Appendix — Dunn Bros. v. Stone

APPENDIX A.

IN THE SUPREME COURT OF MISSISSIPPI

No. 39,731

A. H. STONE, CHAIRMAN, STATE TAX COMMISSION,

Revived as ALEX McKEIGNEY, CHAIRMAN OF

STATE TAX COMMISSION

LEE, JUSTICE:

This is an appeal by A. H. Stone, Chairman of the State

Tax Commission, from a judgment of the circuit court of

the First Judicial District of Hinds County, requiring him

to refund to Dunn Bros., Inc., the sum of $557.93.

The controversy arose in this way: The tax commis-

sion demanded of Dunn Bros., Inc., the payment of $557.93,

being a sales tax of two percent on its gross income of

$27,896.45, from its operation entirely within the State of

Mississippi. The corporation paid the assessment, under

protest, and then brought this action to recover, with the

above mentioned result.

After the case reached this Court, A. H. Stone died;

and Alex McKeigney has succeeded to the office, and the

cause has been revived in his name.

The statutes under which this tax was demanded and

collected are Sections 10,105 and 10,109, Code of 1942.

Section 10,105 is as follows: “There is hereby levied and

shall be collected annual privilege taxes, measured by the

amount or volume of business done, against the persons,

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on account of the business activities, and in the amounts

to be determined by the application of rates against values,

or gross income, or gross proceeds of sales, as the case may

be, as follows:”

The applicable part of Section 10,109 is as follows:

“Upon every person engaging cr continuing within this

state in the business of operating an express business,

transporting freight or passengers from one point to an-

other in this state, there is likewise hereby levied and shall

be collected a tax, on account of the business engaged in,

equal to two per cent of the gross income of the business.

* * * There shall be excepted from the gross income used

in determining the measure of the tax imposed in this sec-

tion so much thereof as is derived from the business con-

ducted in commerce between this state and other states

of the United States.”

The cause was tried upon an agreed statement of facts

in substance as follows: During the year 1951, Tennessee

Gas Transmission Company was constructing an extension

to its pipe line, which crossed several states, including the

State of Mississippi. It purchased the necessary pipe for

this purpose from a foundry in the State of California,

and desired to have the same delivered by common car-

riers on its right of way in Mississippi. To effectuate this

purpose, it made arrangements with a railroad company

to deliver the pipe from the foundry to certain depots, or

railheads, in the State of Mississippi, as near to its right

of way as was feasible. It also engaged Dunn Bros., Inc., a

Texas Corporation, holding a certificate of public con-

venience and necessity for interstate and foreign com-

merce from the Interstate Commerce Commission, but

without such certificate from the Mississippi Public Service

Commission for intrastate commerce in the State of Mis-

sissippi, to deliver the pipe, by motor truck, from the

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depots or railheads in Mississippi to its right of way and

string the same along the said right of way. The Trans-

mission Company, as consignor, shipped the pipe by rail-

road to itself as consignee to the several depots or rail-

heads in Mississippi. Bills of lading were issued accord-

ingly. The delivering railroad did not, of course, parallel

the Transmission Company’s right of way. The Transmis-

sion Company paid freight thereon; and when a shipment

arrived at its rail destination, one of the Transmission

Company’s agents inspected and accepted the same. Dunn

Brothers then took charge of the shipment, and after giv-

ing a receipt to the railroad company for and on behalf of

the Transmission Company as both consignor and con-

signee, unloaded the car and delivered the pipe along the

right of way, for which service the Transmission Company

paid them. In the agreed statement of facts, Dunn Brothers

said that the purpose of the inspection by an agent of the

Transmission Company was to determine whether there

had been any damage to the shipment in transit by the

railroad company. This hauling was done between March

and May, 1951. Dunn Brothers had no property in the

State except its equipment; and as soon as the job was

completed, it moved the equipment out of the state.

The question is whether or not this transportation was

interstate or intrastate; and in either event, whether or not

it was subject to the tax in question.

The Federal cases on this question are legion. There

are also a number of our own cases.

In the recent case of Coleman, Attorney General, v.

Trunkline Gas Company, (Miss.) 63 So. 2d 73, in recogni-

tion of the Federal rule, this Court held that a privilege

tax which was imposed upon a pipe line operator, whose

operations were wholly and exclusively in interstate com-

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merce, was violative of the commerce clause of the Fe

Constitution, and fell outside the field of legitimate

taxation. This decision involved a construction of Se

34, Chapter 138, Laws of 1934, as amended by Chapter

Laws of 1952, which undertook to levy a privilege

mileage basis on account of the state's protection.

record disclosed, however, that the gas company ps

franchise tax, an income tax, and an ad valorem tax

the Court held that, in so doing, it was already en

to the State's protection.

The Federal courts have repeatedly held that

taxes cannot be collected upon the privilege of carryit

a business that is exclusively interstate in character. .

tor Motor Service v. O'Connor, 340 U. S. 602, 71 S. Ct

95 L. Ed. 573; Alpha Portland Cement Co. v. Mass

setts, 268 U. S. 203, 69 L. Ed. 916, 45 S. Ct. 477; Ozark

Line Corp. v. Monier, 266 U. S. 555, 69 L. Ed. 439, 45 |

184.

It was pointed out in the opinion in the Spector !

Service case, supra, that “The objection to its validity

not rest on a claim that it places an unduly heavy b

on interstate commerce in return for protection giv

the State. The tax is not levied as compensation fc

use of highways or collected in lieu of an ad valorem

erty tax. Those bases of taxation have been disclaim

the highest court of the taxing State. It is not a f

an inspection or a tax on sales or use. It is a ‘tax «

cise’ placed unequivocally upon the corporation's fra

for the privilege of carrying on exclusively inte

transportation in the State.”

In Interstate Oil Pipe Line Company v. Ston

Miss. 715, 35 So. 2d 73, which had under conside

Sections 10,105 and 10,109, Code of 1942, Annc

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through a different paragraph of Section 10,109, supra, it

was held that the tax there involved was on income de-

rived from the transportation of oil by the pipe line from

wells to shipping points and for pumping the oil into tank

cars for shipment by rail out of the state. The opinion

quoted from 11 Am. Jur., Commerce, Section 28, p. 29, as

follows: “It is not within the power of the parties by the

form of their contract to convert what is exclusively a lo-

cal business, subject to state control, into an interstate

business, protected by the commerce ciause.”’

The quotation from the text was documented by Fet-

eral Compress & Warehouse Co. v. McLean, 291 U.S. 17, 78

L. Ed. 622, 54 S. Ct. 267; Superior Oil Co. v. Mississippi, 280

U.S. 390, 74 L. Ed. 504, 50 S. Ct. 267; Browning v. Waycross,

233 U. S. 16, 58 L. Ed. 828, 34 S. Ct. 578. The opinion also

cited 15 C. J. S., Commerce, Section 18, pp. 278-291; to the

same effect. The Court observed that “the oil was not

committed by the owner to this pipe line company for

transportation to another state, but to be transported to

the railroad and there loaded into tank cars.” The opinion

then cited Coe v. Errol, 116 U. S. 517, 29 L. Ed. 715, 6 S.

Ct. 475, 479, to show that the carrying of articles in carts

or other vehicles to the depot, where the journey is to

commence, is no part of the journey; and likewise the

carrying of articles from the farm or forest to the depot is

only an interior movement.

On the Pipe Line’s appeal the Supreme Court of the

United States affirmed Interstate Oil Pipe Line v. Stone,

337 U. S. 662, 93 L. Ed. 1613, 69 S. Ct. 1264.

Four of the Justices in an opinion written by Justice

Rutledge said: ‘We do not pause to consider whether

the business of operating the intrastate pipe lines is inter-

State commerce, for, even if we assume that it is, Missis-

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sippi has power to impose the tax involved in this |

Further, we do not find it necessary to dispute that

Supreme Court of Mississippi construed the statute as

posing a tax on the privilege of operating a pipe line w1

within the state, and not a tax solely upon the ‘loca

tivities of “maintaining, keeping in repair, and other

in manning facilities”’ situated in Mississippi, Mem

Natural Gas Co. v. Stone, 335 U. S. 80, 92, 93, 92 L.

1832, 1842, 1943, 68 S. Ct. 1475, or upon the gross rec

themselves, Central Greyhound Lines v. Mealey, 334 |

653, 92 L. Ed. 1633, 68 S. Ct. 1260. While we are of co

bound by the construction given a state statute by

highest court of the State, we are concerned with the

tical operation of challenged state tax statutes, not

their descriptive labels.” The opinion also said: “Sinc

the activities upon which the tax is imposed are ca

on in Mississippi, there is no due process objection tc

tax. The tax does not discriminate against interstate |

merce in favor of competing intrastate commerce of

character. The nature of the subject of taxation m

apportionment unnecessary; there is no attempt to ta

terstate activity carried on outside Mississippi’s bor

No other state can repeat the tax. For these reason:

commerce clause does not invalidate this tax.” Ju

Burton concurred in the result on the ground that the

position “was a tax on the privilege of operating a

line for transporting oil in Mississippi in intrastate |

merce and that, as such, it was a valid tax.” Justice.

in the dissenting opinion, among other things, obse

that “An interstate journey must have a beginning

an end. Common sense rejects an extension of the jou

to the traveler’s front door or the producer’s farm or fa

when no through order for carriage is in effect. The:

limits of interstate commerce in such fringe situation

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uncertain. * * * This Court has interpreted the commerce

clause to permit state nondiscriminatory taxation for the

use of state faci’ities, upon the property used in interstate

commerce, upon production for commerce and upon net

proceeds therefrom. Through such taxes, the states may

exact payment for their protection and encouragement of

commerce. Joseph v. Carter & W. Stevedoring Co., 330 U.

S. 422, 429, 91 L. Ed. 993, 1001, 67 S. Ct. 815, and cases

cited.”

The only factual difference between the case of Inter-

state Oil Pipe Line v. Stone, supra, and the case now before

the Court is that, in that case, the tax on income was de-

rived from the transportation of oil from wells to the ship-

ping points and pumping the same into the tank cars for

shipment by rail out of the state—at the beginning of the

journey—whereas, the tax here was imposed on income

which was derived from hauling pipe from the railhead to

the right of way—at the end of the journey.

In Stone v. Memphis Natural Gas Co., 201 Miss. 670, 29

So. 2d 268, the appellee was held to be liable for the state

franchise tax, although its business was solely and ex-

clusively interstate, and it was not engaged in any intra-

state business. The Court said that the franchise tax was

not one upon “doing business” as that term is ordinarily

understood. The opinion pointed out that there was “no

attempt to tax interstate commerce as such, but the levy

is an exaction which the State requires as a recompense

for its protection of lawful activities carried on in this State

by the corporation, foreign or domestic, activities which are

incidental to the powers and privileges possessed by it by

the nature of its organization—here the local activities in

maintaining, keeping in repair, and otherwise in manning

the facilities of the system throughout the 135 miles of its

line in this State.”

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On the Gas Company’s appeal, the decision of this

Court was affirmed by the Supreme Court of the United

States. Memphis Natural Gas Co. v. Stone, 336 U.S. 80, 92

L. Ed. 1832, 68 S. Ct. 1475. Three of the Justices held that

the tax, under the construction of this Court, was addi-

tional recompense for protection of the pipe line’s local

activities, and could not therefore be regarded as one of

the privileges of doing interstate business; that the activities

taxed were not under the protection of the commerce clause;

and that the burden of such tax was no more unreasonable

than the permissible ad valorem tax. A fourth Justice held

that the tax was within the territorial limits of the state’s

taxing power; that it placed no greater burden upon inter-

state commerce than the state places upon competing intra-

state commerce of like character; that it did not undertake

to tax interstate activities carried on outside of the state’s

border; and that it could not be repeated by another state.

The fifth Justice concurred in the result.

The language of Justice Reed, in his dissenting opinion

in Interstate Oil Pipe Line Company v. Stone, supra,

namely, that “an interstate journey must have a beginning

and an end,” must be kept in mind; likewise the opinion of

the Supreme Court in Coe v. Errol, supra, that the carrying

of articles in cars or other vehicles to the depot, where the

journey is to commence, is no part of the journey; and

, that the carrying of articles from the farm or forest to the

depot is only an interior movement. Again, the language

of Justice Reed, in his dissenting opinion, supra, should be

recalled, namely, that ‘common sense rejects an extension

of the journey to the traveler's front door or to the pur-

chaser’s farm or factory when no through order for carriage

is in effect.” He again well said that “the exact limits of

interstate commerce in such fringe situations are uncer-

tain.”

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If the above reasoning is followed, the journey in inter-

state commerce in this case began at the railroad’s depot

in the State of California. The transportation of the pipe

from the foundry to the depot was only an interior move-

ment. The Transportation Company was the shipper. It

consigned the shipment from a point in California to itself

at a point in Mississippi. The railroad company, the inter-

state carrier, issued its bill of lading to the Transmission

Company, as both consignor and consignee, showing its

agreement to deliver the shipment from a depot in Cali-

fornia to a railroad depot, or railhead in the State of Missis-

sippi. When the shipment arrived at its destination, the

Transmission Company, by an agent, inspected and accepted

it. Following this acceptance, Dunn Brothers took over the

shipment from the railroad. This was, in effect, a delivery

to the Transmission Company. The interstate journey was

then at an end. The railroad Company, the interstate car-

rier, had agreed to deliver the shipment from a point in

California to a point in Mississippi, and this agreement of

carriage had been gully performed. The Transmission Com-

pany then engaged another carrier, a motor carrier, Dunn

Brothers, to deliver the shipment from the depot, or rail-

head, along its right of way; and the fact that this pro-

cedure had been agreed upon, prior to the railroad’s de-

livery, did not change the essential features of the activity.

Nor did the fact that Dunn Brothers held a certificate as a

carrier for interstate commerce grant it immunity, when it

was carrying intrastate commerce exclusively. It is only

for the carriage within Mississippi that the tax is demanded.

A local drayman or an intrastate carrier would have been

obliged to pay the tax here demanded. If, under the cir-

cumstances of this case, appellee should prevail, then by

reason of its claim of interstate commerce, it would escape

the burdens which fall on its competitors in intrastate com-

merce. Evidently equality for, not favoritism to, interstate

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commerce was the underlying purvose of Article I, Section

VIII, cl. 3, of the U. S. Constituuon.

The case of Gross Income Tax Division v. J. L. Fox &

Son, 86 N. E. 2d 693, from the Supreme Court of Indiana,

is directly in point.

The case of American Express Co. v. Miller, 104 Miss.

247, 61 So. 306, is not in point. In that case, the packages

were delivered by the liquor dealers in Louisiana to the

boats, and the masters issued bills of lading for the entire

journey, across the state line, to the customers in Missis-

sippi, collecting at the time the charge for the completed

transportation, with no opportunity or right of the original

shipper thereafter to accept or control the shipment. The

transportation was continuous from the shipper to the con-

signee.

There is this additional reason to uphold this tax:

The agreed statement of facts showed that Dunn Brothers

made its deliveries between March and May of 1951; and

that, as soon as the work was completed, it moved its equip-

ment out of the state. Taxable property is assessed for

ad valorem taxes, and the lien thereon attaches as of Jan-

uary Ist. Sections 9744-5, Code of 1942. Consequently

Dunn Brothers was not liable for, and could not be re-

quired to pay, ad valorem taxes for 1951. There was no

agreement or proof that it paid to the State of Mississippi

any tax whatever. It had the protection of the laws of

Mississippi in its operations and yet it is not shown to have

paid the state anything ‘‘as a recompense for its protec-

tion of lawful activities carried on in this state by the cor-

poration.” Stone v. Memphis Natural Gas Co., supra. Inter-

state transportation should bear a fair share of the cost

of the local government whose protection it enjoys. Many

decisions of the Supreme Court of the United States show

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that, so far as the commerce clause is concerned, state

taxes may be validly laid on corporations who carry on

local activities sufficiently separate from interstate com-

merce, even though such taxes amount to the same as if

levied on the interstate business itself. Independent Ware-

houses v. Scheele, 331 U.S. 70, 91 L. Ed. 1346, 67 S. Ct. 1062;

McGoldrick v. Berwind-White Coal Min. Co., 309 U. S. 33,

84 L. Ed. 565, 60 S. Ct. 388, 128 A. L. R. 876; Ford Motor Co.

v. Beauchamp, 308 U. S. 331, 84 L. Ed. 304, 60 S. Ct. 273;

Southern P. Co. v. Gallagher, 306 U. S. 167, 83 L. Ed. 586, 59

S. Ct. 389; Coverdale v. Arkansas-Louisiana Pipe Line Co.,

303 U. S. 604, 82 L. Ed. 1043, 58 S. Ct. 736; Utah Power & L.

Co. v. Pfost, 286 U. S. 165, 76 L. Ed. 1038, 52 S. Ct. 548; West-

ern Cartridge Co. v. Emmerson, 281 U.S. 511, 74 L. Ed. 1004,

50 S. Ct. 383; Hump Hairpin Mfg. Co. v. Emmerson, 258 U,

S. 290, 66 L. Ed. 622, 42 S. Ct. 305; and American Mfg. Co.

V. St. Louis, 250 U. S. 459, 63 L. Ed. 1084, 39 S. Ct. 522. See

also Stone v. Stapling Machines Co., (Miss.) 71 So. 2d 205,

which the Supreme Court of the United States refused to

review. See also Mavar Shrimp & Oyster Co., Ltd., (Miss. )

73 So. 2d 109.

So, the service by Dunn Brothers in carrying the pipe,

after its acceptance by the Transmission Company, from

the depot or railhead in Mississippi to the right of way also

in Mississippi, was an activity wholly within the State of

Mississippi, was therefore intrastate, and the gross income

therefrom was subject to the tax of two per cent. How-

ever, if it may be said that this was a fringe situation and

therefore uncertain, nevertheless the appellee is still liable

for this tax as a recompense for the protection which it was

afforded by the state as it engaged in this activity. Thus,

for both reasons, as above Stated, the tax was properly

assessed and collected. Hence the judgment of the trial

court is reversed, and a judgment will be entered here

for the appellant.

REVERSED AND JUDGMENT HERE FOR APPEL-

LANT.

ROBERDS, P. J., AND HOLMES. ARRINGTON, AND

ETHRIDGE, JJ., CONCUR.

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Monday, June 13th, 1955, Court Sitting

No. 39,731

Alex. McKeigney, Chairman State Tax Commission

vs.

Dunn Brothers, Inc.,

This cause having been submitted at a former day of

this term on the record herein from the Circuit Court of

Hinds County and this court having sufficiently examined

and considered the same and being of the opinion that

there is error therein doth order and adjudge that the

judgment of said Circuit Court rendered in this cause at

the November 1954 Term—be and the same is hereby

reversed and this court now, here, proceeding to render

and enter the judgment that should have been entered

in the court below doth order and adjudge that the ap-

pellee take nothing by its suit and that the appellant do

have and recover of and from the appellee all of the costs

in this court and in the court below to be taxed, etc.

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IN THE SUPREME COURT OF MISSISSIPPI

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No. 39,731

A. H. STONE, CHAIRMAN, STATE TAX COMMISSION,

REVIVED AS ALEX McKEIGNEY, CHAIRMAN

OF STATE TAX COMMISSION

vs.

DUNN BROTHERS, INC.

On Suggestion of Error.

HOLMES, JUSTICE:

The original opinion in this case held, first, that the

service by Dunn Brothers, in carrying the pipe from the

depot or railhead in Mississippi to the right of way, also

in Mississippi, was intrastate, and that the gross income

therefrom was subject to the tax of 2%; and, secondly,

that, even if such service was in fact not intrastate, never-

theless Dunn Brothers was liable for the tax as a recom-

pense for the benefit and protection which the State af-

forded to the taxpayer while it was engaged in this activ-

ity.

The appellee has filed a vigorous suggestion of error.

Due consideration has been given to it; and the Court

deems it necessary to respond only to some of the reasons

which are urged in connection with the second ground of

the opinion.

It is contended that the Court erred in assuming that

the taxpayer had in fact paid no taxes to the State, when

the stipulation was silent about this matter. The original

declaration charged that the plaintiff had “promptly paid

any and all lawful taxes levied by the State of Mississippi

against its property * * *”. The Tax Commission answered

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that it “does not know what taxes, if any, plaintiff has

paid to the State of Mississippi, but specifically denies

that plaintiff has promptly paid any and all lawful taxes

levied by the State Tax Commission against its property

* * *” In the stipulation, which contained the agreed

statement of facts, there was no reference whatever to tax

payments.

Since the suit by Dunn Brothers was for the purpose

of recovering taxes which it had paid under protest, it of

course had the burden of showing that it was entitled to

a recovery. In Coleman, Attorney General, v. Trunk Line

Gas Company, Miss., 63 So. 2d 73, the gas company proved

that it had paid a franchise tax, an income tax, and an ad

valorem t ~. ‘1:.e Court, in that case, held that the com-

pany, by e~ °n of the payment of these taxes, was already

entitled tu .ise State’s protection, and that the privilege tax

there invulved could not be imposed for such purpose.

Thus evidence of payment of other ‘axes was relevant on

the question as to whether or not Dunn Brothers was en-

titled to recover the taxes which it had previously paid

under protest. But, as stated, it offered no proof as to

payment of other taxes. So even if the appellee had in

fact paid other taxes, still in the absence of proof thereon,

it was not a violent inference that the appellee had paid

no taxes. Cases must be reviewed on the record before

the appellate court.

As stated in the original opinion, the tax was collected

under Sections 10105 and 10109, Code of 1942 annotated.

The latter section is comprised of nine paragraphs, the

last of which contains a provision for certain exceptions

or limitations. None of the paragraphs are numbered. It

it true that the argument for and against the imposition

of this tax revolves around the paragraph which reads as

follows: ‘Upon every person engaging or continuing

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within this state in the business of operating an express

business, transporting freight or passengers from one point

to another in this state, there is likewise hereby levied and

shall be collected a tax, on account of the business engaged

in, equal to two per cent of the gross income of the busi-

ness.” Obviously, this paragraph was very pertinent in

dealing with the intrastate feature.

But in the same section and subsequent to the above

quotation is another paragraph which reads as follows:

“Upon every person engaging or continuing within this

state in the business of operating motor vehicles on the

public highways of this state for the transportation of per-

sons or property for compensation or hire, there is likewise

hereby levied and shall be collected a tax, on account of

the businesss engaged in, equal to two per cent of the gross

income of the business; but such tax shall not apply to

persons engaged in transporting school children under

contract with counties or school districts.” This paragraph

applies to the operation of motor vehicles for the transpor-

tation of persons or property for compensation or hire on

the public highways of the State, and is not limited merely

by such transportation from one point in the State to an-

other. Consequently it is more far reaching than the first

quoted paragraph.

The last paragraph of Section 10109, the exception or

limitation paragraph, is as follows: “There shall be ex-

cepted from the gross income used in determining the

measure of the tax imposed in this section so much thereof

as is derived from the business conducted in commerce

between this state and other States of the United States, or

between this state and foreign countries which the State

of Mississippi is prohibited from taxing under the consti-

tution of the United States of America. And nothing con-

tained in this section shall be construed to levy a tax upon

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the operation by municipal corporations of any electric,

gas or water system owned by the municipality operating

it.’ The evident purpose of the Legislature was to tax all

gross income, in the enumerated instances, except so much

thereof as is derived from interstate commerce between

this State and other states or foreign countries, which the

State is prohibited from taxing under the Constitution of

the United States. But the tax here in question is not pro-

hibited by the Constitution of the United States. See the

many citations in the original opinion.

The mere fact that the parties confined their argu-

ment to the first quoted paragraph does not preclude the

Court from considering the entire section.

We adhere to the views expressed in the original opin-

ion, and it follows that the suggestion of error should be,

and is, overruled.

SUGGESTION OF ERROR OVERRULED.

ROBERDS, P. J.. AND LEE, ARRINGTON AND

ETHRIDGE, JJ., CONCUR.

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Friday, July 15, 1955, Court Sitting

No. 39,731

A. H. Stone, Chairman, State Tax Commission,

Revived as Alex McKeigney, Chairman of

State Tax Commission

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Lunn Brothers, Inc.,

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This cause this day came on to be heard on the sug-

gestion of error filed herein and this court having suf-

ficiently examined and considered the same and being of

the opinion that the same should be overruled doth order

and adjudge that said suggestion of error be and the same

is hereby overruled.

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IN THE CIRCUIT COURT, FIRST DISTRICT

HINDS COUNTY, MISSISSIPPI

No. 13,522.

DUNN BROS., INC.

V

A. H. STONE, CHAIRMAN, STATE TAX COMMISSION.

Written Ruling of Circuit Court Judge.

Dunn Bros. paid certain sales taxes to the State Tax

Commission and brought this suit against A. H. Stone,

Chairman, to recover the same. The taxes were paid un-

der and by virtue of section 10109 Mississippi Code 1942,

which levied sales tax upon every person engaged in busi-

ness of transporting freight or passengers from one point

to another in this State. Dunn Bros. claim their business

was interstate and foreign commerce and under the pro-

tection of the Commerce Clause of the Constitution they

were not liable for payment of the tax, which is admittedly

a privilege tax.

The Tennessee Gas Transmission Company was en-

gaged in building a large pipe line across the State, orig-

inating in the Southwest and crossing several states, ter-

minating at some point in the East. The pipe originated

at its point of manufacture in California, and from there

was shipped by rail to certain convenient rail spots near

the right of way in this State where the plaintiff's trucks

took over and hauled the pipe and strung it along the pipe

line right of way, at convenient places to be integrated into

the pipe line by Tennessee Gas Transmission Company.

page 2

There was no through bill of lading. It appears that

it is contrary to the practice of commerce that through

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bills of lading be issued where different forms of transpor-

tation are adjunct to each other, such as rail-water trans-

portation, or rail-truck transportation.

The pipe was loaded at the scene of its manufacture

in California and shipped by rail to Tennessee Gas Trans-

mission Company to the various rail points in Mississippi.

At these points a new bill of lading was issued, the Ten-

nessee Gas being the consignor and consignee therein; the

destination being the ultimate resting place of such pipe

along the right of way. The plaintiff furnished the facil-

ities for hauling from the various rail points in Mississippi

to the actual location of pipe line right of way.

Plaintiff insists that this was an interstate shipment

in that the movement of the pipe had every character and

incident of the interstate shipment from its point of origin

to its point of destination.

Plaintiff quotes numerous decisions of the United

States Supreme Court and of other federal courts and cer-

tain Interstate Commerce Commission holdings, sustain-

ing him in this position. It appears from the federal cases

quoted in plaintiff's brief that a through bill of lading is

not necessary to characterize the shipment as being in

interstate or foreign commerce; that acceptance or passage

of title is not necessarily the controlling feature; and even

that the integration of the produce with other products of

similar kind or charge of form through certain manufactur-

ing processes will not

page 3

destroy its character as interstate commerce. Shipments

from within a state to a point such as a coastal point with-

in the same state, where the ultimate destination is inter-

state or foreign commerce will preserve the interstate char-

A20

acter of the shipment. The court applies what is known

as “‘The essential character of the movement” theory.

Throughout these decisions of the federal courts in-

volving the commerce clause there runs the following con-

sistent theme. What was the bona fide and true intent and

purpose of the parties in initiating the shipment? If the

true intent and purpose of the shipper and consignee is

that if ultimate destination is originally conceived to be

without the originating state it is in interstate commerce.

The manner and method of handling does not seem to be

important.

Some of the leading cases quoted and relied upon by

the plaintiff are: So. Pac. Terminal Co. v ICC, 219 US

498, 55 L ed. 310; Baltimore & O S W R Co v Settle, 260

US 166; Railroad Commission of Ohio v Worthington, 56

L. ed. 1008; United States v Erie Railroad Co. 280 U S 98;

Texas & N O R Co v Sabine Tram Co, 227 U S 111; and

Hughest Brothers Company v Minnesota, 272 U S 469.

Also the C C A case Texas v Anderson, Clayton & Co., 92

F (2) 104.

The defendant’s demurrer having been overruled and

answer filed, this case was submitted on agreed statement

of facts. It appears to me that the defendant, Tax Com-

mission, in the agreed statement of facts has agreed that

this shipment had the essential character of a shipment

in interstate and foreign commerce, as I have described

the same above. I note from the _

page 4

agreed statement of facts, on page 4 thereof, where it is

agreed by the parties as follows:

“It was the intent and purpose of Tennessee Gas _

Transmission Company in originally ordering the |

A21

shipment from the steel companies located outside

the State of Mississippi for all of said Pipe to be trans-

ported from the point of manufacture directly to the

pipeline right of way within the State of Mississippi,

by the most direct route available. The various rail-

heads within the State of Mississippi to which the

pipe moved via railroad were never intended by the

: Tennessee Gas Transmission Company to be the ul-

3 timate destination of the pipe, but, on the contrary,

it was the intent of the shipper at all times that the

pipe be transported by common carriers from the

point of manufacture outside of Mississippi to the

pipeline right of way within Mississippi.”

"

o%

bed

b

BN

t

4

a

ee

—

ee

2

i

It appears thus that the defendant admits that the

character of the shipment was essentially one in interstate

and foreign commerce, as the same is admeasured by the

accepted rules and principles laid down by the Supreme

Court of the United States.

Farther on in the agreed statement of facts the defend-

ant agrees to the following:

Page 5

“* * * Prior to the time the shipments originally

Started from the pipe manufacturer, arrangements

were made between the Tennessee Gas Transmission

Company and Dunn Bros., Inc., plaintiff herein, under

which the plaintiff agreed to transport the pipe from

the railheads in Mississippi to the pipeline right of

way in Mississippi.”

Furthermore in the agreed statement of facts the de-

fendant agreed to the following:

“From the time the pipe left the manufacturer in

California until the pipe arrived at the right of way,

the pipe was at all times under the care and super-

vision of the aforementioned common carriers, either

railroad or the plaintiff. It is understood, however,

A22

that the defendant reserves the right to take the posi-

tion and argue that, as a matter of law, the legal pos-

session of the pipe passed to Tennessee Gas Transmis-

sion Company upon the completion of the railroad

portion of said transportation.”

It is observed from the above quotation from the

agreed statement of fact that the defendant reserves the

right to argue as a matter of law that the legal possession

of the pipe passed to Tennessee Gas Transmission Com-

pany upon completion of the rail portion of the said trans-

poration. But as plainly stated in the quoted cases, it has

been specifically held by the Supreme Court of the United

States that the passage

page 6

or vestiture of title is not an element that changes the char-

acter of an interstate shipment to an intrastate one.

So, it would appear to me that in view of the admis-

sions that it was the bona fide and actual intent and pur-

pose that the destination of this shipment was the pipe-

line right of way in Mississippi, and that it should move

by common carrier from its origin in California to its des-

tination, it is a practical admission that shipment was

purely in interstate commerce and protected by the Com-

merce Clause of the Constitution.

It is further significant to me that the plaintiff's cer-

tificate of convenience and necessity, granted by the Inter-

state Commerce Commission contains the following re-

striction:

“RESTRICTION: The service authorized herein

is restricted to traffic moving to or from pipeline

rights of way.”

The declaration states, and it is not denied or ad-

mitted, that this plaintiff corporation was organized on

vee ety

A23

the 2d of June, 1950, and that it is a Texas corporation,

and domiciled in the City of Dallas. It appears that since

its business is thus restricted to hauling pipe to pipeline

rights of way, and in consideration of the recent organiza-

tion of the corporation and its domicile in the Southwest,

the corporation was actually created at and about the time

the numerous pipe lines were being constructed and pushed

across the continent from the Southwest to the Eastern

markets. In other words, it appears reasonably deducible

that this corporation had its

page 7

inception and founding for the purpose of handling this

type of services for the construction of these transconti-

nental gas lines. The process of construction of which

had its inception in the last decade.

Purpose and intent is subjective in its nature and

sometimes must be deduced upon the facts and circum-

stances. However, in this case it is not necessary to re-

sort to deduction in view of the plain admissions made by

this defendant. If it were the true intent and purpose of

the shipper in California, the place of origin, that the

place of destination would be at and beside the pipe lines

in Mississippi, then this is truly an interstate shipment and

under the protection of the Commerce Clause. I do not

see how any other conclusion could be drawn under the

decisions of the Supreme Court of the United States.

The defendant Tax Commissioner seems to rely

mainly upon certain statements that have appeared in a

few very recent decisions of the United States Supreme

Court to the effect that “interstate commerce should be

made to pay its way.” The expression seems to have be-

come a kind of slogan for the state taxing authorities

throughout the country.

od ee oe . ——

It certainly could not have been the intent of the Su-

preme Court in infect the settled law with uncertainty by

the use of such a phrase.

It is difficult to understand what the meaning of the

phrase is. It appears that any shipment would either be

in interstate or intrastate commerce and would be tax-

able or

page 8

not taxable, according to the plain facts of the case.

Therefore, judgment will be for the plaintiff.

/s/ M. M. McGowan

Circuit Court Judge.

A25

IN THE CIRCUIT COURT OF THE FIRST JUDICIAL

DISTRICT OF HINDS COUNTY, MISSISSIPPI

No. 13522

DUNN BROS., INC.

VS

A. H. STONE, CHAIRMAN, ETC.

Judgment.

This day came on for hearing the above styled and

numbered cause on the declaration, as amended, answer

filed thereto, and agreed statement of facts filed herein,

and the Court having heard the argument of counsel for

the parties, and having read the briefs filed herein by the

parties hereto, a jury having been waived, and being of

the opinion that the plaintiff should have the relief sought;

It is, therefore, ordered and adjudged that the plain-

tiff, Dunn Bros., Inc., do have, and is hereby granted, a

judgment of and from the defendant, A. H. Stone, Chair-

man, State Tax Commission, in the amount of Five Hun-

dred Fifty-Seven and 93/100 Dollars ($557.93), with six

per centum interest thereon, compounded annually, from

May 14, 1953, to the date hereof, together with all costs

of this suit.

It is further ordered that the opinion of this Court

rendered in this cause be made a part of the record in this

cause, as a part of this order.

Leon F. Hendrick

Circuit Judge

A26

APPENDIX B.

SALES TAX LAW

Chapter 119, Laws of 1934, As Amended

AN ACT to provide for the raising of additional public

revenue by imposing a tax upon the privilege of en-

gaging in certain businesses in Mississippi, to provide

for the ascertainment, assessment and collection of

said taxes; to provide penalties for the violation of

the terms of this Act and to repeal Chapters 90 and

91 of the Laws of Mississippi of 1932.

Section 1. (10103 Miss. Code 1942) Title—Be it

enacted by the Legislature of the State of Mississippi,

the* this Act may be cited as the Emergency Revenue Act

of 1934.

(10104 Miss. Code 1942) Definitions—(1) When used

in this Act, the term “person” or the term “company”

herein used interchangeably, includes any individual,

firm, co-partnership, joint adventure, association, corpora-

tion, estate, trust, or any other group or combination act-

ing as unit, and the plural as well as the singular number,

unless the intention to give a more limited meaning is

disclosed by the context.

(2) The term ‘Tax Commission” means the State

Tax Commission of the State of Mississippi.

(3) The word “Commissioner” when used in this

Act, means the chairman of the State Tax Commission.

(4) The term “tax year” or “taxable year” means

either the calendar year, or the taxpayer’s fiscal year

when permission is obtained from the Commission to use

same as the tax period in lieu of the calender year.

A27

(5) The term “sale” or “sales” includes the barter

or exchange of properties as well as the sale thereof for

money, every closed transaction by which the title to tax-

able property passes shall constitute a taxable event

whether the compensation is by money or service, or other

thing of value, constituting a sale.

(6) The word “taxpayer” means any person liable

for any tax hereunder.

(7) The classification of “wholesaler” of “jobber”

shall apply only to a person doing a regular organized

wholesale or jobbing business known to the trade as such,

selling only to licensed retail merchants or jobbers, for

purposes of resale. The classification of “wholesale sale”’

shall apply only to a sale of tangible personal property

when made to a dealer or jobber, licensed under section 3

of this act, for the purpose of resale in the regular course

of business; a sale of tangible personal property which is

to become a component part of a structure or improve-

ment erected, constructed, repaired, or made, when such

sale is made to a contractor who is taxable under section

2-e of this act on the contract under which the material is

to be used; a sale of tangible personal property used or

to be used or consumed in the furtherance of interstate

transportation or interstate commerce and a sale of tan-

gible personal property which is to be used as a container

or covering for the protection or preservation of merchan-

dise sold, or property upon which service has been ren-

dered.

Sales of tangible personal property to manufacturers

or processors, of machinery and machine parts which are

exclusive necessities to processing within this state shall

be construed to be wholesale sales, and the gross proceeds

from such sales shall be taxable at the wholesale rate.

A28

Provided, further, that sales of industrial materials to

manufacturers only which go directly into the manufactur-

ing process may be reported by the seller as wholesale

sales, taxable at the wholesale rate. Provided, however,

that such sales may be classed as wholesale sales only if

evidenced by proper and adequate invoices and records.

(8) The classification of “retail merchant” shall

apply only to a person doing a regularly organized retail

business known to the trade as such and who maintains

a store, open at reasonable hours or who operates as a

transient vendor, as defined in the privilege tax law, for

sale to the public of such goods, wares or merchandise

as may be handled.

(9) Sales to “farm commissaries” shall be regarded

as retail sales unless such farm commissaries do a regu-

larly organized retail business with the general public by

maintaining a store, as defined in the privilege tax law,

open at reasonable hours for sale to the public of such

goods, wares or merchandise as may be handled.

(10) Provided that, upon resale by such commissaries,

of merchandise on which the tax has been paid to the

wholesaler, no additional tax under the provisions of Sec-

tion 2-c of this act shall be paid or collected by the seller

or owner of such commissaries or by the commissioner

against the owner thereof.

(11) The term “gross income”’ means the gross re-

ceipts of the taxpayer derived from trades, business,

commerce or sales and the value proceeding or accruing

from the sale of tangible personal property, and all receipts,

actual or accrued, by reason of the investment of the

capital of the business engaged in, and without any deduc-

tions on account of the cost of property sold, the cost of

materials used, labor costs, interest or discount paid or

—

A29

any other expense whatsoever; and without any deduc-

tion on account of losses.

(12) The term “business” when used in this act shall

include all activities or acts engaged in ( personal or cor-

porate) or caused to be engaged in with the object of gain,

benefit, or advantage either direct or indirect, and not

exempting subactivities producing marketable commodi-

ties used or consumed in the main business activity each

of such subactivities shall be considered business engaged

in, taxable in the class in which it falls.

(13) The term “gross proceeds of sales” means the

value proceeding or accruing from the full sale price

of tangible personal property including carrying charges

or any other addition to the selling price, on account of

deferred payments by the purchaser, without any deduc-

tion on account of the cost of property sold, the amount

allowed for a trade-in taken as part payment, expenses

of any kind, or losses. Provided, that the term “gross

proceeds of sales” shall include the value of any goods,

wares, merchandise or property withdrawn or used from

an established business or from the stock in trade for con-

sumption or use in the business or by the owner. But the

words “gross income” and “gross proceeds of sales” shall

not be construed to include goods, wares or merchandise.

or the value thereof, returned by customers when the sale

price is refunded either in cash or by credit; nor cash dis-

counts allowed and taken on sales.

Section 2. (10105 Miss. Code 1942) Tax Levied—

There is hereby levied and shall be collected annual privi-

lege taxes, measured by the amount or volume of business

done, against the persons, on account of the business activ-

ities, and in the amounts to be determined by the applica-

tion of rates against values. or gross incom, or gross pro-

ceeds of sales, as the case may be, as follows:

Ay,

ot

A30

Section 2-a. (10106) Mining, ete—Upon every per-

son engaging or continuing within this state in the busi-

ness of mining, quarrying, drilling or otherwise produc-

ing for sale, profit, or commercial use, limestone, sand,

gravel, or other mineral or natural resource products, ex-

cept oil and natural gas, the amount of such tax to be

equal to the value of the articles produced, and shown

by the gross proceeds derived from the sale thereof by

the producer (except as hereinafter provided) multiplied

by the respective rates as follows: Limestone, sand, gravel,

or other mineral products, except oil and natural gas,

two per cent.

The measure of this tax is the value of the entire pro-

duction in this state, regardless of the place of sale or the

fact that delivery may be made to points outside of the

state.

All privilege taxes levied upon persons engaged in

the production of natural resource products by this act

shall be a lien upon all such products so produced and such

lien shall be entitled to preference over all judgments,

executions, encumbrances or liens, whensoever created. Al!

persons to or through whom the title to such products pass

shall be jointly and severally liable for such tax until the

same is paid in full.

If any person liable for any tax under this section

shall ship or transport his products, or any part thereof,

out of this state without making sale of such products, the

value of the products in the condition or form in which

they existed immediately before transportation out of

the state shall be the basis for the assessment of the tax

imposed in this section. The Commissioner shall prescribe

equitable and uniform rules for ascertaining such value;

and the tax imposed in this section shall be due and pay-

2 AG CE eo eania te

A31

able as of the date of such removal from the state,

whether said products have been sold or not.

In computing the tax levied under this section, where

the gross proceeds of sales of such natural resource prod-

ucts are taken as the measure of the value of such prod-

ucts for the purpose of computing the tax, if such products

shall have been sold on a delivered price, the actual freight

charge prepaid by the taxpayer or included in the invoice

price, on such natural resource products, to the place of

delivery, shall be deducted from the gross proceeds of

sales used in determining the amount of the tax.

The tax imposed in this section upon persons engaged

in the business of mining or producing, for sale, profit

or commercial use, shall be collected by the Commissioner,

in the manner provided in this act, from the person in

charge of the production operations, and the Commis-

sioner is hereby authorized to make such investigations

and inspections of the production operations, from time

to time, as he may deem necessary for the purpose of as-

certaining the correct amount of tax due.

Section 2-b. (10107) Manufacturing—That Section

2-b of Chapter 119, Laws of 1934, and all amendments

thereof are hereby repealed.

See Section 2-c regarding retail sales made by manu-

facturers.

Section 2-c. (10108) Selling, ete—Upon every per-

son engaging or continuing within this state in the busi-

hess of selling any tangible personal property whatsoever,

(not including, however, bonds or other evidence of in-

debtedness, or stocks), there is likewise hereby levied, and

Shall be collected, a tax equivalent to two per cent of the

8ross proceeds of sales of the business; provided, how-

ever, that in the case of a wholesaler or jobber, the tax

A32

shall be equal to one-eighth of one per cent of the gross

proceeds of sales of the business. Provided further, that

in the case of farm tractors which are adapted solely to

agricultural purposes, and when sold to farmers, the tax

shall be equivalent to one percent of the gross proceeds

of sales.

Provided, further, that in the case of dealers in fluid

milk that is perishable in twenty-four hours and com-

monly known as pasteurized milk, the tax shall be equiv-

alent to one per cent of the gross proceeds of the sale

of said milk.

Provided, however, that any person engaging or con-

tinuing in the business as a retailer and a wholesaler or

jobber shall pay the tax required on the gross proceeds

of sales of each such business at the rates specified, when

his books are kept so as to show separately the gross pro-

ceeds of sales of each business; and when his books are

not so kept he shall pay the tax as a retailer; and pro-

vided, further, that any such person engaging or continu-

ing in business as a retailer and as a wholesaler or jobber

shall pay the tax as a retailer on the gross proceeds of

sales derived from all sales made by him to any person

other than a licensed merchant purchasing for resale in

the regular course of business.

A person exercising any privilege taxable under Sec-

tion 2-a of this Act and engaging in the business of sell-

ing his natural resource products at retail in the state shall

be required to make returns of the gross proceeds of such

retail sales and pay the tax imposed in this section, for

the privilege of engaging in the business of selling such

natural resource products at retail in this state; and the

value, or gross proceeds of sales, of such natural resource

products thus sold by the producer at retail and in-

wrx

=

ESE OPT MER Mei ALN fe iin ws Gh OF

A33

cluded in the measure of the tax imposed in this sec-

tion, shall be deducted from the gross income, or gross

proceeds of sales, used in determining the measure of the

tax imposed upon such producer in said Section 2-a of

this Act.

But any person exercising any privilege taxable under

Section 2-a of this Act and engaging in the business of sell-

ing his natural resource products to manufacturers, whole-

salers, jobbers, or licensed retailers, shall not be required

to pay the tax imposed in this section for the privilege of

selling such natural resource products at wholesale. Nor

shall any person exercising any privilege taxable under

Section 2-a of this Act be required to pay the tax imposed

in this section for the privilege of selling his natural re-

source products for delivery outside of this state. But

the gross income derived from the sale of such natural re-

source products to manufacturers, wholesalers, jobbers, or

licensed retailers, and the gross income derived from all

sales of such natural resource products for delivery out-

side of this state, shall be included in determining the

measure of the tax imposed upon such producer in said

Section 2-a of this Act.

That, notwithstanding the repeal of Section 2-b of

Chapter 119, Laws of 1934, as amended, same being Sec-

tion 10107 of the Mississippi Code of 1942, by House Bill

311, of the 1946 Regular Session of the Legislature, a per-

son engaging or continuing within this State in the busi-

ness of manufacturing, compounding, or preparing for

sale, profit, or commercial use, either directly or through

the activity of others, in whole or in part, any article or

articles, substance or substances, commodity or commod-

ities, and engaged in the business of selling his manufac-

tured products, at retail in the State, shall be required to

make returns of the gross proceeds of such retail sales

A34

and pay the tax imposed in Section 2-c of said Chapter

119, Laws of 1934, as amended, same being Section 10108

of the Mississippi Code of 1942, for the privilege of en-

gaging in the business of selling such manufactured prod-

ucts at retail in this state.

But notwithstanding the repeal of said Section 2-b of

said Chapter 119 by said House Bill 311, of the 1946 Reg-

ular Session of the Legislature, any person engaging in

this state in the business of manufacturing, compounding,

or preparing for sale, profit, or commercial use, either di-

rectly or through the activity of others, in whole or in part,

any article or articles, substance or substances, commodity

or commodities, and engaging in the business of selling his

manufactured products to manufacturers, wholesalers, job-

bers, or licensed retailers, shall not be required to pay the

tax imposed in said Section 2-c of said Chapter 119 for the

privilege of selling such manufactured products at whole-

sale. Nor shall such person be required to pay the tax

imposed in said Section 2-c of said Chapter 119 for the

privilege of selling his manufactured products for delivery

outside of this state.

Section 2-d. (10109) Public Utilities, ete.—Upon

every person engaging or continuing within this state in

the business of owning or operating a water or public

sewerage system, or owning or operating a street rail-

way for the transportation of freight or passengers for

hire, there is likewise hereby levied and shall be collected

a tax, on account of the business engaged in, equal to two

per cent of the gross income of the business.

Upon every person engaging or continuing within

this state in the business of furnishing to consumers,

electricity, electric lights, current, power or gas, natural

or artificial, there is likewise hereby levied and shall be ©

A35

collected a tax on account of the business engaged in,

equal to one per cent of the gross income of the busi-

( ness, when such electricity, electric lights, current,

: power or gas is sold for industrial purposes, and a tax

on account of the business engaged in, equal to two per

cent of the gross income of the business when such elec-

; tricity, electric lights, current, power or gas is sold for

any other purpose.

Upon every person engaging or continuing within this

state in the business of Owning or operating a telegraph

business, or owning or op®érating a telephone business for

the transmission of messages or conversations between

points within this state, there is likewise hereby levied

and shall be collected a tax, on account of the business

engaged in, equal to two per cent of the gross income of

the business.

Upon every person engaging or continuing within

this state in the business of operating a railroad for the

transportation of freight or passengers for hire between

points within this state, there is likewise hereby levied

» and shall be collected a tax, on account of the business

engaged in, equal to two per cent of the gross income of

the business.

Upon every person engaging or continuing within

this state in the business of operating a sleeping or palace

car business, carrying passengers from one point to an-

other in this State, there is likewise hereby levied and

Shall be collected a tax, on account of the business en-

8aged in, equal to two per cent of the gross income of the

business.

Upon every person engaging or continuing within

this state in the business of operating an express busi-

hess, transporting freight or passengers from one point

Nig

War Ske:

eee

pio: ti

A36

to another in this state, there is likewise hereby levied

and shall be collected a tax, on account of the business en-

gaged in, equal to two per cent of the gross income of the

business.

Upon every person engaging or continuing within

this state in the business of operating a pipe line for

transporting for compensation or hire from one point to an-

other in this state oil or natural gas or artificial gas through

pipes or conduits in this state, there is likewise hereby

levied and shall be collected a tax, on account of the busi-

ness engaged in, equal to two per cent of the gross in-

come of the business.

Upon every person engaging or continuing within

this state in the business of operating motor vehicles on

the public highways of this state, for the transportation

of persons or property for compensation or hire, there is

likewise hereby levied and shall be collected a tax, on ac-

count of the business engaged in, equal to two per cent

of the gross income of the business; but such tax shall

not apply to persons engaged in transporting school chil-

dren under contract with counties or school districts.

There shall be excepted from the gross income used

in determining the measure of the tax imposed in this

section so much thereof as is derived from the business

conducted in commerce between this state and other states

of the United States, or between this state and foreign

countries which the State of Mississippi is prohibited

from taxing under the constitution of the United States

of America. And nothing contained in this section shall

be construed to levy a tax upon the operation by munici-

pal corporations of any electric, gas or water system owned

by the municipality operating it.

A37

Section 2-e. (10110) Contracting, ete.—Upon every

person engaging or continuing in this state in the busi-

ness of contracting for a fixed price, commission, fee or

wage, to build, erect, construct, repair, grade, excavate,

drill, explore, test, survey, mine, install in or add to any

highway, street, sidewalk, bridge, culvert, sewer or water

system, drainage, or dredging system, levee, levee system,

or any part thereof, electric or steam railway, reser-

voir, or dam, hydraulic or power plant, electric lighting

or power system, steam heating plant or system, trans-

mission line, pipe line, tower dock, storage tank, wharf,

excavation, grading, water wells, gas wells, oil wells, or

any part thereof, when the gross amount of the total con-

tract price or the gross amount received as compensation

exceeds the sum of three thousand dollars ($3,000.00),

there is hereby levied and shall be collected a tax on

account of the business engaged in equal to one per cent

of the total of the contract price, or the compensation re-

ceived. The tax imposed in this section is levied upon

the prime contractor and shall be paid by him.

Provided, however, that a contractor performing

contracts to erect any building, the contract price of which

amounts to twenty five thousand dollars ($25,000) or

more, shall also operate under the provisions of this sec-

tion when building, erecting, repairing, installing in or

adding to any such building or structure not listed here-

in.

Provided, that where the work to be performed is

sublet by the prime contractor to different persons, or in

Separate contracts to the same person, each person per-

forming any part of said work shall be liable for the

amount of the tax which accrues on account of the work

performed by such person, when the tax heretofore im-

Sah

me

dE Sac GMB thd BE aaa Db Sab PEE A, eh PRN a AAG? ii tpt! IG SAP hte aa aE pte Rhine 8 I te ERA RA. eh clei ti

A38

posed has not been paid upon the whole contract by the

prime contractor.

Provided, further, that where any person engaged in

any business on which a tax is levied in Section 2-f of this

act, also qualifies as a contractor, and contracts with the

owner of any project to perform any services herein taxed,

where the contract price or the compensation received

exceeds the sum of three thousand dollars ($3,000.00),

such person shall likewise pay the tax imposed by

this section on account of said contract, in lieu of the tax

imposed by Section 2-f of this Act.

It is hereby declared to be the purpose of this section

to impose a tax on the business of contracting within this

state, in all instances where the total contract price or

the compensation received amounts to more than three

thousand dollars ($3,000.00), when the price to be paid

or the compensation received for any services required

or has required the use of equipment or tools of any kind,

or the supplying of any material which has become an

integral part of such contract. And to the end that the

state may receive the tax due in every instance, any per-

son entering into any contract, as defined in this section,

where the total contract price, or the compensation re-

ceived amounts to more than ten thousand dollars ($10,-

000.00) shall, before entering into the performance of such

contract, execute and file with the chairman of the State

Tax Commission a good and valid bond in a surety ceom-

pany authorized to do business in this state, or with suf-

ficient sureties to be approved by the commissioner, con-

ditioned that all taxes which may accrue to the State of

Mississippi under this section on account of the execution

of such contract will be paid when due, and the execu-

tion and filing of said bond shall be a condition precedent

to commencing work on any contract in the State of Mis-

PRIOR & We WL ~r

—

sissippi. Provided, however, that any taxpayer may pay

the tax in advance on any contract in lieu of furnishing

bond.

Every person failing either to procure the permit re-

quired by this act, or to execute the bond herein pro-

vided, or to pay the tax in advance, before beginning the

performance of any contract shall be denied the right to

perform such contract until he complies with such require-

ments, and the attorney general is hereby authorized to

proceed by injunction, when requested by the commis-

sioner so to do, to prevent by injunction any activity in

the performance of such contract until either such per-

mit is secured, or such bond is executed and filed, or such

tax is paid in advance, and any temporary injunction en-

joining the execution of such contract shall be granted

without notice by any judge or chancellor now authorized

by law to grant injunctions.

A39

Provided, that where any person engaged in any busi-

ness which is subject to the taxes levied in Section 2-f of

this act, and who performs service for a contractor as de-

fined in this section, may report the gross income from

such services at the rate of one-eighth of one per cent in

lieu of the two per cent rate levied in Section 2-f. Pro-

vided, however, such services must be on the structure or

improvement being erected or repaired and the contract

must be taxable under this section.

Section 2-f. (10111) Miscellaneous Businesses—( 1 )

Upon every person engaging or continuing within this

State in any of the following businesses, there is likewise

hereby levied and shall be collected a tax on account of

the business engaged in equal to 2% of the gross income

of the business:

A40

Aeroplane repair and service shops

Automobile repair shops

Automobile garages

Automobile fender and body repair shops

Automobile service stations

Battery stations

Motorcycle repair shops

Billiard, pool, and domino parlors

Bowling and ten pen alleys

Cleaning, pressing, and dyeing

Cold storage plants

Cold storage lockers

Cotton compresses

Cotton gins

Cotton warehouses

Custom creosoting, custom planing, custom sawing,

and any other custom processing for a fee.

Electricians and all repairs of electrical equipment

=» not elsewhere taxed.

Foundries, machine or general repair shops not else-

where taxed.

Hotels

Jewelry and watch repairing

Laundries

Mattress renovators

Meat curing plants

Plumbers or pipe fitters

Refrigerator repair shops

Radio repai: shops

Shoe repair shops

Tourist camps, or courts

Tin and sheet metal repair shops

Vulcanizing and recapping of tires

Transfer business

Storage warehouses.

A4l

Welding shops

Woodworking and wood turning repair shops

Renting or leasing of tangible personal property

Furniture repairs and upholstery shops

Office and business machine repairs

Repairs to air conditioning

Elevator repairs

Photographers and film developers

Termite and pest control service

Storage lockers

Grading, excavating or landscaping

Services performed in connection with the surveying,

exploring, developing, producing, distributing or

testing of oil, gas, and other mineral resources,

not elsewhere taxed.

Provided, however, that in computing the tax levied

under this section, if the taxpayer is a natural person,

and employs no assistant in rendering the service taxed,

there shall be deducted from the gross income of the tax-

payer, so as to be taxed, so much thereof as has been re-

ceived by him as compensation for personal services ren-

dered by him in person to others, regardless of whether

or not such personal service includes the incidental use of

machinery, for a consideration (as distinguished from

gross income received by the taxpayer as a result of the

activities of his employees or other persons or services in

connection with the operation of machines, or gross in-

come or gross proceeds of sales derived from the produc-

tion or sale of tangible personal property). Provided,

however, that if any person exercising any privilege tax-

able under this section Shall engage in any business ac-

tivities which are taxable under any of the preceding sec-

tions of this act and shall be liable on account of such

business activities for the payment of a tax under any such

A42

preceding section, no deduction for personal services shall

be allowed in determining the measure of the tax im-

posed in such preceding section.

Section 2-g. (10112) Consolidated Returns—When

any person is engaged in two or more forms of business

activities taxable under the provisions of this act, which

are inter-related, or which are of like character, such

person shall file a consolidated return covering all busi-

ness activities, which are thus inter-related or of like

character.

Section 2-h. (10113) U.S. Gov’t. Sales, ete.—In com-

puting the amount of tax levied under this act, there shall

be excepted from the gross proceeds of sales, so much

thereof as is derived from sales of tangible property to

the United States Government or the State of Mississippi,

its departments and institutions, counties, and municipal-

ities and upon the business of transporting sand or gravel

when consigned to the United States Government, the

State of Mississippi, its departments and institutions, a

county, municipality, or sub-division thereof, and used

for road construction or maintenance, or from business

which the State of Mississippi is prohibited from taxing

under the constitution of this state or the constitution of

the United States, and all freight shipments of commercial

fertilizers moving on intrastate rates within the state are

hereby exempted from all taxes levied and assessed by

Section 2-d of Chapter 119 of the General Laws of Missis-

sippi of 1934. Provided further in computing the amount

of tax levied under this act against persons taxable un-

der Section 2-f of said act, as amended, there shall also

be excepted from the gross income of such businesses, so

much thereof as is derived from charges for labor to the

United States Government or the State of Mississippi, its

departments and institutions, counties, and municipalities.

A43

Section 2-i. (10114) Taxon Gas, Tobacco, Beer, ete.—

And in computing the amount of tax levied under this

act, there shall also be excepted from the gross income of

the business, or gross proceeds of sales, as the case may

be, all sums received or coliected as taxes, on the sale of

gasoline and oils; and all sums received or collected as

taxes levied by the State of Mississippi on tobacco, beer,

wine and malt; and all sums received or collected as Fed-

eral Retailers’ Excise Taxes.

Section 3. (10115) Must Obtain License From the

Commissioner.—If any person shall engage or continue in

any business for which a privilege tax is imposed by this

act, as a condition precedent to engeging or continuing in

such business, he shall apply for and obtain from the Com-

missioner a license to engage in and to conduct such busi-

ness, upon the condition that he shall pay the tax accruing

to the State of Mississippi under the provisions of this act;

and shall keep adequate records of such business as re-

quired by Section 8 of this act, including invoices and

other records of all purchases and sales; and such invoices

and records shall be open for inspection by the Commis-

sioner or any of his authorized agents, at any reasonable

time; and failure to keep, produce and allow such inspec-

tion of said invoices and other records shall be the cause

for revoking such license. Upon receipt of such license,

the applicant shall thereby be duly licensed to engage in

and conduct such business. Said license shall continue in

force so long as the person to whom it is issued shall con-

tinue in the same business at the same location, unless re-

voked by the Commissioner for failure to keep and pre-

serve and allow inspection of the records and invoices

herein required. The Commissioner is hereby authorized

to revoke the license of any person failing to comply with

the requirements hereof, after giving to the person hold-

ing such license, ten days notice of the intention of the

A44

Commissioner to revoke such license. And unless good

cause be shown within said ten days why such license

should not be revoked, the Commissioner may revoke such

license, and may for good cause shown, grant a new li-

cense under such conditions as the commissioner may pre-

scribe; and upon revocation of such license, or engaging

or continuing in business after such license is revoked, or

without procuring such license, shall subject such person

to all the penalties imposed by Section 15 of this act. Pro-

vided further that any person now holding a license here-

tofore issued under the provisions of this act, before this

amendment, shall not be required to obtain a new license

unless he shall change the nature or location of his busi-

ness. But the provisions with reference to keeping and

exhibiting the invoices and records herein required shall

apply to all persons who continue in business under li-

censes heretofore issued.

Section 4. (10116) Exemptions—The tax levied by

this act shall not be collected in the following instances:

(a) All sales on which a tax is paid under the Sea

Foods Act and the gross income subject to an amusement

tax under Chapter 124, Laws of 1934, and amendments

thereto; and all sales to manufacturers of natural resource

products in the original state or condition of sale on which

a severance tax is paid under the provisions of Chapter

192, Laws 1946, and amendments thereto.

(b) All sales made by agricultural or cooperative

associations organized under Chapter 5, Code of Missis-

sippi of 1942, of agricultural products, or the by-products

thereof produced in the preparation or processing of such

agricultural products for market for the benefit of the

producer thereof, and the products of farm, grove or gar-

den.

A45

(c) The gross income of cemetery associations.

(d) Sales of tangible personal property to and the

gross income of hospitals or infirmaries owned and oper-

ated by a corporation or association, no part of the net

earnings of which inures, or may lawfully inure, to the

benefit of any private shareholder, group, or individual,

and which are subject to and governed by Section 6 of

Chapter 363, Laws of 1946, as amended.

(e) The gross proceeds of sales of cotton, whether

lint cotton or seed cotton, baled cotton, whether compres-

sed or not, and cotton seed in its original condition.

(f) Amounts received from the sale of school books.

(g) Sales of all fertilizers, bagging and ties for bal-

ing cotton, insecticides, seeds, boxes, crates, hay baling

wire, bags, cotton sacks, and syrup cans used in growing

and preparing agricultural products for market.

(h) The gross proceeds of sales made by persons

who produce livestock, poultry and other products of farm,

grove or garden, when said sales are made by the pro-

ducer, or members of his immediate family, or employees

selling such products for the producer, in the original state

or condition of preparation for sale at the place of produc-

tion, and before such products are subjected to any other

process coming within a class of business, the privilege of

conducting which is taxed by the provisions of this act.

(i) Amounts received from sales to public schools,

when such schools are Supported wholly or in part by

funds provided by the State of Mississippi.

(j) The gross proceeds of retail dealers in mules,

horses and other livestock.

(k) The gross proceeds of sales of coffins, caskets,

and other materials used in the preparation of human

bodies for burial.

MLN,

Rat

A46

(1) The gross proceeds of sales of vessels or barges

of fifty (50) tons load displacement and over, when sold

by the manufacturers or builders thereof.

Section 5. (10117) Returns, Monthly, etc.—-The taxes

levied hereunder shall be due and payable on or before

the 15th day of the month next succeeding the month in

which the tax accrues. The taxpayer shall, on or before

the 15th day of each month, make out and ma‘i a return,

showing the amount of the tax for which he is liable for

the preceding month, together with a remittance in the

form required by Section 13 of this act, for the amount of

the tax, to the office of the Commissioner. Such monthly

return shall be signed by the taxpayer or a duly authorized

agent of the taxpayer, but need not be verified by oath.

Providing that persistent or wilful failure to make any re-

turn and pay the tax shown thereby to be due, by the time

specified herein, there shall be added to the amount of

tax shown to be due, ten per cent damages.

Provided, however, that when the total tax for which

any person is liable under this act, does not exceed the

sum of ten dollars ($10.00) for any month, a quarterly re-

turn and remittance in lieu of the monthly return may

be made on or before the 15th day of the month next suc-

ceeding the end of the quarter for which the tax is due.

Provided further that when any taxpayer whose lia-

bility for taxes exceeds $10.00 per month, desires to make

quarterly returns in lieu of the monthly returns herein

required, if such taxpayer shall make application to the

Commissioner for such privilege, the Commissioner may

grant such privilege upon the execution and filing by the

taxpayer with the Commissioner a good and solvent bond

with some surety company authorized to do business in

Mississippi as surety thereon in an amount double the ag-

A47

—— een "7

gregate tax paid by such taxpayer for any previous three

months period within the last calendar year. Said bond

to be conditioned for the prompt payment of such taxes

as may be due for each such quarterly period.

Provided, however, that any person taxable under this

act, having cash and credit sales, may report such cash

and credit sales separately, and upon making application

therefor may obtain from the Commissioner an extension

of time for the payment of taxes due on account of such

credit sales. Such extension shall be granted by the Com-

missioner, under such rules and regulations as the Com-

missioner may prescribe. When such extension is granted,

the taxpayer shall thereafter include in each monthly re-

port all collections made during the month next preceding,

and shall pay the taxes due thereon at the time of filing

such report.

Provided, however, that any person taxable under this

act, having cash and credit Sales, and who reports such

credit sales before collection thereof has been made, may

take credit on subsequent returns or reports for bad debts

actually charged off, if such amounts charged off have

previously been included in gross income or gross pro-

ceeds of sales, as the case may be, and the tax paid thereon.

Provided, however, that any amounts subsequently col-

lected on accounts that have been charged off as bad debts,

shall be included in the subsequent reports.

Provided, however, that in cases where an extension

of time for the payment of taxes due on account of such

credit sales shall be granted by the Commissioner and the

taxpayer shall thereafter discontinue the business in re-

lation to which such extension of time shall have been

granted, such taxpayer shall be required to file with the

Commissioner within ten days, or such further time as

the Commissioner may direct, from the date of the dis-

A48

continuance of such business, a special report showing the

amounts of such credit sales which have not been included

in determining the measure of the tax theretofore paid and

such other information with reference to such credit sales

as the Commissioner may require; and the Commissioner

shall thereupon investigate the fact with reference to such

credit sales and the condition of the accounts therefor, and

shall determine, from the best evidence available, the value

of all notes, open accounts or other evidence of debt aris-

ing out of such credit sales; and the value of such notes,

open accounts and other evidence of debt, as thus deter-

mined by the Commissioner, shall be used in determin-

ing the amount of the tax for which such taxpayer shall

be deemed to be liable on account of such credit sales.

When the amount of such tax shall have been ascertained

in the manner herein provided the taxpayer shall be re-

quired to pay the same within ten days or such further

time as the Commissioner may allow, notwithstanding the

fact that such notes or accounts may still remain uncol-

lected.

The monthly, quarterly, and annual returns required

under this act shall be made upon forms to be prescribed

by the Commissioner.

The Commissioner for good cause may extend the time

for making any return required under the provisions of

this act, and may grant such reasonable additional time

within which to make such return as he may deem proper,

but the time for filing any such return shall not be ex-

tended beyond the 15th of the month next succeeding the

regular due date of such return.

Section 6. (10118) Annual Returns, When, How Made

—On or before thirty days after the end of the tax year,

each person liable for the payment of a privilege tax un-

i

t

;

;

aa

der Section 2 and succeeding sections of this act shall make

a return showing the gross proceeds of sales, or gross in-

come of business, and compute the amount of tax charge-

able against him in accordance with the provisions of this

act, and deduct the amount of monthly or quarterly pay-

ments (as hereinbefore provided), and transmit with his

report a remittance in the form required by Section 13 of

this act covering the residue of the tax chargeable against

him to the office of the Commissioner; such return shall

be verified by the oath of the taxpayer, if made by an in-

dividual, or by the oath of the president, vice-president,

secretary or treasurer of a corporation, if made on behalf

of a corporation. If made on behalf of a partnership, joint

adventure, association, trust, estate, or in any other group

or combination acting as a unit, any individual delegated

by such firm, co-partnership, joint adventure, association,

trust, estate, or any other group or combination acting as

a unit shall make the oath on behalf of the taxpayer. If

for any reason it is not practicable for the individual tax-

payer to make the oath, the same may be made by any duly

authorized agent. The Commissioner for good cause shown

may extend the time for making the annual return on the

application of any taxpayer and may grant such reasonable

additional time within which to make the same as May,

by him, be deemed advisable.

A49

Section 7. (10119) Commissioner to Correct Error—

As soon as practicable after the return is filed the Com-

missioner shall examine it; if it then appears that the cor-

rect amount of tax is greater or less than that shown in

the return, the tax shall be recomputed. If the amount

already paid exceeds that which should have been paid on

the basis of the tax so recomputed, the excess so paid shall

be credited against the subsequent liability; and if the

amount already paid exceeds the correct amount of the tax,

A50

and the taxpayer has discontinued business, and there is no

subsequent liability upon which such excess may be cred-

ited, or if the amount of the excess so paid shall exceed

the subsequent liability for a period of twelve months, the

excess shall be refunded to the taxpayer in accordance

with the provisions of this act.

If the amount already paid is less than the amount

which should have been paid, the difference to the extent

not covered by any credits under this act shall be paid

upon notice and demand by the Commissioner.

If any part of the deficiency is due to negligence or

intentional disregard of authorized rules and regulations

with knowledge thereof but without intent to defraud,

there may be added as damages ten per cent for the first

offense, twenty-five per cent for the second offense, and

fifty per cent for any subsequent offense of the total

amount of the deficiency in the tax, and said damages

shall become due and payable upon notice and demand

by the Commissioner.

If any part of the deficiency is due to fraud with in-

tent to evade the tax, then there shall be added as dam-

ages twenty-five per cent for the first offense and fifty

per cent for any subsequent offenses of the total amount

of the deficiency in the tax, and in such a case the whole

amount of tax unpaid, including charges so added, shall

become due and payable upon notice and demand by the

Commissioner and an aditional one per centum per month

on the tax may be added from the date such tax was due

until paid.

The amount of taxes due under any return made here-

under or any return made or due under this act or any

amendments thereto shall be determined and assessed

within three years from the date such return was filed,

—

j and no suit or other proceedings for the collection of any

taxes due shall be begun after the expiration of three years

from the date such return was filed; but nothing herein

i shall affect or defeat any claim, assessment, suit, appeal,

right or cause of action for taxes due prior to the adop-

tion of this act, whether the assessment, suit, appeal or

claim therefor shall have been begun before its adoption

or shall hereafter be begun; provided, that in the case of

a false or fraudulent return with the intent to evade tax

or a failure to file a required return, the amount of tax

due may be determined, assessed and collected, and suit

or proceedings for the collection of such an amount may

be begun at any time after it becomes due.

A51

A taxpayer may apply to the Commissioner for re-

vision of the tax assessed against him, or paid by him, at

any time within three years from the date of the assess-

ment, or from the time of filing of the return. Unless a

claim for credit or refund is filed by the taxpayer within

three years from the time the return was filed, or assess-

ment made, no credit or refund shall be allowed.

Section 8. (10120) Taxpayer Must Keep Records—

Failure to Make Returns—Duty and Power of Commis-

sioner—It shall be the duty of every person engaging or

continuing, in this state, in any business for which a priv-

ilege tax is imposed by this act to keep and preserve ade-

quate records of the gross income, gross receipts or gross

proceeds of sales of such business and such other books or

accounts as may be necessary to determine the amount

of tax for which he is liable, under the provisions of this

act, which said records shall be adequate in substance

rather than form, to conform to the requirements and reg-

ulations promulgated by the Commissioner; and all of such

records shall be written in the English language. And it

sha’! be the duty of every such person to keep and pre-

A52

serve, for a period of two years, all invoices of goods and

merchandise purchased or sold for resale, and all such

books, invoices and other records shall be open for exam-

ination at any time, by the Commissioner or his duly auth-

orized agent.

The records provided for in this section shall be kept

at the taxpayer’s principal place of business within this

state, and failure to keep such records shall subject the

person so failing to all the penalties of this act.

If adequate records of the gross income, gross receipts

or gross proceeds of sales are not maintained or invoices

preserved as provided herein, or if an audit of the records

of a taxpayer discloses that additional taxes are due and

unpaid the Commissioner may make additional returns

‘and assessments from the best information available, and

shall give notice by registered mail of such returns and

assessments, and such returns and assessments shall be

prima facie correct for the purpose of this act, and the

amount of tax shown due thereby shall be a lien against all

the property of the taxpayer until discharged by payment

and if such tax be paid within ten days after notice by the

Commissioner, then there shall be added ten per centum

as damages for the first offense, twenty-five per cent for

the second offense and fifty per cent for any subsequent

offense, and interest at the rate of one per centum per

month from the time such tax was due until paid. If pay-

ment be not made within ten days after demand therefor

by the Commissioner, there may be added twenty-five per-

cent for the first offense and fifty per cent for subsequent

offenses as damages together with interest at the rate of

one per centum per month on the tax from such time such

tax was due. Provided, however, in the event such tax-

payer, within ten days from the date of such notice, shall

by petition in writing state that said return is incorrect, the

os Ea

Mes SLs

A53

Commissioner shall grant a hearing on such petition and

investigate that question fully before proceeding further

under this section.

If no return is made by any taxpayer required to make

returns as provided herein, the Commissioner shall give

written notice by registered mail to such taxpayer to make

such returns within ten days from the date of such notice

and if such taxpayer shall fail or refuse to make such re-

turns as he may be required to make in such notice, then

such returns shall be made by the Commissioner from the

best information available, and such returns shall be prima

facie correct for the purposes of this act, and the amount

of tax shown due thereby shall be a lien against

all the property of the taxpayer from the date the amount

thereof is determined to be due until discharged by pay-

ment, and if such tax be paid within ten days after notice

by the Commissioner, then there shall be added ten per

centum as damages for the first offense, twenty-five per

cent for the second offense, and fifty per cent for any

subsequent offense, and interest at the rate of one per

centum per month from the time such tax was due until

paid. If payment be not made within ten days after de-

mand therefor by the Commissioner there shall be added

twenty-five per cent for the first offense and fifty per cent

for subsequent offenses, as damages together with interest

at the rate of one per centum on the tax from the time

such tax was due. Provided, however, in the event such

taxpayer in answer to said notice from the Commissioner

shall state by petition in writing that he is not required

under the law to make such returns, the Commissioner

shall grant a hearing on such petition and investigate that

question fully before proceeding further under this section.

Section 9. (10121) Tax Shall Be Lien—The tax im-

posed by this act shall be a lien upon the property of any

A54

person subject to the provisions hereof, who shall sell out

his business or stocks of goods, or shall quit business, and

such person shall be required to make out the return

provided for under Section 6 within ten days after the

date he sold out his busimess or stock of goods, or quit busi-

ness, and pay the tax imposed by Section 2-c, and the

purchaser or his successor in business shall be required

to withhold sufficient of the purchase money to cover the

amount of said taxes due and unpaid until such time as

the former owner shall produce a receipt from the Com-

missioner showing that the taxes have been paid, or a cer-

tificate that no taxes are due. If the purchaser of a busi-

ness or stock of goods shall fail to withhold purchase

money as above provided and the taxes shall be due and

unpaid after the ten days period allowed, he shall be per-

sonally liable for the payment of the taxes accrued and

unpaid on account of the operation of the business by the

former owner. And the property sold or transferred may

be proceeded against in the hands of the purchaser or

transferee as though no sale or transfer had been made;

and where premises are equipped with permanent fixtures

so that no other commodity than that sold by the owner

of said premises can be so'd or handled thereat; and the

nature of the commodity sold is such that an amount

thereof sufficient to cover the tax accrued for one month

is not kept on hand at any one time; and such premises

are leased or rented by the owner to persons who do not

pay all taxes accrued on account of the business conducted

on such premises when due; then such place of business,

including fixtures used in such business, shall be liable

to seizure and sale under a warrant issued by the Com-

missioner, when such taxes accrued upon business con-

ducted upon such premises becomes due and unpaid.

Section 10. (10122) Aggrieved Person May File Peti-

tion. If any person having made a return and paid taxes

thereon feels aggrieved by the additional assessment made

Re upon him for any year by the Commissioner he may ap-

ply to the Tax Commission by petition, in writing, within

ten days after notice is mailed to him, for a hearing and

a correction of the amount of the tax assessed upon him

by the Commissioner, in which petition he shall set forth

the reasons why such hearing should be granted and the

amount in which such tax should be reduced. The Tax

Commission shall promptly consider such petition, and

shall grant such hearing notifying the petitioner of the

time and place fixed for such hearing. After such hear-

| ing, the Tax Commission may make such order in the mat-

ter as may appear to it just and lawful, and shall furnish

a copy of such order to the petitioner. Any person im-

properly charged with any tax and required to pay the

same, may recover the amount paid, together with interest,

in any proper action or suit against the Commissioner,

and the Circuit Court of the county in which the taxpayer

resides or is located shall have original jurisdiction of

any action to recover any tax improperly collected.

A55

Provided, however, that in any such suit, the plaintiff

must allege and prove that he alone bore the burden of

the tax sued for, and did not directly or indirectly collect

the tax from his customers. It being the declared pur-

pose of this section to make certain that any taxes re-

funded will go to the one who has borne the burden of the

illegal tax, and therefore is entitled in justice and good

conscience to such relief, and is therefore the real party

in interest. It shall not be necessary for the taxpayer to

protest against the payment of the tax or to make any de-

mand to have the same refunded in order to maintain

such suit. In any suit to recover taxes paid or to collect

taxes the court shall adjudge costs to such extent and in

such manner as may be deemed equitable.

.

A56

Provided, further, that all suits to recover taxes un-

der this section, shall be filed within three years next

after the time of payment of such taxes.

Either party to such suit shall have the right to appeal

to the Supreme Court of Mississippi as now provided by

law. In the event a final judgment is rendered in favor

of the taxpayer in a suit to recover illegal taxes, then it

shall be the duty of the State Auditor, upon receipt of a

certified copy of such final judgment to issue a warrant

directed to the State Treasurer in favor of such taxpayer

to pay such judgment, interest and costs. It shall be the

duty of the State Treasurer to honor such warrant and

pay such judgment out of any funds in the state treasury.

No injunction shall be awarded by any court or judge

to restrain the collection of the taxes imposed by this act,

or to restrain the enforcement of this act. The provisions

of Section 420, Code of 1930, shall not apply to taxes im-

posed by this act.

It shall be the duty of an attorney for the commission

or Commissioner or the Attorney General to represent the

commission, the Commissioner, or any agent or employee,

or the State of Mississippi in all legal matters relating to

the enforcement, construction, application and administra-

tion of this act, and in any litigation which may be in-

stituted by the commission or Commissioner and in which

they or either of them may become involved, upon the

order and under the direction of the Commissioners.

Section 11. (10123) Warrant for Collection of Tax.—

If any tax imposed or any portion of such tax be not paid

within ten days after the same has been determined to be

due by the Commissioner, and the taxpayer has been

given ten days written notice by registered mail of such

determination of the taxes due, the Commissioner may

:

7

‘

}

t

A57

issue a warrant under official seal directed to the sheriff

of any county of the state commanding him to levy upon

and sell the real and personal property of the person own-

ing the same found within his county, for the payment of

the amount thereof, with damages, to the amount of ten

per cent of the tax, in addition to the penalties imposed

for failure to make a proper return, or for making a fraud-

ulent return and interest, and cost of executing and en-

rolling the warrant, and to return such warrant to the

Commissioner and pay to him the money collected by vir-

tue thereof by a time to be therein specified not more than

sixty days from the date of the warrant. The sheriff shall

within five days after the receipt of the warrant, file with

the circuit clerk of his county a copy thereof, and there-

upon the circuit clerk shall enter in the judgment roll in

the column for judgment debtors, the name of the tax-

payer mentioned in the warrant, and in appropriate col-

umn, the amount of the tax, or portion thereof and dam-

ages for which the warrant is issued; and the day w! en

such copy is filed; and thereupon the amount of such war-

rants so docketed shall be and remain a lien upon the

title to and interest in real and personal property, includ-

ing choses in action, except negotiable instruments not

past due, of the person against whom it is issued in the

Same manner as a judgment duly enrolled in the office of

such clerk. The sheriff thereupon shall levy upon any

property of the taxpayer, including negotiable instru-

ments, in all respects, with like effect, and in the manner

prescribed by law in respect to executions issued against

Property ‘upon judgments.or attachment proceedings, of

@ court of record and the remedies by garnishment shall

apply and the officer shall be entitled to the same fees for

his services in executing the warrant as now allowed by

law for like Services, to be collected in the same manner

as now provided by law for like services.

A58 ‘

(10124) Jeopardy Assessment and Warrant.—If the !

Commissioner has just cause to believe and believes the :

collection of taxes due by any taxpayer will be jeopard- |

ized by delay, he may assess such taxes immediately,

together with interest or other amounts provided by this

act, and may immediately issue a jeopardy warrant under

official seal directed to the sheriff of any county of this

state. The sheriff shall immediately upon receipt of the

warrant file with the circuit clerk of his county a copy

thereof, and thereafter both the circuit clerk and the

sheriff shall proceed in accordance with the provisions of

paragraph 1 of this section.

If any sheriff shall fail to execute, file with the cir-

cuit clerk of the county for enrollment on the judgment

roll, and return any warrant directed to him as herein

provided on the return day thereof, the State of Missis-

sippi shall be entitled to recover judgment against the

sheriff and the sureties on his official bond for the amount

of the warrant, and all costs, with lawful interest thereon

until paid, together with ten per cent of the full amount

of judgment for damages, to be recovered by a suit against

the sheriff and his sureties by the Attorney General at

the request of the Commissioner.

er

Se Re ee ee Oe Tee

The tax due and unpaid under the provisions of this

act shall constitute a debt due the state and it shall con-

stitute a lien upon all the property of the taxpayer, and

the same may be collected by an action in debt or other

appropriate judicial proceeding, which remedies shall be

in addition to all other existing remedies.

Pe ee eee |

Any person liable for a tax under the provisions of

this act on account of engaging or continuing in this state

in any business who failed to obtain a license from the

Commissioner as provided in Section 3 of this act, or after

A59

such license has been revoked, or who fails to make his

returns for taxation as provided in Section 6 of this act,

or who fails to keep adequate records and invoices pro-

vided by Section 8 of this act, or fails or refuses to per-

mit inspection of such records, or who fails to pay any

taxes when due under the provisions of this act, shall for-

feit his rights to do business in this state until he com-

plies with all the provisions of this act and until he en-

ters into a bond, with sureties, to be approved by the Com-

missioner, in an amount not to exceed all taxes estimated

to become due by said person under the provisions of

this act for any three months period, conditioned to com-

ply with the provisions of this act, and pay all taxes leg-

ally due by him, and it shall be the duty of the Attorney

General, when he shall have received notice from the

Commissioner that any person is engaged in or continuing

in this state in any business without obtaining such li-

cense, or after such license has been revoked, or without

keeping and allowing inspection of all records required

by this act, or without making such return, or returns, and

without paying all taxes due by him under the provisions

of this act, to proceed by injunction to prevent the con-

tinuance of said business, and any temporary injunction

enjoining the continuance of such business shall be granted

without notice by any judge or chancellor now authorized

to grant injunctions,

Section 12. (10125) Calendar or Fiscal Year Annual

Return—The assessment of taxes herein made and the

returns required therefor shall be for the year ending on

the 31st day of December; provided, however, that if the

taxpayer in transacting his business, keeps the books re-

flecting the same on a basis other than the calendar year,

he may, with the assent of the Commissioner, make his

annual returns and pay taxes for the year covering his

-

A60 3

accounting period, as shown by the method of keeping the |

books of his business. ‘

Section 13. (10126) Is Additional Tax.—The tax im-

posed by this act shall be in addition to all other licenses

and taxes levied by law as a condition precedent to en-

gaging in any business taxable hereunder, except as in

this act otherwise specifically provided. But no municipal-

ity or levee district shall be authorized to levy any tax by

virtue of the provisions of this act.

Remittances—How Made. All remittances of taxes

imposed by this act shall be made to the Commissioner by

bank draft, check, cashier’s check, money order, or money,

who shall issue his receipts therefor to the taxpayer, when

requested, and shal' deposit all moneys received in some

bank or banks in this state, qualified as a state depository;

provided, no remittance other than cash shall be final dis-

charge of liability for the tax herein assessed and levied

unless and until it has been paid in cash to the Commis-

sioner.

Section 13-A. (10127) Settlement With Treasury. On

or before the fifteenth day of each month the amount re-

ceived from taxes levied under the provisions of this act

during the preceding month shall be paid and distributed

as follows:

(a) One-tenth (1/10) of the total amount of taxes

collected under the provisions of this act during the pre-

ceding month shall be deposited in the state treasury to

the credit of a special fund designated as the “Division of

State Aid Road Construction” created by Senate Bill No.

1 of the extraordinary session of the legislature of 149. | —

It being the purpose of this act to pay into said special

fund the approximate amount of sales taxes collected on

the sales of automobiles, trucks and tractors.

A61

(b) An additional amount which shall be equivalent

to one-half cent (14¢) per gallon upon the total net gal-

lonage of gasoline (or motor vehicle fuel other than gaso-

line) upon which the state gasoline or motor vehicle fuel

tax is paid during the preceding month as shown by re-

ports filed with the motor vehicle comptroller as required

by Section 7, Chapter 264, Laws of 1946, as now or here-

after amended, shall likewise be deposited in the state

treasury to the credit of said special fund designated as

the “Division of State Aid Road Construction.” For the

purpose of this subsection the motor vehicle comptroller

shall furnish the commissioner with a monthly certificate

showing the total net gallonage of gasoline or other motor

vehicle fuel upon which the state tax was paid during the

preceding month, which certificate shall be furnished on

or before the fifth day of each month.

The term ‘“‘net gallonage” as used in this subsection

shall mean the total number of gallons of gasoline or other

motor fuel reported to the Motor Vehicle Comptroller dur-

ing the preceding month as being liable for the state tax

less the number of gallons upon which the state tax is

refunded in whole or in part during such month, either by

direct refund or by credit on tax liability.

(c) The remainder of the amounts collected under the

provisions of this act shall be paid into the state treasury

to the credit of the general fund.

From said amount of taxes paid into said special fund

under subsections (a) and (b) hereof, there shall first be

deducted and paid the amounts necessary to pay the ex-

penses of the Division of State Aid Road Construction,

such expenses not to exceed $50,000.00 per annum.

From the remainder of said funds there shall first be

allocated to each county monthly the sum of eight hundred

COE Re Es Cod <a

A62

thirty-three dollars and thirty-three cents ($833.33) and

the balance remaining shall be allocated to the several

counties in the following percentages:

County Per Cent County Per Cent

Adams ; — 0.89 Lowndes 0.96

Alcorn 0.94 Madison . 1.47

Amite _. 1.71 Marion 1.38

Attala i ae Marshall 0.92

Benton 0.84 Monroe 1.03

Calhoun es Montgomery 1.08

Carroll , 1.29 Neoshoba 1.62

Chickasaw ..- 0.97 Newton . 1.22

Choctaw _. 0.98 Noxubee 1.36

Claiborne 1.03 Oktibbeha _. 0.4

Clarke. ee Clay 0.87

Hinds ey Coahoma 1.46

Holmes _- ince Copiah .................. 1.90

Humphreys .... 0.93 Covington 1.12

Issaquena _.. 0.45 DeSoto 0.87

Itawamba — 1.36 Forrest 1.15

Jackson ................. 0.99 Franklin 1.71

ioe ........... 1 George 0.86

Jefferson _.. 0.95 Greene 1.77

Jefferson Davis 0.85 Grenada 0.85

Jones . 1.79 Hancock 0.77

Kemper ...... 1.64 Harrison . . 1.45

Lafayette . 1.22 Panola 1.55

Lamar 0.93 Pearl River . 1.30

Lauderdale ~ 1.80 Perry 1.23

Lawrence. 1.12 Pike . 1.30

Leake pcaoona 1.25 Pontotoc 0.80

ee Prentiss 1.14

Leflore _.. 1.29 Quitman 0.85

Lincoln ...... 1.86 Rankin ...... : 1.46

A63

County PerCent County Per Cent

SE 1.20 Vaion 1.03

Sharkey _... (0.63 Walthall 1.00

Simpson 1.41 Warren... 0.85

es Washington .._ 1.62

mom ...... OS Wayne. 1.76

Sunflower _... 1.77 Webster sd.

Tallahatchie ss: 1.27 Wilkinson _____—s— 0.96

Tate etietes 0.72 Winston _. 1.25

Tippah - 1.24 Yalobusha - 0.75

Tishomingo . 0.98 Yazoo ___. < oan

Tunica _. . 1.04

Section 13-b. (10128) Auditor to Check Books—At

the end of each month the Auditor Shall carefully check

the books and records of the Commissioner and his accounts

with the bank or banks and shall verify the amounts paid

or to be paid into the state treasury. Any duty herein re-

quired of the Auditor may be performed by an inspector

employed under the provisions of Section 3747 of the Mis-

sissippi Code of 1930.

Section 13-c. (10129) Records—The Commissioner

shall keep full and accurate records of all moneys received

by him, and how disbursed; and shall preserve all returns

filed with him under sections 5 and 6 of this act for a pe-

riod of three years.

Section 14. (10130) Information In Files Not To Be

Divulged.—Unless in accordance with the judicial order or

as herein provided, the members of the State Tax Com-

mission, its agents, clerks or Stenographers, shall not di-

vulge the gross income, gross proceeds of sales or the

amount of tax paid by any person as shown by the re-

ports filed under the provisions of Sections 5 and 6 of

this act, except to members and employees of the State

A64

Tax Commission and the income tax department thereof,

for the purpose of checking, comparing and correcting re-

turns, or to the Governor or to the Attorney General, or

any other legal representative of the State in any action

in respect to the amount of tax due under the provisions

of this act.

Section 14-a. (10131) Duty of Secretary of State—

The Secretary of State shall withhold the issuance of any

certificate of dissolution or withdrawal in the case of any

corporation organized under the laws of this state or or-

ganized under the laws of another state and admitted to do

business in this state until the receipt of a notice from

the Commissioner to the effect that the tax levied under

this act against any such corporation has been paid, if

any such corporation is a taxpayer under the law, or until

he shall be notified by the Commissioner that the ap-

plicant is not subject to pay a tax hereunder.

Section 15. (10132) Unlawful to Refuse to Make Re-

turns—Penalty.—It shall be unlawful for any person to

engage or continue in any business for which a tax is

imposed by this act without procuring a license as re-

quired by Section 3 of Chapter 119, Laws of 1934, as

amended herein, or after such license has been revoked, or

who shall fail or refuse to make the return provided to be

made in Sections 5 and 6 of this act or to make any false

or fraudulent return or false statement in any return,

with intent to defraud the state or to evade the payment

of the tax or any part thereof, imposed by this act; or for

any person to aid or abet another in any attempt to evade

the payment of the tax, or any part thereof, imposed by

this act; or for the president, vice-president, secretary or

treasurer of any company to make or permit to be made

for any company or association any false return, or any

—

A65

false statement in any return required by this act with

the intent to evade the payment of any tax hereunder;

or for any person to fail or refuse to permit the examina-

tion of any book, paper, account, record, or other data

by the Commissioner, or his duly appointed agent, as re-

quired by this act; or to fail or refuse to permit the in-

spection or appraisal of any property by the Commissioner

or his duly appointed agent, or to refuse to offer testi-

mony or produce any record as required by this act; or

for any person using the public roads and highways of

this state for the transportation of merchandise for sale,

other than a common carrier having a permanent office

in this state where proper records of merchandise trans-

ported are kept, and produced for inspection by the Com-

missioner or his agents, to fail to have in his or her pos-

session at all times while such merchandise is being trans-

ported, and allow inspection of, the invoices or sales

tickets required by Section 18 of this act. Any person

violating any of the provisions of this act shall be guilty

of a misdemeanor and on conviction thereof shall be fined

not more than five hundred dollars ( $500.00) or imprisoned

not exceeding six months in the county jail, or punished

by both such fine and imprisonment, at the discretion of

the court within the limitations aforesaid. In addition to

the foregoing penalties, any person who shall knowingly

Swear to or verify any false or fraudulent Statement, with

the intent aforesaid shall be guilty of the offense of per-

jury and, on conviction thereof, shall be punished in the

manner provided by law. Any company for which false

return, or return containing a false statement as aforesaid

shall be made, shall be guilty of a misdemeanor and may

be punished by a fine of not more than five hundred dol-

lars ($500.00).

A66

Section 16. (10133) Administration of Act Vested in

Chairman of the State Tax Commission. The administra-

tion of this act is vested in and shall be exercised by the

chairman of the State Tax Commission, except as other-

wise herein provided, and the enforcement of any of the

provisions of this act in any of the courts of the state shall

be under the exclusive jurisdiction of the chairman of the

State Tax Commission who may require the assistance of

and act through the Attorney General, prosecuting attor-

ney of any county, or any district attorney, or any at-

torney for the commission, and may with the assent of the

Governor, employ special counsel in any county to aid the

prosecuting attorney, the compensation of whom shall be

fixed by and paid only upon the approval of the Governor;

but the Attorney General, district attorney or prosecuting

attorney of any county shall receive no fees or compensa-

tion for services rendered in enforcing this act in addition

to the salary paid to such officer. The chairman of the

State Tax Commission shall appoint, as needed, such depu-

ties, agents, clerks and stenographers as authorized by

law, who shall serve under him and shall perform such

duties as may be required by the Commissioner, including

the signing of notices, warrants and such other documents

as may be specifically designated by the Commissioner,

not inconsistent with this act, and they are hereby au-

thorized to act for the Commissioner, as he may prescribe

and as provided herein. Each such agent shall execute a

bond in the sum of five thousand dollars ($5,000.00) for the

faithful discharge of his duties. All of such agents, clerks

and stenographers may be removed by the Chairman of

the State Tax Commission for cause of which the Com-

missioner shall be the final judge.

In case of violation of the provisions of this act the

Commissioner may decline to prosecute for the first of-

ee ee

Ee

A67

fense, if in his judgment such violation is not wilful or

flagrant.

Section 17. (10134) Commissioner to Make Regula-

tions—The Commissioner shall from time to time promul-

gate such rules and regulations not inconsistent with this

act for making returns and for the ascertainment, assess-

ment and collection of the tax imposed hereunder as he

may deem necessary to enforce its provisions; and upon

request shall furnish any taxpayer with a copy of such

rules and regulations.

All forms, necessary for the enforcement of this act,

shall be prescribed, printed and furnished by the Com-

missioner.

The Commissioner may adopt rules and regulations

providing for the issuance of permits to manufacturers to

purchase tangible personal property without the payment

to the vendor of the Sales tax and/or Use tax, and pro-

viding for such manufacturer to report and pay such tax

directly to the Commissioner, in instances where the Com-

missioner determines that such provisions will facilitate

and expedite the collection of the tax at the proper rates

which may be due on such purchases by the manufacturer.

Section 18. (10135) Commissioner or Agent May

Examine Books, Etc.—The Commissioner or his authorized

agent may examine any books, papers, records, or other

data bearing upon the correctness of any return, or all re-

turns, or for the purpose of making a return, or returns,

where none has been made as required by Sections 5 and 6

of this act, including the records of any common carrier,

bank, wholesale or retail dealer in any kind of merchan-

dise, doing business in this State, whether in regard to his

own or another’s return, and may require the attendance

of any person and take his testimony with respect to any

a

A68

such matter, with power to administer oaths to such per-

son or persons. Any person using the public roads and

highways of this state for the transportation of merchan-

dise of any kind to be sold in this state, whether such per-

son is operating as a common carrier, contract carrier or

operating a private vehicle, while so engaged in the trans-

portation of such merchandise, must have in his or her

possession while so engaged, invoices or delivery tickets

correctly disclosing the nature and quantity of such mer-

chandise, the consignor and consignee of each and every

item of such merchandise being transported. Provided,

that common carriers operating under the supervision of the

Interstate Commerce Commission, or the Mississippi Su-

pervisors of Common Carriers, and having and maintain-

‘ing a permanent office or place of business in this state,

where correct and complete records of all merchandise

transported into this state are kept, shall not be required

to have in the immediate possession of the person in charge

of the vehicle in which such merchandise is being trans-

ported, such invoices or delivery tickets, but the records

of such common carriers shall be open to the inspection

of the Commissioner, or his authorized agents, at all rea-

sonable times, for the purpose of obtaining information

with reference to all merchandise transported into the

state for sale. In the case of any vehicle engaged in the

transportation of merchandise for sale, not belonging to

nor operated by common carriers so supervised, nor keep-

ing complete records in this state open to inspection by the

Commissioner, the Commissioner or his authorized repre- _

sentatives or agents, may examine any invoices or sales

tickets carried by the person in charge of such vehicle, and |

compare same with the merchandise being transported, |

for the purpose of ascertaining whether or not the provi-

sions of law are being complied with, the character and |

quantity of merchandise being so transported, and the con-

A69

signor and consignee thereof, in aid of the proper admin-

istration of this act. The absence of such invoices or de-

livery or sales tickets indicating to whom said merchan-

dise belongs, or is to be delivered, in the hands of such

person so engaged in transporting of merchandise, shall be

prima facie evidence that such person is so transporting

such merchandise in violation of this act and liable to a

penalty of $25.00 for each such offense, which said penalty

may be assessed and collected by the Commissioner or his

duly authorized agent, and subject to all the provisions of

this act. If any person summoned as a witness shall fail

to obey any summons to appear before the Commissioner

or his authorized agent, or shall refuse to testify or answer

any material question or to produce any book, record,

paper or other data when. required to do so, such failure

or refusal shall be reported to the Attorney General, the

district attorney or county attorney, who shall thereupon

institute proceedings in the circuit court of the county

where such witness resides to compel obedience to any

summons of the Commissioner, or his authorized agent.

Said proceedings to be by petition for citation to such per-

son refusing to obey such summons, to show cause why

such person should not be required to obey such sum-

mons; and the circuit judge of the district may hear such

petition in term time or vacation upon two days’ notice to

the person sought to be cited; and the circuit judge may

enter such order as he may deem proper, and punish any

failure to comply with such order as for any other con-

tempt of said court. Officers who serve summonses or sub-

poenas, and witnesses attending, shall receive like compen-

sation as officers and witnesses in the justice of the peace

courts; to be paid from the proper appropriation for the

administration of this act.

se - .

A70

Section 19. (10137) Excess Payment May Be Re-

funded—If upon examination of any monthly or quarterly

return made under this act, it appears that an amount of

tax has been paid in excess of that properly due, then the

amount in excess shall be credited against any tax or in-

stallment thereof then due from the taxpayer, under any

subsequent monthly or quarterly return; and if upon ex-

amination of any annual return it appears that an amount

of tax has been paid in excess of that properly due, such

excess may be credited upon any amount due under any

subsequent return of such taxpayer, during any succeeding

years, or in the event that the taxpayer does not continue

in business and has no subsequent liability for such tax, or

prefers to obtain a refund of such excessive payment of

taxes before any subsequent liability for such taxes ac-

crues, such overpayment may be refunded as provided by

Section 3276 of the Mississippi Code of 1930; and the Com-

missioner shall issue to such taxpayer, upon request, a

certificate of overpayment, which certificate shall be suf-

ficient evidence to support a claim for the refund of such

amount of overpayment. Any taxes recovered by suit by

any taxpayer may be refunded in like manner, but such

claim shall be accompanied by a copy of the order, judg-

ment or decree of the court in which such recovery was

had by the taxpayer.

Section 20. (10138) Prior Rights or Actions Not Af-

fected by This Act—Nothing in this act shall affect or

defeat any claim, assessment, appeal, suit, right or cause

of action for taxes due, under the Emergency Revenue

Act of 1932, or the Revenue Act of 1930, prior to the date

on which this act becomes effective, whether such assess-

ments, appeal, suits, claim or action shall have been begun

before the date on which this act becomes effective, or shall

thereafter be begun; and the sections of the Emergency

5 nd exodus thn el

See Pee, 2 8,

A7l

Revenue Act of 1932, or the Revenue Act of 1930, amended

or repealed by this act are expressly continued in full force,

effect and operation for the purpose of the assessment and

collection of any taxes due under any such laws prior to

the date on which this act becomes effective, and for the

imposition of any penalties, forfeitures or claims for a fail-

ure to comply therewith.

Section 21. (10139) Invalidity of Part of Act Not to

Invalidate Entire Act—If any clause, sentence, paragraph

or part of this act shall for any reason be adjudged by any

court of competent jurisdiction to be invalid, such judg-

ment shall not affect, impair or invalidate the remainder

of this act, but shall be confined in its operation to the

clause, sentence, paragraph, or part thereof directly in-

volved in the controversy in which such judgment shall

have been rendered.

Section 22. (10140) Conflicting Laws Repealed—That

Chapters 90 and 91, Laws of Mississippi, 1932, being an

act imposing a privilege tax on gross income and gross

proceeds of sales, be the same are hereby repealed.

me Vourt,

FILED

SEP 30 1955 F

HAROLD B. WILLEY,

NO. 385

IN THE

SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1955

DUNN BROS., INC. Appellant

vs.

A. H. STONE, CHAIRMAN,

STATE TAX COMMISSION,

REVIVED AS ALEX McKEIGNEY,

CHAIRMAN OF STATE TAX

ooo os cp, | OE .......-.... 4. ppellee

APPEAL FROM THE SUPREME COURT OF

THE STATE OF MISSISSIPPI

MOTION TO DISMISS OR AFFIRM

JOHN E. STONE

Woolfolk State Office Building

Jackson, Mississippi

Counsel for Appellee

————————————————

SS aye

Lait <e

IN THE

SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1955

NO. 385

DUNN BROG., INC... Apnsiiant

vs.

A. H. STONE, CHAIRMAN,

STATE TAX COMMISSION,

REVIVED AS ALEX McKEIGNEY,

CHAIRMAN OF STATE TAX

Co

APPEAL FROM THE SUPREME COURT OF

THE STATE OF MISSISSIPPI

MOTION TO DISMISS OR AFFIRM

Appellee, pursuant to Rule 16 of the Revised Rules of

the Supreme Court of the United States, moves that the

final judgment of the Supreme Court of Mississippi be

affirmed on the ground that the question is so unsub-

stantial as not to warrant further argument.

i

STATEMENT OF FACTS AND ISSUES

ON APPEAL

This is an appeal from a decision rendered by the

Supreme Court of the State of Mississippi on the 13th

day of June, 1955, and reported in Southern Reporter

a

2

Advance Sheet 80 So. (2d) 802, holding the appellant

not entitled to refund for taxes paid the State of Mis-

sissippi on gross income earned from transportation

within the State. Suggestion of Error was overruled

on the 15th day of July, 1955, and reported in Southern

Reporter Advance Sheet 81 So. (2d) 712.

Appellant, a Texas corporation, did not qualify to do

business in the State of Mississippi; never maintained

an office therein and owned no property in the State

of Mississippi other than that which was used in the

performance of the work involved in this suit and which

property was removed therefrom upon the completion

of appellant’s contract. Its business consisted of the

transporting and stringing of steel pipe used in the con-

struction of pipe lines.

During the fiseal year, June 1, 1950, to May 31, 1951,

the Tennessee Gas Transmission Company was construcet-

ing a gas pipe line which extended through several states,

and particularly through the State of Mississippi. In

furtherance of its work the company ordered steel pipe,

for this particular job, from a foundry in California,

which pipe was shipped by rail from the foundry to the

nearest railroad station in Mississippi to be then trans- —

ported to the right-of-way of the pipe line where the |

particular pipe was to be used. When the pipe arrived

at the railroad station to which it was billed, it was in-

spected by agents of the Tennessee Gas Transmission

Company, accepted by it and turned over to appellant

for transportation from the railhead to the pipe line

right-of-way. In all bills of lading involved herein the

Tennessee Gas Transmission Company was both the

consignor and consignee. The contract for the transpor-

tation between Tennessee Gas Transmission Company

3

and appellant was entered into prior to the time of the

original shipment.

The case was tried on pleadings and ‘*Agreed State-

ment of Facts’’, none of which, it might be added refer to

the Carmack Amendment upon which appellant places

great reliance in its Jurisdictional Statement, nor is there

any statement or intimation in either the pleadings or

the Agreed Statement of Facts that the appellant, in any

instance, transported pipe across the state line from

railhead in Mississippi, as set forth in the Jurisdictional

Statement, even though said Jurisdictional Statement

states that no tax was demanded in such instances. The

State of Mississippi, acting through appellee’s predeces-

sor, imposed and collected a two per cent tax on the gross

income derived from such transportation under the pro-

visions of Section 10109, Mississippi Code of 1942 (Re-

compiled), and this suit was brought for refund of such

tax.

Il.

ARGUMENT

A SUBSTANTIAL FEDERAL QUESTION IS NOT

PRESENTED IN THIS CASE

A federal question does not arise when a state court

holds that a statute applies only to domestic transporta-

tion.

Erie R. Co. v. Purdy, 185 U. S. 148.

This does not mean that appellee denies the right of

this court to determine for itself what is interstate com-

merce, but this court has held that it is bound by the

construction which a state court places on its own statutes,

Memphis Natural Gas Company v. Stone, 335 U. S. 80,

84, 85.

4

Aero Mayflower Transit Co. v. Board of R. R. Comrs.,

332 U. S. 495, 499, 500.

This was even true in the case of Spector Motor Co. v.

O’Connor, 340 U. S. 602, wherein this court accepted, as

its basic predicate, the construction placed upon the

statute involved by the highest Court of Connecticut,

which held that the tax was levied upon the right to do

interstate business. The Supreme Court of Mississippi

has previously held that the incidence of the tax under

the statute involved in this case was upon intrastate

business.

Interstate Oil Pipe Line Co. v. Stone, 203 Miss. 715,

729, 35 So. (2d) 73, affirmed 337 U.S. 662:

‘‘Hence, the statute was designed only for the pur-

pose of taxing the privilege of operating a pipe line for

transporting the oil from one point to another in the

state...’’

(A)

THE INCIDENCE OF APPELLANT’S TAX

WAS INTRASTATE TRANSPORTATION

Interstate commerce must have a beginning and an

ending. The interior movement of goods does not con-

stitute interstate commerce.

Coe v. Errol. 116 U. 8S. 517, 528;

Interstate Commerce Commission v. Detroit G. H. €

M. R. Co., 167 U. S. 633, 646;

New York ex rel Pennsylvama R. Co. v. Knight, 192

U. S. 21, 27; -

Interstate Oil Pipe Line Co. v. Stone (dissenting), 337

U.S. 662, 675.

As a general rule an interstate journey begins when

a passenger boards a train and ends when he disembarks

wea

a anlingl z a} ee rye Le

GRAS A Ot a RR, Sage

5

therefrom. Taxi transportation to and from the depot

constitutes a local incidence and no part of interstate

commerce.

United States v. Yellow Cab Co., 332 U. 8. 218, 230, 231.

Whenever service is rendered wholly within a state

it is presumed to be subject to state control and taxation,

and the burden is on him who asserts the contrary.

New York ex rel Pennsylvania R. Co. v. Knight, 192

U.S. 21, 27.

The inspection of the shipment prior to acceptance by

agents of the consignee was for their own benefit as set

forth in the Jurisdictional Statement; therefore, was

within itself a sufficient incident to terminiate the inter-

state transportation.

Bacon v., Illinois, 227 U. 8. 504, 516.

The transportation taxed by the State of Mississippi

was only that performed between termini wholly within

the state, and no part of appellant’s transportation was

into another state. Appellant began its work only after

the pipe had been transported by rail as close as possible

to the pipe line right-of-way and delivery had previously

been accepted by the consignee. If interstate commerce

is to have an end and local haulage a beginning, this is it.

The distinction between the two may take place even in

a fleeting moment.

Southern Pacific Co. v. Gallagher, 306 U. S. 167, 177.

Local delivery of goods purchased from another state

may furnish a sufficient incidence upon which to hang a

state sales tax, and this is true regardless of the fact

that interstate transportation was intended at the time

of the sale.

6

McGoldrick v. Berwind-White Coal Co., 309 U.S. 33, 58,

Since the incidence of this tax is upon local or intra-

state transportation, the fact that the contract for such

transportation was negotiated outside the State of Mis-

sissippi is immaterial.

Department of Treasury of Indiana v. Wood Preserv-

ing Corporation, 313 U. S. 62, 67, 68.

Department of Treasury of Indiana v. Ingram-

Richardson Mfg. Co., 313 U. S. 252, 254.

(B)

A STATE MAY TAX GROSS PROCEEDS OF

INTERSTATE COMMERCE

The tax under this statute is exacted for the local

protection afforded appellant.

Interstate Oil Pipe Line Co. v. Stone, 203 Miss. 715, 729,

35 So. (2d) 73.

Even interstate commerce may be made to pay a tax

on its gross receipts so long as it is apportioned to the

mileage in each particular state.

Central Greyhound Lines, Inc. v. Mealey, 334 U. S. 653,

663.

National Leather Co. v. Massachusetts, 227 U. S. 413,

423:

‘Tt is settled law that a state may lawfully impose

upon a foreign corporation a tax for the privilege of

doing business within its borders which is measured

by the proportionate part of its gross receipts which

are received within the state, Maine v. Grand Trunk RB.

Co., 142 U.S. 217, 228...’

—

7

Apportionment presents no problem in this case for

all of the transportation performed by appellant was

within the taxing State of Mississippi.

There is no contention, nor can there be, that the rate

is unfair or that the tax within itself is discriminatory.

The mere fact that appellant holds a Certificate of

Convenience and Necessity from the Interstate Com-

merce Commission is insufficient within iteelf to grant

tax exemption.

Stone v. Interstate Natural Gas Co., (CCA-5) 103 Fed.

(2d) 544, 549:

‘... It is clear also that because a matter is regulable

only by one government it is not thereby exempted

from just taxation by the other.’’

Even interstate commerce may be made to pay its way.

Postal Tel.-Cable Co. v. Richmond, 249 U. 8. 252;

Western Live Stock v. Bureau of Revenue, 303 U. S.

250.

WHEREFORE PREMISES CONSIDERED, appel-

lee prays that the appeal in this case be dismissed or that

the judgment of the Supreme Court of the State of Mis-

sissippi be affirmed.

Respectfully submitted,

JOHN E. STONE

Attorney for Appellee

I, C. B. Snow, acknowledge receipt of copy of the above

and foregoing Motion to Dismiss or Affirm, on this the

26 day of September, 1955.