C. Thomas Stores Sales System v. Spaeth
| Citation | 209 Minn. 504,297 N.W. 9 |
| Decision Date | 14 March 1941 |
| Docket Number | No. 32550.,32550. |
| Parties | C. THOMAS STORES SALES SYSTEM, Inc. v. SPAETH, Com'r of Taxation of Minnesota, et al. |
| Court | Supreme Court of Minnesota (US) |
Appeal from District Court, Hennepin County; E. A. Montgomery, Judge.
Action by C. Thomas Stores Sales System, Inc., a chain store operator, against George Spaeth, as Commissioner of Taxation of the state of Minnesota, and others, to have the act imposing a tax on chain stores declared unconstitutional, and to enjoin the defendants from enforcing it. From a judgment finding the act unconstitutional, the defendants appeal.
Judgment reversed.
J. A. A. Burnquist, Atty. Gen., and Matthias N. Orfield, Sp. Atty., and George W. Markham, Sp. Atty., both of St. Paul, for appellants.
R. H. Fryberger, of Minneapolis, for respondent.
Plaintiff sues to have Ex.Sess.L. 1937, c. 93 (3 Mason's Minn.St.1940 Supp. §§ 5887-18a to 5887-18t), declared unconstitutional and to enjoin the state officials charged with the duty from enforcing it.
Plaintiff is a chain store operator owning 45 stores within the state and is engaged in the business of selling at retail only food products produced, manufactured, and prepared by others. It sells no food products of its own production. Some of its chain store competitors sell food products not only of their own but also of the manufacture and production by others.
The statute is entitled: "An act imposing and relating to a tax on the conducting of business by the system of mail order establishments and by the system of chain stores, and repealing Laws 1933, Chapter 213, as amended by Extra Session Laws 1933-1934, Chapter 16."
It is divided into three parts.
Part I imposes a tax on chain stores which is graduated from $10 on the first and second stores and increases progressively to $350 on each store from the 151st and over.
A system of chain stores is defined as conducting a business from two or more stores under a single or common ownership, supervision, management, or control. Two or more stores are deemed to be under a single or common ownership, supervision, management, or control if they are directly or indirectly owned or controlled by a single person or group of persons having a common interest therein or if 20 per cent or more of the gross revenues, net revenues, or profits from such stores shall be required to be made available for the beneficial use or shall inure to the benefit of any person or group of persons having a common interest therein.
Excepted from the tax are certain specified retailers and "any person who within this state produces, manufactures, prepares, distributes and sells at retail only, food products which he himself produces, manufactures or prepares, where such retail sales are made only from stores owned, operated and controlled exclusively by any such person." Part I, § 1.
Part II imposes a tax on mail order establishments as therein defined which it divides into 11 classes. The tax is a graduated one beginning with $200 on the first store, $300 on the second store, and increasing progressively to $1,100 on the tenth store and $1,200 on each store thereafter. A "mail order establishment" is defined to mean "any place or places, order offices, warehouses and reserve depots in which are stored or kept or orders taken for goods, wares, and merchandise, owned or controlled directly or indirectly by a person engaged in selling same at retail within this State" "at least fifteen per cent (15%) of whose total intrastate sales therefrom are filled and completed in response to orders from purchasers for such goods received by or through the mails, express, messenger or written communication, and which person issues and distributes price lists, circular advertisements, pamphlets or catalogs to prospective purchasers or customers."
There are some exceptions from this tax.
The third part, which is entitled "General Provisions," contains the enforcement provisions. Section 8 thereof contains a clause which in effect repeals the earlier chain store tax law by providing that "No taxes shall be levied or assessed under Laws 1933, Chapter 213, for the year 1937 or thereafter, but said law shall remain in full force and effect with respect to any tax levied or assessed or which should have been levied or assessed thereunder for any year prior to 1937." It provides also that any taxes for the year 1937 paid under the 1933 law shall be credited upon any tax for said year due under chapter 93.
A mail order establishment is not subject to the chain store tax.
The act is assailed as unconstitutional upon the grounds: (1) That it violates art. 4, § 27, of the Constitution, which provides that "no law shall embrace more than one subject, which shall be expressed in its title," by (a) embracing not one but two subjects, viz. chain stores and mail order establishments, and (b) failing to express the subject of the act in the title by not stating therein that the act contains the saving clause found in § 8 of the General Provisions, which keeps the 1933 act operative so as to permit the collection of taxes assessed thereunder prior to 1937 and which provides that credit upon a tax due under chapter 93 should be given for any taxes imposed by the 1933 law which were paid during 1937; and (2) that the act makes arbitrary, unreasonable, unequal, and discriminatory classifications by which plaintiff is denied the equal protection of the law in violation of Const. art. 1, § 2, which forbids class legislation, and art. 4, §§ 33 and 34, which prohibits special legislation, and by which it is subjected to unequal taxation in violation of art. 9, § 1, which requires uniformity of taxation upon the same class of subjects by (a) exempting from the tax retail dealers who distribute food products of their own manufacture and production, (b) including as chain stores subject to the tax any two or more stores, 20 per cent or more of the revenue from each of which goes to one person or group of persons having a common interest therein, and (c) not imposing chain store taxes upon mail order establishments.
The court below found that chapter 93 is unconstitutional, but did not grant an injunction. Judgment was entered accordingly. The appeal is from the judgment.
1. The attack on the act that it contains plurality of subject in violation of Const. art. 4, § 27, is confined to the proposition that it provides for two separate taxes, viz. one on chain stores and another on mail order establishments. No claim is made on that score that the provision for the repeal of the 1933 law is a separate subject, and hence we pass that question.
The subject of a statute is the matter to which it relates and with which it deals. A subject embraces all provisions which are germane to it; they may be parts of it, incident to it, or means auxiliary to the end in view. The subject must be single; the provisions by which the object is accomplished may be multifarious. The constitutional provision ought to be practically and liberally construed. In Johnson v. Harrison, 47 Minn. 575, 50 N.W. 923, 924, 28 Am.St.Rep. 382, we said: "All that is necessary is that the act should embrace some one general subject; and by this is meant, merely, that all matters treated of should fall under some one general idea, be so connected with or related to each other, either logically or in popular understanding, as to be parts of, or germane to, one general subject." Our cases are collected in 6 Dunnell, Minn.Dig., 2d Ed. & Supps. § 8910.
The separate taxes on chain stores and mail order establishments are germane to the general subject of taxation of which they are but parts. Taxation is the subject of a statute imposing taxes upon different things. Apartment Operators' Ass'n v. City of Minneapolis, 191 Minn. 365, 254 N.W. 443 (); Lane Drug Stores, Inc., v. Lee, D.C., 11 F.Supp. 672 (); Gibson County v. Pullman South. Car Co., C.C., 42 F. 572 (); Cannon v. Mathes, 8 Heisk., Tenn., 504 ().
The Gibson County case was decided under the constitution of Tennessee, which is substantially the same as ours in this respect. The court said of the statute: "Its purpose is to tax two different things, but the subject-matter of consideration by the legislators was that of taxation expressed in the title." 42 F. 574.
The uniform legislative practice in this state has been in accord with the rules thus well settled judicially.1 The constitutional validity of the legislative practice has not been questioned prior to the instant case, although occasion to raise the question was presented in State ex rel. St. Paul City R. Co. v. Minnesota Tax Comm., 128 Minn. 384, 150 N.W. 1087, where L.1913, c. 483, taxing such diverse things as iron ore, livestock, agricultural products, personalty, household goods, furniture, fixtures, merchandise, manufactured goods, platted and unplatted land, and all other property not specifically enumerated was attacked as lacking uniformity, but not upon the ground of multiplicity of subject matter. We held the statute constitutional. The uniform legislative practice, while not binding on us, is entitled to great weight in construing the constitution. 1 Dunnell, Minn.Dig., 2d Ed. & Supps., § 1579.
In a more restricted sense the subject matter of chapter 93 is the taxation of merchandisers operating by the multiple store system. In that view, the whole subject is embraced in the term "chain stores." By their entrance into the chain store field, mail order establishments have taken on so many of the features and characteristics of the former that they are associated with chain stores...
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