Sheppard v. Musser

• Decision Date: 22 November 1935
• Docket Number: No. 13379.,13379.
• Citation: 89 S.W.2d 222
• Parties: SHEPPARD et al. v. MUSSER.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

Page 222

89 S.W.2d 222

SHEPPARD et al. v. MUSSER.^*

No. 13379.

Court of Civil Appeals of Texas. Fort Worth.

November 22, 1935.

Rehearing Denied December 20, 1935.

Appeal from District Court, Tarrant County; A. J. Power, Judge.

Suit by Glenn W. Musser, doing business as the Texas Tobacco Company, against George H. Sheppard and others. Judgment for plaintiff, and defendants appeal.

Affirmed in part, and reversed and rendered in part.

William McCraw, Atty. Gen., John W. Pope, Jr., T. F. Morrow, William C. Davis, and Pat M. Neff, Jr., Asst. Attys. Gen., and Will R. Parker, Cr. Dist. Atty., and Cecil C. Rotsch, Asst. Dist. Atty., both of Forth Worth, for appellants.

Carl Goerte and Samuels, Foster, Brown & McGee, all of Fort Worth, for appellee.

BROWN, Justice.

This is an appeal by George H. Sheppard, state comptroller of public accounts of the state of Texas, and his official deputies and W. R. Parker, district attorney of Tarrant county, from an order of the district court of Tarrant county restraining them from collecting taxes claimed by them to be due the state of Texas by Glenn W. Musser, plaintiff in the trial court, in accordance with the provisions of the act of the Forty-Fourth Legislature, which became effective May 11, 1935 (see Acts of Regular Session, c. 241, p. 575 [Vernon's Ann.Civ.St. arts. 7047c—1, 7047cc—1, 7047cc—2, Vernon's Ann.P.C. art. 131c— 1]), commonly known as the Cigarette Act.

Plaintiff's petition and defendants' answer thereto denying the equities of plaintiff's bill of complaint were duly verified, and the temporary writ of injunction was granted upon consideration of those pleadings and upon evidence introduced.

Plaintiff's first amended petition, on which he based his application for the writ, embodies these allegations:

"Your petitioner would respectfully show to the court that he is engaged exclusively and solely in the business of interstate commerce; that he is the owner of and operates a wholesale tobacco business known as the Texas Tobacco Company, and is engaged principally in the sale of cigarettes. That the said business, as hereinbefore alleged, is situated and located in the City of Ardmore in the State of Oklahoma, where his offices, warehouses, and vaults are located, and that he has been issued by the State of Oklahoma, a permit authorizing him to engage in the tobacco business. He would aver that such business as aforesaid is wholly interstate and is conducted in substantially the following manner: He makes his purchase of commodities in wholesale quantities from various manufacturers in the United States, which commodities are shipped in interstate commerce to him at his place of business in Ardmore, Oklahoma, and which goods are there stored in his warehouse and vault until subsequently sold in interstate commerce, the sales being made principally to citizens of and persons residing in the State of Texas. That in the State of Texas, he has in his employ approximately forty solicitors and salesmen who solicit orders of the citizens of Texas, and other persons in Texas, and that when the said orders are taken by the solicitors and salesmen each order is forwarded to the petitioner's place of business in Ardmore, Oklahoma, and there passed on and accepted or rejected by your petitioner and/or his agents. Where orders are accepted the cigarettes corresponding to the amount indicated in each order are taken from the stock in Ardmore, Oklahoma, and each order is separately packed, or the cartons composing each order are tied in a separate package, whereupon the cigarettes are then transported from Ardmore, Oklahoma, to the respective salesmen and solicitors of the petitioner who are located in the State of Texas, and the said salesmen and solicitors deliver the respective orders in the original packages, to the respective purchasers, collect the purchase price and remit to your petitioner, in instances where delivery cannot be accomplished, the cigarettes are returned in interstate commerce to the petitioner, at his place of business in Ardmore, Oklahoma.

"Your petitioner would further aver and show that notwithstanding the fact that the trades and sales of the petitioner were and are wholly those of interstate commerce, and all interstate shipments, and are therefore not subject to the requirements of the said cigarette tax law above referred to, the said George H. Sheppard, in his official capacity as Comptroller of the Public Accounts, acting through his servants, agents and employees, and through rangers of Texas designated to act in his department, have sought and are now seeking to make the provisions of this Act apply to your petitioner, and have annoyed and harassed and are now annoying and harassing this petitioner in the conduct of his business, and are seeking to cripple, destroy and devastate, and are crippling, destroying and devastating the business of your petitioner by seizing and confiscating his commodities, and have threatened to and will, unless enjoined, seize the conveyances upon which the same are transported, well knowing that the said commodities have been sold and shipped in interstate commerce, and that the same is in no legal sense liable to the payment of the said tax or to seizure and confiscation."

Then follow allegations of seizure and confiscation by defendants Sheppard and his deputies at different times and places of cigarettes which had been shipped into the state for delivery to plaintiff's customers in accordance with his alleged method of transacting business.

It is thus apparent that the trial court granted the writ of injunction because of the conclusions reached that the sales made by plaintiff were interstate transactions, and therefore were not subject to control by the Cigarette Act.

The validity of the Cigarette Tax Law, passed by the Forty-Fourth Legislature at its regular session —chapter 241, Acts 1935 —is before us. If the law is sound, the appellee is entitled to only that protection which, as a matter of common right, should be thrown around his lawful interstate transactions.

The majority are of the opinion that the act attempts to make the consumption of an article of commerce a sale, and that this cannot lawfully be done.

If the state of Texas has the right to levy and collect a sales tax on any personal property that is bartered and sold, it necessarily follows that the sale must be made within the borders of the state. Otherwise, rights heretofore guaranteed under the interstate commerce laws of the United States can be entirely destroyed, by any state, through the juggling of words, and the provisions of the federal law protecting commerce in interstate transactions would become "as sounding brass and a tinkling cymbal."

Let us analyze the provisions of the statute before us and see how it attempts to juggle words to effect its purpose.

Subdivision "h" of "section 1" (Vernon's Ann.Civ.St. art. 7047c—1, § 1(h) defines a "First Sale" as folows: "`First Sale' shall mean and include the first sale or distribution of cigarettes in intrastate commerce, or the first use or consumption of cigarettes within this State."

No one can quarrel with the first portion of the definition. The first sale and distribution, in intrastate commerce, undoubtedly covers commercial transactions had and done wholly within the borders of Texas, but the additional words, "or the first use or consumption of cigarettes within this State," means no more nor less than that the state of Texas attempts to levy and collect a tax on all cigarettes that are used or consumed in this state, regardless of the lawful manner in which the right to use or consume them may have been acquired.

If a bona fide purchaser gives appellee a bona fide order for a quantity of cigarettes, in a bona fide interstate transaction, the state of Texas, by this act, says to the purchaser: "When delivery is made to you, you cannot use or consume your cigarettes unless and until either you or the seller places the stamp tax on them; and, if this is not done, your cigarettes will be seized and confiscated." If the state of Texas can do any such thing, it can go a step further and say to the friend of such citizen, to whom the Texan made a gift of a carton of cigarettes, lawfully purchased through interstate commerce: "You cannot use or consume these cigarettes unless and until you pay the State Tax."

"Section 2" of the act (Vernon's Ann. Civ.St. art. 7047c—1, § 2) provides the amount of tax and says: "The said tax shall be paid only once by the person making the `first sale' in this State and shall become due and payable as soon as such cigarettes are subject to a first sale in Texas, it being intended to impose the tax as soon as such cigarettes are received by any person in Texas for the purpose of making a `first sale' of same."

Were it not for what we believe to be an erroneous definition of "first sale" in the act, no complaint could be made of the quoted provisions; but what the Legislature has plainly said is: The said tax shall be paid only once by the person making the first sale or distribution of cigarettes in intrastate commerce, or by the first person who uses or consumes any cigarettes within this state, if such cigarettes have not had the tax paid thereon prior to the acquisition thereof by the user, or consumer, regardless of when, where, and how acquired.

The majority cannot bring themselves to the place where such a construction harmonizes with the plain rights of the private citizen, dealing in interstate commerce, which are guaranteed to him under the Constitution of the United States and the interstate commerce laws, passed by the national Congress, for his protection.

The case of Austin v. Tennessee, 179 U.S. 343, 21 S.Ct. 132, 140, 45 L.Ed. 224, is not an authority for upholding the Texas act. In that case the General Assembly of Tennessee had passed an act which provided: "That it shall be a misdemeanor for any person, firm,...