Title: City of Mobile v. MAD, INC.

State: alabama

Issuer: Alabama Supreme Court

Document:

684 So. 2d 1283 (1996)
CITY OF MOBILE
v.
M.A.D., INC., d/b/a Lumberyard Cafe.
1930116.

Supreme Court of Alabama.
June 28, 1996.
Rehearing Denied September 6, 1996.
Wanda J. Cochran, Asst. City Atty., and John R. Lockett, City Atty., Mobile, for Appellant.
W. Lewis Garrison, Jr. and Ezra B. Perry, Jr. of Corley, Moncus & Ward, P.C., Birmingham, for Appellee.
J. Kenneth Smith, League Counsel, Montgomery, for Amicus Curiae Alabama League of Municipalities, in support of appellant.
PER CURIAM.
The dispositive issue presented in this case is whether Alabama's 56% tax on liquor, see Ala.Code 1975, § 28-3-200 et seq., is a tax levied on liquor retailers or whether it is a tax levied on consumers. This is not the first time this issue has been presented to this Court. For a better understanding of this *1284 case, see Guthrie Enterprises, Inc. v. City of Decatur, 595 So. 2d 1358 (Ala.1992), wherein this Court, acknowledging that it was making "a fairly close call," held that the liquor tax in question was a tax on consumers.
In Guthrie, the City of Decatur had levied a "license tax of ten (10) percent of the gross receipts of [the retailer's] business derived from the sale of all alcoholic beverages, except beer and table wine." 595 So. 2d  at 1358. The importance of distinguishing between a tax on the seller/retailer (which tax is not required to be passed on to the consumer) and a tax on the consumer was fully explained in Guthrie:
595 So. 2d  at 1360. (Emphasis in Guthrie.) In reversing a summary judgment for the city, this Court in Guthrie, relying on S & L Beverages & Blends, Inc. v. Ritchie, 567 So. 2d 341 (Ala.Civ.App.1990), concluded that the legislature must have intended for the state liquor tax to be a consumer tax. The basic rationale of Ritchie, and, thus, of this Court's holding in Guthrie, was that the liquor tax statutes should be construed so as to be in harmony with the statutes controlling the taxation of beer and table wine, which clearly provide that the taxes levied on those beverages are consumer taxes, with the person or entity paying the tax in the first instance acting as an agent for the state for the collection and payment of taxes. See Ala.Code 1975, §§ 28-3-184 ("malt or brewed beverages") and 28-3-190 ("beer"), and § 28-7-16 ("table wine"). This Court in Guthrie, quoting in part from Ritchie, also stated:
595 So. 2d  at 1361-62.
Like the retailer in Guthrie, the retailer involved in this case challenged the license tax imposed by the city on the ground that the state liquor tax was a consumer tax. Unlike the City of Decatur in Guthrie, which levied its tax on the "gross receipts" of retailers, the City of Mobile in this case levied a license tax on "the purchase price paid by the retailer for all liquor purchases from all sources." Relying on the rationale of Guthrie, however, the retailer argued in the trial court, as it does now, that the 56% state liquor tax should not constitute a part of the value of its inventory for purposes of determining the amount of tax owed to the city. Following the rationale of Guthrie, the trial court agreed with the retailer, entered a summary judgment in its favor, and ordered a refund of the taxes allegedly overpaid. The city has appealed, arguing that the state liquor tax should be construed as falling on the retailer, not the consumer, and that Guthrie, and the case on which it primarily relied, Ritchie, were incorrectly decided and should be overruled. After carefully considering the record and the briefs of the parties, as well as the amicus curiae brief filed by the Alabama League of Municipalities, we agree.
The six statutes that together comprise Alabama's tax on liquor were initially enacted in 1943 (Ala.Acts 1943, No. 99, codified at § 28-3-200); 1955 (Ala.Acts 1955, 2d Ex. Session, No. 78, codified at § 28-3-201); 1959 (Ala.Acts 1959, No. 312, codified at § 28-3-202); 1969 (Ala.Acts 1969, No. 550, codified at § 28-3-203); 1979 (Ala.Acts 1979, No. 79-761, §§ 4-6, codified at § 28-3-204); and 1980 (Ala.Acts 1980, No. 80-478, codified at § 28-3-205), respectively. These statutes provide that the tax shall be collected by the Alcoholic Beverage Control Board from "the purchaser." By law, liquor retailers must purchase their liquor from the ABC Board. None of these statutes authorizes or requires "the purchaser" (the retailer) to pass the tax on to the consumer.
In 1979, during the same legislative session in which it enacted what is codified at § 28-3-204, imposing an additional three percent tax on liquor, the legislature also levied a tax on "any malt or brewed beverages." See Ala.Acts 1979, No. 79-802, § 1, codified at § 28-3-184. In doing so, the legislature specifically provided:
In the 1980 legislative session, the same session in which it enacted what is codified at § 28-3-205, imposing an additional 10% tax on liquor, the legislature also levied a tax on "table wine." See Ala. Acts 1980, No. 80-382, § 16, codified at § 28-7-16. In doing so, the legislature again used specific language indicating its intention that that tax be on the consumer:
Also during the 1980 legislative session the legislature passed Act No. 80-529, § 3, codified at § 28-3A-3, which provides in pertinent part:
As this legislative history clearly indicates, the legislature knows how to make a tax a consumer tax. The legislature used unequivocal language in § 28-3-184, imposing a tax on "malt or brewed beverages" and in § 28-7-16, imposing a tax on "table wine," to express its intention that those taxes be passed on to the consumer. It is significant, we think, that when the legislature was using this specific language during the 1979 session (§ 28-3-184) and the 1980 session (§ 28-7-16), it chose not to incorporate it into either § 28-3-204 or § 28-3-205, which imposed additional taxes on liquor. This strongly suggests that the legislature intended to make a distinction for tax purposes between "malt or brewed beverages" and "table wine" on the one hand, and liquor on the other. Furthermore, as the opinion in Guthrie indicated, the Alabama Department of Revenue, the administrative agency charged with the general responsibility of supervising Alabama's tax laws, Ala.Code 1975, § 40-2-11, had, before the Guthrie and Ritchie decisions, interpreted the liquor tax statutes as imposing a tax on the retailer. Such an interpretation, although not controlling, was reasonable and, thus, was entitled to great weight and deference by this Court and by the Court of Civil Appeals. See Farmer v. Hypo Holdings, Inc., 675 So. 2d 387 (Ala. 1996).
Finally, we are not persuaded that the following sentence in Guthrie is a correct basis for the holding in that case:
595 So. 2d  at 1365. As previously noted, the legislature in 1980 authorized the licensing of persons for the retail sale of liquor for off-premises consumption. The legislature did so during the same legislative session in which it enacted § 28-3-205, imposing an additional tax on liquor. Also, as noted earlier, the legislature in 1980 did not incorporate into § 28-3-205 the specific language that it *1288 used in § 28-7-16, in which it imposed the consumer tax on table wine. Broadwater resolved a dispute between private club licensees (see § 28-3A-12) and private lounge licensees (see § 28-3A-11) as to whether the lounge licensees were entitled to sell liquor at retail for off-premises consumption; however, it was § 28-3A-3 that authorized the licensing of liquor retailers, not the decision in Broadwater.
Based on the foregoing, we conclude that Alabama's liquor tax is a tax on the retailer. As Justice Maddox noted in his dissenting opinion in Guthrie, the liquor tax was levied on the retailer as "a part of what it cost[s] the retailer to do business." 595 So. 2d  at 1367. The retailer may pass the tax along to the consumer in the form of a price increase; however, that is not statutorily required. We hold, therefore, that this case is controlled by Merchants Cigar & Candy Co. v. City of Birmingham, 245 Ala. 587, 18 So. 2d 137 (1944), and the line of cases that follows that decision. To the extent that Guthrie is inconsistent with this opinion, it is hereby overruled.
REVERSED AND REMANDED.
MADDOX, ALMON, SHORES, HOUSTON, and BUTTS, JJ., concur.
HOOPER, C.J., and KENNEDY, J., dissent.
KENNEDY, Justice (dissenting).
I am not persuaded that Guthrie Enterprises, Inc. v. City of Decatur, 595 So. 2d 1358 (Ala.1992), released by this Court only four years ago and concurred in by a majority of the Court, was incorrectly decided. In my view, Guthrie, considered in its entirety, was correct. Also, in keeping with the limits imposed upon the Court by the doctrine of stare decisis, I would not overrule established precedent based on what amounts to the conclusion that the legislature may have intended an interpretation different from that given by the Court in Guthrie.
[1]  We note, for clarification, that B & B Beverage did not hold that the liquor tax was a consumer tax. Then Judge Ingram, writing for the majority, addressed only the issue whether retailers were denied equal protection of the law because they were required by law to collect from consumers a sales tax on the state liquor tax that the retailers were required to pay. State stores were not required to do so. Presiding Judge Bradley concurred in Judge Ingram's equal protection discussion; however, he wrote specially to state that, in his opinion, the state liquor tax was a consumer tax. Judge Holmes dissented from the majority opinion and stated the following with respect to Judge Bradley's special concurrence:

"In my opinion, Presiding Judge Bradley's comments regarding `statutory interpretation of the liquor tax statutes' are incorrect. Needless to say, I disagree with his comments and his conclusions."