Jones v. Gordy

Bond, C. J., delivered the opinion of the Court. Retail merchants of the state, in two suits brought by them, question the constitutionality of an Act of the General Assembly of 1935, ch. 188, imposing an “Emergency Gross Receipts Tax” on retail sellers, for the purpose of providing unemployment relief and money for old age pensions, and, in the alternative, if the act is held constitutional, they question conformity of a regulation of the State Comptroller with it. By its terms the act became effective on April 1st, 1935, the date of its passage and approval, and the tax was to be paid at a rate of one per cent, on receipts from sales every month. The Comptroller construed this to impose a tax on receipts in the month of April, 1935, and in every month thereafter during the life of the act, without regard to the possibility that sales may have been made before April, 1935, or later, in a month other than that of the receipts.

And the complainants deny that the act so provides. The writ of injunction is prayed accordingly against collection of any of the tax, or, in the alternative, against the requirement of reports of sales or payments of the tax on receipts from sales made in months other than those of the receipts. The court below denied the applications and dismissed the bills of complaint; and the appeals by the complainants have followed. ¹⁷⁷ The section of the act imposing the tax, designated 72-B of article 56 of the Code, provides that: “For the privilege of engaging in the business of selling tangible personal property at retail, there is hereby imposed upon every person engaging in such business a license fee or tax, at the rate of one per centum of the gross receipts of any such person, on or after April 1st, 1985, to and including March 31st, 1936, from the sale of all tangible personal property at retail in this State.” And the preamble in similar terms entitles the tax an “Emergency Gross Receipts Tax.” Succeeding provisions for enforcement refer in their terms to sales subject to the tax, and, according to the understanding of counsel for the complainants, were provisions originally drafted for a tax based entirely on sales made, and not adapted in their terms to a changed purpose of taxing receipts only. The lack of such a readaptation, and the differences in the present provisions of the act, are thought by the complainants to present questions of the validity of the enactment.

Section 72-C requires sellers to report sales during a preceding month, and by a section, 72-E, as soon as such a return is filed, the Comptroller is to examine it and compute the tax. The succeeding section, 72-F, requires persons in any business on which a tax is imposed to keep records of gross sales, and such other records as may be necessary to determine the tax liability. And a section providing for sales and transfers of businesses speaks of sales of goods as the basis of taxes to be paid. An amendment of the act by another act, numbered chapter 539, of the same legislative session, increased the fee payable for registering the original titles to motor vehicles sold, and after providing for a deduction by motor vehicle dealers of all gross sales of motor vehicles from their gross receipts, required them to pay the one per cent, tax “on the remainder of their gross sales.” There are in the enforcement sections, however, specific references to receipts from sales as the basis or measure of the tax. ¹⁷⁸ The complainants, regarding the basis as uncertain, contend that if the tax is to be measured by gross sales, then the act is unconstitutional because that purpose and effect are not properly allowed for in the title.

Constitution of Maryland, art. 3, sec. 29. And if the tax is to be measured by gross receipts from the sales, it is objected that it is discriminatory, in violation of the twenty-third article of the Declaration of Rights of the state, and the Fourteenth Amendment of the Constitution of the United States, because by confining the basis to receipts in the same month as that of sales made, receipts deferred by credit beyond the months of sales are left untaxed, so that dealers on credit of such length enjoy an exemption. There is a further objection that the tax is unconstitutional because exorbitant and unreasonable, and the still further objection to the comptroller’s construction already stated, and application of the tax to receipts at any time, out of the months of the sales from which they were derived. Objections to the practice followed in the suits we find not well taken.

In Maryland persons of an interested class, similarly affected, may, singly or jointly, and in representation of others, resort to equity to restrain execution of a legislative enactment the validity of which they deny. Baltimore v. Ulman, 79 Md. 469 , 30 A. 43 ; Mason v. Cumberland, 92 Md. 451 , 48 A. 136 ; Leser v. hilip Wagner, 120 Md. 671 , 87 A. 1040 ; Dinneen v. Rider, 152 Md. 343 , 136 A. 754 ; Holt v. Moxley, 157 Md. 619 , 147 A. 596 . There is singleness of purpose in the present complaint which prevents any objection of multifariousness. Standard Founders, Inc., v. Oliver, 168 Md. 317 , 178 A. 223 .

And misjoinder, if there had been any, would not require dismissal of the suits. Code, art. 16, sec. 198. A section 71-1 of the act provides for revision and refunds of the taxes laid in particular instances, upon applications of the sellers, with a right of appeal to the circuit court of a county or to the Baltimore City Court. But that remedy does not exclude resort to equity to test and enjoin a tax on the ground that it is altogether void. ¹⁷⁹ Joesting v. Baltimore, 97 Md. 589, 595 , 55 A. 456 ; Cahill v. Appeal Tax Court, 130 Md. 495, 497, 498 , 100 A. 834 ; Bouis v. Baltimore, 138 Md. 284, 288 , 113 A. 852 .

The objection of the complainants that the title of the act is insufficient if the tax be taken as one measured by gross sales, as distinguished from gross receipts from sales, we do not find it necessary to decide, for in the view of the court it is a tax measured by receipts. The act specifically declares it to be such, and the references to sales or reports of sales as the basis of the assessment in the provisions of what may be described as the machinery of enforcement, however inapt the words may be considered, could not overcome this specific description. We must suppose the Assembly to have been aware of the words it was using, and to have regarded them as adequate for imposition of the tax defined, a tax measured by the receipts, and must construe the sections to make them work accordingly, so far as that is possible. Cutty v. Carson, 125 Md. 25, 33 , 93 A. 302 ; Criswell v. State, 126 Md. 103, 107 , 94 A. 549 ; Brenner v. Brenner, 127 Md. 189, 193 , 96 A. 287 .

The fact that some of them were first drafted for use in connection with another plan can have no bearing on their construction in the act as it is, and is to be disregarded. The Comptroller is not in fact limited to reports of sales for his computation of the tax; by the express terms of the act he may require all other information needed from the merchants. Testimony was taken on a wide range of facts as a basis for challenging the legislation, and it is objected on behalf of the Comptroller that much or all of it is inadmissible for the purpose. Mt.

Vernon Co. v. Frankfort Co., 111 Md. 561 , 75 A. 105 ; Hadacheck v. Sebastian, 239 U. S. 394 , 36 S. Ct. 143 , 60 L. Ed. 348 ; review of decisions. L.R. A. 1915D, 458. The court in this case would arrive at the same conclusions with or without the testimony, and there is no need of deciding what, if any, of it could properly be admitted. A main contention in the case, to which much of it was addressed, is that the tax is invalid because of the ¹⁸⁰ resulting hardships on many merchants.

In the face of one fact, shown in the appellants’ brief, that similar taxes are levied in other states at rates of two per cent., two and one-half per cent., and three per cent, of the receipts from sales, it would hardly be possible for this court, contradicting the Legislature if it had the right to do so, to adjudge the tax_of one per cent, to be excessive in amount. But the Legislature is the body authorized to fix the law on the wisdom and fairness of a tax for revenue. The present tax is plainly one for revenue, and not for the limited purpose of police regulation. See review of decisions, 89 A. L. R. 1432.

Therefore there could be no confiscation by a charge exceeding all reasonable relation to regulation. And as the tax is an imposition of the sovereign power of the State directly, there is no question of construing a delegation of power to be limited to a reasonable exercise. The courts, therefore, cannot upon the evidence oppose their judgment to that of the Legislature on imposing any tax, or on the fairness of the amount imposed. It is only when a license fee is exacted as a police regulation that the court can consider whether it is so unreasonable as to amount to a prohibition. 1 Cooley, Taxation (4th Ed.) sec. 72; State v. Hunt, 129 N. C. 686 , 40 S. E. 216 ; Woodall v. Lynchburg, 100 Va. 318 , 40 S. E. 915 ; Bradley & Co. v. Richmond, 110 Va. 521 , 66 S. E. 872 . “We are now dealing ■with a statute passed by the legislature for the benefit of the state, and we are not called upon to draw nice distinctions between the power to license for regulation, and the power to license, with a view to revenue, as is sometimes required in construing charters of municipal corporations for the purpose of determining whether or not such corporation had the power to exact certain license fees.

The cases of Vansant v. Harlem Stage Co., 59 Md. 330 , and State v. Rowe, 72 Md. 548 , 20 A. 179 , cited by the appellees, are of the latter kind. * * * The courts must leave to the sound discretion of the legislature, which, of course, should be honestly exercised, the question as to what occupations shall be licensed, what rates ¹⁸¹ shall be charged, etc., so long as the laws do not manifestly conflict with some provision of the constitution of the United States or of the state.” State v. Applegarth,. 81 Md. 298, 300 , 31 A. 961, 962 . “This is not a question of the exercise of mere police power, or of the power merely to license or regulate. * * * Under section 6 of the Charter the Mayor and City Council is given the power ‘to license, tax, and regulate all businesses, trades, avocations, or professions,’ and under this grant of power the city had the clear right to impose the charge of $200 ‘for the use and privilege of selling in this market.’ ” Meushaw v. State, 109 Md. 84, 91 , 71 A. 457, 460 ; State v. Shapiro, 131 Md. 168, 173, 174 , 101 A. 703 . “The court will not declare an act unconstitutional because it is unwise or inexpedient, nor will it strike it down because it will operate harshly upon persons affected by it. These are matters committed to the judgment of the law making power.” Painter v. Mattfeldt, 119 Md. 466, 473 , 87 A. 413, 416 ; Weber v. Probey, 125 Md. 544, 551 , 94 A. 162 ; County Commissioners v. Union Mining Co., 65 Md. 543, 549 ; Veazie Bank v. Fenno, 8 Wall. 533, 548 , 19 L. Ed. 482 ; Spencer v. Merchant, 125 U. S. 345, 355 , 8 S. Ct. 921 , 31 L. Ed. 763 ; Knowlton v. Moore, 178 U. S. 41 , 20 S. Ct. 747 , 44 L. Ed. 969 . The complaint of hardship from the tax is not