Case Name: THE WALGREEN COMPANY, a Corporation, Plaintiff and Appellant, vs. THE STATE BOARD OF EQUALIZATION OF THE STATE OF WYOMING, Defendant and Respondent
Court: Supreme Court of Wyoming
Jurisdiction: Wyoming
Decision Date: 1946-03-12
Citations: 62 Wyo. 288
Docket Number: No. 2331
Parties: THE WALGREEN COMPANY, a Corporation, Plaintiff and Appellant, vs. THE STATE BOARD OF EQUALIZATION OF THE STATE OF WYOMING, Defendant and Respondent.
Judges: Kimball, J., concurs.
Reporter: Wyoming Reports
Volume: 62
Pages: 288–340

Head Matter:
THE WALGREEN COMPANY, a Corporation, Plaintiff and Appellant, vs. THE STATE BOARD OF EQUALIZATION OF THE STATE OF WYOMING, Defendant and Respondent.
(No. 2331;
March 12th, 1946;
166 Pac. (2d) 960)
For the plaintiff and appellant the cause was submitted on the brief and also oral argument of John C. Pickett of Cheyenne, Wyoming, and Anthony F. Zar-lengo of Denver, Colorado.
For the defendant and respondent the cause was submitted on the brief of Louis J. O’Marr, Attorney General, Hal E. Morris, Deputy Attorney General and Frank M. Gallivan, Assistant Attorney General, all of Cheyenne, Wyoming, and oral argument by Mr. Morris.

Opinion:
OPINION
Riner, Justice.
This is an appeal proceeding brought to review a judgment of the district court of Laramie County which affirmed an order of the State Board of Equalization dated September 22, 1942, imposing an assess ment of $3,661.91 upon the complaining party. The Walgreen Company, under the provisions of Ch. 102, L. of Wyo. 1937, usually referred to as the "Selective Sales Tax Act of 1937". The Walgreen Company may conveniently be referred to hereinafter as the "appellant" or as the "Company" and the State Board of Equalization as the "respondent" or simply as the "Board". The controversy arises upon what shall be the proper construction of portions of several sections of this Act of the Wyoming Legislature above mentioned and the facts involved are not in dispute, the cause having been tried in the district court upon an agreed statement thereof.
So far as is necessary to understand the history of this litigation and the contentions of the parties the following statement, we think, will suffice:
There are but two questions presented by this record and they come before us in consequence of the fact that appellant has, in times past, been engaged in the business of operating drug stores in this state wherein it made retail sales of tangible personal property upon which it was required by the law hereinbefore cited, to collect sales taxes from its customers and to pay the same, with other taxes, to the Board aforesaid for the benefit and use of the State of Wyoming. The period of time thus included and concerning which the contentions of the parties are here advanced is somewhat more than three years, i. e., from January 1, 1939, to July 31, 1942, inclusive. Between these dates, as paragraph "3.(A)" of the "Agreed Statement of Facts" aforesaid informs us "the Appellant made retail sales of tangible personal property to its customers in amounts of 25c or more totalling $672,428.97, which amounts included alleged sales to employees, money received from photographic work, and interstate sales as hereinafter set forth; that from such sales of 25c or more the Appellant collected from its customers a sales tax in the sum of §14,871.92". During this period of time also the "Agreed Statement" aforesaid states further in its paragraph "(B)" "the Appellant made retail sales of tangible personal property to its customers in amount of 24c or less totalling §286,809.30, upon which no sales tax was collected from the customers." It seems there were other items of taxes which do not appear to be in question now.
The portions of Ch. 102, above referred to, with which this controversy is particularly concerned are found in section "4" thereof reading:
"From and after the effective date of this Act, within the limitation herein set out, there is hereby levied and there shall be collected and paid:
" (a) An excise tax upon every retail sale of tangible personal property made within the State of Wyoming equivalent to two per cent. (2%), except as provided in subsection (e) of this Act, of the purchase price paid or charged, or in the case of retail sales involving the exchange of property, equivalent to two per cent. (2%) of the consideration paid or charged, including the fair market value of the property exchanged at the time and place of the exchange, except that, those commodities now bearing a State excise tax in excess of five (5) per cent, shall not be taxable under the provisions of this Act";
and "subsection (e) " of said section "4" to which "subsection (a) " above refers as an exception is as follows:
"The State Board of Equalization shall provide uniform methods and schedules for adding the tax or the average equivalent thereof to the selling price, and when added such tax shall constitute a part of such price or charge, shall be a debt from consumer or user to retailer until paid, and shall be recoverable at law in the same manner as other debts, and it shall be the duty of said Board to formulate and promulgate appropriate rules and regulations to effectuate the purpose of this Act; provided, that the tax on all sales of twenty- four (24c) cents or less shall be one percent, and provided further, that the purchaser, consumer and user of any single unit purchase', of twenty-four (2Uc) cents or less, shall not be required to pay the tax provided herein and provided further that the tax of one percent herein imposed on all purchases of twenty-four (2J¡.c) cents or less shall be assumed and paid for by the vendor who shall keep a detailed segregated record of all such sales. Any vendor who shall so elect may, in lieu of keeping such detailed segregated record, pay a tax of two per cent, on his total sales upon which the tax provided herein is imposed."
After declaring that:
"Every person receiving any payment or considera-tion upon a sale of property or service subject to the tax imposed under the provisions of this act, or to whom such payment or consideration is payable, (hereinafter called the vendor) shall be liable and responsible for the payment of the entire amount of the taxes imposed and payable under this Act, and shall on or before the 15th day of each month, make a true return of the preceding months gross sales to the State Board of Equalization and shall remit all the taxes due the State from him to the State Board of Equalization. The vendor shall collect the tax from the vendee on all sales of twenty-five (25) cents or more, but in no case shall he collect as tax an amount (without regard to fractional parts of one cent) in excess of the tax computed at the rates prescribed by this Act. Such returns shall contain such information and be made in such manner as the State Board of Equalization may by regulation prescribe",
section 5 of this statute sets forth sundry other provisions which do not seem at present to concern us further. The law then directs that:
"If any vendor shall, during any reporting period, collect as a tax an amount in excess of 2% of his total taxable sales, he shall remit to the Board the full amount of the tax herein imposed, and also such excess; and if any vendor under the pretense of representation of collecting the tax imposed by this Act shall collect during any reporting period, an amount in excess of 2% of his total taxable sales, the retention of sueh excess or any part thereof, or the intentional failure to remit punctually to the State Board of Equalization the full amount required to be remitted by the provisions of this Act, is declared to be unlawful",
and a penal clause follows this declaration.
Section 11 of the Act reads in part:
"A tax due and unpaid under this Act shall constitute a debt due the State from the vendor and is hereby made a lien on all the property of the vendor."
We have italicized the above quoted language of the statute which we regard as especially significant. It is to be noted also that in the case at bar the Company elected, under subsection "(e)" of the statute set forth as above, to keep a "detailed segregated record of all" sales of twenty-four cents or less so that we are not now concerned with the payment of "a tax of two per cent on" the Company's "total sales".
Under the facts and law, as above detailed, it is the Company's contention, as we understand it, that the words "total taxable sales" in the italicized portion of section 5, supra, refer both to sales of over twenty-five cents upon which a two per cent tax is imposed and to sales of under twenty-five cents upon which a one per cent tax is laid, and since it, as vendor, has not collected any sum in excess of two per cent of all these sales, both as to those involving a greater price than twenty-four cents and also those involving that price or less no "excess" sum of money under the law is due the Board for the State of Wyoming. In other words, though on sales of more than twenty-four cents the appellant has collected from its customers an excess of money amounting to $1,423.26, over and above the two per cent allowed by the law on sales of this character it need not account to the Board for this excess.
The Board, however, on behalf of the state, through the Attorney General, insists that the Company's position, as outlined above, is not maintainable under a proper construction of the two sections, 4 and 5, of the statute as we have hereinbefore noted its pertinent language.
The Attorney General has directed out attention to the fact that Ch. 102, aforesaid, became effective as law in this jurisdiction April 1, 1937, and that on April 8, 1937, in response to an inquiry from the Board as to the correct interpretation and application of "subsection (e)" supra, of said chapter, the then Attorney General advised the Board as follows:
"The statute imposes two taxes. One is a tax of two per cent upon retail sales of 25c and upwards. The other is a tax of one per cent upon retail sales of 24c or less. The first tax is imposed upon the purchaser. The second tax is imposed upon the vendor or sellers. These taxes are entirely distinct and separate. The vendor has no right to take money paid to him by vendees in satisfaction of taxes which they are required to pay, and apply same to the payment of the tax which he is required to pay. In other words, the vendor is not the owner of the money paid to him by vendees or purchasers in satisfactoin of taxes imposed by paragraphs (a), (b), (c), or (d) of Section 4 of the Sales Tax Act. When that money is paid to any vendor, such vendor holds it for remittance to the State. He has no right to take any part of it and apply it to the payment of his own tax due the State."
This construction of the law which has received the approval of at least two of the chief law officers of the state has been followed by the Board as the department of the state government charged with the duty of administering the Act ever since being thus advised. Says the Attorney General in his brief filed in the case at bar: "during the eight years that this construction has been in force, thousands of dollars have been col lected from Wyoming merchants as excess taxes, and no attempt has been made by the legislature to change the law, even though this particular case has been pending for a considerable period of time". This assertion does not appear to be disputed. Four sessions of the legislature of the state have occurred since the construction of the law above announced was transmitted to and followed by the Board and no subsequent statute has been enacted which in any wise interferes with the views thus presented so far as we are informed.
In United States vs. American Trucking Associations, 310 U. S. 534, 60 S. Ct. 1059, 84 L. Ed. 1345, it was held that administrative interpretations of a statute are entitled to great weight where they involve a contemporaneous construction of the law by the persons upon whom rests the responsibility of setting its machinery in motion and of making its parts work effectively and smoothly while they are yet untried and new. See also Norwegian Nitrogen Products Co. vs. United States, 288 U. S. 294, 315, 53 S. Ct. 350, 358, 77 L. Ed. 796. And Mr. Justice Harlan said concisely in United States vs. Philbrick, 120 U. S. 52, 7 S. Ct. 413, 30 L. Ed. 559, that "A contemporaneous construction by the officers upon whom was imposed the duty of executing those statutes is entitled to great weight; and since it is not clear that that construction was erroneous, it ought not now to be overturned." See also State ex rel. Goshen Irr. Dist. vs. Hunt, 49 Wyo. 497, 57 Pac. 2nd. 793; State ex rel. Cross vs. Board of Land Comrs., 50 Wyo. 181, 58 Pac. 2nd. 423.
Where the State Treasurer of Wyoming, whose duty it was and is to superintend the administration of the workmen's compensation fund, obtained from the Attorney General of the state the latter's opinion on the proper construction of a provision of the workmen's compensation law, in Baldwin, State Treasurer vs. Roby, 54 Wyo. 439, 457-8, 93 Pac. 2nd. 940, this court used this language:
"The state treasurer acquiesced in the foregoing opinion, as will be seen later. Here we have a practical construction by two departments of the state. The legislature did not amend the law on the point here involved, and we must assume that the legislature acquiesced in the construction so made. Lamont v. Intermountain Realty Co., (48 Wyo. 56, 41 P. (2d) 497). The foregoing construction and legislative acquiescence are important herein. (Citing cases). And that is particularly true in view of the fact that the state has undertaken to collect the money out of which compensation is paid. The opinion of the attorney general is directly opposed to the holding of the New York, Indiana, Michigan and Colorado cases above cited, and these cases, accordingly, particularly in view of the legislative acquiescence in that holding, are no authority in this case."
In the case at bar appellant has cited no cases even from other states with similar statutory law holding contrary to the views expressed by the attorneys general and followed by the Board. Of course, if we were convinced that the construction of these administrative officers acquiesced in by the Board as applied to the law before us was clearly wrong we would be obliged to so say, as this court is necessarily the ultimate authority in the construction of state statutes involving no federal question. But we are not so convinced and for many reasons among which may be mentioned the following:
It is apparent that appellant considers it should be entitled to apply the excess collected by it on taxable sales over two per cent thereon upon the payment due from it to the Board because of the one per cent tax. The consequences of allowing this to be done would be to permit the company to violate the law (subsection (e)-supra), which specifically states that this one per cent tax "shall be assumed and paid for by the vendor". In this connection it may be noted also that in addition to what has been above quoted from section 5 of the Act in question, section 17 thereof further declares:
"It shall be unlawful for any vendor to fail or refuse to make any return and payment provided to be made in this Act, or to make any false or fraudulent return or false statement on any return, or to evade the payment of the tax, or any part thereof, imposed by this Act, or for any person to aid or abet another in any attempt to evade the payment of the tax or any part thereof imposed by this Act."
As pointed out by the opinion of the Attorney General, supra, the law as it must be viewed under appellant's conceded election pursuant to subsection "(e)", aforesaid, provides two distinct tax burdens. One of these rested upon and was required to be paid by the purchasers of goods from the Company to the extent of two per cent of the purchase price on all articles priced at twenty-five cents or over. The other rested upon and was required to be paid by the Company. Its amount was fixed and measured by one per cent of the sales below twenty-five cents.
There is no clause in the law which, either by express terms or even by reasonable implication, indicates that the overcollections such as were shown in the case at bar should become the property of the vendor. It is perfectly plain that taxes are only collected from the vendees where the sales of merchandise are for the price of twenty-five cents or over that figure. It is equally clear that an excess of collections can only arise in the case of taxes collected from the purchasers. From a practical viewpoint the sales of merchandise for twenty-four cents or less merely operate to furnish a basic amount upon which a one per cent exaction is calculated which thus establishes the tax which the vendor is obligated to pay. He, himself, must pay that one per cent tax just as he does real estate or any other personalty tax imposed upon him by law .
It needs no citation of authority to establish that the courts in construing a sales tax statute should attempt to ascertain and give effect to the intention of the legislature in adopting it and that intention is to be gathered from a consideration not of a single clause, sentence, or section in the Act, but effect must be given, if at all possible, to every word contained in the statute so as to make it harmonious and reasonable in its operation. It follows that in the case at bar sections 4 and 5 of the Act here in question together with the other parts of the law dealing with the matter in hand must be construed together and not separately. Doing that, it is evident that the word "excess" referred to in section 5, supra, designates something "collected" by the vendor as a tax in "an amount" over "two per cent of his total taxable sales". The words "total taxable sales" when considered in the light of the quoted provision of "subsection (e)" aforesaid includes all sales made at the price of twenty-five cents or more. The vendor collects nothing as a tax upon sales of twenty-four cents or less.
The vendor should, we think, not be permitted — unless the statute in clear and positive language so says, and this it is far from doing — to use the money of a vendee who for one reason or another has over-paid the sales tax on a purchased article to offset the failure of such vendor to collect the proper amount from another taxpayer. Neither should such vendor be permitted to use the "excess" thus acquired by him to pay the one per cent tax due the Board because in so doing he would be using not his own money but monies erroneously taken from the vendees in the guise of a state tax to pay his own debt to the commonwealth.
As we see it, if such a course of procedure were to be allowed on the part of vendors it might very well be that the door would be opened to designing or negligent merchandisers to overcharge on sales collected from vendees and not collect on others in order to meet competition from rivals in the same business. That would hardly be fair dealing either with the over-charged customer or with the competing rival.
In appellant's brief we are told the proper rule for computing the amount of tax in dispute in this case should be — "take the tax collected, subtract two per cent of the total taxable sales and if there is a remainder remit to the Board". According to the Agreed Statement of Facts, paragraph "3.(A)", supra, the sales tax collected by the appellant totaled $14,871.92. Two per cent of §672,428.97, the total taxable sales (paragraph "3.(A)" aforesaid, construed in the light of subsection (e) supra, as we must construe it) is the sum of 813,448.57. Subtracting this last amount from §14,871.92 results in a remainder of §1,423.35, these figures varying only a few cent from the sum of money ordered by the district court to be paid by the Company to the Board as "excess" collection of sales tax and, accordingly, due the state.
Again, we were told at the argument of this case by counsel for the Company that the crucial question to be answered, shortly stated was: what is the true intent and meaning of the words "total taxable sales" in the clause of the law hereinabove quoted and italicized reading "If any vendor shall, during any reporting period, collect as a tax an amount in excess of 2% of his total taxable sales, he shall remit to the Board the full amount of the tax herein imposed, and also such excess" ? It was their view urged upon us in that connection as hereinbefore indicated that those three words should be construed to include both the amount of sales for twenty-five cents or more and also the amount of sales for twenty-four cents or less. Under the agreed statement of facts as set forth as herein-above the consequences of adopting the suggested view would appear to be, where the vendor as here has elected to keep the "detailed segregated record" as provided in subsection " (e) ", supra, as follows: The stated sales of the Company to its customers of articles for amounts of twenty-five cents or more were $672,428.97; those for twenty-four cents or less were $286,809.30, the total of these two sums being $959,238.27. Two per centum of that total is $19,184.76. The Company collected, as a sales tax on its sales for twenty-five cents or more, the sum of $14,871.92 which, as shown above, was in fact $1,423.35 in excess of two per cent on such sales. One per centum of the sales of articles by the Company for twenty-four cents or less which is imposed by subsection " (e) ", supra, as a tax upon the vendor only is the sum of $2,868.09. Adding this last amount to $14,871.-92 the result is $17,740.01. Subtracting this sum from $19,184.76 produces a remainder of $1,444.75. In other words, the Company could even pay the state both the sum of two per centum collected on its sales of twenty-five cents or more plus the excess of that amount which the state also claims and still the Company would be profiting to the extent of $1,444.75. But the Company, nevertheless, insists that it should retain also the sum of $1,423.35, the excess as above computed. We hardly think it was the intention of the legislature to make it possible for vendors to make such a profit out of tax money taken from the citizens of this state, — in this case to the extent of $2,868.10.
Discriminations of this character in favor of the vendors of articles priced at twenty-four cents or less and who have kept detailed segregated records as provided by subsection "(e)", supra, should not be sanctioned. We may not disregard the plain requirements of that subsection. Neither of the parties to this litigation have asked that that be done or even suggested such a holding. That the intention of that section is quite clear and explicit is evident from the fact that the legislature definitely said not only that the vendee should not pay any tax on articles sold at twenty-four cents or less but also that the vendor should pay a one per cent tax on such sales unless he elected the other option given in the "in lieu" clause in that subsection. It may be properly observed in this connection that the Wyoming Sales Tax Law appears to be unique in that it requires both vendors and vendees to pay a tax based on sales of tangible personal property. This feature appears both in the 1935 Sales Tax law (Ch. 74, L. of Wyo. 1935) and in the 1937 Sales Tax Act now in force. During the ten years that these two taxation statutes have been in operation no one to our knowledge has ever questioned that phase of the legislation.
In our examination of the authorities which might shed some light upon the problems presented by the case at bar several Ohio cases lately decided have come to our notice. Neither of them were cited by the parties hereto either in their briefs or upon the oral argument had. One of these cases, Winslow-Spacarb, Inc., vs. Evatt, Tax Commr., 144 Ohio St. 471, 59 N. E. 2nd 924, demonstrates very well that the Ohio Sales Tax law is quite unlike our Ch. 102, L. of Wyo. 1937, supra, in its general requirements as to who must pay the tax. The other case, Obert et al., vs. Evatt, Tax Commr., 144 Ohio St. 492, 59 N. E. 2nd 931, we regard as of aid here both in that it considered the effect of a single section of the Ohio Sales Tax Act which somewhat resembles the first sentence in Sec. 9 of Ch. 102, L. of Wyo., 1937, quoted above, and also in that it indicates with reasonable clearness the manner in which the Ohio Court viewed a contention made by counsel in that case similar to that insisted upon by the Company in the case at bar. | The Winslow case was decided February 21, 1945; the Obert case just a week later and on February 28, 1945.
In the Winslow-Spacarb, Inc., case, supra, it appeared that that company sold soft drinks from automatic cup-vending machines at the price of five cents each. No'sales tax was paid by the vendor upon its sales thus made and it neither purchased any sales tax stamps nor cancelled any. The Tax Commissioner, Evatt, assessed a three per centum tax on its undisputed gross sales made during a certain period. This ,was attempted to be done under the authority of § 5546-12a of the General Code which purported to levy an excise tax of three per cent on receipts derived from all retail sales with certain described exceptions and less certain credits. However, § 5546-2, General Code, being also a part of the Ohio Sales Tax Act, definitely stated that "if the price is less than nine cents no tax shall be imposed". In order to harmonize these sections and avoid a constitutional objection of non-uniformity of operation upon all persons of the same class the court held that the vendor's gross of five cent sales was not taxable, § 5546-12a being simply an enactment designed to insure approximately the receipt of the tax imposed by § 5546-2 General Code, and did not impose an independent tax.
The Ohio Court, after stressing the express declaration of § 5546-2, quoted above, that no tax should be imposed on sales of articles for less than nine cents and quoting that portion of § 5546-3, General Code, which reads:
"the tax imposed by Section 5546-2 of the General Code shall be paid by the consumer to the vendor in every instance, and it shall be the duty of each vendor to collect from the consumer the full and exact amount of the tax payable in respect to each taxable sale, and to evidence the payment of the tax in each case by can-celling prepaid tax receipts, equal in face value to the amount thereof
then remarked:
"It is apparent that while a vendor making taxable sales must supply himself with prepaid tax receipts, thus prepaying the tax into the public treasury, the sales tax is essentially a consumers tax ultimately paid by the consumer."
It has already been made clear herein that the Wyoming Sales Tax law unmistakably imposes its duty to pay a tax both upon the vendor and the vendee. Furthermore, it may be observed that nothing is said in the case just reviewed about the disposition of any excess tax collections made by vendors. It is clear then that this decision has no application to the problems arising in the instant case under a sales tax Act couched in language like ours.
However, relative to the particular contention of the Company here that it may use excess sales tax collections to pay its own tax liability to the state the later case of Obert vs. Evatt, Tax Commr., supra, is quite instructive. In that case the law questions presented to the court were, as the opinion states:
"(1) Where a vendor fails to file a return required by Section 5546-12b, General Code, or fails to remit the proper amount of tax due under Section 5546-12a, General Code, may the Tax Commissioner by virtue of Sections 5546-9a and 5546-12b, General Code, make an assessment against such vendor for retail sales made since January 1, 1937, but more than three years prior to the date as of which the asssessment is made? (2) If so, where does the burden of proof rest to show the amount of a vendor's tax-exempt sales during such period ?"
There were before the Tax Commissioner, for making his assessments, statements of the total sales of Obert, et al., but there was no separation of taxable from nontaxable sales and no separation of taxable from tax-exempt sales.
Says the court:
"Appellants recognize that Section 5546-12a, General Code, is a part of the Sales Tax Act and say in respect of such section:
'We think it is clear that the provisions of Section 5546-12a were not primarily intended as a measure to provide revenue in addition to that contemplated by Section 5546-2, but rather it was intended as a method of securing conscientious observation of the requirements of Section 5546-2 by the vendor.
'That is, if the vendor has collected from purchasers in full for all taxable sales, then the collection there in excess of 3 % will, or may, offset the amount of his liability for tax on sales of 8 (sic) cents or under.'
"Appellants fail to give consideration to the requirement of Section 5546-12b, General Code, which provides in part: 'in case any vendor has collected in excess of three per cent of his receipts from sales which are taxable under Section 5546-2 of the General Code as tax from consumers and failed to cancel tax receipts in the proper amount, such excess shall be remitted along with the remittance of the amount of tax due under Section 5546-12a of the General Code'."
It would appear that counsel for appellant in the Obert case, not having before, them the very recent decision in the Winslow case, supra, urged that their client might use the collection of sales taxes in excess of three per cent to offset the amount of his liability, under § 5546-12a, for the tax on sales of less than nine cents for which he could get no reimbursement from vendees. It would seem that the court rejected this contention and expressed the view that this could not be done and that the excess should be remitted to the state.
A survey of the facts and law applicable to the case at bar from another viewpoint will further show that the position taken by the Company as above set forth is a mistaken one. If the Company had paid over to the Board all of the sum of §14,871.92 which it is conceded the Company collected from its customers as a sales tax including the excess collection of §1,423.26 which the Board now claims, could the Company recover that excess from the Board, it being the admitted purpose of such recovery that the Company would use the monies thus obtained for its own ends, i. e., to pay its own tax due the state? We think this query should be answered in the negative. And the authorities presently to be cited support the view that under such circumstances the Company could not successfully maintain such a proceeding.
Where an oil company collected a tax imposed by the Motor Fuel Tax Act of 1927 in the State of Illinois (Laws of 1927, p. 758) from customers in addition to the price of motor fuel sold by it, and remitted money and checks for the tax so collected to the Department of Finance in satisfaction of that tax, it appeared that the Motor Fuel Tax Act was thereafter held to be unconstitutional. Suing to restrain the Director of Finance from depositing these collections in the state treasury and also for a return of the money and checks, aforesaid, but without intending to refund the amount recovered to its customers, it was held that the oil company was not entitled to any relief and the Supreme Court of Illinois, in Standard Oil Co. vs. Bollinger, Director of Finance et al., 337 Ill. 353, 169 N. E. 236, said in the course of its opinion:
"During the period in question, the appellee invoked the Motor Fuel Tax Act of 1927 as its authority to collect from its customers 2 cents upon every gallon of motor fuel sold by it. Appellee represented that the additional charge constituted the tax imposed by the act and was not a part of the price paid for the fuel. The money so collected the appellee remitted to the department of finance in satisfaction of the tax. The appellee acted merely as an intermediary between its customers and the department of finance. It paid the tax, not out of its own funds, but by the collections from its customers for the particular purpose. It now seeks to recover what it has not refunded, and does not intend to refund to its customers. It asks the interposition of a court of equity to recover money which does not belong to it, but it refuses to be governed by equitable considerations. The record fails to disclose any basis for the relief sought. Richardson Lubricating Co. v. Kinney (Indian Refining Co. v. Bollinger), supra. (337 Ill. 122, 168 N. E. 886.)"
The New York Court of Appeals in the case of Re Kesbec, Inc., vs. McGoldrick, City Comptroller, 278 N. Y. 293, 16 N. E. 2nd 288, held that a dealer who had collected from customers ,by reason of an improper interpretation by the municipal authorities of municipal sales tax legislation, an amount in excess of the lawful tax which amount he had been legally required to deposit with the said comptroller in order to obtain a review of the assessment was, by reason of his want of beneficial interest, not entitled to its return and also that he could not keep such excess collection.
The Legislature of the State of Kentucky, enacted a law imposing a tax of seven cents a quart on ice cream which was required to be collected from the person making the first sale thereof in the state and to be accounted for by him to the Department of Revenue. Hughes & Co., after the enactment of this law, sold ice cream in Kentucky and added the tax to the price charged for the product thereby collecting the tax from its vendees and so shifting to them the burden of its imposition. Thereafter the Act was declared unconstitutional as confiscatory. Hughes & Co. sued to recover the amount of the taxes thus collected and paid and in the trial court were allowed to recover. Reversing the judgment below in this respect and denying the vendor the right to a return of these payment, the Court of Appeals of Kentucky, after remarking concerning the vendor in the event the latter added the tax to its price for the ice cream, "He has never been out any amount, but only became the collector of the tax for the commonwealth and the custodian of the amount of it until the date when he accounted to the commonwealth therefor", further said in Shannon, Auditor, vs. Hughes & Co., 270 Ky. 630, 109 S. W. 2nd, 1174:
"We are of the opinion that, under the circumstances herein outlined, the sellers of ice cream who paid the tax into the state treasury should show that the amounts they seek to recover do not include collections made by them from their customers pursuant to the provisions of section 2 of the act. To hold otherwise would be manifestly unjust and would result in the unjust enrichment of the one seeking to recover the tax from the commonwealth and supported by no outlay on his part. Indirectly it would allow him to take money wrongfully paid into the treasury of the commonwealth by another through himself acting as collector, and leave the actual payer of the tax with a bare cupboard The act does not countenance such a manifest injustice. The appellee should be confined in the amount of its recovery to taxes paid out of its own funds and which it did not collect from any other source."
Section 2 of the Act mentioned by the court permitted the vendor to collect the tax from his customers at the time he made the sale and delivered the taxed article pursuant thereto by adding the amount of the tax to the price of the article if he so desired.
In this connection it is significant that Sec. 424 of the United States Revenue Act of 1928, (U. S. C. A. Title 26, Sec. 424), rendered the right of a taxpayer to a return of certain taxes illegally exacted conditional upon proof, to the satisfaction of the Commissioner of Internal Revenue, that the amount sought to be re funded had not been collected directly or indirectly from the purchaser of the articles in respect to which the tax was levied, or, if so collected, had been returned to such purchaser, thus requiring the taxpayer to have assumed the burden of the tax as a condition of his right to claim' a refund. This was a declaration of policy by the national lawmaking body and a recognition by it of the principle upon which the above reviewed decisions from New York, Illinois and Kentucky were determined, viz., that a taxpayer may not be allowed a refund of a tax the economic burden of which has been passed to another so as thereby to accomplish for such taxpayer his unjust enrichment. See also 7 U. S. C. A. Sec. 644, Agricultural Adjustment Act.
All things considered, we entertain the view that the judgment of the district court as it involved the question hereinabove considered was correct. So far as the claim of appellant that that part of section 9 of the Act, aforesaid, which reads "It shall be the duty of every person engaging or continuing, in this State, in any business for the transaction of which a license is required under this Act, to keep and preserve for a period of three years at the principal place of business within this State, suitable records of all sales made by him, and such other books or accounts as may be necessary to determine the amount of tax for the collection of which he is liable under the provisions of this Act", constitutes a general statute of limitations which operates to prevent the Board from assessing an additional sales tax for sales transactions during a period which is more than three years prior to the date of the assessment, we also think that the judgment below was correct in denying the validity of such a contention. We can hardly read into the law such an interpretation when it says nothing whatever about limiting the power of the Board to make assessments after the lapse of three years. Appellant cites no cases in support of its contention that such language should be so construed. It may be that in certain cases, where the Board is obliged to rely solely upon the vendor's records to make the proper assessment, from a practical standpoint it would be difficult and perhaps impossible to impose a tax after three years with no records available but we have no such situation presented here.
Recurring once more to the Obert case, supra, and recalling the legal questions therein involved, it appeared also that § 5546-12 of the General Code and a part of the Ohio Sales Tax Act provided:
"Each vendor shall keep complete and accurate records of sales of taxable property, together with a record of the tax collected thereon, which shall in every instance be the amount due under the provisions of this act, and shall keep all invoices, bills of lading, retained parts of cancelled prepaid tax receipts and such other pertinent documents, in such form as the commission (commissioner) may by regulation require. Such records and other documents shall be open at any time, during business hours, to the inspection of the commission (commissioner) and shall be preserved for a period of three years, unless the commission (commissioner) shall, in writing, consent to their destruction within that period or by order require that they be kept longer."
It was also the fact that no order had been made requiring that the records in that case needed should be kept longer than the prescribed statutory period of three years.
It was contended that the Tax Commissioner was estopped from making an assessment for sales made during the prior period when the vendors were not required to maintain their records. But the court said:
"We are of the opinion that the Tax Commissioner is not estopped from making an assessment according to Section 5546-12a, General Code, on account of sales made during a period prior to the three-year period even where the Tax Commissioner has failed to issue an order requiring vendors to keep their, sales records for a period longer than three years."
It was held as stated in the syllabus prepared by the court itself and appended to its opinion that:
"Where the amount of vendor's gross receipts from sales are known, the burden rests upon such vendor to show what part, if any, of such receipts resulted from sales of tax-exempt merchandise.
"There is no limitation of time within which an assessment may be made under Section 5546-9a, General Code, for failure to remit the proper amount of tax due under Section 5546-12a, General Code."
The judgment of the district court of Laramie County being in harmony with the views hereinabove expressed it should, accordingly, be affirmed.
Affirmed.
Kimball, J., concurs.