City of Albuquerque v. Cauwels & Davis, Management Co., Inc.

• Decision Date: 13 August 1981
• Docket Number: No. 13379,13379
• Citation: 632 P.2d 729,96 N.M. 494,1981 NMSC 77
• Parties: CITY OF ALBUQUERQUE, Plaintiff-Appellant, v. CAUWELS & DAVIS, MANAGEMENT CO., INC., A New Mexico corporation, Hertzmark-Parnegg Realty, Inc., a New Mexico corporation, Winrock Village, Ltd., a limited partnership, Hannes H. Parneg, Sidney S. Hertzberg, Chris Inman, Inc., a New Mexico corporation, Chris Inman, Inc., d/b/a Brooktree Homes, and Chris Inman, individually, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 729

632 P.2d 729

96 N.M. 494

CITY OF ALBUQUERQUE, Plaintiff-Appellant, v. CAUWELS & DAVIS, MANAGEMENT CO., INC., A New Mexico

corporation, Hertzmark-Parnegg Realty, Inc., a New Mexico

corporation, Winrock Village, Ltd., a limited partnership,

Hannes H. Parneg, Sidney S. Hertzberg, Chris Inman, Inc., a

New Mexico corporation, Chris Inman, Inc., d/b/a Brooktree

Homes, and Chris Inman, individually, Defendants-Appellees.

No. 13379.

Supreme Court of New Mexico.

Aug. 13, 1981.

[96 NM 494] Malcolm W. deVesty, Asst. City Atty., Albuquerque, for plaintiff-appellant.

Rodey, Dickason, Sloan, Akin & Robb, William C. Schaab, Albuquerque, for defendants-appellees.

OPINION

FEDERICI, Justice.

Taxpayers (appellees) refused to pay gross receipts taxes levied by appellant, the City of Albuquerque (City) upon their income. The City brought suit in the district court to enforce the assessments. The district court entered summary judgment against the City, finding that the assessments violated a state statute and did not apply to these taxpayers in any event. The City appeals. We affirm.

Taxpayers are landlords of rented properties. The parties agree that the City is allowed to assess gross receipts taxes upon businesses in Albuquerque under authority of Section 3-38-3, N.M.S.A. 1978. That section reads as follows A. A municipality may impose an occupation tax and classify any occupation, profession, trade, pursuit, corporation and other institution and establishment, utility and business of whatever name or character, like or unlike, and not licensed as authorized in Section 3-38-1, NMSA 1978, or not licensed by the municipality as authorized by any other law.

B. The occupation tax shall not exceed one dollar ($1.00) per annum for each one thousand dollars ($1,000) gross receipts of business done per annum except a minimum tax of five dollars ($5.00) per annum may be levied or an occupation tax in an amount not to exceed twenty-five dollars ($25.00) per annum per business may be levied on each business. A municipality may classify occupations and impose an occupation tax on each occupation. If a municipality chooses to classify for the purpose of levying an occupation tax, the classifications which shall be used are:

(1) manufacturing;

(2) utility;

(3) wholesale;

(4) retail;

(5) banking; and

(6) financial.

The City enacted Albuquerque Municipal Ordinance §§ 4-1-1 to 4-1-13 to levy gross receipts taxes on businesses. Since filing of this suit, the City has repealed the ordinance under attack here and has enacted a new ordinance. The ordinance involved in this suit imposed an "occupation tax on all gross receipts of every person doing business or engaging in business within the City." § 4-1-3. However, the ordinance then listed a series of partial and total "deductions" from the general tax. These deductions were for: (1) retail trade-ins; (2) the sale of motor vehicles; (3) sales outside the city; (4) sales by non-profit cooperatives; (5) intra-corporate transfers; (6) wholesale sales; (7) construction performed inside and outside the city; (8) construction performed inside and outside the city and sale, lease or rental of construction equipment outside the city; (9) certain sales subject to other taxes; and (10) sales by persons under the age of 18. § 4-1-5. The ordinance then listed a series of "exemptions." Exemptions were for: (1) banking; (2) utility franchises; (3) interdepartmental sales within business organizations; (4) unprocessed produce; (5) isolated sales and rentals; (6) nonprofit organizations; (7) certain dues and registration fees; and (8) remuneration for personal services § 4-1-6. Finally, the ordinance included a severability clause, which stated "that if any deduction or exemption granted by this ordinance be held invalid, it is the intent of the Council that the unaffected remainder of the ordinance be continued in force and that the taxpayers theretofore enjoying such deduction or exemption shall thenceforth, from the effective date of the declaration of invalidity, be liable for the rate of tax (that would normally be imposed without the deduction or exemption)." § 4-1-13.

The issues on appeal are:

1. Whether the City's occupation tax is valid; and

2. Whether any invalid portion of the tax is severable from the valid portions.

A number of the deductions and exemptions created by the ordinance were nothing more than a recital of federal and state laws which prevented the City from imposing the occupation tax on some businesses. Others simply recognized that certain transactions did not fall within the category of gross receipts of a business. In addition, the ordinance created classifications for the six types of business set out in Section 3-38-3. The problem here arises because the City imposed a general tax on all businesses, then proceeded to create exemptions and deductions for the six permitted categories plus some additional categories, such as construction, motor vehicles and children. The City admits that construction was an additional category.

The City argues that it enacted a uniform maximum occupation tax on all businesses under Section 3-38-3(A), and the deductions and exemption did not comprise a classification of occupations. Therefore, the classifications set forth in Section 3-38- 3(B) did not need to be followed. In the alternative, the City argues that through Section 3-38-3(A) the Legislature intended that all occupations be taxable. The classifications in Subsection (B) of the statute were not meant to be exclusive. Therefore, the City had authority to create additional classifications.

In construing the statute, we are mindful of the general rule that the purpose of construction is to give effect to legislative intent. See Chavez v. Commissioner of Revenue, 82 N.M. 97, 476 P.2d 67 (Ct. App. 1970). However, this Court noted in City of Clovis v. Crain, 68 N.M. 10, 13, 357 P.2d 667, 669 (1960) that:

The rule is well...