American Barge Line Co. v. Koontz, CC784
| Citation | 68 S.E.2d 56,136 W.Va. 747 |
| Decision Date | 20 December 1951 |
| Docket Number | No. CC784,CC784 |
| Court | Supreme Court of West Virginia |
| Parties | AMERICAN BARGE LINE CO. et al. v. KOONTZ. |
Syllabus by the Court.
1. Code, 11-12A-3, as amended, imposing an annual privilege tax on gross income from the business of transporting passengers and freight by 'steamboat, steamship or other floating property', insofar as the tax applies to gross income from transporting passengers and freight from a point within this State to another point therein, is a valid and constitutional exercise of the taxing power of the State of West Virginia.
2. Code, 11-12A-3, authorizing a privilege tax on an apportioned percentage of gross income derived from interstate transportation by navigable streams, on a ton mile basis, unreasonably burdens interstate commerce. That part of the statute so providing contravenes Article I, Section 8, of the Constitution of the United States [Commerce Clause], and it is therefore void.
William M. Drennen, Robert G. Kelly, Charleston, Herman A. Bayless, Cincinnati, Ohio, Charles M. Spence, St. Louis, Mo., for plaintiffs.
William C. Marland, Atty. Gen., Joseph E. Hodgson, Asst. Atty. Gen., King S. Kearns, Charleston, for defendant.
This is a proceeding seeking a declaratory judgment whether a tax on the privilege of transporting freight and passengers by water is a valid and lawful exaction under the taxing power of the State of West Virginia. The tax is ostensibly authorized by Section 3, Article 12A, Chapter 33, Acts of the Legislature, First Extraordinary Session, 1933, as amended by Section 5-a, Article 12A, Chapter 108, Acts of the Legislature, 1937, Regular Session, other amendments to the act having expired by their own terms. The above mentioned statute will be hereinafter designated with appropriate section number as Code, 11-12A, as amended.
American Barge Line Company, a corporation, and Mississippi Valley Barge Line Company, a corporation, filed their joint petition in the Circuit Court of Kanawha County against C. H. Koontz, individually and as tax commissioner of the State of West Virginia, under the Uniform Declaratory Judgments Act (Chapter 26, Acts of the Legislature, 1941, Regular Session) and rules of practice and procedure in courts of record in the State of West Virginia, adopted by this Court on the tenth day of February, 1947, 128 W.Va. XV.
The American Barge Line Company is incorporated in the State of Delaware and has its principal office at Wilmington in that state, with other offices and officers located and stationed at Jefferson, Indiana, Cincinnati, Ohio, and Pittsburgh, Pennsylvania. The plaintiff Mississippi Valley Barge Line Company is a Delaware corporation, having its principal office at Saint Louis, Missouri. They will be hereinafter referred to collectively as 'plaintiffs'. The defendant in his individual and official capacity will be hereinafter designated 'defendant'.
Plaintiffs have no office or place of business located in West Virginia, nor any employee stationed therein. They are common carriers and hold certificates of convenience and necessity from the Interstate Commerce Commission of the United States. The vessels which they use in their business are licensed by the Federal Government and their use on navigable waters is subject to applicable laws and regulations of the Federal Government.
The plaintiffs use vessels and barges, operating them upon the Ohio and Mississippi Rivers and upon the navigable tributaries of those rivers, including the Kanawha and Monongahela Rivers. They transport freight of three classes, namely: (a) freight originating at one point in West Virginia and destined to another point in the State of West Virginia, hereinafter referred to as 'intrastate traffic'; (b) freight originating outside of the State of West Virginia and destined to a point within the state, or shipments originating in the State of West Virginia and destined to a point outside the state, hereinafter referred to as 'one-point interstate traffic'; and (c) freight originating at points outside the State of West Virginia and destined to a point outside the state, hereinafter designated as 'through traffic'.
Plaintiffs do not devote any of their facilities exclusively to intrastate traffic, such traffic being handled along with interstate traffic. That portion of plaintiffs' business in navigating the Monongahela and Kanawha Rivers consists in transporting one-point traffic and intrastate traffic, the greater portion of the business of plaintiffs consisting of transporting through traffic. There is no facility furnished by the State of West Virginia, nor is any county or municipality therein used by the plaintiffs in the conduct of their business.
The Ohio, Kanawha, and Monongahela Rivers are navigable streams which have been improved by the Government of the United States and under its authority.
The plaintiffs are licensed by the Government of the United States which authorizes and licenses the plaintiffs' vessels to operate. In addition thereto, the plaintiffs have been granted certificates of convenience and necessity by the Interstate Commerce Commission, as above stated. Incidental to the business of plaintiffs, they collect and pay transportation taxes to the Federal Government and are subject to regulation by the various agencies of that government authorized by law to supervise their activities on the navigable rivers above mentioned. The petition of the plaintiffs admits in substance that the bed, banks, and shores of that portion of the Ohio River bordering on the territory of the State of West Virginia are within the limits of such state. But it is further alleged that since the Ohio River has been improved by locks and dams, the navigable waters of the Ohio River overlie a portion of the State of Ohio, and that the territorial limit of the State of West Virginia only extends to the low water mark of the Ohio River as determined prior to canalization of that river. Plaintiffs allege that after the canalization of the Ohio River, in using the Ohio River for the purpose of navigation, the vessels and barges of the plaintiffs navigate waters of the Ohio River overlying the territory of the State of Ohio.
Plaintiffs invoke Article 4 of 'An Ordinance for the Government of the Territory of the United States Northwest of the River Ohio', providing for the freedom of navigation of the navigable waters leading into the Mississippi and Saint Lawrence Rivers; the Virginia Compact, adopted December 18, 1789 (Hening's Virginia Statutes, Vol. 13, Page 17), approved by the Act of Congress of February 4, 1791, 1 Stat. 189, as forbidding the exaction of the tax here considered.
Plaintiffs aver that their business competes with other persons and other means of transportation.
The defendant, on or about November 22, 1950, demanded that plaintiffs file tax returns and pay transportation tax for the years 1947, 1948 and 1949. The returns so demanded were filed, the pertinent portions of which being as follows:
American Barge Line Company
1947 1948 1949
Gross income W.Va. two-point traffic $ 51,756.98 $ 59,570.54 $ 17,779.82
Pro-rated gross income from through $330,105.30 $874,322.41 $599,747.88
traffic and W.Va. one-point traffic
(Total tax that would be produced by $ 11,124.48 $ 27,276.63 $ 18,017.69
statutory formula)
Mississippi Valley Barge Line Company
1947 1948 1949
Gross income W.Va. two-point traffic $ 24,023.79 $ 28,683.85 $ 54,852.83
Pro-rated gross income from through $554,363.34 $635,570.21 $671,457.59
traffic and W.Va. one-point traffic
(Total tax that would be produced by $ 16,872.81 $ 19,384.43 $ 21,199.58
statutory formula)
Liability for any of the taxes demanded by the defendant was denied. The amount claimed by the defendant for transportation of intrastate traffic, however, was tendered by plaintiffs without prejudice to their rights. The defendant returned the payments so made and asserted a claim for payment of taxes on gross income derived from all intrastate traffic for ten years, with penalties. The letter in which such demand was made indicates that the defendant insists upon payment of taxes on one-point intrastate traffic and through traffic, apportioned as required by the statute. Plaintiffs deny that there is any lawful right on the part of the defendant to assess a privilege tax upon the business in which they are engaged, and assign several reasons in support of their position.
This suit is brought to determine and declare the interpretation and application of the following statute:
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