Stagner v. Wyoming State Tax Com'n

• Decision Date: 22 May 1984
• Docket Number: No. 83-186,83-186
• Citation: 682 P.2d 326
• Parties: Clyde F. STAGNER, d/b/a West Route Trading Company, Appellant (Petitioner), v. WYOMING STATE TAX COMMISSION and State Board of Equalization, Appellees (Respondents).
• Court: Wyoming Supreme Court

Page 326

682 P.2d 326

Clyde F. STAGNER, d/b/a West Route Trading Company, Appellant (Petitioner), v. WYOMING STATE TAX COMMISSION and State Board of Equalization, Appellees (Respondents).

No. 83-186.

Supreme Court of Wyoming.

May 22, 1984.

Carol Herman, Wind River Legal Services, Inc., Fort Washakie, for appellant.

A.G. McClintock, Atty. Gen., and Ron Arnold, Asst. Atty. Gen. (argued), for appellees.

Before ROONEY, C.J., and THOMAS, ROSE, BROWN and CARDINE, JJ.

CARDINE, Justice.

This appeal is from an order denying relief sought in a declaratory judgment action involving construction of the Wyoming cigarette tax statutes. The parties stipulated to the relevant facts. The court held against appellant on all issues.

We will affirm.

Appellant, Clyde Stagner is an enrolled member of the Shoshone tribe of Indians of the Wind River Indian Reservation. He owns and operates the West Route Trading Company located on the reservation. A substantial part of his business involves the sale of cigarettes to enrolled Indians, non-enrolled Indians, and non-Indians. He is not licensed, nor is he required to be licensed by the State of Wyoming to sell cigarettes since he is a member of the Shoshone tribe.

On March 15, 1981, the Wyoming State Tax Commission and State Board of Equalization, seized and sold twelve cases of cigarettes enroute to Mr. Stagner. This seizure was an agency action subject to judicial review; however, the request for review was not timely and therefore was dismissed. On June 9, 1982, the Wyoming State Tax Commission and State Board of Equalization seized thirteen cases of cigarettes enroute to Mr. Stagner. Appellant filed a declaratory judgment suit seeking a ruling that the statutes under which this action was taken by the State of Wyoming were unconstitutional. Then, pursuant to stipulation of the parties, appellant paid the tax on the cigarettes seized on June 9, 1982, and the State Board released the cigarettes to him.

Although appellant presents several issues on this appeal, there are just two issues which we must decide in resolving the case:

1. Does the statute impose the Wyoming cigarette tax upon the seller or upon the retail purchaser or consumer of the cigarettes?

2. Was the seizure of petitioners' cigarettes by the State legally justified under the facts of this case?

I

The United States Supreme Court recently clarified the law concerning state taxation on cigarette sales made on Indian reservations in Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, 425 U.S. 463, 96 S.Ct. 1634, 48 L.Ed.2d 96 (1976). The Court again said that an Indian vendor cannot be required to obtain a state license and that a cigarette sales tax cannot be imposed upon on-reservations sales by Indians to Indians. It held, however, that the State can lawfully impose a cigarette tax on sales by Indians to non-Indians. The Montana statute in question provided that the cigarette tax was a direct tax on the retail consumer, precollected for purposes of convenience and facility only. The Court in a policy discussion stated:

" * * * Since nonpayment of the tax is a misdemeanor as to the retail purchaser, the competitive advantage which the Indian seller doing business on tribal land enjoys over all other cigarette retailers, within and without the reservation, is dependent on the extent to which the non-Indian purchaser is willing to flout his legal obligation to pay the tax. Without the simple expedient of having the retailer collect the sales tax from non-Indian purchasers, it is clear that wholesale violations of the law by the latter class will go virtually unchecked." (Footnote and emphasis omitted.) 96 S.Ct. at 1645.

And continuing also stated:

"The State's requirement that the Indian tribal seller collect a tax validly imposed on non-Indians is a minimal burden designed to avoid the likelihood that in its absence non-Indians purchasing from the tribal seller will avoid payment of a concededly lawful tax. Since this burden is not, strictly speaking, a tax at all, it is not governed by the language of Mescalero [Apache Tribe v. Jones, 411 U.S. 145, 93 S.Ct. 1267, 36 L.Ed.2d 114 (1973) ], dealing with the 'special area of state taxation.' We see nothing in this burden which frustrates tribal self- government, see Williams v. Lee, 358 U.S. 217, 219-220, 79 S.Ct. 269, 270, 3 L.Ed.2d 251, 253 (1959), or runs afoul of any congressional enactment dealing with the affairs of reservation Indians, United States v. McGowan, 302 U.S. 535, 539, 58 S.Ct. 286, 288, 82 L.Ed. 410, 413 (1938): 'Enactments of the federal government passed to protect and guard its Indian wards only affect the operation, within the colony, of such state laws as conflict with the federal enactments.' See also Thomas v. Gay, 169 U.S. 264, 273, 18 S.Ct. 340, 343, 42 L.Ed. 740, 744 (1898). We therefore agree with the District Court that to the extent that the 'smoke shops' sell to those upon whom the State has validly imposed a sales or excise tax with respect to the article sold, the State may require the Indian proprietor simply to add the tax to the sales price and thereby aid the State's collection and enforcement thereof." 96 S.Ct. at 1646.

In Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134, 100 S.Ct. 2069, 65 L.Ed.2d 10 (1980), the United States Supreme Court in resolving other questions relating to state taxation of cigarette sales reaffirmed the holding of Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, supra, stating:

"Moe establishes several principles relevant to the present cases. The State may sometimes impose a nondiscriminatory tax on non-Indian customers of Indian retailers doing business on the reservation. Such a tax may be valid even if it seriously disadvantages or eliminates the Indian retailer's business with non-Indians. And the State may impose at least 'minimal' burdens on the Indian retailer to aid in enforcing and collecting the tax. * * * " (Footnote omitted.) 100 S.Ct. at 2080.

The Court held in Washington v. Confederated Tribes of Colville Indian Reservation, supra, that the exemption applicable to tribal members could not be extended to Indians who are non-members of the tribe. Washington's cigarette sales tax falls upon the first event which may constitutionally be subjected to it. The incident of the tax is on the seller in cases of sales by non-Indians to non-Indians. In a case where the retailer is exempt from the tax, the first taxable event is the use, consumption of or possession by a non-exempt purchaser.

The decisions in both United States Supreme Court cases were based on the fact that the applicable statutes provided for the incident of the tax to fall on the consumer. Both parties in this case agree that the State of Wyoming may not impose the tax upon appellant nor require him to obtain a state license for the sale of cigarettes. They also agree that sales by appellant to enrolled Indians of the Shoshone and Arapahoe tribes are exempt. Appellant contends that Wyoming's cigarette sales tax statutes provide that the incident of the tax is upon the wholesaler; that, therefore, as an enrolled Indian, he is exempt from this tax and it should not be enforced against him. The State contends that the Wyoming legislature imposed the tax upon the sale thereby placing the incidence of the tax upon the purchaser. Section 39-6-103, W.S.1977, Cum.Supp.1983, provides:

"(a) There is levied and shall be collected and paid to the board an excise tax of four-tenths of a cent ($.004) upon the sale of each cigarette sold by wholesalers.

"(b) Sales of cigarettes to any agency of the United States government, sales in interstate commerce or the taxation of any transaction prohibited by the United States Constitution are exempted from the provisions of this article but shall be reported to the board in the manner prescribed by it.

"(d) There is levied and shall be paid to the board an excise tax of forty one hundredths of a cent ($.0040) upon the use or storage by consumers of cigarettes in Wyoming but only if the tax imposed by subsections (a) and (b) of this section has not been paid." (There is no subsection (c) in this section as it appears in the printed acts.)

In 1977 the legislature revised the cigarette tax sales statutes. Prior to that time § 39-163, W.S.1957, Cum.Supp.1975, provided that:

"(a) There is hereby levied and shall be collected and paid to the state board of equalization an excise tax upon the sale of cigarettes by wholesalers of four mills on each cigarette; provided, however, that the burden of paying such tax shall be passed, through subsequent sales of the cigarettes taxed, to the ultimate purchasers and consumers of such cigarettes and such tax so passed shall be deemed a direct tax paid by the said ultimate purchasers and consumers." (Emphasis added.)

Appellant argues that the deletion of the proviso evidences legislative intent to shift the incidence of the tax from the consumer to the seller. We cannot agree with this proposition. The deletion could equally indicate a legislative determination that the proviso was unnecessary.

" * * * [I]t is a well-established principle that in construing a legislative enactment we must, if possible, ascertain the intent of the legislature from the wording of the statute. * * * " Wyoming State Department of Education v. Barber, Wyo., 649 P.2d 681, 684 (1982).

"All portions of the act must be read in pari materia, and every word, clause and sentence of it must be given effect * * *." Haddenham v. City of Laramie, Wyo., 648 P.2d 551, 553 (1982).

"A basic tenet of our judicial system is that a statute must be read in light of its purpose. If a statute is clear on its face and the results produced by a literal reading help bring about the stated objective, we will not entertain strained constructions which impede the legislative policy. * * * " (Citation omitted.) People v. Platte Pipe...