Title: Ex Parte Sizemore
Citation: 605 So. 2d 1221
Docket Number: 1910328
State: Alabama
Issuer: Alabama Supreme Court
Date: September 18, 1992

605 So. 2d 1221 (1992)
Ex parte James M. SIZEMORE, Jr., Commissioner, State Department of Revenue.
(Re James M. SIZEMORE, Commissioner, State Department of Revenue
v.
The DOTHAN PROGRESS).
1910328.

Supreme Court of Alabama.
September 18, 1992.
James H. Evans, Atty. Gen., and Ron Bowden, Chief Counsel, and J. Wade Hope, Asst. Counsel, Dept. of Revenue and Asst. Attys. Gen., for petitioner.
Richard F. Allen and William R. King of Capell, Howard, Knabe &amp; Cobbs, P.A., Montgomery, for respondent.
ADAMS, Justice.
Following an audit of the company that publishes the newspaper The Dothan Progress, the Department of Revenue assessed the company (hereinafter referred to as "the Dothan Progress"), a licensed retailer, unpaid taxes for the period of October 1, 1986, through April 30, 1989, on ink and newsprint purchased tax-free at wholesale and taken from inventory and used in assembling three newspapers that were distributed to the public free of charge. After paying the assessed taxes, the Dothan Progress filed for a refund, which was denied by the Department. Pursuant to a petition for a writ of mandamus filed by the Dothan Progress, the circuit court determined that the Dothan Progress was entitled to a refund; the Department of Revenue appealed that decision to the Court of Civil Appeals, which affirmed the decision of the circuit court. 605 So. 2d 1217. We have granted the Department's petition for certiorari review.
*1222 This case involves the "withdrawal for use" provisions of § 40-23-1(a)(6) and (10), Code of Alabama (1975). The Department of Revenue concedes that this Court considered this exact fact situation involving the same parties in 1987 (see Dothan Progress v. State Department of Revenue, 507 So. 2d 511 (Ala.1986), reversed and remanded, Ex parte Dothan Progress, 507 So. 2d 515 (Ala.1987). The Department of Revenue contends, however, that the opinion in Ex parte Dothan Progress, 507 So. 2d 515 (Ala.1987), was based on the legislature's amendment in 1983 to the definition of "sale at retail" in § 40-23-1(a)(10). That amendment added "without transfer of title" to the definition. The legislature, in 1986, again amended § 40-23-1(a)(10), and took out the "without transfer of title" language. The Department contends that the definition did not remain the same both with and without the "without transfer of title" language, and the Department argues that the effect of the 1986 amendment changes the result reached in our earlier opinion. We agree.
Although the result of our previous opinion turned on the interpretation of the 1983 amendment, the facts, as set out by the Court of Civil Appeals at 507 So. 2d 511, are identical to the facts in the present case:
Dothan Progress v. State Department of Revenue, 507 So. 2d 511, 513 (Ala.1986), reversed and remanded, Ex parte Dothan Progress, 507 So. 2d 515 (Ala.1987).
This Court, in Ex parte Campbell &amp; Associates, Inc., 544 So. 2d 971 (Ala.1989), quoting Ex parte Morrison Food Service of Alabama, 497 So. 2d 136 (Ala.1986),[1] set out the history of the "withdrawal provision," as follows:
"`SALES TAX REGULATION NO. 20
"The Attorney General responded that the Commissioner of Revenue had no authority *1223 to promulgate such a regulation, stating:
"38 Op. Att'y Gen. at 40-41. The Attorney General did, however, suggest legislation to correct the abuse. 38 Op. Att'y Gen. at 41.
"In 1947, the House voted to amend the sales tax law as follows:
"1947 House Journal, Reg.Sess., 940-42.
"These provisions were enacted. See Ala. Acts 1947, Act No. 305, § 1(1)(f), (h), and (j), at 160, 161-62.
"The withdrawal provisions were enacted solely to fill a void not theretofore covered by any existing provision of the *1224 Alabama Sales Tax Law, that is, to tax a person who purchased goods at wholesale for the purpose of reselling and who withdrew some of these goods for his own personal and private use or consumption, without transfer of title.
"In Ex parte Disco Aluminum Products Co., 455 So. 2d 849 (Ala.1984), this court discussed the subsequent history of the withdrawal provision, as follows:
"Ex parte Disco Aluminum Products Co., Inc., 455 So. 2d  at 852-53.
Ex parte Campbell, supra, at 974-77.
Although this Court gave a detailed history of the "withdrawal provision" in Ex parte Campbell, we did not address the opinion of the Court of Civil Appeals in that case, wherein it was specifically stated as follows:
White v. Campbell &amp; Associates, Inc., 544 So. 2d 969, 971 (Ala.Civ.App.1988).
Judge Russell, in an opinion concurring in the result reached by the Court of Civil Appeals in the case before us, stated:
Sizemore v. Dothan Progress, 605 So. 2d 1217 (Ala.Civ.App.1991) (Russell, J., concurring in the result).
We agree that the law with regard to the withdrawal provision is unclear, and we now attempt to clarify the purpose of the 1986 amendment. Because of the confusion of the law in this area, we do so, however, without penalizing the taxpayer in this instance. Therefore, the interpretation of the law in this case is prospective only, and the taxpayer in this case is entitled to its refund from the Department of Revenue.
Having examined the statute both with the 1983 amendment and with the 1986 amendment and in light of the language in the title to the 1986 amendment, we conclude that the legislature could not have been merely reiterating the law as it existed in 1983 without meaning to change the interpretations given to the 1983 amendment. The title to Act 86-689 stated:
Even if the legislature was under the impression in 1983 when that amendment was passed (and evidently it was) that the 1983 amendment merely clarified the law as it was in 1947, the passage of the 1986 amendment clearly indicates that the legislature felt that after 1983, there had been a departure from the pre-1983 law and that it sought to remedy the situation by passing the 1986 amendment. There can be no other explanation. Why else would the legislature bother to add language to the 1986 amendment clearly disavowing the 1983 amendment?
In reaching this conclusion, we hold that the transfer of title is no longer a pivotal factor upon which we base our decision as to whether the withdrawal provisions apply. In the present case, the Dothan Progress withdrew ink and newsprint from stock and used it to print newspapers. Those newspapers were distributed free of charge. Obviously, title to the newspapers was transferred upon their distribution. If a fee had been charged for the papers, there is no dispute that the charge for the tax would be passed on to the purchasers thereof. Here, however, the papers were given to the public, for the most part, free of charge. Why? The obvious reason is that the Dothan Progress had contracted with advertisers to distribute to the general public newspapers containing advertisements. In other words, the Dothan Progress consumed the ink and newsprint to meet its own obligations to its advertisers.
The fact that the newspapers were given away no longer exempts the Dothan Progress from paying taxes on the ink and newsprint used to assemble the free newspapers. The legislature, with the passage of the 1986 amendment, signaled to this Court that the interpretations of the 1983 amendment can no longer be used to interpret cases arising after passage of the 1986 amendment.
For the foregoing reasons, the judgment of the Court of Civil Appeals ordering the refund in this case is affirmed; but as to similar situations arising in the future, the law to be applied should be that set out in this opinion.
AFFIRMED.
HORNSBY, C.J., and SHORES, HOUSTON, STEAGALL, KENNEDY and INGRAM, JJ., concur.
MADDOX, J., concurs in part and dissents in part.
MADDOX, Justice (concurring, in part; dissenting, in part).
Once again this Court is faced with a skirmish between a taxpayer and the State, as the taxing authority, over the applicability of the withdrawal provisions of Alabama's Sales Tax Law. I thought that this *1228 Court's decision in Ex parte Campbell &amp; Associates, Inc., 544 So. 2d 971 (Ala.1989), cited and quoted from extensively in the majority opinion, should have settled any questions concerning when and under what circumstances the withdrawal provisions would apply, but apparently it has not.
I write specially in an attempt to try to explain, once again, that much of the confusion that seems to still exist is the result of a basic misunderstanding of the underlying purpose of the withdrawal provisions of the law. As author of the opinions in Ex parte Campbell &amp; Associates, Inc., and Ex parte Morrison Food Service of Alabama, 497 So. 2d 136 (Ala.1986), I set out much of the history of the adoption by the Legislature of the withdrawal provisions, and in both cases, I stated what I thought the Legislature intended. I believe that some of the confusion has resulted by the Alabama Department of Revenue's misreading of the actual holding in the Morrison case, or the Department's desire to make the withdrawal provisions of the Sales Tax Law applicable even though a "sale at retail" or "retail sale" is to a tax-exempt entity. Because I thought that the Department had misread the actual holding in Morrison, I attempted, in Ex parte Campbell &amp; Associates, to explain the limited holding of the Morrison case, as follows:
Because the confusion continues, and because I authored the opinions in both Morrison and Campbell, I examined the microfilmed copies of the original briefs filed by Morrison's counsel in the Morrison case, for a deeper understanding of the holding of that case. There, the State, on rehearing, asked this Court to change its decision, but at the same time apparently convinced the Legislature to adopt the 1986 amendment that is the subject of this litigation.
It is obvious that the State, in Morrison, was attempting to apply the withdrawal provisions of the law to food service contracts that Morrison had made with tax exempt entities. In its brief on rehearing, Morrison gives some hint of the controversy that existed in that case between Morrison and the State regarding the proper *1229 interpretation of the withdrawal provisions. Counsel for Morrison accused the State Department of Revenue of using the withdrawal provisions of the law to collect what counsel referred to as the "largest tax possible" by seeking to collect sales tax under the withdrawal provisions of the law, even though the sales were made to tax-exempt entities. My examination of these microfilmed copies of the original briefs show the actual debate that was occurring between the Department of Revenue and the taxpayer in that case, Morrison. In its brief filed in opposition to the State's application for rehearing, Morrison argued:
It seems obvious to me, from a rereading of Morrison's brief in the Morrison case, especially in view of Morrison's admission in that case, that Morrison owed sales taxes on the contracts it had made with those entities that were not tax exempt and that the Department of Revenue was attempting to collect a sales tax under the withdrawal provisions of the law, regardless of whether the "sale at retail" or "retail sale" was made to a tax-exempt entity or not. I frankly do not believe that the Legislature intended the withdrawal provisions to apply when there is a "sale at retail" or "retail sale" to a tax-exempt person or entity.
After rereading the statute and the cases interpreting the statute, I believe that the principle of law relating to the application of the withdrawal provisions could be stated, as follows: "Taxpayer, if you purchased tangible property at wholesale, and if you sell it, you must collect the tax from the consumer, unless the consumer is exempt from the payment of a sales tax; if you use and consume the property purchased at wholesale yourself, then you owe a sales tax; if you use the property in *1230 performing a contract, you owe the tax, unless, of course, the user or consumer is exempt from the payment of sales tax; if the property enters into and becomes an ingredient or component of tangible personal property or products manufactured or compounded for sale, and not for the personal and private use or consumption of the person who withdraws, uses or consumes it, the withdrawal provisions would not apply, because the sales tax would be owed by the person or entity who sells the product that was manufactured or compounded for sale."
The majority opinion quotes extensively from the Campbell opinion, and it correctly interprets the withdrawal provisions of the law, as applied to the facts of this case. Therefore, I concur in the holding that the withdrawal provisions of the law are applicable here. I cannot agree, however, that the decision should apply only prospectively. I believe that the law was clear at the time of the taxable event, and I would not excuse this taxpayer from having to pay the tax.
[1]  In Ex parte Morrison, this Court held that Morrison Cafeteria, which was taking some of its food purchased at wholesale and using it to meet food contracts with nine hospitals, nursing homes, and fraternities, was not obligated to pay sales tax thereon. In Ex parte Morrison, this Court stated that "when the taxpayer transfers title to the goods which have been withdrawn, he cannot be taxed under the withdrawal provision." Ex parte Morrison, at 141. This Court found that title did pass at some point and that Morrison, therefore, did not owe sales tax.