Larey v. Continental Southern Lines, Inc.
| Decision Date | 23 October 1967 |
| Docket Number | No. 5--4325,5--4325 |
| Citation | 243 Ark. 278,419 S.W.2d 610 |
| Parties | B. Bryan LAREY, Commissioner of Revenues, Appellant, v. CONTINENTAL SOUTHERN LINES, INC., et al., Appellees. |
| Court | Arkansas Supreme Court |
Lyle Williams and Tom Tanner, Little Rock, for appellant.
Smith, Williams, Friday & Bowen, Little Rock, and Harper, Young, Durden & Smith, Ft. Smith, for appellees.
The question to be determined on this appeal is whether Ark.Stat.Ann. § 75--1251 (Supp.1965) () is constitutional. The action was brought against the Commissioner of Revenues of the State of Arkansas 1 by appellees, all of whom are in the business of transporting passengers and goods, for hire, in interstate commerce to and through Arkansas by motor buses which use special distillate fuels. Each of them filed reports, showing the mileage traveled, on forms prescribed by the Commissioner of Revenues of the State of Arkansas. Upon the basis of these reports, but under protest, each of the appellees paid taxes on the special distillate fuel used at the rate of 8 1/2 cents per gallon on the number of gallons indicated by assuming that each of the appellees used one gallon for each five miles traveled pursuant to the section questioned. Appellees' suit was to recover all that portion of the tax paid by each in excess of 8 1/2 cents per gallon used, with interest from date of payment. They allege that each of them maintained an average consumption of less than the amount determined by statute. The case was tried upon a stipulation of facts. In pertinent part, the stipulation was as follows:
'1. * * * There are intrastate carriers (bus companies) engaged in the identical business and competitive with the Plaintiffs over certain routes.
2. The Plaintiffs and the intrastate bus companies operate motor vehicles which primarily use diesel engines for propulsion.
3. The intrastate bus companies pay an excise tax of $.085 per gallon on all distillate special fuels purchased by them either at the time delivered to their storage facilities for later use or when purchased from a retailer for delivery directly into the motor vehicle's tank.
4. The plaintiffs, as interstate bus companies, submit a monthly report to the Defendant itemizing the quantity of fuel purchased and mileage traveled in Arkansas during the preceding month. With respect to the distillate special fuel imported into Arkansas and used for operation of a motor vehicle, the Plaintiffs pay $.085 per gallon based on the presumption that their motor vehicles consume one gallon of fuel for each five miles traveled. The greater part of the fuel used is imported into Arkansas in the tanks of the vehicles.
5. All of the Plaintiffs obtain more than five miles of travel for each gallon of special distillate fuel consumed. The plaintiff, Continental Southern Lines, Inc., maintains an average of 6.3 miles per gallon and this is representative of the fuel consumption of the Plaintiffs as a group. The intrastate carriers have comparable consumption standards.
6. An intrastate bus company which obtains 6.3 miles per gallon pays a tax of $.0135 per mile of travel. A Plaintiff maintaining the same consumption pays a tax of $.017 per miles of travel.'
The chancellor rendered judgment for appellees with interest at the rate of 6% from date of payment of the tax until they are paid. He also enjoined appellant from attempting to enforce § 75--1251 in such a manner as to result in the collection of the distillate fuel tax in an amount exceeding 8 1/2 cents per gallon.
The third paragraph of § 75--1251 reads as follows:
Appellees contended and the trial court found that the section was unconstitutional in that it is arbitrary, unreasonable, a burden on interstate commerce and discriminatory against interstate carriers in violation of Article 2, § 3 and Article 16, § 5 of the Constitution of Arkansas, and Article 1, Section 8, cl. 3, Article 4, Section 2, cl. 1 and Amendment Fourteen, Section 1 of the Constitution of the United States.
Under the facts in this case, we find that the paragraph above quoted from § 75--1251 is unconstitutional as a burden upon interstate commerce, in violation of Article 1, Section 8, cl. 3 of the United States Constitution.
There is nothing in this record or in Act No. 40 to indicate that the five mile per gallon basis was other than arbitrary. It is stipulated that an average of 6.3 miles of travel per gallon of special distillate fuel is representative of the fuel consumption of appellees and of intrastate carriers. This means that a tax of 8 1/2 cents per gallon is paid by intrastate carriers at the time they purchase gasoline in the state, while interstate carriers who purchase their fuel at a point outside Arkansas pay tax on the fuel used in Arkansas at the rate of 10.71 cents per gallon. Thus, whether the tax be figured upon a gallonage basis or a mileage basis, the interstate carriers pay 1.26 times the tax paid by an intrastate carrier. The only way that the interstate user can avoid this inequality is by buying all his fuel in Arkansas. However desirable this might be from the standpoint of the economy of the State of Arkansas, this discrimination in favor of the intrastate operator violates the constitutional standards for interstate commerce. Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 83 S.Ct. 1201, 10 L.Ed.2d 202.
Appellant urges that since this tax is an excise tax on a privilege, 2 the legislature may make reasonable classifications for the purpose of taxation which must be upheld by the courts unless the classification is clearly unreasonable and arbitrary and without just distinction as a foundation. While we agree with the general statement, appellant has not cited any case, nor do we know of any, where any court has held that a classification based solely upon a distinction between intrastate and interstate commerce has been upheld as reasonable or appropriate. Cases such as Vaughan v. City of Richmond, 162 Va. 145, 181 S.E. 372, cited by appellant, upholding the imposition of higher license taxes on businesses of nonresidents than on businesses of residents have no application here. There the higher licenses were said to be justified because it was shown that residents were taxed in ways which the nonresident wholly escaped. Nonresidents of the City of Richmond who resided in the State of Virginia were charged the higher rate in that situation, so the commerce clause was not involved. To afford equal protection of the laws, required by Amendment Fourteen to the United States Constitution, such classification must rest upon some ground of difference having a fair and substantial relation to the object of the legislation so that all persons similarly situated shall be treated alike. Royster Guano Co. v Commonwealth of Virginia, 253 U.S. 412, 40 S.Ct. 560, 64 L.Ed. 989. Equality for the purposes of competition and the flow of commerce is measured in dollars and cents and not legal abstractions. Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 83 S.Ct. 1201, 10 L.Ed.2d 202.
The commerce clause of the United States Constitution forbids discrimination whether forthright or ingenious. Best & Co. v. Maxwell...
To continue reading
Request your trial
-
Public Utility Dist. No. 2 of Grant County v. State
...215, 166 S.E.2d 671 (1969); Philco Corp. v. Department of Revenue, 40 Ill.2d 312, 239 N.E.2d 805 (1968); Larey v. Continental S. Lines, Inc., 243 Ark. 278, 419 S.W.2d 610 (1967) (reliance on Halliburton, though facts of case did not require evaluation of total tax scheme); Republic Steel Co......
-
City of Little Rock v. Cash
...such judgment as the chancery court should have entered upon the undisputed facts in the record. Larey, Comm'r. v. Continental Southern Lines, 243 Ark. 278, 419 S.W.2d 610 (1967). The illegal taxes are still being collected and that ought to be stopped. In addition, we are satisfied that, a......
-
Ferguson v. Green
...such judgment as the chancery court should have entered upon the undisputed facts in the record. Larey, Commissioner v. Continental Southern Lines, 243 Ark. 278, 419 S.W.2d 610. This court reviewed this case according to the invariable practice in equity cases and found that the chancery co......
-
Malakul v. Altech Arkansas, Inc., 88-247
...jurisdiction over the subject matter, the question cannot be overlooked even if not raised." Larey v. Continental Southern Lines, Inc., 243 Ark. 278 at 286, 419 S.W.2d 610 at 615 (1967). We have gone as far as we can or should go in effacing the jurisdictional lines between our chancery and......