Fontenot v. Hurwitz-Mintz Furniture Co.

• Decision Date: 30 March 1942
• Docket Number: 36437.
• Citation: 200 La. 210,7 So.2d 712
• Court: Louisiana Supreme Court
• Parties: FONTENOT, Director of Revenue, v. HURWITZ-MINTZ FURNITURE CO. et al.

7 So.2d 712

200 La. 210

FONTENOT, Director of Revenue, v. HURWITZ-MINTZ FURNITURE CO. et al.

No. 36437.

Supreme Court of Louisiana

March 30, 1942

McCloskey & Moore and Joseph McCloskey, Jr., all of New Orleans, for plaintiff and appellee.

Robert A. Ainsworth, Jr., of New Orleans, for defendants and appellants.

McCALEB Justice.

Rufus W Fontenot, Director of Revenue, filed this summary proceeding to recover from the defendants certain Public Welfare Revenue Taxes allegedly due to the State of Louisiana and the City of New Orleans. The taxes sought to be recovered for the State were levied under Act No. 2 of 1938. The taxes claimed on behalf of the City of New Orleans were imposed by Ordinance No 14,751 Commission Council Series, which was enacted in pursuance of the power conferred upon the City by Act No. 2 of 1938.

Plaintiff represents the State in his official capacity as Director of Revenue and appears for the City by virtue of Ordinance No 14,778 Commission Council Series, which was enacted under authority of Paragraph (f) of Section 1 of the City Charter, as amended by Act 338 of 1936.

The defendants do not deny liability to the State of Louisiana for the taxes claimed by the plaintiff. However, they have resisted the demand for the taxes due the City of New Orleans on the ground that, since Act No. 82 of 1940, which repealed Act No. 2 of 1938 and City Ordinance No. 14,751, did not contain a saving clause reserving to the City the right to recover any taxes accruing under the ordinance, the City's claim has abated and the Director of Revenue is without authority to sue on its behalf.

The Judge of the District Court rejected this defense and gave judgment in plaintiff's favor. Defendants have appealed from the adverse decision.

By Act No. 2 of 1938, a tax of 1% was levied on the price of retail sales. This tax was to be collected by all dealers from their purchasers and the former were made responsible to the taxing authorities for the payment of the tax. In Section 15 of the Statute, the right was granted to the City of New Orleans to levy a tax similar to that levied by the State. In pursuance of the authority conferred by that section, the City of New Orleans enacted Ordinance No. 14,751 whereunder a City Sales Tax of 1% was imposed.

Act No. 2 of 1938 was repealed by the Legislature in 1940 by Act No. 82 of that year, wherein it was provided that the repeal would become effective on December 31, 1940, 'provided, however, that nothing herein contained shall be construed as a waiver by the State, because of any repeal herein contained, of any accrued taxes and penalties due the State under the provisions of Act 2 of 1938, and such taxes accrued, or which may accrue up to the effective date of said repeal, and penalties thereon shall be collected by the Collector of Revenue in the manner provided by said Act.' In Section 3 of the act, it is declared:

'That all laws or parts of laws as may conflict herewith, including all ordinances of any municipalities passed under authority of said Act No. 2 of the Legislature of 1938, are hereby repealed, * * *.'

Counsel for the defendants, while conceding that the taxes claimed on behalf of the City had accrued prior to the time the City Ordinance was repealed, maintains that the plaintiff is without right to recover these taxes because Section 3 of Act No. 82 of 1940 does not contain provisions reserving the right to the City to recover any taxes which accrued while the ordinance was in force but which have not been claimed until after the effective date of the repeal. In stressing this argument, counsel says that the intention of the Legislature to relieve the delinquent tax debtors of the City is manifest inasmuch as the repealing act specifically reserves to the State the right to collect accrued taxes and is silent with respect to the City.

Conversely, counsel for the plaintiff maintain that the language of the repealing statute does not indicate that the Legislature intended such a result. They assert that the reservation contained in Act No. 82 of 1940 respecting the right of the State to recover any accrued taxes due is broad enough to include any subdivision of the State which had passed ordinances under authority of Act No. 2 of 1938. Alternatively, they claim that the repeal of the City Ordinance levying the tax does not repeal Ordinance No. 14,778 under which the Director of Revenue is appointed as agent for the City to collect taxes due it and that, therefore, the repeal of the taxing ordinance has not abrogated plaintiff's authority to sue for and collect accrued taxes levied under it. And, finally, counsel maintain that, if the repealing statute is interpreted to mean that the Legislature intended to release tax debtors of the City for any taxes which had accrued under the provisions of the City Ordinance, then Section 3 of Act No. 82 of 1940 is unconstitutional in that it violates Section 13 of Article IV of the Constitution of 1921, which provides:

'The Legislature shall have no power to release or extinguish, or to authorize the releasing or extinguishment, in whole or in part, of the indebtedness, liability or obligation of any corporation or individual to the State, or to any parish or municipal corporation thereof; provided, the heirs to confiscated property may be released from all taxes due thereon at the date of its reversion to them.'

The contention of the plaintiff that the saving clause contained in Act No. 82 of 1940 is broad enough to reserve the right of the City of New Orleans to recover taxes accruing prior to the repeal of the Sales Tax Law cannot be sustained. The language used in Section 1 of the Act is clear. The right to claim accrued taxes is therein conferred upon the State alone and not upon any of its subdivisions. And Section 3 of the Statute repeals without qualification all ordinances of any municipalities passed under the authority of Act No. 2 of 1938. Hence, the saving clause cannot be stretched by interpretation so as to make it include the City of New Orleans.

The next point raised by the plaintiff is that the repeal of City Ordinance No. 14,751 by Act No. 82 of 1940 does not affect the authority of the Collector of Revenue to recover accrued taxes levied under it even though the claim is asserted subsequent to the effective date of its repeal. A reading of Ordinance No. 14,778, under which the plaintiff was designated as a tax-collecting agent for the City, discloses that his authority is limited to the collection of taxes levied under the City Sales Tax Ordinance. Since the ordinance levying the tax was repealed by Act No. 82 of 1940, without a saving clause, it is obvious that plaintiff's right to collect accrued taxes levied under that ordinance after the date upon which it wnet out of existence is likewise abated unless it be that Section 3 of Act No. 82 of 1940 is violative of Section 13 of Article IV of the Constitution.

We, therefore, direct our attention to plaintiff's contention that Section 3 of Act No. 82 of 1940 is unconstitutional because it has the effect of releasing or extinguishing the defendants' liability to the City of New Orleans for sales taxes which had become due and exigible prior to the time the repeal of City Ordinance No. 14,751 became effective. That this result has been accomplished by the Legislature in disregard of the constitutional prohibition, we entertain no doubt.

In Succession of Popp, 146 La. 464, 83 So. 765, 767, 26 A.L.R. 1446, it appeared that Mrs. Popp died in 1910, and the succession was opened many years later. At the time of decedent's death, the inheritance tax statute of 1906 (Act 109 of 1906) was in full force and effect, and the tax levied thereunder was five per cent. However, by Act No. 42 of 1912, the rate of the tax was reduced from five per cent to two per cent and that statute was made applicable by its express terms to 'all successions not finally closed, or in which the final account has not been filed'. It was contended by the tax collector that Act No. 42 of 1912 was unconstitutional, insofar as it had been made retroactive in respect of taxes which had already accrued under the prior statute, Act No. 109 of 1906, because, under Article 59 of the Constitution of 1913 (which is identical in its terms with Section 13 of Article IV of our present Constitution), the Legislature was powerless to release in whole or in part any indebtedness, liability or obligation due by any corporation or individual to the State or to any parish or municipal corporation thereof. The Court found that a tax which had accrued was a liability or obligation within the meaning of the constitutional provision and, in upholding the contention of the tax collector, it observed:

'This tax was a debt, since it could and should have been paid; and, it being such, the Legislature was powerless in 1912 to 'release or extinguish' it 'in whole or in part.' The tax must therefore be...