Central Credit Union of Maryland v. Comptroller of Treasury

OppkNiifiiMER, J., delivered the opinion of the Court. The question in this case is whether sales of tangible personal property to a state chartered credit union are exempt from the imposition of the Maryland Retail Sales Tax. Central Credit Union of Maryland (Central) is a credit union organized under the laws of the State of Maryland whose membership consists solely of officers, directors, committeemen and employees of other federal and state chartered credit unions operating in the State. Central accepts deposits from its members and makes loans to them under the supervision of the State Bank Commissioner.

All of its income in excess of its costs of operation is distributed to its members in the form of dividends. Central purchased a check signer on February 20, 1964 from a Baltimore concern, paying $89 plus $5.34 federal excise tax and $2.67 state retail sales tax. Thereafter, Central filed a claim with the Comptroller of the Treasury for refund for the sales tax paid by it. A hearing was held on November 17, 1965.

At this hearing the managing director of the Maryland Credit Union League, Inc., S. J. Dominic, testified that there was no substantial difference between the operations of a federal and a state chartered credit union. The hearing officer, on behalf of the Comptroller of the Treasury, denied Central’s application and, on appeal to the Baltimore City Court, Judge Cullen affirmed the Comptroller’s ruling. Central contends that it is a non-profit organization and therefore exempt from the payment of retail sales tax pursuant to Code (1965 Repl. Vol.), Art. 81, Sec. 326, subsec.

(i) ; that it is exempt from the payment of the tax under Code (1957), Art. 11, Sec. 159, which provides that state chartered credit unions shall be exempt from all taxation now or hereafter imposed by the State; that Laws of 1947, Ch. 281, Sec. 3, which provides that all laws inconsistent with the provisions of the ¹⁷⁸ Retail Sales Tax Act are repealed to the extent of such inconsistencies, if relevant, is unconstitutional; and that the Retail Sales Tax Act is unconstitutional because it exempts federal credit unions from the payment of the sales tax and therefore discriminates against state chartered credit unions such as Central. I The Maryland Retail Sales Tax Act, Art. 81, Secs. 324-371, was originally enacted in 1947. Section 333 expressly provides that it shall be presumed that all sales of tangible and personal property and services set forth in the subtitle are subject to tax until the contrary is established. Section 326 entitled “Exemptions” states that the tax shall not apply to certain sales.

Subsection (i) of this Section, which was in effect at the time of the sale here involved, provides as follows: “(i) Sales to nonprofit, charitable, etc., organisa tions.—Sales to any person operating a nonprofit religious, charitable, or educational institution or organization situated in this State when such tangible personal property is purchased for use in carrying on the work of such institution or organization; provided that the word ‘person,’ as used in this subsection shall not include the United States of America or any agency or instrumentality thereof.” Central properly does not contend that it is a religious, charitable or educational institution or organization. While we have given a liberal interpretation to the term “charitable” institution as used in the comparable exemption with respect to the collateral inheritance tax (see Register of Wills v. Cook, 241 Md. 264 , 216 A. 2d 542 (1966)) there can be no doubt that a credit union which accepts deposits from its members, makes loans to them, and pays dividends to them, is not religious, charitable or educational in nature, even under the broadest concept of those terms. Central contends, however, that the subsection here involved applies to non-profit organizations even if they are not religious, charitable or educational. We disagree with this contention.

The structure of subsection (i) makes it evident to us that the word “non-profit” is ¹⁷⁹ not meant to designate a separate category of exempt institutions but is only a restriction of the kinds of religious, charitable or educational institutions which are exempt. There is no comma after the word “non-profit.” In case of doubt in the construction of a statute, punctuation can be used as an aid. Webb v. Mayor & City Council of Baltimore, 179 Md. 407, 410 , 19 A. 2d 704 (1941); Redmond v. State, 155 Md. 13, 18 , 141 Atl. 383 (1928). Prior to 1963, the exemption covered sales to “non-profit” religious, charitable, scientific, literary or educational institutions and organizations.

The present subsection was amended by Chapter 583 of the Laws of 1963. The title to that Act stated that the purpose of the amendment was to eliminate the exemption for sales to non-profit scientific, literary institutions. The amendment of itself demonstrates to us that the General Assembly intended the term “non-profit” to modify each of the other exempt classifications. In John McShain, Inc. v. Comptroller, 202 Md. 68, 72 , 95 A. 2d 473 (1953), the question was whether the National Institute of Health was entitled to a claim for refund of sales and use taxes under the Retail Sales Tax Act.

At the time of that decision the subsection applied to non-profit religious, charitable, scientific, literary or educational institutions or organizations. Judge Henderson, for the Court, said: “We think it is clear that the National Institute of Health, although an agency or arm of the Government, may fairly be described as ‘operating a nonprofit * * * charitable, scientific * * * or educational institution or organization situated in this State.’ ” As Judge Marked said, for the Court, in Comptroller of Treasury v. Crofton Co., 198 Md. 398, 404 , 84 A. 2d 86 (1951): “We must apply the familiar rules that an exemption from taxation must be strictly construed and to doubt is to deny the exemption.” The restrictive word “non-profit” as used in the subsection here considered is analogous to the more explicit restriction in the exemption from the collateral inheritance tax in Code (1965 ¹⁸⁰ Repl. Vol.), Art. 81, Sec. 150, which grants an exemption to religious, charitable, scientific, literary or educational institutions, “if no part of the net earnings of which enures to the benefit of any private shareholder or individual.” See Register of Wills v. Cook, supra. Even were the word “non-profit” held to apply to institutions other than those which are religious, charitable or educational in nature, Central could not qualify as a non-profit organization.

Code (1957) Art. 11, Secs. 135-162 deal with credit unions. Section 155 expressly provides that: “The board of directors of a credit union may declare a dividend, not in excess of six per cent, from so .much of its net profits at the close of any fiscal year as may be available after providing for expenses, interest and taxes accrued.” 'Within this limitation, Central distributes its income to its members in the form of dividends. Such an organization, however beneficial to its members as to loans and the encouragement of savings, does not come'within the concept of a non-profit organization. See Shaker Medical Center Hosp. v. Blue Cross of Northeast Ohio, 115 Ohio App. 497 , 183 N. E. 2d 628 (1962) and Pritchard v. Crestline Village Mut.

Serv. Co., 95 Cal. App. 2d 151 , 212 P. 2d 526 (1949). II Central contends that in any event it is entitled to the exemption because of the provision of Code (1957), Art. 11, Sec. 159.

This section reads as follows: “The credit unions organized under this article, their capital, reserves, surpluses and other funds, and their income shall be exempt from all taxation now or hereafter imposed by the State, or any county or municipality.” Central contends that under this provision the legislature intended to exempt state chartered credit unions from any and all taxes subsequent to 1943 when this section was enacted and that this exemption includes the Retail Sales Tax Act passed in 1947, four years later. It cites the established rule of statutory construction that statutes should be construed to effectuate the intention of the legislature and if the language is plain and ¹⁸¹ free of ambiguity and has a definite and sensible meaning, it is conclusively presumed to be the meaning of the legislature in enacting the statute. Pineland Lumber Co. v. Miles, 228 Md. 584, 587-88 , 180 A. 2d 870 (1962) and cases therein cited. Chapter 337, Section 24 of the Laws of 1929, the original precursor of Section 159 of Article 11, provided that a credit union “shall not be subject to taxation, except as to real estate owned.

The shares of a credit union shall not be subject to any stock transfer tax * * *” The title of Chapter 785 of the Laws of 1943, which enacted the present form of Section 159, reads as follows: “AN ACT to repeal and re-enact with amendments Section 149 of Article 11 of the Annotated Code of Maryland (1939 Edition), title ‘Banks and Trust Companies’, sub-title ‘Credit Unions’, and to add a new section to Article 81 of said Code, title ‘Revenue and Taxes’, sub-title ‘What shall be taxes and where’, said new section to be known as Section 7(30) and to follow immediately after Section 7(29) of said Article, exempting capital, other funds, income and the shares of Credit Unions from taxation and substituting a direct tax upon their real and tangible personal property.” The title of an act can be used in conjunction with the body of the act to determine the intent, purpose and effect of an amending statute. Gibson v. State, 204 Md. 423, 430, 437 , 104 A. 2d 800 (1954) ; Miggins v. Mallott, 169 Md. 435, 440 , 182 Atl. 333 (1936). The title of the 1943 Act states that the new section therein enacted is to exempt capital, other funds, income and the shares of credit unions from taxation and to substitute a direct tax upon their real and personal property. Under the terms of Article 81, as amended, the only express