Dunn Const. Co. v. Craig

• Citation: 2 So.2d 166,191 Miss. 682
• Decision Date: 12 May 1941
• Docket Number: 34595.
• Court: United States State Supreme Court of Mississippi
• Parties: DUNN CONST. CO. v. CRAIG, State Tax Collector.

2 So.2d 166

191 Miss. 682

DUNN CONST. CO. v. CRAIG, State Tax Collector.

No. 34595.

Supreme Court of Mississippi

May 12, 1941

Watkins & Eager and Butler & Snow, all of Jackson, Heidelberg & Roberts, of Hattiesburg, Chambers & Trenholm, of Jackson, Jacobson, Snow & Covington, of Meridian, and J H. Thompson, of Jackson, for appellant.

W E. Gore, Creekmore & Creekmore, and Forrest B. Jackson all of Jackson, for appellee.

McGEHEE Justice.

The suit is brought by the appellee, Carl N. Craig, in his official capacity as State Tax Collector, on behalf of the State of Mississippi, in the Circuit Court of Hinds County, to collect from the appellant, Dunn Construction Company, a tax of 1% on the gross income received by it from the State Highway Commission, representing the contract price for certain road construction work, and which was paid to such contractor in installments of various amounts during the period from March 24, 1937, to July 14, 1938, inclusive, aggregating the sum of $54,032.39, the demand being for the 1% tax thereon, plus interest and 10% damages, alleged to have been levied by Section 2-e of Chapter 119, Laws of 1934, as amended, upon every person engaging or continuing within this state in the business of contracting, and for the privilege of engaging in such business.

It is alleged in the amended declaration that the amount due the state by the defendant and other contractors doing work for the State Highway Commission for tax on the gross income derived from the performance of their contracts prior to March 18, 1940, is in excess of $750,000; that on January 7, 1941, the plaintiff requested the Chairman of the State Tax Commission by letter of that date to make an assessment of the tax due by the defendant Dunn Construction Company; and that the Commissioner has declined to make such assessment or to collect any taxes due by the defendant, and by other contractors similarly situated, on the gross income received prior to the said 18th day of March, 1940, as requested. A copy of the letter to the Commissioner and of his reply thereto are made exhibits, and are asked to be considered as a part of the pleading.

It is further alleged that on January 11, 1941, the plaintiff requested the Attorney General of the state, in his official capacity as such officer, to join with the plaintiff as a party litigant to enforce the collection of the taxes thus claimed to be due in this and other similar suits now pending. This request was also by letter, a copy of which is likewise made an exhibit, and from which it appears that the Attorney General was already advised of the reasons given by Mr. Stone, Chairman of the State Tax Commission, for declining to make the assessment or collect the tax in question, a copy of the Commissioner's reply to the Chief Attorney of the State Tax Collector being referred to in the letter to the Attorney General as having been theretofore sent to the latter. This official also declined to intervene.

Section 2-h of the said Chapter 119, Laws of 1934, as amended, provides that: "In computing the amount of tax levied under this act, there shall be excepted from the gross income of the business, or gross proceeds of sales, as the case may be, so much thereof as is derived from sales to the United States government or the state of Mississippi, its departments and institutions, * * *." In view of this provision, found contained in the general "Sales Tax Law," Chapter 119, Laws of 1934, amending Chapters 90 and 91, Laws of 1932, it seems that prior to March 18, 1940, the departmental construction given the same by the State Tax Commission was that it exempted from the tax "the gross income of the business" as well as "gross proceeds of sales," when the income was derived from the federal or state government, its departments and institutions, whether for work done, or for sales made under such circumstances, the first part of the sentence above quoted from the statute being susceptible of such interpretation. The natural result of this departmental construction was that the contractors performing work under contracts with one of the departments of the state did not prior to the date aforesaid take into consideration this item of expense and add it to the contract price when bidding for the work, as they had of course done in regard to the cost of premiums on liability and performance bonds required in connection with the execution of these contracts. At any rate, it should be said for the Chairman of the State Tax Commission that after this court held on January 29, 1940, in the case of Compress of Union v. Stone, Chairman, 188 Miss. 49, 193 So. 329, citing as authority for its views the new trend of the most recent decisions of the Supreme Court of the United States as to the constitutionality of such a tax, that the provision of the statute in question had the effect of exempting from the tax only the gross income derived from sales to the United States Government, or to the State of Mississippi, and not the "gross income from the business," as it had been previously construed by the Commissioner, he proceeded to obtain a letter from the Attorney General thus interpreting this decision, and then issued a memorandum to all persons affected thereby, dated March 18, 1940, reading as follows: "Heretofore, it has been held that all income received from the United States Government and the State of Mississippi, its departments and institutions, was exempt. Now, as a result of the Supreme Court's decision and the opinion of the Attorney General, persons liable for any taxes levied by the Sales Tax Law, except those selling tangible property, may no longer be permitted an exemption on account of income received from the United States Government and the State of Mississippi, its departments and institutions." Also, that he advised the State Tax Collector, when declining to make the back-assessment, that "It has been the consistent policy of this department, certainly since 1932, in the collection of taxes, not to give retroactive effect to new court decisions, or to new opinions of the Attorney General, any more than to new laws. We have held that insofar as this office was concerned, we would regard such decisions and rulings precisely as we would regard new legislative enactments, and would proceed to collect taxes in conformity with such decisions and rulings, but with reference to future liability alone."

Whether the position above set forth is sound from a legal standpoint, or announces the correct policy that should have been pursued under the circumstances, is not for us to now decide. The precise and only question presented for decision on this appeal is whether the State Tax Collector has any right or authority under the law to file or maintain this suit, or whether such right, so far as he is concerned, is vested exclusively in the Chairman of the State Tax Commission. We have set forth the status of the amended pleadings for the reason that they allege the failure and refusal of the Tax Commission Chairman and Attorney General to act in the premises, as an additional ground to that stated in the original declaration to entitle the plaintiff to sue; and we have done so as a premise for saying that neither the good faith of these officials in that behalf can defeat the right of the State Tax Collector to maintain the suit, if he is authorized by law to do so, nor can any lack of good faith-and none such is alleged-create such a right if the lawmaking body has in its wisdom seen fit to withhold the power.

The alleged right of the State Tax Collector to file and maintain the suit was challenged in the trial court by demurrer, and the same having been overruled the defendant declined to plead further, with the result that a final judgment was entered for the amount sued for.

The question presented to us is one of statutory construction. It therefore becomes important to review in a general way the history of the legislation dealing with the power of the State Tax Collector, and to say in passing that prior to the year 1924, the powers of his predecessor in office, the state revenue agent, to institute suits had been constantly enlarged through the years until finally there was a pronounced reversal of this policy, well known to everyone whether in sympathy with the action or not, and this change in the trend of legislation resulted in the abatement of certain pending suits, abolishment of that office and the creation of the office of State Tax Collector, Chapter 286 Laws of 1926, marked by a curtailment of powers, notable among which restrictions was the denial by that act of his right to sue to collect income and inheritance taxes, which was reaffirmed in Chapter 71, Laws of the Extraordinary Session of 1928, also revoking other powers assumed to have been theretofore granted. These statutes were brought forward in Chapter 168, Code of 1930, and Section 6986 thereof, defining the powers of the State Tax Collector, excluded also the right to sue for penalties for the violation of the anti-trust laws, it being provided therein, among other things, that: "He shall have power and it shall be his duty to proceed by suit in the proper court against all persons, corporations, companies and associations of persons for all past due and unpaid taxes of any kind whatever, whether of the state, county, municipality, drainage, levee or other taxing district, or any subdivision thereof, and for all past due obligations and indebtedness of any character due and owing to them or any of them, except penalties for the violation of the anti-trust laws and except income and inheritance taxes." When these exceptions to his right to sue were first enacted, especially the one as to income and inheritance taxes,...