Summary
holding that placing juke boxes and other coin operated machines in a store, tavern, or other places of business, where owner of premises received a percentage of gross receipts, did not create a joint venture but merely a rental of the juke boxes, and coin operated machines for state sales tax purposes
Summary of this case from Advanced Business Systems, Inc. v. CrystalOpinion
September 11, 1951. Rehearing Denied December 4, 1951.
Appeal from the Circuit Court, Dade County, Marshall C. Wiseheart, J.
Richard W. Ervin, Atty. Gen., John A. Madigan, Jr., and Fred M. Burns, Asst. Attys. Gen., and Lewis H. Tribble, Tallahassee, for appellant.
Dubbin, Blatt Schiff, Miami, for appellees.
The Supreme Distributors, Inc., et al., filed their sworn bill of complaint in the Circuit Court of Dade County, Florida, against C.M. Gay as Comptroller of the State of Florida, and prayed (1) for a temporary restraining order and (2) for a permanent injunction forever enjoining the Comptroller of the State of Florida from assessing or attempting to collect or levy a sales tax against the several business transactions therein described, under the several provisions of Chapter 26319, Laws of Florida, enacted at the 1949 Extra-ordinary Session of the Florida Legislature. See Chapter 212, F.S.A.
Paragraph 3 of the bill of complaint alleged that the plaintiffs owned and operated automatic coin vending machines, also music machines generally known as "Juke boxes", pin ball, and skill game machines in Dade County, Florida; that the said machines were activated by the insertion of five-cent coins in slots provided therein. The plaintiffs were duly licensed by the State of Florida and Dade County, pursuant to law, and operated from time to time the several machines above referred to in Dade County, Florida. The amusement devices, and particularly the pin ball games, Juke boxes, and skill game devices, were invented by the plaintiffs, built and operated by them and, by them, under agreement placed with different store-keepers, tavern-owners and with all others then having places of business proper or suitable for the location of said machines.
The agreement under which plaintiffs-appellees installed their several machines, as described in paragraph 3 of the bill of complaint, with various and sundry storekeepers, tavern-owners and other desirable locations for operation was substantially as follows: The plaintiffs-appellees were the owners of and supplied the several machines, and necessary equipment, to the location operators; the plaintiffs-appellees serviced the machines and replaced them with new machines, as well as all necessary equipment, at the several locations from time to time. The location operator provided space in his place of business for the location of the machines and all necessary equipment for operation, together with electrical current necessary for their operation and the machines were cared for and protected by the location operators. The customers or players frequenting these locations desiring to play either of the machines could do so by inserting in the slot in the machine a five-cent coin. The money placed in these machines by the customers or players would at given intervals be taken from the machine and divided between the owners of the machines and equipment and each of the several location operators. The location operators do not pay anything to the owner of the machines and equipment; neither do the owners of the machines and equipment pay anything to the location operators. They simply divide, from time to time, among themselves according to the agreement, the money placed in the slots of the machines by the players.
Paragraph 4 of the bill of complaint alleged that it was the State Comptroller's interpretation of Chapter 26319, supra, that the money placed by the customers or players in the slot of the machines was subjected to a 3% sales tax and that the relation between the owners of the machines and the location operators was not that of joint venturers. Attached to and made a part of the bill of complaint, and identified as plaintiffs-appellees' exhibit "A" is a rule and regulation dated May 16, 1950, as promulgated by the State Comptroller which regulates music boxes or juke boxes, pin ball and skill game operators. This rule holds that the percentage received by a location operator constitutes "a rental contract of the boxes." The rule imposes the tax on the owner of the machines but the law passes it on to the renter. If the machine does not take in any money then no tax is collected.
Paragraph 4 further alleged that the State Comptroller entered tax assessments pursuant to Chapter 26319 and Rules against Supreme Distributors, Inc., Advance Music Company and Supreme Music Company — Hyman Darling. These assessments are by appropriate allegations made a part of the bill of complaint and identified in the record as plaintiffs' exhibits "B-1", "B-2", and "B-3". Letters passing between counsel of record for the plaintiffs-appellees and the State Comptroller are made a part of the bill of complaint and identified as exhibits "C" and "D". Section 15 of Chapter 26319 authorizes an appeal from any ruling of the State Comptroller to the Circuit Court. It is alleged that the plaintiffs below exhausted their administrative remedy prior to filing this cause in the court below.
Paragraph 5 alleged that the Comptroller was about to deliver his warrants based on the aforesaid assessment to the Sheriff of Dade County for a levy on the property of the plaintiffs and will do so unless restrained by an order of the Court. That the assessments are each invalid and if the warrants are executed as threatened irreparable damage and injury will accrue to the plaintiffs.
Paragraph 6 alleges that Chapter 26319 does not authorize the Comptroller to enact a rule or to enter the assessment against the plaintiffs identified as exhibits "B-1", "B-2" and "B-3". The assessments are each, it is alleged, invalid and the Comptroller should be permanently enjoined from the execution of the warrants based on the aforesaid assessments.
The plaintiffs-appellees presented their sworn bill of complaint with attached exhibits "A", "B-1", "B-2", "B-3", "C" and "D" to the Chancellor and obtained a temporary restraining order which enjoined the Comptroller from levying execution under any of the tax warrants issued by him on assessments made against the plaintiffs and identified as exhibits "B-1", and "B-2" and "B-3". On September 12, 1950, the Chancellor below, by the terms of a final decree, found the equities of the cause to be with the plaintiffs and against the State Comptroller and the latter was permanently restrained from levying execution on the tax warrants based on the assessments and identified as exhibits "B-1", "B-2" and "B-3".
Section 3 of the final decree recited that "when music or juke boxes, or pin ball and skill games or other coin-operated devices of this type, are placed on location by the owner under a contract whereby the owner receives a percentage of the income from the machine and the operator of the place where located receives a percentage, such contract does not constitute a rental of the boxes or games by the former to the latter and that, therefore, no part of the income from the said music or juke boxes, or pin ball and skill games is subject to be taxed as rental paid and received for a chattel within the meaning of Florida's Revenue Act of 1949."
Section 4 of the final decree recites "That the attempted enforcement of Florida's Revenue Act of 1949 against the plaintiffs when engaged in the enterprise described in finding 3 above, is illegal and represents an abuse of discretion and is an unreasonable exercise of the powers of his office by the defendant, C.M. Gay, as Comptroller of the State of Florida, and an illegal usurpation of power by the said defendant * * *."
From the final decree an appeal has been perfected to this Court.
The bill of complaint alleged that the contract or agreement between a juke box, pin ball and skill game machine owner and the proprietor of a store, tavern or other place of business whereby such coin operating device is supplied by the owner thereof to the proprietor of the location and as compensation for the location of the machine they receive a percentage share of the gross receipts placed by players in the slots of the machines — such an agreement constitutes a joint venture — and the money received and divided by the owner of the machines and the location operators is not subject to the provision of Chapter 26319, Chapter 212, F.S.A. The final decree of the Chancellor below sustained the contention of the plaintiffs-appellees. It is the appellant's contention that the above agreement is a contract of bailment for the mutual benefit of the parties and the funds so received are taxable and subject to the provisions of Chapter 26319, Chapter 212, F.S.A.
On previous occasions this Court has pointed out the essentials necessary to constitute joint adventurers. See Proctor v. Hearne, 100 Fla. 1180, 131 So. 173; Willis v. Fowler, 102 Fla. 35, 136 So. 358; Tidewater Construction Co. v. Monroe County, 107 Fla. 648, 146 So. 209; Albert Pack Corporation v. Fickling Properties, 146 Fla. 362, 200 So. 907. The allegations of the bill of complaint fail to set out the essentials of joint adventurers as between the owners of the machines and the location operators as defined by this Court in the above cited adjudications.
Section 212.05, F.S.A. provides: "It is hereby declared to be the legislative intent that every person is exercising a taxable privilege who engages in the business of selling tangible personal property at retail in this state, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this state any item or article of tangible personal property as defined herein and who leases or rents such property within the State of Florida. For the exercise of said privilege a tax is levied as follows: * * *
"At the rate of three per cent of the gross proceeds derived from the lease or rental of tangible personal property, as defined herein, except the rental of motion picture film where the lease or rental of such property is an established business or part of an established business, or the same is incidental or germane to said business." Section 212.05(3).
The legislature in the enactment of Section 212.05 fixed the policy of the State of Florida by declaring "that every person [in the State of Florida] is exercising a taxable privilege who engages in the business of selling tangible personal property at retail * * * or who rents or furnishes any of the things or services taxable under [the act] * * * and who leases or rents such property within the State of Florida." Section 212.17(4), F.S.A. confers on the Comptroller the power to promulgate reasonable rules and regulations for the enforcement of the several terms and provisions of Chapter 212, F.S.A. See Sec. 212.18(2). A rule promulgated by the Comptroller [appellee's exhibit "A", tr. 10 and 11] defines the agreement as set forth in the bill of complaint as one "constituting the rental of the boxes" meaning music or juke boxes, pin ball and skill game devices.
Counsel for appellees point out that the final decree entered below comes to this Court coupled with a presumption of correctness and further that the burden rests on the appellant to clearly establish reversible error. It is argued further that the disputes and conflicts in the evidence were settled by the Chancellor in his decree challenged on this appeal which evidence has not been transmitted to this Court and hence the decree entered below should be affirmed. This contention clearly overlooks the pertinent allegations of the bill of complaint and a Judicial construction of exhibits "A" "B-1", "B-2", "B-3", "C" and "D" which were by appropriate reference made a part thereof. The agreement between the owners of the devices and the location operators is the very heart of this controversy and is controlled by the provisions of Chapter 26319, Chapter 212, F.S.A. Parol testimony could not be heard or received by the Chancellor which tended to vary or contradict the several exhibits of the plaintiffs attached to their bill of complaint.
It is our view and conclusion that the learned Chancellor applied to the controversy an erroneous principle of law. If a decree is entered in accordance with the Chancellor's erroneous conception of the applicable law, which decree is harmful to the appellant, the same on appeal here will be reversed with appropriate instructions. Atlantic Shores Corporation v. Zetterlund, 103 Fla. 761, 138 So. 50. A decree which was based on an erroneous construction of a controlling statute should be reversed. Town of Lake Maitland v. Carleton, 103 Fla. 583, 137 So. 707.
The decree appealed from is reversed with directions to dismiss the bill of complaint.
SEBRING, C.J., and TERRELL, THOMAS and ROBERTS, JJ., concur.
ADAMS, J., dissents.
HOBSON, J., not participating.