State Tax Commission v. Board of Education

Smith, J.

(dissenting): I find myself unable to agree with the conclusion reached by the majority. In a determination of a question such as this it is the duty of this court to interpret the statute so as to give effect to the intention of the legislature. We are not concerned with the wisdom of the provisions.

Section 3 of chapter 374, Laws of 1937, provides, in part, as follows:

“From and after June 1, 1937, for the privilege of engaging in the business of selling tangible personal property at retail in this state or rendering or furnishing any of the things or services taxable under this act, there is hereby levied and there shall be collected and paid a tax as follows: . . . (e) a
tax at the rate of two percent upon the gross receipts from the sale of admissions to any place of amusement, entertainment, or recreation, excepting, however, admissions to state, county, district, and local fairs and the gross receipts from educational, religious, or charitable activities where the entire amount of such receipts is expended for educational, religious, or charitable purposes.”

Let us examine the above language. In the first place, we find “a tax at the rate of two percent upon the gross receipts from the sale of admissions to any place of amusement, entertainment, or recreation.” Were it not for the above provision there would be no question before us. It is the above provision that places the tax on the activities with which we have to deal if it is placed there at all. But the legislature that placed this tax also provided some exceptions to it. Note first that this tax is “upon the gross receipts from the sale of admissions.” The next clause is “excepting, however, admissions to state, county, district and local fairs.” Note this exception says “admissions,” not the “gross receipts from the sale of admissions,” as in the clause putting the tax on. If the language of the section stopped there then we would still have no question. But the legislature had still further exceptions in mind. The next provision is as follows: “and the gross receipts from educational, religious, or charitable activities where the entire amount of such receipts is expended for educational, religious or charitable purposes.” Note that this clause relates back to the word “excepting” at the beginning of the preceding clause. It must be noted that the words used here are “gross receipts” not “gross receipts from the sale of admissions” as used in the clause putting the tax on, not “admissions” as used in the clause providing for the first exception, but “gross receipts.” There need be no conjecture as to what the legislature meant when it said “educational activity.” Every person who has talked to an educator in recent years knows that. *730But let us assume that the legislature consulted the dictionary. There we find among the definitions of the word activity “an extracurricular activity” — obviously the sort of enterprise that is being considered in this case. What was the reason the legislature used the words “gross receipts from the sale of admissions” in the clause putting the tax on “admissions” in the first exception and “gross receipts” in the clause with which we are concerned? There surely is some reason for it. The reason is that in the case of educational activities the legislature knew that the gross receipts were from many, things besides the sale of admissions, including the sale of popcorn, peanuts, candy, sweaters, or any of the many items incidental to carrying on the activities which we find in our schools as well as from gate receipts. Bear in mind this clause is not putting a tax on, it is making an exception to the tax.

The phrase which gives us trouble, however, is the following: “Where the entire amount of such receipts is expended for educational . . . purposes.”

This phrase is a limitation on the exception of which we have just spoken. Therefore, the entire amount of such receipts must be expended for educational purposes in order for the exception to take effect. The majority opinion holds that the activities mentioned in the pleadings are educational. The conclusion reached in the opinion is placed on the ground that the entire amount of the receipts is not expended for educational purposes, or, in other words, that some portion of the entire amount of the receipts is expended for some purpose that is not educational. The conclusion is, that since in the operation of some of these activities soda póp, popcorn, candy, and in one instance sweaters, are sold, this brings the entire receipts within the provision putting on the tax and takes it out of the exception. My first objection to this conclusion is that the legislature evidently intended to except the receipts from the sale of such things from the tax or it would not have used the words “gross receipts” in stating the exception instead of some form of the word “admission,” as it did in the provision putting on the tax or providing for the first exception.

I hold that once it is admitted that these activities are educational, then one is led inevitably to the conclusion that any money expended for a purpose incidental to these activities is expended for an educational purpose. I reach that conclusion this way: There are many cases holding that the building of a stadium or gymnasium *731is expending public money for an educational purpose. In view of these holdings the cinder path upon which the hundred-yard-dash man runs may be built with public money. The same is true of the jumping standards and the hurdles. The same must be true of the seats for the spectators, because about all a stadium consists of is seats. At least more of the money used in building a stadium is expended for seating facilities than in making the playing field. Now, of course, this money goes to sporting-goods houses, to cement companies and so forth, but as far as the school board is concerned it is expended for educational purposes, that is, making possible the carrying on of the activities mentioned. Once this, conclusion is reached, where should the line be drawn? Like in the case where the money used in building the stadium in which some of the money goes to a cement company, some of the money for the sale of soda pop to the spectators is as much incidental to the carrying on of the activity as seats for the spectators. A persuasive feature leading me to this conclusion is that unless the legislature intended that this construction should be given this provision the entire provision is meaningless. I have examined the briefs carefully and fail to find to what sort of activity this exception would apply if not to the ones we have under consideration. There are no others to which it could apply.

Now as to the Girl Reserves and H'i-Y activities. This tax is placed on the money these activities receive. The prevailing opinion states that using a part of these funds for the purpose of defraying the expenses of parties and picnics and for the purchase of gifts for some unmentioned recipient lacks much of being an educational purpose. But does it? The organizations are a part of any up-to-date school program. The parties given by such organizations are in many cases the only social intercourse available to the students.

This sort of thing has become as much a part of the training given a student as the reading, writing and arithmetic of the classroom. Who are we to say that the expenditure of money for putting on such a party or picnic is not the expenditure of it for educational purposes? It is all done under the supervision of the faculty of the various schools. The benefits all flow to students participating and any student wishing to join and take part may do so.

The prevailing opinion states that the case of an all-school dance is in no sense different from that given by a social club for the members. I cannot agree with that. On an occasion recently the *732writer made a speech to a high-school junior-senior banquet at a town not far from Topeka. The meeting was over at 9:30. On the way back to Topeka most of the seniors and juniors passed the speaker of the evening in their hurry to reach Topeka, where they attended a public dance. Many of the mothers at that town expressed the wish that the school authorities had seen fit to permit the students to have a dance there that night so that they would have danced under the supervision of schoolteachers rather than in a public dance hall. The holding of supervised dances is definitely a part of the educational program in up-to-date school systems. It is the modern method of dealing with a perplexing problem. Was the junior-senior banquet an educational affair? Clearly it was. Then why would not a junior-senior dance after the banquet be educational? Probably the dance would have been more entertaining than was the speaker, but does the fact that an activity is entertaining rob it of its educational features?

There is another reason I do not like this decision. It is a use of mandamus that never was intended. Mandamus is only to be used to compel action on the part of a public official where there is a clear legal duty on the part of the official. No one can read this statute nor the rule of the tax commissioners issued pursuant thereto nor the pleadings in this case without reaching the conclusion that each activity should be considered on its merits. It is a question of fact in each instance as to what is done with the gross receipts from an activity. Yet this court has issued a writ directing the authorities in the different schools, parties to this action, to proceed to collect the sales tax in the many activities conducted in their various schools. I make the statement here that neither this court nor the tax commission has any idea as to the purpose for which the receipts from any one activity are expended. How, then, can this court reach a conclusion that there is any clear legal duty on the authorities as to any particular activity? This feature is more aggravating because the writ will take effect at every school in the state. The tax commission should not be hampered in the execution of its duties with reference to the sales tax, granted. But what about hampering every schoolroom activity and all school authorities with a burden never contemplated by the statute? The practical result of this decision is to introduce the writ of mandamus into every schoolroom in the state. In my opinion the public need does not require any such action.

*733The practical result of the conclusion reached by the court is to overlook the question of the admissions at the gate and to conclude that the legislature when it enacted the statute in question had its eye on the parties, picnics and other trivial items of the high-school activities of the state. I think such a conclusion makes the legislature seem ridiculous.

I cannot sweep aside the argument about the making of every school board a retailer as easily as does the prevailing opinion. The decision does worse than that. It makes the treasurer of every club or similar organization at every school in the state a tax collector. Either the tax commission will be compelled to set up an account for every organization in every school in the state or the school boards in every district will be compelled to set up books to collect the receipts from every activity and account for it that way. In the larger cities this will necessitate a new employee or at least new onerous burdens on some present employee. It must be remembered it is not the payment of the tax to which objection is made, but the imposition of the burden of collecting it. To my mind this is a persuasive argument that the legislature never intended any such a result.

It is idle to state that if the schools desire to carry on the activities without admission charges there is no room for operation of the act. Does anybody have any idea that the activities will be carried on without charging admission? Does anybody know of a school where they are carried on without admission being charged? Does anyone think the legislature did not know they charged admission? A study of these questions leads me inevitably to a conclusion that the legislature had the very situation with which we are dealing in mind and intended to provide that treasurers of Hi-Y clubs and of Girl Reserves, student managers of athletic teams, managers of bands, managers of glee clubs and the financial offices of the hundreds of other clubs in the schools of the state should not be burdened with the task of collecting and accounting for this tax.

In my opinion the writ should have been denied.