Franklin Cnty. Coal Co. v. Ames

• Decision Date: 12 February 1935
• Docket Number: No. 22744.,22744.
• Citation: 359 Ill. 178,194 N.E. 268
• Parties: FRANKLIN COUNTY COAL CO., Inc., et al. v. AMES, Director of Finance.
• Court: Illinois Supreme Court

359 Ill. 178

194 N.E. 268

FRANKLIN COUNTY COAL CO., Inc., et al.

v.AMES, Director of Finance.

No. 22744.

Supreme Court of Illinois.

Dec. 20, 1934.

Rehearing Denied Feb. 12, 1935.

Suit by the Franklin County Coal Company, Inc., and others against Knowlton L. Ames, Jr., Director of Finance. From a decree dismissing the bill for want of equity, complainants appeal.

Affirmed.

Appeal from Circuit Court, Cook County; Joseph Burke, Judge.

Essington & McKibbin and Walter E. Beebe, all of Chicago, for appellants.

Otto Kerner, Atty. Gen. (Montgomery S. Winning, of Springfield, and James G. Skinner, of Chicago, of counsel), for appellee.

FARTHING, Justice.

The appellants, twenty-seven coal mining companies or individuals, filed suit in the circuit court of Cook county against Knowlton L. Ames, Jr., director of finance of Illinois, to enjoin him from enforcing against them two rules promulgated by the department of finance in its administration of ‘An Act in relation to a tax upon persons engaged in the business of selling tangible personal property to purchasers for use or consumption,’ approved June 28, 1933, in effect July 1, 1933 (Laws of 1933, p. 925 [Smith-Hurd Ann. St. c. 120, §§ 440-453]), the short title of which is, ‘Retailers' Occupation Tax Act.’

The circuit court entered a decree dismissing the bill for want of equity, and the complainants have appealed.

The rules above referred to are as follows:

‘Article 2. The test of a sale at retail is whether the sale is to a purchaser for use or consumption and not for re-sale. A sale is made at retail when it is made to a personwho does not purchase the goods for resale either in the form or condition in which purchased or made over or changed into or included in some form of tangible personal property for re-sale. Sales of goods which as ingredients or constituents go into and form part of tangible personal property for re-sale by the buyers are not within the act. If a sale is made of goods which are for re-sale by the buyer as anything other than tangible personal property, such sale is a sale at retail within the provisions of the act.

‘In general, the tax is imposed upon all persons engaged in the business of selling tangible personal property to purchasers for use or consumption. It is intended to cover receipts from a sale which constitutes the last actual transaction prior to ultimate use or consumption.

‘The quantities of goods sold or prices at which sold are immaterial in determining whether or not a sale is at retail within this act. * * *

‘Special Rule No. 28-Coal, coke, fuel oil, gas and other combustibles sold to industrial users. Sales of coal, coke, fuel oil, gas and other combustibles, whether in carload lots or other quantities, to persons who use or consume such substances in producing other tangible personal property or in the rendering of service, constitute sales at retail within the meaning of the Illinois Retailers' Occupation Tax act, provided that such coal, coke, fuel oil, gas or other combustibles do not become a constituent, component or integral part of the manufactured product.’

On motion of the appellee the amended complaint was dismissed for want of equity. This appeal followed.

The appellants contend that they are operators of coal mines, that is, producers, and not retailers, of tangible personal property for use or consumption; that the Legislature did not pass a producers' tax act; that their business is not subject to the act in question; that all coal sold, whether in carload lots or to truck operators, if sold at the ‘mine price,’ is sold at wholesale, no matter who buys it, and therefore their occupation to this extent is not taxable; that, although where the appellants sell coal through coal yards, such part of their business is subject to the tax, as to all other business done by them they are wholesalers and not retailers; that, when they sell to manufacturers, this branch of their business is not taxable because they claim the result would be doublt taxation, in that both the coal used and the manufactured products, under the ruling of the department of finance, would be required to pay the same tax.

The appellee contends that by engaging actively and continuously in selling coal to purchasers for use or consumption the appellants are engaged in the business of selling tangible personal property at retail, regardless of the price and the quantity sold to any one customer at a single sale. The appellee admits that the act does not apply where sales are made for resale.

The appellants contend that taxing statutes must be strictly construed and all reasonable doubts must be resolved against the state and in favor of the taxpayer. United States v. Merriam, 263 U. S. 179, 44 S. Ct. 69, 68 L. Ed. 240, 244, 29 A. L. R. 1547;People v. Noyes, 295 Ill. 355, 129 N. E. 151. However, ‘strict construction’ is a relative, and not a precise, term. It is not the exact antithesis of ‘liberal construction.’ It does not consist in giving words the narrowest possible meaning of which they are susceptible. A strict construction is in no way violated if the words of a statute are given their full meaning. Biffer v. City of Chicago, 278 Ill. 562, 571, 116 N. E. 182. When the language of a statute is definite and clear in its meaning, i. e., free from ambiguity, there is neither necessity nor authority for a resort to statutory construction, Sup v. Cervenka, 331 Ill. 459, 461, 163 N. E. 396. With these rules in mind and the plain definition of ‘sales at retail’ adopted by the Legislature and contained in the act, all that we need do is to determine whether the facts stated in the appellants' bill bring them witnin the act.

We have stated the title of the act and also the short title given it by the Legislature. Section 2 of the act (Smith-Hurd Ann. St. c. 120, § 441) provides, among other things: ‘A tax is imposed upon persons engaged in the business of selling tangible personal property at retail in this State at the rate of two per cent (2%) of the gross receipts from such sales in this State of tangible personal property,’ etc. Section 1 (section 440), defines a sale at retail, as follows: “Sale at retail' means any transfer of the ownership of, or title to, tangible personal property to the purchaser, for use or consumption and not for resale in any form as tangible personal property, for a valuable consideration.'

The appellants do not attempt to say that their sales are occasional, but they insist that their business is producing and not selling, and that, by reason of the quantity sold-carload lots and more-to many of their customers, their business is that of wholesalers. They couple with this the claim that sales at the mine at the same price charged purchasers in carload lots are also sales at wholesale.

The complaint shows that the appellants sell a large percentage of their output to consumers. In Winter v. Barrett, 352 Ill. 441, 463, 186 N. E. 113, 89 A. L. R. 1398, in discussing whether farmers could be exempted from the first Retailers' Occupation Tax Act, we held that such exemption created a lack of uniformity, and that the act was therefore unconstitutional. We recognized that the business of farming includes the business of producing, but held that farmers who engage in the business of selling their produce to consumers are engaged in the business of selling tangible personal property at retail, just as a druggist is who compounds his own remedies for sale at retail to his customers. Both would be conducting the sort of business covered by this act, and the fact that both were producers does not change that part of their business which is made up of such sales. Nor does the fact that the appellants are producers-that is, engaged in the business of mining and preparing coal for sale-have any bearing upon that part of their business which has to do with the sale of their product for use or consumption.

The appellants rely upon the decisions in Texas Co. v. Amos, 77 Fla. 327, 81 So. 471,Chattanooga Plow Co. v. Hays, 125 Tenn. 148, 140 S. W. 1068Flint v. Stone Tracy Co., 220 U. S. 107, 31 S. Ct. 342, 55 L. Ed. 389, Ann. Cas. 1912B, 1312, and Commonwealth v. Thackara Mfg. Co., 156 Pa. 510, 27 A. 13, in support of their contention that the Retailers' Occupation Tax Act does not apply to producers who sell their products as an incident of their main business of producing. These decisions involved statutes which dealt with certain specific occupations, such as merchants, dealers, etc., and on account of the differences in wording they are not applicable to the act before us. Moreover, there is no tax imposed upon the appellants as persons engaged in the business of producing. The tax is imposed upon them, if at all, because they are engaged in the occupation of selling tangible personal property at ‘retail,’ as the term is defined in this statute. If we were to construe the act so as to exclude them from it, a lack of uniformity would result, and the act would be unconstitutional. This act is not limited to persons whose only business is keeping a store or otherwise disposing of personal property in small quantities for use or consumption at a given location, after having bought their merchandise, goods, wares, or chattels from those who sell in large quantities. If any one sells tangible personal property for use or consumption and not for...