Amf v. Dept. of Treasury

• Decision Date: 23 September 2008
• Docket Number: Docket No. 276736.,Docket No. 276511.
• Citation: 761 N.W.2d 269,281 Mich. App. 35
• Parties: ALVAN MOTOR FREIGHT, INC. v. DEPARTMENT OF TREASURY. United Parcel Service, Inc. v. Department of Treasury.
• Court: Court of Appeal of Michigan — District of US

761 N.W.2d 269

281 Mich. App. 35

ALVAN MOTOR FREIGHT, INC. v. DEPARTMENT OF TREASURY.

United Parcel Service, Inc. v. Department of Treasury.

Docket No. 276511.

Docket No. 276736.

Court of Appeals of Michigan.

Submitted August 6, 2008, at Lansing.

Decided September 23, 2008, at 9:10 a.m.

Foster, Swift, Collins & Smith, P.C., Farmington Hills (by Robert E. McFarland), for Alvan Motor Freight, Inc.

Dykema Gossett PLLC, Detroit (by Sherrill D. Wolford and Kathleen McCree Lewis) and Richard D. Birns and J. Edward Goff for United Parcel Service, Inc.

Michael A. Cox, Attorney General, B. Eric Restuccia, Solicitor General, and Heidi L. Johnson-Mehney and Bruce C. Johnson, Assistant Attorneys General, for the Department of Treasury, Amicus Curiae.

Robert Digges, Jr., and Fraser Trebilcock Davis & Dunlap, P.C., Lansing (by Michael S. Ashton and Graham K. Crabtree), for American Trucking Associations, Inc.

Before: MARKEY, P.J., and WHITBECK and GLEICHER, JJ.

PER CURIAM.

In Docket No. 276511, petitioner Alvan Motor Freight, Inc. (AMF), appeals by right the decision of the Tax Tribunal upholding the position of the Department of Treasury that AMF was not entitled to an exemption from taxation under § 4k of the Use Tax Act, MCL 205.91 et seq., because the AMF trucks operated wholly within Michigan and so were not "used in interstate commerce" within the meaning of the exemption even though carrying freight originating from or destined for locations outside the state. MCL 205.94k(4), formerly MCL 205.94k(2) (See 1996 PA 477 and 1999 PA 70). We reverse.

In Docket No. 276736, the department appeals by right the order of the Court of Claims granting summary disposition to plaintiff United Parcel Service, Inc. (UPS), under MCR 2.116(C)(10) on its claim for a refund of use taxes paid for the years 1998 through 2000 on brown delivery vans purchased outside Michigan but used wholly within the state to carry packages from or destined for other states.¹ On the basis of United States Supreme Court precedent, the Court of Claims rejected the department's position that UPS was not entitled to the exemption because its brown delivery vans did not cross state lines. We affirm.

The common issue in these consolidated appeals is whether the "rolling stock" of AMF and UPS that never leaves the state of Michigan, but does carry freight originating from or destined for locations outside the state, is "used in interstate commerce" so as to qualify for tax exempt status under MCL 205.94k. Statutory construction presents a question of law, which this Court reviews de novo. General Motors Corp. v. Dep't of Treasury, 466 Mich. 231, 236, 644 N.W.2d 734 (2002). This Court also reviews de novo a lower court's grant or denial of summary disposition. Id. Because the facts are not disputed, our review of the Tax Tribunal's interpretation and application of the statute to those facts is also de novo. Id.; Danse Corp. v. Madison Hts., 466 Mich. 175, 178, 644 N.W.2d 721 (2002). Moreover, our review is de novo even though we give respectful consideration to the department's interpretation of the statute. In re Complaint of Rovas Against SBC Michigan, 482 Mich. 90, 754 N.W.2d 259 (2008).

For the tax years relevant to these cases, MCL 205.94k provided, in part:

(2) For taxes levied after December 31, 1992 and before May 1, 1999, the tax levied under this act does not apply to the storage, use, or consumption of rolling stock used in interstate commerce and purchased, rented, or leased outside of this state by an interstate motor carrier....

* * *

(4) As used in this section:

* * *

(b) "Interstate motor carrier" means a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines, whose fleet mileage was driven at least 10% outside of this state in the immediately preceding tax year.

(c) "Out-of state usage percentage" is a fraction, the numerator of which is the number of miles driven outside of this state in the immediately preceding tax year by qualified trucks used by the taxpayer and the denominator of which is the total miles driven in the immediately preceding tax year by qualified trucks used by the taxpayer. Miles driven by qualified trucks used solely in intrastate commerce shall not be included in calculating the out-of-state usage percentage.

(d) "Qualified truck" means a commercial motor vehicle power unit that has 2 axles and a gross vehicle weight rating in excess of 10,000 pounds or a commercial motor vehicle power unit that has 3 or more axles.

(e) "Rolling stock" means a qualified truck, a trailer designed to be drawn behind a qualified truck, and parts affixed to either a qualified truck or a trailer designed to be drawn behind a qualified truck. [1996 PA 477, amended effective June 25, by 1999 PA 70 (deleting the italicized language).]

No material facts are disputed in either of the cases at bar. Both UPS and AMF are "interstate motor carriers" that operate "rolling stock" in the state of Michigan. Thus, the sole issue on appeal is whether, as a matter of law, the "rolling stock" of UPS and AMF is "used in interstate commerce" so as to be exempt from use tax under MCL 205.94k.

The main goal of judicial construction of a statute is to "ascertain and to give effect to the intent of the Legislature." United Parcel Service, Inc. v. Bureau of Safety & Regulation, 277 Mich. App. 192, 202, 745 N.W.2d 125 (2007). The first step in doing this is to review the language of the statute. Id. If the statutory language of the statute is unambiguous, then we assume that the Legislature intended its plain meaning, and the statute must be enforced as written. Roberts v. Mecosta Co. Gen. Hosp., 466 Mich. 57, 63, 642 N.W.2d 663 (2002). "A necessary corollary of these principles is that a court may read nothing into an unambiguous statute that is not within the manifest intent of the Legislature as derived from the words of the statute itself." Id.; see also Lash v. Traverse City, 479 Mich. 180, 194, 735 N.W.2d 628 (2007) (The judiciary may not speculate regarding the Legislature's intent beyond those words expressed in the statute.) A provision in a statute "is ambiguous only if it irreconcilably conflicts with another provision, or when it is equally susceptible to more than a single meaning." Lansing Mayor v. Pub. Service Comm., 470 Mich. 154, 166, 680 N.W.2d 840 (2004) (citation and internal punctuation omitted; emphasis in original).

When reading a statute, we must assign to every word or phrase its plain and ordinary meaning unless otherwise defined in the statute, or unless the Legislature has used "technical words and phrases ... [that] may have acquired a peculiar and appropriate meaning in the law." MCL 8.3a; Ford Motor Co. v. Woodhaven, 475 Mich. 425, 438-439, 716 N.W.2d 247 (2006); Village of Holly v. Holly Twp., 267 Mich.App. 461, 470, 705 N.W.2d 532 (2005). Furthermore, we must not read a word or phrase of a statute in isolation; rather, each word or phrase and its placement must be read in the context of the whole act. Lansing Mayor, supra at 167-168, 680 N.W.2d 840; Village of Holly, supra at 470, 705 N.W.2d 532. Consequently, this Court must consider "both the plain meaning of the critical word or phrase as well as `its placement and purpose in the statutory scheme.'" Sun Valley Foods Co. v. Ward, 460 Mich. 230, 237, 596 N.W.2d 119 (1999), quoting Bailey v. United States, 516 U.S. 137, 145, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995).

We read the words "interstate commerce" in the phrase "used in interstate commerce" in the context of its placement and part of the whole of 1996 PA 477, as amended. Specifically, the Legislature enacted a use tax exemption applicable only to an "interstate motor carrier," defined as "a person engaged in the business of carrying persons or property, other than themselves, their employees, or their own property, for hire across state lines." Further, the act recognizes that such interstate motor carriers will likely engage in business activities that occur both within and without the state of Michigan and establishes a percentage requirement for business outside the state for the exemption to apply. In other words, the Legislature was clearly cognizant of, and capable of crafting, requirements regarding the crossing of state lines with respect to the phrase, "used in interstate commerce," but it did not. Moreover, when enacting legislation, the Legislature is presumed to be fully aware of existing laws, including judicial decisions. See Walen v. Dep't of Corrections, 443 Mich. 240, 248, 505 N.W.2d 519 (1993), and Gordon Sel-Way, Inc. v. Spence Bros., Inc., 438 Mich. 488, 505-506, 475 N.W.2d 704 (1991). Thus, in light of this context, we hold that the only reasonable reading of the words "interstate commerce" as used in 1996 PA 477, as amended, is that the Legislature intended them to have the "peculiar and appropriate meaning in the law" that those words have acquired in over a century of judicial decisions applying the Commerce Clause of the United States Constitution.² MCL 8.3a; Ford Motor Co., supra at 439, 716 N.W.2d 247; Van Buren Charter Twp. v. Garter Belt, Inc., 258 Mich.App. 594, 606-607, 673 N.W.2d 111 (2003).

Caselaw spanning over 100 years establishes that the term "interstate commerce" has acquired a technical meaning in the law such that the phrase "used in interstate commerce" refers to trade in goods or services between different states. See The Daniel Ball, 77 U.S. (10 Wall) 557, 565, 19 L.Ed. 999 (1871) (steamer engaged in interstate commerce, even if it never left the confines of the state, so long as it carried goods destined for, or originating from, another state); Northern Pacific R. Co. v. Washington ex rel Atkinson, 222 U.S. 370, 375, 32 S.Ct. 160, 56 L.Ed. 237 (1912) (train moving solely within a single state was engaged in interstate commerce because it hauled goods...