Head v. Cigarette Sales Co.

• Decision Date: 13 July 1939
• Docket Number: 12830.
• Citation: 4 S.E.2d 203,188 Ga. 452
• Parties: HEAD, Revenue Com'r, et al. v. CIGARETTE SALES CO.
• Court: Georgia Supreme Court

4 S.E.2d 203

188 Ga. 452

HEAD, Revenue Com'r, et al. v. CIGARETTE SALES CO.

No. 12830.

Supreme Court of Georgia

July 13, 1939

Syllabus by the Court.

1. The assignments of error upon the failure of the court to sustain the defendants' pleas to the jurisdiction are without merit.

2. The tax imposed by the act of December 31, 1937 (Ga.L.Ex.Sess.1937-38, pp. 126-144), amending the act of March 30, 1937 (Ga.L.1937, pp. 83-109), upon every person who receives by any means in this State, and who holds or possesses for his or her own personal use in this State, or for the use of any member of his or her family, cigarettes which have not been stamped as required by the act, is an excise upon the privilege of holding or possessing such cigarettes for personal use, and is not a direct or ad valorem tax upon such articles. Accordingly, the statute does not violate the constitution of this State because the tax is not uniform with ad valorem tax levied by the State upon tangible property.

3. The State does not create an unreasonable classification in levying a tax upon persons who hold or possess for personal use unstamped cigarettes, while exempting those who hold or possess cigarettes for such purpose which have been stamped by a deal as required by law.

4. The tax is not levied upon an operation of interstate commerce but is a charge upon the holding or possessing for personal use after such commerce is at an end, and therefore the act imposing the tax does not violate the commerce clause of the Federal constitution, U.S. C.A.Const. art. 1, § 8, cl. 3.

5. Under the foregoing rulings, the instant petition, in which the plaintiff sought to enjoin the State Revenue Commissioner and another person from enforcing the statute so far as related to such tax, and to recover damages for previous acts alleged to have been committed by the defendants, did not state a cause of action for any of the relief sought. The court erred in overruling the general demurrers.

The petition in this case challenged the validity of part of the act of March 30, 1937 (Ga.L.1937, pp. 83-109), as amended by the act of December 31, 1937 (Ga.L.Ex.Sess.1937-1938, pp 126-144), and more especially the amending act, so far as related to cigarette tax. The suit was filed by Cigarette Sales Company, a partnership of Murphy, North Carolina against T. Grady Head, revenue commissioner of the State of Georgia, and two employees of the Revenue Department, J. G. Rockmore and Claude C. Miller. Miller was not served. The petition alleged that the plaintiff is engaged in the business of soliciting sales of cigarettes directly to purchasers in the State of Georgia, the sales being made by shipment from Murphy, North Carolina, so that the entire transaction in which petitioner is engaged is wholly within interstate commerce; that the defendants are undertaking to enforce the 'so-called tobacco-tax act,' as amended, in such manner as to injure the plaintiff's business, but that this statute, so far as applied to persons who purchase cigarettes from the plaintiff, is unconstitutional and void in that it violates stated provisions of the State and Federal constitutions. The petition further alleged that before March 1, 1938, the plaintiff had built up a valuable business, which was producing more than $100 per month as net profit, and was reasonably worth more than $25,000. Petitioner has already suffered damage in a large sum stated; and unless a court of equity restrains the illegal acts of the defendants, further and irreparable damages will be sustained, for which the plaintiff has no complete and adequate remedy at law. The petition contained prayers for injunction, damages, and general relief. The defendants Head and Rockmore separately filed general and special demurrers, and pleas to the jurisdiction. The court sustained some of the special grounds of demurrer and overruled others, and overruled all grounds of general demurrer. No ruling was made upon the pleas to the jurisdiction. Head and Rockmore sued out a writ of error, complaining of the overruling of their general demurrers, and of the failure of the court to act on the pleas to the jurisdiction.

Section 1 of the amendatory act provides as follows:

'That in addition to all other taxes of every kind now imposed by law * * * every person * * * who receives by any means in this State and/or retains, keeps or possesses for his or her own personal use in this State or for the personal use of any member of his or her family in this State, or who brings into the State of Georgia for his or her personal use in said State or for the use of any member of his or her family therein and/or who uses or consumes in the State of Georgia, cigars, cheroots, stogies, cigarettes, or any substitute therefor, either or all, shall pay to the State of Georgia, for State purposes only, a license or privilege tax which * * * in cases where such products are received, held and possessed in this State by any person for his or her own personal use or for the use of the members of his or her family, or are brought into this State by any person and retained and possessed for his or her personal use or the personal use of the members of his or her family, or where such products are used or consumed by any person in this State * * *shall be graduated in accordance with the prevailing market or selling price in this State of the product so received * * * for personal use or so brought into the State for use herein or used or consumed in this State as aforesaid. There is hereby levied license or privilege taxes on articles containing tobacco enumerated in this Act the following amounts: * * *

'(h) Cigarettes. Upon all cigarettes made of tobacco or any substitute therefor, three inches long or less and weighing not more than three (3) pounds per thousand, one and one-half (1 1/2) mills on each such cigarette.

'(i) Cigarettes. Upon all cigarettes made of tobacco or any substitute therefor, over three inches long and less than six inches long, weighing not more than six (6) pounds per thousand, three (3) mills on each such cigarette.

'(j) Cigarettes. Upon all cigarettes made of tobacco or any substitute therefor, more than six inches long and not weighing more than six (6) pounds per thousand, six (6) mills on each such cigarette. * * *

'(m-1) The amount of the tax levied upon the receipt, possession, use and consumption of tobacco products affected by the terms of said Act as amended shall be the same and computed on the same basis as would be the case if tobacco products of the same kind were sold or offered for sale * * * by a wholesale or retail dealer * * * and shall be paid through the use of stamps as provided in subdivision (n) of said Act * * *

'(n) The tax herein levied shall be paid through the use of stamps herein provided for. Stamps in the denomination to the amount of the tax shall be affixed to the box or other container from or in which tobacco products taxed by this Act are normally sold at retail. The stamps shall be affixed in such a manner that their removal will require continued application of water or steam; and, in cases of cigars, cheroots and like manufactured tobacco products, where sales are made from the original container, the stamps shall be affixed to the box or container in such a way that the stamps shall be torn in two or mutilated when such containers or boxes are opened for the sale of the tobacco products. In the case of cigarettes, and like products, sold by retail in packages, the required amount of stamps to cover the tax shall be affixed to each individual package or container. All taxable tobaccos herein enumerated, when offered for sale, either at wholesale or retail, without having stamps affixed in the manner set out in this Act, shall be subject to confiscation, in the manner provided for contraband goods as set out in this Act.'

Subsection (r) of section 1 excepted from the tax as many as four packages of not exceeding twenty cigarettes each when brought into this State for one's own personal use from a State which does not levy a tax upon the sale or use of cigars or cigarettes. Section 2(d) of the amendatory act contained the following: 'Every person receiving, holding, or possessing, within the State of Georgia, for his own personal use, or the personal use of members of his family, or who brings into the State of Georgia for his personal use in said State, or the use of the members of his family in said State, any cigars, cheroots, stogies, cigarettes, or any substitutes therefor taxable under this Act, and not stamped as required by this Act as herein amended, shall, within one hour after receipt of such products, or after having acquired possession thereof, or after having brought the same within the State of Georgia, as the case may be, and before the same, or any part thereof, are used or consumed, cause the same to have the requisite denomination and amount of stamp or stamps to represent the tax due thereon affixed as stated.' Other portions of the act, so far as material, together with the attacks made, are stated in the opinion, infra.

The plaintiff complains of acts of the defendants as follows 'Petitioner shows, that, beginning approximately the 1st day of March, defendants have knowingly and wilfully conspired and undertaken to destroy petitioner's entire business without justification or excuse, in that defendants, either personally or through other agents, have repeatedly told customers and prospective salesmen of petitioner that petitioner's business as above outlined was illegal and in violation of the laws of the State of Georgia, and that if such customers continued to make purchases in the manner above outlined, they would be liable to criminal prosecution, and...