180 A. 272 | Md. | 1935
Retail merchants of the state, in two suits brought by them, question the constitutionality of an Act of the General Assembly of 1935, ch. 188, imposing an "Emergency Gross Receipts Tax" on retail sellers, for the purpose of providing unemployment relief and money for old age pensions, and, in the alternative, if the act is held constitutional, they question conformity of a regulation of the State Comptroller with it. By its terms the act became effective on April 1st, 1935, the date of its passage and approval, and the tax was to be paid at a rate of one per cent. on receipts from sales every month. The Comptroller construed this to impose a tax on receipts in the month of April, 1935, and in every month thereafter during the life of the act, without regard to the possibility that sales may have been made before April, 1935, or later, in a month other than that of the receipts. And the complainants deny that the act so provides. The writ of injunction is prayed accordingly against collection of any of the tax, or, in the alternative, against the requirement of reports of sales or payments of the tax on receipts from sales made in months other than those of the receipts. The court below denied the applications and dismissed the bills of complaint; and the appeals by the complainants have followed. *177
The section of the act imposing the tax, designated 72-B of article 56 of the Code, provides that:
"For the privilege of engaging in the business of selling tangible personal property at retail, there is hereby imposed upon every person engaging in such business a license fee or tax, at the rate of one per centum of the gross receipts of any such person, on or after April 1st, 1935, to and including March 31st, 1936, from the sale of all tangible personal property at retail in this State."
And the preamble in similar terms entitles the tax an "Emergency Gross Receipts Tax." Succeeding provisions for enforcement refer in their terms to sales subject to the tax, and, according to the understanding of counsel for the complainants, were provisions originally drafted for a tax based entirely on sales made, and not adapted in their terms to a changed purpose of taxing receipts only. The lack of such a readaptation, and the differences in the present provisions of the act, are thought by the complainants to present questions of the validity of the enactment. Section 72-C requires sellers to report sales during a preceding month, and by a section, 72-E, as soon as such a return is filed, the Comptroller is to examine it and compute the tax. The succeeding section, 72-F, requires persons in any business on which a tax is imposed to keep records of gross sales, and such other records as may be necessary to determine the tax liability. And a section providing for sales and transfers of businesses speaks of sales of goods as the basis of taxes to be paid. An amendment of the act by another act, numbered chapter 539, of the same legislative session, increased the fee payable for registering the original titles to motor vehicles sold, and after providing for a deduction by motor vehicle dealers of all gross sales of motor vehicles from their gross receipts, required them to pay the one per cent. tax "on the remainder of their gross sales." There are in the enforcement sections, however, specific references to receipts from sales as the basis or measure of the tax. *178
The complainants, regarding the basis as uncertain, contend that if the tax is to be measured by gross sales, then the act is unconstitutional because that purpose and effect are not properly allowed for in the title. Constitution of Maryland, art. 3, sec. 29. And if the tax is to be measured by gross receipts from the sales, it is objected that it is discriminatory, in violation of the twenty-third article of the Declaration of Rights of the state, and the Fourteenth Amendment of the Constitution of the United States, because by confining the basis to receipts in the same month as that of sales made, receipts deferred by credit beyond the months of sales are left untaxed, so that dealers on credit of such length enjoy an exemption. There is a further objection that the tax is unconstitutional because exorbitant and unreasonable, and the still further objection to the comptroller's construction already stated, and application of the tax to receipts at any time, out of the months of the sales from which they were derived.
Objections to the practice followed in the suits we find not well taken. In Maryland persons of an interested class, similarly affected, may, singly or jointly, and in representation of others, resort to equity to restrain execution of a legislative enactment the validity of which they deny. Baltimore v. Ulman,
A section 71-I of the act provides for revision and refunds of the taxes laid in particular instances, upon applications of the sellers, with a right of appeal to the circuit court of a county or to the Baltimore City Court. But that remedy does not exclude resort to equity to test and enjoin a tax on the ground that it is altogether void. *179 Joesting v. Baltimore,
The objection of the complainants that the title of the act is insufficient if the tax be taken as one measured by gross sales, as distinguished from gross receipts from sales, we do not find it necessary to decide, for in the view of the court it is a tax measured by receipts. The act specifically declares it to be such, and the references to sales or reports of sales as the basis of the assessment in the provisions of what may be described as the machinery of enforcement, however inapt the words may be considered, could not overcome this specific description. We must suppose the Assembly to have been aware of the words it was using, and to have regarded them as adequate for imposition of the tax defined, a tax measured by the receipts, and must construe the sections to make them work accordingly, so far as that is possible. Cutty v. Carson,
Testimony was taken on a wide range of facts as a basis for challenging the legislation, and it is objected on behalf of the Comptroller that much or all of it is inadmissible for the purpose. Mt. Vernon Co. v. Frankfort Co.,
A main contention in the case, to which much of it was addressed, is that the tax is invalid because of the *180
resulting hardships on many merchants. In the face of one fact, shown in the appellants' brief, that similar taxes are levied in other states at rates of two per cent., two and one-half per cent., and three per cent. of the receipts from sales, it would hardly be possible for this court, contradicting the Legislature if it had the right to do so, to adjudge the tax of one per cent. to be excessive in amount. But the Legislature is the body authorized to fix the law on the wisdom and fairness of a tax for revenue. The present tax is plainly one for revenue, and not for the limited purpose of police regulation. See review of decisions, 89 A.L.R. 1432. Therefore there could be no confiscation by a charge exceeding all reasonable relation to regulation. And as the tax is an imposition of the sovereign power of the State directly, there is no question of construing a delegation of power to be limited to a reasonable exercise. The courts, therefore, cannot upon the evidence oppose their judgment to that of the Legislature on imposing any tax, or on the fairness of the amount imposed. It is only when a license fee is exacted as a police regulation that the court can consider whether it is so unreasonable as to amount to a prohibition. 1Cooley, Taxation (4th Ed.) sec. 72; State v. Hunt,
The objection that there is a deprivation of property without due process of law in the exaction of the tax on the basis of receipts from sales before passage of the act, or a tax on a privilege already exercised free of the tax, rests on a construction that we think unnecessary, and, indeed, inadmissible. There is authority that would put the constitutionality of such a retroactive effect in question, in the decision of the United States Supreme Court that an excise tax on gifts made before the enactment of the statute for it was so arbitrary and capricious as to amount to deprivation of property without due process of law. Untermyer v. Anderson,
The construction which leads to the complaint that sellers on credits beyond the months of sales are practically exempted is also, in the opinion of the court, a mistaken one. Omission of the large proportion of sales and receipts which are on credit would be a surprising one, defeating to a great extent the purpose of the enactment, and is not to be inferred unless the inference is compelled by the terms of the act. Section 72-C, as has been seen, requires that the sellers shall, on or before the 10th day of each month, make a return of the sales and total selling price in each month, and shall pay the Comptroller the amount of the tax imposed. Section 72-E provides that as soon as practicable after the return is filed the Comptroller shall examine it and compute the tax. But the court does not see that these provisions operate to restrict the basis to receipts of selling prices during the months of sales. The sections seem to have no reference to the time of the receipts from sales reported, or time of collection of the tax on the basis of the receipts. The returns of the sales, and such additional information as the Comptroller may require, give him the selling prices, "paid or to be paid," in the words of the section of definitions, 72-A. He is then in possession of the ultimate basis of the tax, although as to deferred payments he is not entitled to collect at once. We see nothing to interfere with the evident purpose that all receipts of the sales reported shall be taxed. The Comptroller may compute whatever the general purpose of the statute requires, so far as the basis is ready for the computation.
The argument that receipts after the whole year of the tax, that is, after March 31st, 1936, cannot serve as a basis of computing any of it rests in part upon this construction limiting computation and collection to receipts during the months of sales from which they are derived. And that construction we have found to be mistaken. But there is a further ground. The words of section 72-B may, considered alone, be read to exclude from the basis or measure of the taxation money from sales during the year not received until after the year. "There is hereby *184
imposed upon every person engaging in such business a license fee or tax * * * at the rate of one per centum of the gross receipts of any such person, on or after April 1st, 1935, to and including March 31st, 1936, from the sale of all tangible personal property at retail in this State." But it is still to be considered that the intended subject of the license or tax is the business or occupation through the year, and the receipts from the selling are to serve in the subordinate, auxiliary capacity of the measure of that tax on the exercise of the privilege throughout. The construction contended for would in large part defeat the purpose of licensing and taxing the business by denying use of the measure in so far as any payments of selling prices might be deferred on credit over the last day of the year, as many would be of course. That seems to be giving the date a meaning and effect which cannot belong to it, in the intention of the Legislature. "Statutes should be construed with a view of the original intent and meaning of the makers, and such construction should be put upon them, as best to answer that intention, which may be collected from the cause or necessity of making the act, or from foreign circumstances; and when discovered, ought to be followed, although such construction may seem to be contrary to the letter of the statute. * * * That, therefore, which is within the letter of a statute, is sometimes not within the statute, not being within the intention of the makers." Buchanan, C.J., inChesapeake O. Canal Co. v. Balto. O.R. Co., 4 G. J. 1, 152; State v. Boyd, 2 G. J. 365, 374; Baltimore v. Root,
As for the partial exemption of motor vehicles dealers by the subsequent enactment, chapter 539 of the same legislative session, it is questioned whether this could, if involving an unconstitutional discrimination within the *185
class properly subject to the tax, have the effect of invalidating the previous act, in which it was not contained, or could have any effect other than to leave the previous act standing in its full original force without the amendment. Truaxv. Corrigan,
Of other criticisms of the act, we think it necessary to discuss only two. By section 72-E, paragraphs (c) and (d), penalties are provided for deficiencies in payments of the tax when the result of negligence and fraud with intent to evade payment, and it is objected that the Comptroller is given power to adjudicate the fact and exact the penalty. Necessarily, there must be an official opinion *186 and move to enforce these provisions, but there is nothing in them which denies the taxpayer the right and opportunity to contest in any instance the facts upon which the imposition is made. A section, 72-P, paragraph (d), provides that of the net fund collected, "the sum of $3,500,000 shall be disbursed upon warrant of the Comptroller, subject to the approval of the Board of Public Works, and expended under the supervision of the Board of State Aid and Charities for the relief of distress within the State arising out of involuntary unemployment, flood, epidemic or other emergency." And a sum not exceeding $1,500,000 is likewise required to be paid or contributed to the payment of old age pensions. Objection is made that these provisions compel the expenditures at all events. So far as that might be a valid objection, the answer would seem to be, as to other criticisms of the act, that the construction is not a necessary one, and would, in fact, be inadmissible because unreasonable. The Legislature might, and surely did, assume an interpretation and acceptation of its words which would not require the money, or any part of it, to be spent without need.
The only ground for relief found, then, is in the regulation of the Comptroller which would require payment of the tax on any credits remaining unpaid from sales before April 1st, 1935. There are probably few remaining, but collection of the tax on receipts still to come in from sales made before April 1st, 1935, should have been restrained, according to the construction of the act which we conclude to be the proper one, and the case will be remanded so that the decree may be modified to embody that injunction.
Decree affirmed in part and reversed in part, and causeremanded for passage of a decree in accordance with this opinion,the parties to pay their own costs respectively. *187