Case Name: State ex rel. Knox, Atty. Gen., v. Home Oil Co.
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1927-10-24
Citations: 148 Miss. 511
Docket Number: No. 25586
Parties: State ex rel. Knox, Atty. Gen., v. Home Oil Co.
Judges: 
Reporter: Mississippi Reports
Volume: 148
Pages: 511–521

Head Matter:
State ex rel. Knox, Atty. Gen., v. Home Oil Co.
(Division A.
Oct. 24, 1927.)
[114 So. 326.
No. 25586.]
Morse & Bryan, for appellant.
Wm. I. McKay, for appellee.
Argued orally by Harry M. Bryan, for appellant, and Wm. I. McKay, for appellee.
Corpus Juris-Cyc. References: Levees and Flood Control, 316CJ, p. 997, n. 10 New; Licenses, 37CJ, p. 237, n. 20 New.

Opinion:
Cook, J.,
delivered the opinion of the court.
Appellant instituted this suit in the circuit court of Warren county seeking to recover certain taxes alleged to be due under and' by virtue of the provisions of chapter 115, Laws 'of 1924, which, among other things, provided that:
"Any person engaged in business of distributor of gasoline, or retail dealer in gasoline, shall pay for the privilege of engaging in such business an excise tax of three cents (3c) per gallon upon the sale of gasoline by such dealer in this state, except, however, . . . the tax herein imposed shall not apply to gasoline purchased by the state or any county, municipality or taxing district of the state for use in the construction, maintenance or repair of public improvements."
The case was submitted to the trial judge in the court below upon an agreed statement of facts, which presented the question of whether or not, under the above-quoted exemption or exception, the'seller or distributor of gasoline is liable to pay the tax of three cents per gallon on gasoline purchased by and for the board of levee commissioners in the state of Mississippi, through the agents of the United States government, for exclusive, use in the construction, maintenance, and repair of levees in the state. The court below held that there was no liability for this tax on such sales, and dismissed the suit, and, from the judgment entered, this appeal was prosecuted.
The agreement of counsel, as it appears in the record, is as follows:
"It is hereby agreed by and between the parties hereto that, for the purpose of the trial and determination of this suit, the same be submitted on the following stipulations and facts, to-wit:
" (1) That, since the coming into operation of chapter 115 of the Laws of 1924, the defendant has sold to the third Mississippi river district of the Mississippi river commission, under the War Department of the United States government, fifty-one thousand nine hundred eighty-three gallons of gasoline, which gasoline was used in the construction, maintenance, and repair of the levees in the several levee districts of Mississippi, and on which gasoline the defendant paid no taxes under said chapter 115 of the Laws of 1924.
"(2) That the several levee districts of Mississippi are taxing districts of said state; and that the levees in said levee districts are public improvements.
"(3) That, under the authority of an Act approved March 4, 1923, Congress has for the last two years included in the Omnibus Appropriation Act for the War Department of the United States an item of ' Flood Control, Mississippi River. ' The funds so appropriated are apportioned by the Mississippi river commission to the various works under its charge, a part of these funds being allotted for the construction, maintenance, and repair of levees along the Mississippi river .in the state of Mississippi. The Federal law requires that, for every dollar so allotted, the Mississippi levee districts shall contribute, at least, fifty cents, in addition to providing-rights of way, and other incidentals free of cost to the United States. Under this arrangement, the several Mississippi levee districts have made the required contributions, placing the contributed funds to the credit and at the disposal of the district engineer of said river district, with which appropriated and contributed funds, on the basis of two dollars from the Federal allottment for every one dollar from the levee districts of the state, labor, materials, and appliances are purchased for the construction, maintenance, and repair of the levees of the several levee districts of the state, the same being- done under the direct and exclusive control of the United States district engineer. And that said gasoline was purchased by said district engineer with said combined funds, and by him used in the construction, maintenance, and repair of the levees in said levee districts of Mississippi, none of such' gasoline having been purchased- for, furnished to, or used by any other independent contractor or person. That the United States government directly applies said combined funds as aforesaid, -without profit, charge, or compensation to itself or to any other person.
"(4) That, so' far as this suit is concerned, the defendant has duly and legally reported, accounted for, and paid all taxes on all other gasoline sold and distributed by the defendant to other persons than the United States and levee districts as aforesaid; and that the defendant duly reported the sale of said gasoline to the United States and levee districts, as aforesaid, but paid no taxes thereon, duly claiming that the same was legally exempt from such taxes by the intent and provisions of said statutes, in good faith, and on advice of counsel.
"(5) That, since said statute has been in operation, the-average daily selling price of gasoline has been seventeen and seventy-five hundredths cents per gallon, which includes the tax of three cents per gallon.
" (6) That, as if fully and effectually pleaded and proper issue joined thereon, the defendant may have all and full benefit and advantages of the following defenses in this suit, if legally entitled to any benefit and advantage, to-wit:
"A. That said statute violates either or both of the Constitution of Mississippi and of. the United States.
"B. That said tax is an unlawful tax and burden on the agencies, operations, and instrumentalities of the ' United States.
"C. That all of the gasoline sold and furnished to the United States and the levee districts as aforesaid is exempt from said tax by the intent and provisions of said statute.
"D. That said tax is not a privilege tax, nor a tax on the distributor, but that it is a property tax, a tax on the purchaser alone, and invalidly excessive and void.
"E. That the levee districts of Mississippi are taxing districts; that the levees are public improvemnts; and that the levee districts receive the entire benefit of the exemption from said tax; and that no other person or body receives any of the benefit therefrom.
"F. Any other defense that defendant may elect to interpose in any other manner.
" (7) That the purpose of this suit and agreement fs to have the courts fully and finally to determine and adjudicate all of the legal rights and defenses of the parties hereto, without further proof, pleadings, or formalities, to the same effect as if all legal defenses had been properly raised, pleaded, and proved."
The court below seems to have based its decision upon two grounds: First, that the tax imposed by chapter 115, Laws of 1924, is a property tax, and not a license or privilege tax; and, second, that the state of Mississippi cannot impose a tax upon property bought and used by the United States government for the express purpose of carrying out one of its public policies; and, for reversal of the judgment of the court below, the appellant relies, principally, upon the case of State ex rel. Knox, Attorney-General, v. Panhandle Oil Co., 112 So. 584, in which this court held that the tax in question is a privilege tax on the dealer, and not a tax on the gasoline sold, or on the person who buys the commodity, and that, in taxing the privilege of carrying on this business, the state was acting within its rights, and the Federal government was not entitled to have such tax annulled upon gasoline purchased by it and used in the operation of its instrumen- talities. While the holdings.of the court in this ease are probably adverse to the reasons assigned by the court below for its decision, still we do not think it decisive of the question presented by the facts here involved.
Prom the ag'reed statement of facts, it appears that Congress had appropriated funds for flood control along the Mississippi river, which were to be apportioned by the Mississippi river commission to the various works under its charge, a part of which might be allotted for the construction, maintenance, and repair of levees along the Mississippi river in the state of Mississippi, upon the condition, however, that for every dollar so allotted the Mississippi levee districts should contribute at least fifty cents, in addition to providing all rights of way and other incidental expenses. Under this arrangement, the several Mississippi levee districts made the required contributions, and the combined funds were placed at the disposal of the United States district engineer,, to be used or expended by him in paying labor and purchasing material and appliances to be used solely in the construction, maintenance, and repair of the levees of the several districts of the state, and, with the funds so contributed by the levee districts and the Federal government, the said district engineer purchased the gasoline here in question, and used it in the construction, maintenance, and repair of the levees in said levee districts of this state.
While the purchase of this gasoline and its use in the construction and maintenance of the levees of this state was in aid of the general policy of the Federal government to assist the states in the solution of the great problem of flood' control along the Mississippi river, the' primary duty of constructing and maintaining these levees and protecting the adjacent lands from overflow still rests upon the state, acting through the agency of its taxing districts, the several levee districts, and, although the gasoline was purchased by, and used under, the direction of an agent of the United States government, in so doing he was also the agent and representative of the several levee districts, and, in reality, the purchases were made by and on behalf of these several taxing districts of the state. Consequently, we are of the opinion that these purchases came within the exception or exemption of this statute,- and that the appellee is not liable for any taxes upon such purchases.
The judgment of the court below will therefore be affirmed.
. Affirmed.