White Stores, Inc. v. Atkins

• Decision Date: 01 April 1957
• Citation: 6 McCanless 180,303 S.W.2d 720,202 Tenn. 180
• Parties: , 202 Tenn. 180 WHITE STORES, Inc. v. Z. D. ATKINS, Commissioner, et al.
• Court: Tennessee Supreme Court

Page 720

303 S.W.2d 720

6 McCanless 180, 202 Tenn. 180

WHITE STORES, Inc. v. Z. D. ATKINS, Commissioner, et al.

Supreme Court of Tennessee.

April 1, 1957.

Egerton, McAfee, Armistead & Davis, Knoxville, for appellants.

George F. McCanless, Atty. Gen., Allison B. Humphreys, Solicitor Gen., Nashville, Milton P. Rice, Asst. Atty. Gen., for appellees.

PER CURIAM.

The succinct and well reasoned opinion of the Chancellor has answered all questions raised herein as well as we could do. To rewrite the opinion would serve no useful purpose and we, therefore, adopt his opinion as the opinion of this Court. Boillin-Harrison Co. v. Lewis & Co., 182 Tenn. 342, 345, 187 S.W.2d 17.

'Complainant's suit is for a declaratory judgment upon the question of whether or not it, as a chain store corporation, owning and operating both a wholesale division, consisting of a central warehouse, and a retail division, consisting of 42 retail stores, or outlets, is entitled to the privileges of a 'wholesale dealer and jobber' under the provisions of Section 67-3106 T.C.A., and particularly the compensation allowed such wholesale dealers and jobbers thereunder for selling and affixing tobacco stamps to tobacco products.

'Complainant is a single corporation and owns and maintains a central warehouse, which it operates in a manner which is, with one exception, identical to that of a wholesale seller or distributor of products; the single exception being that while it is willing to sell to other retail outlets than its own, the facts are it has never made any such sales and does not plan or expect to make any in the future. It also owns and operates forty-two retail stores or outlets in various locations is Tennessee, through which it distributes the products it buys from manufacturers to the consuming public. Its manner of operation, between its wholesale and retail division, is described by its president in his deposition, as follows:

"Q. Will you please briefly just explain you method of operations between your wholesale house, and your retail outlets? A. Well, of course our wholesale house received all of our merchandise that we purchase from manufacturers, suppliers and processers. We receive that merchandise in trailer loads, car loads and of course some L.C.L., that is less than car load shipment. It is maintained there under a rather modern and rigid control of I.B.M. machinery, which tells us at all times exactly how much merchandise we have in that warehouse, when it moves, what merchandise is on the road coming to us--in fact, what contracts are made for the year against which we withdraw these various products.

"As the merchandise is maintained and cared for at this warehouse, we receive from our retail stores an order sheet that has been filled out by them, pre-imprinted, and as we receive this order sheet, through a rather interesting and intricate process of the I.B.M. machinery, we are able to transpose that order onto a punch card, and this punch card is our part of that particular item from there on to its destination at the retail store level.

"It serves as our billing unit, our inventory control from the warehouse to the retail store level. We are no different from the average wholesale jobber to other retail stores. They receive their merchandise as we do, and in many cases from just about the same manufacturers and suppliers and producers. They do not all use the punch card control method. I believe K.M.C. Company in town does, but they still receive their merchandise as we do, and they distribute their merchandise or similar products and similar retail stores, just as we do.

"Q. In other words, when one of your retail stores need an item, they will send an order in to the wholesale department? A. Yes, sir.

"Q. And that order is filled? A. Those instructions come from the manager of our stores. We wait for instructions just like a wholesale jobber would wait instructions from the retailer perhaps that turns his order in to a jobber salesman.

"Q. When merchandise is issued to the retail store, is that merchandise charged to that particular store? A. Yes, we must have an account of every one of our stores, and if the load of merchandise, for instance, goes to our uptown stores, some two blocks away from this point, it is charged to that store, which is known as Store No. 1.'

'Complainant thus distributes practically all of the products it sells, its president estimating that less than ten per cent of its total products are purchased by its retail outlets directly from suppliers or manufacturers.

'Complainant makes no retail sales from its wholesale warehouses.

'On May 3, 1954, complainant applied to the defendant, Commissioner, for a permit or license to sell cigarettes as a wholesale dealer, and which license would entitle complainant to receive the compensation allowed wholesalers and jobbers for selling cigarette stamps. On June 7, 1954, the defendant, Commissioner, having sought and obtained the opinion and advice of the office of the Attorney-General of the State of Tennessee approved complainant's application and issued it such permit or license. Complainant exercised the privileges accorded it by such permit, or license, from June 7, 1954, but shortly before the filing of the original bill in this case it was advised by the defendant Commissioner, that his previous action in granting the license, or permit, was in error, and that he did not intend to renew complainant's wholesale distributor's license or permit. The record shows that the defendant Commissioner, took this latter action upon the advice of the Attorney-General's Office.

'The office of the Attorney-General, with commendable frankness, concedes its earlier advice to the defendant, Commissioner, and its change of opinion and later advice to him regarding complainant's status as a wholesale distributor. That office very properly has joined with the defendant Commissioner in submitting this matter for declaratory judgment with respect to the subject matter of this cause.

'That the question involved is serious and real and one proper for judicial determination is indicated by the fact that it involves the determination of whether or not the Court, through statutory construction, should elide the word 'only' from the statute defining wholesale dealers and jobbers Section 67-3101(f), T.C.A., providing as follows:

"The term 'wholesale dealer and jobber' means persons, firms or corporations who sell at wholesale only any one or more of the articles taxed herein to licensed retail dealers for the purpose of resale only.' (Emphasis supplied.)

'This problem of statutory construction is always a difficult one.

'The complainant's attack upon the action of the defendant Commissioner, and the statutory authority under which he acted is two-pronged. The complainant first says that the defendant Commissioner's, act in refusing to renew its permit was wrongful because under the statute it is a 'wholesale dealer and jobber' within the meaning thereof, and as such is entitled to a renewal of its license, or permit. But, says the complainant, if it is not correct in this contention, and if the statute be construed so as to exclude complainant from the definition of a 'wholesale dealer and jobber' thereunder and the privileges resulting therefrom, then the act, itself, is violative of Article I, Section 8, and Article XI, Section 8, of the Constitution of Tennessee, and also the Fourteenth Amendment to the Constitution of the United States, because it discriminates against complainant and in favor of other wholesale dealers similarly situated.

'The defense made is that the complainant is not a wholesaler under any possible construction of the statute, because it is not engaged in selling one or more of the articles taxed to licensed retail dealers for the purpose of resale only, and that a construction of the Act which excludes complainant as a wholesaler does not render the same unconstitutional for the reasons assigned, because the classification in the taxing statute is a reasonable one upon a ground which has been recognized and sustained by the Supreme Court of Tennessee in Great Atlantic & Pacific Tea Co. v. McCanless, 178 Tenn. 354, 157 S.W.2d 843.

'In that case the Court considered an attack upon the constitutionality of the Act upon the ground that it violated Article I, Section 8, and Article XI, Section 8 of the Constitution of Tennessee, because it discriminated against retail dealers and in favor of wholesale dealers. The complainant in that case was a corporation which operated numerous chain stores and sold tobacco products 'at retail as well as at wholesale.' The Court commented at page 356 [of 178 Tenn., at page 843 of 157 S.W.2d], 'being a retail store, it does not come within the provision of the above quoted statute.' In sustaining the constitutionality of the Act in that case, and in finding the classification reasonable, the Court said at page 357 [of 178 Tenn., at page 844 of 157 S.W.2d]:

"Applying these principles of constitutional law to the facts of the cause under consideration, several reasons occur to us as to the object which the Legislature had in mind in the enactment of this statute. Prior to the enactment of this statute other plans had been tried out by the Legislature, which evidently had proven unsatisfactory. Apparently this latter plan could be executed more economically and more efficiently than the preceding one. In the next place, a wholesaler, as a rule, purchases in much larger qnantities than a retailer, and that in and of itself is a well-established principle in our commercial life that entitles him to a discount. Finally, it appears from our taxing statutes that the Legislature in this State has uniformly placed retail and wholesale merchants in different classes.'

'The complainant's contention, that the word 'only' should be elided from the statutory provision defining a wholesale dealer and jobber,...