State v. Dixie Dairies Corp., 2 Div. 392

• Decision Date: 08 January 1959
• Docket Number: 2 Div. 392
• Citation: 268 Ala. 480,107 So.2d 896
• Parties: STATE of Alabama v. DIXIE DAIRIES CORP.
• Court: Alabama Supreme Court

Page 896

107 So.2d 896

268 Ala. 480

STATE of Alabama v. DIXIE DAIRIES CORP.

2 Div. 392.

Supreme Court of Alabama.

Jan. 8, 1959.

John Patterson, Atty. Gen., Willard W. Livingston and Jas. R. Payne, Asst. Attys. Gen., for appellant.

Le Maistre, Clement & Gewin, Walter P. Gewin, Tuscaloosa, and Geo. E. Sledge, Greensboro, for appellee.

STAKELY, Justice.

This case grew out of an assessment entered by the Department of Revenue of the State of Alabama for sales taxes against Dixie Dairies Corporation. The Department of Revenue set up a sales tax liability against Dixie Dairies Corporation based upon sales of fluid milk made through vending machines owned and operated by Dixie Dairies Corporation.

These vending machines belonging to the Dixie Dairies Corporation are located in various parts of Alabama including Hale and Mobile Counties. The Dixie Dairies Corporation does not own or control the premises on which the vending machines are located nor any premises surrounding the vending machines. The milk sold through the vending machines is packaged in paper cartons. The Dixie Dairies Corporation claims that it is exempt from the sales tax assessment by virtue of the provisions of § 755(q), Title 51, 1955 Cumulative Pocket Part of Code of 1940. Section 755 is a part of the article dealing with the sales tax in Alabama and lists certain exemptions from this tax. Section 755(q) states the following:

'There are however exempted from the provisions of this article and from the computation of the amount of the tax levied, assessed or payable under this article the following:--(q) The gross proceeds of sale or sales of fluid milk as is now or may hereafter be defined by law when such sale or sales are made by a distributor who has purchased such fluid milk or the milk processed into such fluid milk direct from the producer thereof. Provided, however, that the term 'distributor' as used here shall not be construed to include hotels, restaurants, cafes, cafeterias, drug stores, grocery stores and other retail establishments where milk is served or sold for consumption on the premises or as an incident to the principal business.'

The Department of Revenue took the view that the vending machine sales of fluid sweet milk made in the manner of the taxpayer's vending machine operations were taxable and that § 755(q) did not exempt the taxpayer from liability for the sales tax involved.

The Dixie Dairies Corporation appealed the assessment to the Circuit Court of Hale County where the issue was tried and determined in its favor. The State of Alabama brings this appeal from the ruling of the lower court.

The determination of this cause rests in the interpretation to be given to the statute involved, i. e. Title 51, § 755(q), supra.

Section 755(q) exempts the gross proceeds of the sale of fluid milk by a 'distributor' who has purchased such fluid milk direct from the producer. It is insisted by the State that the taxpayer is not a distributor under the statute. The proviso to § 755(q) states that the term 'distributor' shall not be construed 'to include hotels, restaurants, cafes, cafeterias, drug stores, grocery stores and other retail establishments where milk is served or sold for consumption on the premises or as an incident to the principal business.'

There is no attempt to define the word 'distributor' in § 755(q). The proviso to this section only excludes certain establishments from being classified as distributors.

Chapter 7, Title 22, Code of 1940, is concerned with the supervision and control of milk and milk products. In § 206 of Title 22 'distributor' is defined as 'a person who purchases, accepts or receives milk for the purpose of putting such milk in bottles or other unit containers in which same is designed to be sold or for the purpose of cooling, pasteurizing, standardizing or otherwise processing such milk or fluid milk consumption or who buys milk from another producer, producer-distributor or distributor for the purpose of selling, jobbing or distributing such milk at wholesale or retail for any one or more such purposes.' It should be noted that under this statute a 'distributor' may sell, job, or distribute milk at retail as well as wholesale. The record shows clearly that the Dixie Dairies Corporation, under the above definition, is a distributor.

It is the State's contention that the Dixie Dairies Corporation's vending machines fall under the proviso of the exemption statute as 'other retail establishments,'...