Court Opinion

ID: 3894608
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:26:04.932546+00
Date Added: 2024-06-11T14:24:44.586243
License: Public Domain

By section 14 of Ordinance 155 of the City of Nashville, known as the "Gas Franchise Ordinance," the Gas Company agreed that in consideration of the rights and licenses therein granted, and in addition to the payment required to be made in section 12 of the ordinance, it would pay "to the Mayor and City Council of Nashville 5% of its gross receipts from the sale of gas, and also from the sale, at a fair market value, of by-products."
Section 31, Chapter 21, Public Acts 1939, which Act amends Chapter 108, Public Acts 1937, as amended by section 19, Chapter 192, Public Acts 1937, provides as follows:
"Any person, firm or corporation engaged in the business of manufacturing gas or of distributing manufactured gas that is now required by municipal ordinance or franchise to pay a gross receipts, privilege, franchise or license tax to any municipality or county in Tennessee shall not be entitled to said reduction of one and one-half (1 1/2%) per cent but shall be required to pay an amount equal to three (3%) per cent of the gross receipts *Page 606 
derived from intrastate business in this State, and by reason of said requirement any such person, firm or corporation shall be and is hereby relieved from paying any such gross receipts, privilege, franchise or license tax to any municipality or county in Tennessee."
The contention of the City is, in effect, that the payment to the City by the Gas Company of 5% of its gross receipts, as provided for in section 14 of the City Ordinance 155, is not a gross receipts "tax" and, for this reason, the Gas Company is not relieved from the payment of the same by section 31, Chapter 21, Public Acts 1939, copied above.
Technically, the contention that the Gas Company's agreement to pay to the City 5% of its gross receipts was not in its nature a "tax," but was one of the conditions which the City attached to the grant of the franchise and was not imposed by the City in its governmental capacity as a tax, but rested in contract. Lewis
v. Nashville Gas  Heating Co., 162 Tenn. 268, 280,40 S.W.2d 409.
Municipalities, or counties, in Tennessee, are and have been without legislative authority to levy a gross receipts tax. To construe the word "tax" as used in the amendment contained in section 31, Chapter 21, Public Acts 1939, as meaning a tax in its technical sense would destroy the amendment, because there was not in existence a class on which the amendment could operate; and would never be, unless the Legislature thereafter authorized municipalities or counties to levy such a tax. The Legislature knew when it enacted the amendment municipalities and counties were without power to levy a gross receipts tax; hence it knew that no such tax existed.
A statute is always to be construed so as to avoid showing the perpetration of an absurdity by the Legislature. Riggins v.Tyler, 134 Tenn. 577, 184 S.W. 860. The *Page 607 
presumption against absurdity is a powerful guide in the construction of statutes. Wise v. Morgan, 101 Tenn. 273, 48 S.W. 971, 44 L.R.A., 548. If, as held in the majority opinion, the word "tax" is to be accorded its usual and popular meaning, then the Legislature accomplished nothing by the amendment, and its enactment was a vain and useless thing.
It is a familiar rule that it is the duty of the court to ascertain and give effect to the legislative intent, and the real intention will always prevail over the literal sense of terms. InRose v. Wortham, 95 Tenn. 505, 509, 32 S.W. 458, 459, 30 L.R.A., 609, the court quoted Mr. Kent as follows:
"In the exposition of a statute the intention of the lawmaker will prevail over the literal sense of the terms, and its reasons and intention will prevail over the strict letter."
What was the intention of the Legislature in the enactment of the amendment here in question? It was, I think, to relieve any manufacturer or distributor of gas from the obligation imposed by ordinance or franchise to pay to a municipality or county any part of its gross receipts derived from intrastate business in this State, and to pay to the State 3% of gross receipts thereon. This contention preserves the amendment, frees it from absurdity, and is in accord with the manifest intent and purpose of the Legislature in its enactment.
That the Legislature did not employ the word "tax" in its usual sense is emphasized by the language "now required by municipal ordinance or franchise to pay," etc.
A tax cannot, of course, be imposed by "franchise." But a franchise agreement may, as in the instant case, create an obligation to pay to the municipality a percentage *Page 608 
on gross receipts. The purpose of the amendment was to relieve gas companies from such obligation.
The State as against the City had a perfect legal right to relieve the gas company from the franchise obligation to pay 5% of its gross receipts. In Lewis v. Nashville Gas  HeatingCo., supra, 162 Tenn., at page 283, 40 S.W.2d 409, it was said that the State might have abrogated the contract embodied in section 14 of Ordinance 155. If it could abrogate the whole of the contract, it follows that it could abrogate, as against the City, any of the provisions of the franchise contract.
In my opinion the decree of the chancellor should be affirmed. *Page 609