Court Opinion

ID: 3572463
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:25:42.511211+00
Date Added: 2024-06-11T13:47:54.796216
License: Public Domain

I disagree with the result reached by the majority. The prevailing opinion written by Mr. Justice ZINN concedes that the language of the two challenged acts, taken literally, indicates an intention to subject plaintiff to the tax imposed. I think it does so with such clearness and certainty as to render improper resort to construction for ascertaining whether the apparent is the real meaning of such language. DeGraftenreid v. Strong,28 N.M. 91, 206 P. 694.
The tax assailed is levied as a privileges or occupational exaction, graduated in amount by volume of business. Laws 1934 (Sp.Sess.) c. 7, § 201; Laws 1935, c. 73, § 201. The rate of the levy is prescribed in section 201, par. K. of each act, "at an amount equal to two per cent of the gross receipts of the business of every person engaging or continuing in the business of acting as factor, agent or broker selling on a commission basis," etc.
The term "engaging" is given a statutory meaning in article 1 of each act (section 3, paragraph (g) of Laws 1934, Sp. Sess., and section 103, par (g), of 1935) as follows: "The term `engaging' as (when in 1935 act) used in this Act with reference to engaging or continuing in a business or a profession shall also include the exercise of corporate or franchise power, but the term `engaging' shall not be construed in this Act to include occasional and isolated sales, or transactions by a person who does not hold himself out as engaged in business."
It is to be observed from a reading of paragraph K of said section 201, as hereinabove quoted, that plaintiff's activities as delineated in his complaint fall within the literal language thereof unless removed by the statutory definition of the term "engaging" as used in paragraph (g) of section 3, article 1 and section 103, art. 1. This much may fairly be taken as conceded by the plaintiff. He contends, however, that the statutory definition of the word "engaging" removes him from the literal effect of the language employed in imposing the tax. He does not claim immunity by reason of "occasional and isolated sales," so that in last analysis he claims immunity solely as "a person who does not hold himself out as engaged in business." He thus seeks to place himself in the status *Page 411 
of a mere employee whose compensation is fixed by a commission on his gross sales, thinking thereby to escape the tax. It is a serious question whether the language, "or transactions by a person who does not hold himself out as engaged in business," is not merely explanatory of what is meant by the phrase, "occasional and isolated sales," immediately preceding its use. Both parties rely wholly upon the construction arising from a reading of the language itself. Neither cites a single authority to support the positions urged upon the court. I am not persuaded that the definition of the word "engaging" found in the act exempts the plaintiff from the terms thereof.
The plaintiff's position is in part summed up in the following quotation from his brief, to wit: "It seems that the Appellees (defendants) seize upon the word, `commission' as an adequate basis for bringing Appellant within the scope of the Emergency School Tax Acts. Apparently they overlooked the fact that the tax is not on commissions, but is a tax imposed upon persons engagedin the business of acting as agent on a commission basis."
As I interpret the allegations of the complaint, ignoring conclusions of the pleader as not being admitted by the demurrer, that is exactly the characterization given plaintiff, viz., as a person "engaged in the business of acting as agent on acommission basis," etc. Section 201, par. K, clearly and specifically points the imposition toward persons doing the very thing which plaintiff alleges he is doing.
But it is said because plaintiff confines his agency to the sale of products of Phillips Petroleum Company and does not tender his services as factor, broker, or agent to members of the public generally who may wish his services in the sale of such products, that there is no holding out of himself as one engaged in the business and he is nothing more than an employee. It is a matter of common knowledge that many, if not most, contracts of agency involving the sale of goods limit the agent to handling the principal's line of goods. I think it is no test of whether a person is "engaging * * * in the business of acting as * * * agent * * * selling on commission," as the terms "business" and "engaging" are defined in these acts, that the subject-matter of his agency is the goods of a particular principal.
Certain statutory definitions other than those already referred to demonstrate that the apparent is the real meaning intended by the Legislature.
"The term `taxpayer' means any person liable for any tax hereunder." Laws 1934 (Sp.Sess.) c. 7, art. 1, § 3 (c); Laws 1935, c. 73, § 101 (c).
The term "gross receipts" is defined in both acts, as follows: "The term `gross receipts' means the total receipts of a taxpayer received as compensation for personal or professional services for the exercise of which a privilege tax is imposed by this act." (Italics mine.) Laws 1934 (Sp. Sess.) c. 7, art. 1, § 3 (d); Laws 1935, c. 73, art. 1, § 103 (d). *Page 412 
The term "business" as defined in each act reads: "The term `business' when used in this Act shall include all activities or acts engaged in (personal, professional, and corporate) or caused to be engaged in with the object of gain, benefit or advantage either direct or indirect." (Italics mine.) Laws 1934 (Sp.Sess.) c. 7, art. 1, § 3 (f); Laws 1935, c. 73, art. 1, § 105 (f).
The Legislature, no doubt realizing that within the broad meaning of the language thus employed the ordinary wage earner or salaried employee was included, took pains to eliminate him from subjection to the tax by interposing an express exemption in his behalf, to wit: "There are exempted from the taxes imposed by this act the following: * * * Income received in the form ofordinary wages or salaries." (Italics mine). Laws 1934 (Sp.Sess.) c. 7, art. 2, § 212 (d); Laws 1935, c. 73, art. 2, § 212 (d).
It is also important to note the change made in section 201 par. K, of the 1934 act in the enactment of the 1935 act. I already have quoted the portion thereof fixing the amount of the tax. For convenience I now quote all of paragraph K of section 201 as the same appears in the 1934 act, which is its exact language in the 1935 act except for the italicized portion which is omitted in the later act, to wit: "K — At an amount equal to two per cent of the gross receipts of the business of every person engaging or continuing in the business of acting as factor, agent or broker selling on a commission basis, and where title to the goods, wares or merchandise sold does not vest in such person at any time during the transaction. The grossreceipts of any person taxed by this subdivision shall includeonly the total amount of his commissions; provided, that wheremerchandise is sold by a factor acting as a manufacturer'srepresentative, or intermediary, working on a commission basis inlieu of salary, and who at no time has possession of themerchandise sold, the commission of such factor shall be exemptfrom taxation hereunder; provided further that a merchandise broker who buys and sells merchandise for his own account, shall so far as all such transactions are concerned, be considered a wholesaler or retailer, as the case may be, and be subject to tax as such wholesaler or retailer."
In the 1934 act, as will be observed, an exemption was created in favor of a factor acting as manufacturer's representative, or intermediary, working on a commission basis in lieu of salary, "who at no time has possession of the merchandise sold." Even if plaintiff should be considered "a factor acting as a manufacturer's representative," that fact alone would not entitle him to the exemption. In addition he must be one "who at no time has possession of the merchandise sold." It abundantly appears from the complaint that plaintiff does have possession of same, for he alleges that he is charged with the "sale and distribution" thereof.
Thus, a limited exemption in the 1934 act in favor of certain factors "working on a *Page 413 
commission basis in lieu of salary," within which appellant cannot bring himself by reason of its conditions, is entirely eliminated by omission from the 1935 act. That omission is significant. It is solely upon the theory that he is "working on a commission basis in lieu of salary," and thus claims status as an employee not engaged in business, that plaintiff rests his argument that he is not a "taxpayer" as defined in the respective acts. Laws 1934 (Sp. Sess.) c. 7, art. 1, § 3 (c); Laws 1935, c. 73, § 103 (c). In view of this change in the statute and of the language in section 212 (d) limiting the exemption there created to income received in the "form ofordinary wages or salaries," it would scarcely aid plaintiff if his claim of status as a person "working on a commission basis in lieu of salary" should be conceded. Cf. Winne v. Hammond, 37 Ill. 99; State v. Thompson, 120 Mo. 12, 25 S.W. 346; Couturie v. Roensch (Tex.Civ.App.) 134 S.W. 413; Planters' Warehouse Co. v. McMekin, 36 Ga. App. 219, 136 S.E. 104; Evans v. Bulley, 1 Newfoundl. 330; Marrinan Medical Supply, Inc., v. Ft. Dodge Serum Co. (C.C.A.8th Ct.) 47 F.2d 458. The plaintiff would seem to be a "factor" within these authorities.
The prevailing opinion seeks to minimize the obvious significance of the omission from the 1935 act of the language italicized in the last quotation supra of said subparagraph K by suggesting that the later act is not an amendment of the former but an entirely new act. The implication is that, if an amendment, the significance of the omission might be deemed controlling. A mere comparison of the two acts is all that is required to show that the 1935 act is a substantial re-enactment of the 1934 act, transferring its administration from State Tax Commission to Bureau of Revenue, when created, authorizing the issuance of tokens for reimbursing to "taxpayers" amount of the tax applicable to any sale, and effecting other minor changes. The 1935 act contains no express repeal of the 1934 act, merely repealing all acts or parts of acts in conflict with the later act.
That the 1935 act is not to be deemed "a new act entirely," as stated in the prevailing opinion, or at all, is plain. A contrary view is clearly based upon a misapprehension of the effect of the re-enactment. The later act is nothing more than a continuation of the earlier one with such changes either by omission or addition, by way of amendment, as the Legislature saw fit to adopt. Cf. State v. Thompson, 37 N.M. 229, 20 P.2d 1030.
"The re-enactment of a statute, or of a provision of a statute, is not a repeal of such statute or provision; it is to be construed as simply the continuance of the old rule. However, there may be a repeal of parts or provisions of the old statute or section which are omitted from the re-enactment." (Italics mine). 59 C.J. 926, § 528. See, also, 25 R.C.L. p. 934, § 106, under "Statutes."
There can be no doubt that plaintiff's occupation as described in his complaint is *Page 414 
literally within the definition of "business" as found in the two acts. The majority seem to concede as much. "The term `business' when used in this act shall include all
activities or acts engaged in (personal, professional or corporate) * * * with the object of gain, benefit or advantage either direct or indirect." Could language be broader? I do not think so. Certainly, this language puts plaintiff within the act.
But this is not all. In specifying the rate applicable to certain taxpayers, it is fixed "at an amount equal to two per cent. of the gross receipts of the business of every person engaging or continuing in the business of acting as factor,agent or broker selling on a commission basis, and where title to the goods * * * sold does not vest in such person at any time during the transaction." This is exactly what plaintiff describes himself as doing. The previous definition of "business" makes the doing of such things a "business" within the meaning of the act. Being placed thus within the very language of the act by two separate provisions thereof, in order to escape the tax, the plaintiff must point to language taking him out. This he fails to do.
In both what I have referred to as the prevailing opinion by Mr. Justice ZINN and the specially concurring opinion by Mr. Justice BICKLEY, the majority seem to rest mainly their conclusion that plaintiff is not liable upon the exemption from the tax of "income received in the form of ordinary wages or salaries," appearing as section 212 (d) of c. 7, art. 2, Laws 1934, Sp.Sess., and as the same section in c. 73, Laws 1935. Unquestionably, as heretofore stated, this exemption was intended to excuse from payment of the tax the army of salaried employees and wage earners. That it has such effect there can be no doubt. But unwarranted fear that it may not fully accomplish its purpose has brought the majority to a false conclusion.
They express fear that to give effect to the literal language of the act might subject the sales girl, the clerk in a store, or the wage earner, working on a commission basis, to payment of the tax. The exemption, it is true, is limited to income received in the "form of ordinary wages or salaries." The clerk or wage earner working on a commission basis obviously is not receiving income in the form of ordinary wages or salaries. The ordinary wage or salary is a fixed sum per day, per week, or per month. The fact that it is on a commission basis does not necessarily deny it status as a wage or salary. But, certainly, it is not the form in which wages and salaries ordinarily are paid.
The obvious answer to this suggestion is that not one in a thousand clerks, laborers, or wage earners works on a commission basis. It is common knowledge that they are paid fixed sums on a daily, weekly, or monthly basis. So that in exempting the income of those so paid, the Legislature lifted from operation of the act this large body of wage earners and salaried employees. Legislative bodies necessarily view things in the large. They legislate *Page 415 
to meet conditions thus seen. We must attribute familiarity by our Legislature with the form taken in the payment of ordinary wages or salaries. Even if the tax were applicable to a clerk or wage earner working on a commission basis, it would be no test of the law's validity that it thus works a hardship in extreme cases. State v. Mirabal, 33 N.M. 553, 273 P. 928. Neither does this consideration warrant departure from the literal meaning of language employed in a statute to avoid such a contingency.
In his specially concurring opinion, Mr. Justice BICKLEY suggests that to tax the agent working on a commission basis in lieu of salary and leave untaxed the agent performing the same services for a fixed salary would be to impute to the Legislature a failure to heed the constitutional guaranty of equal protection. Unequal protection of the law is not claimed in the respect indicated. And while this suggestion is employed only arguendo, it is not at all certain that a difference in the method of paying compensation, whether as a flat salary or wage, or on commission basis, does not afford reasonable basis of classification for purposes of taxation. Cases can be supposed where exactly the same duties would be performed under either method. They are exceptional. In the vast majority of cases, it is generally recognized that the agent on commission basis is more of a free lance, has greater freedom of action and wider discretion, more control over his time, with earnings limited only by his own energy and abilities. Ordinarily and to a much greater extent than the strictly salaried agent or employee, he is the architect of his own fortune. These considerations, though it is unnecessary to decide the point, would tend to warrant classification.
This argument is applied by Mr. Justice BICKLEY, of course, only as an aid in arriving at true legislative intent. And so, he apparently concludes with the majority, that the act as written applies only to such agents as, "for example, real estate agents, fire insurance agents, brokers, factors, etc.," who offer their services to the public at large, and do not confine their activities to the service of a single principal.
This holding is in part, at least, to escape the feared consequence of unequal protection. But where does it bring us? May not agents of the type to which the majority agree the act does apply, with as much reason invoke the equal protection clause upon the ground that they are taxed for the privilege of doing identically the same thing for different principals as others who are excused upon the mere ground that they perform it many times for the same principal only? Cf. Stewart Dry Goods Co. v. Lewis, 294 U.S. 550, 55 S. Ct. 525, 79 L. Ed. 1054. Is it not better, therefore, since unequal protection in this respect is not asserted, to declare the statute means exactly what it says, and await the time, if ever it comes, when its invalidity is challenged in such behalf, to consider the constitutional question? It seems so to me, particularly, in view of the fact that the construction to which this argument brings *Page 416 
the majority exposes it to the same attack and with equal, if not greater force, from the class of agents left subject to the tax.
Wholly aside from the considerations just discussed, although the majority find themselves unable to do so, I see a vast difference in the status of a sales girl or wage earner, working on a commission basis, instances of which are so rare as to be negligible, and that of the wholesale agent of an oil company with duties as outlined in the complaint before us. The latter is truly engaged in business within the meaning of the act and subject to the tax.
Complaint is made by plaintiff that his status is entirely different from that of others paying the tax; that the price of his products is fixed by his principal and cannot be changed by him; that he neither can shift the tax to his principal, nor pass it on to the consumer, because bound by terms of a written contract. (This contract was not pleaded for scrutiny of the court.) These considerations strongly challenge the justice of the tax in its application to plaintiff and other agents so circumstanced. But the appeal should be directed to the Legislature. It is not the function of the courts to pass upon the wisdom or policy of legislation, so long as it is within constitutional bounds.
The action of the district court in sustaining the demurrer to plaintiff's complaint was proper and should be sustained. Because of a contrary conclusion by the majority and for the reasons given, I dissent.