Cent. Vt. Ry., Inc. v. Campbell, 508.

• Decision Date: 16 February 1937
• Docket Number: No. 508.,508.
• Citation: 192 A. 197
• Court: Vermont Supreme Court
• Parties: CENTRAL VERMONT RY., Inc. v. CAMPBELL, Com'r of Motor Vehicles.

192 A. 197

CENTRAL VERMONT RY., Inc.,
v.
CAMPBELL, Com'r of Motor Vehicles.

No. 508.

Supreme Court of Vermont. Franklin.

Feb. 16, 1937.

192 A. 197

Rehearing Denied May 4, 1937.

192 A. 198

POWERS, C. J., dissenting.

Appeal in Chancery; Allen R. Sturtevant, Chancellor.

Suit by the Central Vermont Railway, Incorporated, against Murdock A. Campbell, Commissioner of Motor Vehicles. From a decree for plaintiff, defendant appeals.

Reversed and remanded.

Argued before POWERS, C. J., SLACK, MOULTON, and SHERBURNE, JJ., and SHERMAN, Superior Judge.

Lawrence C. Jones, Atty. Gen., for appellant. Horace H. Powers, of St. Albans, for appellee.

MOULTON, Justice..

It is alleged in the bill of complaint that the plaintiff is a common carrier by railroad, operating within and between the States of Vermont, Massachusetts, and Connecticut; that the defendant is the Commissioner of Motor Vehicles of the State of Vermont, and, as such, the enforcing officer of the gasoline tax statute, chapter 52 of title 8 of the Public Laws; that certain trains operated by the plaintiff in interstate commerce use gasoline for fuel; that the gasoline for such trains is purchased by the plaintiff at places outside the State of Vermont, and imported to five storage places within the state, where it is kept to await its use as fuel in interstate traffic; that such gasoline is at all times destined and earmarked for the exclusive use by the plaintiff in its interstate trains, and is so used; that the defendant demands payment of the tax assessed upon gasoline by chapter 52 of title 8 of the Public Laws, and threatens the plaintiff with the penalties provided by that law, unless the tax is paid. It is sought permanently to enjoin the defendant from attempting to enforce the statute. A temporary injunction was granted below. The defendant filed a demurrer to the bill, which was overruled, and a permanent injunction was entered. The defendant has appealed.

P.L. 1222, so far as material, defines the term, "distributor," as used in chapter 52, as "a person, firm or corporation who imports or causes to be imported gasoline or other motor fuel for use, distribution or sale within the state." By P.L. 1228 it is provided that each distributor "in all cases not exempt from such tax under the laws of the United States" shall pay a tax of four cents per gallon upon each gallon of such motor fuel sold by him, and "shall also pay to the commissioner a tax of four cents per gallon upon each gallon of such motor fuel used within the state by him." Other sections deal with licenses, records, reports required from distributors, and penalties for noncompliance, but need not be specially noticed since no question arises concerning them. It does not appear that a distributor's license has been exacted from the plaintiff, or that records or reports have been demanded. Two questions are presented: (1) Whether the imposition of the tax upon use of gasoline purchased, imported, and stored by the plaintiff in the manner and for the purpose alleged, is an unconstitutional interference with interstate commerce; and (2) whether the withdrawal of certain quantities of this gasoline from the storage tanks, for the purpose of filling the receptacles in the motorcars of the plaintiff, is a "use" of it within the meaning of the statute.

The tax is not to be condemned as a license tax upon the privilege of engaging in interstate commerce, as in Real Silk-Hosiery Mills, Inc., v. City of Portland,

192 A. 199

268 U.S. 325, 45 S.Ct. 525, 69 L.Ed. 982; neither is it to be upheld, at least so far as this plaintiff is concerned, as a tax demanded for the use of the highways of the state, as in Clark v. Poor, 274 U.S. 554, 47 S.Ct. 702, 71 L.Ed. 1199. It is an excise tax upon the domestic sale or use of the gasoline, measured by gallonage. Bowman v. Continental Oil Co., 256 U.S. 642, 647, 41 S.Ct. 606, 608, 65 L.Ed. 1139. It will be helpful to review at some length the recent decisions which are based upon similar enactments.

In Edelman v. Boeing Air Transport, 289 U.S. 249, 53 S.Ct 591, 77 L.Ed. 1155, a statute of Wyoming (Laws 1929, c. 139, § 1) levied a tax "on all gasoline used or sold in this State * * * for domestic consumption." The respondent maintained an airplane service, transporting passengers, mail, and express in interstate traffic. It purchased gasoline, both within and without the state, which it intermingled and stored in tanks at its two airports in Wyoming. It paid, without objection, the tax on gasoline purchased within the state, upon which such tax had not been paid by the wholesaler, and the tax on all gasoline which it sold within the state at its airports, or which it withdrew from the tanks for local use. But it was contended that the tax could not validly be applied to the gasoline, imported from outside the state, stored in the tanks at its airports, and used for filling the interstate airplanes in which it was eventually consumed. The court said that as the statute had been administratively construed and applied, the tax was not levied upon the consumption of gasoline in the respondent's interstate planes, but was applied to the stored gasoline as it was withdrawn from the storage tanks at the airport and placed in the planes. "No tax is collected for gasoline consumed in respondent's planes either on coming into the state or on going out. It is at the time of withdrawal alone that 'use' is measured for the purposes of the tax. The stored gasoline is deemed to be 'used' within the state and therefore subject to the tax, when it is withdrawn from the tanks. * * * A state may validly tax the 'use' to which gasoline is put in withdrawing it from storage within the state, and placing it in the tanks of the planes, notwithstanding that its ultimate function is to generate motive power for carrying on interstate commerce." 289 U.S. 249, 53 S.Ct 591, 592, 77 L.Ed. 1155, at page 1157.

It may be noted that, on the first trial of the Edelman Case, in the United States District Court [51 F.(2d) 130, 133], the tax was upheld upon the ground that, since the statute provided, in substance, that the tax received from gasoline used at any municipal airfield within the state should be applied to the maintenance and improvement of the field, and since the interstate carrier by contract had the privilege of using such airfields, the case came within the principle that where a state at its own expense furnishes facilities for interstate and intrastate commerce, it may exact a reasonable compensation therefor. In the next trial before the Circuit Court of Appeals [61 F.(2d) 319], a distinction was drawn between gasoline purchased outside the state, and that purchased within it, as to the former the tax being held invalid, and, as to the latter, valid. But in the Supreme Court the only issue considered was "whether the taxation, of the gasoline which respondent withdraws from storage and uses for 'filling' its planes imposes an unconstitutional burden on interstate commerce." 289 U.S. 249, 53 S.Ct. 591, 592, 77 L.Ed. 1155, at page 1157.

In Nashville, Chattanooga & St. Louis Ry. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R. 1191, a Tennessee statute (Pub.Acts 1925, c. 67, § 2) provided for a gallonage tax on gasoline to be applied to persons, firms or corporations, dealers or distributors storing gasoline, and distributing the same or allowing it to be withdrawn from storage whether for sale or other use. The facts are thus stated in the opinion (288 U.S. 249, 53 S. Ct. 345, 349, 77 L.Ed. 730, at page 737, 87 A.L.R. 1191): "Appellant, an interstate rail carrier, purchases large quantities of gasoline outside the state of Tennessee and brings it into the state in tank cars, from which it is unloaded and placed in its own storage tanks. None of it is sold by appellant, but all is withdrawn and used by it as a source of motive power in interstate railway operation in Tennessee, Kentucky, Alabama, and...