CENTRAL VERMONT RAILWAY, INC. v. MURDOCK A. CAMPBELL, COMMISSIONER OF MOTOR VEHICLES.
January Term, 1937.
February 16, 1937
108 Vt. 510
Present: POWERS, C. J., SLACK, MOULTON and SHERBURNE, JJ., and SHERMAN, Supr. J.
Horace H. Powers for the plaintiff.
MOULTON, J. It is alleged in the bill of complaint that the plaintiff is a common carrier by railroad, operating within and
The tax is not to be condemned as a license tax upon the privilege of engaging in interstate commerce as in Real Silk Hosiery Mills, Inc. v. City of Portland, 268 U. S. 325, 69 L. ed. 982, 45 Sup. Ct. 525, neither is it to be upheld, at least so far as this plaintiff is concerned, as a tax demanded for the use of the highways of the State as in Clark v. Poor, 274 U. S. 554, 71 L. ed. 1199, 47 Sup. Ct. 702. It is an excise tax upon the domestic sale or use of the gasoline, measured by gallonage. Bowman v. Continental Oil Co., 256 U. S. 642, 647, 65 L. ed. 1139, 41 Sup. Ct. 606, 608. It will be helpful to review at some length the recent decisions which are based upon similar enactments.
In Edelman v. Boeing Air Transport, 289 U. S. 249, 77 L. ed. 1155, 53 Sup. Ct. 591, a statute of Wyoming (Laws 1929, Ch. 139, § 1) levied a tax “on all gasoline used or sold in this State * * * for domestic purposes.” The respondent maintained an airplane service, transporting passengers, mail and express in interstate traffic. It purchased gasoline, both within and without the State, which it intermingled and stored in tanks at its two airports in Wyoming. It paid, without objection, the tax on gasoline purchased within the State, upon which such tax had not been paid by the wholesaler, and the tax on all gasoline which it sold within the State at its airports, or which it withdrew from the tanks for local use. But it was contended that the tax could not validly be applied to the gasoline, imported from outside the State, stored in the tanks at its airports and used for filling the interstate airplanes in which it was eventually consumed. The Court said that as the statute had been administratively construed and applied, the tax was not levied upon the consumption of gasoline in the respondent‘s interstate planes, but was applied to the stored gasoline as it was withdrawn from the storage tanks at the airport and placed in the planes. “No tax is collected for gasoline consumed in respondent‘s planes either on coming into the State or on going out. It is at the time of withdrawal alone that ‘use’ is measured for the purposes of the tax. The stored gasoline is deemed to be ‘used’ within the State and therefore subject to the tax, when it is withdrawn from the tanks * * *. A State may validly tax the ‘use’ to which gasoline is put in withdrawing it from storage
It may be noted that, on the first trial of the Edelman case, in the United States District Court [51 Fed. (2d) 130, 133], the tax was upheld upon the ground that, since the statute provided, in substance, that the tax received from gasoline used at any municipal airfield within the State should be applied to the maintenance and improvement of the field, and since the interstate carrier by contract had the privilege of using such airfields, the case came within the principle that where a State at its own expense furnishes facilities for interstate and intrastate commerce, it may exact a reasonable compensation therefor. In the next trial before the Circuit Court of Appeals [61 Fed. (2d) 319], a distinction was drawn between gasoline purchased outside the State, and that purchased within it, as to the former the tax being held invalid and, as to the latter, valid. But in the Supreme Court the only issue considered was “whether the taxation of the gasoline which respondent withdraws from storage and uses for ‘filling’ its planes imposes an unconstitutional burden on interstate commerce” (p. 1157, L. ed.).
In Nashville, Chattanooga & St. Louis Ry. v. Wallace, 288 U. S. 249, 77 L. ed. 730, 53 Sup. Ct. 345, 87 A. L. R. 1191, a Tennessee statute (Pub. Acts 1925, Ch. 67, § 2) provided for a gallonage tax on gasoline to be applied to persons, firms or corporations, dealers or distributors storing gasoline, and distributing the same or allowing it to be withdrawn from storage whether for sale or other use. The facts are thus stated in the opinion (p. 737, L. ed.): “Appellant, an interstate rail carrier, purchases large quantities of gasoline outside the state of Tennessee and brings it into the state in tank cars, from which it is unloaded and placed in its own storage tanks. None of it is sold by appellant, but all is withdrawn and used by it as a source of motive power in interstate railway operation in Tennessee, Kentucky, Alabama and Georgia. Storage of the gasoline is a preliminary step to such use in interstate commerce. The tax is assailed both on the ground that it is imposed on the gasoline while still a subject of interstate commerce in the course of transportation from points of origin to points outside the state of Tennessee; and on the ground that it is in effect a tax upon the use of the gasoline in appellant‘s business as an interstate
Eastern Air Transport, Inc. v. South Carolina Tax Commission, 285 U. S. 147, 76 L. ed. 673, 52 Sup. Ct. 340, was a suit brought to restrain the collection of a gallonage tax upon gasoline purchased by the complainant in South Carolina and used by it in interstate commerce, upon the ground that the statute imposing the tax placed a direct burden upon such commerce (Act Feb. 23, 1922 [32 St. at Large S. C., p. 835, § 1] as amended by Act March 16, 1929 [36 St. at Large S. C., p. 107]). The tax was added to the price of the gasoline by the dealer from whom it was purchased by the complainant. It was held that if such tax were regarded as in effect a tax upon the goods sold, its validity in the circumstances could not be questioned, as in that aspect the tax would be upon the gasoline as a part of the general mass of property within the State and hence subject to the State‘s authority to tax, although the property might be actually used in interstate commerce; and treating the tax as an excise tax upon the sales did not change the result, as the sales were purely intrastate transactions (pp. 674, 675, L. ed.). This decision, impliedly at least, overrules Mid-Continent Air Express Corporation v. Lujan [U. S. District Ct.], 47 Fed. (2d) 266,
In American Airways, Inc. v. Grosjean, 3 Fed. Supp. 995 [aff. 290 U. S. 596, 78 L. ed. 524, 54 Sup. Ct. 129], a statute of Louisiana (Act No. 6 of 1928, Ex. Sess., as amended by Act No. 8 of 1930, and Act No. 16 of 1932; Act. No. 1 of 1930, Ex. Sess.), levied a gallonage tax upon all gasoline or motor fuel “sold, used or consumed in the State of Louisiana for domestic consumption” and provided for its collection from “all persons, firms or corporations or associations of persons, engaged as dealers in the handling, sale or distribution of such products
In Commonwealth v. Dixie Greyhound Lines, Inc. (1934), 255 Ky. 111, 72 S. W. (2d) 1032, a gallonage tax was imposed upon gasoline sold at wholesale within the State of Kentucky, and the statute provided that the term “at wholesale” should be used to mean and include any person who shall purchase or obtain gasoline without the state and sell or distribute or use the same within the State.” Ky. Stat. 1930, § 4224b-1. The appellee was a foreign corporation, operating an interstate line of busses, a comparatively small part of its business being intrastate. It purchased gasoline outside the State, and stored it at its station in Paducah, Ky., where it was distributed to its busses as needed. It was held (116-118): “All of this gasoline lost its interstate character when it came to rest in Kentucky, and, though much of it was withdrawn for use in interstate transportation, it acquired a local situs and became subject
In the instant case the plaintiff‘s gasoline, although it had been a subject of interstate commerce while it was in transit from the place of its purchase outside of the State, had come to rest, its journey ended, and had become a part of the mass of property in the State, and was subject to state taxation, there being no discrimination against it because of its origin in another state. See Gregg Dyeing Co. v. Query, 286 U. S. 472, 478, 479, 52 Sup. Ct. 631, 633, 634, 84 A. L. R. 831, 76 L. ed. 1232, 1237; Hart Refineries v. Harman, 278 U. S. 499, 501, 73 L. ed. 475, 476, 49 Sup. Ct. 188; Sonneborn Bros. v. Cureton, 262 U. S. 506, 67 L. ed. 1095, 43 Sup. Ct. 643, 646, 647. The principle that a temporary halt in the movement of interstate com-
The fact that the prospective employment of the gasoline is in interstate commerce does not change the situation. Edelman v. Boeing Air Transport, supra; American Airways v. Wallace, supra; Hughes Bros. Co. v. Minnesota, supra. “It is elementary that a state may tax property used to carry on interstate commerce.” New Jersey Bell Tel. Co. v. State Board, 280 U. S. 338, 346, 74 L. ed. 463, 467, 50 Sup. Ct. 111, 113. The only qualification is that the tax must place no direct burden upon such commerce, and, as we have seen, an excise tax upon the sale or use of gasoline, destined to be employed as furnishing motive power for interstate transportation, if imposed before such transportation has commenced, is a purely domestic transaction, places no forbidden burden upon interstate commerce and comes within no constitutional prohibition. See cases heretofore cited and discussed.
The plaintiff argues that in Edelman v. Boeing Air Transport, and Nashville, Chattanooga & St. Louis Ry. Co. v. Wallace, the gasoline was imported without definite assignment for interstate use, and was subsequently used for both interstate and intrastate transportation, while here it was destined and used solely in interstate commerce. This is true with regard to the former case, but in the latter decision it is distinctly stated that all of the imported motor fuel was withdrawn and used in interstate commerce. The same situation appears to have existed in American Airways, Inc. v. Grosjean, supra. Gregg Dyeing Co. v. Query, 286 U. S. 472, 76 L. ed. 1232, 52 Sup. Ct. 631, 84 A. L. R. 831, is not in point since the only issue was the validity of a tax upon imported gasoline stored for subsequent local use. We fail to find substance in the distinction which the plaintiff seeks to draw.
Two decisions, Helson v. Kentucky, 279 U. S. 245, 73 L. ed. 683, 49 Sup. Ct. 279, and Bingaman v. Golden Eagle Western Lines, 297 U. S. 626, 80 L. ed. 928, 56 Sup. Ct. 624, relied upon by the plaintiff, are distinguishable from the case in hand.
Helson v. Kentucky arose from an attempt by the State of Kentucky to enforce a tax upon gasoline consumed within the limits of the state in furnishing motive power for an interstate ferry boat. The plaintiffs in error, who were citizens and residents of Illinois, and there maintained their office and place of business and the situs of their personal property, purchased and received the gasoline in Illinois. The ferry did an exclusively interstate business. It was held (p. 252, U. S., p. 687, L. ed.), that the tax was exacted as the price of the privilege of using an instrumentality of interstate commerce. “A tax laid upon the use of the ferry boat would present an exact parallel. And is not the fuel consumed in propelling the boat an instrumentality of commerce no less than the boat itself? A tax which falls directly upon the use of one of the means by which commerce is carried on directly burdens that commerce. If a tax cannot be laid by a state upon the interstate transportation of the subjects of commerce, as this court definitely has held, it is little more than repetition to say that such a tax cannot be laid upon the use of a medium by which such transportation is effected.”
In Bingaman v. Golden Eagle Western Lines, a statute of New Mexico provided an excise tax of five cents a gallon “upon the sale and use of all gasoline and motor oil.” Laws 1933, Ch. 176, § 2. The appellee, a Delaware corporation, was a common carrier operating a line of busses over the highways of New Mexico in interstate transportation only. The busses were propelled by gasoline which was purchased in another state, placed in tanks attached to the busses and transported and used exclusively in interstate commerce. It was sought to enjoin the collection of the tax upon such gasoline. Following the construction placed upon the statute by the New Mexico Supreme Court, it was held that the tax was not a charge as compensation to the state for the use of its highways, but was an excise tax for the use of an instrumentality of interstate commerce, and as such,
In both of these cases, the gasoline was, at the time of the imposition of the tax, in active use as an instrumentality of, and being carried in, interstate commerce. In commenting upon the Helson case, it is said, in American Airways v. Wallace: “There is an obvious distinction between taxing gasoline used for motor fuel in interstate commerce, and taxing the business of storing gasoline within the state, and distributing or allowing same to be withdrawn from storage for sale ‘or other use‘” (p. 881). And in Nashville, Chattanooga & St. Louis Ry. v. Wallace, supra (p. 350, Sup. Ct. Rep.), it is pointed out that the tax in the Helson case was directly imposed upon the use of the gasoline in generating power for the interstate ferry boat. See also Edelman v. Boeing Air Transport, supra (p. 590, Sup. Ct. Rep.). The Bingaman case, although concerned with motor fuel carried in tanks attached to interstate busses, is the same in legal effect as the Helson case.
To these cases may be added United Airways, Inc. v. Shaw, 43 Fed. (2d) 148, where the statute laid a tax on all gasoline consumed within the State of New Mexico. As applied to gasoline consumed by airplanes operating in interstate commerce, the tax was held to be a direct burden upon such commerce, and therefore invalid. The distinction between that case and the one in hand is clearly seen, and appears in American Airways, Inc. v. Wallace, supra, p. 881.
There remains to consider the question whether the word, “used,” in
When a statute is susceptible of two constructions, one of which supports it and gives it effect, and the other renders it unconstitutional and void, the former is to be adopted, even though the latter may be the more natural interpretation of the language used, for an act is never to be construed as unconstitutional if a reasonable construction can be placed upon it which will render it valid. State v. Clement Nat. Bank, 84 Vt. 167, 200, 78 Atl. 944, Ann. Cas. 1912D, 22. “A statute must be construed, if fairly possible, so as to avoid not only the conclusion that it is unconstitutional, but also grave doubts upon that score.” United States v. La Franca, 282 U. S. 568, 574, 75 L. ed. 551, 51 Sup. Ct. 278, 281. Every presumption is to be indulged, and doubts are to be resolved in favor of the validity of a statute. Graves v. Minnesota, 272 U. S. 425, 428, 71 L. ed. 331, 47 Sup. Ct. 122, 123; Corporation Commission v. Lowe, 281 U. S. 431, 438, 74 L. ed. 945, 50 Sup. Ct. 397, 399. The presumption of constitutionality must prevail in the absence of some factual foundation of record for overthrowing the statute. O‘Gorman & Young, Inc. v. Hartford Fire Ins. Co., 282 U. S. 251, 257, 258, 75 L. ed. 324, 51 Sup. Ct. 130, 132, 72 A. L. R. 1163; Railway Express Agency v. Comm. of Virginia, 282 U. S. 440, 444, 75 L. ed. 450, 51 Sup. Ct. 201, 202, 71 A. L. R. 102.
As we have seen, it is said in the Edelman case that “A state may validly tax the ‘use’ to which gasoline is put in withdrawing it from storage within the state * * *,” and this language is quoted and approved in American Airways, Inc. v. Grosjean, supra, and Commonwealth v. Dixie Greyhound Lines, Inc., supra. The statute in the Edelman case imposed the tax “on all gasoline used or sold in this state * * * for domestic consumption” (Laws Wyo. 1929, Ch. 139, § 1), and this is, in legal effect, the same as
We hold that when gasoline is withdrawn from storage, under the circumstances shown in this cause, it is “used” within the meaning of
In holding, as we do, that the tax is valid and enforceable, we have not been unmindful of the rule that tax laws are to be interpreted liberally in favor of the taxpayer and that words defining things to be taxed may not be extended beyond their clear import. Miller v. Nut Margarine Co., 284 U. S. 498, 508, 76 L. ed. 422, 52 Sup. Ct. 260, 262; Hartland v. Damon‘s Est., 103 Vt. 519, 530, 156 Atl. 518. However, the intention of the Legislature is to be ascertained, not from the literal sense of the words used, but from a consideration of the whole and every part of the statute, the subject matter, the effects and consequences, and the reason and spirit of the law. In re Fulham‘s Estate, 96 Vt. 308, 317, 119 Atl. 433.
It follows that it was error to overrule the demurrer.
Decree reversed and cause remanded.
POWERS, C. J., dissents on the interpretation of the tax statute involved.
MOULTON, J. The plaintiff has moved for a reargument of this cause. The defendant objects that the motion comes too late, since it was not made until after the mandate had been sent down and entered in the court of chancery. But the final decree had not been enrolled and so the objection is unavailing.
The ground for the reargument is that in construing
In the brief filed by the plaintiff when the cause was argued it is said that “the word ‘use’ in ordinary usage means the consumption and enjoyment of property,” that “the word ‘use’ means consumption and nothing else,” and that “the ‘use’ intended by the plaintiff was consumption of gasoline in interstate commerce.” In the opinion, we called attention to the fact that if only this meaning should be given to the word, the statute would be invalid as applied to such transportation, and in this connection we stated the rule requiring a constitutional interpretation. That a recognized construction of “use” includes withdrawal from storage, under such circumstances as here disclosed, is shown by the authorities cited, and so, even without recourse to the rule to which reference has been made, there is a sufficient basis for our decision.
Motion for reargument denied. Let full entry go down.
POWERS, C. J., dissents.