Title: Besser Company v. Bureau of Revenue
Citation: 394 P.2d 141, 74 N.M. 377
Docket Number: 7425
State: new-mexico
Issuer: new-mexico Supreme Court
Date: July 20, 1964

394 P.2d 141 (1964) 74 N.M. 377 BESSER COMPANY, a corporation, Plaintiff-Appellant, v. The BUREAU OF REVENUE of the State of New Mexico and Robert Valdez, Commissioner thereof, Defendants-Appellees. No. 7425. Supreme Court of New Mexico. July 20, 1964. *142 Jethro S. Vaught, Jr., Joseph R. McNeany, Albuquerque, for appellant. Earl E. Hartley, Atty. Gen., Norman S. Thayer, Asst. Atty. Gen., for appellees. MOISE, Justice. Plaintiff-appellant, having paid taxes claimed by defendant-appellee under New Mexico Emergency School Tax Act (§§ 72-16-1 to 72-16-47, N.M.S.A. 1953), under protest, brought this action to recover the amounts paid. The parties stipulated as follows: Thereafter, the court entered its decision, concluding that under the facts the tax paid under protest was properly assessed and was due and payable; whereupon, a judgment was entered dismissing plaintiff's complaint. This appeal has been perfected, and by its brief filed in this court, although stated in somewhat different terms, the plaintiff presents argument generally in support of its grounds of protest specified in stipulation 15, quoted above. Inasmuch as defendant states that the tax was imposed pursuant to § 72-16-4.5, N.M.S.A. 1953, and under no other provision of our law, it is not necessary for us to consider plaintiff's arguments that taxes imposed by other sections would not apply to it. Our task is to ascertain if plaintiff's operations are included within § 72-16-4.5, supra, and the definitions of § 72-16-2(F), (G), (H) and (I), and not exempt under § 72-16-12. If it is concluded that the tax was properly imposed pursuant to the provisions mentioned, we must also consider plaintiff's claim that the tax would constitute an undue burden on interstate commerce in violation of Art. I, § 8, U.S. Constitution, and a violation of the due process clause of the 14th Amendment to the U.S. Constitution. For convenience, we here set forth the pertinent parts of the sections mentioned above: We do not copy § 72-16-12, N.M.S.A. 1953, because a casual reading of it discloses that it provides an additional tax and exemption therefrom as against persons taxable under sections other than § 72-16-4.5, supra. In view of defendant's statement that taxes are being claimed under § 72-16-4.5, supra, and no other provision, this section is not applicable. Concerning the correct rule to be applied by us in construing taxing or revenue acts, there can be little question. They should be strictly construed to the extent that they provide that a citizen's property is being taken in a summary proceeding, or penalties or forfeitures imposed on him, but in other respects should be given a fair, unbiased and reasonable construction, without favor either to the taxpayer or the state, to the end that the legislative intent is effectuated and the public interests to be subserved thereby furthered. Southern Pac. Ry. Co. v. State, 34 N.M. 479, 284 P. 117; Amarillo-Pecos Valley Truck Lines, Inc. v. Gallegos, 44 N.M. 120, 99 P.2d 447; Beatty v. City of Santa Fe, 57 N.M. 759, 263 P.2d 697. It is apparent that plaintiff's principal complaint under its first point results from the fact that § 72-16-4.5, supra, is entitled "Privilege Taxes Retailers," and then states that the tax shall be computed on the basis of 2% of the gross receipts of the business of selling goods, wares, etc., at retail and for consumption and not for resale. It is asserted that plaintiff is in no sense a retailer. We would first point out that the heading or head notes contribute nothing so far as an effective legislative enactment is concerned. See State v. Mares, 61 N.M. 46, 294 P.2d 284. Also, it must be conceded, we believe, that plaintiff is not a "retailer" as that term is generally used and understood, or as broadly defined in § 72-16-2(H), supra. We had occasion, in Albuquerque Lumber Co. v. Bureau of Revenue of New Mexico, 42 N.M. 58, 75 P.2d 334, to consider whether a dealer in plumbing fixtures who sold to plumbing contractors for installation in structures for others was a "retailer." It was there stated that, "It is a familiar rule of statutory construction that in the absence of anything in the context to the contrary, common or popular words are to be understood in a popular sense." On this basis it was determined that "sale" as used in the Emergency School Tax Act was used in its usual and popular sense. It was further concluded that the sales in question were sales at retail under the definition of "retail" above set forth, and being "for consumption and not for resale in the form of tangible personal property, * * *" and properly taxed. The situation here differs from that discussed above. First, we note that the definition of "retail" applies "except as herein otherwise provided," and second, § 72-16-4.5, supra, imposes its tax on "the gross receipts of the business * * * of selling at retail * * * including receipts from rentals or leasing of tangible personal property * * *." Plaintiff is in the business of renting tangible personal property, and there can be no question that it was the legislative intent that the receipts therefrom be taxed at the same rate as sales at retail, viz., 2% of the gross receipts therefrom. We are satisfied that this is the correct interpretation under the rules of construction noted above. In our view of the law, the definition of "consumption" contained in § 72-16-2(I), supra, is of no assistance to plaintiff since as already noted the tax is imposed on the gross receipts from rentals or leasing of tangible personal property, which is totally apart from the tax also imposed in the same section on "sales for consumption and not for resale" and included in the definition of "retail." We still must decide if plaintiff's operations constituted "engaging" in the business to which the tax attached, because "occasional and isolated sales, or transactions by *146 a person who does not hold himself out as engaged in business" are excluded under the definitions in § 72-16-2(G), supra. Webster's New International Dictionary (3rd Ed.) includes a definition of "occasional" as "met with, appearing or occurring irregularly and according to no fixed or certain scheme"; and defines "isolated" as "unique; occurring alone or once; sporadic, not likely to recur." As we interpret the language of § 72-16-2(G), the number of transactions entered into is not necessarily controlling. The real question is whether the sale or lease is in line with the business for which the seller or lessor was organized and in which it engages. It has no application where, as here, plaintiff is in the business of leasing machinery to anyone who needs and wants it. The fact that there are only four block manufacturers who are customers of plaintiff does not make the transactions "occasional" or "isolated" and a conclusion that plaintiff is not "engaging" in business does not follow. On the contrary, plaintiff was doing exactly what it was organized and authorized to do, and as often as business conditions and circumstances demanded. It was "engaging" in business. Compare Northwestern Pac. Ry. Co. v. State Board of Equalization of State of California, 21 Cal. 2d 524, 133 P.2d 400; Pacific Pipeline Construction Company v. State Board of Equalization, 49 Cal. 2d 729, 321 P.2d 729; Martin v. United States (C.C.A. 10), 100 F.2d 490; State Farm Mut. Automobile Ins. Co. v. Brooks (C.C.A. 8), 136 F.2d 807; Bankers &amp; Shippers Ins. Co. of New York v. Blackwell, 260 Ala. 463, 71 So. 2d 267; Nelson v. State (Ct.Crim.App. Okl.), 355 P.2d 413. There remains for us to consider plaintiff's arguments that the tax imposed by defendant is invalid as an undue burden on interstate commerce and that it denies plaintiff due process of law. We do not consider that either position has any merit. We first notice Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S. Ct. 546, 82 L. Ed. 823, 115 A.L.R. 944, a decision affirming this court's decision in the same case appearing at 41 N.M. 288, 67 P.2d 505. We quote the following from the opinion of Mr. Justice Stone: In that case, the court concluded that the tax was "in form and substance, an excise conditioned on the carrying on of a local business * * *." Similarly, the tax here imposed is conditioned on the local business of renting equipment located in this state. It is not a tax on the importation of the equipment; neither is it a tax measured by income on the equipment operated in any other state; nor is the tax different from that assessed and paid by local concerns renting equipment for use by others in this state. Under the authority of Western Live Stock v. Bureau of Revenue, supra, it would seem clear that the tax does not constitute an undue burden on interstate commerce, but on the contrary is a tax on plaintiff's local and intrastate business of leasing machinery. Our attention has been directed to the case of Stone v. Stapling Machines Co., 220 Miss. 470, 71 So. 2d 205; Appeal dismissed, 348 U.S. 802, 75 S. Ct. 31, 99 L. Ed. 633, a case closely similar to our own on its facts. It was there held that a 2% sales tax on the gross income from the rentals for machines owned by the taxpayer, a Delaware corporation, with its place of business in New Jersey, which machines were located in Mississippi did not constitute an unconstitional burden on interstate commerce. We quote from that case: Plaintiff's efforts to distinguish that case, in our view, are entirely futile. Plaintiff cites numerous decisions of the Supreme Court of the United States, and particularly relies on Scripto, Inc. v. Carson, 362 U.S. 207, 80 S. Ct. 619, 4 L. Ed. 2d 660, and McLeod v. J.E. Dilworth Company, 322 U.S. 327, 64 S. Ct. 1023, 88 L. Ed. 1304. We have examined them all, and do not consider that they in any sense support plaintiff's position. Concerning the two cases specifically mentioned, it should be sufficient to distinguish them, to point out that both involved attempts at collection of a use tax on a foreign sale from the non-resident vendor. The tax here being considered is one imposed on the gross receipts from the rentals from the machines located in New Mexico. A word about the due process argument. In Wisconsin v. J.C. Penney Company, 311 U.S. 435, 61 S. Ct. 246, 85 L. Ed. 267, 130 A.L.R. 1229, a case involving the constitutionality of a statute imposing an excise tax upon the privilege of declaring and receiving dividends derived from property located and business transacted within the state, as applied to a foreign corporation, Justice Frankfurter speaking for the court stated the test of due process in the following language: Under the facts of the instant case, with plaintiff's property situated in New Mexico and earning rentals which are paid to plaintiff, that "Protection, opportunities and benefits" from the state have been enjoyed by plaintiff is manifest. The tax paid by plaintiff and here sought to be returned is an entirely proper and reasonable exaction in return for that "protection" and those "opportunities" and "benefits." Compare, Stone v. Stapling Machines Co., supra. For the reasons stated the judgment of the trial court should be affirmed. It is so ordered. COMPTON, C.J., and CHAVEZ, J., concur.