STONE v. YELLOW MFG. ACCEPT. CORP

Greek L. Rice, Attorney-General, by Geo. H. Ethridge, Assistant Attorney-General, J.H. Sumrall, of Jackson, and R.W. Heidelberg, of Hattiesburg, for A.H. Stone, Chairman State Tax Commission.

This brief contains a discussion pertinent to all the cases involved in the suits testing the constitutionality of Chapter 110, Laws of 1940.

All rights of persons and private corporations are subject to reasonable regulations and this is true of all constitutional rights, none of which are absolute but only relative, being subject to reasonable regulations by the legislature in the exercise of legislation for the general welfare.

Analysis of Chapter 110, Laws of 1940, as to provisions involved in this suit, showing the tax imposed and its application and construction.

Mathison v. Brister, 166 Miss. 67, 145 So. 358; Stone v. Interstate Natural Gas Co., 103 F.2d 544; Wis. v. J.C. Penney Co., 85 L.Ed. (U.S. advance) 222; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 70, 84 L.Ed. 565; McGoldrick v. Gulf Oil Co., 84 L.Ed. 536; Nelson v. Sears, Roebuck Co., 85 L.Ed., advance, 522; Watson v. Buck, 85 L.Ed. (advance) 937; Louis K. Leggett Co. v. Lee, 109 Fla. 477.

The state may levy a reasonable tax as a compensation for any right or privilege that the state gives in any case. In other words, the state may tax any right or privilege given under the state law for the protections of the state government involved in such subject matter.

White v. Miller, 162 Miss. 296, 139 So. 611; Huber v. Freret, 138 Miss. 238, 103 So. 3; Gandy v. Public Service Corp., 163 Miss. 187, 140 So. 687; Allen v. State, 180 Miss. 418, 177 So. 787.

Discussion of the statute and the rules for a construction of the statutes — are to be construed so as to make the law valid, if possible. Rules of construction are applied to Chapter 110 of the Laws of 1940 and its purposes and the cases cited to support the said statute.

Notgrass v. State ex rel. Rice, 175 Miss. 358, 165 So. 884; American Mfg. Co. v. St. Louis, 250 U.S. 459, 39 S.Ct. 522, 63 L.Ed. 1084; Magnolia Bank v. Pike County, 111 Miss. 857, 72 So. 697; State of Wisconsin v. J.C. Penney Co., 85 L.Ed. (advance) 222; McGoldrick v. Berwind-White Coal Mining Co., 309 U.S. 70, 84 L.Ed. 565; Watson v. Buck et al., 85 L.Ed. (advance) 937; Louis K. Leggett Co. v. Lee, 109 Fla. 477-481; Adams v. Standard Oil Co., 97 Miss. 879, 53 So. 692; Johnson v. Long Furniture Co., 113 Miss. 373, 74 So. 283; Smith v. Chickasaw Co., 156 Miss. 171, 125 So. 96; Gandy v. Public Service Corp., 163 Miss. 187, 140 So. 687.

The tax levied by Chapter 110, Laws of 1940, is not a tax on property as such, but is an excise or privilege tax.

Notgrass Drug Co. v. State ex rel. Rice, 175 Miss. 358, 165 So. 884; Notgrass Drug Co. v. State, 180 Miss. 659, 177 So. 763; Allen v. State ex rel. Rice, 180 Miss. 418, 177 So. 787; Hatch v. Reardon, 204 U.S. 152, 27 S.Ct. 188, 51 L.Ed. 415, 9 Ann. Cas. 736; Southern Package Corp. v. State Tax Commission, 174 Miss. 212, 164 So. 45; Penney Stores v. Mitchell, 59 F.2d 785; Jackson Fertilizer Co. v. Stone, 173 Miss. 183, 162 So. 170; see, also, James v. United Artist Corp., 305 U.S. 410, 39 S.Ct. 272, 83 L.Ed. 256; Am. Mfg. Co. v. St. Louis, 250 U.S. 459, 63 L.Ed. 1084; Magnolia Bank v. Pike Co., 111 Miss. 857, 72 So. 697; Alabama v. King, 86 L.Ed. 1; Curry v. United States, 86 L.Ed. 6; First Nat. Bank v. Harrison Co., 157 Miss. 197, 127 So. 686.

The power of the legislature to classify property and privileges, on rights, for purposes of taxation.

Rottehaefer Constitution, p. 668, et seq.; Jackson v. Miss. Fire Ins. Co., 132 Miss. 415, 95 So. 845; Miller v. Lamar Life Ins. Co., 158 Miss. 753, 131 So. 282, 43 New Federal Digest, "License," key No. 7(4); Miss. Digest, "License," key No. 7(4); U.S. Digest (L.C.P. Co. edition), "Taxes," Sec. 16(2); 16 C.J.S. 1062-1067.

Discussion of questions raised as to the provisions of the statute denying to corporations, or persons, failing to pay the tax, access to the courts of the state, with discussion and citation of cases and authorities relied upon.

In re Lee, L.R.A. 1918B, 144 and case notes; 16 C.J.S. 940, Sec. 478; Feazell v. Soltzfus, 98 Miss. 886, 54 So. 444; 14 Am. Jur. 30, Sec. 48; C.N.R. Co. v. Eggan, 232 U.S. 533, 64 L.Ed. 713, 40 S.Ct. 402; Quartette Music Co. v. Haygood, 108 Miss. 755, 67 So. 211; Code of 1892, Sec. 3401; Stewart v. Potts, 49 Miss. 749; Anding v. Levy, 57 Miss. 51, 34 Am. Rep. 435; Decell v. Lewenthal, 57 Miss. 331, 34 Am. Rep. 449; Deans v. Robertson, 64 Miss. 195, 1 So. 159; Pollard v. Phoenix, 63 Miss. 244, 56 Am. Rep. 805.

Discussion of the question of forbidding the corporation, or persons, assessed from passing the tax onto the dealer, or consumer.

State ex rel. Rice v. Allen, 180 Miss. 659, 177 So. 763; Notgrass Drug Co. v. State, 180 Miss. 639, 177 So. 763; Notgrass Drug Co. v. State, 175 Miss. 358, 165 So. 884.

Duty of citizens to pay taxes to support government.

U.S. Digest (L.C.P. edition), title "Taxes," Sec. 6; Bristol v. Washington County, 177 U.S. 132, 44 L.Ed. 701.

The buying and selling of notes and commercial paper by citizens of one state from citizens, or corporations, from another state is not engaging in interstate commerce.

Hemphill v. Orloff, 277 U.S. 537, 72 L.Ed. 978; Blumenstock v. Curtis Pub. Co., 252 U.S. 435, 64 L.Ed. 649.

It is no defense to the payment of taxes that the tax, if collected, would render the business unprofitable to the particular taxpayer or to particular persons or corporations upon whom the tax is imposed, it being within the power of the legislature to tax to such extent as the legislature deems necessary and to select the subject of taxation and the amount of tax to be imposed. The legislature may tax for the very purpose of discouraging certain commercial transactions and the effect of the tax on the business is no answer to the constitutional power of the legislature to tax, but the tax here involved does not make the business unprofitable, it being a remunerative business which is taxed.

Stone v. Rogers, 186 Miss. 53, 189 So. 810; Mathison v. Brister, 166 Miss. 67, 145 So. 358.

Watkins Eager, of Jackson, for Yellow Manufacturing Acceptance Corporation.

Objections to constitutionality of Chapter 110, Laws of 1940, asserted in brief for C.I.T. Corporation, appellant, in C.I.T. Corporation v. A.H. Stone, Chairman of State Tax Commission, et al., 193 Miss. 344, 7 So.2d 811, are referred to and adopted.

If the tax in question is held to be a privilege or excise tax, all doubts must be resolved in favor of the taxpayer and liability may not be imposed unless the same is free from doubt.

The appellee now adopts brief filed by C.I.T. Corporation upon the foregoing point in C.I.T. Corporation v. A.H. Stone, Chairman of the State Tax Commission, et al., 193 Miss. 344, 7 So.2d 811.

Assuming the tax in question to be a privilege tax, the transactions involved were had outside of the State of Mississippi, and if the statute should be construed and enforced as to impose liability upon the Yellow Manufacturing Acceptance Corporation, appellee, therefore, such statute would violate the Fourteenth Amendment to the Constitution of the United States as well as the Fourteenth Section of the Bill of Rights of the State of Mississippi. The taxing power of a state may not extend beyond the boundaries of the state.

Adams v. Mortgage Co., 82 Miss. 263, 34 So. 482; A.H. Stone, Comm., v. Interstate Natural Gas Co. (C.C.A. 5), 103 F.2d 544; Allgeyer v. State of Louisiana, 165 U.S. 517, 41 L.Ed. 823; American Mfg. Co. v. St. Louis, 63 L.Ed. 1084; A. P. Tea Co. v. Grosjean, 301 U.S. 412, 81 L.Ed. 1193; C.I.T. Corporation v. Stuart, 185 Miss. 140, 187 So. 204; City Sales Agency v. Smith, 126 Miss. 202, 88 So. 625; Connecticut General Life Ins. Co. v. Johnson, 303 U.S. 77, 82 L.Ed. 673; Dodds v. Pyramid Securities, 165 Miss. 269, 147 So. 328; First National Bank of Boston v. Maine, 284 U.S. 312, 76 L.Ed. 213; Hans Rees' Sons, Inc., v. N.C., 283 U.S. 123, 75 L.Ed. 879; Independent Linen Service Co. v. State ex rel. Attorney-General, 169 Miss. 62, 152 So. 647; Item Co. v. Shipp, 140 Miss. 699, 106 So. 437; Jackson Fertilizer Co. v. Stone, 173 Miss. 183, 162 So. 170; James v. Dravo Contracting Co., 302 U.S. 134, 82 L.Ed. 155, 114 A.L.R. 318; Long Beach Canning Co. v. Clark, 141 Miss. 177, 106 So. 646; Marshall v. Grimes, 41 Miss. 27; McGoldrick v. Berwind-White Coal Co., 84 L.Ed. 565; McGoldrick v. Gulf Oil Corp., 84 L.Ed. 536; Miller v. Sherrard, 157 Miss. 124, 126 So. 903; Money v. Wood, 152 Miss. 17, 118 So. 357; Morrison v. Guaranty Mortgage Trust Co., 191 Miss. 207, 199 So. 110; Nelson v. Sears, Roebuck Co., 85 L.Ed. 1145; New York Life Ins. Co. v. Dodge, 246 U.S. 257, 62 L.Ed. 772; New York Life Ins. Co. v. Head, 234 U.S. 149, 58 L.Ed. 1259; North American Mortgage Co. v. Hudson, 176 Miss. 266, 168 So. 79; People's Tobacco Co. v. American Tobacco, 246 U.S. 79, 62 L.Ed. 587; Peterman Construction Co. v. Blumenfeld, 156 Miss. 55, 125 So. 548; Refrigeration Discount Corporation v. Turley, 189 Miss. 880, 198 So. 731; Section 497, Mississippi Code of 1880; Section 5, Chapter 110, Mississippi Laws of 1940; Smith v. Chickasaw County, 156 Miss. 171, 125 So. 96; Southern National Gas Co. v. Alabama, 81 L.Ed. 970; Southern Package Corp. v. State Tax Commission, 174 Miss. 212, 164 So. 45; State of Mississippi v. Smith, 68 Miss. 79, 8 So. 294; State v. Gilmer Grocery Co., 156 Miss. 99, 125 So. 710; St. Louis Cotton Compress Co. v. Arkansas, 260 U.S. 346, 67 L.Ed. 297; Swing v. Brister, 87 Miss. 516, 40 So. 146; Tradesmen's National Bank v. Oklahoma Tax Commission, 84 L.Ed. 947; Wiley Electric Co. v. Electric Storage Battery Co., 167 Miss. 842, 147 So. 773; Wisconsin v. J.C. Penney Co., 85 L.Ed. 267; Yellow Mfg. Acceptance Corp. v. American Oil Co., 191 Miss. 757, 2 So.2d 834; "History of the American People" by Woodrow Wilson, Volume III, p. 54.

Argued orally by R.W. Heidelberg, J.H. Sumrall and Geo. H. Ethridge, for appellant, and by W.H. Watkins, for appellee.