Wade Church, present Atty. Gen., and Stanley Z. Goodfarb, Asst. Atty. Gen., Robert[85 Ariz. 295] Morrison, former Atty. Gen., and Robert G. Mooreman, formerly Sp. Asst. Atty. Gen., on briefs, for appellants.
Paul W. LaPrade, Whitney & LaPrade, Phoenix, for appellee.
This is an appeal by the Arizona State Tax Commission from a judgment entered for appellee in its suit for refund of taxes paid under protest. The matter was submitted to the trial court upon stipulated facts, including the testimony of one witness upon deposition, pursuant to appellee's motion for summary judgment. In substance, the question presented is like that heard in Moore v. Smotkin, 79 Ariz. 77, 283 P.2d 1029, on rehearing, 79 Ariz. 401, 291 P.2d 216, pertaining to the reach of the Excise Revenue Act of 1935, as amended, as it applies to the business of 'contracting', A.R.S. Section 42-1310, in this case for a period subsequent to December 1, 1953.
The agreed facts are that appellee is a corporation engaged in planning and selling what are known as 'Staggs-Bilt' homes on tracts provided therefor. It purchases acreage and subdivides it by filing a map and plat of the land, setting forth easements, dedicated streets and the division into lots; improves the property by putting in paving, curbs, and, where required, sewer and water mains; plans the homes to be constructed on the lots; contracts for the construction of the homes; obtains mortgage financing for the project, acting itself as the mortgagor; and effects sales of the home and lot units to the public. Some of the units are sold after the homes are built and some are sold pursuant to contracts to purchase entered into before the homes are built. All such sales contracts include a provision like the following:
'House to be built according to model house floor plan _____, and built according to plans and specifications on file with FHA.'
As noted, appellee does not itself build the houses it sells. Instead, the houses are built for appellee by Staggs Construction Company pursuant to a basic contract therefor, stipulating the price of each type of house to be constructed. Staggs Construction Company, in turn, subcontracts the building work to others. Although the sole stockholders of both companies are Ralph E. Staggs and his wife, Patricia Jean Staggs, who also are, respectively, president and vice president-secretary of both companies, appellant did not contend below, and does not argue here, that the corporations should be treated as a single unit, and their affiliation, therefore, will be disregarded in our consideration of the matter.
The taxing statute provides for 'annual privilege taxes measured by the amount or volume of business transacted', A.R.S. [85 Ariz. 296] Section 42-1309, and specifies the businesses covered and applicable rates as follows (A.R.S. Section 42-1310):
'The tax imposed by subsection A of § 42-1309 shall be levied and collected at the following rates:
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'2. At an amount equal to one per cent of the gross proceeds of sales or gross income from the business upon every person engaging or continuing within this State in the following businesses:
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'(i) Contracting, but payments paid by the contractor for labor employed in construction, improvements or repairs ...