Citation Numbers: 41 S.E.2d 646, 227 N.C. 174
Judges: DENNY, J.
Filed Date: 3/5/1947
Status: Precedential
Modified Date: 1/13/2023
BARNHILL, J., dissenting in part.
DEVIN, J., joins in the opinion of BARNHILL, J. This is an action to recover taxes paid under protest.
The plaintiff, a citizen and resident of Buncombe County, North Carolina, on or about 15 March, 1943, purchased seventy-eight horses from ranches located in the State of Montana, and had them shipped to him at Asheville, N.C. during the months of June and July, 1943. Thereafter, on or about 3 April, 1945, the plaintiff paid the defendant, under protest, the sum of $407.40, which represented the taxes due the State, by the plaintiff, including penalties for late filing, under the provisions of Section 115 of the Public Laws of 1939, G.S.,
Upon the pleadings and evidence offered in the trial below, the court held: That the tax levied by the aforesaid statute is a valid license or privilege tax upon the business of purchasing horses and/or mules for resale within the State of North Carolina; that it applies alike to purchases of horses and/or raised within or without the State and is applicable only to horses and/or mules purchased for resale within the State of North Carolina, and entered judgment that plaintiff recover nothing by his action and that the same be dismissed. Plaintiff appeals to the Supreme Court, assigning error. The plaintiff alleges and contends that Section 115 of the Revenue Act of 1939, as amended, purporting to levy the tax involved herein, is unconstitutional, in that: (1) Purchasing horses and/or mules for resale, is not a trade or profession within the meaning of Article V, Section 3, of the Constitution of North Carolina; (2) The levy of a head tax of $3.00 upon horses and/or mules purchased for the purpose of resale exacted by subsection (a) of Section 115, of said Revenue Act, as amended, is a tax on property and as such is unconstitutional and void, being in violation of the aforesaid Section of our State Constitution; *Page 177 (3) The Act does not levy a head tax on horses and/or mules raised in North Carolina and is therefore, in contravention of Article I, Section 8, clauses 1 and 3, of the Constitution of the United States; and (4) The head tax levied under the Act imposes an undue burden upon interstate commerce by subjecting interstate purchases of horses and/or mules to the risk of multiple taxation and by exempting "horses and/or mules which are acquired or received as a result of an allowance for credit for horses and/or mules taken in part payment on horses and/or mules subject to the tax imposed in this section" from said tax.
The pertinent parts of Section 115, of the Revenue Act of 1939, as amended, now G.S.,
"Every person, firm, or corporation engaged in the business of purchasing for the purpose of resale, either at wholesale or retail, horses and/or mules shall apply for and procure from the commissioner of revenue a state license for the privilege of engaging in such business in this state and shall pay for such license an annual tax for each location where such business is carried on as follows:
"Where not more than one carload of horses and/or mules is purchased for the purpose of resale . . . $25.00.
"Where more than one carload and not more than two carloads of horses and/or mules are purchased for a purpose of resale . . . $50.00.
"Where more than two carloads of horses and/or mules are purchased for the purpose of resale . . . $100.00.
"For the purpose of calculating the amount of tax due under the above schedule, a carload of horses and/or mules shall be twenty-five (25).
"(a) In addition to the annual licenses levied in this section, every person, firm, or corporation, engaged in the business of purchasing for the purpose of release, either at wholesale or retail, horses and/or mules shall pay a tax of three dollars ($3.00) per head on all such horses and/or mules purchased for the purpose of resale. `Purchase' shall be taken to mean and shall include all horses and/or mules acquired or received as a result of outright purchase or on consignment, account or otherwise for resale, either at wholesale or retail: Provided, however, that `purchases' shall not include the acquisition of horses and/or mules which are acquired or received as a result of an allowance for credit for horses and/or mules taken in part payment on horses and/or mules subject to the tax imposed in this section nor shall it include horses and/or mules which have been repossessed as a result of nonpayment of the original sales or purchase price. `Purchases' shall include all horses and/or mules acquired for the purpose of resale, either at wholesale or retail, whether such horses and/or mules are shipped into this state by railroad or brought in otherwise. . . .
"(b) The additional per head tax levied in this section on purchase of horses and/or mules purchased for the purpose of resale, either at *Page 178 wholesale or retail, shall be due and payable immediately upon receipt of such horses and/or mules within this state."
Article V, Section 3, of our State Constitution, among other things, provides that "The power of taxation shall be exercised in a just and equitable manner. Taxes on property shall be uniform as to each class of property taxed. . . . The General Assembly may also tax trades, professions, franchises and incomes." The appellant contends that the business of purchasing horses and/or mules for the purpose of resale in North Carolina is not a trade within the meaning of the above section of our Constitution. This contention is not in accord with the uniform decisions of this Court. In defining the meaning of the word "trades," as used in the above section of our Constitution, in the case of S. v. Worth,
The appellant challenges the validity of the per head tax on the ground that it is a property and not a privilege or license tax, and lacks that uniformity required for ad valorem taxes.
Prior to the enactment of Section 115, of the Revenue Act of 1939, as amended, any person, firm or corporation engaged in the business of purchasing and selling horses and/or mules in North Carolina, was required to pay a minimum license tax of $12.50 for the privilege of selling one carload of horses and/or mules, and $5.00 for each additional carload purchased. In computing the tax twenty-five horses and/or mules were considered a carload and when a car contained in excess of that number an additional tax of twenty-five cents per head in excess of twenty-five, was required to be paid. In addition thereto, a sales tax of 3% was levied for the privilege of carrying on said business. In 1939, *Page 179 the annual license and head tax, was substituted, as set forth herein, and the sales of horses and/or mules were expressly exempted from the sales tax. G.S., 105-169, Subsection (n).
The General Assembly is not restricted to uniformity as between trades or professions in levying a privilege or license tax. However, the tax must apply equally to all persons belonging to the prescribed class upon which it is imposed. Galtin v. Tarboro,
The amount of a privilege or license tax may be determined by the population of the city or town in which the business is to be conducted. Or, it may be determined by gross sales or the aggregate number of sales of a commodity handled — such as cotton. Albertson v. Wallace,
In requiring the payment of a head tax by dealers in horses and/or mules, the General Assembly did not levy a tax on the privilege or right to purchase horses and/or mules, nor did it levy an ad valorem tax on the animals purchased, but the statute expressly levies the tax on every person, firm or corporation engaged in the business of purchasing horses and/or mules for the purpose of resale. The General Assembly adopted this method as a fair and reasonable one for ascertaining the amount of such tax to be paid, in addition to the annual license tax. In determining whether or not the power to tax has been exercised in a "just and equitable manner," the Court may take into consideration the fact that in levying a particular license or privilege tax upon a business, such business is exempt from some other comparable tax. Cudahy Packing Co. v. Minnesota,
The appellant also attacks the validity of the head tax on the ground that the Act discriminates as between local and interstate commerce, in that, under the terms of the Act, the tax does not apply to North Carolina bred horses and/or mules. The statute provides that "`Purchase' shall be taken to mean and shall include all horses and/or mules acquired or received as a result of outright purchase or on consignment, account or otherwise for resale either at wholesale or retail." We do not think there is any ambiguity in the above provision of the statute, but that it is clear that the aggregate amount of the head tax is measured by the number of horses and/or mules purchased for resale, except such purchases as may be expressly exempted therefrom by other provisions in the statute.
The amount of the tax to be paid at the time of obtaining the annual license is graduated according to the number of carloads of horses and/or mules purchased for resale. For the purpose of calculating the amount of the tax due under the above schedule, a carload of horses and/or mules *Page 181 shall be twenty-five. We do not think the general levy is changed or limited by a further provision in the Act that "purchases shall include horses and/or mules acquired for the purpose of resale, either at wholesale or retail, whether such horses and/or mules are shipped into this State by railroad or brought in otherwise." We are of the opinion this further provision was inserted to emphasize the fact that all the horses and/or mules brought into the State may not be shipped over railroads or in carload lots, but that the tax is assessed on all horses and/or mules brought in regardless of the manner of transportation.
The appellant further contends the levy is limited to foreign bred horses and/or mules, since the head tax on the business of purchasing horses and/or mules for resale, does not become due and payable until the dealer receives such animals "within this State." However, we think this provision in the statute merely fixed the time the tax becomes due and payable and applies with equal force to purchases made within the State. It simply means a dealer is not required to pay the tax when he purchases horses and/or mules for resale until such animals come into his possession within the State, regardless of the date of purchase or the origin of the shipment.
An Act of the General Assembly will not be held invalid as violative of the Constitution unless it so appears beyond a reasonable doubt. And when there is reasonable doubt as to the validity of a statute, such doubt will be resolved in favor of its constitutionality. Brumley v. Baxter,
The remaining question is to determine whether or not this section of our Revenue Act imposes an undue burden upon interstate commerce.
It is well settled that a State cannot levy a tax which directly or indirectly imposes an undue burden upon interstate commerce. Gwin, White Prince v. Henneford,
The appellant is relying strongly upon the case of Gwin, White Princev. Hennerford, supra, in which the State of Washington undertook to levy a tax measured by the gross receipts of the appellant derived from its business of marketing fruit shipped from the State of Washington to points outside the State, including foreign countries. The appellant was engaged exclusively in interstate commerce. The tax was held invalid because it discriminated against interstate commerce, in that it imposed upon it, merely because interstate commerce was being done, the risk of a multiple burden to which local commerce was not exposed.
In the case of Western Live Stock v. Bureau of Revenue, supra, the State of New Mexico levied a privilege tax of 2% of amounts received from the sale of advertising space by one engaged in the business of publishing newspapers or magazines. The appellants, who sold to advertisers outside the State, space in a magazine they published in New Mexico and circulated to subscribers within and without the State, challenged the validity of the tax on the ground that it was an undue burden on interstate commerce. The Court said: "In the present case the tax is, in form and substance, an excise conditioned on the carrying on of a local business, that of providing and selling advertising space in a published journal, which is sold to and paid for by subscribers, some of whom receive it in interstate commerce. The price at which the advertising is sold is made the measure of the tax. This Court has sustained a similar tax said to be on the privilege of manufacturing, measured by the total gross receipts from sales of the manufactured goods both intra and interstate. American Mfg. Co. v. St.Louis, supra (
In applying the principle laid down in the above decisions, we hold the tax under consideration is a levy on a local business for the privilege of engaging in such business, and does not place a burden upon interstate commerce. Powell v. Maxwell, Comr. of Revenue, supra. Therefore, the risk of multiple taxation is not involved. Consequently, the further contention that the various exemptions contained in the Act make it discriminatory and in contravention of the commerce clause, is without merit. *Page 183
The General Assembly has exempted those engaged in the business of buying and selling horses and/or mules from paying the head tax on certain purchases, exchanges and repossessions. The law simply provides: (1) A dealer is relieved of the payment of a head tax when purchasing horses and/or mules from another dealer within the State who has paid the tax; (2) That in selling horses and/or mules, the dealer will be exempt from paying a head tax on any horses and/or mules he may accept in part payment thereof; and (3) Such dealer is exempted from paying an additional head tax on any horses and/or mules he may find it necessary to repossess as a result of the nonpayment of the original sales or purchase price. Whether or not the General Assembly acted wisely in granting these exemptions, is not before us for decision. We do think, however, it had the power to grant them without violating any of the provisions of our State or Federal Constitution. In levying a tax for the privilege of engaging in business, certain transactions may be exempted from tax liability so long as the exemptions apply alike to all who are engaged in business within the particular classification and "reasonable and pertinent bases for said classification and exemptions are readily discernible," Leonard v. Maxwell,Comr. of Revenue, supra. Smith v. Wilkins, supra; Mercantile Co. v. MountOlive, supra; Cobb v. Commissioners,
In granting these exemptions we find no arbitrary or unjust exercise of the "power to tax" on the part of the General Assembly.
The judgment of the court below is
Affirmed.
Hilton v. . Harris , 207 N.C. 465 ( 1934 )
Smith v. . Wilkins , 164 N.C. 136 ( 1913 )
State v. . Dixon , 215 N.C. 161 ( 1939 )
Leonard v. . Maxwell, Comr. of Revenue , 216 N.C. 89 ( 1939 )
Tobacco Co. v. . Maxwell, Comr. of Revenue , 214 N.C. 367 ( 1938 )
Mercantile Co. v. . Mount Olive , 161 N.C. 121 ( 1912 )
Bridges v. . Charlotte , 221 N.C. 472 ( 1942 )
Powell v. . Maxwell, Comr. of Revenue , 210 N.C. 211 ( 1936 )
State v. . Carter , 129 N.C. 560 ( 1901 )
State v. . Worth , 116 N.C. 1007 ( 1895 )
State v. . Williams , 209 N.C. 57 ( 1935 )
State v. . Elkins , 187 N.C. 533 ( 1924 )
Provision Co. v. . Maxwell, Comr. of Revenue , 199 N.C. 661 ( 1930 )
Morris v. . Holshouser , 220 N.C. 293 ( 1941 )
Cobb v. . Commissioners , 122 N.C. 307 ( 1898 )
Johnston v. . Gill, Comr. of Revenue , 224 N.C. 638 ( 1944 )
Rosenbaum v. . New Bern , 118 N.C. 83 ( 1896 )
Albertson v. . Wallace , 81 N.C. 479 ( 1879 )
Turner v. . Reidsville , 224 N.C. 42 ( 1944 )
Snyder v. . Maxwell, Comr. of Revenue , 217 N.C. 617 ( 1940 )
State v. Frinks , 284 N.C. 472 ( 1974 )
IMT, Inc. v. City of Lumberton , 366 N.C. 456 ( 2013 )
Charlotte Coca-Cola Bottling Co. v. Shaw , 232 N.C. 307 ( 1950 )
In Re Sterilization of Moore , 289 N.C. 95 ( 1976 )
North State Finance Co. v. Leonard , 263 N.C. 167 ( 1964 )
City of Randleman v. Hinshaw , 267 N.C. 136 ( 1966 )
Broadwell Realty Corp. v. Coble , 291 N.C. 608 ( 1977 )
American Equitable Assurance Co. of NY v. Gold , 249 N.C. 461 ( 1959 )
LENOIR FINANCE COMPANY v. Currie , 254 N.C. 129 ( 1961 )
Smith v. City of Fayetteville , 220 N.C. App. 249 ( 2012 )
Gill, Comr. of Revenue v. Bank , 230 N.C. 118 ( 1949 )