Shanks v. Kentucky Independent Oil Co.

• Decision Date: 27 June 1928
• Citation: 225 Ky. 303,8 S.W.2d 383
• Parties: SHANKS, Auditor, v. KENTUCKY INDEPENDENT OIL CO.
• Court: Kentucky Court of Appeals

8 S.W.2d 383

225 Ky. 303

SHANKS, Auditor, v. KENTUCKY INDEPENDENT OIL CO.

Court of Appeals of Kentucky

June 27, 1928

Appeal from Circuit Court, Franklin County.

Mandamus by the Kentucky Independent Oil Company against W. H. Shanks Auditor. From a judgment for petitioner, the defendant appeals. Reversed, with directions to sustain the demurrer to the petition.

Frank E. Daughtery, ex Atty. Gen., Chas. F. Creal, ex Asst. Atty Gen., James W. Cammack, Atty. Gen., and James M. Gilbert Asst. Atty. Gen., for appellant.

H. B Mackoy, of Cincinnati, Ohio, C. C. Grassham and W. A. Berry, both of Paducah, Robert T. Burke, of Louisville, Browning & Reed, of Ashland, and C. C. Turner, of Frankfort, for appellee.

REES J.

The appellee, Kentucky Independent Oil Company, brought this action in the Franklin circuit court against the auditor of public accounts of the commonwealth of Kentucky seeking a writ of mandamus requiring the auditor to draw his warrant upon the state treasurer in favor of the plaintiff company for the sum of $36,851.64 alleged to have been paid by it as a tax under chapter 120, Acts of the General Assembly of 1924, and known as the Gasoline Tax Act.

It is alleged in the petition that the company paid to the state of Kentucky a corporation license tax under the provisions of section 4189a et seq., Kentucky Statutes, and that this corporation license tax was for the privilege of transacting business within the state of Kentucky for the year 1924. It is further alleged in the petition that after the payment of the corporation license tax by plaintiff, the Legislature passed an act known as the three-cent gasoline tax act, which became effective on June 18, 1924, and that thereafter the plaintiff paid to the state $36,581.64 for its sales of gasoline between June 18, 1924, and December 31, 1924, inclusive.

The auditor of public accounts filed an answer, in the first paragraph of which it is admitted that plaintiff paid the corporation license tax required by section 4189a et seq., Kentucky Statutes, but alleged that this tax, while paid in 1924, was for the privilege of transacting business during the year 1923. In paragraph 2 of the answer it is admitted that the plaintiff paid the amount claimed by it during the year 1924 under the Gasoline Tax Act, but it alleged that such tax was not paid by the plaintiff, but was by it exacted and collected from divers and various retail dealers to whom it sold and distributed gasoline, and on each sale made by the plaintiff during the year 1924 and after the act in question became a law, it in each instance charged the retailer or other person to whom it sold gasoline the regular wholesale market price, including a substantial profit, and, in addition thereto, collected from such retail dealer or other person the three-cent tax on each gallon of gasoline so sold. In paragraph 3 of the answer it is alleged that, the corporation having failed to assert its rights when it paid the tax and having added such amount to the sale price of its gasoline to reimburse it for such sums as it might have paid as taxes, it is now estopped to claim a refund thereof.

A demurrer to the petition was filed, but without passing on the demurrer the court sustained plaintiff's demurrer to the first, second, and third paragraphs of the answer and awarded judgment for the plaintiff directing the auditor to issue his warrant, as provided by section 162 of the Kentucky Statutes, upon the treasurer for the sum demanded.

In view of our conclusion that the demurrer to the petition should have been sustained, it is unnecessary to consider the defenses set up in the answer or to discuss or determine the ethics of appellee's position.

It is admitted that appellee in 1924 paid the tax imposed on corporations by section 4189a et seq., Kentucky Statutes, and the appellee claims that this tax having been paid for the privilege of doing business during the year 1924, under the ruling of Greene, Auditor, v. Frankfort Distillery Co., 209 Ky. 427, 273 S.W. 28, no other license tax could be imposed upon it during the remainder of the year, as such additional tax would constitute double taxation because it would mean collecting a tax twice for the same purpose in the same year. The tax imposed under section 4189a et seq. is not laid upon the occupation in which the corporation may be engaged, but it is laid upon the privilege of carrying on business in corporate form and, by the terms of the act, all corporations which under existing laws are liable to pay a franchise or license tax are exempted from the annual corporation license tax. In Greene, Auditor, v. Frankfort Distillery Co., supra, in construing section 4214a1, Kentucky Statutes, which provides that every corporation, association, company, copartnership, or individual engaged in the business or occupation of manufacturing distilled spirits and every owner or proprietor of a bonded warehouse in this state in which such spirits are stored shall pay a license tax of two cents on every proof gallon of such distilled spirits which is liable for tax to the federal government, this court, assuming, as did the parties, that the tax was a license tax within the meaning of section 4189a, and that, therefore, a corporation could not be required to pay both taxes, held that section 4189a was prospective and not retroactive, and the Frankfort Distillery Company, having paid the corporation license tax for the privilege of doing business in the state during the year 1917, could not be required to pay another license tax for the same privilege under section 4214a1.

Section 4223c1 was similarly construed in Craig, Auditor, v Security Producing & Refining Co., 189 Ky. 565, 225 S.W. 729. Section 4223c1, being the Act of March 29, 1918 (chapter 122, Acts 1918, p. 540), as stated in its title, is an amendment and re-enactment of the Act of May 2, 1917 (chapter 9, Acts 1917, p. 40), which required every person, firm, corporation, or association producing crude petroleum in this state to pay annually, in lieu of all other taxes on the wells producing such crude petroleum, a tax equal to one per centum of the market value of all crude petroleum so produced "for the right or privilege of engaging in such business in this state." In Raydure v. Board of Supervisors, 183 Ky. 84, 209 S.W. 19, it was held that the oil production tax is a license tax and not a property tax. The Attorney General vigorously insists that the conclusions reached in the Frankfort Distillery Co. Case are unsound and the case should be overruled, but, as to the correctness of the assumptions and conclusions in that and the Security Producing & Refining Co. Case, we need not inquire, since the act of 1924, known as the Gasoline Tax Act, is to be distinguished from the whisky...