Central Vermont Railway, Inc. v. Murdock A. Campbell, Commissioner of Motor Vehicles

• Decision Date: 16 February 1937
• Citation: 192 A. 197,108 Vt. 510
• Parties: CENTRAL VERMONT RAILWAY, INC. v. MURDOCK A. CAMPBELL, COMMISSIONER OF MOTOR VEHICLES
• Court: Vermont Supreme Court

192 A. 197

108 Vt. 510

CENTRAL VERMONT RAILWAY, INC.
v.
MURDOCK A. CAMPBELL, COMMISSIONER OF MOTOR VEHICLES

Supreme Court of Vermont

February 16, 1937

January Term, 1937.

P. L. Ch. 52, Gasoline Tax---Not a License Tax or a Tax for Use of Highways---An Excise Tax on Domestic Sale or Use---Gasoline Brought into State and Stored by Railroad Subject to Taxation---Movable Property Taxable Unless in Continuous Transit in Interstate Commerce---Taxation of Property Used to Carry on Interstate Commerce---Excise Tax on Sale or Use of Gasoline Destined to Furnish Motive Power in Interstate Commerce---Constitutionality of P. L. 1228, "Used" as Referring to Consumption or to Withdrawal from Storage---Construction Supporting Constitutionality of Statute to Be Adopted---Presumptions Indulged and Doubts Resolved in Favor of Validity of Statute---Presumption of Constitutionality to Prevail in Absence of Factual Foundation of Record---Gasoline "Used" within Meaning of P. L. 1228 When Withdrawn from Storage---Tax Laws Interpreted Liberally in Favor of Taxpayer but Intention of Legislature Ascertained from Entire Statute---Motion for Reargument Not out of Time.

1. Tax imposed by P. L. Ch. 52 on each gallon of gasoline sold or used in the State by a distributor as therein defined is not to be condemned as unconstitutional in its incidence upon gasoline purchased by a railroad company outside the State, stored by it within the State and withdrawn for use in operation of its trains in interstate commerce, as being a license tax upon the privilege of engaging in interstate commerce, nor upheld as constitutional as being a tax demanded for the use of the highways of the State.

2. Tax on gasoline imposed by P. L. Ch. 52 is an excise tax upon the domestic sale or use of the gasoline, measured by gallonage.

3. Gasoline purchased by railroad company outside the State, brought by it into the State and stored, to be withdrawn for use in operation [108 Vt. 511] of its trains in interstate commerce, had become a part of the mass of property in the State, and was subject to state taxation whether imposed upon the commodity itself or upon its sale or use so long as such taxation was not discriminatory against it because of its origin in another state, the principle that a temporary halt in the movement of interstate commerce does not break its continuity and render the merchandise subject to taxation in the state where the interruption occurs not being applicable.

4. The interstate commerce clause of the Constitution does not give immunity to movable property from local taxation which is not discriminative unless it is in actual continuous transit in interstate commerce, and the tax may be imposed upon the commodity itself or upon its sale or use.

5. A state may tax property used to carry on interstate commerce, but the tax must place no direct burden upon such commerce.

6. An excise tax upon the sale or use of gasoline, destined to be employed as furnishing motive power for interstate transportation, if imposed before such transportation has commenced, is a purely domestic transaction, places no forbidden burden upon interstate commerce and comes within no constitutional prohibition.

7. The tax imposed by P. L. 1228 on gasoline "used" by a distributor within the State is invalid as placing a direct burden on interstate commerce when applied to fuel consumed in interstate transportation if the word "used" denotes simply the consumption of gasoline; but if the word is taken to refer to withdrawal from storage, then the withdrawal is a purely domestic transaction although its purpose is thereafter to furnish motive power to propel an interstate train, and the tax constitutes only an indirect burden which is not prohibited by any constitutional provision.

8. When a statute is susceptible of two constructions, one of which supports it and gives it effect, and the other renders it unconstitutional and void, the former is to be adopted, even though the latter may be the more natural interpretation of the language used, for an act is never to be construed as unconstitutional if a reasonable construction can be placed upon it which will render it valid.

9. Every presumption is to be indulged, and doubts are to be resolved in favor of the validity of a statute.

[108 Vt. 512] 10. The presumption of the constitutionality of a statute must prevail in the absence of some factual foundation of record for overthrowing it.

11. Where gasoline is purchased by a railroad company outside the State and stored by it within the State to be used in the operation of its trains in interstate commerce, held that when such gasoline is withdrawn from storage, it is "used" within the meaning of P. L. 1228 imposing a tax upon each gallon of fuel sold by a distributor or used by him within the State, and that the tax upon gasoline so withdrawn from storage is valid.

12. Tax laws are to be interpreted liberally in favor of the taxpayer, and words defining things to be taxed may not be extended beyond their clear import, but the intention of the Legislature is to be ascertained, not from the literal sense of the words used, but from a consideration of the whole and every part of the statute, the subject matter, the effects and consequences, and the reason and spirit of the law.

13. In suit in equity, objection that motion for reargument was too late, because not made until after the mandate had been sent down and entered in the court of chancery, held unavailing under the provisions of P. L. 1327 where the final decree had not been enrolled when the motion was filed.

APPEAL IN CHANCERY. Bill of complaint seeking to enjoin enforcement by commissioner of motor vehicles of P. L. Ch. 52 imposing tax on gasoline, with respect to imposition of the tax on gasoline purchased by the plaintiff outside the State and stored by it within the State to be used in operation of its trains in interstate commerce. Temporary injunction granted. The defendant demurred. Heard upon the bill and demurrer at the April Term, 1936, Franklin County, Sturtevant, Chancellor. Demurrer overruled. Decree for the plaintiff granting permanent injunction. The defendant appealed. The opinion states the case.

Decree reversed and cause remanded.

Lawrence C. Jones, Attorney General, for the defendant.

Horace H. Powers for the plaintiff.

Present: POWERS, C. J., SLACK, MOULTON and SHERBURNE, JJ., and SHERMAN, Supr. J.

OPINION

MOULTON [192 A. 198]

It is alleged in the bill of complaint that the plaintiff is a common carrier by railroad, operating within and [108 Vt. 513] 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 or 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 apepar 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 [108 Vt. 514] 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...