Golden Eagle Western Lines v. Bingaman, 2765.

• Decision Date: 19 July 1935
• Docket Number: No. 2765.,2765.
• Parties: GOLDEN EAGLE WESTERN LINES, Inc., v. BINGAMAN, Commissioner of Revenue of New Mexico, et al.
• Court: U.S. District Court — District of New Mexico

14 F. Supp. 17

GOLDEN EAGLE WESTERN LINES, Inc., v. BINGAMAN, Commissioner of Revenue of New Mexico, et al.

No. 2765.

District Court, D. New Mexico.

July 19, 1935.

Earl A. Bagby, of Los Angeles, Cal., and E. R. Wright, of Santa Fé, N. M., for plaintiff.

Frank H. Patton, Attorney General, of the State of New Mexico, for defendants.

Before McDERMOTT and BRATTON, Circuit Judges, and NEBLETT, District Judge.

PER CURIAM.

By section 2, chapter 176, Laws of 1933, the New Mexico Legislature "levied and imposed an excise tax of five cents (5¢) per gallon upon the sale and use of all gasoline and motor fuel sold or used in this state for any purpose except gasoline sold in interstate commerce."

Plaintiff operates a bus line through New Mexico, doing no intrastate business. It buys no gasoline in the state,¹ Transcontinental & Western Air Co. v. Lujan, 36 N.M. 64, 8 P.(2d) 103, nor does it store gasoline in the state, American Airways, Inc., v. Wallace (D.C.) 57 F.(2d) 877, affirmed 287 U.S. 565, 53 S.Ct. 15, 77 L.Ed. 498; Nashville, C. & St. L. R. Co. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R. 1191; American Airways, Inc., v. Grosjean (D.C.) 3 F. Supp. 995, affirmed 290 U.S. 596, 54 S.Ct. 129, 78 L.Ed. 524; Edelman v. Boeing Air Transport, Inc., 289 U.S. 249, 53 S.Ct. 591, 77 L.Ed. 1155. The only use in the state to which plaintiff puts its gasoline is in propelling its busses, the gasoline being carried in tanks on the busses connected directly with the carburetors. As an excise tax on the privilege of use, the facts bring it squarely within the much-distinguished but still unreversed doctrine of Helson and Randolph v. Com. of Kentucky, 279 U.S. 245, 49 S.Ct. 279, 73 L.Ed. 683.

However, unlike the ferryboats in the Helson Case and the airplanes and railroad motors in the other cited cases, plaintiff does use the state-owned highways, and the state has ample power to exact a reasonable charge for that use even of purely interstate carriers. The right to carry on interstate commerce gives plaintiff no right to use state highways or park in the state house grounds as a garage, without paying a fair charge therefor. Clark v. Poor, 274 U.S. 554, 47 S.Ct. 702, 71 L.Ed. 1199; Carley & Hamilton, Inc., v. Snook, 281 U.S. 66, 50 S.Ct. 204, 74 L.Ed. 704, 68 A.L.R. 194; Interstate Busses Corporation v. Blodgett, 276 U.S. 245, 48 S.Ct. 230, 72 L.Ed. 551; Continental Baking Co. v. Woodring, 286 U.S. 352, 52 S.Ct. 595, 76 L.Ed. 1155, 81 A.L.R. 1402. It is neither charged nor proven here that 5 cents a gallon is, together with the modest mileage charge laid by another statute, such an exorbitant charge as to be a tax disguised as compensation, nor that the method has no reasonable relation to the use made of the highways. We know that the heavier and faster the bus, the more damage it does to the highways and, in rough approximation, the more gasoline it uses. If the Legislature, by this statute, exacted compensation for the use of the highways, plaintiff must fail.

But unless the statute can fairly be construed as a charge for the use of state facilities rather than an excise tax on the privilege of interstate commerce, then plaintiff must prevail. Interstate Transit, Inc., v. Lindsey, 283 U.S. 183, 51 S.Ct. 380, 75 L.Ed. 953. Free to construe this statute a priori, the fact that the proceeds of the sales tax, and perhaps of the use tax, go exclusively to highway financing, would be most persuasive. Interstate Transit, Inc., v. Lindsey, supra. That a mileage tax is also imposed is not controlling. Interstate Busses Corporation v. Blodgett, supra. Practical considerations support such a construction, for these menacing mammoths of the highways ought to pay for the damage they do.

But we are not free. The New Mexico statute means what the New Mexico Supreme Court says it means. The predecessor of this statute, in language so nearly identical as to admit of no distinction, has been twice before the Supreme Court of New Mexico. In Breece Lumber Co. v. Mirabal, 34 N.M. 643, 287 P. 699, 84 A.L.R. 827, plaintiff was compelled to pay the tax on gasoline used in logging operations, none of which was used on the highways. The court specifically held it was a tax, as the statute says, and not compensation for the use of the highways. Later, an airplane company, not using the highways, was compelled to pay the sales tax, but not the use tax. Transcontinental & Western Air Co. v. Lujan, supra. In 1931 the Legislature exempted gasoline bought in large quantities and not used on the highways. This amendment was called to the attention of the Supreme Court on rehearing, in the last case; the claim being that the amendment disclosed a legislative intent to construe the statute as designed only for compensation for the use of the highways. But the Supreme Court said that the history of the statute warranted no such construction, adhered to its view that a tax was imposed and not compensation exacted, and the airplane company was required to pay the tax.

A decent respect for these opinions of the highest court of New Mexico seems to repel the conclusion that this statute exacts a charge for the use of highways but does not impose a tax. If it is a compensation statute, the airplane company should not have paid. It cannot be a tax for airplanes and a charge for busses. It is one or the other. True, it was the sales tax there involved, and not the use tax. But, where the statute imposes "an excise tax * * * upon the sale and use," it is hair splitting to say that "excise tax" means what it says with reference to "sale" and an entirely different thing with reference to "use" in the same breath.

Until the New Mexico statute is amended or the Supreme Court of New Mexico otherwise interprets it, the majority of the court defer to the decisions as they now exist. The presumption of constitutionality hardly justifies a federal court in refusing to follow state decisions construing state statutes.

That Texas rebates plaintiff taxes paid on gas purchased in Texas and used in New Mexico is a circumstance that bears on the rough justice of the situation, but it does not bear on the critical question of what the New Mexico Legislature intended when it enacted this statute some years before the rebate was granted by another sovereignty.

We adopt the stipulated facts as our findings; a decree enjoining the collection of the tax will be prepared and entered. Administrative provisions of the statute, incidentally attacked, seem appropriate to the enforcement of the statute. They do not require plaintiff to do business in New Mexico. The decree will not enjoin administrative provisions appropriate to enforce the mileage tax statute or the sales tax on such gasoline as plaintiff does buy in the state. If defendant appeals within thirty days of the entry of the decree, a stay will be granted to the end that the bond now in force shall remain in force pending the appeal, to protect the defendant in event the decree is reversed.

We are indebted to counsel for their intelligent co-operation in agreeing upon the facts and in expediting a decision, and for very helpful argument and briefs.

BRATTON, Circuit Judge (dissenting).

The crucial question presented for determination is whether the tax involved represents a reasonable and nondiscriminatory excise upon the privilege of using the public highways of New Mexico in the conduct of an interstate motorbus business or a levy upon the prerogative to engage in interstate commerce. If the former, it is valid; if the latter, it violates the commerce clause of the Constitution of the United States (article 1, § 8, cl. 3) and must fall.

A sketchy chronology of the legislation in New Mexico may be helpful. Chapter 93, Laws of 1919, imposed a tax of 2 cents per gallon on all gasoline sold or used within the state, and expressly provided that the proceeds derived therefrom, after payment of certain salaries and expenses, should be covered into the road fund to be used for the construction, improvement, and maintenance of the public highways. Chapter 175, Laws of 1921, levied a tax upon gasoline sold, but did not cover gasoline used, and it repealed the earlier act in toto. That act was amended by chapter 61, Laws of 1925, but it likewise did not include a tax on gasoline used. Chapter 20, Laws of 1927, being sections 60-203, 60-205, Comp.1929, dealt exclusively with sales, and did not concern itself with use. Chapter 14 of the same session laid a tax of 5 cents per gallon on gasoline used for the propulsion or operation of motorbusses, commercial cars, trucks, or other vehicles upon the highways. It was amended by chapter 29, Laws of 1929, being section 60-101, Comp. 1929, to extend the tax to gasoline used for any purpose. The amending act reads: "There is hereby levied and imposed an excise tax of five cents per gallon upon the use of all gasoline and motor fuel used in this state for any purpose; Provided, that in the collection of such tax a deduction shall be allowed of the amount of the excise tax paid in this state by distributors or dealers upon the sale of the gasoline so used."

Chapter 31, Laws of 1931, authorized a refund of the tax collected upon gasoline purchased in specified quantities and used exclusively for other purposes than the operation of motor vehicles upon the public streets or highways of the state. That act was amended in certain particulars by chapter 162, Laws of 1933, but the amendment has no significance here. It still authorizes a refund upon 100 or more gallons of gasoline if acquired by single purchases of 50 gallons or more and is used otherwise than in the operation of vehicles on the streets or highways. That act was approved March 15, 1933. Then followed chapter 176, Laws of 1933, approved the succeeding day. It defines a distributor, among others, as any person using or consuming gasoline within the state before it shall have been received by any other...