State Tax Commission v. Hughes Drug Co.

• Decision Date: 11 March 1927
• Citation: 293 S.W. 944,219 Ky. 432
• Parties: STATE TAX COMMISSION v. HUGHES DRUG CO. STATE TAX COMMISSION v. SEIBERZ.
• Court: Kentucky Court of Appeals

293 S.W. 944

219 Ky. 432

STATE TAX COMMISSION v. HUGHES DRUG CO.

STATE TAX COMMISSION v. SEIBERZ.

Court of Appeals of Kentucky.

March 11, 1927

Appeal from Circuit Court, Franklin County.

Suits by the Hughes Drug Company and by John J. Seiberz against the State Tax Commission, seeking to have Acts 1926, c. 165 declared unconstitutional. Judgment for plaintiffs, and defendant appeals. Reversed, with directions.

Frank E. Daugherty, Atty. Gen., and O. S. Hogan, Asst. Atty. Gen for appellant.

D. L Hazelrigg, of Frankfort, for appellee Hughes Drug Company.

Walter P. Lincoln, of Louisville, for appellee Seiberz.

REES J.

The two above-styled appeals involve the same question and were heard together below, and, a motion having been sustained to hear them together in this court, they will be disposed of in one opinion.

The question involved is the validity of chapter 165 of the 1926 Acts of the General Assembly, which is an act imposing an excise or license tax of 50 cents on each pint sold at retail in this state of all distilled spirits known as whisky brandy, gin, rum, and other species of double stamped spirits, and requiring each individual, association, partnership, joint-stock company, and corporation selling such distilled spirits at retail to pay such tax for the privilege of engaging in such business.

The appellee, Hughes Drug Company, is a corporation engaged in the drug business, and it filed this suit in the Franklin circuit court seeking to have the act declared unconstitutional and void. The petition alleges that the act is violative of the Constitution and is void either as a revenue raising act, or as a regulatory act. Appropriate pleadings were filed, and, the case having been submitted, the lower court entered a judgment declaring the act in question unconstitutional and void.

It is earnestly argued that the tax was imposed for the purpose of raising revenue and is void, being violative of the uniformity provisions of the Constitution; that it is not regulatory in its nature and cannot be sustained as an exercise of the police power of the state.

It may be conceded at the outset that the act was plainly intended to be and is one for the purpose of raising revenue, and not to regulate the business of selling the articles therein named; and as an act to raise revenue, if the tax is a property tax, as contended by appellee, then it is invalid, being in violation of section 171 of the Constitution, which provides that taxes shall be uniform upon all property of the same class subject to taxation within the territorial limits of the authority levying the tax. However, the tax is clearly not a property tax, but is an excise tax such, as is authorized by section 181 of the Constitution, which provides in part:

"The General Assembly may, by general laws only, provide for the payment of license fees on franchises, stock used for breeding purposes, the various trades, occupations and professions, or a special or excise tax."

An excise tax is defined by Black's Law Dictionary as:

"An inland imposition paid sometimes upon the consumption of a commodity and frequently upon a retail sale."

And excise law is defined by the same authority as:

"A law imposing excise duties on specified commodities and providing for the collection of revenue therefrom. In a more restricted and more popular sense, a law regulating, restricting or taxing the manufacture or sale of intoxicating liquors."

In Baldwin's Edition of Bouvier's Law Dictionary, excise is defined as:

"An inland imposition paid sometimes upon the consumption of a commodity and frequently upon the retail sale. Storey's Const. § 950; Cooley on Taxation 4. A tax laid upon the manufacture, sale, or consumption of commodities within the country; upon licenses to pursue certain occupations and upon corporate privileges. Flint v. Stone Tracy Co., 220 U.S. 151, 31 S.Ct. 342, 55 L.Ed. 389, Ann. Cas. 1912B, 1312; Cooley on Constitutional Limitation (7th Ed.) 680."

In Anderson's Dictionary of Law excise is defined as:

"An inland imposition sometimes upon the consumption of a commodity, and sometimes upon the retail trade; sometimes upon the manufacturer, and sometimes upon the vendor."

In Pollock v. Trust Co., 157 U.S. 429, 15 S.Ct. 673, 39 L.Ed. 759, it is said:

"Excises are a species of tax consisting generally of duties laid upon the manufacture, sale, or consumption of commodities within the country, or upon certain callings or occupations, often taking the form of exactions for licenses to pursue them."

In Words and Phrases, First & Second Series, excise is defined to be an inland duty or impost operating as an indirect tax on the consumer, a fixed, absolute, and direct charge laid on merchandise, products, or commodities.

In 26 R. C. L. 34, it is said:

"Excises, in their original sense, were something cut off from the price paid on a sale of goods, as a contribution to the support of the government. The word has, however, come to have a broader meaning and includes every form of taxation which is not a burden laid directly upon persons or property; in other words, excise includes every form of charge imposed by public authority for the purpose of raising revenue upon the performance of an act, the enjoyment of a privilege, or the engaging in an occupation."

In Booth's Executor v. Commonwealth, 130 Ky. 88, 113 S.W. 61, 33 L. R. A. (N. S.) 592, in holding an inheritance tax to be an excise tax, this court said:

"While it is true that 'excise' has been defined to be an inland duty or impost levied upon articles of manufacture or sale, and also upon licenses to pursue certain trades or to deal in certain commodities, it is nevertheless a term of very general signification, meaning tribute, custom tax, tollage, or assessment, and in recent years the courts have so enlarged its meaning as to declare that an inheritance tax is an excise tax; indeed, it is so denominated in practically every case included in the list previously cited."

In Raydure v. Board of Supervisors, 183 Ky. 84, 209 S.W 19, it was held that the oil production tax was not a property tax, and was authorized under section 181 of the Constitution, and was valid, although the construction placed upon it had the effect of imposing a double tax on the owner of an oil lease who is also the owner of an oil producing well on the leased territory, as his oil lease is subject to an ad valorem tax and the oil he produced to a production tax. Other instructive cases are Strater Bros. Tobacco Co. v. Commonwealth, 117 Ky. 604, 78 S.W. 871, 25 Ky. Law Rep. 1717; Brown-Foreman Co. v. Commonwealth, 125 Ky. 402, 101 S.W. 321, ...