Norville v. State Tax Commission

• Decision Date: 10 January 1940
• Docket Number: 6082
• Citation: 97 P.2d 937,98 Utah 170
• Court: Utah Supreme Court
• Parties: NORVILLE v. STATE TAX COMMISSION

97 P.2d 937

98 Utah 170

NORVILLE v. STATE TAX COMMISSION

No. 6082

Supreme Court of Utah

January 10, 1940

Original proceeding by W. O. Norville, doing business under the firm name and style of Norville Motor Company, for a writ of certiorari to review and set aside an order of the State Tax Commission directing the County Auditor of Salt Lake County to raise the valuation of plaintiff's personal property for taxation.

Order affirmed.

Louis H. Callister and Ned Warnock, both of Salt Lake City, for plaintiff.

Irwin Arnovitz, Grant A. Brown, and Alvin I. Smith, all of Salt Lake City, for defendants.

WOLFE Justice. McDONOUGH and PRATT, JJ., concur. LARSON, Justice concurring in part and dissenting in part. MOFFAT, Chief Justice, dissent.

OPINION

WOLFE, Justice.

Writ of certiorari to review and set aside an order of the State Tax Commission to the County Auditor of Salt Lake County ordering him to raise the valuation of plaintiff's personal property, by including the value of certain motor vehicles which plaintiff had held within the State during the tax year for sale but which were ultimately sold at retail out of the State of Utah.

Plaintiff is engaged in the business of retailing and distributing motor vehicles. All of said vehicles are purchased by plaintiff out of the State; none is received on consignment. Some of these vehicles are sold at retail within the State but others are sent to retailers who sell them outside the State. These latter are the vehicles which plaintiff did not include in its average monthly inventory and which were ordered included by the State Tax Commission.

The order of the State Tax Commission was issued pursuant to Sec. 80-5-4, R. S. U., 1933, as amended by Chap. 98, Laws of Utah, 1937, which is set forth below:

"The county assessor must, before the 15th day of April of each year, ascertain the names of all taxable inhabitants and all property in the county subject to taxation, except such as is required to be assessed by the state tax commission, and must assess such property to the person by whom it was owned or claimed, or in whose possession or control it was, at 12 o'clock m. of the 1st day of January next preceding, and at its value on that date, except in the case of a person who owns or has in his possession or subject to his control personal property within this state, with authority to sell it, which has been purchased either in or been consigned to him from a place out of this state for the purpose of being sold at a place within this state, in which instance the assessor must assess such property to such person, using as it[s] value, the average value of such property ascertained by taking the amount in value on hand, as nearly as possible, in each month of the next preceding calendar year in which he has been engaged in such business, adding together such amounts and dividing the aggregate amount thereof by the number of months that he has been engaged in such business during such year. No mistake in the name of the owner or supposed owner of property renders the assessment thereof invalid. Assessors shall become fully acquainted with all property in their respective counties, and are required to visit each separate district or precinct either in person or by deputy, annually, and in person or by deputy annually to inspect the property they are required to assess. [As amended by Chap. 98, L. 1937.]" (Italics added).

The amendatory part of the statute has been italicized. It should be noted that the amendment is an addition to the section as it stood before, and no part of the prior statute was deleted or modified.

The issue arises over the words

"personal property within this state * * * which has been purchased either in or been consigned to him from a place out of this state for the purpose of being sold at a place within this state * * *."

The plaintiff contends (1) that the phrase "for the purpose of being sold at a place within the state" applies to goods purchased as well as to goods consigned. Hence, since the Commission is insisting that goods sold out of the state be included in the average monthly assessment, it is going beyond the meaning of the very words of the statute. Plaintiff contends (2) that the statute is unconstitutional because it unreasonably and arbitrarily classifies property for the average inventory on the basis of whether or not it has been purchased in the state, whereas property purchased out of the state for sale within the state is in exactly the same situation as to an ad valorem tax. There are other contentions, but we shall consider these two first.

The Tax Commission counters with the proposition that the above language must be read as follows:

"personal property within the state which has been purchased either in or [out of the state or] has been consigned * * * for the purpose of being sold at a place within this state * * *"

the bracketed portion to be supplied and the italicized portion to apply only to consigned goods. If the Commission is correct, both of plaintiff's contentions fail; the asserted unconstitutional classification does not exist, and goods purchased either in or out of the state, whether for re-sale in or out of the state, by the terms of the statute, are subject to assessment on the average monthly inventory.

Statutes duly enacted by the legislature are presumed to be constitutional and valid. Tintic Standard Mining Co. v. Utah County, 80 Utah 491, 15 P.2d 633; Highland Boy Gold Mining Co. v. Strickley, 28 Utah 215, 78 P. 296, 1 L.R.A., N.S., 976, 107 Am. St. Rep. 711, 3 Ann. Cas. 1110, affirmed in 200 U.S. 527, 26 S.Ct. 301, 50 L.Ed. 581, 4 Ann. Cas. 1174. See 11 Am. Jur. Sec., 128 at p. 776 et seq. When there is ambiguity in the terms of a statute or when it is susceptible of two interpretations one of which would render it unconstitutional and the other bring it within constitutional sanctions, the court is bound to choose that interpretation which would uphold the statute, and to pronounce a statute unconstitutional only when the case is so clear as to be free from doubt. Highland Boy Gold Mining Co. v. Strickley, supra; Stillman v. Lynch, 56 Utah 540, 192 P. 272; Denver & Rio Grande Railroad Co. v. Grand County, 51 Utah 294, 170 P. 74, 3 A.L.R. 1224; Powell v. Pennsylvania, 127 U.S. 678, 8 S.Ct. 992, 32 L.Ed. 253; 11 Am. Jur. Sec. 92 at p. 719 et seq.

The duty of this court in construing and interpreting legislative acts is to give effect to the intent of the legislature. State ex rel. Pincock, Sheriff v. Franklin, 63 Utah 442, 226 P. 674; Buttrey v. Guaranteed Securities Co., 78 Utah 39, 300 P. 1040; In re Parrott's Estate, 199 Cal. 107, 248 P. 248; Territory ex rel. Sampson v. Clark, 2 Okla. 82, 35 P. 882; Gayler v. Wilder, 10 HOW 477, 13 L.Ed. 504; Brown v. Duchesne, 19 HOW 183, 15 L.Ed. 595.

As stated in Sutherland on Statutory Construction, Sec. 241, at p. 320:

"In the exposition of a statute the intention of the law-maker will prevail over the literal sense of the terms; and its reason and intention will prevail over the strict letter. When the words are not explicit the intention is to be collected from the context; from the occasion and necessity of the law; from the mischief felt, and the remedy in view; and the intention is to be taken or presumed according to what is consonant with reason and good discretion."

In Helvering v. New York Trust Co., 292 U.S. 455, 54 S.Ct. 806, 809, 78 L.Ed. 1361, the United States Supreme Court reaffirmed what it said in Ozawa v. United States, 260 U.S. 178, 43 S.Ct. 65, 67 L.Ed. 199:

"We may then look to the reason of the enactment and inquire into its antecedent history and give it effect in accordance with its design and purpose, sacrificing, if necessary, the literal meaning in order that the purpose may not fail."

See also State v. Livingston Concrete Bldg. & Mfg. Co., 34 Mont. 570, 87 P. 980, 9 Ann. Cas. 204, and Territory ex rel. Sampson v. Clark, supra [2 Okla. 82, 35 P. 883], wherein the Court said:

"When the intention [of the legislature] can be gathered from the statute, words may be modified, altered, or supplied to give to the enactment the force and effect which the legislature intended."

Moreover, in seeking to give effect to the intent of the legislature the court will adopt that interpretation of a taxing statute which lays the tax burden uniformly on all standing in the same degree with relation to the tax adopted. In re Steehler's Estate, 195 Cal. 386, 233 P. 972. And will avoid an interpretation which would lead to an impractical, unfair, or unreasonable result. In re Parrott's Estate, supra.

Tax statutes should be interpreted in connection with other tax legislation and in the light of the report of the committee which framed the statute, Nash Sales v. City of Milwaukee, 198 Wis. 281, 224 N.W. 126, and where those statutes are patterned after statutes of sister states, the interpretation given by the highest court of the sister state is presumed to prevail. New York Jobbing House v. Sterling Fire Ins. Co., 54 Utah 394, 182 P. 361; In re Schenk's Estate, 53 Utah 381, 178 P. 344; Lukich v. Utah Construction Co., 48 Utah 452, 160 P. 270; In re Raleigh's Estate, 48 Utah 128, 158 P. 705.

The doctrine that taxing statutes are, in case of doubt as to the intention of the legislature to be, construed strictly against the taxing authority and in favor of those on whom the tax is levied, has been well set out in the case of Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 55 S.Ct. 50, 79 L.Ed. 211. See, also, Los Angeles & S. L. R. Co. v. Richards, 52 Utah 1 172 P. 474; W. F. Jensen Candy Co. v. State Tax Commission, 90 Utah 359, 61 P.2d 629, 107 A.L.R. 261; 25 R. C. L. Sec. 307 at p. 1092; Cooley on...