Interstate Motor Freight System v. Bowers

• Decision Date: 27 July 1955
• Docket Number: 34407,Nos. 34218,s. 34218
• Citation: 57 O.O. 123,164 Ohio St. 122,128 N.E.2d 97
• Parties: , 57 O.O. 123 INTERSTATE MOTOR FREIGHT SYSTEM, Appellant, v. BOWERS, Tax Com'r, Appellee. GEO. F. ALGER CO. et al., Appellants, v. BOWERS, Tax Com'r, Appellee.
• Court: Ohio Supreme Court

Page 122

164 Ohio St. 122

128 N.E.2d 97, 57 O.O. 123

INTERSTATE MOTOR FREIGHT SYSTEM, Appellant, v. BOWERS, Tax Com'r, Appellee.

GEO. F. ALGER CO. et al., Appellants, v. BOWERS, Tax Com'r, Appellee.

Nos. 34218, 34407.

Supreme Court of Ohio.

July 27, 1955.

Syllabus by the Court.

1. Where a statute creates a board of officers of a state with power and authority to enter into reciprocity agreements with the proper authorities of an adjoining state regulating the use on the roads and highways of the two states of trucks and automobiles and any other motor vehicles owned in such two adjoining states; and where such officers of the two adjoining states so authorized enter into a reciprocity agreement with respect to the operation of motor carriers operating between the two states whereby it is agreed that when outstate carriers as to either state secure reciprocity exemption cards or plates then such states shall severally waive and forego payment by their respective outstate motor carriers of license-plate taxes, including weight taxes for motor vehicles, and also mileage fees for their operation, which reciprocity agreement can be terminated by either state on written notice first to be given to the other of intent to terminate, and which agreement is not terminated but is in full force and effect between such states; and where one of such states at a later date enacts legislation whereby within its territorial limits a new and additional highway use tax is assessed on all motor carriers operating within such state, the rate of which tax is based on the number of the axles, and the amount of the tax is determined by the operation mileage of the motor carrier; the outstate motor carriers of the other state operating in interstate commerce through the state wherein such new highway use tax is imposed are exempted from such tax by reason of the terms of such reciprocity agreement still in force and effect between such states.

2. Where a case can be determined upon any other theory than that of the constitutionality of a challenged statute, no consideration will be given to the constitutional question.

3. Under the provisions of Section 1464-3, General Code, Section 5703.05, Revised Code, the Tax Commissioner of Ohio is authorized and empowered to remit or refund taxes or assessments illegally or erroneously assessed or collected or for any other reason overpaid, with certain exceptions therein noted which are not applicable to the facts in this case, and on written application of any person claiming to have overpaid to the Treasurer of State, where the commissioner finds there has been an overpayment, he may issue a certificate of abatement to the taxpayer for such overpayment.

In case No. 34218, the appellant, Interstate Motor Freight System, has appealed from a decision of the Board of Tax Appeals affirming an order of the Tax Commissioner refusing a claim for refund for taxes (something referred to as the axlemile tax) levied against it under the Highway Use Tax Act, Sections 5728.01 to 5728.15, inclusive, Revised Code, which taxes were claimed to have been paid erroneously.

The appellant is a Delaware corporation having its principal place of business in the city of Grand Rapids, Michigan, and is engaged in the transportation of property for hire as a common carrier by motor vehicle in interstate commerce over highways located within the state of Ohio and 16 other states of the United States, under authority by the Interstate Commerce Commission.

The appellant claims that the highway use taxes paid to the state of Ohio from October 1, 1953, to March 31, 1954, in the amount of $29,533.59, were erroneously paid for the reason that there is presently in existence a reciprocity agreement between the state of Ohio and the state of Michigan, dated October 26, 1937, under which agreement those states agree to waive and forego 'license plate taxes, including weight taxes for motor vehicles and also mileage fees for their operations including Ohio taxes levied under the provisions of Sections 614-94, 614-112, 6291, 6292 and 6293, and any connected provisions of the Ohio General Code, or which may be levied or payable in lieu of such provisions.'

The matter was submitted to the Tax Commissioner who, in denying the refund, held in part as follows:

'The Tax Commissioner finds it unnecessary to ascertain the validity or existence of the alleged agreement of October 26, 1937, since by the provisions of Section 15 of the Highway Use Tax Act (Amended Substitute House Bill No. 619, Section 5728.15 of the Revised Code) the Legislature has provided the manner in which reciprocal agreements relating to the highway use tax law may be effected. The Tax Commissioner finds that said section is controlling over any existing reciprocal agreements that may be in effect between Ohio and her sister states and that no reciprocal agreements have been entered into between Ohio and Michigan under the above noted provisions of the highway use tax law.

'The Tax Commissioner further finds that the highway use tax law makes no provision for authorizing refunds except as provided in section 6 of the act (Section 5728.06 of the Revised Code) which section authorizes refunds on taxes paid for axles not actually used. There is no provision in the act which authorizes refunds on tax alleged to have been erroneously paid.'

An appeal was prosecuted to the Board of Tax Appeals and that body affirmed the order of the Tax Commissioner two of its members writing concurring opinions and one a dissenting opinion.

Case No. 34407 is the appeal of Geo. F. Alger Company and six other nonresident corporations from the Board of Tax Appeals, growing out of 10 separate final orders of the Tax Commissioner in which that officer refused to grant their petition for reassessment of highway use taxes.

It was stipulated that the appellant companies are nonresident motor carriers engaged in the business of transporting freight for hire in interstate commerce under certificates of public convenience and necessity issued to them by the Interstate Commerce Commission, and that such companies have registered the certificates with the Public Utilities Commission of Ohio and have been granted and hold authority to conduct motor carrier operations in interstate commerce over the public highways of Ohio.

The assessments, which are the subject of this appeal, were made by the Tax Commissioner for the first two quarter periods under the Highway Use Tax Act and cover the period from October 1, 1953, to March 31, 1954. Each assessment order provides that no penalty shall be added to the basic assessment if the assessment is paid within 30 days after final determination by the Board of Tax Appeals or the Supreme Court. Otherwise a 15 per cent penalty is to apply to the basic assessment.

An appeeal was prosecuted from the assessment made by the Tax Commissioner to the Board of Tax Appeals by each of the appellant companies. Although each of the appeals was separately docketed, the ten cases were consolidated by the Board of Tax Appeals for hearing because the same questions were raised in each appeal.

In the appeal by the Geo. F. Alger Company the claim was made that the assessment of the Tax Commissioner imposed a tax which is illegal, excessive, discriminatory and in violation of constitutional guaranties.

The Board of Tax Appeals affirmed the orders of the Tax Commissioner, reciting with approval in its entry the following finding of the Tax Commissioner:

'The Tax Commissioner finds it unnecessary to ascertain the validity or the existence of the alleged agreement between said states since by the provisions of Section 15 of the Ohio Highway Use Tax Act (Amended Substitute House Bill No. 619, Section 5728.15 of the Revised Code), the Legislature has provided the manner in which reciprocal agreements relating to the high way use tax law may be effected. The Tax Commissioner finds that said section is controlling over any existing reciprocal agreements that may be in effect between Ohio and her sister states and that no reciprocal agreements have been entered into between Ohio and Michigan under the above noted provisions of the highway use tax law.

'As to the constitutional question raised by the petitioner, the Tax Commissioner finds that he is without jurisdiction to set aside acts of the Legislature on the grounds that they are unconstitutional.'

One member of the Board of Tax Appeals wrote an opinion, concurred in by a second member, and the third member wrote a dissenting opinion.

The seven companies involved perfected an appeal to this court from the decision of the Board of Tax Appeals, assigning as error both the question as to the existence of a reciprocity agreement raised in the Interstate Motor Freight System appeal and the claims that the Highway Use Tax Act is unconstitutional.

Calland, Stouffer & Asher, Columbus, and Warner, Norcross & Judd, Grand Rapids, Mich., for Interstate Motor Freight System.

Matheson, Dixon & Brady, Detroit, Mich., Taylor C. Burneson, Columbus, and Thomas F. Chawke, Detroit, Mich., for George F. Alger Co.

C. William O'Neill, Atty. Gen., Joseph S. Gill and W. E. Herron, Columbus, for appellee.

HART, Judge.

These are appeals from decisions of the Board of Tax Appeals affirming orders of the Tax Commissioner assessing highway use taxes against motor carriers of Michigan operating in Ohio.

The appellants attack the assessments made against them pursuant to the provisions of the Highway Use Tax Act, Sections 5728.01 to 5728.15, inclusive, Revised Code, and the decisions of the Board of Tax Appeals validating such tax, on the claimed ground that the tax is illegal, excessive, discriminatory and in violation of constitutional guaranties. Specifically, the appellants, among other things, variously claim:

That there is presently in force and effect a reciprocity agreement between the state of Ohio and the state of...