HATTERAS YACHT COMPANY v. High
144 S.E.2d 821
N.C.
1965
Check Treatment
LáKE, J.

G.S. 105-164.4, whiсh is part of the North Carolina Sales and Use Tax Act of 1957, as amended, provides:

“There is hereby levied and imposed, in addition to all other taxes of every kind now impоsed by law, a privilege or license tax upon every person who engages in the business of selling tangible personal property at retail * * *. (1) At the rate of three рer cent (3%) of the sales price of each item or article of tangible personal property when sold at retail in this State * * *. Provided, however, that in the cаse of the sale of any airplane, railway locomotive, railway car or the sale of any motor vehicle, the tax shall be only at the rate of one рer cent (1%) of the sales price, * * * but at no one time shall the maximum tax with respect to any one such airplane, railway locomotive, railway car or motоr vehicle, including all accessories attached thereto at the time of delivery thereof to the purchaser, be in excess of one hundred twenty dollars ($120.00).”

The sаme section of the statute then defines the term “motor vehicle” as follows:

“For the purposes of this section, the words ‘motor vehicle’ mean any vehicle which is self-propelled and designed primarily for ‍‌‌‌‌‌‌‌​‌‌‌​​​​​‌‌‌‌‌‌‌‌​‌‌​‌‌‌‌​​​​‌‌‌​​‌‌​‌‌‌​‍use upon the highways, any vehicle which is propelled by electric power obtained from trolley wires but not operatеd upon *656 rails, and any vehicle designed to run upon the highways which is pulled by a self-propelled vehicle, but shall not include any implement of husbandry, farm tractor, road cоnstruction or maintenance machinery, or equipment, special mobile equipment as defined in G.S. 20-38, nor any vehicle designed primarily for use in work off the highway.”

G.S. 105-164.13, which is a pаrt of the same Act, exempts entirely sales of specified types of articles, including sales of “boats” to commercial fishermen for use by them in such fishing. It is stipulated that these yachts do not fall into that category.

Provisions in a tax statute granting exemptions from the tax thereby imposed are to be strictly construed in favor of the imposition of the tax and against the claim of exemption. Sale v. Johnson, 258 N.C. 749, 129 S.E. 2d 465; Distributors v. Shaw, 247 N.C. 157, 100 S.E. 2d 334; Investment Co. v. Cumberland County, 245 N.C. 492, 96 S.E. 2d 341; Motor Co. v. Maxwell, 210 N.C. 725, 188 S.E. 389; Rich v. Doughton, 192 N.C. 604, 135 S.E. 527. A proviso in such a statute taxing certain transactions at a lower rate than that made applicable in general, or providing that as to certain transactions the total tax shall not exceed a specified amount, there being no such limitation generally, is a partial exemption and is, therefore, to be strictly construed against the claim of such special or preferred treatment.

The Act first imposes a license tax upon “every person who engages in the business of selling tangible personal property at retail” at the rate of three per cent (3%) of the sale price of еach article so sold. G.S. 105-164.4(1). This is the general rule, applicable except as otherwise provided to every sale of every type of article. The Act thеn provides that sales of certain, specified types of articles are “exempted from the tax imposed by this article.” G.S. 105-164.13. Provisos ‍‌‌‌‌‌‌‌​‌‌‌​​​​​‌‌‌‌‌‌‌‌​‌‌​‌‌‌‌​​​​‌‌‌​​‌‌​‌‌‌​‍incorporated into G.S. 105-164.4(1) crеate a third class of transactions, as to which the tax is computed at a smaller percentage of the sale price, coupled in some instances with а limitation of the maximum tax to be imposed on account of the sale of any single article within the category. The question for us is, Into which of these classes of transаctions did the Legislature intend a sale of a pleasure yacht, self-propelled by an internal combustion engine, to fall?

Obviously, a sale of such a yacht falls within the gеneral classification subject to the three per cent (3%) rate of tax, unless the yacht is a “motor vehicle.” Whether such a yacht is a motor vehicle within the usual mеaning of that term is immaterial, for the *657 Legislature in this statute has defined a motor vehicle to be “any vehicle which is self-propelled and designed primarily for use upon thе highways.” It is stipulated that the yachts in question are self-propelled and they are, of course, vehicles. We come, therefore, to the question, Is a yacht designed primarily for use upon the highways? The statute does not define “highways.”

Definitions of “highway” contained in other statutes are not controlling. The same is true of judicial constructiоns of the term as used in other statutes. At best, they only throw some light upon the normal usage of the term, for, nothing else appearing, the Legislature is presumed to have used thе words of a statute to convey their natural and ordinary meaning. Seminary v. Wake County, 251 N.C. 775, 112 S.E. 2d 528. The question is, What did the Legislature mean by “highways” as used ‍‌‌‌‌‌‌‌​‌‌‌​​​​​‌‌‌‌‌‌‌‌​‌‌​‌‌‌‌​​​​‌‌‌​​‌‌​‌‌‌​‍in this proviso granting a special, partial exemption from a tax?

There have been numerous decisions by this Court and by the courts of other jurisdictions, which, when read without regard to the matters then at issue, appear to give suрport to the contention of the plaintiff. Thus, in Parsons v. Wright, 223 N.C. 520, 521, 27 S.E. 2d 534, this Court said, “The term highway is the generic name for all kinds of public ways, whether they be carriage-ways, bridle-ways, foot-ways, bridges, turnpikе roads, railroads, canals, ferries or navigable rivers.” In Taylor v. Paper Co., 262 N.C. 452, 457, 137 S.E. 2d 833, the Court said, “A navigable stream is a public highway,” and in Gaither v. Hospital, 235 N.C. 431, 444, 70 S.E. 2d 680, it was said, “[N]avigable waters constitute a public highway, which the publiс is entitled to use for the purposes of travel either for business or pleasure.” A careful reading of these decisions reveals, however, that in each of them thе Court was concerned with the right of the plaintiff to travel upon or use a particular way, or to prevent an obstruction thereof, or to acquire a different way across the land of another. For similar expressions from other jurisdictions see: Summerhill v. Shannon, 235 Ark. 617, 361 S.W. 2d 271 (use of a road upon the grounds of a school); Canard v. State, 174 Ark. 918, 298 S.W. 24 (defendant charged with driving while drunk upon ‍‌‌‌‌‌‌‌​‌‌‌​​​​​‌‌‌‌‌‌‌‌​‌‌​‌‌‌‌​​​​‌‌‌​​‌‌​‌‌‌​‍a paved road within the grounds of a fair); Trucking Co. v. Bowers, 173 Oh. St. 31, 179 N.E. 2d 346 (refund of gasoline tax); Toy v. Atlantic ETC. Co., 176 Md. 197, 4 A. 2d 757 (obstruction of a navigable stream); Savage Truck Line v. Commonwealth, 193 Va. 237, 68 S.E. 2d 510 (miles traveled on ferry included in computing tax due State for use of highways). We think the true rule was stated by the Supreme *658 Court of Illinois in People v. Wheeling, 24 Ill. 2d 267, 181 N.E. 2d 72, where it said:

“The term ‘highway’ is a generic one ‘frequently used in a very broad sense with the result that no fixed rule with regard to its meaning can be given, and its construction depends on the intent with which it is used, as determined by the context.’ (39 C.J.S., Highways, § 1). In discussing the meaning to be given to the term ‘highway’ it has been pointed out that whether ‘streets, ferries, railroads, toll roads, rivers or rural roads are all meant to be included in a particular statute can not, in many instаnces, be asserted without a careful study of the entire statute and a full consideration of all the matters which the courts usually call to their assistance in ascertаining the meaning and effect of legislative enactments.’ ” See also, 1 Elliott, Roads and Streets (4th Ed.), § 1.

Though this Court had said in Parsons v. Wright, supra, that a railroad is a highway within the broad, generic sense, and though a locоmotive is a self-propelled vehicle designed primarily for use upon such a road, the Legislature at the 1963 session amended G.S. 105-164.4(1) so as to insert “railway; locomotive” in the proviso here in question. This seems a clear indication that the Legislature did not intend that “highway” would be interpreted in the broad, generic sense in the definition of “motor vehicle” contained in this same proviso.

The parties have stipulated, “It has been the long-standing and uniform administrative interpretation of the Department of Revеnue to classify pleasure water craft as subject to the 3% sales and use tax rather than as ‘motor vehicles’ within the intent and purview of the Sales and Use Tax Act.” An administrаtive interpretation of a tax statute ‍‌‌‌‌‌‌‌​‌‌‌​​​​​‌‌‌‌‌‌‌‌​‌‌​‌‌‌‌​​​​‌‌‌​​‌‌​‌‌‌​‍which has continued over a long period of time with the silent acquiescence of the Legislature should be given consideration in the construction of the statute. Knitting Mills v. Gill, 228 N.C. 764, 47 S.E. 2d 240. The growing use of pleasure watercraft in this State increases the likelihood that the Department’s view of the matter has beеn well known. The Legislature has not seen fit to change the language of the statute. On the contrary, at the 1965 session Senate Bill No. 75 was introduced for the purpose of аmending the proviso in G.S. 105-164.4(1) by inserting the word “boat” following the word “airplane.” The proposed change in the Act was not enacted. The legislative record indicates thаt the bill was not brought to a vote.

*659 In normal usage the word “highway” does not connote abater-way, and we think it clear that a strict construction of this statute does not show an intent by the Legislature to take sales of pleasure yachts out of the general class of sales which are taxed at three per cent (3%) of the sale price. The assessment of the additional tax was in accord with the statute and the dismissal of this action for refund was proper.

Affirmed.