Town of Burnsville v. Kwik-Pik, Inc., KWIK-PI
| Citation | 185 W.Va. 696,408 S.E.2d 646 |
| Decision Date | 25 July 1991 |
| Docket Number | No. 19901,KWIK-PI,INC,19901 |
| Court | West Virginia Supreme Court |
| Parties | TOWN OF BURNSVILLE, a Municipal Corporation, Plaintiff Below, Appellant, v., a West Virginia Corporation; Seventy-Niner, Inc., a West Virginia Corporation; and Roger M. Nettles, Individually and as Officer and Shareholder of Said Corporations, Defendants Below, Appellees. |
Syllabus by the Court
1. The rules for construing statutes also apply to the interpretation of municipal ordinances. There is generally a presumption that an ordinance is valid when it appears that its subject matter is within a municipality's power and it has been lawfully adopted. The burden of proof is on the person asserting that the ordinance is invalid.
2. Under W.Va.Code, 8-13-5, and W.Va.Code, 11-13-25, the maximum municipal business and occupation tax rate on the business of selling tangible personal property is one-half of one percent of the gross income of the business. This rate has historically been independent of the state business and occupation tax rate.
3. In enacting the municipal business and occupation tax statute, W.Va.Code, 8-13-5, the legislature did not intend to require a municipality to provide a monetary exemption to its business and occupation tax. Such a monetary exemption is optional.
4. A recital of authority or reference to the statute which authorizes enactment of an ordinance is not ordinarily necessary to the validity of an ordinance, and, therefore, an error in such a provision does not invalidate the ordinance so long as the power to enact it does, in fact, exist.
5. In the construction of tax laws, we still must apply our general rules of statutory construction with a view toward upholding the legislative intent. Strict construction should not be used to defeat tax legislation that is reasonably clear in its meaning.
Robert Reed Sowa, Sutton, for appellant.
Joseph W. Wagoner, Haller & Wagoner, Weston, for appellees.
Gordon H. Copland, Steptoe & Johnson, Clarksburg, for amicus curiae, West Virginia Mun. Attys. Conference, Inc.
This is an appeal from a final order of the Circuit Court of Braxton County, entered on May 24, 1990, which denied relief in a civil action brought by the Town of Burnsville to recover local business and occupational (B & O) taxes owed by the defendants below, Kwik-Pik, Inc., Seventy-Niner, Inc., and Roger M. Nettles. The circuit court ruled that the Town's B & O tax ordinance was not in conformity with the legislative grant of authority to impose such taxes and was, therefore, invalid. We reverse the judgment of the circuit court.
The Town of Burnsville (Town) is a Class IV municipal corporation 1 located in Braxton County. Defendants Kwik-Pik, Inc., and Seventy-Niner, Inc., operate a convenience store and a restaurant, respectively, within the Town corporate limits. Defendant Roger M. Nettles is an officer and shareholder of both of the defendant corporations.
In April 1987, and again in August 1987, the Town notified the defendants that neither corporation had paid municipal B & O taxes since 1984 and that litigation could be expected if they were not paid soon. From January 1, 1988, to February 1, 1988, the Town offered a tax amnesty program, waiving penalties for late payment of overdue taxes and interest. The defendants did not avail themselves of this program.
On May 26, 1988, the Town filed suit against the defendants in the Circuit Court of Braxton County, seeking to recover the unpaid taxes, plus interest and penalties, and to enjoin the defendants from conducting business within the Town limits until such amounts had been paid. The defendants responded with a motion to dismiss the complaint under Rule 12(b)(6) of the West Virginia Rules of Civil Procedure, alleging that the B & O tax ordinance established a rate contrary to the legislative grant of taxing power.
Thereafter, the parties moved for summary judgment. After a hearing at which the parties presented their arguments, the circuit court, by order entered May 24, 1990, concluded that the ordinance was not in conformity with the legislative grant of taxing authority. The court further concluded that it lacked the power to conform the Town's ordinance to the statutory requirements. The court, therefore, held that the ordinance was invalid and granted summary judgment in favor of the defendants. 2
Before addressing the issues raised in this appeal, it is helpful to review some of the ordinances and statutory provisions which are essential to an understanding of this dispute. In 1980, the Town reenacted its municipal B & O tax ordinance to provide for an annual tax "against any person, firm or corporation on account of business and other activities carried on within the Town of Burnsville," including businesses of the type operated by the defendants. 3
The Town's authority to impose such taxes was derived from W.Va.Code, 8-13-5 (1972), which authorized municipalities to impose for their own use on businesses within the corporate limits a tax "similar" to the state B & O tax contained in W.Va.Code, 11-13-1, et seq. 4 In 1985, however, the legislature began phasing out the state B & O tax. The legislature deleted from the state statute provisions for the levy and collection of B & O taxes on most businesses, including those in which the defendants are engaged, after June 30, 1987. See W.Va.Code, 11-13-2 (1985). At the same time, the legislature enacted W.Va.Code, 11-13-28 (1985), which expressly rendered these omitted provisions "inoperative" as of July 1, 1987. 5 Most of these inoperative provisions were later expressly repealed. See 1989 W.Va. Acts, 1st Ex.Sess., ch. 2.
The legislature, however, preserved the power of municipalities to levy and collect local B & O taxes. In 1985 the legislature amended W.Va.Code, 8-13-5, to authorize municipalities to impose a local B & O tax on "any business activity or occupation for which the state imposed its annual business and occupation or privilege tax ... prior to" July 1, 1987. 6
The defendants assert that the municipal B & O tax ordinance is in conflict with the enabling statute, W.Va.Code, 8-13-5, in the following respects: (1) the ordinance imposed a tax rate on the defendants' businesses in excess of the rate previously imposed by the State on such activity; (2) the ordinance failed to provide exemptions similar to those previously provided by the State; and (3) the ordinance failed to set forth interest and penalty provisions similar to those previously provided by the State. In addition, the defendants argue that the language of the ordinance itself precludes the Town from levying B & O taxes on any business which is not currently subject to the State B & O tax.
Certain general legal principles are applicable to municipal ordinances. In Syllabus Point 1 of Davidson v. Shoney's Big Boy Restaurant, 181 W.Va. 65, 380 S.E.2d 232 (1989), we stated:
We have also recognized that Cogan v. City of Wheeling, 166 W.Va. 393, 395-96, 274 S.E.2d 516, 518 (1981). See also City of Bluefield v. McClaugherty, 64 W.Va. 536, 63 S.E. 363 (1908). There is generally a presumption that an ordinance is valid when it appears that its subject matter is within a municipality's power and it has been lawfully adopted. The burden of proof is on the person asserting that the ordinance is invalid. See Perdue v. Ferguson, 177 W.Va. 44, 350 S.E.2d 555 (1986); Ellison v. City of Parkersburg, 168 W.Va. 468, 284 S.E.2d 903 (1981); Henderson v. City of Bluefield, 98 W.Va. 640, 127 S.E. 492 (1925); Harrold v. City of Huntington, 74 W.Va. 538, 82 S.E. 476 (1914). See generally 6 McQuillin Municipal Corporations § 20.06 (3d rev. ed. 1988).
The first contention is that the Town's ordinance is invalid because it imposed a tax rate in excess of the State's B & O tax rate. The appellees are in the business of selling tangible personal property. The state B & O tax rate applicable to such activity on January 1, 1959, was one-half of one percent. 7 This is the same rate established in the Town's ordinance for the same type of business. 8
The alleged disparity arises from the fact that the state B & O tax rate on such businesses varied throughout the period in question. In 1980, the state tax rate was "fifty-five one-hundredths of one percent [.55%] of the gross income of the business[.]" W.Va.Code, 11-13-2c (1971). In 1983, the legislature provided for an annual 5 percent reduction in the state B & O tax rate over a five-year period beginning on July 1, 1985. 9 This reduction lasted for two years, until the legislature rendered the state B & O tax inoperative for most businesses in 1987. 10 The defendants contend that these reductions brought the state B & O tax rate below the Town's rate of .50 percent, thereby rendering the Town's tax invalid.
In this respect, W.Va.Code, 8-13-5 (1972), was rather awkwardly worded. The statute specified that the municipal B & O tax on a particular activity shall not "exceed the rate imposed by the State." This provision was followed immediately, however, by a proviso which limited the municipal B & O tax on a variety of identified businesses and occupations, including those of the defendants, to the state B & O tax rate that was in effect on January 1, 1959. 11 The language of the proviso has been carried forward in subsequent revisions of W.Va.Code, 8-13-5; 12 however, the...
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