Powell v. . Maxwell, Comr. of Revenue
186 S.E. 326
N.C.
1936
Check Treatment
Schenck, J.

The portion of the act under consideration is subsection 13, section 404, Public Laws 1935, and reads as follows: “In addition to the taxes levied in this act or in any other law there is hereby levied and imposed upоn every person, for the privilege of using the streets and highways of this State, a tax of three per cent of the sales price of any new or used motor vehicle purchased or acquired for use on the streets and highways of this State requiring registration therеof under section 2621 (6), Consolidated Statutes, which said amount shall be paid to the Commissioner of Revenue at the time of applying for registration of such motor vehicle, or certificate of titlе for same. No certificate of title or registration plate shall be issued for same unless and until said tax has been paid: Provided, however, if such person, so applying for registration and license plate for such motor vehicle, or certificate of title therefor, shall furnish to the Commissioner of Revenue a certificate from a licensed motor vehicle dealer in this State upon a form furnished by the Commissioner certifying that such person has paid the tax thereon levied in this act, the tax herein levied shall be remitted to such person to avoid in effect double taxation on said motor vehicle under this act. The term 'motor vehicle’ as used in this section shall include trailers.” N. O. Code of 1935 (Michie), 7880, (156)e, subsection 13.

*214 The foregoing subsection 13 was administratively construed to be limited to a maximum tax of $10.00 upon any single article of merchandise as is fixed in the preceding subsection 12, which reads as follows: “The maximum tax that shall be imposed upon any single article of merchandise shall be ten dollars ($10), and as an additional means of enforcement of the payment of the tax herein levied the Department of Bevenue shall not issue a license plate or a certificate of title for any nеw or used motor vehicle sold by any merchant or licensed dealer until the tax levied for the sale of same ‍​‌‌‌​​​​​‌‌​​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​‌​‌​‌‌‌‌​​‌‌​​‌‍under this act has been paid, or a certificate duly signed by a licensed dealer is filеd at the time the application for license plate or title is made for such motor vehicle; such certificate to be on such form as may be prescribed by the Commissioner of Bevenue, and that such certificate shall show that the said licensed dealer has assumed the responsibility for the payment of the tax levied under this act and agrees to report and remit the tax in his next regular monthly sales tax report required to be filed under this act.” N. C. Code of 1935 (Michie), 7880, (156)e, subsection 12.

The position taken that the portion of the act under consideration is in contravention of the provision of the Federal Constitution that “No state shall, without the consent of Congress, levy any imposts or duties on imports or exports, . . .” Art. I, sec. 10 (2), is untenable, since this provision relates to foreign commerce and has no reference to interstate commerce. Woodruff v. Parham, 8 Wall., 123, 19 L. Ed., 382; Pittsburgh & S. Coal Co. v. Louisiana, 156 U. S., 590, 30 L. Ed., 544.

The position taken that the portion of the act under consideration impinges the provision of the Federal Constitution that “Thе Congress shall have the power ... to regulate commerce . . . among the several states, . . Art. I, sec. 8 (3), is likewise untenable, for the reason that the tax levied is not upon articles in interstate cоmmerce, since it does not become operative until after the purchase of the automobile has been consummated and until after it has been brought into North Carolina — the tax becоmes effective only when the automobile has come to rest within the State, and then without regard to where it was purchased, and is imposed as an excise or use tax. Excise tax upon the use оf an article within the State, although the article may be of out-of-state origin, does not fall under the regulation of the commerce clause of the Federal Constitution. Bowman v. Continental Oil Co., 256 U. S., 642, 65 L. Ed., 1139; Hart Refineries v. Harmon, 278 U. S., 499, 73 L. Ed., 475; Nashville, C. & St. L. R. Co. v. Wallace, 288 U. S., 249, 77 L. Ed., 730. In the last mentioned case, Mr. Justice Stone writes: “The gasoline, upon being unloaded and stored, ceased to be a subject of transportation in interstate commerce and lost its immunity as such from state taxation.”

*215 The position taken that the portion of the act under consideration is subversive to that clause of the 14th Amendment to the Federal Constitution reading, “. . . nor shall any state deprive any person of life, liberty, or property, without due process оf law,” is also untenable, for ‍​‌‌‌​​​​​‌‌​​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​‌​‌​‌‌‌‌​​‌‌​​‌‍the reason that the tax levied is an excise or use tax, levied and collected for the privilege of using the streets and highways in North Carolina, and not an attempt to tax transactions which take place beyond the confines of the State, over which North Carolina has no jurisdiction.

"We are of the opinion, and so bold, that the tax levied by'the portion of the act under consideration is neither an ad valorem tax nor a sales tax upon extraterritorial transactions, but is an excise or use tax, levied and collected for the privilege of operating automobiles upon the streets and highways of North Carolina. The authority to levy excise and use taxes in general is well settled in this State. O’Berry, Treasurer, v. Mecklenburg County, 198 N. C., 357; Stedman, Treasurer, v. Winston-Salem, 204 N. C., 203.

The appellants contend, however, that, conceding the Lеgislature was vested with the authority to levy and to provide for the collection of a general excise tax for the privilege of operating automobiles upon the streets and highways of thе State, the insertion into the act of the proviso to the effect that when the person applying for registration of bis motor vehicle “shall furnish ... a certificate from a licensed motor vehicle dealer in this State . . . certifying that such person has paid the tax thereon levied in this act, the tax herein levied shall be remitted to such person to avoid, in effect, double taxation on said motor vehicle under this act,” caused the act to contravene Art. I, sec. 8 (3), of the Constitution of the United States, vesting the power to regulate commerce among the several states in Congress, and Art. V, sec. 3, of the Constitution of North Carolina, providing that “Taxation shall be by uniform rule,” in that it brings about a discrimination in favor of arffomobiles bought from North Carolina dealers and against automobiles bought оutside of the State.

It must be conceded that if the tax levied discriminates against the plaintiff by reason of the fact that be purchased bis automobile outside of the ‍​‌‌‌​​​​​‌‌​​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​‌​‌​‌‌‌‌​​‌‌​​‌‍State, such a discrimination would bе violative of the aforesaid regulatory and uniformity provisions of the Federal and State Constitutions. Welton v. Missouri, 91 U. S., 275, 23 L. Ed., 347. The plaintiff contends that the remission of the tax upon the furnishing of a certificate from a licensed motor vehicle dealer in this State to the effect that the sales tax bad been paid, gives rise to a discrimination against him by reason of the fact that the tax is collected upon bis autоmobile bought in Virginia and not collected (or is “remitted”) upon automobiles bought in North Carolina. However, in this connection, it must *216 be observed that if the plaintiff, instead of purchasing bis automobile in Virginia, bad purchased it from a North Carolina dealer, under the provisions of the Revenue Act, he would have been required to pay to the dealer when he purchased his automobile exactly the sаme amount of tax as he, when he applied for the registration of his automobile bought in Virginia, was required to pay for the privilege of using the streets and highways of the State. The amount of tax exacted upon the North Carolina bought and the Virginia bought automobile is the same, namely, $10.00. There is no discrimination in so far as the amount of the tax is concerned.

"While the appellant challenges thе right of the Commissioner of Revenue to construe administratively subsection 13, section 404, Public Laws 1935, as subject to the same limitation of maximum tax upon any single article of merchandise as is fixed in subsection 12 оf said section 404, namely, $10.00, the authority to construe all sections of the act imposing taxes is specifically given by section 507 thereof, wherein it is provided that “such decisions by the Commissioner of Revеnue shall be prima facie correct, and a protection to the officers and taxpayers affected thereby”; and it is a well established rule of this Court that in passing upon ‍​‌‌‌​​​​​‌‌​​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​‌​‌​‌‌‌‌​​‌‌​​‌‍the constitutionality of tax statutes thе administrative construction and application of such statutes shall be regarded and considered. Cannon v. Maxwell, Comr. of Revenue, 205 N. C., 420, and cases there cited.

The plaintiff is relegated to the position that there is a discrimination in the manner in which the tax is levied and collected under the statute — his complaint being to the form rather than to the substance.

In Gregg Dyeing Co. v. Query, 286 U. S., 472, 76 L. Ed., 1232, involving the construction of a statute in many respects similar in principle to the act under consideration, Chief Justice Hughes writes: “In maintaining rights asserted under the Federal Constitution, the decision of this Court is not dependent upon the form of a taxing scheme, or upon the characterization of it by the state cоurt. We regard the substance rather than the form, and the controlling test is found in the operation and effect of the statute as applied and enforced by the state.”

Brogden, J., in Stedman, Treas., v. Winston-Salem, supra, says: “The judicial denominatiоn of a tax as an excise tax or a property tax is a mere use of terms and the selection of certain letters ‍​‌‌‌​​​​​‌‌​​​​‌‌‌‌​​‌​​​‌‌​​​‌‌​‌​‌​‌‌‌‌​​‌‌​​‌‍from the alphabet. The ultimate test is the operation of the tax and its practical application to the commercial transactions of life.”

When the substance of subsection 13 of section 404, chapter 371, Public Laws 1935, is regarded rather than its form, and its operation tested by its practical application, it is manifest that there is no discrimination in favor of the North Carolina bought automobile over the *217 Virginia bought automobile by the remission of the privilegе or excise tax to the owners of the former, since the result is, as stated in the act itself-, “to avoid, in effect, double taxation” on automobiles bought from North Carolina dealers and to make the tax on all new bought automobiles equal. There can be no discrimination when there is equality.

Affirmed.