Lewiston-Auburn United Grocers, Inc. v. Johnson

• Decision Date: 12 May 1969
• Docket Number: LEWISTON-AUBURN
• Citation: 253 A.2d 338
• Parties: UNITED GROCERS, INC. v. Ernest H. JOHNSON, State Tax Assessor, State of Maine.
• Court: Maine Supreme Court

Page 338

253 A.2d 338

LEWISTON-AUBURN UNITED GROCERS, INC. v. Ernest H. JOHNSON, State Tax Assessor, State of Maine.

Supreme Judicial Court of Maine.

May 12, 1969.

Brann & Isaacson, by Irving Isaacson, Lewistown, for plaintiff.

James M. Cohen, Asst. Atty. Gen., Augusta, for defendant.

Before WILLIAMSON, C. J., and WEBBER, TAPLEY, MARDEN, DUFRESNE and WEATHERBEE, JJ.

WEATHERBEE, Justice.

On report.

It is agreed that the plaintiff is a distributor of cigarettes and that it had in its premises on June 15, 1968, 119 cases of cigarettes, 102 of which had affixed to them the cigarette tax stamsp provided for in 36 M.R.S.A. Chapter 703. No stamps had as yet been affixed to the other 17 cases. On that date unknown thieves stole the entire 119 cases, without the fault of the plaintiff, and they have never been recovered. The State Tax Assessor has refused to refund to the plaintiff the value of the stamps which had been affixed to the 102 cases and he has notified plaintiff that it is obligated to pay the tax on the 17 cases.

Plaintiff's complaint brought under 36 M.R.S.A. Section 4378, appeals the Assessor's decision and requests the refund of the value of the affixed stamps and a declaration that plaintiff is exempt from paying a tax on the unstamped cases. The matter comes to us from the Superior Court on Report.

The primary issue becomes one of whether the Legislature intended Chapter 703 to impose a tax upon cigarettes which are being held for the purpose of sale or a tax upon the sale on cigarettes.

We look first to the language of the statute for evidence of legislative intent. Hunter v. Totman, 146 Me. 259, 265, 80 A.2d 401, 404 (1951).

The first paragraph of Section 4365 reads:

'A tax is imposed on all cigarettes held in this State by any person for sale, said tax to be at the rate of 5 mills for each cigarette and the payment thereof to be evidenced by the affixing of stamps to the packages containing the cigarettes. Any cigarette on which a tax has been paid, such payment being evidenced by the affixing of such stamp, shall not be subject to a further tax under this chapter. Nothing contained in this chapter shall be construed to impose a tax on any transaction, the taxation of which by this State is prohibited by the Constitution of the United States.' (Emphasis added)

Section 4368 requires the distributor to affix the stamps to each package sold by him but permits him to do this at any time before the cigarettes leave his possession. Section 4369 obligates the dealer (who may or may not have purchased all of his cigarettes from a distributor) to affix stamps to any unstamped cigarettes within 72 hours after they come into his possession.

Section 4370 prohibits the sale by distributors and the sale or possession with intent to sell of unstamped cigarettes by anyone else except for the right of a dealer to delay the affixing of stamps 72 hours as permitted by Section 4369 (and certain sales by one distributor to another of cigarettes bearing the stamp of another state, with which we are not concerned). The language of these sections is persuasive of the State's contention that the Legislature intended to impose a tax on the possession of cigarettes for sale rather than a tax on their sale. The plain language of Section 4365-'A tax is imposed on all cigarettes held in this State by any person for sale'-is not contradicted by any other portion of the statute.

While the distributor is not required to affix the stamps until just before sale, if he chooses, this does not establish that the time of sale is the taxable event-the affixing of the stamp is only the indicia of payment of the tax. Section 4365. The fact that Section 4370 prohibits the distributor from selling and all other people from selling or possessing unstamped cigarettes (except for the dealers 72 hours period of grace) is merely a recognition of the distributor's privilege of delaying stamping until any time before sale. The variation in the time at which the stamps are required to be affixed by distributor and dealer represents the Legislature's acceptance of the practices and exigencies of merchandizing. The fact that Section 4382 provides that the tax paid by the distributor is ultimately assumed by the consumer does not impress us as indicating an intent that a tax on sales is imposed.

The Pennsylvania Court in a case similar to ours, recently considered the significance of the section of its statute which requires only that the stamps be affixed at sometime before sale and the section which requires that the tax paid by the distributor shall ultimately be added to the purchase price of the cigarettes, saying:

'Neither of these sections help him (the distributor) in any way. The affixing of stamps to each package of cigarettes merely furnishes the proof that the tax was paid and had nothing to do with the imposition or assessment of the tax and, of course, the place where the tax eventually rests has nothing to do with the duty to collect it...