C. Thomas Stores Sales System v. George
| Decision Date | 14 March 1941 |
| Docket Number | 32,550 |
| Parties | C. Thomas Stores Sales System, Inc. v. George Spaeth And Others |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county to have Ex. Sess L. 1937, c. 93, relating to the taxation of chain stores and mail order establishments, declared unconstitutional and to enjoin defendant Spaeth as state commissioner of taxation and the members of the board of tax appeals from enforcing the act. From a judgment entered pursuant to findings, Edmund A Montgomery, Judge, adjudging the act unconstitutional defendants appealed. Reversed.
J. A A. Burnquist, Attorney General, and Matthias N. Orfield and George W. Markham, Special Attorneys, for appellants.
R. H. Fryberger, for respondent.
The opinion of the court was delivered by: Peterson
Statute -- subject and title of act -- taxation of chain stores and mail order establishments.
1. The title of an act expresses the subject in compliance with Const. art. 4, § 27, where the title declares that the act is one to tax chain stores and mail order establishments and repeals a prior statute taxing chain stores and the body contains provisions for such taxation, the repeal of the former law, and a saving clause relating to taxes levied and assessed thereunder. The subject of such an act is taxation, and that appears from the parts expressed in the title.
Statute -- subject and title of act -- taxation of chain stores and mail order establishments.
2. A title which recites that the act contains a repeal need not refer to a germane saving clause.
Taxation -- exemptions -- taxation of chain stores -- persons producing and selling own products.
3. Ex. Sess. L. 1937, c. 93, Part I, § 1, excepting from the tax therein imposed on chain stores "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," includes only those who are engaged exclusively in the business of producing, manufacturing, and preparing the products which they sell.
Constitution -- equal protection of laws -- uniformity of taxation.
4. The standards of equal protection under Minn. Const. art. 1, § 2, and art. 4, §§ 33 and 34, and of uniformity of taxation under art. 9, § 1, are the same as the standard of equality required by the equal protection clause of U.S. Const. Amend. XIV.
Constitution -- equal protection of laws -- taxation of chain stores -- exemption of persons producing and selling own products.
5. Operators of chain stores are not denied the equal protection of the law by excepting from a chain store tax retailers selling products of their own production, manufacture, and preparation.
Constitution -- persons not entitled to question constitutionality of statute.
6. One who is not discriminated against by a legislative classification does not have an interest entitling him to raise the question of the unconstitutionality of a statute on the ground that it denies equal rights and privileges by discriminating between persons and classes generally or between classes of which he is not a member.
Constitution -- classification for taxation -- chain stores and mail order houses.
7. A classification for purposes of taxation which taxes mail order establishments separately from chain stores is not unconstitutional.
Plaintiff sues to have Ex. Sess. L. 1937, c. 93 (3 Mason Minn. St. 1940 Supp. §§ 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...
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