Fruit Growers Exp. Co. v. Norberg, 81-185-M

• Decision Date: 17 February 1984
• Docket Number: No. 81-185-M,81-185-M
• Citation: 471 A.2d 628
• Parties: FRUIT GROWERS EXPRESS COMPANY v. John H. NORBERG, Tax Administrator. P.
• Court: Rhode Island Supreme Court

Page 628

471 A.2d 628

FRUIT GROWERS EXPRESS COMPANY v. John H. NORBERG, Tax Administrator.

No. 81-185-M.P.

Supreme Court of Rhode Island.

Feb. 17, 1984.

Alfred S. Lombardi, William P. Robinson, III, Edwards & Angell, Providence, for petitioner.

Dennis J. Roberts, II, Atty. Gen., Perry Shatkin, Chief Legal Counsel, Div. of Taxation, Providence, for respondent.

OPINION

KELLEHER, Justice.

We have issued a statutory writ of certiorari pursuant to the pertinent provisions of the Administrative Procedures Act, to wit, G.L.1956 (1977 Reenactment) § 42-35-16, to review a District Court justice's affirmation of the tax administrator's denial of a taxpayer's request for a tax refund.

The pertinent details of this controversy have been set forth in an agreed statement of facts which was initially presented at a hearing conducted on the administrative level. The taxpayer (Fruit Growers or taxpayer) is a Delaware corporation whose headquarters is situated in the District of Columbia and whose entire stock is owned by twelve major railroad companies. Fruit Growers owns and is obligated to furnish to some sixty-one railroad carriers specialty cars that permit the interstate shipment of perishable commodities, both fresh and frozen, throughout the United States. The commodities are conveyed by rail in two types of containers, freight cars and so-called piggyback trailers, which are mounted on specially equipped flat cars. Both the freight cars and the trailers contain a refrigeration system that is designed to maintain the interior temperatures within a range of zero to seventy degrees Fahrenheit, depending upon the commodity transported and external temperatures. The refrigeration unit uses diesel fuel to power the generator, which in turn produces the electricity that serves as the source of power for the refrigeration apparatus.

General Laws 1956 (1968 Reenactment) § 31-36-15 provided that even though a special tax was due on all fuel sold within Rhode Island, that tax was refundable if the fuel was used for certain designated purposes. Fruit Growers claims that the fuel used to power its refrigeration units is refundable under that portion of § 31-36-15 which permitted the taxpayer to be reimbursed for a tax imposed on fuel utilized "for the operation of railroad transportation equipment on fixed rails or tracks."

Years ago, in 1968, the Division of Taxation (division) issued an opinion to Fruit Growers' supplier, stating that any fuel the supplier sold to Fruit Growers would be eligible for a tax refund under § 31-36-15. Things went smoothly for the next eight years. However, in 1976 the division apparently had a change of heart and on March 29, 1976, sent a second unsolicited opinion to the supplier, in which communication the supplier was advised that the division's 1968 communication was erroneous because the taxpayer did not fall within the reimbursement provisions set forth in § 31-36-15. The division softened the blow by making it clear that its second opinion was to be applied solely to Fruit Growers' future purchases. Thus, when Fruit Growers, on December 15, 1976, filed with the division a claim for refund of fuel tax paid during the period April 21 to October 31, 1976, of some $3,798, that claim was denied. The claim indicates that during the period in question, Fruit Growers purchased from its supplier 37,987 gallons of diesel fuel, which was subject to a tax of ten cents on the gallon.

In due course, Fruit Growers exhausted its administrative remedies without success, suffered a similar fate before the District Court, and is presently before us in a two-pronged appeal in which it argues that the claim clearly falls within the language of the reimbursement statute, and if not, the tax is unconstitutional because it constitutes an undue burden on interstate commerce. For reasons that will become apparent, we will limit our consideration to the question of the statute's ambiguity.

The District Court justice first found that the reimbursement language was ambiguous; he then proceeded to construe the language strictly against the taxpayer. In taking this tack, the trial justice was of the belief that since the language granting a refund was akin to language granting an exemption, any ambiguity in the statute would be construed strictly against the taxpayer. The trial justice was of the belief that the reimbursement would be warranted if the fuel was consumed in a "function integrally related" to the use of the railroad's transportation equipment. According to the trial justice, fuel consumed during operational functions that were merely "incidental" to the use of the equipment would not come within the reach of the statute. The trial justice also believed that there was merit in the administrator's argument that if the taxpayer's position was upheld, refunds would be due for fuel consumed in cooking the food served in the railroad's dining cars. The tax administrator in his decision declared that the General Assembly "obviously" intended the exception to be applied to fuel used in the "propulsion" of railroad equipment.

Recently in In re Dina N., R.I., 455 A.2d 318 (1983), we noted that the construction of statutes is a matter reserved for the courts, with this court serving as the final arbiter on questions of statutory construction. We also emphasized that when the language of a statute in question is clear and unambiguous and does not contradict an...