State Board of Equalization of Wyoming v. Oil Wells Supply Co.

• Decision Date: 02 March 1937
• Docket Number: 1989
• Citation: 51 Wyo. 226,65 P.2d 1093
• Parties: STATE BOARD OF EQUALIZATION OF WYOMING v. OIL WELLS SUPPLY CO., ET AL
• Court: Wyoming Supreme Court

65 P.2d 1093

51 Wyo. 226

STATE BOARD OF EQUALIZATION OF WYOMING v. OIL WELLS SUPPLY CO., ET AL

No. 1989

Supreme Court of Wyoming

March 2, 1937

APPEAL from the District Court, Laramie County; SAM M. THOMPSON Judge.

Proceeding by the State Board of Equalization of the State of Wyoming against Oil Wells Supply Company and others. From an adverse judgment, plaintiff appeals.

Judgment affirmed.

For the plaintiff and appellant, there was a brief by Ray E. Lee Attorney General; Thomas F. Shea, Deputy Attorney General and William C. Snow, Assistant Attorney General, all of Cheyenne, and oral argument by Mr. Lee.

The question involved in this appeal is whether the articles sold by the Oil Well Supply Company to the other defendants in this case fall within the class of articles "actually used in the production of or entering into the processing of or become an ingredient or component part of the articles, substances, services or commodities manufactured or compounded, produced or furnished" by the defendants to whom they were sold by said Oil Well Supply Company. We contend, that tools, for example, which are purchased and used by a manufacturer as a means of producing the article, which he manufactures do not actually enter into the production thereof. The Michigan Sales Tax law defines sales at retail as being articles other than such as are used otherwise than for consumption or use in industrial processing or agricultural production. The Supreme Court of Michigan in the case of Boyer-Campbell Co. v. Fry, et al., 260 N.W. 165, in construing the Michigan law and rules made pursuant thereto, fully supports our theory in this regard. It would be as fair to say that the clothing worn by the employees who operate a refinery is used in the production of the gasoline and other products of crude oil, as to say that the electrical light bulbs used in lighting the plant are used and consumed for such purpose. We feel that the proper line of demarcation is that applied by the board, and that an article, used in the production of another article, to be exempt must actually be consumed in such production and not useable for other purposes. If we are correct in this view, none of the items upon which the state seeks to impose a tax are exempt because such items are not consumed in the production of gasoline or any of the other products of crude oil itself. The rule seems to have support in the case of Eastern Air Transport v. Commission, 285 U.S. 147.

For the defendants and respondent, Oil Well Supply Company, Rocky Mountain Drilling Company, Mutual Oil Syndicate and Continental Oil Company, there was a brief by Hagens and Wehrli of Casper and oral argument by Mr. Hagens.

Counsel for appellant contend that if the article sold is used and consumed in manufacturing, producing or processing, it is not exempt unless it becomes in tangible form an ingredient or component part of the product manufactured or produced, and they cite Boyer-Campbell Company v. Fry, (Mich.) 260 N.W. 165, a case decided under the Michigan statute, which differs from the statute in Wyoming. The Wyoming statute, Emergency Sales Tax Act of 1935, sub-division (f), Section 2, provides that every purchase of tangible property is exempt from taxation where the property purchased is used in the production of, or enters into the processing of, or becomes a component part of the article produced. The argument of appellant would nullify most of the provisions of the act. Services do not become a tangible part of manufactured products. Only three kinds of services are taxable under the act, viz: transportation, telephone and telegraph services. The general intent of the legislature will be governed by the particular intent subsequently expressed. State v. Barrett, (Ind.) 87 N.E. 7. The office of an exception in a statute is to exclude from the operation of the statute certain things or subjects which would otherwise be included. Campbell v. Jackson Bros., (Ia.) 118 N.W. 755; Bank v. United States, 214 F. 200; Schuyler v. Southern Pacific Co., (Utah) 109 P. 458. In case of doubt as to the meaning of a statute construction received from contemporary authority will be recognized. 25 R. C. L. 1042; 59 C. J. 1025; People v. Illinois Cent. R. Co., (Ill.) 112 N.E. 700; Tyler v. Treasurer, (Mass.) 115 N.E. 300; Petition of Zogbaum, 32 F.2d 911; Peterson v. Town of Guernsey, (Wyo.) 183 P. 645; State v. Krause, (Wisc.) 202 N.W. 319; U. S. v. Philbrick, 120 U.S. 52; Bank v. Missouri, 263 U.S. 641; Riley v. Thompson, (Cal.) 227 P. 772. The tax provided by the act of 1935 is clearly intended to be paid by the ultimate consumer. It was not the intention of the legislature that the ultimate consumer should be put to the necessity of paying this tax more than once. Double taxation is objectionable. 61 C. J. 137. The presumption is against the intention of the legislature to impose double taxation on the same property, unless overcome by express words of the statute. 61 C. J. 139; In re Arrotts Estate, (Pa.) 185 A. 697. The act of 1935 provides for a retail sales tax. Commonwealth v. Milling Company, (Pa.) 167 A. 307; Buck Glass Co. v. Gordy, (Pa.) 135 A. 886. The ordinary meaning of the language employed by the legislature must be presumed, unless such presumption would defeat the evident object of the act. Ward v. Commissioners, (Wyo.) 256 P. 1039; Oil Company v. People, 202 P. 180; Texas Company v. State, (Ariz.) 254 P. 1060; Oil Co. v. Brodie, (Ark.) 239 S.W. 753. Tax statutes must be construed in favor of the citizens and against the government. If there is doubt, the doubt must be resolved in favor of the tax payer. 59 C. J. 1131; 25 R. C. L. 1092; Life Assur. Soc. v. Thulemeyer, 52 P.2d 1223; U. S. v. Hurst, 2 F.2d 73; In re Stechler's Estate, (Cal.) 233 P. 972; Middleton v. County, (Mass.) 84 So. 907; Texas Co. v. Amos, (Ala.) 81 So. 471; Mills v. State, (Ga.) 125 S.E. 728; Greene v. Weller & Sons, (Ky.) 195 S.W. 422; Somers v. Finance Corp., (Mass.) 139 N.E. 837. The Wyoming sales tax act was intended to fall upon the ultimate consumer not more than once, and to be uniform and equal and that all tangible personal property and services which were used, consumed, entered into or which became an ingredient or component part of the article purchased by the consumer, should be exempt. Analogous authorities are: State v. Motor Co., (La.) 139 So. 61; Gee Coal Company v. Dept. of Finance, 361 Ill. 293; Collins-Dietz-Morris Co. v. State Corp. Comm., (Okla.) 7 P.2d 123; U. S. F. & G. Co. v. U.S. 58 L.Ed. 200; United States v. Hegman, (Pa.) 54 A. 344; U. S. v. Morgan, 111 F. 474; Brogar v. Surety Co., 246 U.S. 258; Guaranty Co. v. Crane, 219 U.S. 24. Similarly, under the Wyoming statutes, this court has held in support of the same principle. Franzen v. Southern Surety Co., (Wyo.) 246 P. 30; Investment Company v. Maryland Casualty Co., (Utah) 293 P. 611. The case of Eastern Air Transport Company v. Commissioner, 285 U.S. 147, cited by plaintiff, is not in point.

For the respondents, The Texas Company and California Petroleum Corporation, there was a brief by Y. A. Land of Denver, Colorado, and A. D. Walton of Cheyenne, Wyoming, and oral argument by Mr. Land.

The Michigan statute construed by the Supreme Court of that state in Boyer-Campbell Co. v. Fry differs from the Wyoming statute. This difference is so marked that we do not believe the decision to be controlling in the present controversy. While the principal question here involved has been ably presented from the defendants' point of view in the brief filed on behalf of Oil Well Supply Company, Rocky Mountain Drilling Company, Mutual Oil Syndicate and Continental Oil Company, all of which we beg leave to adopt, so far as it does not conflict with the views herein expressed, we desire to separately discuss the proposition urged by defendants The Texas Company and California Petroleum Corporation, not discussed in the briefs filed on behalf of the other defendants. The tax is imposed upon the vendor and not upon the vendee, and plaintiff can only enforce collection thereof from the vendor. We direct the court's attention to provisions of the sales tax act of 1935, which expressly provides that the vendor shall be responsible for the collection of the tax and shall remit the same. Sections 8, 9, 11, 12, 13, 14, 16 and 17 of the act outline the penalty for fraudulent returns and the duty imposed upon vendors in the administration of the law. The California law of 1933 is quite similar. It was construed in Construction Company v. Corbett, 7 F.Supp. 616, being a three-judge statutory court sitting in the Northern District of California, Southern Division. The opinion in that case contains a clear interpretation of the act, which we believe supports our contention. We also cite the case of Wiseman v. Phillips, 84 S.W.2d 91, construing the sales tax law of Arkansas, which we believe to be pertinent to the case at bar.

KIMBALL, Justice. BLUME, Ch. J., and RINER, J., concur.

OPINION

KIMBALL, Justice.

This is a proceeding brought by the State Board of Equalization under the Declaratory Judgments Act for a declaration of rights that depend on the meaning of certain provisions of the Emergency Sales Tax Act of 1935 (Ch. 74, Sess. Laws, 1935), which imposes a tax on retail sales. Oil Well Supply Company, one of the defendants, has sold supplies and equipment to the six other defendants each of whom is engaged in one or more of the branches of the oil and gas business. The plaintiff contends that the sales were retail sales subject to a tax, while defendants contend that they were wholesale sales, as defined by section 2(f) of the act. The case was heard on the pleadings and agreed statements of the facts. The trial court's judgment was in accord with de...