FIRST STUDENT, INC., Petitioner, v. STATE OF WASHINGTON, DEPARTMENT OF REVENUE, Respondent.
No. 96694-0
IN THE SUPREME COURT OF THE STATE OF WASHINGTON
NOV 14 2019
194 Wn.2d 707 | 451 P.3d 1094
JOHNSON, J.
En Banc
JOHNSON, J.—This case involves an issue of statutory interpretation regarding the applicability of a tax classification. First Student Inc., a school bus contractor, seeks reversal of a Court of Appeals decision affirming a summary judgment dismissal of its business and occupation (B&O) tax refund action. At issue is whether First Student‘s transportation of students qualifies as transporting persons “for hire” such that it is subject to the public utility tax (PUT), under
FACTUAL AND PROCEDURAL HISTORY
First Student is a registered Washington business that owns and operates school buses. These buses are primarily used to provide transportation services for schoolchildren through contracts with various school districts. Since First Student registered as a business in 1990, it has consistently reported its income under the B&O tax classification, as specified in
First Student submitted refund requests to the Department for B&O taxes paid regarding its school bus services provided to school districts for the time period between December 1, 2008 and December 31, 2014. The Department
First Student filed an appeal of the administrative decision in superior court and moved for summary judgment, seeking a determination that First Student‘s provision of transportation services to school districts was taxable under the PUT rather than the B&O tax; the Department requested summary judgment, seeking the opposite relief. The trial court found no genuine issues of material fact and granted summary judgment in favor of the Department, denying First Student‘s motion for summary judgment. First Student appealed.
The Court of Appeals affirmed the trial court and, in its analysis, consulted dictionary definitions in existence at the time of enactment of the statutes for the ordinary meaning of “for” and “hire” and consulted a 1951 Black‘s Law Dictionary entry for the technical meaning of “for hire or reward,” concluding the meaning of “for hire” was ambiguous. First Student, Inc. v. Dep‘t of Revenue, 4 Wn. App. 2d 857, 423 P.3d 921 (2018). In resolving this ambiguity, the Court of Appeals afforded deference to the long-standing Department interpretation that school bus operators were excluded from the PUT and properly taxed under the B&O tax. We granted review. First Student, Inc. v. Dep‘t of Revenue, 193 Wn.2d 1001, 438 P.3d 129 (2019).
Our review of a trial court‘s legal conclusions in a tax refund action is de novo. Simpson Inv. Co. v. Dep‘t of Revenue, 141 Wn.2d 139, 148, 3 P.3d 741 (2000). When interpreting statutes, we derive legislative intent solely from the plain language of the statute, considering the text of the provision, the context of the statute, related provisions, amendments to the provision, and the statutory scheme as a whole. Cashmere Valley Bank v. Dep‘t of Revenue, 181 Wn.2d 622, 631, 334 P.3d 1100 (2014). A statutory provision is ambiguous when it is fairly susceptible to two or more reasonable interpretations. Dep‘t of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 12, 43 P.3d 4 (2002).
The goal of construing statutory language is to carry out the intent of the legislature; in doing so, we avoid strained, unlikely, or unrealistic interpretations. Simpson, 141 Wn.2d at 148, 149. Unless the statute expresses a contrary intent, we may resort to an applicable dictionary definition to determine the plain and ordinary meaning of a word that is not otherwise defined by the statute. Am. Legion Post No. 32 v. City of Walla Walla, 116 Wn.2d 1, 8, 802 P.2d 784 (1991). When “‘the legislature uses a term well known to the common law, it is presumed that the legislature intended [it] to mean what it was understood to mean at common law.‘” Ralph v. Dep‘t of Nat. Res., 182 Wn.2d 242, 248, 343 P.3d 342 (2014) (quoting N.Y. Life Ins. Co. v. Jones, 86 Wn.2d 44, 47, 541 P.2d 989 (1975)).
Generally, Washington‘s B&O tax applies to the act or privilege of engaging in business activities.
The businesses of “motor transportation” and “urban transportation” are subject to the PUT. Under the PUT, “[t]here is levied and . . . collected from every person a tax” for the privilege of engaging in defined businesses, with a tax rate of 0.6 percent for “[u]rban transportation business[es]” and a tax rate of 1.8 percent for “[m]otor transportation . . . businesses.” Former
“Motor transportation business” is defined in relevant part as “the business (except urban transportation business) of operating any motor propelled vehicle by which persons or property of others are conveyed for hire.”
In its administration of
The Court of Appeals rejected First Student‘s arguments as to ambiguity, finding the meaning of “for hire” to be ambiguous. The court concluded that it was unclear whether the legislature intended the term “for hire” to be given its ordinary or technical meaning. It concluded that the ordinary meaning of the term “for hire” could be understood as “effecting the engagement or purchase of labor or services for compensation or wages,” while the technical meaning, derived from a Black‘s Law Dictionary entry for “for hire or reward,” contemplated the passengers being directly responsible for any compensation paid. First Student, 4 Wn. App. 2d at 867, 868. While the court noted that the technical definition of “for hire” could not be harmoniously applied to other enterprises defined in
The variability and inherent ambiguity the term “for hire” can have is illustrated in Allen v. City of Bellingham, 95 Wash. 12, 163 P. 18 (1917). Allen involved the regulation of jitney buses, which were similar to modern day buses, charging individuals a small fare to ride between fixed points. Despite concluding
While there is no “for hire” entry in ordinary dictionaries existing at the time of the statutory amendments, definitions exist for both “for” and “hire.” “For” has many potential definitions, each depending on the surrounding context; it was defined in relevant part as
2. Indicating the end with reference to which anything acts, serves, or is done; as: a As a preparation towards, against, or in view of; having as goal or object; in order to be, become, or act as; to serve as, or as part of; to supply the need of; in order to effect; as, one dresses for dinner; he has enlisted for a soldier; built for a church; only wild game for food; he labored for the good of humanity. . . .
. . . .
e So as to secure or conduce to, in the way of result; conducive to; as, it is all for your benefit; to act for the wisest.
WEBSTER‘S NEW INTERNATIONAL DICTIONARY 984 (2d ed. 1954); WEBSTER‘S NEW INTERNATIONAL DICTIONARY 984 (2d ed. 1934).
1. The price, reward, or compensation paid, or contracted to be paid, for the temporary use of a thing or a place, for personal service, or for labor; pay; reward; in its general sense, pay for the use of anything, including wages, rent, and formerly interest; in specific sense, recompense paid for the use of a chattel other than money or for services.
WEBSTER‘S, supra, at 1182 (1954); WEBSTER‘S, supra, at 1182 (1934).
The ordinary definition of conveying persons “for hire” could have been understood to have meant conveying persons in order to effectuate compensation for personal service or labor or conveying persons so as to secure or conduce compensation for personal service or labor. Neither definition details whether the passenger must pay for the transportation. As such, we next turn to the technical definition under the common law.
Differing definitions also exist under the common law, as evidenced in out-of-state cases. First Student cites out-of-state cases, arguing that “for hire” is nearly synonymous with “for compensation” in the context of transporting passengers, asserting that it is immaterial who provides the compensation. See, e.g., Surface Transp. Corp. of N.Y. v. Reservoir Bus Lines, Inc., 271 A.D. 556, 560, 67 N.Y.S.2d 135 (1946); Short Line, Inc. v. Quinn, 298 Mass. 360, 362, 10 N.E.2d 112 (1937). The Department similarly cites out-of-state cases that have distinguished school buses from “for hire” vehicles, though these cases may not be analogous to the
[t]o transport passengers or property of other persons than owner or operator of the vehicle for a reward or stipend, to be paid by such passengers, or persons for whom such property is transported, to owner or operator. Michigan Consol. Gas Co. v. Sohio Petroleum Co., 32 N.W.2d 353, 356, 321 Mich. 102 [1948].
BLACK‘S LAW DICTIONARY 773 (4th ed. 1951). Washington common law does not explicitly define the term “for hire,” but our cases suggest that the passenger must, in some way, effectuate the compensation for transportation. See, e.g., Klopfenstein v. Eads, 143 Wash. 104, 107, 254 P. 854, 256 P. 333 (1927) (reasoning that an individual was not a “passenger for hire” because the record failed to show the passenger “paid, or expected to pay, for his own transportation“), overruled on other grounds by Roberts v. Johnson, 91 Wn.2d 182, 588 P.2d 201 (1978); Peterson v. Seattle Traction Co., 23 Wash. 615, 645, 63 P. 539, 65 P. 543 (1900) (noting that an employee was a “passenger for hire” if the transportation was given as part consideration for his services). While First Student‘s school buses would convey persons “for hire” if the term merely meant to transport people for compensation, it would not meet the definition of “for hire” under Black‘s definition because the students being transported do not pay First Student.
We next turn to the context of
First Student, however, asserts that the 1955 amendment adding the term “for hire” is evidence of legislative intent to expand the definition to include all businesses that had previously been excluded under the definition of “auto transportation company.” This is far from clear in that “auto transportation
Nothing is found in the legislative history or elsewhere to support First Student‘s argument that the legislature intended to change the tax classification of school buses with the “for hire” amendments. However, as support for the classification of school buses under the B&O tax, in interpreting an ambiguous statute, we will afford agency interpretations that are within an agency‘s special expertise great weight. Port of Seattle v. Pollution Control Hr‘gs Bd., 151 Wn.2d 568, 593, 90 P.3d 659 (2004). We also have previously recognized that “interpretive rules and regulations promulgated by the tax commission are entitled to great weight in resolving doubtful meanings of taxing laws.” Pringle v. State, 77 Wn.2d 569, 573, 464 P.2d 425 (1970). The Department is charged with the administration of the B&O tax and the PUT, and the Tax Commission operated under a similar charge before the creation of the Department.
When the PUT was initially enacted in 1935, it included “highway transportation business” and “urban transportation business.” LAWS OF 1935, ch. 180, § 37(i), (j). In 1943, the legislature amended the definition of “urban transportation business” to include “for public use in the conveyance of persons or property for hire.” LAWS OF 1943, ch. 156, § 10A(j)(2). Following this change, in 1943, the Tax Commission revised rule 180, specifically indicating that school buses were subject to the B&O tax. Wash. State Tax Comm‘n Rules and Regulations, Rule 180 (1943). In 1955, the legislature amended the definition of “highway transportation business” to include “by which persons or property of others are conveyed for hire.” LAWS OF 1955, ch. 389, § 28(9). In 1956, the Tax Commission amended the rule continuing to exclude school buses. Wash. State Tax Comm‘n Rules and Regulations, Rule 180 (1956). The Department‘s adoption of
A licensing scheme that existed at the time of the amendments provided that school buses were not “for hire” vehicles, as was noted in a formal Washington State attorney general opinion. “No charge may be made of the passengers. School buses are licensed upon a tax-exempt basis under
CONCLUSION
We find the meaning of “for hire” is ambiguous as used in the PUT definitions of “motor transportation business” and “urban transportation business.” We resolve this ambiguity in favor of the long-standing interpretation that school
JOHNSON, J.
WE CONCUR:
Fairhurst, C.J.
Wiggins, J.
Madsen, J.
González, J.
Owens, J.
Gordon McCloud, J.
Stephens, J.
Yu, J.