Opinion
No. 34160.
May 20, 1940.
1. LICENSES.
Under statute imposing privilege tax on each person engaged in trading stamp business, company which was engaged in business of packing and distributing flour and feed products, and which placed coupons in original containers in such manner that coupons were irremovable except by ultimate consumer from whom they were redeemable in small articles of merchandise, was not liable for privilege tax, since statute applies to the distinct kind of business mentioned in statute (Gen., and Loc. and Priv. Laws 1935, Ex. Sess., chap. 20, sec. 221).
2. LICENSES.
Where a person or corporation is engaged in a distinct business and, as a feature thereof, in an activity merely incidental which serves no other person or business, the incidental and restricted activity is not to be considered as intended to be separately or additionally taxed.
APPEAL from the chancery court of Harrison county; HON. D.M. RUSSELL, Chancellor.
Mize, Thompson Mize, of Gulfport, for appellant.
The court erred in dismissing the bill and in failing to render judgment against Ballard Ballard Company for the amount sued for.
The appropriate statute is Section 211, Chapter 30, of the Extraordinary Session of the Mississippi Legislature of 1935 and similar statutes appearing in the privilege tax code since 1932. The section is as follows: "Upon each person engaged in the business of issuing, selling or delivering trading stamps, checks, receipts, certificates, tokens or other similar devices to persons, firms, or corporations, engaged in trade or business, with the understanding or agreement, expressed or implied, that the same shall be presented or given by the latter to their patrons, as a discount, bonus, premium, or as an inducement to secure trade, or patronage, and the person, selling or delivering the same, will give to the person presenting or promising the same, money or other thing of value, or any commission or preference in any way on account of the presentation thereof . . . $250.00."
It does not admit of doubt that the trading stamp business operated by the appellee falls squarely within the above quoted statute. Statutes must be read and construed so as to give every word, phrase, and sentence a meaning.
The agreed statement of facts shows that Ballard Ballard Company was engaged in the business of issuing and delivering coupons to retail merchants with the understanding that these coupons would be given by the retail merchants to their patrons as an inducement to secure trade, and Ballard Ballard Company would then give the person presenting the coupons some premium of value. This is unmistakable from the facts. It is true that the agreed statement of facts shows that the coupons were delivered to the retail merchant in packages and were not touched by the retail merchant, but they were passed on to the patrons of the retail merchant in the original package, but the fact remains that these coupons were made and issued by Ballard Ballard Company in Louisville, Kentucky and that the coupons had a redemption value and that they were used as an inducement to trade.
The agreed statement of facts attempts to show that these coupons were used only as an advertising medium, but even if this were true, under the statute as written and quoted above, Ballard Ballard Company would still be liable for the payment of the privilege tax as the term "business" as defined in the preamble of definitions includes an act which has as its object gain, profit, benefit or advantage, either direct or indirect. It is unmistakable from the statute and the definitions from the chapter on privilege taxes that this statute covers situation just such as is presented here. Had it not covered this situation and had the legislature intended to exclude the activity of the appellee in issuing coupons, the statute would have contained a provision exempting this particular classification. This case will necessarily have to be reversed unless the statute is given some meaning not written therein.
Appellee takes the view that inasmuch as Ballard Ballard Company is in the flour distributing business and has paid privilege taxes on that business that another privilege tax cannot be assessed because such would be double taxation and contrary to constitutional restrictions, and that view was evidently taken by the court below. However, the law of Mississippi has held contrary to that contention, and in the case of Barataria Canning Co. v. State, 101 Miss. 890, 58 So. 769, the court said: "The right to require the payment of license fees for the privilege of carrying on business of different kinds has been recognized for many years in this state, and the license fees required to be paid have been fixed in the discretion of the legislature according to the circumstances and the character of the business."
It was well settled that where several occupations are pursued as in the case at bar that a separate privilege tax may be imposed on each type of business, even though the several businesses are combined in one general business, and a license to pursue a given business does not confer a right to pursue another distinctive business.
Postal Telegraph-Cable Co. v. Miller, 155 Miss. 522, 124 So. 434; 37 C.J. 244, par. 104.
Lyell Lyell, of Jackson, and George W. Norton, Jr., of Louisville, Kentucky, for appellee.
The use of coupons by appellee is not a separate and distinct business but is merely incidental to its business of selling and distributing at wholesale flour and feed manufactured by it.
Commonwealth v. Gibson Co., 101 S.W. 385, 125 Ky. 440, 31 Ky. Law Report 51; Hewin v. Atlanta, 121 Ga. 723, 49 S.E. 765; So. Express Co. v. R.M. Rose Co., 124 Ga. 581, 53 S.E. 185; 1 Cooley on Taxation (4 Ed.), Sec. 233.
The Mississippi Supreme Court has uniformly held that only in cases where separate and distinct businesses are conducted will more than one license tax be imposed.
Carney v. Hamilton, 89 Miss. 747, 42 So. 378; Garbutt v. State, 116 Miss. 424, 77 So. 189; Planters Lbr. Co. v. Wells, 147 Miss. 279, 112 So. 9; Gully, State Tax Collector, v. Goyer, 165 Miss. 279, 147 So. 327; Gully, State Tax Collector, v. Gulfport Loan Brokerage Co., 168 Miss. 449, 151 So. 721; Hugo v. City of Oxford, 179 Miss. 450, 176 So. 158; Bluff City Ry. Co. v. Clark, 95 Miss. 689, 40 So. 77; Mayor and Bd. of Aldermen of the City of Vicksburg v. Mullane, 106 Miss. 199, 63 So. 412; Wilby v. State of Miss., 93 Miss. 767, 47 So. 465; Independent Linen Service Co. v. State of Miss., 169 Miss. 62, 152 So. 647; Stone v. Grenada Cotton Compress Co., 123 Miss. 191, 85 So. 127.
The statutes in question are ambiguous, and it affirmatively appears that appellee's method of advertising by the use of coupons clearly does not come within the contemplation of the statute.
Gully v. Jackson International Co., 165 Miss. 907, 145 So. 905; Independent Linen Service Co. v. State ex rel. Rice, 152 So. 647, 169 Miss. 62; Middleton v. Lincoln County, 122 Miss. 673, 84 So. 907; Pan American Petroleum Co. v. Miller, State Tax Collector, 154 Miss. 565, 122 So. 393; Thompson v. McLeod, 112 Miss. 383, 73 So. 193; Thompson v. Kreutzer, 112 Miss. 165, 72 So. 891; Dawson v. Ky. Distilleries and Warehouse Co., 65 L.Ed. 638; Robertson, State Revenue Agent, v. Tex. Oil Co., 141 Miss. 356, 106 So. 449.
Every doubt and uncertainty as to the meaning of the ambiguous statutes involved and every doubt or uncertainty of the application of the statutes to appellee must be resolved in favor of appellee.
Tex. Co. v. Wheeless et al., 185 Miss. 799, 187 So. 880; Am. Oil Co. v. Wheeless et al., 185 Miss. 521, 187 So. 889.
Appellee has for many years been engaged in the business of packing and distributing flour and feed products. Its plant is in Kentucky and it distributes its products wholesale to several points in this State. At its plant it packs slips of paper called coupons in the original containers in such a manner that these coupons are irremovable except by the ultimate consumer. The consumer, after his purchase of the flour or feed from the retailer and when he opens the package, obtains the coupon, and when he has thus acquired a sufficient number of these coupons, they are redeemable in small articles of merchandise called premiums at the stores of local retail merchants designated for that purpose, but who, as a matter of practice, are always other than the retailers who sold appellee's products to the consumer. These coupons are thus packed, and go only to the consumer, as an inducement to him to purchase appellee's products, but not as an inducement and cannot be used as an inducement to make purchases of any other merchandise. Appellee has no direct profit in the redemptions, so far as the record shows.
Appellee has paid all privilege taxes required of it, but appellant demands by this suit an additional privilege tax under Section 221, Chap. 20, Laws (Ex. Sess.), 1935, which is as follows: "Trading stamps. . . . Upon each person engaged in the business of issuing, selling or delivering trading stamps, checks, receipts, certificates, tokens or other similar devices to persons, firms, or corporations, engaged in trade or business, with the understanding or agreement, expressed or implied, that the same shall be presented or given by the latter to their patrons, as a discount, bonus, premium, or as an inducement to secure trade, or patronage, and the person, selling or delivering the same, will give to the person presenting or promising the same, money or other thing of value, or any commission or preference in any way on account of the presentation thereof . . . $250.00."
For more than thirty years certain companies have carried on in this State the business known as dealer or operator in trading stamps. This business is conducted in about this manner: The trading stamp company sells its stamps to retail merchants, who, on the sale of any of their merchandise, will give the purchaser a stamp or stamps in proportion to the amount of the purchase; and when the purchaser has obtained the required number of these stamps they are redeemed by the trading stamp company in premiums. The purpose of this plan is to induce and stimulate trade by and for the retail merchant in all classes of goods which he has on hand for sale, regardless of who may have been the producer; and the trading stamp company makes its profit in the sale of the stamps to the retail merchants. This business is dealt with and further illustrated in Sperry, etc., Co. v. Mechanics' Clothing Co., C.C., 128 F. 800, Id., C.C. 135 F. 833; Commonwealth v. Gibson Co., 125 Ky. 440, 101 S.W. 385, and Hewin v. City of Atlanta, 121 Ga. 723, 49 S.E. 765, 67 L.R.A. 795, 2 Ann. Cas. 296.
We are of the opinion that the cited statute applies to the distinct business and the distinct kind of business mentioned in the next foregoing paragraph, and not to the restricted incidental plan outlined in the opening paragraph. What appellee has been doing has been strictly in furtherance of the sale of its own products and had nothing to do with the sale, or the promotion of the sales, of the products or goods of others, of sales in general, as is the case of the trading stamp business. Inasmuch as what appellee was doing was simply an incidental feature of its own business of selling its own products, and not used for the benefit of any other producer, the principle found in such cases as Garbutt v. State, 116 Miss. 424, 77 So. 189; Gully v. Gulfport Loan, etc., Co., 168 Miss. 449, 151 So. 721, and Hugo v. City of Oxford, 179 Miss. 450, 176 So. 156, is to be applied.
The Garbutt case is sufficiently illustrative. There was a statute imposing a privilege tax upon each person engaged in hiring laborers or soliciting laborers to go beyond the limits of the State. The Court said: "The act as we construed it, does not undertake to tax one who solicits or hires laborers for his own use or employment, the employer seeking labor for himself; the tax is laid upon the person doing a regular business of emigrant or employment agent."
The principle of adjudication deducible from the cases is that where a person or corporation is engaged in a distinct business and, as a feature thereof, in an activity merely incidental which serves no other person or business, the incidental and restricted activity is not to be considered as intended to be separately or additionally taxed. For instance, we have a statute, Section 7, Chap. 20 (Ex. Sess.), 1935, which imposes a privilege tax on outdoor commercial advertising. A merchant may put any advertising matter he pleases as to his own business on his delivery trucks, or on his bill boards, or the like, without being liable under that statute; but if for pay he include advertisement for others, he would be liable.
Affirmed.