South Central Bell Tel. Co. v. Traigle

• Decision Date: 20 March 1978
• Docket Number: No. 11800,11800
• Citation: 357 So.2d 610
• Parties: SOUTH CENTRAL BELL TELEPHONE COMPANY v. Joseph H. TRAIGLE, Collector of Revenue, State of Louisiana.
• Court: Court of Appeal of Louisiana — District of US

Page 610

357 So.2d 610

SOUTH CENTRAL BELL TELEPHONE COMPANY v. Joseph H. TRAIGLE, Collector of Revenue, State of Louisiana.

No. 11800.

Court of Appeal of Louisiana, First Circuit.

March 20, 1978.

Writ Granted May 5, 1978.

Victor A. Sachse, Jr., Baton Rouge, for plaintiff-appellant and defendant in reconvention South Central Bell Telephone Co.

Robert Pugh, Shreveport, for defendant-appellant and plaintiff in reconvention Shirley McNamara, Secretary, Department of Revenue and Taxation.

Before ELLIS, BLANCHE, COVINGTON, CHIASSON and PONDER, JJ.

CHIASSON, Judge.

Both parties suspensively appeal from the judgment of the trial court. South Central Bell Telephone Company (South Central Bell) appeals that portion of the judgment which held that the Collector of Revenue (Collector) was entitled to the taxes paid under protest by South Central Bell. The Collector appeals that portion of the judgment which denied its reconventional demand for attorney's fees.

The issue is whether, for purposes of the Louisiana Transportation and Communication (T&C) tax, La.R.S. 47:1001, et seq., the "gross receipts" upon which the tax is based includes funds derived by South Central Bell from the sale of advertising in its directories, commonly referred to as the "yellow pages" but also including "bold face" print in the "white pages".

Insofar as applicable herein, the trial court in its written reasons for judgment held:

1. ". . . that the only business of a public utility exempt from the tax is that portion involved in interstate commerce. . . ."

2. ". . . that South Central Bell's receipts from the sale of advertising in its directories are receipts from a public utility business and are therefore subject to the Louisiana gross receipts tax on public utilities. . . ."

We find that the record establishes the following facts:

(1) That South Central Bell is a public utility company;

(2) That the Louisiana Public Service Commission regulates the rates that South Central Bell can charge for its telephone services;

(3) That the gross receipts of South Central Bell from all business engaged in by it are considered by the Louisiana Public Service Commission in establishing telephone rates;

(4) That the Louisiana Public Service Commission requires that South Central Bell publish the "white pages" of its directories;

(5) That it is not mandatory that South Central Bell publish the "yellow pages" of its directories;

(6) That the Louisiana Public Service Commission does not exercise any control over the publication or rates to be charged for advertising in the "yellow pages" of the telephone directories, nor does any other governmental agency;

(7) That South Central Bell does not have the exclusive right to conduct a classified directory advertising business;

(8) That classified directories are published and distributed in Louisiana by other publishers and the receipts of these other publishers are not subject to the "T&C" tax;

(9) That South Central Bell pays occupational license tax pursuant to La.R.S. 47:358 upon its gross receipts from all businesses, public utility and non-public utility, engaged in by the telephone company;

(10) That the actual solicitation of sales of advertising in the "yellow pages" is subcontracted to L. M. Berry & Company by South Central Bell;

(11) That the receipts from the sale of advertising are accounted for separately from receipts received from telephone services rendered and charges for long distance calls;

(12) That South Central Bell has not paid "T&C" tax on its gross receipts from advertising since 1962 (13) That on May 5, 1972, the Collector advised South Central Bell that "effective for the quarter ending September 30, 1971, firms defined as utilities under LRS 47:1003 must include the entirety of all gross receipts derived from the conduct of their business (whether it be gross receipts from storage, rentals, swamper time, lease or location work, or other company gross receipts either incidental or not to the utility phase of their operation )." (Emphasis supplied by Collector);

(14) That South Central Bell paid the additional assessment under protest and timely filed suit to recover the additional taxes paid pursuant to La.R.S. 47:1576.

The "T&C" tax assesses an additional license tax for the privilege of engaging in the business of owning and/or operating any public utility in this state, of two per centum (2%) of the gross receipts from its intrastate utility business. (La.R.S. 47:1001). La.R.S. 47:1003(1) includes "telephone companies" within the definition of "public utility"; and "telephone companies" is defined in La.R.S. 47:1003(7) as "any person, firm, association or corporation, domestic or foreign, owning and operating, or owning or operating, any telephone line in this state with appliances for the transmission of messages by speech or sound, and engaged in the business of furnishing telephone service for compensation." "Gross receipts" is defined in La.R.S. 47:1003(11) as "the total amount of billings for services rendered, and all receipts from business beginning and ending within the state . . . ."

La.R.S. 47:1004 provides:

"The provisions of this Part shall apply to any person who is or may be engaged in any business, a portion of which is covered by or included in the various classes of business defined in R.S. 47:1003; but only upon the gross receipts derived from that portion of the business which is covered by or included in and not exempted by R.S. 47:1003 shall be subject to tax."

Pursuant to the rule-making power granted to the Collector by La.R.S. 47:1511, the following relevant rules and regulations were promulgated by the Collector, to wit:

T&C Article 1003.1 provides:

"2. 'Gross receipts' means the total amount of billing for services rendered and all receipts from business beginning and ending within the state.

"(a) 'All receipts from business' is not limited to revenues received from the portion of business covered in the various classes of business as defined in R.S. 47:1003. Once a taxpayer is defined as a public utility, the tax is based upon all gross receipts from any business engaged in."

Pertinent principles of statutory construction applicable to the facts of the instant case were set out in State v. State Agricultural Credit Corporation, 176 La. 590, 146 So. 159 (1933), wherein, dealing with a dispute over a license tax, the Supreme Court stated:

"The general principle of all fiscal legislation is that a taxing statute must be construed strictly. The words imposing a tax must be found in the statute, and, if such words are not found there, the tax cannot be imposed.

"And it is a general rule of statutory construction that qualifying words or phrases are to be applied to the words or phrases immediately preceding.

"Where a statute on its face appears to limit the operation of its provisions to particular persons or things by enumerating them, and then engrafts on the indicating clause another clause further modifying and restricting its application, both clauses should be construed together, the terms of the indicating clause being governed by the terms of the modifying clause; thus excluding the possibility of misinterpreting a statute by extending its provisions to cases not intended by the Legislature to be brought within its purview."

In Hibernia Nat. Bank v. Louisiana Tax Commission, 195 La. 43, 196 So. 15 (1940), the Supreme Court further stated:

"It is also well-established that tax laws are to be interpreted liberally in favor of taxpayers and that the words defining things to be taxed should not be extended beyond their clear import. Uncertainty in the language of the statute must be resolved against the government and in favor of the taxpayer. Miller v. Standard Nut Margarine Co., 284 U.S. 498, 508, 52 S.Ct. 260, 76 L.Ed. 422, 429; State v. Standard Oil Co., 188 La. 978, 992, 178 So. 601; State v. State Agricultural Credit Corp., Inc., 176 La. 590, 597, 146 So. 159, and Elmer Candy Co. v. Fauntleroy, 5 Cir., 24 F.2d 95."

Finally, Article 14 of the Louisiana Civil Code mandates that in statutory construction "(t)he words of a law are generally to be understood in their most usual signification, without attending so much to the niceties of grammar rules as to the general and popular use of the words."

Applying these principles to the statutory laws pertaining to this case we find that the Legislature imposed upon...