Lawrence v. Mississippi State Tax Commission , 162 Miss. 338 ( 1931 )

S.B. Lawrence, the appellant, is a resident of Hinds county, Mississippi, engaged in constructing and maintaining public roads and highways in the state of Mississippi and in other states. In the year 1929 he went into the state of Tennessee, entered into and completed contracts for the construction of certain highways, which contracts were entered into and entirely completed in the state of Tennessee. He collected from that state the money accruing to him by reason of the performance of said contracts. His net income was such that, if his income, earned and collected entirely beyond the limits of the state of Mississippi, in the state of Tennessee, were subject to taxation, he would be owing the state of Mississippi the sum of two thousand two hundred eighty-eight dollars and thirty-one cents.

The Mississippi state tax commission, in accordance with the provisions of the Mississippi statutes on the subject, took steps to assess him with the income tax imposed by law. The appellant appeared before the state tax commission, and objected to the assessment of the said income tax, contending that he is not subject to the income tax upon money earned outside of the state of Mississippi in the contract above referred to; that the state could not, under the fourteenth section of the bill of rights of the state of Mississippi, or the Fourteenth Amendment to the Constitution of the United States, impose liability for income earned as result of performing labor or pursuing an occupation beyond the limits of the state, and in the limits of another state.

On the hearing, the tax commission assessed him with an income tax on the income earned out of the state. The appellant thereupon filed a bill in chancery in accordance with section 5057, Code of 1930, to review the assessment. He contended that chapter 32, Extraordinary Session Mississippi Legislature 1928, did not impose liability for income earned wholly out of the state of Mississippi, that, if the statute should be so construed and enforced as to impose liability upon him for such income, then the statute would violate the above sections of the Constitution. It was alleged that section 11, chapter 132, Laws of 1924, as amended by chapter 32, Laws of 1928, Extraordinary Session, violates the above sections of the Constitution because it does not apply to incomes earned by domestic corporations wholly outside of the state of Mississippi. We quote from complainant as follows: "Complainant alleges and avers the fact to be: That chapter 32, Mississippi Legislature of 1928, Extraordinary Session, as construed and enforced, violates the Fourteenth Amendment to the Constitution of the United States in that the same deprives the petitioner of his property without due process of law, and denies to him the equal protection of the law; for that, in the imposition of liability for income tax for the year 1929, said act arbitrarily discriminated against this petitioner. The petitioner during the year 1929, was engaged in the business of constructing public roads, streets and highways in the state of Mississippi, Louisiana and Tennessee. That during said years, and during all subsequent years, he was in active competition with domestic corporations organized under the laws of the state of Mississippi, and domiciled therein, which corporations were likewise engaged in the business of building roads, highways and streets in the states of Louisiana, Mississippi and Tennessee, and that there was during said years, prior thereto, and at all times since, a large number of domestic corporations in the state of Mississippi, engaged in carrying on business and transacting business in said three states aforementioned, as well as other states where said domestic corporations had places of manufacture, production and/or places of merchandise."

He further alleged that other such domestic corporations were not assessed with, or held to be liable to, an income tax earned beyond the limits of the state of Mississippi by such domestic corporations, and that such corporations have not paid such taxes to the state of Mississippi, but have been adjudged by the Mississippi state tax commission to be free from liability therefor, and that no demand had been made therefor, but that such income earned from without the state has been intentionally, continuously, and systematically deducted from the gross income of domestic corporations.

It will be seen from an examination of chapter 32, Laws of state of Mississippi, Extraordinary Session of 1928, amending section 11 of chapter 132, Laws of 1924, that for the purpose of this act, except as otherwise provided for nonresidents, the term "gross income" does not include income of a domestic corporation when earned from sources outside this state, and such sources shall be defined to mean all manufacture or production and places of merchandising.

The chancery court held the appellant liable for the tax, and rendered judgment against him, from which this appeal is prosecuted.

If chapter 32 of Laws of state Mississippi, Extraordinary Session 1928, is constitutional, of course the appellant is subject to the tax; if such act is unconstitutional, then section 11 of chapter 132 Laws of 1924, would remain in force as though the amendment had not been made, and under the said chapter both individuals and domestic corporations would be subject to income tax on the income earned outside of the state as well as income earned within the state. State v. Gulf, M. N.R. Co., 138 Miss. 70, 104 So. 689, and authorities therein cited. It is therefore unnecessary to decide whether chapter 32, Laws of Mississippi, Extraordinary Session 1928, is constitutional or not, because from either viewpoint the same conclusion and judgment would be reached; that is to say, in taking either view the appellant would be liable for the tax. See Miller, State Tax Collector, v. Columbus G. Ry. Co., 154 Miss. 317,122 So. 366, at page 324 of the Mississippi Report (122 So. 367), where the court said: "In event a railroad discriminated against by this statute should challenge the validity thereof on the ground that it is arbitrarily discriminated against, it would not be necessary for the court to decide the question, for so to do would profit the complaining railroad nothing; for, if the statute should be held void, chapter 282, Laws of 1914, would remain in full force and effect, under which the complaining railroad's tax would be three hundred fifty dollars per mile, the exact amount imposed by chapter 259, Laws of 1926; or, if the proviso only of chapter 259, Laws of 1926, is void, the same result would follow." See, also, Moore v. Tunica County,143 Miss. 821, 107 So. 659; Claiborne County v. Morehead, 145 Miss. 867,111 So. 372; Buford v. State, 146 Miss. 66, 111 So. 850; Miller v. Tucker, 142 Miss. 146, 105 So. 774; Pearl River County v. Lacey Lumber Co., 124 Miss. 85, 86 So. 755; Adams v. Standard Oil Co. of Ky., 97 Miss. 879, 53 So. 692; American Express Co. v. Beer, 107 Miss. 528, 65 So. 575, L.R.A. 1918B, 446, Ann. Cas. 1916D, 127.

The judgment of the court below must therefore be affirmed.

Affirmed.