Meador, Sheriff And Tax Collector v. Mac-Smith Garment Co

• Decision Date: 02 October 1939
• Docket Number: 33779
• Citation: 188 Miss. 98,191 So. 129
• Court: Mississippi Supreme Court
• Parties: MEADOR, SHERIFF AND TAX COLLECTOR, v. MAC-SMITH GARMENT CO

191 So. 129

188 Miss. 98

MEADOR, SHERIFF AND TAX COLLECTOR, v. MAC-SMITH GARMENT CO

No. 33779

Supreme Court of Mississippi, Division B

October 2, 1939

APPEAL from the chancery court of Harrison county HON. D. M RUSSELL, Chancellor.

Suit by the Mac-Smith Garment Company against O. L. Meador, Sheriff and Tax Collector, for an injunction restraining the defendant from selling or attempting to sell the property of the plaintiff for collection of ad valorem taxes thereon for the year 1937, and from collecting or attempting to collect such taxes for the four succeeding years thereafter. Decree for plaintiff, and defendant appeals. Affirmed.

Affirmed.

Mize Thompson & Mize, of Gulfport, for appellant.

Exemption cannot be tacked upon exemption by changing ownership of the property.

Morris v. Riley, 135, Miss. 1, 99 So. 466; Robertson, State Revenue Agent, v. Mississippi Packing Co., 134 Miss 837, 98 So. 539; Pineland Bag Corporation v. Riley 142 Miss. 574, 107 So. 554; Adams County v. National Box Co., 125 Miss. 598, 88 So. 168.

It is our understanding of the law governing exemptions that the exemptions must clearly show his right to the exemption so that there can be no reasonable doubt. The moment a reasonable doubt arises as to whether a given statute grants exemption, that doubt under the rulings of this court must be resolved in favor of the taxing authority and statutes exempting from taxes must be strictly construed in favor of the taxing authority and not in favor of exemption.

Adams County v. Catholic Diocese of Natchez, 110 Miss. 890, 71 So. 17; New Standard Club v. McRaven, 111 Miss. 92, 71 So. 289, Ann. Cas. 1918E, 274; Currie Finch Brick & Lumber Co. v. Miller, 123 Miss. 850, 86 So. 579; Adams County v. National Box Co., 125 Miss. 598, 88 So. 168; Gulfport Building & Loan Association v. City of Gulfport, 155 Miss. 498, 124 So. 658; Leaf Hotel Corporation v. City of Hattiesburg, 168 Miss. 304, 150 So. 779; Hollandale Ice Co. v. Board of Supervisors of Washington County, 171 Miss. 515, 157 So. 689; Chapman v. State, 178 Miss. 507, 176 So. 39; Jackson Fertilizer Co. v. Stone, 173 Miss. 183, 162 So. 170.

The question comes down to the point for consideration by the court, may a new corporation taking over the business and property of a former corporation engaged in the same type of business secure the five year exemption from taxes granted to certain enterprises of public utility where the same property and business had already been exempt for five years? In other words, can there be successive exemptions of the same property by tacking one upon the other upon a change of ownership. It is our contention from the above cited cases that exemption cannot be tacked upon exemption. The exemption conferred in a case of this sort is an exemption of the specific property described in the petition for exemption and it is not a personal exemption. The petition of the Wolcott & Campbell Spinning Co. and the petition of Max Harris were both petitions for exemption and the property described in both petitions was identical. Also the purpose of the new corporation set out in the application of Max Harris was contained in the purposes of the corporation in the petition of the Wolcott & Campbell Spinning Co. The exemption when conferred, as we understand the law, attaches to the property and follows it for a five year period, notwithstanding the change in ownership, and when the five years has expired, the said property is not eligible for further exemption. If it were eligible to further exemptions, no enterprises need ever pay taxes because at the end of each exemption period, a new corporation could be formed to take over the property and renew exemption forever.

The property in question had been duly and legally assessed in the manner and form provided by law. While it is true that Max Harris filed a petition for exemption for the property, still the order for exemption made by the Board of Supervisors did not exempt the property from ad valorem taxes.

Sections 3161, 3162, 3164, 3166, and 3179, Mississippi Code of 1930.

In this case the assessments were legally and lawfully made, notice to taxpayers given and everything done by the Board of Supervisors as was required by law, but the complainant in the court below did not file any objections to the assessments although legal notice was given and thereby the assessments became final as no appeal was taken within the ten days after the board adjourned, and the law is well settled in this state that a taxpayer failing to appeal from an order from the Board of Supervisors approving an assessment is concluded thereby.

Yazoo Investment Co. v. Suddoth, 70 Miss. 416, 12 So. 246; Yazoo Delta Lumber Co. v. Eastland, 104 Miss. 553, 61 So. 597.

We do not think that new enterprises established under the provision of Chapter I of the Extraordinary Session of 1936 are exempt from state ad valorem taxes. (We do not mean to concede that the making of cotton garments by the Mac-Smith Garment Co. was a new enterprise.)

The general tax law levies ad valorem taxes on all property in the State of Mississippi both real and personal. Chapter I of the First Extraordinary Session of 1936 undertakes to grant exemption to certain new factories and new enterprises. Section 19 of the act is amended by Chapter 18 of the laws of the Second Extraordinary Session of 1936 which undertakes to grant exemption to all ad valorem taxes to all new enterprises, but the act does not "prescribe the mode and manner in which the right to such exemption shall be determined", as is made mandatory by Section 182 of the Mississippi Constitution.

McCool v. State, 149 Miss. 82, 104; State v. Henry, 87 Miss. 125, 40 So. 152, 5 L. R. A. (N. S.) 340.

The Mac-Smith Garment Company did not establish a new enterprise of public utility.

Natchez Investment Co. v. City of Natchez, 124 So. 654.

There was no new enterprise but the continuation by the Mac-Smith Garment Co. of the enterprise that was new when the Wolcott & Campbell Spinning Co. applied for its exemption.

Eaton & Eaton, of Gulfport, for appellee.

Appellant argues that appellee is precluded from ad valorem tax exemption because Wolcott and Campbell Spinning Company in 1930 secured a five year exemption on this same property and that Wolcott and Campbell Company was engaged in the same type of business as appellee. The principal error in that argument is the statement that the business conducted by appellee is the same as, or a continuation of, the business that was formerly conducted by Wolcott and Campbell Spinning Company.

The order of the Board of Supervisors, from which no appeal was taken and which, in the absence of fraud (and none is charged), is not subject to collateral attack.

Hinton v. Board of Supervisors, 84 Miss. 536, 36 So. 565; Wright v. Edwards Hotel and City Ry. Co., 101 Miss. 470, 38 So. 332, 15 C. J., Sec. 472.

But, if, as a finding of fact, this order of the Board is subject to judicial review in a collateral attack, the oral evidence clearly shows that appellee's proposed business was in no respect related to the business of Wolcott and Campbell Spinning Company.

It was proved and not disputed that none of the machinery used by Wolcott and Campbell Spinning Company was used or could have been used by appellee in its operations, that John Bright Lord retained and sold all the Wolcott & Campbell machinery; that appellee bought and installed entirely new and different machinery for the making of shirts from that used by Wolcott and Campbell in manufacturing cotton into thread; that the cotton thread so manufactured was for hosiery mills; that it was not even suitable for the manufacture of cotton materials out of which shirts could have been made.

Even the Act to Balance Agriculture with Industry, as amended, classifies the business of garment making as distinct from that of manufacturing cotton or wool into a finished or semi-finished product.

Much legislation is directed in Senate Bill No. 1 to the promulgation of a plan under which municipalities and counties or portions of counties might issue bonds for the building of structures to house new industries. This plan was sustained as constitutional in Albritton v. Winona, 178 So. 779. But such aid was not considered by the legislature as alone sufficient to induce industry to locate in this state. There was therefore a revision of the tax exemption law.

Section 19, Chapter 18 of the First Extraordinary Session of 1936; Section 3109, Code of 1930.

A comparison of the lists of industries that are exempted discloses numerous kinds in Section 19 that do not appear in Code Section 3109, and one of them is "garment factories".

Thus the legislature considered that the manufacture of garments was, in and of itself, an industry that would not have been exempt under Section 3109 but that it was a distinct and separate industry of such importance as to justify only tax exemption but public financing, if necessary, to secure its location.

The legislature at the Second Extraordinary Session of 1936 amended Section 19 of Senate Bill No. 1 enacted at the First Extraordinary Session by providing in specific language that old structures, when devoted to the use of a new enterprise, would be exempt.

This statute was strictly complied with by appellee, and the Board made its findings and entered its order on its minutes. When that was done, the law itself automatically granted the exemption. The function of the Supervisors was not to enter an order granting the exemption. It was to make a finding of fact, and the exemption followed from operation of law if the finding was that the enterprise was a new one.

It would seem that the Act to Balance Agriculture with Industry as...