Arkansas-Best Freight System, Inc. v. Lynch
| Decision Date | 20 December 1983 |
| Docket Number | ARKANSAS-BEST,No. 82-1769,82-1769 |
| Citation | 723 F.2d 365 |
| Parties | FREIGHT SYSTEM, INC.; Carolina Freight Carriers Corporation; Consolidated Freightways Corporation; ET & WNC Transportation Company; Overnite Transportation Company; Roadway Express, Inc.; Ryder Truck Lines, Inc.; Spector-Red Ball, Inc.; Thurston Motor Lines, Inc.; Transcon Lines; Yellow Freight System, Inc.; Smith Transfer Corporation and Chemical Leaman Tank Lines, Inc., Appellants, v. Mark G. LYNCH, Secretary of Revenue of the State of North Carolina; Douglas R. Holbrook, Director, Ad Valorem Tax Division of the North Carolina Department of Revenue; Alamance County; Buncombe County; Burke County; Catawba County; Durham County; Edgecombe County; Forsyth County; Granville County; Halifax County; Henderson County; Iredell County; Martin County; Mecklenburg County; Moore County; Nash County; New Hanover County; Onslow County; Pender County; Randolph County; Robeson County; Rockingham County; Rowan County; Surry County; Union County; Wake County; Wayne County; Wilkes County and Wilson County, Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
David C. Scruggs, Memphis, Tenn. (Russell Dale Woodall, Memphis, Tenn., on brief), for appellants.
Hamlin L. Wade, Charlotte, N.C. (Ruff, Bond, Cobb, Wade & McNair, Charlotte, N.C., George W. Boylan, Asst. Atty. Gen., Raleigh, N.C., W. Gene Sigmon, Sigmon, Sigmon & Isenhower, Newton, N.C., on brief), for appellees.
Before WINTER, Chief Judge, WIDENER, Circuit Judge, and BRYAN, Senior Circuit Judge.
Certain carriers operating in North Carolina brought this action against the North Carolina Secretary of Revenue and the Director of the Ad Valorem Tax Division of the North Carolina Department of Revenue 1 claiming discrimination in their 1980 and 1981 property taxes under 49 U.S.C. Sec. 11503a. Finding no violation of the statute, the district court granted defendants' motion for summary judgment, and we affirm.
In 1980 Congress passed the Motor Carrier Act of 1980, 49 U.S.C. Sec. 11503a, which prohibited States and political subdivisions from taxing motor carrier transportation property at a higher ratio of true market value than other commercial and industrial property in the same assessment jurisdiction. 2 The language of that statute parallels the language of the Railroad Revitalization and Regulatory Reform Act, (4-R Act), 49 U.S.C. Sec. 11503, initially enacted in 1976. 3 The Bus Regulatory Reform Act of 1982, P.L. 97-261, 96 Stat. 1102, was later passed to bring interstate bus lines into this legislative scheme. 1982 U.S.Code & Cong.News 2308, 2337. Through this series of statutes, Congress sought to eliminate the burden on interstate commerce resulting from the discriminatory taxing of interstate carriers by state and local governments. 4 See Senate Committee on Commerce, Discriminatory State Taxation of Interstate Carriers, S.Rep. No. 1483, 90th Cong., 2d Session 1 (1968) (commenting on S.927). The statute in terms finds such discriminatory taxation to "unnecessarily burden and discriminate against interstate commerce."
In North Carolina, locally-assessed real property is reappraised for taxation every eight years, N.C.Gen.Stat. Sec. 105-286. Locally assessed personal property is so reappraised every year. N.C.Gen.Stat. Sec. 105-285. The motor carriers' property involved in this action is their rolling stock. 5 Such personal property is appraised for taxation annually by the state Department of Revenue. N.C.Gen.Stat. Sec. 105-335(c)(2).
The motor carriers contend that they are being discriminated against under the statute because their rolling stock is being appraised for taxation at a higher ratio of true market value than is commercial and industrial real property. Such discrimination exists, they say, because rolling stock is reappraised annually while real property is only reappraised every eight years. The rolling stock appraised is at its current market value each year, thus keeping up with inflation and appreciation, either or both, while real property is not. The result is that rolling stock is therefore appraised for taxation at 100% of its true market value, while real property is assessed at less than 100%. Motor carriers base their entire claim for relief upon sales assessment ratio studies which, by definition, are based solely upon real estate. 6 They claim that Sec. 11503a designates sales assessment ratio studies as the preferred method of proof of tax discrimination, not only where real property tax ratios are being compared to the study ratios but also where, as here, personal property tax ratios are being compared to the real property tax ratios of the ratio study. Simply stated, motor carriers claim a violation of Sec. 11503a because their personal property is taxed at a higher effective rate than commercial and industrial real property, as evidenced by sales assessment ratio studies.
A disparity in the taxation of personal property and real property is permissible under the Act. The legislative history reveals that States can still validly tax these two types of property at different rates, as long as there is equality within each type.
Senate Committee on Commerce, Discriminatory State Taxation of Interstate Carriers, S.Rep. No. 1483, 90th Cong., 2d Session 11 (1968).
Our opinion in Clinchfield Railroad Co. v. Lynch, supra, is to the same effect as S.Rep. 1483. There, discrimination in real estate taxation was shown by use of a sales assessment ratio study. The results of the study showed that the real property of the railroad in Mecklenburg County, N.C., for example, was being taxed at 100%, while the real property of other commercial and industrial taxpayers in the same county was being taxed at 72% of actual value. That disparity resulted from the annual reassessing of railroad property, while other real property was only reassessed every eight years. Thus, for tax purposes the railroad property appraisals kept pace with inflation and appreciation, either or both, while other real property did not.
Because of a lack of proof in the record in Clinchfield Railroad, the district court could not segregate the railroad's real property, which was being overtaxed, from its personal property. Because the State failed to carry its burden and segregate these properties, we affirmed the district court's judgment reducing the tax burden on...
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... ... system is subject to challenge under former 49 United States Code Appendix ... history of 4-R Act in interpreting former § 1513(d) ]; Arkansas-Best Freight System, Inc. v. Lynch (4th Cir.1983) 723 F.2d 365, 366, fn. 3 ... ...
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...property in determining the appropriate assessment ratio for the motor carriers' personal property. In Arkansas-Best Freight System, Inc. v. Lynch, 723 F.2d 365 (4th Cir.1983), motor carriers, again invoking 49 U.S.C. Sec. 11503a, argued that they were being discriminated against because th......
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