La Crosse Queen, Inc. v. Wisconsin Dept. of Revenue

• Decision Date: 04 April 1996
• Docket Number: No. 95-2754,95-2754
• Citation: 549 N.W.2d 261,201 Wis.2d 537
• Parties: La CROSSE QUEEN, INC., Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent-Respondent. d
• Court: Wisconsin Court of Appeals

Page 261

549 N.W.2d 261

201 Wis.2d 537

La CROSSE QUEEN, INC., Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent-Respondent.^d

No. 95-2754.

Court of Appeals of Wisconsin.

Submitted on Briefs March 11, 1996.

Opinion Released April 4, 1996.

Opinion Filed April 4, 1996.

For the petitioner-appellant the cause was submitted on the briefs of Paul J. Munson of McDonald & Munson of La Crosse.

For the respondent-respondent the cause was submitted on the brief of James E. Doyle, Attorney General, and Gerald S. Wilcox, Assistant Attorney General.

Before EICH, C.J., GARTZKE, P.J., and VERGERONT, J.

VERGERONT, Judge.

This appeal concerns the exemption from sales tax for commercial vessels primarily engaged in interstate commerce, § 77.54(13), STATS. ¹ La Crosse Queen, Inc. appeals from a judgment affirming the determination of the Wisconsin Tax Appeals Commission that payments it received for the lease of an excursion vessel, the La Crosse Queen IV, were not exempt because the vessel was not primarily engaged in interstate commerce. We conclude that the vessel was engaged in interstate commerce during the years in question, but we are unable to decide on this record whether it was "primarily" engaged in interstate commerce. We therefore reverse the judgment with directions to the trial court to remand to the commission for this determination.

BACKGROUND

During the years 1989 through 1991, La Crosse Queen, Inc. was the owner of an excursion vessel named the La Crosse Queen IV and leased it to Riverboats America, Inc. The vessel carries passengers on sightseeing and dinner cruises and operates exclusively on the Mississippi River. The western boundary of the State of Wisconsin is the center of the main channel of the Mississippi River. ² All passengers embark and disembark at La Crosse, Wisconsin. Approximately seventy-five percent of the passengers carried by the vessel are from states other than Wisconsin.

On the one and one-half hour cruise, the vessel goes upstream, crosses over the Wisconsin boundary into Minnesota territorial waters, travels to the lock and dam at Dresbach, Minnesota, then turns around and returns to La Crosse. There is a longer four-hour cruise that serves a meal and includes this same route. On this cruise and on charter cruises, the vessel typically "locks through" the lock at Dresbach before it turns around. There is also a two-hour dinner cruise that goes south on the river and then turns around to return to La Crosse. A guide provides information about the river and its history during the cruises. No passengers disembark at any point during the cruises.

The vessel operates under Interstate Commerce Commission (ICC) authority number WC-1172; until the time of deregulation, the vessel was required to file tariff reports with the ICC. Because the Mississippi River is considered an interstate waterway, the vessel must be, and is, certified by the United States Coast Guard, and must report annually to the Army Corps of Engineers.

The owners of La Crosse Queen, Inc. purchased the business from Roy Franz in 1975, although the vessel they purchased then was not the La Crosse Queen IV. Franz challenged the imposition of a sales tax on the ticket sales for the cruises on the ground, among others, that it was an unconstitutional burden on interstate commerce. In Roy A. Franz, d/b/a The Big Indian Boat Lines v. DOR, No. 159-122 (Dane County Cir.Ct. July 30, 1979), the Dane County Circuit Court determined that the tax was valid and, in particular, determined that no interstate commerce was involved, relying on Mayor of Vicksburg v. Streckfus Steamers, 150 So. 215 (Miss.1933). The method and nature of the operation of the La Crosse Queen IV is basically the same as the operation of Franz's business, except that the La Crosse Queen IV exceeds fifty tons, whereas Franz's vessel did not.

The Wisconsin Department of Revenue issued an assessment of sales tax on the gross receipts from the lease payments for the years 1989 through 1991. The taxpayer appealed to the Wisconsin Tax Appeals Commission. The commission determined that the vessel was not primarily engaged interstate commerce because the rides were purely recreational and not an essential part of the passengers' interstate travel. The commission relied on the Franz decision, citing approvingly from Mayor of Vicksburg, and on the "integral step in interstate movement" criterion from United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947), overruled on other grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984). The trial court affirmed.

DISCUSSION

We review the decision of the commission, not the trial court. See Port Affiliates, Inc. v. DOR, 190 Wis.2d 271, 279, 526 N.W.2d 806, 809 (Ct.App.1994). Whether the vessel is primarily engaged in interstate commerce within the meaning of § 77.54(13), STATS., presents a question of law. See Town of La Pointe v. Madeline Island Ferry Line, Inc., 179 Wis.2d 726, 736, 508 N.W.2d 440, 444 (Ct.App.1993). We are not bound by an agency's conclusions of law, although we give varying degrees of deference to the agency depending on the particular circumstances. William Wrigley, Jr. Co. v. DOR, 160 Wis.2d 53, 69-71, 465 N.W.2d 800, 806-07 (1991), rev'd on other grounds, 505 U.S. 214, 112 S.Ct. 2447, 120 L.Ed.2d 174 (1992).

We conclude that the proper degree of deference in this circumstance is "due weight," rather than "great weight." See Wrigley, 160 Wis.2d at 70-71, 465 N.W.2d at 806-07 (due weight, rather than great weight, is appropriate where the question is very nearly one of first impression and the agency has not developed expertise or a body of precedent on the question). Since there is no statutory definition of "interstate commerce," an interpretation of § 77.54(13), STATS., involves applying the most appropriate definition from court decisions that address Congress's power to regulate interstate commerce. ³ This is what the commission did when it relied on Yellow Cab Co. and on Mayor of Vicksburg in affirming the assessment. This is what we have done in interpreting "interstate traffic" in § 70.111(3), STATS., which exempts from general property taxes "[w]atercraft employed regularly in interstate traffic." Town of La Pointe, 179 Wis.2d at 730, 508 N.W.2d at 442. The commission is not in a better position than the reviewing court to decide this type of statutory interpretation, which does not depend on the commission's specialized or technical knowledge. The commission has on only one prior occasion interpreted the term "interstate commerce" in the context of § 77.54(13), or in any similar context. See Washington Island Ferry Line, Inc. v. DOR, WTAC Nos. 91-S-126, 91-S-385 (March 16, 1993), aff'd, No. 93-CV-1442 (Dane County Cir.Ct. Dec. 4, 1993) (Washington Island Ferry Line operates primarily in interstate commerce because substantial amount of goods and persons transported originates from or is destined to points outside Wisconsin). The issue we address is therefore very nearly one of first impression for the commission.

Transportation between points within a state over a route in another state is interstate commerce. Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653, 661, 68 S.Ct. 1260, 1265, 92 L.Ed. 1633 (1948). That definition was applied to transportation by water in Cornell Steamboat Co. v. United States, 321 U.S. 634, 64 S.Ct. 768, 88 L.Ed. 978 (1944). In Cornell, the company's tugboats carried no cargo but moved cargo vessels from one New York port to another New York port, crossing from New York territorial waters into New Jersey territorial waters on a substantial portion of these trips. The Court concluded that this was interstate commerce within the meaning of the Interstate Commerce Act. Cornell, 321 U.S. at 638-41, 64 S.Ct. at 770-72.

Central Greyhound Lines and Cornell were relied on by the Missouri Supreme Court in analyzing whether an excursion boat with operations similar to those of the La Crosse Queen IV was engaged in interstate commerce in City of St. Louis v. Streckfus, 505 S.W.2d 70 (Mo.), appeal dismissed,419 U.S. 810, 95 S.Ct. 24, 42 L.Ed.2d 37 (1974). Streckfus operated an excursion boat that conducted tours on the Mississippi River from the City of St. Louis, Missouri, returning to the City of St. Louis, with no disembarkation at any other point. During the cruise, the boat crossed and recrossed the boundary line between the states of Missouri and Illinois (the middle of the main channel of the river). Streckfus was fined for permitting the operation of coin-operated vending devices on the boat without a license from the City of St. Louis. He challenged this on the ground that the fine imposed an undue burden on interstate commerce. After discussing Cornell, Central Greyhound Lines and a number of other United States Supreme Court decisions, the Missouri court concluded:

The transportation of passengers in this case by boat on a boundary river in a continuous non-stop journey from and to the same point in Missouri during which the boat crosses the boundary line into and traverses waters of Illinois is interstate commerce. Cornell Steamboat Co. v. United States, supra; Central Greyhound Lines, Inc. v. Mealey, supra.

Streckfus, 505 S.W.2d at 73-74. The Missouri court then decided that the license requirement was not an undue burden on interstate commerce.

The commission's decision does not discuss the definition of interstate commerce established in Cornell. Instead, it relies on Mayor of Vicksburg, which was decided before Cornell. Mayor of Vicksburg relied on United States Supreme Court cases decided prior to Cornell and Central Greyhound Lines in concluding that an excursion vessel leaving from and returning to Vicksburg, Mississippi, and crossing over to the Louisiana side of the river en route, was not engaged in interstate commerce. Mayor of...