National Amusement Co. v. Wisconsin Dept. of Taxation

• Citation: 163 N.W.2d 625,41 Wis.2d 261
• Parties: NATIONAL AMUSEMENT CO., a Wis. corporation, Respondent, v. WISCONSIN DEPT. OF TAXATION (now the Department of Revenue), Appellant. *
• Decision Date: 07 January 1969
• Court: United States State Supreme Court of Wisconsin

Page 625

163 N.W.2d 625

41 Wis.2d 261

NATIONAL AMUSEMENT CO., a Wis. corporation, Respondent, v. WISCONSIN DEPT. OF TAXATION (now the Department of Revenue),

Appellant. ^*

Supreme Court of Wisconsin.

Jan. 7, 1969.

Bronson C. La Follette, Atty. Gen., Allan P. Hubbard, Asst. Atty. Gen., Madison, for appellant.

Maurice B. Pasch, Madison, for respondent.

HANLEY, Justice.

The sole issue on this appeal is whether the sale of popcorn and soft drinks prepared and sold at motion picture theater refreshment stands is subject to sales taxation under sec. 77.52(1)(a)(7), Stats.

Weight to Accord Trial Court's Decision.

The first thing to determine is the weight to be given the trial court's decision in this matter. When the facts have been stipulated, the remaining issue or issues constitute questions of law. In considering such questions, this court does not give any special weight to the conclusions of the trial court.

'Most of the facts were stipulated, there being few, if any, in dispute, and those not in sharp conflict. Here we have the trial court applying the law to the facts or the facts to the law, as it sees it. In such cases this court is not bound by the findings of the trial court, and the rule that the findings must be sustained unless against the great weight and clear preponderance of the evidence is not applicable. * * *' Dairy Queen of Wisconsin, Inc. v. McDowell (1952) 260 Wis. 471, 474, 51 N.W.2d 34, 36, 52 N.W.2d 791. See also: In re Adams Machinery, Inc. (1963), 20 Wis.2d 607, 123 N.W.2d 558, and Engineers and Scientists of Milwaukee, Inc. v. City of Milwaukee (1968), 38 Wis.2d 550, 554, 157 N.W.2d 572.

Thus this court should decide the question presented here according to its own previously-established rules of statutory construction.

Applicable Rules of Construction.

There are some rules of construction which are fundamental to this case. First, when statutory language is clear and unambiguous,

'* * * no judicial rule of construction is permitted, and the court must arrive at the intention of the legislature by giving the language its ordinary and accepted meaning.' City of West Allis v. Rainey (1967), 36 Wis.2d 489, 495, 153 N.W.2d 514, 517; and State v. Resler (1952), 262 Wis. 285, 55 N.W.2d 35.

It would appear that the following rule is also applicable to this case:

'* * * a tax cannot be imposed without clear and express language for the purpose, and where ambiguity and doubt exist, it must be resolved in favor of the person upon whom it is sought to impose the tax. * * *' City of Plymouth v. Elsner (1965), 28 Wis.2d 102, 106, 135 N.W.2d 799, 802; and Wadhams Oil Co. v. State (1933), 210 Wis. 448, 459, 245 N.W. 646, 246 N.W. 687.

Considering these two basic rules of construction, it would appear that a party objecting to the tax assessment can escape its imposition by pointing to any ambiguity and doubt in the statute creating the tax. The ultimate result in this case therefore depends upon whether the statute is ambiguous and doubtful. This appears to be the position taken by this court in the only other selective sales tax case decided to date.

'* * * While it is to be conceded that if there is any ambiguity in a taxing statute, any doubt shall be resolved in favor of the taxpayer, * * * a court is not to search for doubt in an endeavor to defeat an obvious legislative intention. * * *' Telemark Co. v. Wisconsin Department of Taxation (1965), 28 Wis.2d 637, 640, 137 N.W.2d 407, 408.

Test of Ambiguity.

This court has consistently used the same test for ambiguity:

'A statute or portion thereof is ambiguous when it is capable of being understood by reasonably well-informed persons in either of two or more senses. * * *' State ex rel. Neelen v. Lucas (1964), 24 Wis.2d 262, 267, 128 N.W.2d 425, 428, citing State ex rel. City of West Allis v. Dieringer (1957), 275 Wis. 208, 218, 81 N.W.2d 533.

Whenever a case such as this one is before the court, however, it is obvious that people disagree as to the meaning to be given to a statute. This alone cannot be controlling. The court should look to the language of the statute itself to determine if 'well-informed persons' should have become confused.

'* * * In construing or 'interpreting' a statute the court is not at liberty to disregard the plain, clear words of the statute. * * *' State v. Pratt (1967), 36 Wis.2d 312, 317, 153 N.W.2d 18, 20.

Now it is necessary to look to the statute itself:

'77.52 Imposition of selective retail sales tax. (1) For the privilege of selling, leasing or renting the tangible personal property herein described at retail a tax is hereby imposed upon all retailers at the rate of 3 per cent of the gross receipts from the sale, lease or rental of such tangible personal property sold, leased or rented at retail in this state on or after February 1, 1962.

'(a) The tax imposed herein applies to the sale, lease or rental of the following:

'* * *

'7. Meals, food, food products and beverages for human consumption sold by restaurants, hotels, cafes, bars, caterers, lunch counters, wagons, and other establishments engaged in the business of preparing food or beverages and selling for direct consumption on or off the premises, * * * (followed by exceptions which are not pertinent to this case).'

Giving the words of the statute their ordinary meaning, the statute appears to be plain and unambiguous. We read the statute to say:

The entire gross receipts resulting from the sale of meals, food, food products, or beverages are subject to the selective sales tax from the following establishments:

1. Restaurants, hotels, cafes, bars, caterers, lunch counters, wagons, and

2. Any other establishment which meets the following test:

(a) Is engaged in the business of preparing food or beverages, and

(b) Sells for direct consumption on or off the premises.

The placing of a comma after 'wagons' in sec. 77.52(1)(a)(7), Stats., indicates that the clause

'* * * engaged in the business of preparing food or beverages and selling for direct consumption on or off the premises * * *.'

modifies only 'other establishments.' This seems to be the only logical interpretation of the statutory language. This, however, is not the test which has been applied by the Department. We do not believe respondent would argue with this overall interpretation of the statute. Respondent claims to be outside the application of the statute because of his interpretation of some of the words in the statute.

Respondent's Interpretation.

Respondent contends:

1. That popcorn and soft drinks are not meals, food, food products or beverages;

2. That the theater is not engaged in the business of preparing food or beverages;

3. That a theater does not prepare food or beverages; and

4. That a theater is not a restaurant, hotel, cafe, bar, caterer, lunch counter, wagon, or other similar establishment.

Each argument will be considered separately.

1. It is respondent's position that popcorn and soft drinks are confections and that confections are not taxable under the selective sales tax. Webster's Third New International Dictionary, Unabridged, 1967, (hereinafter referred to only as 'Webster's'), contains the following definition of 'confection':

'1. Mixture: a preparation esp. for human consumption made by mixing diverse ingredients: * * * a preparation of fruits, nuts, roots, or other morsels with sugar * * *'

That same source defines 'food' as:

'la: material consisting of carbohydrates, fats, proteins, and supplementary substances (as minerals, vitamins) that is taken or absorbed into the body of an organism in order to sustain growth repair, and all vital processes and to furnish energy for all activity of the organism * * *'

Even if popcorn qualified as a confection, and it does not appear that it should, confections are still 'food,' and they would certainly be considered so by most 'reasonably well-informed persons.'

Webster's also defines 'beverage':

'1. Liquid for drinking: esp. such liquid other than water (as tea, milk, fruit juice, (beer) usu. prepared (as by flavoring, heating, admixing) before being consumed * * *'

There can be no doubt that the ordinary meaning given to the word 'beverage' include such items as 'soft drinks.'

2. Respondent contends that a theater is engaged in the business of entertaining and not in the business of preparing food or beverages. It is conceded that a theater is primarily in the entertainment business, but the statute does not say 'primarily engaged in the business;' it merely says 'engaged in the business.'

The legislature intended the phrase 'engaged in the business of preparing food or beverages' to have a broad meaning. If theaters were not within the meaning of the phrase, it would logically follow that food and beverages prepared and sold in department stores, drugstores, bowling alleys, but terminals, on trains and in planes, in conjunction with these other business activities, also would escape taxation. Any business only incidentally engaged in the business of preparing food or beverages, but primarily engaged in another business activity, would be able to prepare and sell meals, food, food products and beverages without any sales tax liability. Under such a theory, theaters could prepare and sell full course meals without any sales tax liability.

Respondent further contends that refreshments are provided to theater patrons merely as a convenience or as a service. However, the record is replete with evidence that the refreshment stands are high profit endeavors. It is difficult to believe that refreshment stands would still be operated if they did not contribute to the income of the theater. We hold that selling of popcorn and beverages at a theater constitutes 'business' as that word is ordinarily used by 'reasonably well-informed persons.'

3. Respondent next contends that it does not 'prepare' food or beverages. The trial judge stated:

'I don't think the legislature intended that the...