment of Waynick's debt to it; that it offered for sale the Jackson truck during the fiscal years 1921-22, 1922-23, and 1923-24, and is still offering same for sale. The plaintiff has paid no license or privilege tax for selling said automobiles during any of the fiscal years aforesaid. On the 1st day of October, 1923, defendants B. R. Lacy, treasurer, and R. A. Doughton, commissioner of revenue, caused the other defendant, D. B. Stafford, sheriff of Guilford county, to levy upon said truck for the privilege and license tax of $500 and $250 for each of said fiscal years, and to advertise the same to satisfy said tax, penalty and costs.

And, the court being of the opinion that the plaintiff is not liable to the state of North Carolina for a license or privilege tax for the sale of automobiles, it is ordered, adjudged, and decreed that the restraining order heretofore granted in this action be, and it is hereby, continued in full force until final judgment and decree in this action.

T. J. Shaw, Judge Presiding."

Defendants excepted and appealed.

James S. Manning, Atty. Gen., and Frank Nash, Asst. Atty. Gen., for appellants.

Hoyle & Harrison, of Greensboro, for appellee.

ADAMS J.

In 1920 J. M. Waynick was engaged in selling automobiles, and on December 31 executed and delivered to the plaintiff the written instrument described in the judgment as a bill of sale. There is no pretension that he paid the license tax prescribed by law, and it is found as a fact that the plaintiff paid no such tax during either of the fiscal years set out in the record. In 1921 or 1922 Waynick abandoned his business, and the plaintiff took possession of and sold all the automobiles, and now has the truck which he has repeatedly offered for sale. The only question for decision is whether the plaintiff is liable for the license tax.

At the session of 1919 the General Assembly enacted a statute providing that every person, firm, or corporation engaged in selling automobiles or automobile trucks in this state, the manufacturer of which has not paid the license tax imposed by law, before selling or offering for sale any such machine, shall pay to the state treasurer a tax of $500, and shall procure a license for such business annually in advance on or before the 31st of May, or before engaging in the business for which the tax is levied, and shall keep it posted in a conspicuous place where the business is carried on. Public Laws 1919, c. 90, §§ 72, 85, 87; Public Laws Ex. Sess. 1920, c. 65; C. S. § 7851. The substance of these provisions is continued in the Revenue Act of 1921 and of 1923 (Public Laws 1921, c. 34, §§ 72, 85, 87; Public Laws 1923, c. 4, §§ 78, 92, 94), the tax under the act of 1923 being payable to the state commissioner of revenue. The record presents no controversy, however, either as to the parties to the action or as to the amount of the taxes claimed to be due and unpaid.

The plaintiff contests its liability for the tax on several grounds.

1. It is contended that the statute imposing the tax is inoperative on the ground that it unlawfully discriminates against nonresident manufacturers, and unlawfully interferes with interstate commerce. Considering the bases of these contentions--the first, that the corporations are discriminated against, and the second that their products are--the Supreme Court of the United States construed the statute as discriminating against nonresident manufacturers doing business in the state by reducing the tax from $500 to $100 if the manufacturer of automobiles has three-fourths of his entire assets invested in the bonds of the state or any of its counties, cities, or towns, or in other property situated therein and returned for taxation, and as discriminating in favor of the product of resident manufacturers by attempting to regulate interstate commerce. Bethlehem Motors Corporation v. Flynt, 256 U.S. 421, 41 S.Ct. 571, 65 L.Ed. 1029.

The plaintiff contends that, by reason of its discriminative provision, the statute is void. This is not our understanding of the decision. We do not think it goes so far. The invalidity of one part of a statute does not nullify the remainder when the parts are separable, and the invalid part was not the consideration or inducement for the Legislature to enact the part that is valid. In Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 565, 22 S.Ct. 431, 441, 46 L.Ed. 679, 692, Mr. Justice Harlan said:

"If different sections of a statute are independent of each other, that which is unconstitutional may be disregarded, and valid sections may stand and be enforced. But if an obnoxious section is of such import that the other sections without it would cause results not contemplated or desired by the Legislature, then the entire statute must be held inoperative."

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