State ex rel. Hardesty v. Aracoma - Chief Logan No. 4523, Veterans of Foreign Wars of U.S., Inc.

• Decision Date: 12 March 1963
• Docket Number: No. 12184,ARACOMA-CHIEF,12184
• Citation: 147 W.Va. 645,129 S.E.2d 921
• Court: West Virginia Supreme Court
• Parties: STATE of West Virginia ex rel. C. Howard HARDESTY, Jr., State Tax Commissioner, v.LOGAN NO. 4523, VETERANS OF FOREIGN WARS OF the UNITED STATES, INC.

Page 921

129 S.E.2d 921

147 W.Va. 645

STATE of West Virginia ex rel. C. Howard HARDESTY, Jr., State Tax Commissioner, v. ARACOMA-CHIEF LOGAN NO. 4523, VETERANS OF FOREIGN WARS OF

the UNITED STATES, INC.

No. 12184.

Supreme Court of Appeals of West Virginia.

Submitted Jan. 22, 1963.

Decided March 12, 1963.

Syllabus by the Court

1. 'When a statute is clear and unambiguous and the legislative intent is plain the statute should not be interpreted by the court, and in such case it is the duty of the court not to construe but to apply the statute.' Point 1, Syllabus, J. D. Moore, Inc. v. Hardesty, State Tax Commissioner, W. Va., 129 S.E.2d 722.

2. 'Where a person claims an exemption from a law imposing a license or tax, such law is strictly construed against the person claiming the exemption.' Point 2, Syllabus, State ex rel. Lambert v. Carman, State Tax Commissioner, 145 W.Va. 635, 116 S.E.2d 265.

3. Where an exemption statute is subject to interpretation, the Court may give effect to the spirit, purpose and intent of the lawmakers, and will not so limit its interpretation as to defeat the underlying purpose of the statute.

4. It is always presumed that the legislature will not enact a meaningless or useless statute.

5. A fraternal society, organization or association, organized and operated for the exclusive benefit of its members and not for profit, does not lose the exemption provided for in Code, 11-13-3(d), as amended, by the operation of a restaurant in its clubrooms, so long as it limits the use thereof to its members and their guests.

6. A fraternal society, organization or association, which holds itself out to the general public as a caterer of banquests and parties in its clubrooms, without regard to membership in its organization, from which operation it makes or expects to make a profit, is in business within the contemplation of the provisions of Code, 11-13-2c, as amended, and is subject to the payment of the tax provided therein. By reason of this operation, it does not qualify for the exemption contained in Code, 11-13-3(d), as amended.

Naaman J. Aldredge, Logan, for appellant.

C. Donald Robertson, Atty. Gen., Frank M. Ellison, Asst. Atty. Gen., Charleston, for appellee.

CAPLAN, Judge.

This is a statutory proceeding instituted under the provisions of Code, 11-13-13, as amended, wherein the state tax commissioner seeks to recover from Aracoma-Chief Logan No. 4523, Veterans of Foreign Wars of the United States, Incorporated, hereinafter sometimes referred to as appellant, certain taxes alleged to have been due and owing the State for the period from 1952 through 1960.

The appellant is a veterans' organization, duly incorporated under the laws of the State of West Virginia as a non-profit corporation, with its principal place of business in the City of Logan, Logan County. At this location the organization, among other activities, operates a restaurant for its members. In accordance with the rules of the appellant, the members may invite, as a guest, one who does not hold membership therein, but such non-member may not avail himself to the restaurant facilities unless he is accompanied by a member.

By agreement this case was tried by the court in lieu of a jury upon facts as stipulated by the parties. Although stipulation ordinarily connotes agreement, we find, upon examination of the record, that Stipulation V is in conflict with Stipulation IV and with a letter made a part of the record by the parties. Stipulation V reads: 'That it is agreed that the Defendant is a Fraternal organization operated and organized under the lodge system for the exclusive benefit of their members and not for profit.' Considering this stipulation alone, it appears that the appellant organization is operated in compliance with the provisions of the exemption statute and is entitled to such exemption. However, in Stipulation IV, the parties agreed: 'That the Defendant organization has served in its facilities during the period involved, some non-member people and organizations.' Furthermore, in the letter heretofore mentioned, written by an official of the appellant and addressed to the state tax commissioner, the following was stated in relation to its operation: 'The way we operate is as follows: We admit only members to the post, except when they want to bring a guest, of which we have meals and refreshments for sale. The guest is not allowed in the club without being accompanied by the member. We also cater to Banquest parties, or which some other organizations, companies or business group may want to have in our clubroom or dining hall with us serving and making the profit from such affair, and the total receipts for the full year from all banquets will not amount to more than $2,000.00 at the most.' This apparent conflict in the facts, even though stipulated by the parties, must be resolved by the court in the same manner as it would resolve any conflicting testimony.

By reason of this restaurant operation, the tax commissioner demanded from the appellant payment of business and occupation taxes as required by Code, 11-13-2c, as amended. On the ground that it was exempted under the provisions of Code, 11-13-3(d), as amended, the appellant refused to make such payment and this action was commenced. The trial court awarded judgment to the plaintiff and the appellant prosecutes this writ of error.

The tax, payment of which is demanded in this action, is known as the business and occupation tax and is imposed for the privilege of doing business in this State. Imposition of such privilege tax is provided in Code, 11-13-2, as amended, as follows: 'There is hereby levied and shall be collected annual privilege taxes against the persons, on account of the business and other activities, and in the amounts to be determined by the application of rates against values or gross income as set forth in sections two-a to two-j, inclusive, of this article * * *'.

The specific statute under which the State seeks payment herein is Code, 11-13-2c, as amended, and reads: 'Upon every person engaging or continuing within this State in the business of selling any tangible property whatsoever, real or personal, including the sale of food, and the services incident to the sale of food in hotels, restaurants, cafeterias, confectioneries, and other public eating houses, * * * there is likewise hereby levied, and shall be collected a tax equivalent to one-half of one per cent of the gross income of the business, * * *.'

The appellant contends that it is exempt from the payment of such tax by virtue of Code, 11-13-3, as amended, which provides: '* * * The provisions of the article shall not apply to: * * *(d) fraternal societies, organizations and associations organized and operated for the exclusive benefit of their members and not for profit; * * * .'

The appellant is engaged in the business of selling food, a tangible item, and, unless granted immunity by the exemption statute quoted above, is subject to the tax provided in Code, 11-13-2c, as amended. The state tax commissioner takes the position that the appellant has lost its exemption by its admitted practice of permitting guests of members to dine in its restaurant facility and by holding itself out to the public as a caterer of banquets and parties, from which it derives a profit. This, he asserts, is contrary to the language of the exemption statute which includes organizations 'operated for the exclusive benefit of their members and not for profit.'

The contentions of the parties hereto present for consideration and adjudication a question consisting of two parts. Has the appellant, under the facts and in the circumstances of this case, its exemption by (1) permitting a guest, accompanied by a member, to partake of meals and refreshments in its club; (2) by its general practice of catering, in its restaurant facilities, to organizations, business groups and persons, not members or guests of members, from which operation it admittedly makes a profit?

Let us now consider the first part of the above question. The record reveals, by stipulation and by the letter hereinbefore referred to and quoted in part, that the appellant's restaurant facilities are not available to a non-member augest unless accompanied by a member. The appellee asserts that by reason of the practice of permitting a guest, even though he must be accompanied by a member, to avail himself of the appellant's restaurant facilities, the organization is no longer operated for the exclusive benefit of its members and not for profit. In support of that position several well established principles of law are noted.

In resolving this issue it is well to set out and consider these principles as they may apply to the facts and circumstances of this case. A statute granting an exemption from the payment of a particular tax is strictly construed. In re Hillcrest Memorial Gardens, Inc., W.Va., 119 S.E.2d 753; Central Realty Co. v. Martin, 126 W.Va. 915, 30 S.E.2d 720; In re Mountain State College, Inc., Assessment, 117 W.Va. 819, 188 S.E. 480; State v. McOwell Lodge, 96 W.Va. 611, 123 S.E. 561, 38 A.L.R. 31; State v. Kittle et al., 87 W.Va. 526, 105 S.E. 775. It is well settled law that an exemption statute is strictly construed against the person claiming the exemption. State ex rel. Lambert v. Carman, 145 W.Va. 635, 116 S.E.2d 265; In re Hillcrest Memorial Gardens, Inc., W.Va., 119 S.E.2d 753; State v. McDowell Lodge, 96 W.Va. 611, 123 S.E. 561, 38 A.L.R. 31. See 51 Am.Jur. 526, Texation, Section 524, and cases cited in footnotes thereto. Furthermore, it has been universally held that when a statute is clear and unambiguous, and the legislative intent is plain, the statute should not be interpreted by the Court. J. D. Moore, Inc. v. Hardesty, State Tax Commissioner, Pt. 1, Syl. W.Va., 129 S.E.2d 722; Hereford v. Meek, 132 W.Va. 373, 52 S.E.2d 740; State v. Jackson, 145 W.Va. 51, 112 S.E.2d 452; State...