Town of Utica v. State ex rel. Rice, Atty. Gen

• Decision Date: 15 May 1933
• Docket Number: 30661
• Citation: 166 Miss. 565,148 So. 635
• Court: Mississippi Supreme Court
• Parties: TOWN OF UTICA v. STATE ex rel. RICE, ATTY. GEN

148 So. 635

166 Miss. 565

TOWN OF UTICA v. STATE ex rel. RICE, ATTY. GEN

No. 30661

Supreme Court of Mississippi

May 15, 1933

Division A

Suggestion Of Error Overruled June 12, 1933.

APPEAL from circuit court of Hinds county HON. W. H. POTTER, Judge.

Proceeding by the state, on the relation of Greek Rice Attorney-General, against the town of Utica. From the judgment, defendant appeals. Reversed and remanded.

Reversed and remanded. Overruled.

W. E. Morse, of Jackson, for appellant.

We think that an examination of the statute, chapter 93, Laws of 1932, is proof conclusive to the court that a municipality which buys this oil for its own use is not subject to this tax. In the first place, the definition of gasoline in the first section excludes fuel oil from the definition of the word gasoline, so that unless there is a privilege tax levied for the business of selling fuel oil or for the business of blending fuel oil, or for the business of storing fuel oil, for the purpose of resale or distribution then there is no tax on fuel oil as such.

City of Jackson v. Mitchell, 126 So. 2.

This act does not say that every person who purchases or acquires in any manner any fuel oil, shall be a distributor or wholesale dealer of gasoline. Neither does it say that such a person shall be a retail dealer. The tax as attempted to be levied by the act and not through the enforcement officers of the state, does not levy a tax such as is sought to be collected here by the state officials.

In order to be liable for the tax, we would have to be a wholesale dealer or distribution, or retail dealer. The special pleas set up that we were not engaged in any business. The town owned this fuel oil. It was burning the oil in its own engines. There was no attempt to evade taxes. There never had been any attempt to levy such a tax as this before. It is our contention that under the present laws there is no tax on fuel oil where the same is purchased by a municipality and used as fuel oil.

All privilege taxes are construed strongest against the state and in favor of the taxpayer.

Ex parte Taylor, 58 Miss. 478, 38 Am. Rep. 366; R. R. Co. v. State, 62 Miss. 105; Bell v. Kerr, 80 Miss. 177, 31 So. 708; Wilby v. State, 93 Miss. 767, 47 So. 465; State v. Grenada Compress Co., 123 Miss. 191, 85 So. 137; Sperry v. Harbinson, 123 Miss. 679, 86 So. 455; Planters' Lbr. Co. v. Wells, 112 So. 9; Pan-American Pet. Co. v. Miller, 122 So. 393.

If the tax is to be construed as simply a tax on oil and not on the basis of a privilege or excise tax, then the act, of course, is unconstitutional and void, and this would be so, whether the Legislature called it excise tax, privilege tax, or whatever name they might call it, as the court looks through the form to the substance to determine the nature of the tax itself.

Thompson v. Kreutzer, 72 So. 891; Thompson v. McLeod, 73 So. 194.

A Legislature cannot make a private purpose a public purpose, or draw to itself or create the power to authorize a tax or a debt for such a purpose, by its mere fiat.

Dodge v. Township, 107 F. 827, 46 C. C. A. 661, 54 L.R.A. 242; Wilby v. State, 93 Miss. 769, 47 So. 465; Locke, Tax Collector v. Dantzler, 81 So. 175; Chicago, R. I. & P. Co. v. Robertson, 84 So. 449; Reed Bros. v. Board of Supervisors, 88 So. 504; Barnes v. Jones, 103 So. 773; State v. G. M. & N. R. Co., 104 So. 689.

Gardner & Backstrom, of Gulfport, and J. Morgan Stevens, of Jackson, amici curiae.

There exists no liability on the appellant to pay the state an excise or any character of tax on the fuel oil so purchased and consumed for the following reasons: (a) Chapter 93 of the Laws of 1932 imposes an excise tax of one cent per gallon only on persons engaged in the business of buying, selling, storing or distributing fuel oil; (b) the appellant was not at the time of the delivery to it, nor is it now, engaged in business as a wholesaler or retailer, or the occupation or business of buying, selling, storing or distributing fuel oil in the state of Mississippi; (c) in effect the state is attempting to collect an ad valorem tax; (d) because the imposition of such tax contravenes paragraph 2 of section X, and paragraph 3 of section VIII of Article I of the Constitution of the United States; and, (e) is an effort on the part of the state to collect a tax on the right to own or consume property, for which there is no authority in law.

It would be something new and revolutionary in legislation, as well as in jurisprudence in this state, to require a citizen to pay an excise tax for the right of owning property or consuming property which he owns. It would seem the Legislature has exhausted its ingenuity in devising new ways to levy taxes, but we have not yet reached the point where we require a citizen to pay a privilege tax for the mere right to own property. The right of ownership of property is not a privilege granted by the state or nation, but is a right inherent in the people.

Section 32, Mississippi Constitution of 1890.

Laws are to be strictly construed against the taxing power. The power cannot be implied. All doubts must be resolved in favor of the taxpayer.

Miller v. Illinois Central R. Co., 146 Miss. 422, 111 So. 558; State v. Grenada Cotton Compress Co., 123 Miss. 191, 85 So. 137; Board of Levee Commissioners v. Howze Mere. Co., 149 Miss. 843, 116 So. 92; Gully, State Tax Collector, v. Jackson International Co., 145 So. 905.

If the court holds that the appellant is liable for an excise tax of one (1) cent per gallon on the fuel oil purchased by it as disclosed by this record, then it necessarily means that it is a tax imposed on the right to own property, for it is inconceivable that the court can adjudicate that the town was a dealer or distributor in fuel oil under the provisions of the act here involved, or under any other statute.

Ownership is not a privilege conferred by government, but is one of the rights governments were organized to protect.

Thompson, Auditor, v. Kreutzer, 72 So. 891, 112 Miss. 165; Thompson, Auditor, v. McLeod, 73 So. 193, 112 Miss. 383; Barnes v. Jones, 103 So. 773.

A Legislature cannot make a private purpose a public purpose, or draw to itself or create the power to authorize a tax or a debt for such a purpose, by its mere fiat.

Dodge v. Township, 107 F. 827; Section 112, Constitution of 1890.

The position may well be taken that the entire act is invalid because it clearly violates the interstate commerce clause of the Constitution of the United States, if construed according to the technical wording thereof.

A tax imposed on an article imported or brought into the state in interstate commerce cannot be taxed by the state simultaneously with its entry into the state.

Brown v. Maryland, 12 Wheat. 419, 6 L.Ed. 678.

Herbert Nunnery, Special Agent, for the state.

It is the position of the state that any person, association or corporation receiving these petroleum products in wholesale quantities is deemed a distributor and subject to the tax imposed on the particular product, regardless of whether privately consumed, or whether resold and is, therefore, considered a distributor or wholesale dealer in gasoline and the like product.

In the case at bar appellant is purchasing and storing the fuel oil for its private consumption, which is equal to receiving and storing for hire or sale at retail. In passing upon the act of the Legislature it is, and should be, the duty of the court to first determine the intent of the Legislature.

It is a settled rule of statutory construction that it is the duty of the court to ascertain the intent of the Legislature and to give it effect so far as possible within constitutional limitations.

Gregg Dyeing Co. v. Query, 164 S.E. 588, 76 L.Ed. 852, 286 U.S. 472.

I submit, in the case at bar, that it was conclusively the intent of the Legislature to place this tax of one cent per gallon upon all fuel products received or consumed in this state and in order to get the clear and unmistakable intent of the Legislature it is necessary to construe the statute as a whole, conceding that it is a very lengthy act, broad in principle, and requiring undivided attention on all points from beginning to end, the Gregg case being similar to the case at bar on the point of the gasoline not being used on the highways of the state.

The act is very clear in designating and classifying persons receiving fuel oil in wholesale quantities upon which no tax has been paid, as distributors.

City of Jackson v. State ex rel. Mitchell, 156 Miss. 306, 126 So. 2.

The tax imposed by the act herein involved, is an excise tax or privilege tax and not a property tax.

The excise tax on petroleum products has been upheld in theory and principle in this state and the Supreme Court has passed upon its validity.

Superior Oil Co. v. Knox, Attorney-General, 156 Miss. 377, 119 So. 360; City of Jackson v. Mitchell, Attorney-General, supra; State v. Panhandle Oil Co., 147 Miss. 663, 112 So. 584; Panhandle Oil Co. v. State of Mississippi, Knox, Attorney-General, 277 U.S. 218, 72 L.Ed. 857, 56 A.L.R. 583.

The long line of decisions of both the Supreme Court of the United States and the state Supreme Court, have held that the tax imposed by chapter 93 of the Laws of 1932, and similar acts, is an excise tax and not a property tax.

It is clear that it was the intent of the Legislature to levy the Mississippi Excise Tax on all petroleum products, used or intended to be used, in the state of Mississippi and that when same comes to rest in this state for the purpose of being consumed, then it loses its interstate commerce character. In the case at bar the fuel oil was brought from out of the state of Mississippi to Utica, in Mississippi, and there...