City of Louisville v. Churchill Downs

• Decision Date: 05 May 1936
• Citation: 267 Ky. 339
• Parties: City of Louisville et al. v. Churchill Downs.
• Court: United States State Supreme Court — District of Kentucky

267 Ky. 339

City of Louisville et al. v. Churchill Downs.

Court of Appeals of Kentucky. Chancery Branch, First Division.

Decided May 5, 1936.

1. Appeal and Error. — Suit by taxpayer successfully contending

below that 1934 statute repealed earlier statute held not moot notwithstanding repeal of 1934 statute subsequent to appeal; tax payable during existence of statute still being at issue (Ky. Stats. Supp. 1933, sec. 4223b-1 et seq.; Ky. Stats. Supp. 1934, sec. 4281v-1 et seq.).

2. Licenses. — Tax, in so far as imposed on gross receipts from sale of merchandise, held not tax on business of selling, but tax on purchases; seller being state's agent for collection (Ky. Stats. Supp. 1934, sec. 4281v-1 et seq.).

3. Constitutional Law. — In construing tax statutes, presumption is against Legislature's intention to impose multiple or duplicate taxation on same privilege or occupation.

4. Statutes. — Implied repeal is not favored and, if possible, courts must so construe statutes that both shall be operative.

5. Statutes. — To effect repeal by later statute, intention to nullify earlier statute must appear, or terms of later must be so repugnant to those of earlier statute as to be impossible of administration.

6. Licenses. — Tax on gross receipts from amusement places, including race ocurses, such as receipts from admissions, concessions, betting machines, etc., held purely excise tax and not in duplication of nor in conflict with daily license tax on race tracks, and hence statute imposing gross receipts tax did not impliedly repeal license tax act (Ky. Stats. Supp. 1933, secs. 4223b-1, 4223b-3; Ky. Stats. Supp. 1934, secs. 4281v-2, 4281v-4, 4281v-18).

7. Licenses. — "Excise tax" is something cut off from price paid on sale of goods as contribution to government.

8. Gaming. — Proprietor of pari mutuel machines, after deducting his percentage, held bailee or agent in holding balance for bettors, and hence gross receipts tax, as applied to corporation operating race track and such machines, should be imposed only on corporation's percentage and not on gross sums wagered (Ky. Stats., secs. 1328a, 1961; Ky. Stats. Supp. 1934, secs. 4281v-2, 4281v-4).

Appeal from Jefferson Circuit Court.

BAILEY P. WOOTTON, former Attorney General; S.H. Brown, former Assistant Attorney General, and B.M. VINCENT, Attorney General, for appellants.

CARROLL & McELWAIN, JOHN S. MILLIKEN and MILLIKEN & HANDMAKER for appellee.

OPINION OF THE COURT BY STANLEY, COMMISSIONER.

Affirming in part and reversing in part.

The General Assembly at its 1932 session, amending and re-enacting a previous law, provided that a person, firm, association, or corporation engaged in the business of conducting a race track shall pay a stipulated sum each day upon which races are run as a license tax. Chapter 153, Acts of 1932 (section 4223b-1 et seq., Kentucky Statutes, 1933 Supplement).

The appellee, Churchill Downs, Inc., conducts a race track in Louisville and under the provisions of the foregoing act paid $2,500 a day license. It brought this suit for a declaration of rights in relation to that act and the Gross Receipts Tax Law of 1934, chapter 25, Acts of Extra Session 1934 (Ky. St. Supp. 1934, sec. 4281v-1 et seq.). The consideration of an ordinance of the city of Louisville levying a license tax on race tracks and the operation of betting devices previously enacted, which became ineffective by the terms of the act of 1932, above outlined, was also asked. Churchill Downs and the City of Louisville take the position that the Gross Receipts Act of 1934 repealed the act of 1932. The state tax commission and the auditor of public accounts take the position that it is supplementary to the 1932 act, and lays an additional tax. They also contend that the tax should be paid upon the gross sums bet or passing through the pari mutuel machines, and not on the portion taken out by the proprietor only. Churchill Downs challenges this construction of the statute.

The chancellor declared that since the act of 1934 subjects the owner of the race track to the payment of a license or excise tax of 3 per cent. of its gross receipts accruing from its constituent activities, including the betting machines, the act superseded and repealed the act of 1932. The judgment also declares that the tax is payable only on the amount received by Churchill Downs in consideration of the operation of the betting machines, which amounts to 10 per cent. of the total pool. There was no declaration respecting the city ordinance. The judgment is before us for review.

Although the Gross Receipts Tax of 1934 has been repealed since this appeal was filed, the case is not moot, for in any event the amount payable during the life of the law is at issue.

The act of 1932 imposed a license upon the business of conducting a race track. It further provides:

"The license tax herein imposed shall be in lieu of all other license, income, excise, special or franchise tax to the State of Kentucky, or any County, City, Town, Municipality or other political subdivision thereof; and no County, City, Town, Municipality or other political subdivision of the State of Kentucky shall be authorized or empowered to levy or impose any license, income, excise, special or franchise tax on any such person, firm, association, or corporation engaged in the business of conducting a race track at which races are run for purses or prizes under the jurisdiction of the State Racing Commission, or on the operation or maintenance of any pari-mutuel machine or similar device, or on the sale of any commodity or merchandising during the running of races thereon or at any such race tracks by any such person, firm, association, or corporation." Ky. Stats. Supp. 1933, sec. 4223b-3.

In so far as the act of 1934 related to gross receipts from the sale of merchandise, it was not a tax on the business of selling, but a tax on the purchases, the seller being the agent of the state to effect the collection. City of Covington v. State Tax Commission, 257 Ky. 84, 77 S.W. (2d) 386. Section 2 of the act (section 4281v-2, Kentucky Statutes, 1934 Supplement) declared expressly that "places of amusement and/or entertainment" within the terms of the act embraced "race courses," and that as applied to such place of amusement or entertainment "gross receipts" should be construed to mean the amount received "in consideration of admissions, operation of machines, exercise of privileges granted for a charge, rentals on property, advertising by the said places of amusement and/or entertainment, or other accounts received by said places, regardless of form and regardless of whether or not enumerated in this paragraph and whether or not similar to those enumerated." Section 4281v-4 of the Kentucky Stautes, 1934 Supplement, is as follows:

"An excise tax is hereby imposed on every person operating a place of amusement and/or entertainment equal to three per centum (3%) of the gross receipts derived from the operation of said place or places of amusement and/or entertainment, and every person operating a place of amusement and/or entertainment is required to collect a tax from the purchaser of the tickets of admission and/or account to the State of Kentucky for such tax, in the manner provided in this act."

It is manifest that in so far as the tax on admissions is concerned there is no conflict between this act and the act of 1932, for, as is agreed by all, this was no additional tax imposed on the proprietor of the race course, for it was collected from the patron. It will be observed, however, that in respect of "gross receipts derived from the operation of said place or places of amusement and/or entertainment," other than from admissions, there is no authority granted to collect from customers or patrons. Of such are those who patronize the betting machines,...