State v. Pioneer Oil & Refining Co.

• Decision Date: 16 March 1927
• Docket Number: (No. 793-4453.)
• Citation: 292 S.W. 869
• Parties: STATE v. PIONEER OIL & REFINING CO. et al.
• Court: Texas Supreme Court

Page 869

292 S.W. 869

STATE v. PIONEER OIL & REFINING CO. et al.

(No. 793-4453.)

Commission of Appeals of Texas, Section A.

March 16, 1927.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Action by the State of Texas against the Pioneer Oil & Refining Company and another. Judgment for plaintiff for part of taxes sued for was reversed by the Court of Civil Appeals (273 S. W. 615), and plaintiff brings error. Judgment of the Court of Civil Appeals reversed, and judgment of the district court reformed, and, as reformed, affirmed.

Dan Moody, Atty. Gen., and Ernest May, Asst. Atty. Gen., for the State.

Batts & Brooks, of Austin, for defendants in error.

NICKELS, J.

At its regular session, 1923, the Thirty-Eighth Legislature enacted a statute (chapter 134), whose more important sections read as follows:

"Section 1. The term `wholesale dealer' as used in this act is hereby defined as any person, firm, association or corporation in the state of Texas, who produces, refines, buys or compounds what is commercially known as gasoline or any of its substitutes or who receives, distributes, delivers, sells or offers to sell such gasoline or any of its substitutes within the state of Texas, and shall include any producer, refiner, manufacturer, or compounder of such gasoline or any of its substitutes, who sells the same at retail direct or through an agent to the consumer or any person, firm, association or corporation within the state of Texas who receives, imports, transports, delivers, sells or offers to sell any such gasoline or any of its substitutes that has been transported by any means, system or method into the state of Texas from any other state, territory or nation if said gasoline or any of its substitutes as above defined has ceased to be an interstate commerce shipment.

"Sec. 2. An occupation tax equal to one cent upon each gallon sold by wholesale dealers, as defined by this act, for consumption within this state is hereby imposed upon what is commercially known as gasoline and all substitutes therefor by whatever name known, sold, manufactured, refined, derived, prepared or compounded from petroleum.

"Sec. 3. Every wholesale dealer, as herein defined, shall on or before the 25th day of each month transmit to the comptroller of public accounts a report under oath (on such forms as the comptroller of public accounts shall prescribe) of the total number of gallons of gasoline, or such gasoline substitutes, sold at wholesale for consumption within this state during the preceding month, and shall at the same time pay to the treasurer of this state an amount equal to one cent upon each gallon of such gasoline, or gasoline substitute, so sold during the preceding month."

By section 9 it is provided that "the first report and payment required under this act shall be made on or before May 25, 1923," but that the act itself shall become effective April 1, 1923. Section 4 provides a penalty for default in making any such report and payment and section 5 imposes upon the Attorney General, etc., the duty to sue for the tax and penalty in event of default. Section 6 declares the tax to be in lieu "of all other occupation taxes on the sale of gasoline." Section 7 deals with disposition of the revenue derived. And section 8 provides that the unconstitutionality of any "section or provisions" shall not effect "the remaining sections or provisions." Section 9 includes an emergency clause, and the bill was passed with the vote necessary to put it into effect April 1, 1923.

At its second called session that Legislature passed another bill (chapter 55) levying an occupation tax upon wholesale dealers in gasoline, etc., and, in terms, repealing the statute above described. By proper emergency clause and vote this bill became effective June 1, 1923, and the "first report and payment" would have become due thereunder July 25, 1923. At its third called session (chapter 5) still another statute was enacted which levied an occupation tax upon wholesale dealers in gasoline, etc., and repealed all laws in conflict therewith. This statute became effective June 14, 1923. In the last act the Legislature undertook to save the claims for taxes, etc., which accrued under either of the previous statutes — the repeals notwithstanding.

The state, acting through its Attorney General, brought this suit to recover taxes alleged to have accrued for the months of April and May, 1923, per the terms of the statute first mentioned. The oil companies — admitting the sales and gallonage alleged as the measure of the tax — defended upon the grounds (a) that the statute is so ambiguous as to be void; (b) that if the statute has any definite meaning, its terms operate so as to produce unconstitutional inequality; and (c) that the statute was repealed by the second act so as that claims for unreported and delinquent taxes were abrogated. In reply to the latter defense, the state maintains that the taxes sued for were obligations or liabilities in its favor before the repeal took effect and perforce the terms of section 55, article 3, of the Constitution, it was beyond the power of the Legislature to release or extinguish those obligations or liabilities, even if it so intended in the repeal. Another proposition asserted by the state is that the second act is itself unconstitutional — in the parts which provide for a tax — and hence it cannot be said that the Legislature intended for the repeal to be effective at all.

The gallonage alleged included sales which, in ordinary parlance, would be understood as having been made at "wholesale," and others which would so be understood as being at "retail." The trial court allowed judgment for taxes measured only by so-called "retail sales" gallonage. The construction of the act, thus applied, had the concurrence of the Attorney General, we assume, because no appeal was prosecuted in behalf of the state. The oil companies appealed, advancing the contentions above noted, and thereupon the honorable Court of Civil Appeals expressed agreement with the trial court's construction of the first statute, but held that the repeal, embodied in the second act, so operated as to preclude assertion of claims upon which the suit is rested, reversing the judgment and rendering judgment in favor of the oil companies. (Tex. Civ. App.) 273 S. W. 615. Writ of error was allowed to the state upon assignments presenting the questions mentioned.

Section 55, article 3, of the Constitution, provides that:

"The Legislature shall have no power to release or extinguish, or to authorize the releasing or extinguishing, in whole or in part, the indebtedness, liability or obligation of any incorporation or individual, to this state, or to any county or other municipal corporation therein."

We do not stop to consider whether a delinquent tax is an "indebtedness" or "obligation," within the meaning of the language quoted, for that it is a "liability" cannot be doubted. Olliver v. City of Houston, 93 Tex. 206, 54 S. W. 940, 943; City of Henrietta v. Eustis, 87 Tex. 14, 26 S. W. 619.

If the statute first mentioned competently levied a tax, that tax became due, and liability therefor matured, on May 25, 1923, in respect to the "first report and payment." This is made plain by the terms of the act fixing that date for "report and payment," and providing penalties, etc., for default. There is in the opinion of the Court of Civil Appeals a statement or implication to the effect that the claims were inchoate because the reports had not been made; but, in our opinion, no such effect can be given the taxpayers' delinquency, for that would mean the citizen who obeyed the law would be disfavorably circumstanced as compared with the citizen who disobeyed. The authority of the Legislature to extinguish claims for taxes already matured was in no sense involved in Bryan v. Harvey, 11 Tex. 311, Clegg v. State, 42 Tex. 605, or G. & W. Ry. Co. v. City of Galveston, 96 Tex. 520, 74 S. W. 537, cited as authority for the view opposing ours. So far as relevant at all, Bryan v. Harvey merely holds that the authority of the assessor and collector to execute a tax deed, which was conferred by the old statute, "was a naked power, not coupled with an interest," and was therefore subject to be and was revoked by the repealing statute. In so far as the repeal affected the rights of the state, it merely related to an incident of one of the remedies. An ad valorem tax was in question in Clegg v. State. The opinion recognized the general rule that the power to enforce such a tax rests upon a levy and an assessment — the assessment being necessary to the just apportionment of the tax burden as between the properties upon which it is imposed. In such a case, a levy alone is not sufficient; there must be both a levy and an assessment; hence, when one of these essentials is lacking, the right to the tax may justly be regarded as being incomplete and falling short of the "liability" referred to in the Constitution. In C. & W. Ry. Co. v. Galveston there was before the court the question of whether or not a charter provision, which declared that delinquent taxes should bear interest at a certain rate, was repealed by a subsequent special statute granting a new charter. The ruling was that the Legislature did not intend to abrogate the right to collect interest, but preserved this right in the saving clause of the new statute. Legislative power itself was not presented or determined. The general rule, "that when a right depends solely upon a statute which is repealed, the right ceases to exist," must be taken with its own limitation. In the present case the right is not inchoate, for nothing remained to be done to mature the tax; and it does not "depend solely" upon a "statute which is repealed," for, having once become a liability, its irrevocable nature finds source in the constitutional provision.

We come, then, to examination of the statute...