Wiseman v. Arkansas Wholesale Grocers' Ass'n

• Decision Date: 24 February 1936
• Docket Number: No. 4-4282.,4-4282.
• Parties: WISEMAN, Commissioner of Revenues, v. ARKANSAS WHOLESALE GROCERS' ASS'N.
• Court: Arkansas Supreme Court

90 S.W.2d 987

WISEMAN, Commissioner of Revenues, v. ARKANSAS WHOLESALE GROCERS' ASS'N.

No. 4-4282.

Supreme Court of Arkansas.

February 24, 1936.

Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor.

Suit by the Arkansas Wholesale Grocers' Association against Earl R. Wiseman, Commissioner of Revenues of the State of Arkansas. Decree for plaintiff, and defendant appeals.

Reversed and remanded, with directions.

Carl E. Bailey, Atty. Gen., Thomas Fitzhugh, Asst. Atty. Gen., and Millard Alford, of Little Rock, for appellant.

E. B. Dillon, of Little Rock, Rowell, Rowell & Dickey, of Pine Bluff, and S. S. Jefferies, of Little Rock, for appellee.

MEHAFFY, Justice.

This suit was begun in the Pulaski chancery court by the Arkansas Wholesale Grocers' Association to restrain Earl R. Wiseman, commissioner of revenues of the state of Arkansas, from collecting the sales tax on sales made by wholesale grocers to retail merchants of wrapping paper, paper bags, and twine. The following is the complaint filed by appellees:

"Plaintiff states that Plaintiff is an unincorporated association of wholesalers and jobbers, resident of the State of Arkansas, with a membership of approximately fifty members located and domiciled in various cities and towns throughout the State and engaged in the sale by wholesale to retail merchants, among other things, of wrapping paper, paper bags and twine, and brings this suit for and on behalf of the members of plaintiff association and as representative of a class for all jobbers and wholesalers in Arkansas engaged in selling, at wholesale to retailers, wrapping paper, paper bags and twine.

"Plaintiff further states that said defendant is the duly qualified and acting Commissioner of Revenues of the State of Arkansas, and, as such Commissioner, did, in October, 1935, issue and promulgate a ruling that all wholesale houses in Arkansas selling `such materials as coco-cola glasses, fountain straws, paper napkins, vinegar pumps, wrapping paper, paper bags and twine, etc., to the merchants for use, will be required to collect the Sales Tax and report same.'

"Plaintiff further states that said ruling by said Commissioner was made, and the collection of a Sales Tax is now being enforced, by said Commissioner upon wrapping paper, paper bags and twine by the purported authority of Act No. 233 of the Acts of the General Assembly of the State of Arkansas for the year of 1935 [page 591].

"Plaintiff further states that the wrapping paper, paper bags and twine upon which said Commissioner has ruled that he is entitled to collect a Sales Tax, and upon which he is now collecting a Sales Tax, are sold and disposed of in the following manner: The wrapping paper, paper bags and twine are sold at wholesale to various and sundry retail merchants in the State of Arkansas, and they are used by said retail merchants for the purpose of wrapping up, tying and as containers for various and sundry articles of merchandise purchased by the customers of said retail merchants.

"Plaintiff states that no Sales Tax is due the State of Arkansas upon wrapping paper, paper bags or twine as above described, for the two following reasons:

"1. The said Sales Tax, namely, aforesaid Act No. 233, is a tax upon consumption, or the ultimate consumer, and that wrapping paper, paper bags and twine sold as above described are sold for resale by the retailer, and are resold by the retailer to his customer although no specific charge is made for wrapping paper, paper bags or twine.

"2. That wrapping paper, paper bags and twine sold in the above manner are, under the definition set out in said Act No. 233, materials used for processing and, under the provisions of said Act, are not subject to a Sales Tax.

"Plaintiff further states that said Defendant is now wrongfully, illegally and without authority of law collecting a Sales Tax upon wrapping paper, paper bags and twine sold by Plaintiff in a manner aforesaid, and will continue to collect said Sales Tax unless enjoined by this Court.

"Plaintiff further states that Plaintiff has no complete or adequate remedy at law for the wrongful collection by said defendant of said Sales Tax upon said wrapping paper, paper bags and twine.

"Wherefore, Plaintiff prays that an injunction be granted by this Court, restraining and prohibiting said Defendant from collecting any Sales Tax upon the sale by a wholesaler to a retailer on wrapping paper, paper bags and twine to be used in the regular course of his business in the manner heretofore set out, and for all other proper relief.

                              "Signed E. B. Dillon
                                     "S. S. Jeffries
                                "Solicitors for Plaintiff."
                

The following demurrer was filed by the appellant:

"The Defendant, Earl R. Wiseman, Commissioner of Revenues, demurs to Plaintiff's Complaint filed herein because said Complaint on its face does not state facts sufficient to constitute a cause of action."

                           "Signed Millard Alford
                            "Attorney for defendant
                                  "Thomas Fitzhugh
                            "Assistant Attorney General."
                

The court overruled the demurrer, and appellant declined to plead further, and the court entered a decree finding that Act No. 233 of the Acts of the General Assembly of the state of Arkansas for the year 1935 (page 591) does not impose a sales tax upon wrapping paper, paper bags, or twine sold by a wholesaler or jobber to a retail merchant, to be used by said retail merchant in the regular course of his business for the purpose of wrapping up, tying, and as a container for various and sundry articles of merchandise purchased by the customers of said retail merchants. The court restrained Earl R. Wiseman, commissioner of revenues, from collecting or attempting to collect any sales tax upon the above-named articles.

Act No. 233 of the Acts of 1935 is styled, "Arkansas Emergency Retail Sales Tax Law." Section 1, p. 591. Paragraph (b) 1 of section 3 of said act (page 592) reads as follows: "(b) 1. The term `sale at retail' shall mean any transaction, transfer, exchange, or barter by which is transferred for a consideration the ownership of any personal property, thing, commodity and/or substance, and/or the furnishing, or selling for a consideration any of the substances and things hereinafter designated and defined, when such transfer,...