State v. Sunburst Refining Co.
| Decision Date | 04 April 1925 |
| Docket Number | 5687. |
| Citation | 235 P. 428,73 Mont. 68 |
| Parties | STATE v. SUNBURST REFINING CO. |
| Court | Montana Supreme Court |
Rehearing Denied April 21, 1925.
Appeal from District Court, Lewis and Clark County; W. H. Poorman Judge.
Action by the State of Montana against the Sunburst Refining Company. From the judgment rendered, both parties appeal. Reversed in part and remanded, with directions to enter judgment for defendant, and affirmed in part.
Homer G. Murphy, of Helena, and Norris, Hurd & Rhoades, of Great Falls, for appellant.
L. A Foot, Atty. Gen., and A. H. Angstman, Asst. Atty. Gen., for the State.
In the complaint herein plaintiff alleges that the Sunburst Refining Company, a Montana corporation, with its principal place of business at Great Falls, manufactured and sold in this state during the quarter ending September 30, 1923, 270,740 gallons of gasoline and distillate, and during the next succeeding quarter 337,332 gallons; that it did not make the quarterly reports within the time prescribed by law, and failed and refused to pay the license tax imposed by the law. Judgment is sought for the amount of the tax due, interest thereon and a penalty.
The answer of the defendant Refining Company admits all the material allegations of the complaint, and by way of special defense sets forth that during the period mentioned certain corporations (naming them), organized under the laws of sister states of the Union, were engaged in manufacturing gasoline and distillate in such other states and in shipping their products into this state in original packages; that corporations organized under the laws of this state, and individuals and concerns were engaged in business in this state, purchasing gasoline and distillate in other states and shipping the same into this state in original packages; that in the conduct of such business these corporations, foreign and domestic, and the individuals and concerns referred to received such gasoline and distillate, stored them in warehouses and depots at distributing points in this state, and thereafter sold such products in the original packages and delivered them from the warehouses and depots to their customers in this state, and thus entered into direct competition with the defendant herein; and that, if the statute imposing the license tax is enforced, the effect of such enforcement will be an unjust, unreasonable, and arbitrary discrimination against this defendant and its business, and in favor of its competitors and their business.
Upon these pleadings judgment was rendered and entered for the amount of the tax found to be due, with interest, and from that judgment defendant appealed. The state prosecuted a cross-appeal from that part of the judgment which denied to it the right to recover the penalty demanded.
Our original gasoline license tax statute was enacted in 1921 (chapter 156, Laws of 1921), and is found in sections 2381-2396, Revised Codes of 1921. In 1923 sections 2382, 2383, and 2392 were amended, and sections 2393 and 2394 were repealed (chapter 150, Laws of 1923), and this was the state of the law at the time this cause of action accrued. Section 2381 provides:
Section 2382, as amended, provides that every distributor engaged in conducting business in this state shall pay each year-
"a license tax for engaging in and carrying on such business in this state, in an amount equal to two cents for each gallon of gasoline, and two cents for each gallon of distillate refined, manufactured, produced, or compounded by such distributor and sold by him in this state, or shipped, transported or imported by such distributor into, and distributed and sold by him within this state, during such year: Provided, however, that no gasoline or distillate distributed or sold by any such distributor in the original packages in which the same was shipped, transported or imported, into this state, shall be included or considered in determining the amount of such license tax," etc.
The other sections provide for the reports to be made, the time of payment, the distribution of the tax when collected, the penalty for failure to comply with the law, etc. This statute is not in any sense a police regulation. It imposes an excise or occupation tax solely for raising revenue, and was doubtless intended to be that form of license tax mentioned in and authorized by the last sentence of section 1, article 12, of our state Constitution. Bearing in mind the definitions given in section 2381, above, and that tank cars, drums, and cans are original packages, and our inquiry upon this appeal has to do only with amended sections 2382 and 2383, and the practical operation of those sections can be determined best by the following four illustrations:
1. Since plaintiff produced and sold in this state 100,000 gallons of gasoline and distillate per month, or at the rate of 1,200-000 gallons per year, this statute would require it to pay a license tax of $24,000 per year for the privilege of conducting its business; whereas its competitor, H. Company, which manufactured 1,200,000 gallons of gasoline and distillate in an adjoining state, shipped the products into this state in the original packages, stored them in its warehouse, and thereafter sold them to dealers in this state in the original packages-all during the same period-would not be required to pay any license tax whatever, even though the two companies conducted business in the same city and under identical conditions.
2. A and B., each located in this state, engage exclusively in the business of selling gasoline and distillate in this state in the original packages, each has his entire capital invested in his business, each owes the same duty to the state, and each receives the same measure of protection from the general laws of the state. The two places of business are side by side in the same city, and the two businesses are conducted under identical circumstances and conditions; but A. handles only Montana-made gasoline and distillate, whereas B. handles gasoline and distillate manufactured in Wyoming. It is the same distance from the common place of business to the Montana refinery from which A. receives his supplies as it is to the Wyoming refinery from which B. obtains his supplies, and the freight rate is the same in each instance, and each sells 1,000,000 gallons of gasoline and distillate...
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