ARK.] WISEMAN V. ARK. WHOLESALE GROCERS' ASS'N 313 WISEMAN V. ARKANSAS WHOLESALE GROCERS' ASSOCIATION. 4-4282
Opithon delivered February 24, 1936. 1. TAXATION—SALES TAX—SALE AT RETAIL. — Under the Sales Tax Act (Acts 1935, No. 233) the q ualities of goods sold or the prices at which they are sold are immaterial in determining whether or not a sale is at retail.
314 WISEMAN V. ARN. WHOLESALE GROCERS' ASS 'N [192 STATUTES—REASONABLE CONSTRUCTION.—In construing statutes, . courts should give them a reasonable interpretation, and, where the language is clear and unambiguous, the courts must enforce the statutes. .3. STATUTES—CONSTRUCTION OF REVENUE ACT.—In cases of doubt as to inclusion of particular property within the terms of a tax act; the , presumption is in favor of the taxing power, and the burden is on the claimant to, establish clearly his right to exemptions. . . . 4. TAXATION—SALES TAX—WRAPPING PAPER.—Sales by wholesalers to retail dealers of wrapping Paper, paper bags, and twine, used by retail merchants for wrapping merchandise sold, are "sales for consumption and use," and not "sales for resale," and therefore subject to the sales tax from the wholesale dealers, within the Sales Tax Act (Aets 1935, No..233). Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor ; reversed. ' Suit by' Arkansas Wholesale Grocers' Association against Earl R. Wiseman, Commissioner of Revenues. From a decree for plaintiff, defendant appeals. • Carl E. Bailey, Attorney General-, Thomas Fitzhugh, AsSistant, and Millard Alford, for appellant. E. B. Dillon, Rowell, Rowell & Dickey and S. S. Jeff eries, for appellee. MEHAFFY, J. This suit was begun in the Pulaski Chancery Court by the. Arkansas Wholesale Grocers' Association to restrain Earl-R; Wiseman, Commissioner of Revenues of the State of Arkansas, from collecting the sales tax on sales made by wholesale grocers to .retail merchants of wrapping paper . , paper . bags, and twine. The following is the complaint filed by appellees. "Plaintiff states that plaintiff is an unincorporated association of wholesalers and jobbers, resident of the State of Arkansas, with a membership of approximately fifty members located and domieiled in various cities and towns throughout the State and engaged in the- sale by wholesale to retail merchants, among other things, of wrapping paper, paper 'bags and ;twine, and brings this suit for and on behalf of the members of plaintiff association and as represeniative of a class for all jobbers and wholesalers in Arkansas engaged in selling, at wholesale to retailers wrapping paper, paper bags and twine.
ARK. WISEMAN V. ARK. WHOLESALE GROCERS' ASS 'N 315 "Plaintiff further states that said defendant is the duly qualified and acting Connnissioner of Revenues of the State of Arkansas, and, as such Commissioner, did, in . October, 1935, issue and promulgate a . ruling that all wholesale houses in Arkansas selling 'such materials as Coca-Cola glasses, fountain straws, paper napkins, vinegar pumps, wrapping paper, pa . per bags, and twine, etc., to the, merchants for use, will be required to collect the, sales tax .and report same.' . . "Plaintiff further states that said ruling by said Commissioner was made, and the collection of a Sales Tax is now being enforced, by said Commissioner upon wrapping paper, paper bags and twine by the purported authority of .act No. 233 of the Acts of the General Assembly of the State of Arkansas for the year , of 1935. "Plaintiff further states that the wrapping paper, paper bags and twine upon which said Commissioner has ruled that he is entitled to collect a sales tax, and upon which he is now collecting a sales tax, are sold and disposed of in the following manner : The wrapping paper, paper bags and . twine are sold at wholesale to various and sundry retail merchants in the State of Ark-ansas, and they are used by Said retail merchants for the purpose of wrapping up, tying and as containers for various and sundry articles of merchandise purchased by the customers of . said retail merchants. "Plaintiff states that , no. sales tax is due the State of 'Arkansas upon . wrapping paper, paper bags or twine as above described, for the two following reasons "1. The said sales tax, namely; aforesaid Act No. 233, is a tax upon consumption, or the ultimate consumer, and that wrapping paper, paper bags and twine sold as.above described are sold for resale by the retailer, and are resold by the retailer to his customer although no specific charge js made for wrapping paper, paper .bags or twine. "2. That wrapping paper, paper bags and twine sold in the above manner are, under the definition set out in said act No, 233, materials used for processing and, under the provisions of said act, are not subject to..a sales tax.
316 WISEMAN V. ARK. WHOLESALE GROCERS' ASS'N [192 "Plaintiff further states that said defendant is now wrongfully, illegally and without- authority of law . collecting A sales tax Upon wrapping paper, paper bags and twine sold by plaintiff in a manner aforesaid, and will continue -to coiled said sales tax unless enjoined by this court. "Plaintiff further states that he has no complete or adequate remedy at law for the wrongful collection by said defendant of said sales tax upon said wrapping paper, paper bags and twine. "Wherefore, plaintiff prays that an injunction be granted by this court, restraining and prohibiting said defendant from collecting any Sales Tax upon the sale by a wholesaler to a retailer . on wrapping paper, paper bags and twine to be used in the regular course of his business in the manner heretofore set out, and for all other proper yelief. "Signed, "E. B. Dillon, " S. ' S. Jeffries, "Solicitors for Plaintiff." The following demurrer was filed by the appellant : " The defendant, Earl R. Wiseman, Commissioner of Revenues, demurs to plaintiff's complaint filed herein because said complaint on its face does not state facts sufficient to constitute a Canso of aCtion.. -• -"Signed,' Millard Alford, Attorney for Defendant. " Thomas Fitzhtigh, 'Assistant AttorneY General." The cotrt overruled the demurrer and appellant declined to plead further, and . the court entered a decree finding that act 233 of the Acts of the General Assembly of the State of Arkansas for the year 1935 does not im-• pose a sales .tax upon wrapping paper, paper bags or twine sold -by a wholesaler or jobber to a retail merchant, to be used by said retail merchant in the regular course of his business for the purpose of wrapping up,. tying, and as a container' for various and sundry articles of merchandise purchased by the customers of said retail merchants. The court reStrained Earl R. Wiseman, Commissioner of Revenues, from collecting or attempting to collect any sales tax upon the above-named articles.
ARK . WISEMAN V. ARK. WHOLESALE GROCERS ' ASS 'N 317 Act 233 of the ActS of 1935 is 'styled, "Arkansas Emergency Retail Sales Tax Law." Paragraph (b) lof 3 of said act 'reads as follows : " (b) . 1. The term 'Sale' at retail shall' mean any transaction, transfer,, exchange, or barter by which. transferred for a . consideration the' , ownership or any personal property; :thing, commodity' and/or snbstance, and/or the furashing, or selling for a consideration any of the substances and - things hereinafter designated and defined, which such transfer, s exchange;' or barter 'is made in the . ordinary conrse of the transferor's business and is made to the transferee for the consnmption or use.Or for any other purposelhan for resale.- The term 'sale 'at retail' includes conditional sales, installment lease sales; and any other transactions when the . title is retained as security for the purchase price, but is intended to be transferred later. 'Sale at retail' shall not ' include sales Of materials for further processing." Paragraph (i) of § 3 of the act reads . as.follows , . ." (i) The test of a. sale at retail is whether the . sale. is to, a consumer for use and. not. for resale. Sales of goods which; as ingredients or constituents, go- into and form a part of the tangible personal property for resale by the buyer are not within the act ; also sale of tangible personal property where other property is accepted as part of purchase price, such personatproperty .so accept ed to be resold,• is not subject to tax." .The only question for our determination is' whether, under aCt 233, wrapping paper, pa.per bags and twine are sold to the retail merchant for resale. -•. The appellee stated hi its 'complaint "The wrapping paper, paper bags' , and twine upon which said COM-L missioner haS ruled that he is entitled tO collect a sales tax and . upcin . which he is how ' collecting the , sales tax are sold and disposed of in - the following manner : .The wrapping paper, paper bags and twine 'are sold at whole-' sale to the various and . sundry retail merchants in the State of. ' Arkansas, and they are used by said retail merchants for the purpose of wrapping up, tying, and as containers for various and sundry articles of merehan-
318 WISEMAl■T :V. ARK, WHQLESALE GROCERS: . Ass':I■T [192 dise purchased :by the .customers of , said% retail. merchants." . . ; - . . • .„. The appellee also states in . its complaint .fhat the articles mentioned "are resold by , the retailer . to his customer, although no speci .. f ie charge is, made fOr wrapping paper, paper bags and twine." .: As. a matter .of fact, these articles are used.by the retail merchant in the . conue-t ;of . his business, and -are absorbed by the. dealer . in ,the, reasonable conduct .of his business. That , , is, they are taken; care of out of his profits, and not added to the sel]ng , price. If a mer-ehant should purchase ,a truck from the wholesale merchant to be used in the delivery of, .goods and merchandise,.-the fact that. he used the ; truck worild require- that the price of it he absorbed out , of his profits. in the reasonable conduct . .of his . business,. but .no one would .say that he bought. it for resale. it is a matter of. common knowledge that the price of the:trucks, scales,.showcases, wrapping . paper, , paper 'bags and twine are, all taken care of in the SamewaY. The 'statute ithposes a tax--tipon that which is consumed and used, and exempts only that which is sold for resale. The Illinois court said i" This act is 'not limited to persons whose .only business . is keeping a:store .dr otherwise disposing of perSonal property in small' quantities for' use rit *donsrimption at' a given '-locatiOli,''afte't haling bought -their therchrindiSe, 'goodS; yards-M.; 'chattels from those who sell in large quantities.- If ariy one sells tangible personal. property for use or consUmption, and not for resale; and does , so not occasionaHY, but .as a business or occupation, regardless of how he .acquires title to the thing sold or who has produced it, his occupatiOn is covered by this act." Franklin . Connty . Coal Co. v. Ames, ' 359 M. 178;194 N. E. 68. , The court in the same case also said: . `f . TurnMg to the conterition of the appellants that theirs is a whole-. sale and not a retail .business, this, act defines sales, at retail as 'any transfer of ; the ownership Of or. title to tangible personal property , to the purchaser for use or consumption, and. not for resale in any form as tangible personal property'."
ARK.] WISEMAN 'V. ARK: WHOLESALE GROCERS' Ass ' N 319 In the above case there was a' sale nf • coal, and the contention was . made, not only that the company produced the coal, 'but that they 'sold it ai wholesale: The quantities of:goods sold,• or prices at which they are sold are immaterial in . deterniining whether or not a Sale is retail,- within thiS act; because the ad itself-provides , that the term "sale at: ,retail" shall: mean any 'transaction, transfer, exchange or batter by :which is transferred for a consideration the ownership of any personal property, thing, comthodity -. or substances, 'or- , the , furnishing or .selling- for a consideration any of • the sfibstances and things designated and defined in: :the act, and it makes no difference , whether this : is sold in large-or small- qUantities, nor by whom _it. is sold, if it - is • sold to• the tranS-feree fbr'consumption: or _use, or any other purpose than resale. RetailSales have been defined as sales to oonSumers, rather than to dealers, -or merchants for resale. It s is not contended that .the retail merchant is engaged in selling paper bags, paper or twine: In fact' the apriellee states that there is no fixed price for theSe artiCles. There is no fixed price because . there is no sale - by the retail ,merchant, but the articles .are - tiSed.and consunied by the retail merchant in the'reasonabfe conduct of his business. This court has defined "sale" as follows "A sale is a contract for the transfer of property from one person to another for a valuable consideration." • In the instant case, however, it is conceded that there is no fixed price fel.- the- above-mentioned articles. These articles are not only used by the merchant in the conduct of his business, but they often carry advertise-Merits.. , .The Alabama conit , said, in 'speaking of sales tax : "It may be said to be coMmon knowledge that . tax burdens of all kinds are figured by every business in connec-•ion with, or-as a part of its-overhead expenSe; and- prices fixed to yield a net profit. The consumer pays . the tax,.'' Woco Pep Co. of Montgomery v: City .0fMontgoMery, 219 Ala. 293, 121 So. Rep. 64.,
390 [192 • The court in that case also said : "The usual idea 'of 'absorbed by the dealer' is taken care of out of his profits and not added to the selling price." In construing statutes it is the duty of the courts to give them a reasonable, sensible interpretation, and where the language is clear and Unambiguous, it is only .for the courts to obey and enforce the statutes. Boyer-Campbell v. Fry; 271-Mich. 282, 260 N. W. 265, 98 A..L. R. 827. "In all cases of doubt as to the legislative intention or as to the inclusion of particular property within the terms of the. statute, the presumption is in favor of the taxing power, and the burden is on the claimant to establish clearly his right to exemption, bringing himself clearly within the terms of such•conditions as the'statute may impose." Wiseman v. Madison Cadillac Co., 191 Ark. 1021, 88 S. W. (2d) 1.007; 61 C. J. 391; Brodie v. Fitzgerald, 57 Ark. 445, 22 S. W. 29; 26 R. C. L. 313 et seq.; 2 Cobley on Taxation, .(4th ed.) 1403, § 672. Our . conclusion is that the sales of the articles mentioned were made to the retail merchant for consumption and use, and . not for the purpose of resale. • • The decree of the chancery court is reversed, and the ca.use iS remanded with directions to sustain the 'de-imirrer and dismiss the complaint.
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