F.W. Woolworth Co. v. Gray

• Decision Date: 05 February 1951
• Docket Number: No. 7184,7184
• Citation: 77 N.D. 757,46 N.W.2d 295
• Parties: F. W. WOOLWORTH CO. v. GRAY, State Tax Commissioner.
• Court: North Dakota Supreme Court

Page 295

46 N.W.2d 295

77 N.D. 757

F. W. WOOLWORTH CO. v. GRAY, State Tax Commissioner.

No. 7184.

Supreme Court of North Dakota.

Feb. 5, 1951.

Syllabus by the Court.

1. Laws 1949, Chapter 341, (1949 Supp. to NDRC 1943, Chapter 57-39) imposes a tax of two per cent upon the gross receipts from all sales of tangible personal property, except as exempted, sold at retail in this state to consumers or users, and provides that retailers shall and the tax so imposed, or the average equivalent thereof, to the sales price or charge and when so added such taxes shall constitute a part of the sales price or charge, shall be a debt from the consumer or user to the retailer until paid, and shall be recoverable at law in the same manner as other debts. Laws 1949, Chapter 341, further requires the retailer, in adding such tax to the price, to use a bracket system for application of the tax, which states that no tax may be added to the sales price or charge on sales for 24 cents or less. Held, that the tax of two percent imposed must be based upon the gross receipts from all sales regardless of the amount of the tax collected by the retailer from the consumer under such bracket system.

2. Section 6, Chapter 341, Laws 1949, which provides that on sales of tangible personal property for 24 cents or less no tax shall be added to the sales price or charge and collected from the consumer or user does not exempt sales for 24 cents or less from the two per cent tax which is imposed upon gross receipts under Section 2 of the Chapter.

3. Section 6, Chapter 341, Laws 1949, as so construed does not contravene sections 11 and 20 of the Constitution of the State of North Dakota or the Fourteenth Amendment to the Constitution of the United States.

Wattam, Vogel, Vogel & Bright, Fargo, for appellant.

Wallace E. Warner, Atty. Gen., P. O. Sathre, Asst. Atty. Gen., for respondent.

Cupler, Tenneson & Serkland, Fargo, as amicus curiae.

CHRISTIANSON, Judge.

The plaintiff, a New York corporation, brought this action against the Tax Commissioner of the State of North Dakota to recover the sum of $1486.96 which it is alleged that the defendant required the plaintiff corporation to pay as taxes exacted under the provisions of Laws 1949, Chapter 341, 1949 Supp. to NDRC 1943, Chapter 57-39, commonly known as the Retail Sales Tax Act.

The plaintiff alleges in its complaint that the plaintiff is a foreign corporation organized and existing under the laws of the State of New York and duly and regularly qualified under the laws of the State of North Dakota to do business in the State and engaged in the merchandising business therein. That the defendant is the duly elected and qualified Tax Commissioner of the State of North Dakota and as such is charged by law with the duty of administering Laws 1949, Chapter 341, commonly known as the Retail Sales Tax Law. That the plaintiff is engaged in the sale of merchandise in the State of North Dakota in six different cities and has qualified under the provisions of the Retail Sales Tax Law by obtaining a permit from the defendant for each and all of such stores.

That under the terms and provisions of said Sales Tax Law, above referred to, the plaintiff, in the manner provided by law, made and returned to the Tax Commissioner, the defendant herein, for the period from July 1, 1949, up to and including the 30th day of September 1949, a true and correct report of all sales of merchandise sold at its various stores in this state during said period, and did at the same time pay to said defendant the total amount of the tax collected on individual sales where the amount involved exceeded the sum of twenty-four cents.

That under the terms and provisions of said Chapter 341, of the Session Laws of the State of North Dakota for the year 1949, no retailer is permitted to collect from the consumer a tax on individual sales of merchandise where the amount paid for such merchandise is less than twenty-five cents, and no retailer of merchandise is liable for the payment to the State of North Dakota of any tax on such individual sales of less than twenty-five cents.

That under the terms and provisions of said law plaintiff was not permitted to and did not collect from any purchaser or consumer any tax on individual sales of less than twenty-five cents. That, despite the terms and provisions of said law, the plaintiff, at the time of the payment of the full amount of tax collected under and in accordance with the provisions of said law, was required by the defendant to pay the additional sum of $1486.96, being the amount claimed by the Tax Commissioner as necessary in order to equal two per cent on all gross sales within the State of North Dakota during said period including the individual sales of less than twenty-five cents.

That the payment of said $1486.96 was at said time made under written protest and solely in order to avoid prosecution by the defendant and the invoking by the defendant as against this plaintiff of the penalties in said law provided.

That under the plain and specific terms and provisions of said Chapter 341 of the Session Laws for 1949, no tax was or is due on individual sales of less than twenty-five cents, and the collection by the defendant of a tax on such sales from the retailer, or in fact the collection of a greater tax from the retailer than such retailer is lawfully permitted under said law to collect from the purchaser or consumer is invalid, illegal, unreasonable, discriminatory, contrary to the rights of the plaintiff, and wholly unlawful for the reason that the tax due and owing under said law is a tax solely and only against the consumer and not against the retailer.

That this plaintiff at each store owned and operated by it in the State of North Dakota kept an accurate and correct record of all sales tax which under said law it was permitted to and did collect and, as hereinbefore alleged, remitted to the defendant the full amount of such tax so collected.

That this plaintiff during said period was wholly unable under the so-called bracket system contained in said law, to collect or recoup any part or portion of the excess tax in the amount of $1486.96, which it was compelled by the defendant to pay and did pay under protest.

That prior to the commencement of this action the plaintiff made demand in writing upon the defendant for a return of said sum of $1486.96 so illegally and unlawfully collected from the plaintiff by the defendant, which demand was by the defendant in all things refused.

Plaintiff prays judgment for the sum of $1486.96 with interest thereon at legal rate from the date of payment thereof together with costs and disbursements.

The defendant demurred to the complaint on the ground that it does not state facts sufficient to constitute a cause of action. The trial court made an order sustaining the demurrer and the plaintiff has appealed.

The Retail Sales Tax law was first enacted in this state in 1935 and was limited to a two-year period,--May 1, 1935, to May 1, 1937. Laws 1935, Chapter 276. In 1937 an act containing substantially the same provisions was enacted for a period beginning May 1, 1937, and ending June 30, 1939. Laws 1937, Chapter 249. Acts for similar two-year periods and containing substantially the same provisions as those contained in the law enacted in 1935 were enacted by legislative assemblies in 1939, 1941, 1943, 1945, and 1947. Laws 1939, Chapter 234; Laws 1941, Chapter 283; Laws 1943, Chapter 264; Laws 1945, Chapter 308; Laws 1947, Chapter 344.

As introduced the present Retail Sales Tax law, Laws 1949, Chapter 341, like the acts for the previous years contains substantially the same provisions as those embodied in the original enactment. In the course of passage, however, a change was made in Sec. 6 of the 1949 Act, which the plaintiff claims operates to exempt or exclude from the sales tax receipts on all sales where the purchaser paid and the plaintiff received payment of twenty-four cents or less.

The Retail Sales Tax law enacted by the Legislative Assembly of this state in 1935 was adopted from Iowa. Many of the sections were adopted without the slightest change. That is true of Sections 6 and 7 of the 1935 enactment. See, Laws of Iowa of the 45th G.A. Extraordinary Session, Chapter 82, Div. IV, Sec. 37 et seq.; Code of Iowa 1935, Ch. 329-F1, Sec. 6943-F38, et seq.

Chapter 276, Laws 1935, provided:

Sec. 1(f) "Gross receipts' means the total amount of the sales of retailers, valued in money, whether received in money or otherwise, provided, however, that discounts for any purposes allowed and taken on sales shall not be included, nor shall the sale price of property returned by customers when the full sale price thereof is refunded either in cash or by credit. * * *' Sec. 2. 'There is hereby imposed, beginning the first day of May, 1935, and ending May 1, 1937, a tax of two per cent (2%) upon the gross receipts from all sales of tangible personal property, consisting of goods, wares, or merchandise, except as otherwise provided in this division, sold at retail in the State of North Dakota to consumers or users; * * *.

'The tax herein levied shall be computed and collected as hereinafter provided.'

Sec. 3. Exemptions. This section exempted from the provisions of the act and from the computation of the amount of tax imposed by it gross receipts from certain described sales such as the gross receipts from sales of tangible personal property which the State is prohibited from taxing under the Constitution or laws of the United States or under the Constitution of the State.

Sec. 4. This section provided that taxes paid on gross receipts represented by accounts found to be worthless and actually charged off for income tax purposes may be credited upon subsequent payment of the tax and that if such accounts are thereafter collected by the retailer a tax shall be paid upon the amount so collected and that the...