Tennessee Oil Co. v. McCanless

MAJORITY OPINION ON TAXATION OF EXPORT GASOLINE. The majority of the Court do not concur in the chancellor's construction of Code Section 1140 as amended by section 13 of chapter 130 of the Acts of 1933. This construction relieves complainant of liability for tax on gasoline sold to Moody and Browder. Without question these sales were made, properly passed, and there was delivery to the buyers in Tennessee. The complainant was a distributor of gasoline, as that term is defined in Section 1126 of the Code and was liable for the tax upon the gasoline sold to Moody and Browder unless relieved by the exemption contained in section 13 of chapter 130 of the Public Acts of 1933. Unless this section is applicable to the transactions the gasoline sold to Moody and Browder should clearly be included in the measure of complainant's tax. Section 13 of chapter 130 of the Acts of 1933, carried into Williams' Code at Section 1140 and in Michie's 1938 Code at Section 1140, is as follows: "Sec. 13. Be it further enacted, That Section 1140 be amended by striking out said Section and substituting in lieu thereof the following: "`Gasoline or distillate not previously the subject of an original sale in this State, stored in this State for export to points outside the State, shall not be included in the measure of the tax liability of any distributor or dealer; provided that such gasoline or distillate is stored in a separate tank marked "export tank"; "`Provided that a bond is executed by the distributor or dealer that in the opinion of the Commissioner of Finance and Taxation adequately protects the State against loss of tax in case said gasoline or distillate is not subsequently exported outside the State; "`Provided that gasoline or distillate stored for export longer that a period of sixty days must be included in the *Page 694 measure of the tax liability of the distributor or dealer so storing such gasoline or distillate.'" By this 1933 amendment the distributor is relieved of the tax on gasoline stored for export in designated tanks and exported within sixty days from the date of storage. This exemption is granted to a distributor as to the gasoline he exports within the statutory period. It is not granted to the distributor as to the gasoline he sells and delivers in this State, even though that gasoline be sold for export. To export means to carry or to send abroad. Webster'sInternational Dictionary; Thompson v. United States,142 U.S. 471, 12 S.Ct., 299, 35 L.Ed., 1084. A distributor does neither when he sells and delivers at his place of business in this State. A case in point is A.G. Spalding Bros. v. Edwards, D.C., 285 F., 784, 785. In that case a manufacturer of sporting goods in New York sold certain baseball bats and balls to a commission house in the same city for export to a business firm in Venezuela. The manufacturer marked the goods for export, delivered them to the export carrier, taking a receipt which it delivered to the purchaser, who made payment. The internal revenue collector demanded the sales tax imposed by the current Act of Congress, Oct. 3, 1917, sec. 600, 40 Stat., 316. The tax was paid under protest and the manufacturer sued for its recovery, relying on the provision of Section 9 of Article 1 of the Federal Constitution reading, "No Tax or Duty shall be laid on Articles exported from any State." The suit was dismissed. Among other things the Court said: "Here, however, the sale was wholly made and consummated within the United States; the only part played by plaintiff in the actual export movement was that at *Page 695 the request of its purchaser it marked and delivered the goods to the steamship company. So far as plaintiff was concerned, the merchandise might have been removed from the carrier's custody by Scholtz Co. and resold within the United States. The reason for this was that no actual export movement on the part of plaintiff was ever begun." In the case before us the complainant contributed nothing to the transaction in the way of export movement. The gasoline was delivered to the buyers' trucks at the complainant's place of business and the movement was wholly instituted and controlled by the buyers. A comparison of the original Code, Section 1126 and 1140 with the amendments to those sections enacted by chapter 130 of the Act of 1933 strengthens the view indicated. The second paragraph of Section 1126 of the Code is in these words: "The term `distributor' means and includes every person who engages in the business in the state of refining, manufacturing, producing, or compounding gasoline or distillate, and selling the same in this state; and also every person who engages in the business in this state of shipping, transporting, or importing any gasoline or distillate into, and making original sales of the same, in this state." Section 1140 of the Code reads as follows: "None of the provisions of this statute shall apply to the sales of gasoline or distillate when sold for, and exported out of the state." It will be noted under these two Code sections that gasoline sold for export was not included in the measure of the distributor's tax liability. By the second paragraph of section 1 of chapter 130 of the Acts of 1933, Section 1126 of the Code was amended by adding to the *Page 696 definition of distributor one making original sales in this State "for any purpose whatsoever." In section 13 of chapter 130 of the Acts of 1933, amending Section 1140 of the Code, the exemption was accorded to gasoline "stored in this State for export" and subsequently exported, not as in original Code, Section 1140 to gasoline "when sold for [export], and exported out of the state." It seems to us that these amendments were made by the Act of 1933 to meet the construction of the statute upon which the complainant insists. It should be noticed that the judgment of the District Court inA.G. Spalding Bros. v. Edwards, supra, was reversed by the Supreme Court in 262 U.S. 66, 43 S.Ct., 485, 486, 67 L.Ed., 865. Since we are construing a statute of this State, the decision of the one Court no more than the other is binding upon us and we like the reasoning of the District Court. Things upon which the Supreme Court based its decision in the Spalding case do not appear in the case before us. There the dealer marked the goods for export, delivered them to an export carrier, and took a bill of lading. Here delivery was made of the gasoline to the buyers' trucks at the distributor's place of business, just as delivery would have been made to any buyer using or vending the gasoline in Tennessee. There the Supreme Court refers to any exercise of the purchaser's right to remove the goods from an export movement as a theoretical possibility and said there was not "the slightest probability of any such change." Here experience with fraudulent gasoline tax evasion has demonstrated that there is great probability of diversion from bona fide export in transactions such as these. There the Supreme Court followed the rule of liberal protection for exports. Here *Page 697 we must follow the rule of strict construction of tax exemptions. The amendments of the gasoline tax laws heretofore set out enacted in 1933, as we have said, very plainly show that it was not the intention of the lawmakers to exempt from the measure of the distributor's tax liability gasoline handled as was the gasoline sold to Moody and Browder. McKINNEY CHAMBLISS, JJ., concur in this opinion.