Department of Treasury v. Midwest Liquor Dealers

• Decision Date: 30 April 1943
• Docket Number: 17028.
• Citation: 48 N.E.2d 71,113 Ind.App. 569
• Parties: DEPARTMENT OF TREASURY et al. v. MIDWEST LIQUOR DEALERS, Inc.
• Court: Indiana Appellate Court

48 N.E.2d 71

113 Ind.App. 569

DEPARTMENT OF TREASURY et al. v. MIDWEST LIQUOR DEALERS, Inc.

No. 17028.

Appellate Court of Indiana, in Banc.

April 30, 1943

George N. Beamer, Atty. Gen., and Jos. P. McNamara, David I. Day and Byron B. Emswiller, Deputy Attys.Gen., for appellants.

Leroy Sanders, of Indianapolis, for appellee.

DOWELL Judge.

This was an action brought by appellee, plaintiff below for a declaratory judgment to construe portions of the Indiana Gross Income Tax Act(Chap. 50, Acts 1933;Chap. 117, Acts 1937) and the Liquor Control Act of Indiana(Chap. 226, Acts 1935).

The complaint was in two paragraphs to which appellantsdefendants below, filed answers of general denial and on the issues thus joined the cause was submitted to the trial court on an agreed stipulation of facts made in open court and admitted as evidence by which the following appears:

That appellee since April 1, 1935, has been an Indiana corporation engaged in the wholesaling of alcoholic spirituous beverages under a wholesale liquor dealer's license issued by the Alcoholic Beverage Commission of the State of Indiana and as such pays to the State of Indiana the required license fee for the right to engage in such business; that pursuant to the law of Indiana (Section 40(b), Chap. 226, Acts 1935, pp 1175, 1176)appellee was required to purchase from the Alcoholic Beverage Commission excise stamps and was required to affix such stamps to the immediate container of alcoholic spirituous beverages therein contained, and duly cancel same of the denomination of one dollar on each gallon, twenty-five cents on each quart, twenty cents on each one-fifth gallon twelve and one-half cents on each pint and six and one-fourth cents on each half pint or fraction thereof; that no other stamp or tax was required by law to be so purchased or so affixed to a container in which such beverages were sold or given away within the state; that appellee, and no one else, was required by law to purchase such stamps to be so affixed upon such containers of such beverages sold or given away, or withdrawn for sale or gift, by appellee within the state and that the Indiana Alcoholic Beverage Commission did not permit any distiller or retailer (except transient dining car permittees) to purchase or affix such stamps; that wholesale liquor dealers licensed as such under the law of Indiana by the said Commission were the only persons so required to buy excise stamps from the Excise Director (except transient dining car permittees); that appellee was not so required to purchase and affix same to containers unless a sale or gift was made, or unless there was a withdrawal for sale or gift; that appellee and other wholesale liquor dealers were selected by the said Commission as the purchasers of excise stamps, providing against the State of Indiana any loss on account of such stamps; that during the year of 1935appellee purchased from said Commission such excise stamps and paid therefor the sum of $77,838.41 and during the year 1936 purchased such stamps and paid therefor the sum of $208,099.83.

Paragraph one of the complaint pleads the Gross Income Tax Law of 1933(Chap. 50, Acts 1933, p. 388, Subsection (f) of Section 1) and the Liquor Control Act of 1935, (Chap. 226, Act 1935, § 40, p. 1056); paragraph two thereof the Gross Income Tax Lawas amended by the Act of 1937(Chap. 117, Acts 1937, Subsection (m) of Section 1) and likewise the Liquor Control Act of 1935, supra.

Reduced to its fundamentals the complaint otherwise alleges that appellee, pursuant to the requirements of the law, during the years 1935, 1936 and 1937 purchased excise stamps, affixed them to alcoholic beverage containers which were sold by appellee with amount of tax added to price; that upon sale thereof and payment therefor appellee was reimbursed for such excise stamps by its customers; that upon making its gross income tax returns for said years appellee did not include therein as taxable gross income the money returned to it by its customers which appellee had previously expended for such stamps; that the Gross Income Tax Department was about to assess an additional tax against appellee as gross income tax on the money expended for such stamps; that there was no authority in the said Gross Income Tax Law for the State of Indiana to levy a tax upon a tax; that appellee was acting as agent for the State of Indiana in the collection of such excise taxes and that the return of said money to appellee was not a part of its gross income within the meaning of said Gross Income Tax Law; that said money cannot be classified as taxable gross income within the meaning of said law; that such money is specifically exempted from taxation under the Gross Income Tax Law by Section 6(b) thereof.

The finding and judgment of the court below was as follows:

"And the Court being duly advised in the premises, finds for the plaintiff, that the allegations of its complaint for a declaratory judgment are true and that plaintiff is entitled to the judgment therein prayed for; that the meaning and effect of the Gross Income Tax Law of the State of Indiana(Acts of 1933, Chapter 50, as amended by the Acts of 1937, Chapter 117) and the Liquor Control Act of the State of Indiana (Acts of 1935, Chapter 226) is that any monies received by plaintiff in reimbursement for any monies expended by plaintiff for excise stamps purchased by plaintiff from the Alcoholic Beverage Commission of the State of Indiana, is not a part of plaintiff's gross income within the meaning of said Gross Income Tax Law, is exempted therefrom, and is not subject to such tax.That plaintiff acts as Agent of the State of Indiana in the collection of such excise taxes.

"It Is Therefore, Considered, Adjudged and Decreed by the Court, that in the collection of said excise taxes under the aforesaid Liquor Control Act(Acts 1935, Chapter 226), the plaintiff acts as agent of the State of Indiana; that any monies received by the plaintiff in reimbursement for any monies expended by plaintiff for excise stamps purchased by plaintiff from the Alcoholic Beverage Commission of the State of Indiana, is not a part of plaintiff's gross income within the meaning of said Gross Income Tax Law, is exempted from such tax and is not subject to be taxed under said Gross Income Tax Law; and the State of Indiana, its Gross Income Tax Division, and the defendants herein, ought not and cannot recover from plaintiff any gross income tax on any monies received by plaintiff as reimbursement to plaintiff for monies expended and advanced by plaintiff in the purchase of said excise stamps from the Alcoholic Beverage Commission of the State of Indiana.

It is further considered and adjudged by the Court that plaintiff recover of defendants its costs herein."

Appellant's motion for a new trial questions the sufficiency of the evidence to sustain the trial court's decision and asserts that the decision is contrary to law.

Thus the question so presented to this court for consideration is: Whether or not the appellee was the agent of the State of Indiana acting for and on behalf of the state in the collection of the stamp tax and whether or not appellee was compelled to pay a gross income tax upon the money received by it from its customers in reimbursement of that previously laid out and expended for the purchase of excise stamps from the Excise Department.

It is the appellee's contention that it was such an agent and that for this reason appellee comes within the exception provided in Sec. 6(b) Chapter 50, Acts 1933, § 64-2606 Burns', which is as follows: "There shall be excepted from the gross income taxable under this act: * * * (b) All taxes received...