McCallum v. Associated Retail Credit Men

BLAIR, J.

By this suit appellee, Associated Retail Credit Men of Austin, a domestic corporation, obtained a perpetual injunction against appellant, Jane Y. McCallum, Secretary of State, from demanding of it the annual franchise tax of $10 imposed against private domestic corporations by article 7084, Rev. St. 1925, on the grounds: (1) That the article only imposed the tax against capital stock corporations; and (2) that appellee was exempt from payment of the tax under provision of article 7094 — hence this appeal.

We think the trial court erred in holding that article 7084 only imposed the tax against capital stock corporations. We construe the statute to impose the tax against all private domestic corporations not exempt under provision of article 7094. However, we think the trial court correctly held appel-lee exempt from payment of the tax under provision of article 7094, and a discussion of ground 1 becomes immaterial.

Appellee was incorporated in 1919 under what is now subdivision 53 of article 1302, without capital stock and not for profit, but primarily “to acquire, preserve and disseminate valuable business information” for its members, now some thirty-six retail merchants of Austin, although incidentally and secondarily other merchants and individuals of Austin are benefited by the operations of appellee. The annual dues of $10 per member are used to carry out the purposes of the association. Appellee paid the required filing fee of $50 at the time of its incorporation, but has never paid nor has payment of the annual franchise tax of $10 ever been demanded of appellee until appellant, as secretary of state, made demand on October 2, 1929. for its payment for each year since ap-pellee’s incorporation. Each secretary of state since 1915 has exempted retail merchant associations incorporated as appellee from payment of this franchise tax, with notation on the record kept of such corporations, “exempt under Art. 7403,” now article 7094, and which exempts “corporations having no capital stock and organized for the exclusive purpose of promoting the public interest of any city or town,” from payment of said franchise tax.

The language of this exemption statute is broad and general and capable of being construed to include many kinds of corporations having for their purpose the development of some particular interest of a city or town, as distinguished from development of all the interests of a city or town. The secretary of state is charged with the duty of collecting the franchise tax imposed by article 7084. This department of the state government, with apparent legislative acquiescence and construction of article 7094, has for fifteen years pursued the practice of not collecting such franchise tax from retail merchant associations incorporated as appellee, upon the ground that such corporations were exempt by article 7094. So, without more specific legislation on the subject, we do not feel that the tax should now he imposed under the settled rule of law that, if any doubt arises with respect to the imposition of a tax, it must be resolved against the right to make the exaction. Austin v. Nalle, 85 Tex. 520, 22 S. W. 668, 960; Franklin Fire Ins. Co. v. Hall, 112 Tex. 336, 247 S. W. 822, 823, which in point of fact and on principle is very similar to this case. There the tax sought to be collected was an annual license fee or occupation tax of 50 cents imposed upon insurance agents; and, in disposing of the case, the Supreme Court applied the above rule of law, and also the following rule of statutory construction; “The contention of the respondent in this case is not supported by departmental practice nor legislative construction. On the contrary, the charge made in this instance has never heretofore been exacted of local insurance agents. The insurance department has never heretofore demanded this charge from loeal insurance agents. The legislature has acquiesced in this construction, in that it has not passed any act making this charge applicable as it is sought to be applied in this instance. The acquiescence of the Legislature in the departmental construction has not been merely a passive one, for the reason that the fees authorized by the act. are a source of revenue, the consideration of which is one of the primary duties of the Legislature.” And paraphrasing further language of the opinion in the above case, we think the language of article 7094 is so broad and general as to be capable of being construed to include appellee, and, interpreting it in the light of the departmental practice and legislative construction, to exempt appellee and similar corporations from the payment of the franchise tax imposed by article 7084 upon domestic corporations.

It is true that the franchise tax imposed by ‘ article 7084 was paid by corporations similar to appellee as well as chambers of commerce and boards of trade of cities and towns until 1915. An opinion was given by the Attorney General about 1916, the caption of which reads as follows: “Corporations as chartered under Subdivision 56 of Article 1121 (now ‘ Sub. 53 of Art. 1302) as commercial clubs or boards of trade are exempt from the pay. ment of franchise taxes by Revised Statutes, Article 7403” (now article 7094).

This,opinion related particularly to whether the Chamber of Commerce of Tyler was exempt from payment of the franchise tax, and the Attorney General here contends that a wrong interpretation of this opinion as including corporations organized as retail merchant associations was the basis for the construction placed upon the exemption statute by each Secretary of State since 1915. Even so, the Legislature has acquiesced in the construction placed by this department of the state government upon the broad and general language, “corporations having no capital stock and organized for the exclusive purpose of promoting the public interest of any city or town,” by re-enacting the statute in the codification of 1925 without change, and with the departmental construction for many years outstanding, and for the further reason that the tax is “a source of revenue, the consideration of which is one of the primary duties of the Legislature.” See, also, Houston & T. C. Ry. Co. v. State, 95 Tex. 521, 68 S. W. 777.

The judgment of the trial court will be affirmed.

Affirmed.