176 N.E.2d 417
Nos. 36873 and 36874Supreme Court of Ohio.
Decided July 5, 1961.
Taxation — Sales tax — Sections 4505.06 and 5739.03, Revised Code — Preventing dealer from establishing payment of tax on sale of automobile — By presenting prepaid tax receipts with application for certificate of title — Statutes valid.
The amendments to Sections 4505.06 and 5739.03, Revised Code, that became effective on July 1, 1959, and which prevent an automobile dealer from establishing payment of the sales tax on his sale of an automobile by presenting prepaid tax receipts with the application for a certificate of title for the purchaser, are valid.
APPEALS from the Court of Appeals for Franklin County.
In case No. 36873, it is alleged in the petition filed in the Common Pleas Court by plaintiff, an automobile dealer, that the dealer sold an automobile to a certain buyer on July 17, 1959, and attached to the application for a certificate of title for that buyer prepaid sales tax stamps in the proper amount of the tax imposed with respect to that sale but that defendant clerk of courts refused to issue a certificate of title because the tax was not paid to defendant by cash, certified check, draft or money order in accordance with the requirements of Section
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4505.06, Revised Code, as amended effective July 1, 1959.
In case No. 36874, similar allegations are made in the petition filed in the Common Pleas Court by the buyer of that automobile.
Plaintiff in each case contends that certain amendments to Sections 5739.03 and 4505.06, Revised Code, which became effective July 1, 1959, are unconstitutional.
By Section 5739.02, Revised Code, “an excise tax is * * * levied on each retail sale made in” Ohio with certain specified exceptions. The amount of the tax is dependent upon the price; and, generally speaking, it amounts to three per cent of the price involved in a taxable sale.
Section 5739.03, Revised Code, reads in part:
“* * * the tax imposed by Section 5739.02 * * * shall be paid by the consumer to the vendor, and each vendor shall collect from the consumer the full and exact amount of the tax payable on each taxable sale, and, unless a receipt therefor is required to be issued by a Clerk of a Court of Common Pleas under the provisions of Section 4505.06 * * * shall evidence the payment of the tax by cancelling prepaid tax receipts, equal in face value to the amount of the tax * * *.” (Emphasis added to indicate portion added by amendment effective July 1, 1959.)
Subsequent provisions of that section provide for delivery of “one part of each such cancelled prepaid tax receipt to the consumer.” These prepaid tax receipts are commonly referred to as sales tax stamps and are frequently saved for charitable and other organizations for redemption by them at two per cent of their face value pursuant to the provisions of Sections 5741.08
and 5741.09, Revised Code.
Prior to July 1, 1959, Section 4505.06, Revised Code, provided in part:
“In the case of the sale of a motor vehicle by a dealer to a general purchaser or user, the certificate of title shall be obtained in the name of the purchaser by the dealer upon application signed by the purchaser. In all other cases such certificate shall be obtained by the purchaser. * * *
“The clerk, except as * * * [to nontaxable sales], shall refuse to accept for filing any application for a certificate of title and shall refuse to issue a certificate of title unless prepaid
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tax receipts required by Section 5739.03 * * * are presented with the application in the manner and form to be prescribed by the Tax Commissioner or unless the applicant submits with the application, payment of such tax by cash, certified check, draft, or money order payable to the clerk who shall issue a receipt in the form prescribed by the commissioner, or a receipt issued by the commissioner showing the payment of the tax. Such receipts are consumer’s portions of prepaid tax receipts for the purposes of Sections 5741.08 and 5741.09 * * * and are subject to redemption in the same manner and at the same rate as the redemption of consumer’s portions of prepaid tax receipts.” (Emphasis added to indicate portions deleted by amendment effective July 1, 1959.)
The Common Pleas Court sustained demurrers to each of the foregoing petitions and, the plaintiffs not desiring to plead further, rendered a judgment of dismissal in each action.
On appeals to the Court of Appeals on questions of law, those judgments were reversed.
The causes are now before this court on appeals from those judgments of reversal by the Court of Appeals.
Messrs. McLeskey McLeskey and Messrs. Hamilton Kramer, for appellees.
Mr. Mark McElroy, attorney general, Mr. John J. Lokos and Mr. Earl W. Allison, prosecuting attorney, for appellants.
TAFT, J.
The dealer complains because it is now required to pay the sales tax “by cash, certified check, draft, or money order” with the application for a certificate of title for the purchaser of an automobile, instead of being allowed to make such payment by presenting prepaid tax receipts with that application, as it was permitted to do prior to the amendments of Sections 4505.06 and 5739.03, Revised Code, that became effective July 1, 1959.
In order to understand one of the dealer’s reasons for such a complaint, it is necessary to consider Section 5739.07, Revised Code. So far as pertinent, that statute reads:
“All * * * prepaid tax receipts shall be sold and accounted
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for at a discount of not to exceed two per cent of the face value, as a commission for handling and cancelling such prepaid tax receipts.”
The principal complaint of the dealer is its loss of the two per cent commission.
The dealer contends that the state singled out the automobile dealer and determined that such automobile dealer shall receive no compensation for the collection of the sales tax on the sale of an automobile but that every other vendor shall be paid compensation for collection of the sales tax on their sales; that this constitutes a discrimination so arbitrary and unreasonable as to amount to a denial of due process of law as well as of the equal protection of the law; and that this requires a holding that those amendments to Sections 4505.06 and 5739.03, Revised Code, are unconstitutional.
The dealer admits that the state would not be required to pay compensation to any vendor for collecting the sales tax on his retail sales, but contends that, if the state does undertake to pay such compensation to vendors generally, it cannot exclude automobile dealers from the right to such compensation for collecting the sales tax on retail sales of automobiles.
However, under the words of Section 5739.07, Revised Code, the two per cent is “a commission for handling and cancelling * * * prepaid tax receipts,” — not compensation for collecting the sales tax. Under the amendments to the law complained of by the dealer, the dealer is no longer required to handle or cancel prepaid tax receipts on the sale of an automobile. Hence, there is no reason for paying him a commission for doing so.
The dealer contends that it is prejudiced by those amendments not only by being denied the opportunity of getting the two per cent commission on sales of automobile but also by being deprived of the opportunity of giving its customers tax stamps on such sales which they can give to charitable or other organizations for redemption pursuant to Sections 5741.08 and 5741.09, Revised Code. Even assuming the validity of these contentions, it does not necessarily follow, as the Court of Appeals held, that there is an unwarranted discrimination against it as an automobile dealer.
The General Assembly has the right to designate the sellers
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of automobiles as a class to be deprived of those opportunities without depriving other vendors of such opportunities if there is a real and substantial reason for doing so. In our opinion, there is.
The sales tax stamp system was apparently devised to enlist the help of the purchaser and of the vendor in collecting that tax. The extent to which the General Assembly had this in mind is indicated by the provisions of Section 5741.08, Revised Code, for redemption of sales tax stamps at two per cent of their face value by charitable and other organizations “to obtain the assistance [of such organizations] in the collection of” sales and use taxes.
In collecting the tax on the sale of an automobile the state does not need the help of the seller or of others to the extent that it needs such help in collecting the tax on the sale of other kinds of personal property. By reason of the certificate of title law, a purchaser from an automobile dealer gets no “right, title, claim, or interest in or to” the purchased automobile until a certificate of title is issued to such purchaser. Section 4505.01 et seq., Revised Code. Because of these provisions, it must have been clear to the General Assembly that the most certain method of collecting the tax on the sale of an automobile by a dealer was to have it collected by the public official who was authorized to issue the certificate of title. There is no such certain method of collecting the tax on retail sales of other kinds of personal property.
It is apparent therefore that, with respect to the tax on the retail sale of an automobile by a dealer, there is no need to call upon anyone to insure the collection of such tax other than the public officer authorized to issue the certificate of title. On the other hand, since there is no such certain method of collection of the tax on retail sales of other kinds of property, it is necessary, in order to assist in collecting the tax, to enlist and pay for the support and help of the vendor and others in the handling and collection of prepaid tax receipts (i.e., sales tax stamps).
What we have said with respect to the action brought by the dealer in case No. 36873 obviously disposes of the action brought by the buyer of the automobile in case No. 36874.
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It follows that the judgment of the Court of Appeals in each case must be reversed, and that of the Common Pleas Court in each case must be affirmed.
Judgments reversed.
WEYGANDT, C.J., ZIMMERMAN, MATTHIAS, BELL, RADCLIFF and O’NEILL, JJ., concur.
RADCLIFF, J., of the Fourth Appellate District, sitting by designation in the place and stead of HERBERT, J.