Foster & Creighton Co. v. Graham
| Decision Date | 03 July 1926 |
| Parties | FOSTER & CREIGHTON CO. v. GRAHAM, STATE COMPTROLLER, ET AL. |
| Court | Tennessee Supreme Court |
Appeal from Chancery Court, Davidson County; James B. Newman Chancellor.
Suit by the Foster & Creighton Company against Edgar J. Graham, State Comptroller, and Frank S. Hall, Commissioner of Finance and Taxation, both individually and in their official capacities. Decree sustaining a demurrer and dismissing the bill, and complainant appeals. Affirmed.
R. B C. Howell, J. C. Edwards, and W. E. Norvell, Jr., all of Nashville, for appellant.
Frank M. Thompson, Atty. Gen., and Wm. L. Granbery and Chas. C Trabue, both of Nashville, for appellees.
The bill in this cause was filed by Foster & Creighton Company, a Tennessee corporation, with its principal office at Nashville, against Edgar J. Graham, state comptroller, and Frank S. Hall, commissioner of finance and taxation, both individually and in their official capacities, to recover two payments made by complainant, under protest, of gasoline tax, amounting to $510.45, which complainant had been compelled to pay the state under chapter 58 of the Public Acts of 1923, as amended by chapter 67 of the Public Acts of 1925, on two tank cars of gasoline, one car containing 8,095 gallons and the other 8,036 gallons.
The bill alleges that the complainant is engaged in the contracting business, erecting buildings, building roads, etc., and, while engaged in constructing a road in Maury county, Tenn., it purchased in interstate commerce, and had shipped to it, the two cars of gasoline in question, not for sale, but to be used by it in the operation of its motor trucks used in the construction of said highway under a contract with the state.
The bill further alleged that complainant has never been a distributor or dealer in gasoline, nor engaged in the business of refining, manufacturing, producing, or compounding gasoline or selling it in this state, nor has it ever been engaged in the business of storing the same in this state for any other purpose than its own use; that, when the gasoline in question was received in the tank cars above mentioned, it was placed in a tank in Maury county, to be used by complainant for its own purposes, and was so used as a necessary incident to the proper carrying on of its business as a road contractor, for the carrying on of which business it had paid a privilege tax to the state; that there was no filling station convenient to the work in which complainant was engaged in performing; and that said gasoline was purchased by complainant, and stored by it in its own tank, for convenience, and withdrawn as it was needed for use in its business.
The bill alleged that, under a proper construction of chapter 58 of the Public Acts of 1923, as amended by chapter 67 of the Public Acts of 1925, the act does not impose the three cent gasoline tax upon one who is not a dealer or distributor, but only stores gasoline in his own tank, and withdraws the same for his own use; but that, if said act, as amended, when properly construed, does apply in such case, then, to that extent, it contravenes article 1, § 8, article 11, § 8, article 2, § 17, and article 2, § 28, of the state Constitution, and is invalid.
That article 2, § 28, is violated because:
(a) A tax on the use or consumption of a particular commodity is a property tax, and all taxes on property must be uniform, and according to its value.
(b) That it is not a privilege tax, and is not included in the power delegated to the Legislature by our Constitution to levy privilege taxes.
(c) That the selection of the use of gasoline alone for taxation, to the exclusion of all other petroleum products, is unreasonable and arbitrary, and violates article 1, § 8, and article 11, § 8, of our Constitution.
(d) That the act, as amended, violates article 2, § 17, of our Constitution, because the caption is expressly limited to a tax on the business of selling, storing, or distributing gasoline, while the body of the act applies to those who may purchase and store gasoline, and thereafter withdraw it for their own use, and therefore contains a subject not expressed in the caption.
A demurrer was filed to the bill by the defendants, which was sustained by the chancellor, and the bill dismissed, from which decree complainant has appealed and assigned errors, raising substantially the questions above indicated.
The caption of chapter 58 of the Acts of 1923 reads as follows:
"An act requiring all persons, firms, associations, joint-stock companies, syndicates and corporations engaged in or carrying on the business in this state of selling gasoline and distillate in this state, to pay to the state comptroller a privilege tax, for engaging in and carrying on such business in this state, equal to two cents per gallon of such gasoline and distillate, to be in addition to all other taxes, such fund to be used solely in the construction and maintenance of a highway system in the state."
Section 1 of said act reads:
"Be it enacted by the General Assembly of the state of Tennessee, that as used in this act the term 'person' means and includes every individual, firm, association, joint-stock company, syndicate and corporation.
The term 'distributor' means and includes every person who engages in the business in the state of refining, manufacturing, producing or compounding gasoline or distillate, and selling the same in this state; and also every person who engages in the business in this state of shipping, transporting or importing any gasoline or distillate into, and making original sales of the same, in this state.
The term 'dealer' means and includes every person, other than a distributor, who engages in the business in this state, of distributing or selling gasoline or distillate within this state."
By subsequent sections a privilege tax of two cents a gallon was imposed on dealers "for each gallon of gasoline * * * sold or distributed by such dealer in this state." This tax, by the express terms of the act, was denominated "a special privilege tax in addition to all other taxes."
The tax was subsequently increased to three cents by chapter 4 of the Public Acts of 1925.
The caption of the amendatory act (chapter 67, Acts of 1925) reads as follows:
"An act to amend an act entitled: 'An act requiring all persons, firms, associations, jointstock companies, syndicates and corporations engaged in or carrying on the business in this state of selling gasoline and distillate in this state, to pay to the state comptroller a privilege tax for engaging in and carrying on such business in this state, equal to two cents per gallon of such gasoline and distillate, to be in addition to all other taxes, such fund to be used solely in the construction and maintenance of a highway system in the state,' being chapter 58 of the Public Acts of 1923, so as to amend the caption by including the words, 'or storing or distributing,' after the word 'selling' in the third line of the caption of the printed act as published, and by amending the body of the act by imposing the tax upon persons, firms, associations, joint-stock companies, syndicates and corporations storing or distributing any of the products mentioned in said act."
Section 1 of this amendatory act reads:
"Be it enacted by the General Assembly of the state of Tennessee, that the caption of chapter 58, of the Public Acts of 1923, being entitled ''
Section 2 reads:
"Be it further enacted, that section 3 thereof be amended by adding at the end thereof the following: 'The tax imposed by this act shall apply to persons, firms, or corporations, dealers or distributors, storing any of the products mentioned in this act, and distributing the same, or allowing the same to be withdrawn from storage, whether such withdrawal be for sale or other use; provided that "sellers" of gasoline and such substitutes thereof and distillates paying the tax herein provided may continue to pay the same computed and paid on the basis of their sales as hereinbefore required and stores and distributors shall compute and pay this tax on the basis of their withdrawals or distributions.' "
It will be seen that the act of 1923 imposed a tax on "dealers," and measured it by the quantity of gasoline "sold or distributed" by them, and the term "dealer" was defined as one engaged in the business of "distributing or selling gasoline."
The act of 1925 extended the scope of the act of 1923 so as to include, not only those engaged in selling gasoline, but also those engaged in storing it, and then withdrawing it for sale or other use.
The original act expressly excluded from its operation gasoline while it was in interstate commerce (section 2). All other gasoline, when sold or distributed, was included in the calculation of the tax.
We think the effect of the amendatory act of 1925, when properly interpreted, is to reach gasoline that is stored and thereafter withdrawn and used without being sold by any person, etc.
Under the act of 1923, a large consumer of gasoline, desiring to escape the tax...
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