Lawrence v. Mississippi State Tax Commission

• Decision Date: 09 November 1931
• Docket Number: 29404
• Citation: 137 So. 503,162 Miss. 338
• Court: Mississippi Supreme Court
• Parties: LAWRENCE v. MISSISSIPPI STATE TAX COMMISSION et al

137 So. 503

162 Miss. 338

LAWRENCE v. MISSISSIPPI STATE TAX COMMISSION et al

No. 29404

Supreme Court of Mississippi

November 9, 1931

(In Banc.)

1 TAXATION.

Income earned by citizen and resident of state, whether earned within or without state, held subject to tax (Laws 1924 chapter 132, section 11, as amended by Laws 1928 [Ex. Sess.] chapter 32).

2 TAXATION.

Under income tax statute before amendment, both domestic corporations and individuals are taxable on income earned outside state as well as on income earned within state (Laws 1924, chapter 132).

3 STATUTES.

Unconstitutional and void statute is without effect in legal contemplation and does not affect statutes amended.

4. TAXATION.

A citizen resident of the state of Mississippi is taxable upon his income earned whether in the state or out of the state under chapter 132, Laws of 1924, as amended by chapter 32, Laws of 1928, Extraordinary Session. It is competent for the state to impose a tax upon an income having a situs at the domicile of the person in this state who earned it.

5. STATUTES.

Where it is alleged that the amendment of chapter 132, Laws ot 1924, section 11, is unconstitutional because it exempts from such taxes the income of a domestic corporation which is earned outside of the state, and does not exempt individuals resident in the state from such tax, it is unnecessary to decide the constitutional question, because, if the amendment is unconstitutional, it leaves the original section 11, chapter 132 Laws of 1924, in force, and, if constitutional, the individual is likewise taxable. In either case the individual would be subject to the tax.

6. TAXATION.

Under chapter 132, Laws of 1924, both domestic corporations and individuals are taxable upon income earned outside of the state as well as upon income earned within the state. State v. Gulf, M. & N. R. Co., 138 Miss. 70, 104 So. 689, cited.

7. STATUTES.

Where the legislature in an amendment to a previous statute enacts an unconstitutional amendment, the original section remains unaffected. An unconstitutional or void statute is in legal contemplation nothing, and does not affect prior laws. Moore v. Tunica County, 143 Miss. 821, 107 So. 659, and other cases cited.

GRIFFITH and McGOWAN, JJ., dissenting.

HON. V. J. STRICKER, Chancellor.

APPEAL from chancery court of Hinds county HON. V. J. STRICKER, Chancellor.

Suit by S. B. Lawrence against the Mississippi State Tax Commission and others. From the judgment rendered, the complainant appeals. Affirmed.

Affirmed.

Watkins, Watkins & Eager, of Jackson, and Stevens Heidelberg, of Hattiesburg, for appellant.

Liability should not be imposed upon a citizen of Mississippi for income wholly earned and collected in exercising an occupation beyond the limits of the state.

Par. (a), sec. 5033, Miss. 1930 Code; Miller, State Revenue Agent, v. Illinois Central Railroad, 111 So. 558, 146 Miss. 422.

A distinction turns upon whether the tax is an excise tax or a property tax; that as to an excise tax, the same cannot be imposed on property or callings exercised beyond the limits of the state.

Farmers Loan & Trust Co. v. Minnesota, 280 U.S. 204, 74 L.Ed. 371; Frick v. Commonwealth, 268 U.S. 473, 69 L.Ed. 1058.

Income earned in carrying on an occupation exclusively beyond the limits of the state was not taxable.

Arpin v. Eberhardt Wis., 147 N.W. 1016.

That a state may tax callings and occupations as well as persons and property has long been recognized.

"The power of taxation, however vast in its character and searching in its extent, is necessarily limited to subjects within the jurisdiction of the state."

Shaffer v. Carter, 252 U.S. 37, 64 L.Ed. 445.

No liability is imposed upon domestic corporations engaged in competition with appellant in constructing highways in Mississippi or adjoining states, including Tennessee, under similar circumstances: Therefore, to impose liability upon the appellant when none is imposed upon domestic corporations would cause the statute to violate both the state and the Federal Constitutions.

Section 14 of the Mississippi Constitution, and the 14th Amendment to the Constitution of the United States; W. A. Frost v. Corporation Commission, 278 U.S. 515, 73 L.Ed. 483; Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389, 72 L.Ed. 927; Southern Railway Co. v. Green, 216 U.S. 400, 54 L.Ed. 536; Royster Guano Co. v. Virginia, 253 U.S. 412, 64 L.Ed. 989; Chalker v. Railway Co., 249 U.S. 522, 63 L.Ed. 748.

Tax laws are to be strictly construed against the taxing power. If the right to tax is not plain, it cannot be implied. Doubts are resolved in favor of the taxpayer. Before one is liable for taxes he must come within the express provisions of the taxing statute.

25 R. C. L. 1092, sec. 307.

The intention of the Legislature should be ascertained and in doing so it should be assumed that the Legislature intended to enact a constitutional statute.

State v. Newman Lumber Co., 60 So. 216, 113 Miss. 263, 25 L. R. A. (N. S.) 858; Maris v. Lindsey, 87 So. 12, 124 Miss. 742.

The statute will not be construed so as to lead to injustice.

Robertson v. Texas Oil Co., 106 So. 449, 141 Miss. 356.

The statute will not be construed so as to produce unjust results.

Canal Bank & Trust Co. v. Brewer, 114 So. 127, 147 Miss. 885.

The statute will not be so construed as to produce absurd results.

Kennington v. Hemingway, 57 So. 809, 101 Miss. 259.

A state court may control the constitutionality of a state statute through adding something to it or taking something from it by construction.

Osborne v. State of Florida, 164 U.S. 650, 41 L.Ed. 586.

Hamlin v. Texas, 198 U.S. 579, 49 L.Ed. 1171; Armour Packing Co. v. Lacey, 200 U.S. 234, 50 L.Ed. 456; Pullman Co. v. Adams, 189 U.S. 422, 41 L.Ed. 878, affirming 78 Miss. 839.

Income from business conducted out of the state not taxable.

United States Glue Company v. Town of Oak Creek (Wis.), 153 N.W. 241, Ann. Cases 1918A, p. 421; Hutchins et al. v. Commissioner of Taxation (Mass.), 172 N.E. 605; State v. Widule (Wis.), 154 N.W. 696; Bayfield v. Pishon (Wis.), 156 N.W. 463; Hart v. Tax Commissioner (Mass.), 132 N.E. 621.

The power to levy an excise upon the performance of an act or the engaging in an occupation does not depend upon the domicile of the persons subject to the excise, nor upon the physical location of the property used in connection with the act or occupation taxed, but depends upon the place in which the act is performed or occupation engaged in. Thus a state may constitutionally tax performance of a certain act within its limits, and may enforce payment of the tax even when the act is performed by nonresidents of the state with respect to property which has never been within its boundaries, provided the act which is subject to the tax is performed within the state, and conversely an excise cannot constitutionally be imposed upon the performance of an act outside of the limits of the governmental unit by which the excise is levied.

26 R. C. L. 295.

A corporation is not a proper classification of itself.

Ballard v. Cotton Oil Co., 81 Miss. 507.

A state cannot tax income received as compensation for the use of either real estate or tangible personal property which has a situs outside the state.

In re: opinion of Justices of New Hampshire, 149 A. 321.

W. A. Scott, Jr., Assistant Attorney-General, for the appellees.

An analysis of the income tax law of our state clearly shows that the income of a resident is taxable, regardless of the territorial source from which it may be derived. Furthermore, the amendment of 1928 exempting domestic corporations without granting a corresponding exemption to resident individuals clearly indicates such an intention, as prior thereto.

Chap. 132, Laws 1924, sec. 2; Subsec. E-F, secs. 4, 11 (a) (6-9); Chap. 32, Laws of Extraordinary Session 1928.

The tax imposed on residents of the state on the whole of their income, whether derived from business within or without the state is not unconstitutional.

Hattiesburg Grocery Company v. Robertson, 126 Miss. 34, 88 So. 4; State v. G. M. & N. R. R. Co. , 138 Miss. 70, 104 So. 689.

The income of a resident is subject to income tax no matter where earned.

Anderson v. Savage, 139 N.E. 496, 245 Mass. 174; People ex rel. Estate of Woolworth v. S. T. Commissioners, 192 N.Y.S. 772, 200 A.D. 287.

With regard to an income tax on domestic corporations, there would seem to be no constitutional difficulty in taxation by a state of the entire net income of a domestic corporation for its business operations wherever they may be carried on.

26 R. C. L. 144, sec. 118 (Perm. Supp.).

As to the residents, the state may and does exert its taxing power over their income from all sources whether within or without the state, and it accords to them a corresponding privilege of deducting their losses wherever these accrue.

Shaffer v. Carter, 252 U.S. 37, 64 L.Ed. 445.

A construction of the act which confines the application of the tax to income derived from operations and sources within the state would work a serious and unjust discrimination against that class of the state's citizens and taxpayers whose income is derived from local sources in favor of that large class of the state's citizens, whose income in whole or in part is derived from operations and sources outside of the state would seem to be sufficiently apparent.

Crescent Mfg. Co. v. Tax Commission, 124 S.E. 761.

The imposition of a personal tax by the state measured by money received from a business conducted in another state and kept on deposit there is permitted.

Fidelity Trust Company v. Louisville, 245 U.S. 54, 62 L.Ed 145; McGuire v. Trefry, 253 U.S. 12, 40 S.Ct. 417, ...