Hatteras Yacht Co. v. High, 532

• Decision Date: 24 November 1965
• Docket Number: No. 532,532
• Citation: 265 N.C. 653,144 S.E.2d 821
• Parties: The HATTERAS YACHT COMPANY v. Sneed HIGH, Commissioner of Revenue of the State of North Carolina.
• Court: North Carolina Supreme Court

Page 821

144 S.E.2d 821

265 N.C. 653

The HATTERAS YACHT COMPANY v. Sneed HIGH, Commissioner of Revenue of the State of North Carolina.

No. 532.

Supreme Court of North Carolina.

Nov. 24, 1965.

Rodman & Rodman by Edward N. Rodman, Washington, for plaintiff appellant.

Atty Gen. T. W. Bruton, Deputy Atty. Gen. Peyton B. Abbott, for defendant appellee.

LAKE, Justice.

G.S. § 105-164.4, which is part of the North Carolina Sales and Use Tax Act of 1957, as amended, provides:

'There is hereby levied and imposed, in addition to all other taxes of every kind now imposed by law, a privilege or license tax upon every person who engages in the business of selling tangible personal property at retail * * *. (1) At the rate of three per cent (3%) of the sales price of each item or article of tangible personal property when sold at retail in this State * * *. Provided, however, that in the case of the sale of any airplane, railway locomotive, railway car or the sale of any motor vehicle, the tax shall be only at the rate of one per cent (1%) of the sales price, * * * but at no time shall the maximum tax with respect to any one such airplane, railway locomotive, railway car or motor vehicle, including all accessories attached thereto at the time of delivery thereof to the purchaser, be in excess of one hundred twenty dollars ($120.00).'

The same section of the statute then defines the term 'motor vehicle' as follows:

'For the purposes of this section, the words 'motor vehicle' mean any vehicle which is self-propelled and designed primarily for use upon the highways, any vehicle which is propelled by electric power obtained from trolley wires but not operated upon rails, and any vehicle designed to run upon the highways which is pulled by a self-propelled vehicle, but shall not include any implement of husbandry, farm tractor, road construction or maintenance machinery, or equipment, special mobile equipment as defined in G.S. 20-38, nor any vehicle designed primarily for use in work off the highway.'

G.S. § 105-164.13, which is a part of the same Act, exempts entirely sales of specified types of articles, including sales of 'boats' to commercial fishermen for use by them in such fishing. It is stipulated that these yachts do not fall into that category.

Provisions in a tax statute granting exemptions from the tax thereby imposed are to be strictly construed in favor of the imposition of the tax and against the claim of exemption. Sale v. Johnson, 258 N.C. 749, 129 S.E.2d 465; Good Will Distributors v. Shaw, 247 N.C. 157, 100 S.E.2d 334; Bragg Investment Co. v. Cumberland County, 245 N.C. 492, 96 S.E.2d 341; McCanless Motor Co. v. Maxwell, 210 N.C. 725, 188 S.E. 389; Rich v. Doughton, 192 N.C. 604, 135 S.E. 527. A proviso in such a statute taxing certain transactions at a lower rate than that made applicable in general, or providing that as to certain transactions the total tax shall not exceed a specified amount, there being no such limitation generally, is a partial exemption and is, therefore, to be strictly construed against the claim of such special or preferred treatment.

The Act first imposes a license tax upon 'every person who engages in the business of selling tangible personal property at retail' at the rate of three per cent (3%) of the sale price of each article so sold. G.S. § 105-164.4(1). This is the general rule, applicable except as otherwise provided to every sale of every type of article. The Act then provides that sales of certain, specified types of articles are 'exempted from the tax imposed by this article.' G.S. § 105-164.13. Provisos incorporated into G.S. § 105-164.4(1) create a third class of transactions, as to which the tax is computed at a smaller percentage of the sale price, coupled in some instances with a limitation of the maximum tax to be imposed on account of the sale of any single article within the category. The question for us is, Into which of these classes of transactions did the Legislature intend a sale of a pleasure yacht, self-propelled by an internal combustion engine, to fall?

Obviously, a sale of such a yacht falls within the general classification subject to the three per cent (3%) rate of tax, unless the yacht is a 'motor vehicle.' Whether such a yacht is a motor vehicle within the usual meaning of that term is immaterial, for the Legislature in this statute has defined a motor vehicle to be 'any vehicle which is self-propelled and designed primarily for use upon the highways.' It is stipulated that the yachts in question are self-propelled and they are, of course, vehicles. We come, therefore, to the question, Is a yacht designed primarily for use upon the highway? The statute does not define 'highways.'

Definitions of 'highway' contained in other statutes are not controlling. The same is true of judicial constructions of the term as used in other statutes. At best, they only throw some light upon the normal usage of the term, for, nothing else appearing, the Legislature is presumed to have used the words of a statute to convey their natural and ordinary meaning. Southeastern Baptist Theological Seminary v. Wake County, 251 N.C. 775, 112 S.E.2d 528. The question is, What did the Legislature mean by 'highways' as used in this proviso granting a special, partial exemption from a tax?

There have been numerous decisions by this Court and by the courts of other jurisdictions, which, when read without regard to the matters then at issue, appear to give support to the contention of the plaintiff. Thus, in Parsons v. Wright, 223 N.C. 520, 521, 27 S.E.2d 534, 536, this Court said, 'The term highway is the generic name for all kinds of public ways, whether they be carriage-ways, bridle-ways, foot-ways, bridges, turnpike roads, railroads, canals, ferries, or navigable rivers.' In Taylor v. West...