State Ex Rel. Koeln v. Southwestern Bell Telephone Co.

The plaintiff, Collector of the Revenue for the City of St. Louis, brought suit against the defendant to recover a balance claimed to be due on defendant's income tax for the year 1921. The case was tried on stipulated facts.

The defendant filed a return for state income taxes showing its net income for the year 1921 to be $1,392,977.73. The plaintiff collector presented to defendant a bill for income taxes for that year for $18,573.04. The defendant tendered in full payment of the bill $15,090.59. Then it was agreed that the defendant should pay the amount tendered without prejudice to either party, that it should not prevent the State from claiming the balance of the bill, nor prevent the defendant from resisting such claim. This suit is for that balance between the amount of the tax bill and the amount paid, $3,482.45.

The difference between the parties arises on the effect of the Act of 1921 amending Section 13112, Revised Statutes 1919, relating to income tax of corporations. That act reduced the income-tax rate from one and one-half per cent to one per cent. The dispute between the parties is as to when that reduction went into effect.

I. Whether a tax rate may be different for different parts of a year, instead of taking the year as a unit for taxation purposes, was settled by this court in case of Smith v. Dirckx,283 Mo. 188.

The Legislature may provide for an income tax rate prevailing part of the year with a different rate for the other part of the year. The Act of 1921 (Extra Session Acts ofEffective Reduction 1921, pages 189 and 190) amended SectionDate. 13112, Revised Statutes 1919, so that it contains the following:

``Corporations, joint stock companies, insurance companies,etc. — That there shall be levied, assessed, collected and paid annually upon the total net income received in the calendar year 1919, and in each year thereafter, from all sources by every corporation . . . a tax of one and one-half per cent upon such income; . . . Provided, however, that the taxes collected under this chapter shall for the years 1922 and subsequent years be levied, assessed, collected and paid annually at the rate of one per cent: Provided, further, that for that part of the calendar year 1921 which shall not have expired at the date this actshall take effect, said taxes shall be levied, assessed and collected at the rate of one-half of one per cent."

The act also contained an emergency clause as follows:

"The fact that until this act shall take effect income taxes must be levied, assessed and collected under the existing rates, which are excessive and continue an unreasonable burden on the taxpayer, creates an emergency within the meaning of the Constitution, and therefore, this act shall take effect and be in force from and after its passage and approval."

It is claimed by the respondent that the reduction from one and one-half to one per cent begins from August 1, 1921, when the act was approved. Appellant claims that the reduction begins from the time the act went into effect November 2, 1921. The emergency clause could not have the effect of putting the act into effect from the time of its approval, because it was not one of those laws excepted from the operation of a referendum as provided in Article 4, Section 57, of the Constitution.

The amendment provides that for that part of the year 1921, "which shall not have expired at the date this act shall take effect," the rate shall be one-half of one per cent instead of one per cent as provided for the future. Thus by the terms of the act after the year 1921 the rate should be one per cent of the income. During the year 1921 the old rate of one and one-half per cent should be levied and collected until the act should take effect, and then to the end of the year the rate should be one half of one per cent. Thus the amendment provides for two rates at different periods after the act shall take effect. It is argued by the respondent that the intention of the Legislature was to relieve corporations of the one and one-half per cent tax as soon as possible, and that it should approximate as nearly as possible one per cent for the year 1921. That is, that the reduction for that part of the year should be sufficient to make the entire year equal to one per cent. The emergency clause could not have the effect to put the amendment in operation until ninety days after the adjournment of Legislature. The language of Section 36 of Article 4 of the Constitution is very definite. It provides that "no law passed by the General Assembly, etc. . . . shalltake effect or go into force until ninety days after theadjournment of the session at which it was enacted, unless in case of an emergency," etc. Under the plain prohibition of the Constitution the Act of 1921 would not be effective as a law until November 2nd of that year. While it is true that the intention of the Legislature must control in the interpretation of a statute, that intention must be gathered from the language which they use in the act. [Grier v. Railway, 286 Mo. l.c. 534.] We must gather the intention from what they said, not from what they may have intended to say, just as we interpret a deed or other instrument. So without the emergency clause there could be no doubt of the effect of the language used. It reduces the rate for that part of the calendar year 1921 which shall not have expired at the date "this act shall take effect," using almost exactly the language of the Constitution. The act could not take effect until ninety days after the adjournment of the Legislature.

II. It is argued, however, that while the emergency clause could not have an effect as an emergency clause, and the law could not become operative as a law from the date of its approval, nevertheless the emergency clause does perform an office by showing the intention of the Legislature toIntention: have the tax amount approximately one per cent forEmergency the entire year. Infact, the construction contendedClause. for by respondent would make it one and one-twelfth per cent during that year. Why should the Legislature desire to make the tax "approximately" one per cent when they could very easily have made it exactly one per cent by proper language in the body of the act. That is, instead of the circuitous method, seeking to have the emergency clause perform an office for which it was not intended, they could have accomplished their purpose directly.

To attempt to give the act effect from the time of its approval is to make it retrospective contrary to Section 15, Article II, of the Constitution. That was distinctly held by this court in construing this income tax law in Smith v. Dirckx, 283 Mo. l.c. 197 and 198. The law then had no force between the time of its passage and the time when it went into effect, November 2, 1921.

III. But it is suggested that while the Legislature could not make the law retrospective in its operation and could not effect the rate of taxation prior to the time it went into force, yet it was within the power of the Legislature to relieve the taxpayers of a part of the burden of taxes already incurred. Probably the Legislature could do that. It could have embodied in the act a provision that the corporations under consideration should be relieved of a part of the tax for the year 1921, so that it might be reduced to exactly one per cent for the year. But the Legislature did not do that. There is no language anywhere in the act which shows such intention. They did not attempt to relieve the taxpayer concerned of any taxes which had accrued. They only attempted to effect the rate of taxation from the time the Act went into effect.

It is argued that the Legislature were supposed to know the law and knew that the Supreme Court had already held that an emergency clause in an act like this could have no effect and, therefore, knowing that the emergency clause could have no effect as such, they endeavored to make it perform another office by indirection. They sought to make it nullify the operative words of the act. We are not at liberty to go into subtle speculation regarding the legislative purpose in order to give the statute an effect which its language does not warrant. The interpretation contended for by the respondent would have us say that the Legislature by a roundabout, obscure and uncertain method attempted something which they would not attempt directly, to give the body of the act an entirely different effect from that which the language imports. That is, in order to absolve the Legislature from an inadvertence we are asked to charge them with an act of doubtful propriety.

The plain language of the act must be given effect as it reads, so that the amendment of 1921 went into effect November 2nd of that year, making the defendant liable as claimed by the appellant.

The judgment is reversed and the cause is remanded with directions to the trial court to enter judgment for the amount sued for, with interest thereon. All concur.