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 *Page 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, inHerlihy 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 my 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.
[1, 2] 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 *Page 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 gas in the state.
(6) Operating private car lines within the state.
(7) Publication of newspapers, magazines, etc.
(8) Job printing, engraving, embossing, etc.
Class (d), rate, two per cent.:
(1) "Selling any tangible personal property whatsoever at retail, except bonds and stock."
Class (e), rate, one per cent.:
(1) Restaurants, dining cars, lunch rooms, soda fountains, etc.
Class (f), rate, two per cent.:
(1) Conducting theatres, operas, shows, races, contests, dance halls, etc.
(2) Hotels, guest houses, resorts, parking lots, tourist camps, etc.
Class (g), rate, one-fourth of one per cent.:
(1) Compounding, packing, preserving and selling tangible personal property at wholesale. *Page 44
It will be observed from a reading of these classes that the business of contracting is nowhere mentioned or referred to in them but the contention of appellants is that the construction company, which had built two steel bridges and their approaches on highway 60 under a contract with the state, should pay a sales tax of two per cent. on the consideration received therefor, $118,000.00, their theory being that in building the bridges and turning them over to the state it was, within the meaning of class (d), supra, engaged in the business of selling tangible personal property at retail. The trial court held adversely to this contention but upon appeal to this court that ruling was reversed by a well-stated opinion prepared by Justice ROSS and concurred in by me, Justice LOCKWOOD dissenting, 50 Ariz. 332,72 P.2d 573. When this opinion was rendered, however, on October 9, 1937, I did not know that on June 11, 1937, the legislature had amended chapter 77, Session Laws of 1935, by adding to its section 2, article 2, a class of business not theretofore enumerated, reading as follows:
"(h) At an amount equal to one per cent. of the gross proceeds or gross income from the business, upon every person engaged or continuing in the business of contracting. Payments made by the contractor for labor employed in construction, improvements or repairs shall not be subject to the tax herein imposed." Chapter 2, Acts 1st Special Session, Thirteenth Legislature.
This provision was a part of the sales tax law when the case was argued before us on June 16th, but it had been such only three or four days and the acts of the legislature which passed it had not then been published, hence, it must be that the parties to the litigation were at that time unaware of its passage, for counsel for neither side called our attention to it. Had they done so, I would have treated it then, *Page 45 as I do now, in so far as it concerns contractors, as a legislative construction of the language imposing a tax on those engaged in the business of selling tangible personal property at retail, because this is the natural and logical effect of the procedure used and the language employed to bring contractors expressly within the provisions of the sales tax law. If the Thirteenth Legislature had felt that contractors were, within the meaning of the act of 1935, engaged in the business of selling tangible personal property at retail but had decided that the rate of two per cent. on the contract price was too high and should be reduced, it seems plain that it would have brought this change about in the natural way, that is, by amending specifically the language imposing such a rate, subsection 1 of class (d), and not have left it to those whose duty it was to administer the law, and perhaps the courts, to decide whether, in so far as that provision applied to contractors, it had been repealed by implication. Instead of doing this, however, it treated contracting as a business separate and distinct from any other included within the terms of the act — not as one already within its provisions — placed it in a class by itself, and provided that those engaged in it should pay only one per cent. upon their gross income and that even this should not be imposed on the payments made for labor employed on the job.
The fact that the legislature, when it first imposed by express language a tax on those engaged in contracting, fixed such a low rate, one only about a third as high as that retailers of tangible personal property were required to pay, indicates, to my mind, that it thought it was bringing them within the provisions of the sales tax law for the first time, and not that it was lowering a rate already required of them, because one finds it difficult to believe that legislators, who in June, 1937, felt that a rate of around three-fourths *Page 46 of one per cent. on the gross income of a business was proper, could ever have entertained the view or required that those following it should pay a rate of two per cent., or practically three times that much. To hold that the Twelfth Legislature did intend to impose such a rate on contractors and that the Thirteenth was merely amending it in that particular would mean that the later body reduced it sixty-five per cent., provided the payments for labor be figured at, say, thirty per cent. of the total cost, with the result that one constructing two bridges and their approaches for $118,000.00 would pay a tax of $826.00, instead of $2,360.00. It is unbelievable that contractors were ever required to pay a rate almost three times that demanded of those engaged in other businesses in which the labor cost is a big factor, for a close scrutiny of the latter discloses that the policy of the legislature from the start was to impose a low rate on those whose business called for heavy labor expenditures. While it is true that labor enters, to some extent, into every business enterprise, yet it was never the intention of the legislature that it should be treated as tangible personal property and a tax collected for the state on the payments made therefor.
It should not be overlooked that the first sales tax law in Arizona, which was enacted in June 1933, Acts Eleventh Legislature, First Special Session, chapter 17 (Revised Code Supplement 1934, article 15, page 344), and remained in effect for two years, imposed a tax of one and one-half per cent. on those engaged in the business of selling tangible personal property at retail and that, so far as the record discloses, no effort was made during this period to collect a tax on the income from contractors. The legislature was evidently satisfied with this construction of its language, for in the enactment of a second sales tax law two years later, or in June, 1935, it incorporated therein without *Page 47 change, except that the rate was raised from one and a half to two per cent., the exact language of class (d), section 2, article 2 of the act of 1933, imposing a tax on the gross income of the business of selling tangible personal property at retail. The same interpretation was placed on this act by the tax commission for over a year after its passage, or until July 23, 1936, when it decided that contractors were subject to the tax as retailers of tangible personal property and ordered the director of the sales tax division to collect it from then on. When the Thirteenth Legislature, many of whose members had served in the Twelfth, met in May of this year in its first special session to revise the sales tax law, it evidently knew that a controversy as to the proper construction of that provision had arisen, that the trial court had decided the question, and that it had been brought to this court on appeal. Knowing these facts, it reenacted the exact language of class (d), section 2, article 2 of chapter 77 of the act of 1935, imposing a two per cent. tax on those engaged in selling tangible personal property at retail, and proceeded to provide specifically in a separate and distinct section that contractors should pay not two but one per cent. on their gross income, and that their payments for labor should be excluded from even this. I cannot regard such action by the legislature, in view of the facts then existing, otherwise than saying in effect that it was never intended that contractors should be treated as retailers of tangible personal property and that it was then, for the first time, placing them under the provisions of the sales tax law, and requiring them to pay what, in its judgment, was a proper rate. It evidently felt that the expression, "the business of selling any tangible personal property whatsoever at retail," except as therein modified, had been used in the acts of 1933 and 1935 in the sense in which they are generally understood, *Page 48 so in chapter 2, First Special Session, 1937, it proceeded to use the exact language again in the same sense and to employ in addition the term, "the business of contracting," to convey the meaning it ordinarily carries, the purpose of the first being to continue the sales tax on a person engaged in the business of selling at retail and of the second to impose it for the first time on one engaged in the business of contracting. Each of them referred to an enterprise separate and distinct from that mentioned or intended by the other.
Hence, it seems clear that the incorporation of subsection (h),supra, in section 2, article 2 of the sales tax act of 1937 was intended as a legislative construction of the expression, "selling any tangible personal property whatsoever at retail, except bonds and stock," in so far as that language applied to those engaged in the business of contracting, and since the body that incorporated it in the law and may change, modify or eliminate it, has thus construed it, it is, as I see it, the duty of the court to accept that declaration of its meaning. It is a rule of statutory construction that where, in the enactment of a law, the legislature employs in a subsequent clause of the same act or in later legislation on the same subject language clarifying a doubtful expression theretofore used, the court should give that language the meaning the legislature intended. The principle was stated by Chief Justice MARSHALL many years ago in Alexander v. Mayor etc. of Alexandria, 5 Cranch, 1, 7,3 L. Ed. 19, when he said:
"If in a subsequent clause of the same act provisions are introduced, which show the sense in which the legislature employed doubtful phrases previously used, that sense is to be adopted in construing those phrases. Consequently, if a subsequent act on the same subject affords complete demonstration of the legislative sense *Page 49 of its own language, the rule which has been stated, requiring that the subsequent should be incorporated into the foregoing act, is a direction to courts in expounding the provisions of the law."
In 25 R.C.L., p. 1064, § 288, is found the following language:
". . . If it can be gathered from a subsequent statute in parimateria what meaning the legislature attached to the words of a former statute, they will amount to a legislative declaration of its meaning, and will govern the construction of the first statute."
See, also, the following: Board of Commrs. of SweetwaterCounty v. Bernardin, (C.C.A.) 74 F.2d 809; Fergus MotorCo. v. Sorenson, 73 Mont. 122, 235 P. 422; State v.Clausen, 63 Wash. 535, 116 P. 7; State v. Youngbluth etal., 60 Wash. 383, 111 P. 240; Stephens County v. Hefner,118 Tex. 397, 16 S.W.2d 804; American Laundry Machinery Co. v. Union Trust Co. of Rochester et al., 153 Misc. 55, 274 N.Y. Supp. 898.
In view of the foregoing, it is my opinion that the judgment of the trial court was correct and should be affirmed. It is so ordered.
LOCKWOOD, J., concurs.