Court Opinion

ID: 9643555
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:32:52.918687+00
Date Added: 2024-06-11T18:05:16.679910
License: Public Domain

POPE, Justice
(dissenting).
The majority has overworked the word “used”, as employed by Article 20.04 V.T. C.S., and has achieved a very complex meaning from a simple sentence. The Legislature, as would be expected when it enacted a new law, stated the time that certain transactions would fall within and be taxable under the statute. It did this by stating in Article 20.04 V.T.C.S., that two kinds of transactions would be exempt.
“Article 20.04(H): Written Contracts And Bids Executed Prior To The Effective Date of This Chapter. There are exempted from the taxes imposed by this Chapter the receipts from the sale, use or rental of, and the storage, use or other consumption in this State of, tangible personal property (i) used for the performance of a written contract entered into prior to the effective date of this Chapter or (ii) pursuant to the obligation of a bid or bids submitted prior to the effective date of this Chapter which bid or bids could not be altered or withdrawn on or after that date and which bid or bids and contract entered into pursuant thereto are at a fixed price not subject to change or modification by reason of a tax imposed by this Chapter.
“Provided, however, that notice of such contract or bid by reason of which an exclusion is claimed under this paragraph (H) must be given by the taxpayer to the Comptroller on or before the lapse of one hundred and twenty (120) days from the date of passage of this Chapter.”
Even without such a provision, there would be a question whether a transaction that antedated September 1, 1961, the effective date of the new law, would fall within the taxing provisions. To avoid such a question, the quoted statute exempted.
“ * * * the receipts from the sale * * * 0f * * * personal property (i) used for the performance of a written contract entered into prior to the effective date of this Chapter * * *.”
There were receipts from the sale by IBM to British-American. The receipts came from the sale of personal property, three IBM machines. The machines were used for the performance of the written contract. The contract was in writing. It was made before the effective date of the law. Under the ordinary understanding of these words, the transaction was exempt from the tax. “When we abandon the plain meaning of words, statutory construction rests upon insecure and obscure foundations at best.” State Board of Insurance v. Betts, 158 Tex. 612, 315 S.W.2d 279, 281 (1958).
This ordinary meaning is confused by two errors. The first arises from the unnecessary mixing of the meaning of the two exemption provisions in Article 20.04. The article mentions two kinds of transactions which are exempt, but they are not the same kind of transactions except that both must occur prior to the effective date of the new tax. The word “or” separates them. In fact it appears that the two exemptions follow in logical sequence. The first exemption concerns a first or original sale and the other concerns even second sales provided a bid was made prior to the effective date of the law. The article means that, applied to this case, the written contract between IBM and British-American evidenced the first sale and was ex*845empt. It means that even a second sale would also have been exempt, if British-American had, prior to the effective date of the law, made a bid to furnish the same machines to a third person. The majority has held that in such a situation, the first sale would be taxable but the second one would be exempt. I find it difficult to understand the legislative purpose for taxing the first sale, but exempting a second sale, though both were made before the effective date of the law.
The other error arises when we unnecessarily import the meaning of the carefully and artfully defined word, “use,” into provisions which employ the ordinary word, “used.” “Use” is defined as follows:
“Article 20.01 (R). Use. ‘Use’ includes the exercise of any right or power over tangible personal property incident to the ownership of that tangible personal property except that it does not include the sale of that tangible personal property in the regular course of business.”
“Used” is not defined. It appears some twenty times in the statutes and, in context, does not have a statutorily defined meaning. It means employed. It is impossible to adopt the statutory definition of “use,” give it a past-tense meaning, and come out with a sensible meaning of “used.” It makes sense to speak of a “use tax”; but not of a “used tax.” The awkward results we would reach by incorporating the statutorily defined “use” into provisions of the same article that employ the word “used” is seen when we try to do so with such provisions as:
“Art. 20.04. ‘Exempted from taxes imposed by this Chapter,’ as used herein, means exempted from the computation of the amount of the taxes imposed.” (Emphasis added).
“Art. 20.03(B). ‘Retailer engaged in business in this State’ as used in this Section (B) and the preceding Section (A) means annd includes any of the following: * * (Emphasis added).
“Art. 20.04(C) (3). As used in this Article, the term ‘returnable containers’ means containers of a kind customarily returned by the buyer of the contents for re-use.” (Emphasis added).
The majority reasons that Article 20.04 (H) contemplated a sale by the original purchaser to a third person because the article exempted “the receipts from the sale * * It argues that this means that the original purchaser must be the one who obtains “receipts” from a sale. This is not supported by the Limited Sales Tax law. The tax in all instances is on the receipts of the seller though it is paid by the purchaser. Article 20.01(D) provides:
“ ‘Receipts’ means the total amount of the sale or lease or rental price, as the case may be, of the retail sales of retailers, valued in money, whether received in money or otherwise, without any deduction on account of any of the following * *
Article 20.02 provides:
“There is hereby imposed a limited sales tax at the rate of two per cent (2%) on the receipts from the sale at retail of all tangible personal property within this State.”
Article 20.021(A), provides:
“Every retailer shall add the sales tax imposed by Article 20.02 of this Chapter to his sale price and when added the tax shall constitute a part of the price, shall be a debt of the purchaser to the retailer until paid, and shall be recoverable at law in the same manner as the purchase price.”
The majority opinion also reasons that the IBM machines which were the subject of the sale were used by IBM, the seller, but not by the buyer. It occurs to me that the subject matter of a sale is used by both *846the seller and buyer to consummate the sale. Bristish-American, as purchaser used it “for the performance of a written contract” no less than did the seller. The purchaser was obligated by his written contract to accept the subject matter of the contract no less than the seller was to deliver it. The same subject matter was essential both to the performance of seller’s and the purchaser’s obligations. SO Tex. Jur.2d Sales, Sec. 1.
In my opinion the transaction occurred before the effective date of the new law and was within the exemption. I would affirm the judgments of the courts below.
GRIFFIN and WALKER, JJ., join in this dissent.
GREENHILL, J., joins in this dissent on motion for rehearing.