Edmunds v. Bureau of Revenue of N.M.

• Decision Date: 24 September 1958
• Docket Number: No. 6404,6404
• Citation: 330 P.2d 131,1958 NMSC 112,64 N.M. 454
• Parties: Edward EDMUNDS, Jr., d/b/a Edmunds Chemical Company, Plaintiff-Appellant, v. BUREAU OF REVENUE OF the State of NEW MEXICO; Tony Luna, Commissioner of Said Bureau; and Robert E. Prittchet, Director of the School Tax Division of said Bureau, Defendants- Appellees.
• Court: New Mexico Supreme Court

Page 131

330 P.2d 131

64 N.M. 454

Edward EDMUNDS, Jr., d/b/a Edmunds Chemical Company Plaintiff-Appellant, v. BUREAU OF REVENUE OF the State of NEW MEXICO; Tony Luna Commissioner of Said Bureau; and Robert E Prittchet, Director of the School Tax Division of said Bureau Defendants- Appellees.

No. 6404.

Supreme Court of New Mexico.

Sept. 24, 1958.

Hannett, Hannett & Cornish, Albuquerque, for appellant.

Charles B. Barker, Santa Fe, for appellees.

SHILLINGLAW, Justice.

Appellant, a resident retailer of chemicals, sold certain chemical reagents for use in processing uranium ore to a large mill in Grants, New Mexico, and he came under the provisions of the Emergency School Tax Act, Sec. 72-16-1 et seq., N.M.S.A.1953, which was enacted as chapter 73, Laws of 1935:

72-16-4: 'There is hereby levied, and shall be collected by the Bureau of Revenue, privilege taxes, measured by the amount or volume of business done, against the persons, on account of their business activities, engaging or continuing, within the state of New Mexico, in any business as herein defined, and in the amounts determined by the application of rates against gross receipts, as follows:

* * *

* * *

'D. At an amount equal to two (2) per cent of the gross receipts of the business of every person engaging or continuing in the business of selling at retail of goods, wares, materials, equipment, machinery, and commodities * * *'

Appellant paid the required school tax, amounting to 2% on such sales, making these payments under protest.

It appeared that certain nonresident persons and corporations also sold chemical reagents to the uranium mill at Grants and such nonresident vendors do not come within the terms of the Emergency School Tax Act hereinabove quoted.

It might be explained at this point that, in the normal case of a sale of goods or products by a nonresident vendor to a resident purchaser, the provisions of Sec. 72-17-3, N.M.S.A.1953, which was enacted as chapter 95, Laws of 1939, come into play as follows:

'An excise tax is hereby imposed on the storage, use or other consumption in this state of tangible personal property purchased from a retailer on or after July 1, 1939, and stored, used or consumed in this state at the rate of two per cent [2%] of the sales price of such property; * * *.'

This is the New Mexico Compensating Tax Act of 1939, the purpose of which was declared by the legislature to be, in Sec. 72-17-1, N.M.S.A.1953:

'* * * to protect, so far as is practicable the merchants, dealers and manufacturers of New Mexico who operate under the excise tax laws of this state, and who meet the requirements of such laws, against the unfair competitions of importations into New Mexico, without the payment of a sales tax, of goods, wares and merchandise.'

However, the Compensating Tax Act makes some express exceptions, the relevant exceptions being listed in Sec. 72-17-4(l), N.M.S.A.1953, as follows:

'All chemicals and reagents procured or purchased by any mining, milling or oil company for use or consumption in processing ores or oil in mill, smelter, or refinery, or in acidizing oil wells; * * *'

Thus a situation is presented where, in the case of the sale of chemical reagents, the appellant resident vendor is subjected to a 2% tax on his sales, his nonresident competitors are free of such taxation, and the 2% compensating tax does not apply to the purchase of such products. Appellant claims that this situation, in effect, subjects the resident vendor to a 2% penalty for being a resident, or gives the nonresident vendor a 2% advantage for being a nonresident.

Having paid the 2% school tax on these sales under protest, appellant brings this action against the Bureau of Revenue for the recovery of such amounts paid, alleging that the 2% school tax, as applied to him on sales of chemical reagents to the uranium mill, is an unconstitutional denial of equal protection of the laws and of due process of law under both the state and federal constitutions.

There being no question raised as to the validity of the Emergency School Tax Act itself, the only question in this case is whether this act, under either the 14th Amendment to the Constitution of the United States or under Art. II, Sec. 18 of the Constitution of the State of New Mexico, is unconstitutional as applied to this appellant under the circumstances described.

Arguing against appellant's position, counsel for the Bureau of Revenue submits that appellant can succeed in this action only if the 1939 Compensating Tax Act operated as a repeal by implication, in whole or in part, of the 1935 Emergency School Tax Act. Counsel concedes for the sake of argument that the above quoted exemptions under the Compensating Tax Act in the case of sales of chemical reagents are unconstitutional as being 'directly contrary to the declared purpose of the legislature in enacting the Compensating Tax law' but argues that a declaration by this court of the unconstitutionality of these exemptions could not benefit appellant so as to entitle him to recover 'school tax regularly and legally assessed and paid.'

First let us state that we know of no decision in this jurisdiction or elsewhere which declares an act of a legislature to be invalid as a violation of the declared policy of that very same legislature, as is argued by counsel for the Bureau. Secondly we admit that a declaration of the invalidity of the exemptions under the Compensating Tax Act as listed in Sec. 72-17-4(l), N.M.S.A.1953, could not enable appellant to recover the school tax paid under protest. But such is not the appellant's case.

In his complaint and in his arguments, both in the court below and on this appeal, appellant has contended that, in view of the 2% advantage given nonresident vendors of chemical reagents by the Compensating Tax Act, the collection of the 2% school tax was an unconstitutional denial of equal protection and due process as applied to him on similar sales of chemical reagents.

Appellant cites State v. Martinez, 48 N.M. 232, 149 P.2d 124, 126, 155 A.L.R. 811, not a case which involved a taxing problem but one in which we passed upon the question of discrimination against residents under an act providing that it was unlawful for any resident to bring into the state more than one pint of alcoholic...