J. M. & M. S. Browning Co. v. State Tax Commission

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TURNER, Justice

(dissenting).

I dissent. However, I do agree with Mr. Justice WOLFE’S opinion wherein it says:

“The tax is not an income tax. * * * The tax is imposed on the privilege of exercising the corporate franchise or on the privilege of doing business in Utah.”

Having made this declaration, I think the statute involved should be applied consistently with the same. The following excerpt is taken from the opinion:

“The method of computing and allocating the net income to Utah is set forth in Section 80-13-21. This dispute arises over the construction of this latter section, which provides: ‘80-13-21. Rules for Determining Net Income Allocated to This State. The portion of net income assignable to business done within this state, and which shall be the basis and measure of the tax imposed by this chapter may be determined by an allocation upon the basis of the following rules: (1) Rents, interest and dividends derived from business done outside this state less related expenses shall not be allocated to this state.”

My disagreement with the prevailing opinion arises out of its application of this provision of the statute and the comments and holding in reference to the opinion of this court in

American Inv. Corp.

v.

State Tax Comm.,

101 Utah 189 , 120 P. 2d 381 . The facts in the case at bar disclose that the plaintiff companies are Utah corporations. The Browning Arms Company has an established place of business in St. Louis, Mo. The plaintiffs receive royalties from the manufacture and sale of Browning guns, etc. However, these matters of business are not in controversy.

Our dispute arises over allocation of rents, interest and dividends derived from business done outside of this state. The statute says these shall not be allocated to the State of Utah, but the prevailing opinion does allocate these to Utah, saying in substance that rents, interest and dividends derived from business done outside of Utah are derived from business done in Utah because the plaintiffs doing such business are engaged in the investment business and

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their business is business done in Utah. It purposely eliminates the provisions of the statute by covering the companies with a cloak so great that everything is included. There -can be no exceptions. The prevailing opinion does not define the term, “Doing Business,” and I think fails to cite authority to support its grasping reach for more money to be subjected to taxation. Clearly, such an exertion is for tax on income, not on franchise. It seems that the procedure advocated is an attempt to avoid the statute. I find this unacceptable. We have no judicial right to avoid a statute by judicial legislation where the wording of the statute is unambiguous. Experience may prove that a statute cannot be applied accurately or efficiently, but this fact calls for legislative attention, not for judicial legislation.

I am also concerned with the natural and probable effects of the prevailing opinion. Its sweep is so broad that I am fearful it will be accepted by Utah corporations with capital invested outside of this state as an invitation to leave and find some other state as a home where working conditions and government agencies are more favorable. Neither justice nor reason should require any such thing and unless the statute warrants such construction, it should be avoided.

I am of the opinion that this court correctly construed the statute involved herein in the case of

American Inv. Corp.

v.

State Tax Comm.,

supra. I believe the tax in this case should be computed in accordance with the holdings of this court in that case, and if the Commission finds the statute is unworkable in some respect, this fact should be made known to the legislature.