Summary
holding that an act imposing a special excise tax on 'corporations' was not applicable to a municipal corporation engaged in the distribution and sale of water
Summary of this case from Casualty Reciprocal Exc. v. Missouri EmployOpinion
March 17, 1937.
MUNICIPAL CORPORATIONS: Persons: Excise Tax. An act imposing an excise tax upon persons engaged in certain public service business, defining "persons" to include "any individual, firm, copartnership, joint adventure, association, corporation," etc., does not apply to a municipal corporation; the word "corporation" as generally used in statutes does not mean municipality.
Appeal from Cole Circuit Court. — Hon. N.G. Sevier, Judge.
REVERSED AND REMANDED ( with directions).
John A. Nolan, for appellant; J.C. Hoester, Jr., and John G. Burkhardt, of counsel.
(1) The appellant city of Webster Groves, being a municipal corporation, is not a "person" within the meaning of the act. Sec. 1 (a), Laws 1933-1934, Ex. Sess., p. 156; Pub. Serv. Comm. v. Kirkwood, 319 Mo. 562, 4 S.W.2d 773; City of Columbia v. Pub. Serv. Comm., 43 S.W.2d 813. (2) Unless expressly provided, the State does not intend to tax the means and instrumentalities of its subordinate agencies. In re Droll, 108 Neb. 85, 187 N.W. 876, 26 A.L.R. 543; State v. City of Montgomery. 151 So. 856; Nashville v. Smith, 96 Tenn. 216, 6 S.W. 273; Grafton Co. v. Haverhill, 69 N.H. 120, 40 A. 399; Foster v. Duluth, 140 N.W. 129; 2 Cooley on Taxation (4 Ed.), 1360: Reuter v. Picot, 38 Mo. 125; State ex rel. Mo. Portland Cement Co. v. Smith, 90 S.W.2d 405. (3) The act if applied to the appellant city of Webster Groves is violative of Section 12-a, Article X of the Constitution of Missouri, which section empowers municipalities to acquire and operate water plants. State ex rel. City of Columbia v. Allen, 183 Mo. 283; Palmer v. Liberal, 64 S.W.2d 265. The appellant city of Webster Groves is not a "person" engaged in the business of selling tangible personal property or services at retail with the "object of gain, benefit or advantage." Sec. 1c, Laws 1933-1934, Ex. Sess., p. 156; Sec. 12a, Art X, Mo. Const.; State ex rel. City of Columbia v. Allen, 183 Mo. 283; Palmer v. Liberal, 64 S.W.2d 265. (4) The subject of the act is not clearly expressed in the title as required by Section 28 of Article IV of the Constitution of Missouri. City of Columbia v. Pub. Serv. Comm., 43 S.W.2d 813.
Roy McKittrick, Attorney General, and Olliver W. Nolen, Assistant Attorney General, for respondent.
(1) The fact that appellant, the city of Webster Groves, is a municipal corporation, does not exempt it from the tax as contained in the act. Oklahoma Home G. E. Co., 58 P.2d 124; City of Covington v. State Tax Comm., 77 S.W.2d 386; Sumid v. City of Prescott, 230 P. 1104; Bay City Plumbing Heating Co. v. Lind, 235 Mich. 457; City of Ardmore v. State, 32 P.2d 728. (2) Political subdivisions of the State are not exempt from the tax. City of Covington v. State Tax Comm., 77 S.W.2d 386; State ex rel. Mo. Portland Cement Co. v. Smith, 90 S.W.2d 405; City of Ardmore v. State, 32 P.2d 728. (3) The tax imposed is an excise (privilege or occupation tax) and not a property tax. Therefore, taxing appellant on its gross receipts derived from the sale of water does not violate or contravene Section 12a of Article X of the Constitution or any other section of the Constitution which relates to the exemption of property taxation. State Tax Comm. v. Logan, 54 P.2d 1197; State ex rel. Mo. Portland Cement Co. v. Smith, 90 S.W.2d 406; City of Tacoma v. Tax Comm., 33 P.2d 899; City of West Palm Beach v. Amos, 130 So. 711; State v. City of Monroe, 149 So. 541; State v. Williams, 87 S.W.2d 423. (4) Appellant, the city of Webster Groves, is engaged in the selling of services, substances and things as enumerated in the act with the object of gain, benefit or advantage. State v. Yelle, 25 P.2d 95; Okla. G. E. Co. v. Okla. Tax Comm., 58 P.2d 126; City of Tacoma v. Tax Comm., 33 P.2d 903; Wiseman v. Gillioz, 96 S.W.2d 459.
The Fifty-seventh General Assembly in Extra Session, passed an act imposing an excise tax upon the privilege of engaging in the business of selling tangible personal property at retail and upon the privilege of engaging in the business of selling certain services. [Laws, Ex. Sess., 1933-34, pp. 155-166.] The act was repealed by the Fifty-eighth General Assembly. [Laws 1935, p. 411.] The plaintiff is a municipal corporation and owns and operates a system for the distribution and sale of water to consumers within the city. During the effective period of the act and prior to the filing of this suit plaintiff upon demand of the State Auditor, but, it alleges, under protest, paid the tax imposed by the act upon the privilege of engaging in the business of selling water service, the total amount paid to the State Auditor admittedly being $173.80. Alleging, among other things, that the act "is not applicable to" it "as a municipal corporation" plaintiff by this suit sought to enjoin the State Auditor from paying the said sum of $173.80 to the State Treasurer and prays that "he be directed to repay said sum to plaintiff" and that the State Auditor be enjoined "from . . . attempting to collect" any further sums from plaintiff by virtue of said act. The circuit court found against plaintiff and it has appealed from that judgment.
To develop the basis of plaintiff's contention that the act does not apply to a municipality engaged in selling public utility service it will be necessary to refer to certain provisions thereof. Section 2A, page 157, provides (italics ours), " For the privilege of a person engaging in the business of rendering the services, furnishing or selling the substances and things hereinafter in this section designated or defined, a tax is hereby imposed upon such person at the rate of one-half of one per cent of the gross receipts of any such person from the sale . . . or the furnishing of the services, substances and things hereinafter in this section designated or defined, sold . . . or furnished in this state. . . . The tax imposed by this section as to the sale of services, substances and things shall apply to the businesses of: (a) . . . (b) sales of electricity or electrical current, water, sewer service, gas (natural or artificial), to domestic, commercial or industrial consumers." Thus it will be noted the tax is imposed upon a person "for the privilege" of such person "engaging" in the kind of business designated. "Person" as used in the act is defined in Section 1 thereof (p. 156) as follows: "The following words, terms and phrases when used in this act have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning: (a) `Person' includes any individual, firm, copartnership, joint adventure, association, corporation, estate, trust, business trust, receiver, syndicate or any other group or combination acting as a unit, and the plural as well as the singular number." The plaintiff-appellant contends that it does not come within this definition, that, within the meaning of the act, it is not a person upon whom the tax is imposed and that the act does not apply to a municipality. The State Auditor takes the position that the word "corporation" as used in the foregoing definition should be taken and construed to include a municipality, it being a municipal corporation.
In definition and legal classification and terminology a well-settled distinction exists, and is recognized generally, between a "corporation" and a "municipal corporation." Each term has a distinct and commonly accepted meaning. As illustrative reference may be had to our statutes. The numerous statutory provisions relating to the organization, powers, etc., of municipalities are collected and classified under the designation "Municipal Corporations" (see for example Chap. 38, R.S. 1929). Municipalities are variously referred to in our Constitution as cities or towns and municipal corporations. "In common parlance, towns, cities and other municipal organizations are not known as corporations." [Linehan v. City of Cambridge, 109 Mass. 212.] Reverting to statutory language in this State the term "corporation" is used and refers to private and business corporations and the statutes relating to such corporations are assembled under the designation or classification of "corporations." [See for example Chap. 32, R.S. 1929.] Likewise where the term "corporation" is used in our Constitution it uniformly refers to private or business organizations of individuals. Neither by the language of the Constitution nor statutes is the term "corporation" so used as to apply to and include a municipality or municipal corporation and where a city or town is referred to, in the sense of being a corporate entity, the term municipal corporation is used. Looking to the context of the act as a whole we find no language or provisions therein from which an implication necessarily arises that it was the legislative intent to include a municipal corporation within the act. Indeed we find nothing in the other provisions of the act which so much as tends to show such an intent. The provision for verification of the return to be made to the State Auditor requires that it "be verified by the oath of the taxpayer, if made by an individual, or by the oath of the President, Vice-President, Secretary, or Treasurer of a corporation if made on behalf of a corporation." While the persons thus specifically named are the usual officers of private corporations, they are not, except treasurer, officers of a municipality. Further the collocation of "corporation" with the words "individual," "firm," "copartnership," etc., indicates that a private corporation and not a municipality was meant. In view of the foregoing considerations, the meaning commonly ascribed to the word "corporation" both in popular usage and legal nomenclature and absence of language indicating a legislative intent to use it in a different sense we must assume it was used in its ordinary and commonly understood meaning and the assumption legitimately follows that had the Legislature intended to include a municipality in the act it would have done so by specific language to that effect. It is our conclusion that the word "corporation" as used does not include a municipality and therefore a municipality is not within the act. The decisions of this court in Public Service Commission v. City of Kirkwood, 319 Mo. 562, 4 S.W.2d 773, and the City of Columbia v. Public Service Commission, 329 Mo. 38, 43 S.W.2d 813, lend support to such conclusion.
It follows that the judgment herein should be, and hereby is, reversed and the cause remanded with directions to the circuit court to grant such injunctive relief, as, in conformity herewith, plaintiff is entitled to have with judgment for plaintiff in such sum, if any, which the court shall find was collected from plaintiff by the State Auditor, under plaintiff's protest, if so, prior to the commencement of this proceeding and held or impounded subject to the outcome hereof. Hyde and Bradley, CC., concur.
The foregoing opinion by FERGUSON, C., is adopted as the opinion of the court. All the judges concur.