City of Portland v. Kozer

• Decision Date: 24 July 1923
• Citation: 217 P. 833,108 Or. 375
• Parties: CITY OF PORTLAND v. KOZER, SECRETARY OF STATE, ET AL.
• Court: Oregon Supreme Court

217 P. 833

108 Or. 375

CITY OF PORTLAND v. KOZER, SECRETARY OF STATE, ET AL.

Supreme Court of Oregon

July 24, 1923

In banc.

Appeal from Circuit Court, Marion County; Geo. G. Bingham, Judge.

Suit by the City of Portland against Sam A. Kozer, Secretary of State, and another. From a decree sustaining a demurrer to the complaint and dismissing the suit, plaintiff appeals. Affirmed.

Frank S. Grant and Lyman E. Latourette, both of Portland, for appellant.

Willis S. Moore, Asst. Atty. Gen. (I. H. Van Winkle Atty. Gen., and Dey, Hampson & Nelson, of Portland, on the brief), for respondents.

BEAN J.

This is a suit to enjoin the secretary of state from collecting a tax known as the gasoline tax. A demurrer was filed to plaintiff's complaint, which, being sustained by the circuit court, plaintiff declined to plead further, whereupon a decree was rendered dismissing the suit. Plaintiff appeals.

The case involves the construction of chapter 159, General Laws of Oregon for 1919, and chapter 412, General Laws of Oregon for 1921. The validity of the statutes is not questioned.

Section 2 of chapter 159, Laws of 1919, provides:

"That in addition to the taxes now provided for by law each and every dealer, as defined in this act, who is now engaged or who may hereafter engage in his own name, or in the name of others, or in the name of his representatives or agents in this state, in the sale or distribution, as dealers and distributors, of motor vehicle fuel as herein defined shall not later than the fifteenth day of each calendar month render a statement to the secretary of state of the state of Oregon of all motor vehicle fuel sold or distributed by him or them in the state of Oregon during the preceding calendar month, and pay a license tax of 1 cent per gallon on all motor vehicle fuel, except distillate, so sold or distributed, and a license tax of one-half cent per gallon on distillate so sold or distributed as shown by such statement in the manner and within the time hereinafter provided."

Section 5 provides that said "license tax" shall be turned over by the secretary of state to the state treasurer, and placed to the credit of the state highway fund to be expended as provided by law.

Section 2 of chapter 412, Laws of 1921, provides that every dealer in addition to the taxes now provided by law, shall pay a license tax of one cent per gallon on all motor vehicle fuel sold or distributed by him in the state of Oregon during the preceding month. Section 5 provides for funds for the refund of taxes in certain instances. Section 9 reads thus:

"All motor vehicle fuel as defined in this act, distributed by any distributing agency to its branches throughout the state of Oregon, shall be deemed to have been sold and shall be subject to the requirements of this act, the same as if sold to the public at large."

Section 9 of chapter 159 of the Act of 1919 is the same as the section just quoted. Section 11 of chapter 412 of the Act of 1921 provides for a refund of taxes paid on motor vehicle fuel used for other purposes than the operation of motor vehicles on the public highways, whether the tax was paid by the consumer directly or by adding the amount of such tax to the price of the fuel.

It is contended on behalf of plaintiff that the tax is ultimately paid by the consumer and that the state, counties, municipalities, and other state agencies are exempt from paying the tax of two cents per gallon which is imposed by these statutes.

The complaint sets out two separate causes of action. One refers to the first statute and the other to the later statute. Each cause of action, after setting out the official position of Sam A. Kozer as Secretary of State, the corporate existence and business of the Associated Oil Company, and the fact that the city of Portland is a municipal corporation, alleges that the plaintiff has a large number of vehicles consisting of police patrol vehicles, fire apparatus, etc., all of which are used for public and governmental purposes; that the same are equipped for using gasoline and other liquids of similar character described by the statute, and are dependent upon the same for successful operation and maintenance; that in truth and in fact the exaction imposed by the statute is added to the price and uniformly collected by the seller and distributor from the consumer so that the seller or the distributor acts only as an agent or collector for the state; and that such tax was not intended to be imposed upon the city of Portland or other state agencies exercising governmental control.

It is submitted on behalf of plaintiff that statutes which authorize or impose taxes are not to be so construed as to impose the tax upon the state or state agencies, such as cities, counties, etc. It may be within the authority of the state to impose a tax upon itself and upon its agencies, but a statute will not be so construed unless very definite language is used to exhibit such intention, citing 1 Cooley on Taxation (3d. Ed.) p. 263, and other authorities.

The Attorney General, on behalf of the secretary of state, suggests that chapter 159, General Laws of Oregon for 1919, provides for the tax upon the privilege of selling motor vehicle fuels, and chapter 412, General Laws of Oregon for 1921, provides for a tax upon the privilege of using the highways of this state, citing Northwest Auto Co. v. Hurlburt, 104 Or. 398, 207 P. 161, and other authorities.

Article 9, § 1, of the Constitution ordains as follows:

"The legislative assembly shall, and the people through the initiative may, provide by law uniform rules of assessment and taxation. All taxes shall be levied and collected under general laws operating uniformly throughout the state."

Article 9, § 1b, provides that all ships and vessels of 50 tons or more capacity, whose home ports of registration are in the state of Oregon, shall be exempt from taxes until 1935. No other exemption is ordained by the Constitution.

Prior to 1917, section 1 of article 9 provided that the legislative assembly should provide by law for the taxation of all property both real and personal "excepting such only for municipal, educational, literary, scientific, religious, or charitable purposes, as may be specially exempted by law."

Section 4235, Or. L., provides what property shall be exempt from taxation. Subdivision 2 thereof reads as follows:

"All public or corporate property of the several counties, cities, villages, towns, school districts, irrigation districts and drainage districts in this state used or intended for corporate purposes, except lands belonging to such public corporations held under a contract for the purchase thereof."

Under the Constitution as it read prior to the amendment, it was held in Crawford v. Linn County, 11 Or. 482, 5 P. 738, that no class of property not falling within the exceptions classified in that section could be exempted by the Legislature from taxation.

It is a general rule that in the absence of a constitutional inhibition the right to make reasonable exemptions from taxation rests with the Legislature, but where there is a doubt in regard to a statute attempting to make an exception, the uncertainty will be resolved in favor of the state and against the exemption. Wallace v. Board of Equalization, 47 Or. 585, 86 P. 365.

In Northwest Auto Co. v. Hurlburt, 104 Or. 398, 207 P. 161, this court, speaking by Mr. Justice McBride, said:

"The courts in speaking of financial exactions of the character herein discussed have sometimes called them licenses, and sometimes privilege taxes. Again, they are sometimes spoken of as license fees or license taxes; but by whatever name they may be called, they partake of the nature of a tax in many respects, and the designation given in the statute is immaterial, the courts being interested in the substance rather than in the name."

We are inclined to the belief that by defining or precisely designating the exactions under the statute referred to, we do not proceed on our journey to any extent. The writer is of the impression that the impositions on motor fuels provided by the statute partake to a certain extent of a license, sales tax, and privilege tax combined.

It is no doubt true that the amount of the tax usually finally falls upon the purchaser, because the seller will naturally fix the price to be collected for the commodities sold which will include the amount of the tax. See Clark v. Titusville, 184 U.S. 329, 333, 22 S.Ct. 382, 46 L.Ed. 569. It may also be said that what is ultimately gained by the purchaser for the amount of the tax so included in the price is the use of the highways for automotive vehicles propelled by motor vehicle fuels. There are also some of the essential elements of the tax upon the sale, or the privilege of the sale of motor fuels. The dealer, however, is required to pay the tax. Such dealer is required to keep a record in such form as may be prescribed by the secretary of state of all purchases, receipts, sales, and distribution of motor fuel, and is subject to a penalty for violation of the act. The tax is not imposed upon the purchaser directly. He is not required to do anything by the act, although the result may incidentally cause the price of the motor vehicle fuels to be enhanced. Pierce Oil Corp. v. Hopkins (C. C. A.) 282 F. 253. In the latter case the court said:

"The conclusion that the tax is not levied against the purchaser disposes of the basis of the only contention made

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