This is an appeal by Honorable Robert L. Hurt, District Attorney of Dallas County, Honorable William McCraw, Attorney General, and Honorable George H. Sheppard, Comptroller of the State of Texas, from a decree in favor of appellees, perpetually enjoining appellants as public officials from enforcing an act of the Forty-Fourth Legislature adopted at its First Called Session (House Bill No. 18, c. 400, 3 Vernon's Ann.P.C. art. 1111d) commonly known as the Chain Store Tax Law.
On original submission, having reached a tentative decision, to the effect that the judgment of the trial court was erroneous and should be reversed and judgment here rendered for appellants, dissolving the injunction issued, and a tentative opinion having been filed, the court deemed it advisable to certify to the Supreme Court for adjudication the issues of law arising in the case. The tentative opinion follows:
Appellees own and operate stores or mercantile establishments within the meaning of section 5 of the statute, Vernon's Ann.P.C. art. 1111d § 5, and are liable for the payment of the filing and license fees prescribed by the Act for the exercise of such privilege, provided the statute is a valid enactment. The statute makes it unlawful for any person, etc., to operate any store or mercantile establishment without a license issued by the Comptroller, requiring the payment of a filing fee of 50 cents for each store or mercantile establishment operated, stipulating in this connection that the expenses incurred by the Comptroller in administering the Act shall never exceed the amount of filing fees received. The provisions of the statute brought under review are these: "Section 5. Every person, agent, receiver, trustee, firm, corporation, association or copartnership opening, establishing, operating or maintaining one or more stores or mercantile establishments within this State, under the same general management, or ownership, shall pay the license fees hereinafter prescribed for the privilege of opening, establishing, operating or maintaining such stores or mercantile establishments. The license fee herein prescribed shall be paid annually and shall be in addition to the filing fee prescribed in Sections 2 and 4 of this Act. Provided that the terms, `store, stores, mercantile establishment or mercantile establishments,' wherever used in this act shall not include: wholesale and/or retail lumber and building material businesses engaged exclusively in the sale of lumber and building material; and/or oil and gas well supplies and equipment dealers; or any place of business engaged exclusively in the storing, selling, or distributing of petroleum products and servicing of motor vehicles; or any business now paying an occupation tax measured *Page 932 by gross receipts; or any place or places of business used as bona fide wholesale or retail distributing points by manufacturing concerns for distribution of products of their own manufacture only; or any place or places of business used by bona fide processors of dairy products for the exclusive sale at retail of such products. The license fees herein prescribed shall be as follows: 1. Upon one (1) store the license fee shall be One Dollar ($1); 2. Upon each additional store in excess of one (1) but not to exceed two (2), the license fee shall be Six Dollars ($6); 3. Upon each additional store in excess of two (2) but not to exceed five (5), the license fee shall be Twenty-Five Dollars ($25); 4. Upon each additional store in excess of five (5) but not to exceed ten (10) the license fee shall be Fifty Dollars ($50); 5. Upon each additional store in excess of ten (10) but not to exceed twenty (20), the license fee shall be One Hundred Fifty Dollars ($150); 6. Upon each additional store in excess of twenty (20) but not to exceed thirty-five (35), the license fee shall be Two Hundred Fifty Dollars ($250); 7. Upon each additional store in excess of thirty-five (35) but not to exceed fifty (50), the license fee shall be Five Hundred Dollars ($500); 8. Upon each additional store in excess of fifty (50), the license fee shall be Seven Hundred Fifty Dollars ($750); such fees are for the period of twelve (12) months, and upon the issuance of any license after the first day of January of any one year, there shall be collected such fractional part of the license hereinabove fixed as the remaining months in the calendar year (including the month in which such license is issued) bears to the twelve-month period."
Appellees successfully contended below, and contend here, that the statute offends a number of constitutional provisions, state and federal; the most pertinent being provisions of our State Constitution, to wit, section 3 of article 1, guaranteeing equal rights and prohibiting special privileges, section 19 of article 1, the "due course of law" provision, section 2 of article 8, requiring occupation taxes to be equal and uniform upon the same class of subjects, and also the "due process" and "equal protection" clauses of the
The pertinent part of section 2 of article 8 of the State Constitution reads: "All occupation taxes shall be equal and uniform upon the same class of subjects within the limits of the authority levying the tax." Under this provision, we think it obvious that the Legislature may validly subdivide or classify an occupation into different subjects, taxing each separately, provided the tax levied on each subject is equal and uniform. The occupation dealt with by the statute in question, described in general terms, is that of merchandizing, classified by the act into eight different brackets or subjects; the tax imposed on each, as is apparent from a reading of the statute, being equal and uniform.
We think the primary purpose of the act was to raise revenues, although the levy is mentioned as a "license fee." The emergency clause reciting the need of additional revenue; amounts levied being far in excess of regulatory needs, and the distribution made after collection, indicate clearly that the act was intended, primarily at least, as a revenue measure. We do not think it a matter of significance that the levy is called a "license fee," as its payment gives the right to carry on the business without the performance of any other condition. See 37 C.J. p. 169, § 6; p. 171 § 7; Hoefling v. City of San Antonio,
Being a valid tax-gathering measure, we do not think it should be condemned because incidentally it may also serve a wholesome purpose referable to the police power, thus accomplishing dual results. In Fox Film Corporation v. Trumball, D.C.,
That the chain store method tends to create a monopoly in merchandizing, we do not think there can be a doubt. The Supreme Court of Indiana, in Midwestern, etc., Corporation v. State Board,
So, in view of section 26 of the Bill of Rights, providing that "Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed," we do not think it can reasonably be insisted that the statute, as a revenue measure, is any less valid, because it lends itself to a policy of discouraging monopolistic tendencies of chain store merchandizing by differential taxation on the various units, thereby furthering the stability and encouraging the maintenance of small independent mercantile establishments.
In our consideration of the questions presented, we will not be concerned either with the wisdom, propriety, or justice of the measure under review, or with the motive or public policy that actuated the Legislature in enacting the statute; our sole purpose and duty being to sustain or condemn dependent upon the existence or nonexistence of a substantial difference between the subjects taxed and those exempted, and as repeatedly held, the difference (if it exists at all) need not be great.
Arguing their contention that the classifications are whimsical, arbitrary, and discriminatory, appellees compare large department stores operating under one roof, carrying many lines of merchandise and paying a nominal tax, with a chain of many stores under one management, enjoying less annual sales and paying a much larger tax. The illustration, necessarily, is based upon the assumption that the one-roof merchant carries a larger volume of merchandise than the chain of many units; but the statute imposes no such condition. Each store in a chain may carry as large a volume and as many different lines of merchandise (excluding those exempted) as the merchant may choose without increasing the tax burden; in fact, each unit of a chain may become a department store, rivaling or even overwhelming in size its largest independent competitor.
Appellees make the further contention that the voluntary chain (composed of independent merchants) enjoys every advantage enjoyed by a singly owned chain. It is no doubt true that, by co-operation, voluntary chain merchants may enjoy many of the advantages enjoyed by the singly owned chains, yet there inheres in the different methods of merchandizing material differences; advantages in favor of the chain store merchant that are interrelated and interdependent; besides, the voluntary chain cannot jointly advertise as effectually as the chain is permitted to do, without price-fixing in violation of our Anti-Trust Law, article 7426, subd. 2, R.C.S.
It is held generally that the method of chain store merchandizing is quite different from that adapted to the ordinary singly owned and operated independent store, and that this difference is regarded so fundamental as to justify the Legislature in classifying and taxing them differently. In the case of Penny Stores v. Mitchell, D.C.,
We do not deem it necessary to follow the detailed attack made by appellees on the statute in question, because we think every objection urged and every criticism made has heretofore been denied by courts — state and federal — in cases arising under similar chain store tax statutes construed with reference to the
Mr. Justice Roberts, in State Board of Tax Com'rs of Ind. v. Jackson, supra, used the following language in point: "The principles which govern the decision of this cause are well settled. The power of taxation is fundamental to the very existence of the government of the states. The restriction that it shall not be so exercised as to deny to any the equal protection of the laws does not compel the adoption of an iron rule of equal taxation, nor prevent variety or differences in taxation, or discretion in the selection of subjects, or the classification for taxation of properties, businesses, trades, callings, or occupations. Bell's Gap R. Co. v. Pennsylvania,
So, we conclude that the validity of the act in its affirmative operation — that is, in the classification of the subjects taxed — is no longer an open question, but has been definitely settled against the contention of appellees.
Appellees also challenged the validity of the act, because of the exemptions, contending that they are unsupported by any factual difference between the taxed and untaxed subjects; that they are unreasonable, whimsical, arbitrary, violative alike of the equality and uniformity clauses of the State Constitution and of the equal protection clause of the
Appellees argue that the classification and levies are based solely upon the basis of the number of stores owned and operated under one management, in which goods, wares, or merchandise of any kind are sold at retail or wholesale, and that as the businesses exempted also sell merchandise of designated kinds, it follows that the subjects taxed and those exempted are identical, hence the exemptions are discriminatory and personal in nature, rendering the statute void.
We think appellees have an erroneous concept of the subjects taxed. The definition of the "store and mercantile establishments" taxed is found in section 7 of the act, Vernon's Ann.P.C. art. 1111d, § 7 (which must be construed in connection with section 5) reading: "The term `store' as used in this Act shall be construed to mean and include any store or stores or any mercantile establishment or establishments not specifically exempted within this Act which are owned, operated, maintained, or controlled by the same person, agent, receiver, trustee, firm, corporation, copartnership or association, either domestic or foreign, in which goods, wares or merchandise of any kind are sold, at retail or wholesale." The following clause section 7 "in which goods, wares or merchandise of any kind are sold," necessarily, is limited by and must be construed in connection with the exemptions mentioned in section 5, and as thus limited the clause, describing the stores and mercantile establishments taxed, means those "in which goods, wares or merchandise of any kind are sold, at retail or wholesale," except lumber and building material; oil and gas supplies and equipment; petroleum products; publishing and selling textbooks (the only business within the meaning of the exemption in favor of businesses paying an occupation tax measured by gross receipts); manufactured products in the hands of the manufacturer, and dairy products in the hands of the processor. As thus construed, we think it apparent that the basis of classification adopted includes not only the method of merchandizing, but the nature and kind of merchandise sold as well.
Statutes containing exemptions based upon similar differences have repeatedly been held valid by both state and federal courts, as against the objection that they violated State and Federal Constitutions in the respects as contended here. A few representative cases from our own courts will be noticed at this point. In Texas Co. v. Stephens,
The Court of Civil Appeals at Austin applied the same doctrine in Dallas Gas Co. v. State,
Although many other Texas cases to the same effect could be cited, we do not deem it necessary to lengthen the opinion by doing so, as those referred to reveal the status of the case law in this state on the phase of the subject under consideration. These decisions show that, whether the validity of an occupation tax is tested by applicable provisions of the State Constitution, requiring equality and uniformity in levying the tax, or is tested by the equal protection clause of the
A few pertinent federal cases on the same phase of the subject will now be mentioned. In American Sugar Ref. Co. *Page 938
v. Louisiana,
We will now turn from the subject in its general aspect to a consideration of the status of the law with respect to the power of the Legislature to make exemptions in taxing the occupation of merchandizing by the chain store method. The first chain store tax case in which the court dealt specifically with the subject of exemptions was Liggett Co. v. Lee,
It will be observed that the statute involved in each of the cases just mentioned contained only one exemption, that is, filling stations engaged exclusively in the sale of gasoline and other petroleum products, while the statute under review in the instant case contains a number of exemptions. However, the number involved is immaterial, the test being whether the exempted subject is substantially different from the taxed subject; if the difference exists, the Legislature, in the exercise of its discretion, may exempt as many lines as it chooses. The Ohio chain store tax statute, being reviewed in the case of Great A. P. Tea Co. v. Valentine, D.C.
In support of their contention that the statute violates the Constitutions, appellees cite and rely upon a number of cases from our Supreme Court and other appellate courts of the state. One of the leading cases is that of Pullman Palace Car Co. v. State,
We conclude that the chain store tax statute under consideration is constitutional and valid, and that, in enacting same the Legislature acted well within its constitutional powers.
We will briefly notice other assignments and propositions urged by appellants, although the questions raised pass out under our holding, to the effect that the provisions of the act in the respect brought under review, are valid. Appellants invoke the doctrine announced by our Supreme Court, in Texas P. R. Co. v. Mahaffey,
Appellants also contend that, if the court should hold the exemptions contained in section 5 of the act arbitrary, that the same may be stricken out, and still there will remain a complete and perfectly workable act. That appellants' position at this point may be understood, we quote from their brief; they say: "* * * This proviso might be entirely eliminated from the Act and we would still have a perfectly workable and complete Act. And the legislature has expressly said that, if any part of the Act is held unconstitutional, it shall not affect the remainder. We see no reason why this expressed intention should not apply to this proviso as well as to any other section of the Act which the court might determine to be unconstitutional. The legislature has, in effect, said: It is our intention to leave out of the provisions of the Act the exempted businesses, but if we cannot do so because of some constitutional provision, then it is our intention that all businesses falling within the main definition of stores or mercantile establishments should be included therein, including those mentioned in the proviso." As authority for this contention, appellants cite Henderson v. McMaster,
In propositions Nos. 11, 12, 13, and 14 and assignments to which the propositions are germane, appellants complain of the action of the trial court in excluding certain evidence. Necessarily, this contention is based upon the idea that the constitutionality of the act is to be tried out as a question of fact — in other words, as a jury question, rather than as a judicial question to be decided by the court. This position is rather unique, no authority in point has been cited, and, in our opinion, none can be found. It is only where a statute is ambiguous or uncertain in meaning that resort may be had to extrinsic evidence to show its meaning. 59 C.J. 1037, § 615. Cases may be found where evidence was heard, as in the instant case, and we know of no objection to such procedure, as extrinsic facts may bring immediately to the attention of court the conditions confronting the Legislature when the statute was enacted; but as courts are authorized to take judicial cognizance of such conditions, we do not think error can be predicated upon the refusal of the trial court to admit evidence, where, in the exercise of its discretion, such evidence is deemed unnecessary: "Whether a seeming Act of a legislature is or is not a law is a judicial question to be determined by the court and not a question of fact to be tried by a jury, even though a determination of the question may involve a finding of fact." 59 C.J. 621, § 181. "The right and duty of the judiciary to take jurisdiction and decide cases when constitutional questions are presented, are both imperative and inescapable * * *." 12 C.J. 699 § 40. Also see Blessing v. Galveston,
We therefore overrule appellants' propositions and assignments complaining of the action of the trial court in refusing to permit the introduction of the evidence offered.
In harmony with the views heretofore expressed, we hold that the act in question, as to appellees, is valid and constitutional; that the court below erred in holding to the contrary and in perpetually enjoining appellants (public officials of the State charged with the duty of enforcing the statute) from enforcing the same; therefore, are of opinion that the judgment below should be reversed and judgment here rendered for appellants, dissolving the injunction.
The exhaustive briefs and able written and oral arguments by counsel for both sides have been of great assistance to members of this court, for which they express appreciation.
[Signed] LOONEY, Associate Justice.
While we agree to the conclusion as to the constitutionality of the "chain store" law, announced by Associate Justice LOONEY in the tentative opinion, such agreement is not without grave doubt as to the validity of this law, when construed in the light of the provisions of section 2 of article 8 of the State Constitution, and in view of the exemptions of certain named businesses from the operation of the law. However, as under the settled rule of law obtaining in this state, when passing upon the validity of a statutory enactment, requiring all doubt as to its constitutionality to be resolved in favor of the validity of the law, we yield our doubt to such rule of law, and agree to the conclusion reached in the tentative opinion.
[Signed] B. L. JONES, Chief Justice.
[Signed] JOEL R. BOND, Associate Justice.
The questions of law certified to the Supreme Court are these:
"(1) Was the act in question enacted by the Legislature primarily for the purpose of raising revenue under its taxing powers, or was it enacted primarily as a regulatory measure, under the police power?
"(2) If the court holds the act to be a regulatory measure, enacted by the Legislature under its police power, is it valid and constitutional, as against the contention by appellees that the license fees imposed are excessive and in violation of section 48 of article 3 of the Constitution, providing that, `The Legislature shall not have the right to levy taxes or impose burdens upon the people, except to raise *Page 943 revenue sufficient for the economical administration of the government'?
"(3) Is section 5 (and related provisions) of the act valid against the objection that it violates either of the following provisions of the State Constitution, to wit, section 3 of article 1, guaranteeing equal rights and prohibiting special privileges; section 19 of article 1, the `due course of law' provision; and section 2 of article 8, the equal and uniform occupation tax provision?
"(4) Is section 5 (and related provisions) of the act valid as against the objection that it violates the `due process' or the `equal protection' clauses of the
"(5) Is section 5 (and related provisions) of the act valid in view of the exemptions, as against the contention that the exemptions are not based upon any factual differences between the burdened and unburdened subjects, but are unreasonable, whimsical, arbitrary, therefore, violative alike of the provisions of the State and Federal Constitutions mentioned in questions 3 and 4?
"(6) If the court holds that the exemption of the businesses mentioned in section 5 was arbitrary and not based upon any reasonable difference between the businesses burdened and the businesses exempted, therefore invalid, would this fact render nugatory and invalid the remaining part of section 5 — in other words, was it the intention of the Legislature, primarily, to exempt these businesses if it could validly be done, but if not, in view of the `saving clause' of the act, section 11, Vernon's Ann.P.C. art. 1111d, § 11, did the Legislature intend that, all businesses falling within the main definition of stores or mercantile establishments, including those attempted to be exempted, should be brought under the operation of the act?"
After a lengthy discussion of the questions involved, with full citation of authorities, the Supreme Court, in an opinion by Judge HICKMAN, answered the certified questions as follows:
Question No. 1 was answered in language quoted from the tentative opinion, as follows: "We think the primary purpose of the Act was to raise revenues, although the levy is mentioned as a `license fee.' The emergency clause reciting the need of additional revenue; the amounts levied being far in excess of regulatory needs, and the distribution made after collection, indicate clearly that the Act was intended, primarily at least, as a revenue measure. We do not think it a matter of significance that the levy is called a `license fee,' as its payment gives the right to carry on the business without the performance of any other condition." The court having answered that the act was a revenue raising measure, question No. 2 became immaterial, hence was not answered. Questions 3 and 4 were also answered in the language of a conclusion announced in the tentative opinion, as follows: "So, we conclude that the validity of the Act in its affirmative operation — that is, in the classification of the subjects taxed — is no longer an open question, but has been definitely settled against the contention of appellees." Question No. 5 being answered in the affirmative, question No. 6 passed out and was not answered. See Hurt v. Cooper, Tex.Sup.,
At this juncture, appellees filed a motion, praying that the judgment of the trial court be reversed and the cause remanded for further proceedings; the contention being that, in the discussion preceding the answer to question 5, the Supreme Court found the fifth clause of section 5 of the act, the "manufacturer exemption" clause, to be ambiguous; the clause reads: "or any place or places of business used as bona fide wholesale or retail distributing points by manufacturing concerns for distribution of products of their own manufacture only" — which indicates, so appellees contend, that said clause has a different meaning and presents a theory other than the one on which the case was tried, probably rendering the statute unconstitutional and void; therefore they seek to have the case remanded to the trial court, that evidence bearing upon the legislative intent may be taken and in this way clear up the ambiguity or uncertainty in meaning allegedly found by the Supreme Court.
In the first place, we do not think the Supreme Court found an ambiguity or uncertainty in the meaning of the statute. The opinion in the respect under consideration simply states that "the least that can be said is that the language is reasonably susceptible of the construction which we have given it. That *Page 944 construction upholds the act and should, therefore, be applied rather than one which might invalidate it."
But aside from that, in the last analysis, appellees seek to have this court hold that a question of law certified to the Supreme Court, and answered as such, is really a question of fact to be heard and determined as such in the trial court. The motion is altogether untenable. Our duty in the premises is plainly directed by statute. Where certified questions are propounded by a Court of Civil Appeals, article 1759 defines the duty of the Supreme Court as follows: "The Supreme Court, on receiving such record, and certified question of law, from the Court of Civil Appeals transmitting the same, shall examine such record and certified question of law, and render an opinion as in other cases; which opinion, when so rendered by the Supreme Court on the record and question of law presented therein, shall be final and shall be the law on the question involved until said opinion shall have been overruled by the Supreme Court or abrogated by legislative enactment, and the Court of Civil Appeals shall be governed thereby. After the question is decided, the Supreme Court shall immediately notify the lower court of its decision."
Articles 1851 and 1854, R.S., define the duties of a Court of Civil Appeals in the situation presented. These statutes read: "Art. 1851. Whenever there shall arise an issue of law which a Court of Civil Appeals should deem advisable to present to the Supreme Court for adjudication, the presiding judge shall certify the question to be decided by the Supreme Court. Pending the decision of the Supreme Court, the cause in which the issue is raised shall be retained for judgment in harmony with the decision of the Supreme Court upon the issue submitted. * * * Article 1854. When the Supreme Court decides a question certified to it by a Court of Civil Appeals, such decision shall be binding upon the Court of Civil Appeals."
We therefore overrule appellees' motion to reverse and remand the cause, but, in harmony with the decision of the Supreme Court and in obedience to controlling statutes, we reverse the judgment of the trial court granting a temporary injunction in favor of appellees against appellants, and here render judgment for appellants, dissolving the injunction.
Reversed and rendered