Comm'r of Corps. & Taxation v. Ryan

• Decision Date: 01 July 1948
• Parties: COMMISSIONER OF CORPORATIONS AND TAXATION v. RYAN et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

323 Mass. 154

80 N.E.2d 471

COMMISSIONER OF CORPORATIONS AND TAXATION

v.RYAN et al.

Supreme Judicial Court of Massachusetts, Suffolk.

July 1, 1948.

Appeal from Appellate Tax Board.

Application by Charles V. Ryan and others to Commissioner of Corporations & Taxation for a hearing on action of Commissioner in suspending applicants' license to sell cigarettes at retail. From a holding of Appellate Tax Board granting applicants equitable relief for unlawful suspension of license, the Commissioner appeals.

Order in accordance with opinion.

Before QUA, C. J., and LUMMUS, DOLAN, SPALDING and WILLIAMS, JJ.

R. W. Cutler, Jr., Asst. Atty. Gen., for appellant.

J. F. Egan and C. V. Ryan, both of Springfield, for appellees.

LUMMUS, Justice.

This case arises under G.L. c. 64C, entitled ‘Cigarette Excise,’ which was inserted by St.1945, c. 547, § 1, and which has never before received judicial interpretation. The statute provides that no person shall sell cigarettes unless licensed by the appellant commissioner. § 2. Such a license may be revoked by the commissioner ‘for failure of the licensee to comply with any provision of said chapter * * * or for other good cause.’ § 4. Every licensee ‘shall keep a complete and accurate record of all cigarettes' purchased, which ‘shall include a written statement’ containing, among other things, ‘the price paid for each brand of cigarettes purchased.’ § 5. By § 6 an excise equal to one and one half mills for each cigarette sold is imposed. By § 14(a) ‘It shall be unlawful for any retailer, with intent to injure competitors, destroy substantially or lessen competition, to advertise, offer to sell or sell at retail cigarettes at less than cost to the retailer,’ and by § 14(b) ‘Evidence of advertisement offering to sell, or sale, of cigarettes by any retailer * * * at less than cost to him, shall be prima facie evidence’ of such intent.

By § 13(a) ‘The term ‘cost to the retailer’ shall mean the invoice cost of the cigarettes to the retailer, or the replacement cost of the cigarettes to the retailer within thirty days prior to the date of sale, in the quantity last purchased, whichever is lower, less all trade discounts except customary discounts for cash; to which shall be added the cost of doing business by said retailer as evidenced by the standards and the methods of accounting regularly employed by him in his allocation of overhead costs and expenses, paid or incurred, and must include, without limitation, labor (including salaries of executives and officers), rent, depreciation, selling costs, maintenance of equipment, delivery costs, all types of licenses, taxes, insurance and advertising.'

By § 13(b) ‘In the absence of proof of a lesser or higher cost of doing business by the retailer making the sale, the cost of doing business by the retailer shall be presumed to be six per centum of the invoice cost of the cigarettes to the retailer, or of the replacement cost of the cigarettes to the retailer within thirty days prior to the date of sale, in the quantity last purchased, whichever is lower, less all trade discounts except customary discounts for cash.’

By § 22 any person aggrieved by any action of the commissioner or his authorized representatives may apply for a hearing. By § 24 ‘Any person aggrieved because of a decision of the commissioner under section twenty-two may appeal therefrom to the appellate tax board within ten days after written notice of the decision has been mailed or delivered to him.’

The partnership consisting of Charles V. Ryan, Helen L. Ryan and Harry J. Richard, hereinafter called the retailers, conducted a drug store in Springfield under the name of Ryan Drug Company, in which they sold cigarettes at retail. They had a license from the commissioner of corporations and taxation, which was to expire on June 30, 1947. On February 28, 1947, the commissioner suspended that license. That action followed a letter from the commissioner to all retailers of cigarettes in which he stated that the retail prices of the so called ‘popular brands' of cigarettes should be not less than 20 cents a package or $1.98 a carton. On March 10, 1947, the retailers applied for a hearing under G.L. c. 64C, § 22. On May 21, 1947, after a hearing, the commissioner decided not to vacate the suspension and not to restore the license. On May 23, 1947, the retailers appealed to the Appellate Tax Board. G.L. c. 64C, § 24; G.L.(Ter.Ed.) c. 58A, § 6, as amended by St.1945, c. 367, § 3, and St.1947, c. 632, § 2. The board, by a majority decision, made on October 22, 1947, held that the cause for which the commissioner suspended the license was insufficient in law, and granted to the retailers the sum of $250 as equitable relief, under G.L. c. 64C, § 24. The commissioner appealed to this court on November 5, 1947, under G.L.(Ter.Ed.) c. 58A, § 13.

The commissioner, in his letter of suspension dated February 28, 1947, declared that in suspending the license he acted under G.L. c. 64C, § 4. That section authorizes suspension ‘for failure of the licensee to comply with any provision of said chapter * * * or for other good cause.’ In revoking a license for cause the commissioner had a duty to specify the cause for which he was acting. Higgins v. License Commissioners of Quincy, 308 Mass. 142, 145, 147, 31 N.E.2d 526;Becker Transp. Co., Inc., v. Department of Public Utilities, 314 Mass. 522, 526, 527, 50 N.E.2d 817. But it does not appear that the retailers objected to proceeding with the hearing without better specification of the ground of suspension, and very likely waived any infirmity in the letter of suspension. Miami Grove Inc., v. Licensing Board for Boston, 312 Mass. 318, 324, 44 N.E.2d 637. The board found as follows: ‘The commissioner, in open hearing, stated and we find that the suspension of the license was based on the fact that the Ryan Drug Company did not comply with the provisions of the February 18, 1947, letter. This letter is referred to above and indicated that cigarettes should be sold at not less than $.20 per package, or $1.98 per carton.’ If that was the sole ground for the suspension of the license, that suspension was invalid, for nowhere in G.L. c. 64C is authority given to the commissioner to fix prices for cigarettes. The cost, below which cigarettes may not be sold, is the actual cost to the particular retailer, and not the usual cost in the trade or the cost as determined by any survey or by any public officer. G.L. c. 64C, §§ 13, 14.

But we assume in favor of the commissioner, for the purposes of the present case, that he acted upon his finding, which he expressed on May 21, 1947, that at the time of the suspension...