State ex rel. Schultz-Lindsay Const. Co. v. State Bd. of Equalization

• Decision Date: 26 April 1965
• Docket Number: No. 10943,SCHULTZ-LINDSAY,10943
• Citation: 145 Mont. 380,403 P.2d 635
• Parties: STATE of Montana ex rel.CONSTRUCTION COMPANY, Inc., Plaintiff and Relator, v. The STATE BOARD OF EQUALIZATION of the State of Montana, John C. Alley, Chairman, Morley Cooper and Howard Lord, as members thereof, the State Highway Commission of the State of Montana, Alex Blewett, Chairman, Joseph N. Nass, S. N. Halvorson, A. M. Swanson and D. W. Van Delinder, as members thereof, Defendants and Respondents.
• Court: Montana Supreme Court

Page 635

403 P.2d 635

145 Mont. 380

STATE of Montana ex rel. SCHULTZ-LINDSAY CONSTRUCTION COMPANY, Inc., Plaintiff and Relator, v. The STATE BOARD OF EQUALIZATION of the State of Montana John C. Alley, Chairman, Morley Cooper and Howard Lord, as members thereof, the State Highway Commission of the State of Montana, Alex Blewett, Chairman, Joseph N. Nass, S. N Halvorson, A. M. Swanson and D. W. Van Delinder, as members thereof, Defendants and Respondents.

No. 10943.

Supreme Court of Montana.

April 26, 1965.

Arnold A. Berger (argued), Billings, for appellant.

Edward Dussault (argued), Missoula, Jean Turnage (argued), Polson, A. W. Scribner (argued), Helena, amici curiae.

Forrest H. Anderson, Atty. Gen., Helena, Donald A. Garrity, Asst. Atty. Gen., (argued), Helena, William A. Douglas (argued), Helena, Donald D. MacPherson (argued), Helena, for respondents.

JAMES T. HARRISON, Chief Justice.

This is an original proceeding. On March 31, 1965 relator filed a petition requesting this court to accept original jurisdiction of a declaratory judgment action to test the validity of House Bill 506, enacted into law by the Thirty-ninth Legislative Assembly of the State of Montana, as Chapter 277 of the Laws of 1965. Hereafter, for brevity, this will be referred to as the Act.

Relator alleged in its petition that the United States of America, through its Bureau of Public Roads, participates financially in the construction of interstate, primary and secondary roads throughout this state and other states; that because of the passage and threatened enforcement of the Act the Bureau of Public Roads ordered withdrawal of Federal participating funds; that other states would continue to receive such Federal participating funds and would be able to continue their highway programs, but that the withdrawal of funds from Montana would cause the state to fall behind in its road construction program and the entire economy of the state would be adversely affected; that a determination of the validity of the Act was of such urgency that this court should take original jurisdiction of the controversy.

Following an ex parte hearing upon such petition, and by reason of the allegations therein contained, this court accepted jurisdiction and ordered the filing of relator's complaint, and directed the respondents to appear to answer or otherwise plead to such complaint on or before April 12, 1965. Thereafter, by order the cause was set to be heard on oral argument on April 12, 1965, and was so heard and time granted for filing additional briefs. Such briefs have been filed and the cause has been submitted.

Relator in its complaint named as defendants and respondents the State Board of Equalization and its members, and the State Highway Commission and its members, and hereafter they will be referred to as respondents.

Relator alleged, inter alia, that it was a proceeding for declaratory relief under the Uniform Declaratory Judgments Act; that relator was a North Dakota corporation constructing public highways and engaged in that business in the State of Montana; that it intended in the future to continue to engage in such business; that such business was highly competitive and contracts for the construction of highways are awarded on the basis of competitive bidding, and to compete it was essential that no unfair and artificial advantages be given to its competitors. Further that the Act discriminates against relator by requiring it to pay a different and greater tax than Montana residents engaged in the business of constructing public highways are required to pay, that the State Board of Equalization is charged with the duty of enforcing, and would enforce, the Act; that in 1964 relator had received payments for work done for the State Highway Commission and paid all Montana license taxes required; that under the Act it would be required to pay a sum greatly in excess of the amounts paid in that year and that if it received the same amount of payments for work in 1965 the license and payments required under the Act would be greatly in excess of payments required by a resident Montana corporation; that plaintiff has several contracts with the State Highway Commission and the Commission will deduct one percent of all payments due relator and deliver such money to the State Board of Equalization, to the severe and irreparable damage of the relator; and that the Act is invalid in that it violates the Constitutions of the State of Montana and the United States of America in that it denies relator the equal protection of the laws, imposes a tax which is not uniform upon the same class of subjects, and is special legislation. Relator prayed for a declaratory judgment determining the validity of the Act and the duties and obligations of relator under the Act. Annexed to the complaint as an exhibit is a copy of the Act, which reads as follows:

'AN ACT PROVIDING FOR A NONRESIDENT CONTRACTOR'S LICENSE FEE

'BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF THE STATE OF MONTANA:

'Section 1, As used in this act: (1) 'Contractor' means an individual, partnership or corporation performing architectural, engineering or construction work in Montana for a federal, state or local agency of government.

'(2) 'Nonresident contractor' means (a) a corporate contractor, fifty-five per cent (55%) or more of the effective ownership of which is in persons who are not residents of Montana, or (b) an individual contractor who is not a resident of Montana or who is a nonresident stockholder in a nonresident corporate contractor, or (c) a partnership contractor, fifty-five per cent (55%) or more of the effective ownership of which is in persons who are not residents of Montana or who own stock in a nonresident corporate contractor.

'(3) 'Gross receipts' shall mean all receipts from sources within the state, whether in the form of money, credits or other valuable consideration, received from engaging in or conducting a business, without deduction on account of the cost of the property sold, the cost of the materials used, labor or service cost, interest paid, taxes, losses or any other expense whatsoever. However, 'gross receipts' shall not include cash discounts allowed and taken on sales, and sales refunds, either in cash or by credit, uncollectible accounts written off from time to time, and payments received in final liquidation of accounts included in the gross receipts of any previous return made by the person.

'Section 2. (1) For the privilege of qualifying as a nonresident contractor, a person shall first apply, upon forms prescribed by the board of equalization, and obtain a license so to do, and pay a license fee, as provided in section 3 of this act. A license issued to a nonresident contractor shall cover all its operations in Montana regardless of the number of its establishments.

'(2) Application for a renewal of a license and payment of the initial fee of twenty-five dollars ($25.00) thereon shall be made not later than January 31st of each year. However, a nonresident contractor who has purchased a contractor's license prior to the effective date of this act will have his money refunded and purchase a nonresident contractor's license.

'(3) No license shall be issued for a period of time extending beyond the termination of the calendar year for which issued.

'(4) Any nonresident contractor subject to licensing provisions of a regulatory nature such as, for example, the requirement of posting a bond before commencing business as a collection agency, must, in addition to filing the regular application above mentioned, comply with such regulatory provisions before being entitled to a license hereunder.

'Section 3. The license fee for each nonresident contractor shall be twenty-five dollars ($25.00) plus a sum equal to one per cent (1%) of the gross receipts from such business during the income year for which the license is to be issued.

'Section 4. A nonresident contractor is exempt from the contractor's license tax, the income tax provided for in Title 84, Chapter 49, R.C.M.1947, and the corporation license tax provided for in Title 84, Chapter 15, R.C.M.1947, when such nonresident contractor is covered by the provisions of this Act. All other contractors must pay the contractor's license tax; and income tax provided for in Title 84, Chapter 49, R.C.M.1947; and the corporation license tax provided for in Title 84, Chapter 15, R.C.M.1947, were applicable.

'Section 5. A state, county and city agency for whom a nonresident contractor is performing work shall withhold, in addition to any other amounts withheld, one per cent (1%) of all payments due the contractor and send such amounts to the state board of equalization. Should the state, county and city agency, for whom the nonresident contractor is performing work or has performed work, fails to withhold such amounts, the contractor shall make payment of these amounts to the state board of equalization. These payments must be submitted to the state board of equalization by the contractor within thirty (30) days of the date on which the contractor received each increment of payment for work performed by the contractor. When the state board of equalization has collected the tax provided for in Section 3 of this act, it shall refund any surplus.

'Section 6. In case of any failure to make and file a nonresident contractor's license return, the person failing to file such a return, upon conviction shall be fined not less than one thousand dollars ($1,000.00) or more than ten thousand dollars ($10,000).

'Section 7. Ninety-five per cent (95%) of all license fees collected under Section 3 of this act shall be deposited in the earmarked revenue fund to be used for state equalization aid to schools; five per cent (5%) shall be deposited in the earmarked revenue fund to be used by the state board of equalization in administering this act.

'Section 8. A corporation incorporated under Montana law...