Case Title: STATE OF OKLAHOMA, EX REL. v. HD Lee Co.

Citation: 174 Kan. 114, 254 P.2d 291

Docket Number: 

State: kansas

Court: Kansas Supreme Court

Date: 1953-03-07T00:00:00Z

Document:
174 Kan. 114 (1953)
254 P.2d 291
THE STATE OF OKLAHOMA, ex rel. OKLAHOMA TAX COMMISSION, Appellee,
v.
THE H.D. LEE COMPANY, INCORPORATED, a Corporation, Appellant.
No. 38,836

Supreme Court of Kansas.
Opinion filed March 7, 1953.
Henry G. Eager, of Kansas City, Mo., argued the cause, and Roy N. McCue and Howard F. McCue, both of Topeka, and Charles M. Blackmar and Charles B. Blackmar, both of Kansas City, Mo., were with him on the briefs for the appellant.
R.F. Barry, of Oklahoma City, Okla., argued the cause, and Lester M. Goodell, Frederick A. Mann and Margaret McGurnaghan, all of Topeka, and W.F. Speakman and E.J. Armstrong, both of Oklahoma City, Okla., were with him on the briefs for the appellee.
The opinion of the court was delivered by
PRICE, J.:
This was an action by the state of Oklahoma, upon the relation of the Oklahoma Tax Commission, to recover from defendant, *115 The H.D. Lee Company, Incorporated, a corporation, sales taxes on merchandise sold by defendant to an Oklahoma concern. Judgment was for plaintiff and defendant has appealed.
The parties entered into a stipulation of facts, and since it best tells the story will be set out in full:
Upon the issues joined by the pleadings and the stipulation of facts, the court entered judgment against defendant 
The first question presented concerns the application of our statute (G.S. 1951 Supp. 79-2910a) with respect to plaintiff's right to bring the action in this state. The statute reads:
Oklahoma has had a similar comity statute since 1939 (68 O.S. 1951, § 1483).
Defendant contends the language of our statute, "any tax which may be owing" (our emphasis), clearly refers to taxes becoming due subsequent to the effective date of the act (June 30, 1951) and therefore could not operate retroactively so as to create in plaintiff a cause of action to recover taxes due and owing prior to that date.
We think defendant's construction of the statute is too strained. In the first place, the statute does not create a cause of action where none previously existed. It simply provides a remedy  it merely opens the doors of Kansas courts to other states which grant the same privilege to Kansas. Taxes are "owing" when there exists an obligation for their payment. As used in the statute, the words "may be owing" clearly mean such taxes as are "presently owing" at the time of commencement of suit, and are not limited to future taxes accruing after the passage of the act. Under pertinent Oklahoma statutes, later referred to, that state was given a cause of action to recover taxes owing to it before the Kansas statute was enacted, and our statute grants specific authority to Oklahoma to bring the action for their recovery in this state.
Defendant also argues that under the doctrine of "forum non conveniens," meaning "a forum not convenient," and said to be a rule of convenience and expediency rather than one of jurisdiction (37 C.J.S., Forum, Note 94 (10), p. 133), plaintiff should not be permitted to bring this action in Kansas. A short answer to this contention is that the record utterly fails to establish that defendant has in any way been "inconvenienced" by being forced to defend the action in this state. Furthermore, defendant is a Kansas corporation and according to its charter Topeka is designated as the situs of its principal place of business. There is no showing that the lower court abused its judicial discretion in accepting jurisdiction of the case. (For a discussion of the doctrine see 14 Am. Jur., Courts, § 230, p. 424, and annotation at 87 A.L.R. 1425.)
Defendant further contends that Oklahoma is without authority to impose and collect the sales taxes in question because to do so *119 would place a cumulative burden upon the free flow of goods between states in violation of the interstate commerce clause (Art. 1, Sec. 8) of the Federal constitution, the argument being that of the incidents making up the sales in question the greater number, and also those of greater significance, took place in Missouri rather than in Oklahoma, and that only Missouri could lawfully assess such a tax.
Plaintiff's answer to this argument is that title to and possession of the merchandise passed in Oklahoma; that the sales were in fact consummated there, and therefore that state unquestionably has the right to impose and collect the tax.
We think defendant's contentions in this respect cannot be sustained. Applicable Oklahoma statutes, all references being to 68 O.S. 1951, provide:
§ 1251c levies a tax of 2% upon the gross proceeds or gross receipts derived from all sales of tangible personal property.
§ 1251a (c) defines the word "sale" as meaning the transfer of either the title or possession of tangible personal property for a valuable consideration, regardless of the manner or method by which such transfer is accomplished.
Under § 1251i the tax so levied is to be paid by the consumer or user to the seller, and it is the duty of each seller to collect from the consumer or user the full amount of the tax.
By § 1251f the duty is placed upon the seller to pay to the state the tax so collected from the sale of tangible personal property.
See also Selected Invest. Corp. v. International Trading Syn., 207 Okla. 523, 251 P.2d 502, 503, where it was said:
Without repeating the mechanics of the sales under consideration which are set forth in the stipulation of facts, it seems clear that under the Oklahoma statute (1251a [c]), supra, the sales took place in that state. It was there that occurred the transfer of title and possession of the merchandise. The invoices stated the sales were "F.O.B. Tulsa" and it was at that place where physical delivery and transfer of possession were had. In 46 Am. Jur., Sales, § 442, p. 609, the general rule is stated:
*120 In Hunter v. Kramer, 71 Kan. 468, 80 Pac. 963 (Memorandum Decision, 75 Kan. 856, 88 Pac. 1134), it was held:
There is nothing in the record to indicate that it was the intention of the parties that title to the merchandise should pass in Missouri, so as to bring the matter within the rule stated in Wing v. Mid-Continent Seeds, 170 Kan. 242, 225 P.2d 78, to the effect that where the contract of sale does not provide as to passage of title the primary consideration in determining whether title has passed is the intention of the parties.
The sales here having taken place in Oklahoma, the imposition of a sales tax by that state is not violative of the interstate commerce clause of the Federal constitution merely for the reason the merchandise was transported to that state from Missouri.
See also the case of Montgomery Ward & Co. v. Commission of Revenue and Taxation, 156 Kan. 408, 133 P.2d 1008, where at page 414 it was said:
And finally, it is contended by defendant the court erred in rendering judgment for the 10% penalty in the amount of $82.88, and we are cited to authorities to the effect that one state will not enforce the penal laws of another. (15 C.J.S., Conflict of Laws, § 4, p. 856; 11 Am. Jur., Conflict of Laws, § 6, p. 303.) That such is the general rule is conceded, but its application here depends upon whether the provisions of the Oklahoma statutes make the 10% item a "penalty" or a part of the tax by way of interest exacted for delinquency in payment.
68 O.S. 1951, § 1466 (c), provides that if any tax due, or any part thereof, is not paid within thirty days after it becomes delinquent *121 a penalty of 10% of the total amount due and delinquent shall be added thereto, collected and paid. § 1466 (d) provides for a penalty of 25% of the amount of the assessment for failure or refusal of a taxpayer to file a report or return required by any state tax law within ten days after a written demand for such report or return has been served upon the taxpayer. § 1466 (f) provides that all penalties or interest imposed by the act or any state tax law are recoverable by the tax commission as a part of the tax with respect to which they are imposed. § 1464 provides that all taxes, fees, interest and penalties imposed by any state tax law, from the time the same shall become due, may be collected in the same manner as a personal debt of the taxpayer to the state of Oklahoma.
It seems clear that under these statutes, and particularly § 1466 (f), the 10% penalty provided for by § 1466 (c) for failure to pay within thirty days after the tax becomes delinquent is actually a part of the tax by way of interest exacted for delinquency in payment, and is therefore recoverable in an action brought in a court of this state. We have no doubt that in enacting G.S. 1951 Supp. 79-2910a, supra, our legislature intended that if the situation here present were reversed Kansas would be entitled to recover under a comity statute of another state the interest and penalties contained in our sales-tax statute (G.S. 1949, 79-3615). See also Machinery Co. v. Smith, 87 Kan. 331, 124 Pac. 414, 41 L.R.A. (N.S.) 379, Anno. Cas. 1913 E, 243 (96 Kan. 213, 150 Pac. 568), to the effect the rule that a penal statute will not be enforced outside the territorial jurisdiction of the legislature enacting it applies only to such statutes as are entirely penal and not to those which are in part compensatory. The item in question was properly included in the judgment rendered.
The judgment of the lower court is affirmed.