Pelouze v. City Of Richmond

• Court: Virginia Supreme Court
• Writing for the Court: GREGORY
• Citation: Pelouze v. City Of Richmond, 183 Va. 805, 33 S.E.2d 767 (1945)
• Decision Date: 23 April 1945
• Parties: PELOUZE. v. CITY OF RICHMOND.

33 S.E.2d. 767

183 Va. 805

PELOUZE.

v.CITY OF RICHMOND.

Supreme Court of Appeals of Virginia.

April 23, 1945.

Error to Law and Equity Court of City of Richmond; Willis D. Miller, Judge.

Action by the City of Richmond against H. L. Pelouze, trading as the Pelouze Sales Company, for license taxes assessed against defendant as a sales agent. Judgment for plaintiff, and defendant brings error.

Affirmed.

Before CAMPBELL, C. J., and HOLT, HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

C. V. Werne, of Richmond, for plaintiff in error.

Horace H. Edwards and Henry R. Miller, Jr., both of Richmond, for defendant in error.

GREGORY, Justice.

A judgment for $422.59 was rendered against the plaintiff in error, H. L. Pelouze, trading as Pelouze Sales Company, in favor of the City of Richmond, for certain license taxes for the years 1940, 1941, 1942 and 1943.

The case originated by a warrant in the Civil Justice Court of the city of Richmond on the 20th day of October, 1943. An affidavit of substantial defense was made, and under Code, sec. 3102 (Michie), the case was removed to the Law and Equity Court of the city of Richmond, where it was tried before the judge of that court without a jury, by consent of both parties.

The plaintiff in error is and has been a citizen and resident of the City of Richmond for a number of years, includingthe years 1940, 1941, 1942, and 1943, and was engaged in soliciting orders for the sale of various appliances used in the heating of buildings as well as other similar devices. He was an exclusive sales agent for the City of Richmond and certain counties in Virginia. His principals were nonresidents of the State of Virginia. The orders were solicited for the nonresident principals, and were sent direct to them, and they either confirmed or rejected the orders. If the orders were accepted by the principals the articles were shipped directly from the out-of-state principals to the purchasers within the City of Richmond and certain counties embraced in the territory. The invoices, the collections and other incidents connected with each transaction were handled entirely by the principals. Upon the orders confirmed, the plaintiff in error was paid a commission by his principals at regular intervals. He maintained his own office in the City of Richmond, at his own expense. He carried no materials or stock on hand, and made no deliveries.

The tax was assessed by the Commissioner of the Revenue under section 22 of chapter 10 of the Richmond City Code of 1937, as amended. That section provides: "Agents--Sales Agents or Agencies--Persons, firms or corporations engaged in business as sales agents or agencies, $50.00, and one-half of one percentum of the gross earnings, receipts, fees, or commissions for the preceding license year, in excess of $1,000."

The plaintiff in error contended in the lower court and assigns here as a ground for reversal of the judgment that the court below erred in not dismissing the action for the nonpayment by the city of a writ tax. He also contends that there was insufficient evidence upon which the judgment could be sustained, and finally he contends that the tax imposed constitutes an unreasonable burden upon interstate commerce, and is therefore void.

Code, sec. 3102 (Michie), provides, in part, that "the plaintiff shall, within thirty days from the date of such removal, pay to the clerk of the court to which the case has been removed the amount of the writ tax as fixed by law, and four dollars on account of costs in said court, and in the event of his failure so to do, the case shall stand dismissed. * * *"

And section 126 of the Tax Code, Code 1942 Appendix p. 2676, provides: "When any original suit * * * is commenced in a court of record, and in every case of removal or appeal of a cause from a justice's court to a court of record * * * there shall be a tax thereon if the amount of the debt or demand for damages shall not exceed one thousand dollars, of one dollar. * * * The taxes on suits or other judicial proceedings shall be paid to the clerks of the courts, respectively, in which such suits are brought by proceedings had. No clerk shall issue any writ, or docket any removed or appealed warrant, or any notice mentioned in this section until the tax thereon shall be paid."

The plaintiff in error contends that the City of Richmond has violated the provisions of the quoted sections by its failure to pay the writ tax, and therefore its action must stand dismissed.

The city on the other hand takes the position that the writ tax referred to in Code, sec. 3102, and section 126 of the Tax Code is not assessable on behalf of the State against the City of Richmond, one of its political subdivisions; and that there is no express requirement or justifiable implication that cities shall pay such writ tax.

The city relies upon two opinions of the Attorney General, concurred in by the State Tax Commissioner. The Attorney General, in those opinions--one of November 3, 1938, and another of December 9, 1943--was of the view that a city is not required to pay a writ tax in order to institute and maintain an action or suit in any court in this Commonwealth. It is also a matter of common knowledge that the general practice of municipalities throughout the Commonwealth is not to pay a writ tax upon its actions or suits. This administrative practice of the State officials and the wide-spread general practice of the clerks of the courts in not charging and collecting from municipality a writ tax for instituting their actions and suits has not been changed by the legislature, and strongly supports the conclusion that cities and other municipalities should be exempt from liability to pay a writ tax. The Attorney General in his opinion of November 3, 1938 (see printed published opinions of the Attorney General for the period 1938-39, p. 181) expresses this view, in which we concur:

"It is plain, and this office has frequently so held, that the charge imposed by section 126 of the Tax Code is a tax and not a fee.

The general rule is that a statute will not be construed to tax the property of a municipality unless such an intention is clearly manifested by the statute. See 61 C.J. at p. 369. This is true although the State unquestionably has power to tax the property of its political subdivisions in the absence of a constitutional provision forbidding such a tax.

"In Commonwealth v. Richmond, 116 Va. 69, at page 77, 81 S.E. 69, at page 72, L.R.A.1915A, 1118, our court said:

" 'Judge Cooley, in his work on Taxation, (3rd Ed., pp. 263, 264), said: "Before noticing the exemptions expressly made by law, it will be convenient to speak of some which rest upon implication. Some things are always presumptively exempted from the operation of general tax laws, because it is reasonable to suppose they were not within the intent of the Legislature in adopting them. Such is the case with property belonging to the state and its municipalities and which is held by them for governmental purposes. All such property is taxable, if the state shall see fit to tax it; but to levy a tax upon it would render necessary new taxes to meet the demand of this tax, and thus the public would be taxing itself, and no one would be benefited but the officers employed, whose compensation would go to increase the useless tax. It cannot be supposed that the Legislature would ever purposely lay such a burden upon public property, and it is, therefore, a reasonable conclusion that, however general may be the enumeration of property for taxation, the property held by the state and by all its municipalities for governmental purposes was intended to be excluded, and the law will be administered as excluding it in fact." '

"In my opinion, the rule as above stated is applicable to such a tax as is here in question."

The general rule is that provisions exempting property of individuals or private corporations from taxation must be strictly construed, taxation of such property being the rule and exemption from taxation the exception. But, as the policy of the State has always been to exempt property of municipalities, in such cases exemption is the rule and taxation the exception. Commonwealth v. Smallwood Memorial Institute, 124 Va. 142, 97 S.E. 805.

In 51 Am.Jur., Taxation, § 557, it is said:

"Also as a general rule property owned by a State, county, municipal corporation or other local public body is exempt from taxation either as a matter of public policy or by specific constitutional or statutory provisions, provided it is devoted to uses public in their nature. When public property is involved, exemption is the rule and taxation the exception. Public property is presumed to be exempt from the operation of general property tax laws. Tax statutes are construed not to embrace property of the government or its instrumentalities unless the legislative intention to include such property is plainly and clearly expressed. This immunity rests upon fundamental principles of government, being necessary in order that the functions of government shall not be unduly impeded, as well as for other reasons. To tax public property necessarily involves other taxation for the payment of the taxes so laid

" 'Public property', as that term is used in provisions making public property exempt from taxation, in general, means property belonging either to the state or a political division thereof, such as a county, city, town, and the like, used exclusively for any public purpose".

And again, in § 562 of the same work, this is said:

"The rule of strict construction of tax exemption statutes and the general rule that tax exemptions cannot rest on implications have reference to private property, and not to property of municipal corporations, which is generally regarded as exempt from state taxation notwithstanding the absence of any provision either in the state constitution or in the general statu...