The State ex rel. Liggett & Myers Tobacco Co. v. Gehner

• Decision Date: 08 April 1927
• Docket Number: 27362
• Parties: The State ex rel. Liggett & Myers Tobacco Company v. Frederick Gehner, Assessor, and as President, and A. R. Schollmeyer et al. as Members, of Board of Equalization of City of St. Louis
• Court: Missouri Supreme Court

292 S.W. 1028

316 Mo. 1075

The State ex rel. Liggett & Myers Tobacco Company v. Frederick Gehner, Assessor, and as President, and A. R. Schollmeyer et al. as Members, of Board of Equalization of City of St. Louis

No. 27362

Supreme Court of Missouri

April 8, 1927

Record quashed.

Jourdan & English for relator.

(1) By the statutes of the United States, a corporation is obliged to make its return for taxation and pay its income taxes to the collector of internal revenue within the district where it has its principal office (In this case, the city of St Louis.) 43 U.S. Stat. L. 288, sec. 241. (2) The statute fixing the Missouri income tax to be paid by a foreign corporation is specific as to the method by which the net income of such corporation is to be ascertained, and as to foreign corporations the statutes requires a return of gross income received from sources within the State and requires a deduction of the taxes paid within the year imposed by authority of the United States paid within the State. R. S 1919, sec. 13114. (3) Revenue statutes are to be strictly construed in favor of the taxpayer and against the State. State ex rel. Nat. Life Ins. Co. v. Hyde, 292 Mo. 352; In re Estate of Clark, 270 Mo. 351, syl. 6; State ex rel. Am. Central Ins. Co. v. Gehner, 280 S.W. 416. (4) All statutes must be construed in pari materia and the courts in construing such statutes should take into consideration not only portions of the statute in question but laws enacted at the same or even a prior session of the Legislature. Grimes v Reynolds, 184 Mo. 688; Curtwright v. Crow, 44 Mo.App. 568; Dworkin v. Caledonian Ins. Co., 285 Mo 342, 363. (5) Where an income tax statute requires a return of gross income with deductions of specific items therefrom to ascertain net income, and as to one item of deduction the Legislature authorizes such deduction not in excess of a proportionate amount, and as to a second item of deduction omits to say anything about proportions, it is evident that the Legislature intended to treat the two items differently, and by avoiding the use of terms indicating a proportionate part for such second item of deduction intended that the whole item should be deducted. The converse of a proportion is the whole, and the whole item will be deducted, and a proportionate deduction cannot be read into the statute by the court. State ex rel. v. Glaves, 268 Mo. 106.

North T. Gentry, Attorney-General, George W. Crowder, Assistant Attorney-General; A. R. Morse, Attorney for State Auditor; Julius T. Muench, City Counselor, and Oliver Senti, First Associate Counselor, of counsel, for respondents.

(1) In construing a statute, effect is to be given, if possible, to every word and clause in a sentence. It is the duty of the court, so far as practical, to reconcile the different provisions so as to make them consistent and harmonious and give a sensible and intelligent effect to each. 36 Cyc. 1128. (2) It is the universal rule in the exposition of statutes that the intent of the law, if it can be clearly ascertained, shall prevail over the letter, and this is especially true where the precise words, if construed in the ordinary sense, would lead to manifest injustice. Taxing statutes, like other statutes, should be construed in accordance with this rule. Lionberger v. Rowse, 43 Mo. 67; Lionberger v. Rowse, 9 Wall. 468, 19 L.Ed. 721; Cooley on Taxation (4 Ed.) sec. 505; State ex rel. v. Gehner, 286 S.W. 117.

Blair, J. All concur, except Ragland, J., who dissents, and Gantt, J., who does not sit.

OPINION

Blair, J.

This is an original proceeding by certiorari, whereby relator seeks to quash the assessment of income taxes against it for the year 1925 by the Board of Equalization of the City of St. Louis. The pleadings are the petition of relator, the return of respondent, setting forth the records of the Board of Equalization, and relator's motion to quash the record of respondent.

The facts are not in dispute. They are concisely stated in the record made by respondent board when it assessed the tax in question. We quote therefrom as follows:

"The board finds and determines from the evidence that Liggett & Myers Tobacco Company is and at all times herein mentioned was a corporation organized and existing under the laws of the State of New Jersey, and duly licensed to do business in the State of Missouri and having its principal office and place of business in the city of St. Louis, Missouri; that a blank form for the making of income tax returns to the State of Missouri for income received during the year 1925 by said company was duly served by the Assessor of the City of St. Louis, Missouri, upon said Liggett & Myers Tobacco Company, and said corporation in due and proper time prepared a return truly stating the gross amount of its income received within the year 1925 from all sources within the State of Missouri, in the amount of $ 1,673,053.36; that from said gross amount of its income the said Liggett & Myers Tobacco Company returned deductions therefrom as authorized in the first, second and third clauses of the second subdivision of Section 13114, Revised Statutes of Missouri for the year 1919, which deductions from said gross income amounted in the aggregate to $ 850,447.76.

"The board further finds that said Liggett & Myers Tobacco Company made a further deduction from the said gross amount of its income for taxes paid within the year imposed by the authority of the United States in the amount of $ 1,789,427.58, and also deducted from the gross amount of said income, taxes paid within the year imposed under the authority of the State of Missouri and its political subdivisions in the amount of $ 40,667.73, and that when said deductions were made the total amount of said deductions exceeded the amount of said gross income from all sources within the State of Missouri by $ 1,007,489.71.

"The board further finds that the said amount deducted for taxes imposed by the authority of the United States truly and correctly represents the amount of income taxes imposed by the authority of the United States and paid during the year 1925 to the Collector of Internal Revenue of the United States at and within the State of Missouri, and the board further finds that the said amount deducted for taxes paid within the year 1925 imposed by the authority of the State of Missouri and the city of St. Louis in the amount of $ 40,667.73 is true and correct.

"However, the board finds that the said amount of taxes so paid within the year 1925 imposed by the authority of the United States represents the amount paid to the United States for income taxes assessed against said Liggett & Myers Tobacco Company by the authority of the United States upon the income of said Liggett & Myers Tobacco Company from all sources within the United States, and the board finds that the proportion of said income tax imposed by the United States which the gross amount of the income of said Liggett & Myers Tobacco Company for the year 1925 from business transacted and capital invested within the State bears to the gross amount of its income derived from all sources within and without the State amounts to $ 79,736.89; and the board, therefore, orders the said deduction of $ 1,789,427.58 for taxes paid within the year imposed by authority of the United States reduced to the sum of $ 79,736.89, notwithstanding that all said taxes imposed by the authority of the United States were paid within the State of Missouri; and the board, therefore, finds that said Liggett & Myers Tobacco Company is taxable for income taxes to the State of Missouri on the amount of $ 702,200.98, and orders that said assessment be made against said company for income taxes for the year 1925 in said amount."

It is not necessary to detail the steps taken by relator in resisting the order of the Board of Equalization. The appropriateness of relator's remedy by certiorari is not challenged. The sole question is whether or not, in determining its net taxable income in this State, relator is entitled to deduct from the gross amount of its income from its business within the State of Missouri in the year 1925 all taxes paid by it in the State of Missouri and within said year and imposed by the authority of the United States upon its income from all sources within the United States. If so, the record of the Board of Equalization...