138 W. Va. 84 | W. Va. | 1953
Lead Opinion
Plaintiff, Appalachian Electric Power Company, an electric public service corporation, instituted its declaratory judgment proceeding in the Circuit Court of Kan-awha County, for the purpose of having determined its liability as to a deficiency business and occupation tax assessment, covering the years 1945, 1946, 1947, 1948 and 1949, made by the state tax commissioner, as the result of an audit of the accounts of the company. The tax commissioner demurred to the petition, the circuit court overruled the demurrer and, upon joint motion of the parties, certified to this Court the following questions :
“1. Does Section 2(d), Article 13, Chapter 11, of the Official Code of West Virginia of 1931, as amended, impose the sole tax upon the privilege of engaging in the
“2. May income of an electric light and power company arising from Delayed Payment Charg’es be lawfully included within the measure of the privilege tax provided in Section 2(d), Article 13, Chapter 11, of the Official Code of West Virginia of 1931, as amended, namely, ‘sales and demand charges’?
“3. May income of an electric light and power company arising from merchandising activities be lawfully levied upon under the provisions of Section 2(c) of said article?
“4. May income of an electric light and power company arising from Sales of Water, activities producing income classified as Miscellaneous Electric Revenues, Servicing of Customers’ Installations and activities producing income classified as Other Miscellaneous Non-Operating Income be lawfully subjected to the privilege tax provided in Section 2 (h) of said article ?
“5. May the privilege tax provided in Section 2 (i) of said article be lawfully imposed upon the income of an electric light and power company arising from the renting of electric properties and from leasing of non-operating physical properties?”
Code, 11-13-2 (d), as amended, around which the principal controversy revolves, in so far as material here, reads: “Upon any person engaging or continuing within this State in any public service or utility business, * * * there is likewise hereby levied and shall be collected taxes on account, of the business engaged in equal to the gross income of the business multiplied by the respective rate as follows: * * *; electric light and power companies, four per cent on sales and demand charges for domestic purposes and commercial lighting and three per cent on sales and demand charges for all other purposes, * *
Section 2(c) of the same article provides that every
The principal income of the company is from sales of electric energy. It also receives certain income from what may be described as delayed payment charges, which are additional charges collected from its customers who fail to pay the charges for electric energy within a fixed time. Other income is received by the company from sources such as sales of tangible property, rent of properties of the company not continuously used or immediately required in its utility business, sales of water, servicing of customers’ installations, and certain other non-utility businesses. For the years material, the company reported and paid the tax assessed, under Section 2(d), on sales of electric energy, as “sales and demand charges.” It reported and paid the tax on that part of its income designated as “delayed payment charges”, not as “sales and demand charges”, but as income taxable only under Section 2(h), as a “service business or calling not otherwise specifically taxed”, at the lower rate. It reported and paid the tax on its other income at the rates provided either in Section 2(c), 2(h), or 2(i).
For each of the years involved, the company’s income from delayed payments amounted to $27,108.06, $13,-277.73, $17,299.53, $21,373.05 and $28,913.24, respectively. From the audit made by the tax commissioner, after
The income reported by the company for each of the years involved as having been received from sales of tangible property, upon which it paid the tax provided by Section 2(c), less justifiable deductions, was $4,-088.12, $50,617.43, $107,614.28, $158,880.13 and $164,-693.02, respectively. The 1949 income derived from sales of tangible property was approximately five one-thousandths of one per cent of the total income of petitioner for that year. The volume of each of the other types of businesses mentioned in the questions certified, which hereinafter may be referred to as incidental businesses, as compared with the entire volume of business done by petitioner, may very well be visualized from the approximate percentage of income of each of the particular businesses with the entire income of the business of petitioner for the year 1949: Rent electric properties (associates), five ten-thousandths of one per cent; rent electric properties (other than associates), three one-thousandths of one per cent; sales of water and water power, three one hundred-thousandths of one per cent; servicing customers’ installations, six ten-thousandths of one per cent; lease of physical properties, four one hundred-thousandths of one per cent; miscellaneous, two one-hundredths of one per cent.
The Public Service Commission of West Virginia, being the public body having statutory powers to supervise and regulate public utilities within the State, with respect to certain of their affairs, and especially with refer
Our attention is directed to principles usually applied in aid of construction of statutes, some of which apply especially to construction of taxing statutes. We have concluded, however, that the statute under consideration requires no construction, at least in so far as the instant proceeding is concerned. See Douglass v. Tax Commissioner, 137 W. Va. 345, 71 S. E. 2d 319. No contention is made as to any ambiguity of any section of the statute, except Section 2 (d), and the question there turns upon whether certain income of the company is included within the term “sales and demand charges”. Clearly, the income upon which the tax is based is the income derived from the public service furnished, including not merely a price for electric energy, sold and delivered, but such segments of the utility business as may be necessary or proper in the economic and efficient management and control thereof. The income upon which the tax is based must be derived from the public service or utility business, not some other business, and must be included within the term “sales and demand charges”. This much
Considerable discussion is contained in the briefs with reference to what income is included within the term “sales and demand charges”, used in Section 2(d), and made the' sole basis for determining the amount of income to be used in levying the tax therein provided. In its setting and context we think its meaning definite. True, the word “sales” and the word “demand” each has different uses. Here they are used as relating only to charges as to a single business, an electric utility business, and only as to certain income, the income from the public service furnished.
In Department of Public Works, ex rel. City of Spokane v. Spokane Gas & Fuel Company, P. U. R. 1925A 165, we find this language: “‘(b) The demand charge consists of that part of company expense incidental to providing and maintaining a production, transmission, and distribution system of sufficient capacity to render service as required. The principal elements in this cost are the fixed charges, among which are interest, taxes, and depreciation on the necessary plant, and part of the operating and maintenance expense of the physical property. The demand charge is distributed among the customers in proportion to the demand which is contracted for by each customer, and hence in the proportion which each customer contributes towards the creating of the total demand expense.’ ”
In Re Idaho Power Company, P. U. R. 1920E 209, it is stated: “Demand charge is simply a readiness-to-serve charge. In -other words, it is an amount paid to the power company by the customer for the privilege of having
In City of Dearborn v. Michigan Consol. Gas Co., 296 Mich. 388, 297 N. W. 534, it is stated: “Was the penalty charge which was substituted for the discount plan a violation of the franchise, or is it to be considered a part of the new rate schedule? In the franchise, consumers were entitled to a discount of 10 cents per 1,000 cubic feet, if the bills were paid before a certain date. The substitution, after the expiration of the rate schedule and under the new rates, was that consumers who did not pay their bills before a certain date, would be assessed an additional charge of 10 cents per Detroit gas unit consumed, or approximately 20 cents per 1,000 cubic feet more than the consumers who were not delinquent in payment. This substitution only affects the rates. It is apparent that a penalty or discount affects the amount of net return to the company, and has a definite connection and influence upon the fair rate of return which the company should earn. This is considered by the company in establishing base rates. If the discount plan is followed, the base rate is comparatively higher; if a penalty is charged, the base rate does not include cost of collection of delinquent bills. We consider such substitution merely as a part of the charge for gas service, and properly to be considered as a part of the rates promulgated; and this was within the jurisdiction of the commission.” Webster’s International Dictionary, Second Edition, gives but a single meaning to the word “demand” when used
Since the intention of the statute is clear and the term “sales and demand charges” has a definite meaning, and since only that part of the income within “sales and demand charges” for the public service furnished, may be used as the base for the tax levied by Section 2(d), we face only the problem of determining whether income from a particular source is income derived from the public service furnished, on the one hand, or whether it is merely incidental to or independent of the public service, on the other hand.
The principal question which gave rise to the justifiable controversy herein relates to the delayed payment charges. Is such income a part of the income of the utility company, within the term “sales and demand charges”, and subject to the tax provided in Section 2(d), as contended by the tax commissioner? As previously pointed out, the delayed payment charges, sometimes described as discounts, sometimes as penalties, and sometimes as “Customers’ Forfeited Discounts and Penalties”, are additional or further charges made by the utility company against customers who fail to pay the regular utility charge within a specified time. In petitioner’s brief, the charge is illustrated by quoting a tariff provision sometimes used: “Delayed Payment Charge. The above tariff is net if account is paid in full within ten (10) days of date of bill. On all accounts not so paid, an additional charge of 5 % of the amount billed .(but not less than $.10) will be made.” The same rate charge, including the delayed payment charge, is made against each customer. Only the action of the customer in paying promptly, or in failing to pay promptly, determines whether the additional charge shall be collected. Undoubtedly, the purposes of making the charge, as indicated, are to facilitate collection of all charges, to decrease the total collection costs and thereby lessen the
Certain income is received by petitioner for tangible property sold and delivered by it, and the tax commissioner strongly contends that such income should be taxed under Section 2(c), under which section a tax is levied upon the privilege of selling tangible property. It is the contention of the company that the sale by it of tangible property is for the sole purpose of furthering
The conclusion reached is strengthened by the statutory definition of the word “business”, found in Code, 11-13-1: “ ‘Business,’ as used in this article, shall include all activities engaged in or caused to be engaged in with the object of gain or economic benefit either direct or indirect. * * The principal business engaged in by petitioner, of course, is the utility business, but the sale of tangible property is incidental to that business and is an activity “engaged in with the object of gain or economic benefit”, although the gain or benefit may be indirect. The “activity”, the business of selling tangible property, engaged in by the utility, is made part of the business of the utility, but the income therefrom is not included within “sales and demand charges”, expressly made the base for the tax. It is also signifi
The tax commissioner further contends that to tax other businesses as to income derived from selling tangible property, and not the utility for the same privilege, would constitute discriminatory taxation, in violation of the provisions of the Constitution requiring that taxes be equal and uniform; and also, that such action would be violative of due process. We think no such result follows. It is manifest that the sale of particular types of tangible property by the utility company, for the sole purpose of furthering its public service business, is not on the same plane with businesses selling tangible property
In discussing the tax imposed on delayed payment charges, we have attempted to demonstrate the type or source of income included within “sales and demand charges”, and taxed under Section 2(d). In discussing the business of the petitioner as it relates to sales of tangible property, we have attempted to demonstrate the type or source of income of petitioner not included within “sales and demand charges”, and not taxed directly under any section of the business and occupation tax statute. What has been said, we believe, sufficiently answers any question as to other classes of businesses mentioned in the questions certified. As before noted, we must, under the pleadings, consider each of such businesses as being operated by petitioner in the furtherance of its public service business. We do not, of course, attempt to lay down any definite rule governing the question as to every case. Whether a certain business is incidental to the utility business and in furtherance thereof, or whether it is an independent business, must necessarily be determined from the facts peculiar to each case. Even should we be permitted to consider the question as it relates to such other busi
From what has been said, it necessarily follows that the rulings of the Circuit Court of Kanawha County must be affirmed in part, reversed in part, and the proceeding remanded to that court.
Rulings affirmed, in part; reversed in part; remanded.
Dissenting Opinion
dissenting in part:
I concur in the decision of the majority in this case to the extent that it holds that the tax levied against the plaintiff, an electric light and power company, under Section 2(d), Article 13, Chapter 11, Code, 1931, as amended, is determined solely by the amount of income received by it from sales and demand charges, and that its income from an activity merely incidental to its public service business is not included within its income from sales and demand charges and is not subject to any tax levied by any section of Article 13 of Chapter 11, Code,
In holding, erroneously I think, that the income derived from delayed payment charges is included in income of an electric light and power company received from its sales and demand charges, the majority disregards and violates firmly established and widely recognized rules of statutory construction and the equally well settled rule that a statute which is clear and free from ambiguity is not open to judicial interpretation.
The plaintiff insists, the defendant admits, and the majority holds, that the provisions of Section 2(d),- Article 13, Chapter 11, Code, 1931, as amended, are clear and unambiguous; yet, in the face of its pronouncement to that effect, the majority, in disregard of the rule, proceeds to interpret that section of the statute and, in so doing, erroneously construes the plain words “sales and demand charges”, each of which has a well defined and commonly accepted meaning and significance, to include and embrace delayed payment charges which, in any proper sense, are neither sales nor demand charges but are, in fact, separate, distinct and totally different items.
When a statute is clear and unambiguous and the legislative intent is plain, the statute should not be interpreted by the courts. State v. Epperly, 135 W. Va. 877, 65 S. E. 2d 488; Douglass v. Koontz, 137 W. Va. 345, 71 S. E. 2d 319; Hereford v. Meek, 132 W. Va. 373, 52 S. E. 2d 740; State ex rel. Department of Unemployment Compensation v. Continental Casualty Company, 130 W. Va. 147, 42 S. E. 2d 820; State ex rel. McLaughlin v. Morris, 128 W. Va. 456, 37 S. E. 2d 85; State v. Patachas, 96 W. Va. 203, 122 S. E. 545; 50 Am. Jur., Statutes, Section 225. If the legislative intent is plain, the courts should give the unambiguous language of a statute full force and effect, and should not attempt to read into the provision a meaning which is not intended. Hereford v.
In 50 Am. Jur., Statutes, Section 225, the text contains this pertinent language: “Where the language of a statute is plain and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation, and the court has no right to look for or impose another meaning. In the case of such unambiguity, it is the established policy of the courts to regard the statute as meaning what it says, and to avoid giving it any other construction than that which its words demand. The plain and obvious meaning of the language used is not only the safest guide to follow in construing it, but it has been presumed conclusively that the clear and explicit terms of' a statute express the legislative intention, so that such plain and obvious provisions must control. A plain and unambiguous statute must be applied, and not interpreted, since such a statute speaks for itself, and any attempt to make it clearer is a vain labor and tends only to obscurity.” The words of a statute should be given their ordinary and familiar significance and import and they should be accorded their general and proper use and their usual and common acceptation. Hereford v. Meek, 132 W. Va. 373, 52 S. E. 2d 740; State ex rel. Department of Unemployment Compensation v. Continental Casualty Company, 130 W. Va. 147, 42 S. E. 2d 820; Miners in General Group v. Hix, 123 W. Va. 637, 17 S. E. 2d 810; Nor
The pertinent provision of the statute here involved, Section 2(d), Article 13, Chapter 11, Code, 1931, as amended, is in these words: “Upon any person engaging or continuing within this State in any public service or utility business, * * * there is likewise hereby levied and shall be collected taxes on account of the business engaged in equal to the gross income of the business multiplied by the respective rates as follows: Street and interurban and electric railways, one per cent; water companies, four per cent, except as to income from municipally owned water plants; electric light and power companies, four per cent on sales and demand charges for domestic purposes and commercial lighting and three per cent on sales and demand charges for all other purposes, except as to income from municipally owned plants producing or purchasing electricity and distributing same; * * (Emphasis supplied). By the quoted language of this provision of the statute the Legislature expressly fixed “sales and demand charges” of electric light and power companies, instead of their gross income, as the base or the measure of the tax levied and imposed by the statute, and, by using those plain and explicit terms, the Legislature clearly intended that they should be given the meaning which they plainly express.
It is significant that the quoted provision does not contain the words “delayed payment charges” or any other like or equivalent terms; and it must be presumed that any mention of charges of that character was purposely omitted. If the Legislature had intended to include in the tax base delayed payment charges of the use of which
As the Legislature, in fixing the basis of the tax imposed upon electric light and power companies, mentioned only sales and demand charges as the constituents of the tax base, the maxim “expressio unius est exclusio alterius,” which means that the express mention of one thing implies the exclusion of any other thing, applies. This maxim is of ancient origin and extends to all written instruments, including contracts, deeds, statutes and constitutions which require judicial interpretation. Douglass v. Koontz, 137 W. Va. 345, 71 S. E. 2d 319; Harbert v. The County Court of Harrison County, 129 W. Va. 54, 39 S. E. 2d 177; State ex rel. Downey v. Sims, 125 W. Va. 627, 26 S. E. 2d 161; Taylor v. Taylor, 66 W. Va. 238, 66 S. E. 690; Tate v. Ogg, 170 Va. 95, 195 S. E. 496. Affirmative specifications in a statute exclude implication. Beverlin v. Beverlin, 29 W. Va. 732, 3 S. E. 36. If, therefore, the foregoing provision of the statute is subject to judicial interpretation which, as already pointed out, it is not because clear and free from ambiguity, delayed payment charges and their equivalents are necessarily excluded from the base upon which the tax against electric light and power companies is imposed.
The words “sales”, “demand charges”, and “delayed payment charges” are clear and unambiguous and each of them has a definite and commonly understood and accepted meaning among persons who engage in the business conducted by electric light and power companies. None of those words or expressions contains or is syn
When an electric- light and power company delivers electric current to its consumer at the designated point of delivery, at the rate prescribed by the tariff to which the company is subject, the sale of the electricity is completed. It is not affected or defeated by the failure of the consumer to pay the purchase price promptly or at all. The delayed payment charge, a penalty or an additional charge, imposed and collectible only if the consumer does not pay the independently fixed rate on or before a designated date, is not a part or a factor of the completed sale and does not enter into it. The sale is concluded before the delayed payment charge accrues or becomes effective and whether it becomes effective at all
The delayed service charge is merely incidental to the business conducted by an electric light and power company. It is as much so in fact as the other incidental activities mentioned and discussed in the majority opinion which correctly holds that such incidental activities are not subject to the tax imposed by Section 2(d) or by any other section of Article 13, Chapter 11, Code, 1931, as amended. For that reason that holding of the majority should, in my opinion, apply to delayed payment charges received by the plaintiff and exonerate and relieve such charges from any tax imposed by any section of Article 13 of the statute. The decision of the majority, that the activities which the defendant contended were taxable under Sections 2(c), 2(h) and 2(i) of the statute are merely incidental to the business of the plaintiff under the allegations of its petition, which on demurrer are taken as true, and, as such, are not subject to any tax imposed by Article 13, is authority for and sustains my view that delayed payment charges, as an incidental activity of the business of the plaintiff, are likewise exempt from any tax imposed by that article of the statute.
The interpretation placed upon the applicable provision of Section 2(d) also violates a well established rule which governs the construction of statutes relating to taxation which are ambiguous or of doubtful meaning and, for that reason, are subject to judicial interpretation. That rule is that statutes which impose taxes must be construed strictly and most strongly against the taxing authority and in favor of the taxpayer and that all doubts as to their meaning must be resolved in favor
For the reasons indicated, I would hold that delayed payment charges received by the plaintiff are not included within its sales and demand charges and are not subject to the tax imposed by Section 2(d), Article 13, Chapter 11, Code, 1931, as amended. In consequence, I would affirm the action of the Circuit Court of Kanawha County in overruling the demurrer of the defendant to the petition of the plaintiff.