Court Opinion

ID: 6822316
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:09:37.316769+00
Date Added: 2024-06-11T16:04:11.002467
License: Public Domain

Whittle, J.,
delivered the opinion of. the court.
The Commonwealth, by this appeal, is challenging the correctness of a judgment entered in the Chancery Conrt of the City of Bichmond, by which the assessment of an additional merchant’s license tax against appellee for the year 1950 was ordered corrected and vacated and appellee thus exonerated from payment of the tax sought to be collected under it.
The record discloses that Harvey M. Jones and George B. Gooding were partners engaged in the business of retail merchants. On January 12,1949, Gooding died and in winding up his estate Jones became the purchaser of Gooding’s interest in the *728business, including all rights of the parties in the retail merchant’s license for the year 1949, which was assignable under the provisions of Virginia Code, 1950, § 58-256.
In January, 1950, Jones paid a license tax for that year based on 1949 sales of $236,927. Sales during 1950 amounted to $340,349.52, which showed an increase of $103,422.52.
In June, 1951, the Department of Taxation assessed an additional license tax of $206.84 against Jones for the year 1950, based on the increased sales in 1950 over sales in 1949, the result being that the total license tax assessed for 1950 was based on true sales for that year.
Code, § 58-321 requires every person, firm and corporation engaged in the business of a retail merchant to pay an annual license tax for the privilege of doing business in this State. This tax is measured by the amount of sales made by the person, firm or corporation during the next preceding year. A retail merchant beginning business or one who has been in business for only a part of the next preceding license year is required to pay a license tax for the current year based on the estimated sales through the then-current license year. Code, §§ 58-324 and 58-325.
Code, § 58-326 provides that if the estimated sales under either of the preceding sections are less than the true sales during the period involved, the Department of Taxation is charged with the duty of assessing such additional taxes as may be found to be due.
Jones filed an application for the correction of the assessment for 1950, which he claimed to be erroneous for the reason that the basis for his license tax should have been the sales in the business during the year 1949. His argument was based upon the theory that when he took over the business as the sole proprietor he was not “beginning business” within the meaning of §§ 58-324 and 58-325, but was continuing the business formerly operated by Jones and Gooding, within the intent of Code, § 58-257.
The trial court sustained Jones’ contention and ordered the additional assessment corrected and vacated, and Jones was thus exonerated from the payment of the added tax. To the judgment entered on the order we granted an appeal.
The section of the Code here under consideration reads:
“§ 58-257. Effect of change in partners or name of firm.— *729No change in the name of firm, nor the taking in of a new partner, nor the withdrawal of one or more of the firm, shall he considered as commencing business, but if any one or more of the partners remain in the firm, the business shall be regarded as continuing; and if they dissolve and one or more of the partners continue business, any tax on the purchases, sales or profits of the business, which might otherwise be chargeable to the firm, may be apportioned among them according to the justice of the case.”
Jones, as heretofore stated, contends that under the provisions of the statute his business should be regarded as a continuation of the business of the former partnership and not a “commencing business”.
On the other hand, the Commonwealth argues that § 58-257 applies only to partnerships and firms, and that since the taxpayer in this instance is not a partnership or a firm he is to be treated as “commencing business”.
Jones argues in his brief that the court must reconcile the words “one” and “firm”, as they are used in the quoted section in order to give meaning to the statute; that the statute says nothing about any continuing partnership but states that the business, the subject of the tax, shall be regarded as continuing if or more of the partners remain in the firm, meaning former firm or enterprise. If only one member of a firm (or former firm) remains to continue the business which is the subject of the tax, the ownership, which is not the subject or measure of the tax, is changed to a sole ownership and the statute states that the continuity of the business (not partnership) shall be preserved in that instance; that if, as the statute states, the business shall be regarded as continuing, manifestly the continuing owner should not be regarded as a beginner; that the Commonwealth’s theory is predicated upon the incorrect construction of the word “firm” as used in § 58-257 as necessarily meaning more than one person, and that it gives no consideration to the use of the word one in the clause “but if any one or more of the partners remain in the firm. ’ ’
We agree with appellee’s reasoning. Under partnership law the death of a partner dissolves the partnership. When Good-ing died the partnership of Jones and Gooding continued only for the purpose of winding up the partnership affairs. *730this was accomplished by the sale of Gooding’s interest to Jones the partnership ceased to exist.
Section 58-257 provides, in part: “ * * * bnt if any one or more of the partners remain in the firm, the business shall be regarded as continuing ;** (Italics supplied) The partnership or firm does not necessarily continue but the business shall be regarded as continuing.
In this instance Jones, one of the partners, remained, and the business continued under his proprietorship. Here the legislature is treating the unit-subject of the license tax as the business. The tax is measured by sales made in the due course of business. The classification of owners plays no part in the basis of the tax. "Whether the business be owned by an individual, a corporation, or a partnership or firm composed of many individuals, the tax applies to either or all alike. It is assessed and collected on the basis of sales made in the business.
Under the Commonwealth’s interpretation the statute would apply in a case where one or more partners withdrew from a partnership, leaving as many as two partners remaining, but it would not apply in a case where, by virtue of the withdrawal of partners, a single owner was left to carry on the business.
The Commonwealth suggests that Jones, in order to come within the purview of the statute, should have taken in a partner when he bought Gooding’s interest in the business. The answer to this is that the statute exacts no such requirement, and we have no right to amend this tax law to include the suggestion.
In this instance “firm” is used in a broad sense, meaning the business to which the tax relates, and not in the narrow, technical sense denoting a partnership.
“In construing a taxing statute, that interpretation is to to be adopted which lays the burden uniformly on all standing in the same degree with relation to the tax adopted, or, stating it somewhat differently, tax laws should be construed so as to make their application fair and to avoid arbitrary results.” 51 Am. Jur., Taxation, § 315, pp. 365-366.
The prime requisite of any statute is clarity and certainty, *731and this is especially true when applied to tax statutes. liams v. Richmond, 177 Va. 477, 14 S. E. 2d 287, 134 A. L. R. 833.
“If * * * an interpretation can he made, consistent with the language used, which will carry into effect the object sought to be accomplished by the statute, that interpretation should be adopted, in preference to one which would be equally consistent with the language used, standing alone, but which would defeat, or tend to defeat, the manifest intent of the legislature.’’ Harris v. Commonwealth, 142 Va. 620, 625, 128 S. E. 578.
In order to agree with the interpretation placed upon the statute by the Commonwealth, it would have to be changed to read: If more than one of the partners remain in the firm the business shall be regarded as continuing. This would be a strained interpretation, contrary to the universal rule that a tax statute must be strongly construed against the government and in favor of the taxpayer. Commonwealth v. Appalachian Elec. P. Co., 193 Va. 37, 68 S. E. 2d 122; Williams v. City of Richmond, supra; 18 M. J., Taxation, § 10, page 136.
As far back as 1846, in Plumer v. Commonwealth, 3 Gratt. (44 Va.) 645, 647, it was said: “ * * * in the revenue laws, when clauses * * * are ambiguously or obscurely worded, the interpretation is ever in favour of the subject (taxpayer); ‘for this plain reason’ said Heath, Justice, in Hubbard v. Johnston, ‘that the legislature is ever at hand to explain its own meaning, and to express more clearly what has been obscurely expressed’.”
A statute should be construed so as to give effect to its component parts. Its meaning should not be derived from single words isolated from the true purpose of the Act. Rackliff v. Inhabitants of Greenbush, 93 Maine 99, 44 A. 375.
In this instance the statute is too plain to permit a contrary interpretation placed upon it by an administrative agency to change its meaning. Commonwealth v. Appalachian Elec. P. Co., supra, (193 Va., at page 45).
A reference to Commonwealth v. Gregory, 193 Va. 721, 71 S. E. 2d 80, relied upon by the Commonwealth, will disclose that it has no application in this instance. In that case we were dealing with a partnership composed of two brothers trading as Gregory Realty Company, and there we held that under § 58-219 of the Code (a gift statute) all firms are class “C” beneficiaries, *732and as this partnership (the beneficiary) was a firm, it necessarily came within the purview of the statute.
We are of the opinion that the learned trial judge correctly held that the business should be regarded as continuing, and the judgment is

Affirmed.

Eggleston, Buchanan, and Smith, JJ., dissenting.