State v. J. Watts Kearny Sons , 181 La. 554 ( 1934 )

These cases have been consolidated for trial, as the issues involved in each are the same.

The state has proceeded by rule in each case to collect from defendants, appellants, a retail license tax for the years 1929, 1930, 1931, and 1932, together with 2 per cent. per month interest on the amount claimed for each year from March 1st, and 10 per cent. attorney's fees on the total amount of principal and interest.

The defense in each case is a denial that defendant is liable for a retail license tax. Defendants aver that they are engaged in the business of selling building materials at wholesale; that the sales classified by the state as retail sales for these years were merely incidental to the business carried on by defendants; and that these sales average only a small percentage of the total sales for the years in question.

Judgments were rendered in the court below against defendants for a retail license tax for the years 1929, 1930, 1931, and 1932, and the correctness of these judgments, as to amount, is admitted by defendants, if it should be held that they are liable for such tax.

Defendants sell, first, to dealers; second, to contractors and subcontractors; third, to municipalities and public boards; and, fourth, to consumers.

Sales are made to all comers, without inquiry as to what the purchaser is going to do with the material. Anybody can give defendants an order that will be filled and delivered at domicile.

The state contends that such operations require an occupational license tax both as wholesaler and as retailer, under section 30 of Act No. 205 of 1924, and which provides: "That when any two or more kinds of business are combined, except as herein expressly provided for, there shall be a separate license required for each kind of business."

In City of New Orleans v. U. Koen Co., 38 La. Ann. 328, 330, it is said: "As the law reaches dealers who transact operations, either as wholesale or as retail merchants, separately, it undoubtedly affects them when they do both indiscriminately."

Section 7 of Act No. 205 of 1924, as amended by Act No. 132 of 1928, imposes the tax on "wholesalers" and defines "wholesaler" as follows:

"``Wholesaler' defined.

"Provided, that no person or persons shall be deemed wholesaledealers unless he or they sell by the original or unbrokenpackage or barrel only; and provided further, that no person or persons shall be deemed wholesale dealers unless he or they sellto dealers for re-sale. If they sell in less quantities than original unbroken package or barrel, they shall be consideredretail dealers and pay license as such." (Italics ours.)

It is clear from the language of this section that, to constitute a "wholesaler," he must not only sell "by the original or unbroken package," but that he must sell also "to dealers for re-sale." (Italics ours.)

In construing section 7, above quoted, in State v. Milam Grain Milling Company, 176 La. 541, 146 So. 47, 48, this court said: "In our opinion, the provision of section 7 of the license act of 1924, quoted supra, admits of but one interpretation, viz., that a wholesaler who sells in unbroken packages direct to consumers, on one who sells in broken packages to dealers, for resale, is subject to the payment of a retail license."

It is not left to the discretion of this court to define a "wholesaler," as the Legislature of this state, in clear and unambiguous language, has declared that the "wholesaler" is one who must sell in unbroken packages to "dealers for re-sale."

It follows, necessarily, that if the contractors and subcontractors, and the municipalities and public boards to which defendants sell in unbroken packages, are not "dealers for re-sale," then defendants are not wholesalers in such transactions, but must pay the state a retail license on such sales.

The word "dealer" is defined in Words and Phrases, Vol. 1 (Second Series) pp. 1222 and 1223 as follows:

"``Dealers' are the middlemen between the manufacturers or producers and consumers. Commonwealth v. Vetterlein, 63 A. 192, 193, 214 Pa. 21 (quoting Commonwealth v. Campbell, 33 Pa. 380).

"A ``dealer' is one whose business it is to buy and sell merchandise, goods, and chattels, as a merchant, storekeeper, or broker; the term being synonymous with ``trader.' State v. Rosenbaum, 68 A. 250, 251, 80 Conn. 327, 15 L.R.A. (N.S.) 288, 125 Am. St. Rep. 121. * * *

"``Dealer,' in the popular and therefore the statutory sense of the word, is not one who buys to keep or makes to sell but one who buys to sell again. He stands immediately between the producer and the customer and depends for his profit, not upon the labor he bestows upon his commodities, but upon the skill and foresight with which he watches the markets. Commonwealth v. Vetterlein, 63 A. 192, 193, 214 Pa. 21 (quoting Norris v. Commonwealth, 27 Pa. 494)."

A contractor who buys building material is not one who buys and sells — a trader. He is not a "dealer," or one who habitually and constantly, as a business, deals in and sells any given commodity. He does not sell lime and cement and nails and lumber.

His undertaking is to deliver to his obligee some work or edifice or structure, the construction of which requires the application of skill and labor to these materials so that, when he finishes his task, the materials purchased are no longer to be distinguished, but something different has been wrought from their use and union. The contractor has not resold but has consumed the materials. Sales to contractors are sales to consumers, and, for this very reason, the Legislature did not include contractors and subcontractors in the term "dealers for re-sale," as used in section 7 of Act No. 205 of 1924, but has placed them in an entirely different classification in section 24 of that act. Consequently, contractors and subcontractors are not licensed at all as wholesale or retail dealers.

Municipalities and public boards make no resale of the commodities they buy, and cannot be classed as "dealers" in such articles.

A wholesaler who sells in unbroken packages direct to consumers is subject to the payment of a retail license, as held in State v. Milam Grain Milling Co., cited supra.

In holding in that case that the definition of "wholesaler" in section 7 of Act No. 205 of 1924 "admitted of but one construction," the court necessarily concluded that this section was couched in language clear and free from ambiguity or doubt.

In such a case, the doctrine of contemporaneous construction invoked by defendants has no application, as there is no room for construction and, consequently, no need to give it aid. Houghton v. Payne, 194 U.S. 88, 24 S. Ct. 590, 48 L. Ed. 888.

Judgment appealed from in each of these cases is affirmed.

O'NIELL, C.J., dissents and hands down reasons.