Phillips v. South Carolina Tax Com'n
| Decision Date | 09 December 1940 |
| Docket Number | 15178. |
| Parties | PHILLIPS v. SOUTH CAROLINA TAX COMMISSION. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court, of Jasper County; L. D Lide, Judge.
Action by H. W. Phillips against the South Carolina Tax Commission to recover income taxes paid under protest. From a judgment for plaintiff, defendant appeals.
The order of Judge Lide requested to be reported follows:
The South Carolina Tax Commission assessed the plaintiff in the sum of $501.73 for additional income taxes for the years 1934 to 1937, inclusive; and this amount was paid under protest. Thereafter and within due time this action was brought to recover the taxes so paid. After issue was joined the facts involved in the controversy were agreed upon, and an agreed statement of facts was signed by counsel for the respective parties, upon which the cause was heard before me on April 16, 1940, while I was presiding in the Fourteenth Circuit; and after argument of counsel was taken under advisement. In addition to the oral arguments very helpful briefs were filed by counsel for the respective parties.
The plaintiff, H. W. Phillips, was reared in the State of Virginia, his father, who was a lumberman, having a home in Suffolk. In 1912 the plaintiff married and lived in Suffolk Va., from that time until 1916, in which year he and his associates purchased certain timber in Jasper County, South Carolina, sufficient for a five-year operation. Since then he has from time to time been interested in or engaged in the sawmill or lumber business in South Carolina, but not continuously, and in connection with this business he has lived for a part of each year at or near Hardeeville in Jasper County.
The plaintiff, however, has kept a furnished apartment in Suffolk, Va., and he and his wife have lived there during a portion of each year. In addition to taxes on his property there, he has paid his poll tax and his income tax to the State of Virginia (exclusive of income earned in South Carolina), as well as a capitation tax to the City of Suffolk, during the period involved in this litigation. His wife, Mrs. Em Jones Phillips, has also paid such taxes in Virginia. It should be stated here that it was agreed that the final decision in this case should be binding on Mrs. Phillips.
The plaintiff has during the period involved in this litigation retained his citizenship in the State of Virginia, and he and his wife have been duly registered in Nansemond County and have voted in most of the primary elections held in that State since 1916, and have never registered or voted in South Carolina. In addition to the furnished apartment in Suffolk the plaintiff in 1929 purchased a farm in Nansemond County, Virginia, for the purpose of establishing a permanent country home thereon, and this farm is still owned by him and his wife, and the annual tax is duly paid thereon.
In 1919 the plaintiff built a home near Asheville, N. C., and since 1919 the plaintiff and his family "have lived a part of each year at Suffolk, Virginia and near Asheville, North Carolina, and Hardeeville, South Carolina, and have spent about six months of each of the years at Hardeeville, South Carolina".
The foregoing recital is based upon the agreed statement of facts, to which reference should, of course, be had for further details, but it is apparent from what has been said that the domicile of plaintiff was and still is in the State of Virginia.
During the years in question and prior thereto the plaintiff has filed his income tax return annually with the South Carolina Tax Commission, but only included therein money actually earned by him within this State, having omitted from these returns any income, interest and dividends, received during this time from investments or any other source in other States. The remainder of his income not reported in South Carolina was reported in Virginia each year, and Mrs. Phillips also made a separate return to the State of Virginia; and Mr. and Mrs. Phillips have paid such income taxes to the State of Virginia, including property taxes on intangibles.
The South Carolina Tax Commission, having concluded that the plaintiff was chargeable by the State of South Carolina on account of his entire net income, including interest and dividends, wherever the same arose, and that such interest and dividends were subject both to the normal tax and the intangible tax imposed by the 1933 amendment to the income tax laws of this State, because he was residing in South Carolina, made the assessment which resulted in this litigation.
Section 2437, Code of 1932, imposes an income tax "upon every individual residing in the State of South Carolina", and further provides that this tax shall be levied, collected and paid annually with respect to the entire net income of the taxpayer. This Section is a part of the income tax law of the State to which there have been amendments from time to time, including the amendment above referred to, but the pertinent language of this Section has not been changed. And the question involved in the instant case is whether the plaintiff comes within the statement above quoted, that is to say, is he an "individual residing in the State of South Carolina"; is he or was he a resident of the State of South Carolina? The preceding Section, to wit, 2436, contains the definition of each of a number of words and phrases used throughout the income tax act, but contains no definition whatever of the words "residing", or "resident", or "residence".
Manifestly the word "residence" is a general term susceptible of varying interpretations. Its precise meaning is dependent upon the explanatory context; and with reference to statutory enactments would be governed by the legislative intent or purpose. But since the word might be literally construed to mean living in the State temporarily or transitorily as well as permanently obviously it should be given some definite construction, having in mind a fair and impartial imposition of the income tax burden; which was doubtless the legislative intention.
The word "residence" is defined in 54 C. J. 705-706, as follows:
As shown by the foregoing quotation, the word is "ambiguous, elastic, flexible or relative", and its many shades of meaning would include a very temporary or transient residence as well as the most permanent abode. But a distinction has long been made between actual residence and legal residence. In the quite recent case of Roof v. Tiller, 195 S.C. 132, 10 S. E.2d 333, opinion filed April 3, 1940, the Court quotes with approval a definition of residence where a distinction is recognized between legal and actual residence. And as stated in 17 Am.Jur. 596, "The phrase 'legal residence' is sometimes used as the equivalent of domicile"; and it seems to me that in connection with the matter of the assessment of an income tax no sound distinction can be drawn between "legal residence" and "domicile".
The term "domicile" means the place where a person has his true, fixed and permanent home and principal establishment, to which he has, whenever he is absent, an intention of returning. The true basis and foundation of domicile is the intention, the quo animo, of residence. Bradley v. Lowry, Speers, Eq. 1, 39 Am.Dec. 142.
As the Court said in this case of Riddle v. Reese, 53 S.C. 198, 31 S.E. 222, 223, "The question of a person's place of residence is to be determined by his own intention, accompanied by his own voluntary act".
In the case of Barfield v. Coker & Co., 73 S.C. 181, 53 S.E. 170, 171, the Court said: "One of the essential elements to constitute a particular place as one's domicile or principal place of residence is an intention to remain permanently, or for an indefinite time, in such place." It will be observed that the Court here treats domicile as being substantially the same as principal place of residence or legal residence. The same rule is indicated in the cases of Sample v. Bedenbaugh, 158 S.C. 496, 155 S.E. 828, and St. Clair v. St. Clair, 175 S.C. 83, 178 S.E. 493.
The term "residence" has been construed by the Courts in many connections, and its meaning in one relation would not be the same as that in another. We are here concerned of course with its meaning in relation to the imposition of an income tax. As I have already stated, the plaintiff has his domicile in the State of Virginia, or phrasing it a little differently, he has his legal residence in the State of Virginia. The lumber or timber business to which he has devoted most of his business life is essentially transient in character, depending upon the supply of available timber, which is cut out in the course of a few years, and his stay in South Carolina from time to time in connection with this business, while extending over a considerable period, has been of a temporary nature, and has never been coupled with any intention of making South Carolina his home or to abandon his domicile in Virginia, where he continues to live a portion of each year. If he is considered...
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