Howard Pore, Inc. v. State Commissioner of Revenue

It is my view that this case is controlled by decision inMontgomery Ward Co., Inc., v. Fry, 277 Mich. 260; that the very ably written opinion of Mr. Justice CARR, if adopted by the Court, would serve, in effect, to overrule that case.

To say that the Montgomery Ward Case holds that the term "gross proceeds," as used in the sales tax act, means "the price fixed at the sale," paid partly in money and partly with the credit arbitrarily allowed on the trade-in, only in those cases in which the allowed credit is equal to or more than the actual market value of the trade-in, is to heed the result achieved, on the particular facts before the Court, but to disregard the construction placed upon the statute by which, alone, that result was reached.

There is not the slightest suggestion in this Court's opinion in the Montgomery Ward Case that decision was predicated upon the proposition that the taxpayer should be deemed to be bound, for tax purposes, by the credit he had arbitrarily allowed on the trade-in if that exceeded its actual market value Neither is it mentioned in the opinion that the tax payer was contending for a figure representing the market value of the trade-in at the time of its subsequent resale rather than at the time it was taken in trade, it not appearing that the value had fluctuated in the interim. On the contrary, the opinion clearly states that the controlling question in the case was whether the tax should be computed upon the "actual market value" of, or the "credit arbitrarily allowed" for, the trade-in. This Court thereupon proceeded to define the term "gross proceeds," upon which the tax is computed under the act, as meaning the money paid plus the credit arbitrarily allowed for the trade-in. That definition was the sole basis for decision. In fact, it constituted the decision and led inevitably to the statement in the opinion that "the loss, if any, in such transactions, as well as the profit, if any, is that of the plaintiff without any share therein by the State." The fact that there was loss and not profit on the resale of the trade-ins in that case does not render the words "as well as the profit, if any," mere dicta, but, rather, they give expression to the corollary to the proposition that the loss, if any, is the plaintiff's, — a corollary inescapable in view of the construction placed by this Court upon the term "gross proceeds," upon which decision turned.

The sales tax is computed, under the act, on the basis of "gross proceeds." The controlling question in the instant case is, as it was in the Montgomery Ward Case, what does the term "gross proceeds" mean in cases where the consideration paid for a new article is part money and part trade-in. Persuasive, indeed, is Mr. Justice CARR'S reasoning in support of his conclusion that the term "gross proceeds," as defined in the original 1933 enactment, means purchase money paid, together with the market value of the trade-in rather than the amount arbitrarily allowed as a credit for the trade-in. However, in the Montgomery Ward Case this Court construed the term contrariwise. Are we at liberty now to overrule that case?

The sales tax act was enacted in 1933 (Act No. 167). TheMontgomery Ward Case construing the term "gross proceeds" as defined in section 1 of that act, was decided on October 5, 1936. Thereafter section 1 of the act was re-enacted by way of amendment by Act No. 313, Pub. Acts 1939, and Act No. 59, Pub. Acts 1941. The re-enactments left the definition of "gross proceeds" of the 1933 act unchanged as applied to original sales. In People v. Lowell, 250 Mich. 349, in speaking of the effect of the reenactment of a statutory provision by way of amendment, this Court said:

"The old section is deemed stricken from the law, and the provisions carried over have their force from the new act, not from the former. 1 Lewis' Sutherland Statutory Construction (2d Ed.), § 237."

When the legislature in the years 1939 and 1941 re-enacted by way of amendment the definition of "gross proceeds" contained in the original 1933 enactment it must be presumed to have known the construction placed upon that definition by this Court in theMontgomery Ward Case in 1936 and to have adopted that construction in the re-enactments, which is, therefore, now binding upon this Court.

"It seems that, where a statute is re-enacted which has received a construction by the Supreme Court, such construction becomes a part of the new law." McEvoy v. City of Sault Ste.Marie (syllabus 6), 136 Mich. 172.

"It is the duty of the courts when construing a statute to ascertain and give effect to the legislative intent. When enacting the present law or amending it, the legislature might easily have provided otherwise. No such action having been taken, we must assume that it was content with the construction which had been placed on the similar provisions of the former act."Gwitt v. Foss, 230 Mich. 8.

"The reasoning of this Court and its interpretation of the various provisions of the act since its original enactment in the year 1912 does not require the application of the art of apologetics or the skill of an apologist. We may, on the other hand, properly indulge in the judicial assumption that the legislature has been content with that interpretation, else it would have long since exercised its independent prerogative to restate the limitation of this field of the provisions of the act." Twork v. Munising Paper Co., 275 Mich. 174.

"Since it may be presumed that the legislature knew a construction, long acquiesced in, which had been given by the courts to a statute re-enacted by the legislature, there is a presumption of an intention to adopt the construction as well as the language of the prior enactment. It is accordingly a settled rule of statutory construction that when a statute or a clause or provision thereof has been construed by a court of last resort, and the same is substantially re-enacted, the legislature may be regarded as adopting such construction. The rule has beenapplied even where the construction placed upon the statute wasunnecessary to a determination of the question involved in thecase." 50 Am. Jur., Statutes, p. 461, § 442.

"The general rule of statutory construction that when a statute, or a clause or provision thereof, has received a judicial construction, and the same is substantially re-enacted, the legislature may be regarded as adopting such construction, is persuasive, and in some cases is even regarded as binding upon the courts." 50 Am. Jur., Statutes, p. 462, § 443.

"Where a statute that has been construed by the courts of last resort has been re-enacted in same, or substantially the same, terms, the legislature is presumed to have been familiar with its construction, and to have adopted it as a part of the law, unless a contrary intent clearly appears, or a different construction is expressly provided for." 59 C.J. p. 1061, § 625.

See, also, Heald v. District of Columbia, 254 U.S. 20 (41 Sup. Ct. 42, 65 L.Ed. 106) and voluminous notes thereunder in the Lawyers' Edition citing a host of authorities in support of the proposition that:

"The rule seems to be well settled that the re-enactment in the same or substantially the same terms, of a statute which has received a judicial construction, amounts to a legislative adoption of such construction."

It must be presumed that, in the re-enactment, the legislature adopted the construction given the term "gross proceeds" in theMontgomery Ward Case or it would have changed the words or clearly expressed an intent to the contrary. See Barnewall v.Murrell, 108 Ala. 366 (18 So. 831); Copper QueenConsolidated Mining Co. v. Territorial Board of Equalization ofthe Territory of Arizona, 206 U.S. 474 (27 Sup. Ct. 695,51 L.Ed. 1143).

In the case of Swift Co. v. Wood, 103 Va. 494 (49 S.E. 643), the supreme court of Virginia said:

"When a statute has been construed by the courts, and is then re-enacted by the legislature, the construction given to it is presumed to be sanctioned by the legislature, and thenceforthbecomes obligatory upon the courts. Mangus v. McClelland,93 Va. 786 (22 S.E. 364)."

To the same effect the supreme court of Alabama in MerchantsNational Bank of Mobile v. Hubbard, 222 Ala. 518 (133 So. 723, 74 A.L.R. 646), said:

"We think when a construction of a code section has been deliberately announced, when directly involved, and has stood without change for many years, and in the meantime the code section thus construed has been readopted without change, we arebound by such construction of it until the legislature makes a change."

The supreme court of Indiana in the case of Barr v. Sumner,183 Ind. 402 (107 N.E. 675, 109 N.E. 193), said:

"The decisions of the question are uniform and consistent and cover a period of more than half a century during which the statute in relation to the submission of interrogatories has been twice reenacted. Section 546, R.S. 1881, Acts 1881 (s.s.), p. 240; section 572, Burns 1914, Acts 1897, p. 128. The re-enactments, under the circumstances, adopted the previous constructions of the act by this court. State v. Ensley (1912), 177 Ind. 483 (97 N.E. 113, Ann. Cas. 1914D, 1306). Werewe of the opinion that all those consistent decisions areerroneous we would be without rightful authority to overrulethem, because this court is vested with no legislative power."

Inasmuch as it must be held that the construction placed by this Court, in the Montgomery Ward Case, upon the definition of "gross proceeds," contained in section 1 of the 1933 act, was adopted by the legislature in the 1939 and 1941 re-enactments, I deem the conclusion inescapable that we are bound by that construction until such time as the legislature may, by legislative enactment, express a clear intent to the contrary. It is not for us to legislate.

If necessary, a writ should issue as prayed, without costs, a public question being involved.