THAD M. MOORE, FRANK LUKE and D. C. O'NEIL, and Members of and Constituting the State Tax Commission of Arizona, and FRANK E. FRASER, as Director of the Sales Tax Division of the State Tax Commission of Arizona, Appellants,
PLEASANT HASLER CONSTRUCTION COMPANY, a Corporation, Appellee
APPEAL from a judgment of the Superior Court of the County of Maricopa. J. C. Niles, Judge. (For former opinion see 50 Ariz. 317, 72 P.2d 573). On motion for rehearing. Judgment of trial court affirmed.
Mr. Joe Conway, Attorney General, Mr. W. E. Polley, His Assistant, and Mr. J. B. Sumter, of Counsel, for Appellants.
Messrs. Kibbey, Bennett, Gust, Smith & Rosenfeld, for Appellee.
[51 Ariz. 41] McALISTER, C.J.
The judgment of the trial court was reversed and appellee, the construction company, has requested a rehearing and in its motion assigns several reasons why, in its view, the court reached the wrong conclusion. Some of these present anew matters dealt with in the original opinion, but in disposing of the motion consideration will be given only to those not then presented.
One of the grounds urged by appellee in support of its motion is that it was a close doubtful question whether contractors came within the terms of the sales tax law and, this being true, the court should have applied to the facts the rules of contemporaneous practical construction and
given that act the meaning those whose duty it was to administer it placed upon it for a period of over three years from the date it first became operative. Its doubtful meaning, appellee contends, in so far as contractors are concerned, is shown by these facts: First, there was a dissenting opinion by a member of this court holding that contractors are not engaged in the business of selling tangible personal property at retail; second, the decision of the trial court that contractors do not come within its terms; third, the opinion of the Attorney General of the state, the legal advisor of the tax commission, to the same effect; fourth, the words, "business of selling," as generally understood, do not include "the business of contracting," but to uphold appellants' contention of the sales tax law they must be treated as though they do; fifth, the tax commission whose duty it was to collect the tax, did not attempt to bring contractors within the act for a period of over three years after it was first enacted in June, 1933; sixth, conflicting opinions on the question in the four jurisdictions in which the matter has been considered, those in Illinois and Arkansas favoring the view that contractors [51 Ariz. 42] are engaged in the business of selling tangible personal property at retail and those in Maryland and Louisiana holding to the contrary. It should be pointed out in this connection, however, that since the rendition of the original opinion in which Blome v. Ames, 365 Ill. 456, 6 N.E.2d 841, 111 A.L.R. 940, was cited by us as authority, the Supreme Court of Illinois, in Herlihy Mid-Continent Co. v. Nudelman, etc., 367 Ill. 600, 12 N.E. 638, has expressly overruled that case in so far as it holds that "construction contractors who furnish labor and material in excavating... or in the erection of foundations or buildings, or in the making of various kinds of structural repairs to buildings" are subject to the sales tax. Such contractors, not the Sanitary District of Chicago for whom they were building, are, within the meaning of that law, the users, not the sellers, of these materials. It may, perhaps, be true that the rule of contemporaneous practical construction should, as a result of the foregoing facts, be applied, but since by view of the matter in its present state rests upon a different proposition, I shall not undertake to say definitely whether it should be or not. The doubtful meaning of the sales tax law, however, as applied to contractors, is a material factor in bringing about the opinion I now entertain of the question whether its provisions include them.
A reading of chapter 77, Session Laws of 1935, the sales tax law with which we are here concerned, discloses that it divides those persons upon whom the legislature imposed a sales tax into seven different classes and that it requires all those in the same class, with one exception, to pay the same rate but that it does not apply that rate to each of the seven classes. Upon one class it imposes a rate of one-fourth of one per cent. on its gross income or sales, upon four classes a rate of one per cent., and upon two [51 Ariz. 43] classes a rate of two per cent., as the enumeration given below will disclose.
Class (a), rate, one per cent.:
(1) Manufacturing, baling, crating, etc., for sale, profit or commercial use, agricultural and horticultural products, etc.
Class (b), rate, one per cent.:
(1) Transporting for hire persons or property by motor vehicle from one point to another in the state.
Class (c), rate, one per cent.:
(1) Mining, quarrying, smelting for sale, oil, gas, sand, copper, gold, silver, etc.
(2) Furnishing electricity, gas and water.
(3) Transmitting messages by telephone or telegraph in the state.
(4) Transporting for hire freight or passengers in the state.
(5) Operating a pipe line for carrying oil or ...