Case Name: Hardin, Commissioner of Revenues, v. Vestal
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1942-06-15
Citations: 204 Ark. 492
Docket Number: 4-6798
Parties: Hardin, Commissioner of Revenues, v. Vestal.
Judges: Mr. Justice Humphreys joins me in this dissent.
Reporter: Arkansas Reports
Volume: 204
Pages: 492–501

Head Matter:
Hardin, Commissioner of Revenues, v. Vestal.
4-6798
162 S. W. 2d 923
Opinion delivered June 15, 1942.
Leffel Gentry and Elsijane Trimble, for appellant.
House, Moses <B Holmes and Eugene JR. Warren, for appellee.

Opinion:
McHaney, J.
Appellee brought this action against appellant, as a class suit, to enjoin appellant from collecting or attempting to collect a sales or gross receipts tax from him, or others similarly situated, based on the gross receipts or gross proceeds derived from the sale of raw products produced by them, either from the farm, orchard or garden, where such sale is made by them directly to the consumer or user from an established business located on their farms where said products are produced. The act under which the tax is proposed to be levied is No. 386 of 1941. His complaint, in addition to alleging that he is a citizen and resident of Pulaski county and is a florist and nurseryman, operating a floral farm and nursery in said county, also alleged that he is engaged in selling products derived from his farm, orchard and garden, that is, flowers, shrubs, fruit trees and plants from an established place of business located on his farm, where such products are grown; that said act "is discriminatory, arbitrary and unreasonable in attempting to levy a tax against him as a florist and nurseryman for gross receipts or proceeds derived from the sale of said raw products made directly to consumer and user from said established place of business located on his farm and produced on said farm; that said act deprives plaintiff and others similarly situated of their privileges and immunities contrary to the constitution of the United States and the state of Arkansas, and the provisions therein made and provided." The equal protection clauses of both constitutions are also invoked.
Appellant demurred to the complaint on the ground that it does not state facts sufficient to constitute a cause of action. The court overruled the demurrer. Appellant refused to plead further, but stood on his demurrer, and the court entered a decree enjoining appellant from attempting to collect the tax as prayed. This appeal followed.
The particular section of said Act 386 of 1941 complained of is subsection (n) of § 4, which provides: "Gross receipts or gross proceeds derived from the sale of any cotton or seed cotton or lint cotton or baled cotton, whether compressed or not, or cotton seed in its original condition; gross receipts or gross proceeds derived from the sale of raw products from the farm, orchard, or garden, where such sale is made by the producer of such raw products directly to the consumer and user; gross receipts or gross proceeds derived from the sale of livestock, poultry, poultry products, and dairy products of producers owning not more than five cows; exemptions granted byr this subdivision shall not apply when such articles are sold, even though by the producer thereof, at or from an 'established business'; neither shall this exemption apply unless said articles are produced or grown within the state of Arkansas. Provided, however, nothing in this subsection shall be construed to mean that the gross receipts or gross proceeds received by the producer from the sale of the products mentioned herein shall be taxable when the producer sells at an 'established business' located on his farm commodities produced on the same farm. The provisions of this subsection are intended to exempt the sale by livestock producers of livestock sold at special livestock sales. The provisions of this subsection shall not be construed to exempt sales of dairy products by any other businesses. The provisions of this subsection shall not be construed to exempt sales by florists, nurserymen and chicken hatcheries."
It was appellee's contention in the court below and is hero that the act, as interpreted by appellant, is unconstitutional because the classification made by the legisla ture in subsection (n) of § 4 of said act is unreasonable, discriminatory and arbitrary. It is conceded that, "If the classification is reasonable and is not arbitrary or capricious, then there is no unconstitutionality." Appellee's brief. The concession is well taken. The tax levied b}T the act is an excise or privilege tax. Wiseman v. Phillips, 191 Ark. 63, 84 S. W. 2d 91; Ark. Power & Light Co. v. Roth, 193 Ark. 1015, 104 S. W. 2d 207. It is difficult to perceive what right appellee has to complain of the tax levied by the act as he is not required to pay the tax in the first instance, because the third paragraph of § 7 provides: "The seller, or person furnishing such taxable service, shall collect the tax levied hereby from the purchaser." So, appellee is not taxed. As we said in the Wiseman case, "He.is a tax collector." But assuming, for the purpose of this opinion, that he has such right, we cannot agree that the classification made by the act is unreasonable or arbitrary. Subsection (n) provides for exemption from the tax on gross receipts from sale of certain farm produce including cotton, cotton seed; raw products from farm, orchard or garden; livestock, poultry, poultry products and dairy products of producers owning not more than five cows. Also exempt from the tax are the gross receipts received by the producer from the sale of the above products "when the producer sells at an 'established business' located on his farm commodities produced on the same farm." The concluding sentence of this paragraph is: "The provisions of this subsection shall not be construed to exempt sales by florists, nurserymen and chicken hatcheries."
It is true that the products exempted by the act are agricultural products and that agriculture, in its broadest sense, includes horticulture, and that horticulture includes floriculture and viticulture. The florist is engaged in floriculture, and, according to Webster, is "a cultivator of, or dealer in, ornamental flowers or plants. ' ' Appellee is both a cultivator and a dealer in ornamental flowers and plants. He operates a florist shop in the city of Little Rock and he concedes lie is liable for the tax on gross receipts of sales made there. But, as to those he sells on his farm, where he grows the flowers and plants, he contends the classification is arbitrary because farm products as defined in the act are exempt. Appellee is also a nurseryman. That business is a branch of horticulture, says Webster, and is "a place where trees, shrubs, vines, etc., are propagated for transplanting or for use as stalks for grafting; a plantation of young trees or other plants." Simply because the legislature saw proper to exempt certain farm produce and livestock, agricultural products, from the tax imposed, and specifically refused to exempt florists' and nursery products, is no reason to say the classification made is arbitrary, unreasonable and capricious. It is true that all grow from the soil, but the products grown by farmers are entirely separate and distinct from the products grown by florists and nurserymen. It is not contended by appellee that the act discriminates against him in favor of other florists and nurserymen, and it does not, because it applies to all in his class alike by requiring the tax to be paid.
In Williams v. City of Bowling Green, 254 Ky. 11, 70 S. W. 2d 967, the Supreme Court of Kentucky said: "Whether a particular classification offends or does not offend the equal protection clause of the Fourteenth Amendment has been the subject of numerous decisions by the United States Supreme Court. The principles established by those decisions are in brief as follows: The restriction imposed by the Fourteenth Amendment does not compel the adoption of an iron-clad rule of equal taxation, nor prevent a variety of differences in taxation, or discretion in the selection of subjects or the classification for properties, businesses, callings or occupations. The fact that a statute discriminates in favor of certain classes does not make it arbitrary, if the discrimination is founded upon a reasonable distinction, or if any state of facts reasonably can be conceived to sustain it." The above quoted statement is in substance the holding of the United States Supreme Court in State Board of Tax Commissioners of Indiana v. Jackson, 283 U. S. 527, 51 S. Ct. 540, 75 L. Ed. 1248, 73 A. L. R. 1464, 75 A. L. R. 1536, and it was there further held that the legislature may not only classify, but, for taxation purposes, it may subdivide classes into particular classes. It was there said, to quote headnote No. 7: "An Indiana statute lays an annual license tax on stores, increasing progressively with the number of stores under the same general management., supervision or ownership — such that, in the present case, the owner of a 'chain' of some 225 stores selling groceries, fresh vegetables and meats, was obliged to pay $5,443, whereas the owner of a single store only, though it involved a much greater investment and income, would pay but $3. Held not violative of the equal protection clause, in view of the distinctions and advantages which combine and are exerted in a single ownership and management of a series of like stores in different locations, as compared with mere cooperative associations of independent stores, or with department stores selling many kinds of goods under the same roof."
Therefore, even though the business of the florist and nurseryman are subdivisions of agriculture, it is not difficult to distinguish their business from that of the farmer. Farming — the growing of grain, cotton, livestock, poultry and other produce — is absolutely essential to the life of the nation, while the growing of flowers and plants and of fruit trees and shrubs is not. Nor do we mean to minimize the importance of the latter. We merely point out one distinction to show that the classification made by the legislature is not arbitrary or unreasonable, and especially is this true in view of the well settled rule that the law must be sustained, "if any state of facts reasonably can be conceived to sustain it." Other distinctions might be pointed out, but we deem it unnecessary to do so.
We think it unnecessary to cite and comment on the numerous cases cited by the parties, as to do so would greatly extend this opinion to no practical purpose.
Appellee makes the further argument that the act does not apply to him. He evidently thought it did when he brought this suit and we think it does. He alleges that he is a florist and a nurseryman, and the act specifically says his sales shall not be exempt from the tax.
The decree will, therefore, be reversed, and the cause remanded with directions to sustain the demurrer, and for further proceedings not inconsistent with this opinion.