McLeod v. Santa Fe Trail Transportation Co.

• Decision Date: 08 February 1943
• Docket Number: 4-7051
• Citation: McLeod v. Santa Fe Trail Transportation Co., 205 Ark. 225, 168 S.W.2d 413 (Ark. 1943)
• Parties: MCLEOD, COMMISSIONER OF REVENUES, v. SANTA FE TRAIL TRANSPORTATION CO
• Court: Arkansas Supreme Court

168 S.W.2d 413

205 Ark. 225

MCLEOD, COMMISSIONER OF REVENUES, v. SANTA FE TRAIL TRANSPORTATION CO

4-7051

Supreme Court of Arkansas

February 8, 1943

Appeal from Pulaski Chancery Court; Frank H. Dodge, Chancellor reversed.

Cause reversed and remanded.

O. T Ward, for appellant.

House Moses & Holmes, for appellee.

MCFADDIN J. Mr. Justice SMITH dissents.

OPINION

MCFADDIN, J.

Act 383 of the General Assembly of 1941 is the motor fuel tax law. In other cases we have construed certain sections of the said act. Hardin, Commissioner, v. Croom, 203 Ark. 519, 157 S.W.2d 520; and Park v. Hardin, Commissioner, 203 Ark. 1135, 160 S.W.2d 501. And we are now asked to interpret and construe portions of §§ 4 and 6 of the said act.

In the present case, The Sante Fe Trail Transportation Company (appellee here) filed suit in the Pulaski chancery court against Joe Hardin, Commissioner of Revenues of the State of Arkansas, (Murray B. McLeod has now been substituted as said Commissioner in this case). The complaint alleged that the plaintiff was engaged in operating motor buses for the conveyance of passengers within and without the state, and that under § 6 of the act, No. 383 of 1941, the plaintiff was allowed an exemption from the payment of taxes on motor fuel purchased in other states and brought into the state of Arkansas in the regular tanks in its motor vehicles, and the said exemption amounted to twenty gallons of fuel for each vehicle on each trip, and that notwithstanding the exemption allowed by the said section, the defendant, as Commissioner, was seeking to collect a tax on all the motor fuel brought into the state without giving credit for the said exemption allowance of twenty gallons; and that the plaintiff had offered and tendered the proper amount of taxes with the twenty gallons exempt, but the defendant had assessed additional sums against the plaintiff and would proceed to impose penalties and interfere with the operation of the plaintiff's business unless enjoined. The prayer was for injunction.

The Commissioner answered, denying that the plaintiff was entitled to an exemption of twenty gallons of motor fuel, and claimed that the said act levied a tax on all motor fuel used in the state of Arkansas, and that the plaintiff had not reported on all motor fuel used in the state or offered to pay tax therefor. The defendant further pleaded that § 4 of Act 383 of 1941 imposed a tax on all motor fuel sold or used in the state, and that in so far as said § 6 allowed an exemption of twenty gallons to commercial operators for hire, the said section was void as being discriminatory against other operators and in favor of commercial vehicles for hire.

The chancery court sustained plaintiff's demurrer to the answer, and upon the defendant's refusal to plead further, a decree was entered enjoining and restraining the defendant, as the Commissioner of Revenues, from seeking to collect from the plaintiff the state tax of six and one-half cents per gallon on the first twenty gallons of motor fuel per vehicle purchased outside of the state and brought into the state in the regular tanks of the plaintiff's vehicles and used in operating the vehicles of the plaintiff in the state.

From the said decree there is this appeal; and the appellant contends: (1) that § 4 fixing an absolute tax on all motor fuel sold or used in the state or purchased for sale or use in the state is the governing provision and superior to § 6; and (2) that § 6, in so far as it might allow twenty gallons exempt, is void as arbitrarily discriminating in favor of motor carriers as opposed to other types of motor vehicles; and (3) that § 6 is invalid because there is no way to reconcile all the language of § 6 and to compute the tax under that section, and that therefore § 6 should be stricken out entirely, and all motor fuel should be taxed under § 4.

Preliminary to a discussion of the contentions, we point out some of the historical background of the said Act 383 of 1941, as follows:

For a number of years the state of Arkansas has levied a tax on motor fuel. Act 63 of 1931 levied a tax; and by Act 11 of the Extraordinary Session of 1934, the tax was fixed at six and one-half cents on each gallon "sold or used in this state or purchased for sale or use in this state."

Act No. 67 of 1933, provided that no vehicle should be driven into the state of Arkansas carrying over twenty gallons of gasoline in the tank to be used as motor fuel until the state tax thereon had been paid.

This Act 67 of 1933 was challenged by the Dixie Greyhound Lines, which filed suit in the United States District Court for the Eastern District of Arkansas seeking to enjoin the Commissioner of Revenues of the state from prohibiting the entry into the state of a motor vehicle carrying over twenty gallons of motor fuel until the state tax had been paid on such excess over twenty gallons. See 101 F.2d 572 for the decision of the Circuit Court of Appeals. The case was carried to the United States Supreme Court and was decided by that tribunal on February 12, 1940, and is reported in 309 U.S. 176, 84 L.Ed. 683, 60 S.Ct. 504. The United States Supreme Court rendered a majority decision by Mr. Justice McReynolds with a concurring decision by Mr. Justice Stone and a dissenting opinion by Mr. Justice Black. In the majority opinion, Mr. Justice McReynolds found that each bus of the Dixie Greyhound Lines consumed about one gallon of gasoline for every five miles traveled, and that in a journey from Memphis to St. Louis less than one gallon was consumed in Tennessee, sixteen gallons were consumed in Arkansas, and fifty-one gallons were consumed in Missouri; and that to establish an arbitrary figure of twenty gallons of motor fuel and not even allow the surplus to be transported tax free through the state for use in another state, constituted a direct burden on interstate commerce. The majority opinion quoted from the Circuit Court of Appeals opinion, saying: "While we can understand how the use of state highways by a carrier can be roughly measured by the amount of gasoline which that carrier uses to move its vehicles over the highways, we are unable to comprehend how the use of the highways of one state can appropriately be measured by the amount of gasoline carried in the fuel tank of an interstate carrier for use upon the highways of another state."

In the concurring opinion, Mr. Justice Stone pointed out that the gasoline brought into the state in the tank of a vehicle for use solely in interstate commerce is exempt from taxation except for a limited state purpose, and this language appears: "It must appear on the face of the statute or be demonstrable that the tax as laid is measured by or has some fair relationship to the use of the highways for which the charge is made." And again: "In laying an exaction as a means of collecting compensation for the use of its highways the state must tax the commerce as it is done, and not as it might be done if the state could control it."

In short, the United States Supreme Court affirmed the injunction against the enforcement of the 1933 Act.

The decision of the United States Supreme Court was rendered on February 12, 1940. Then came Act No. 383 of 1941, which was presumably enacted to overcome the objections levied at the 1933 Act.

Also preliminary to a decision in this case, we point out certain applicable canons of judicial interpretation and construction, to-wit:

It is a cardinal rule of construction that effect must be given, if possible, to the whole statute and every part thereof. To this end it is the duty of the court, as far as practicable, to reconcile the different provisions so as to make them consistent, harmonious and sensible. Wilson v. Biscoe, 11 Ark. 44; Scott v. State, 22 Ark. 369; Williams v. State, 99 Ark. 149, 137 S.W. 927, Ann. Cas. 1913A, 1056; Miller v. Witcher, 160 Ark. 479, 254 S.W. 1063; Ledbetter v. Hall, 191 Ark. 791, 87 S.W.2d 996; 59 C. J. 1002; Lewis' Sutherland Statutory Construction, 2d Ed., § 368; Crawford on Statutory Construction, § 165; West's Arkansas Digest, "Statutes," § 206.

That interpretation should be given to the statute to sustain it rather than to defeat it; and it is only where sections are in hopeless conflict that one section should be stricken. Cherry v. Leonard, 189 Ark. 869, 75 S.W.2d 401; Hodges v. Dawdy, 104 Ark. 583, 149 S.W. 656; Graves v. McConnell, 162 Ark. 167, 257 S.W. 1041; 59 C. J. 946, 1000; Lewis' Sutherland Statutory Construction, § 380; Crawford on Statutory Construction, § 166, West's Arkansas Digest, "Statutes," § 207.

To aid in the construction of a statute, it is presumed that the Legislature, in enacting the law, did so with the full knowledge of the constitutional scope of its powers, of prior legislation on the same subject and of judicial decisions under the pre-existing law. Rhodes v. Cannon, 112 Ark. 6, 14, 164 S.W. 752; Merchants' Transfer & Warehouse Co. v. Gates, 180 Ark. 96, 21 S.W.2d 406; Texarkana Special School District v. Consolidated District, 185 Ark. 213, 46 S.W.2d 631. 59 C. J. 1008, 1014; Crawford on Statutory Construction, § 161; West's Arkansas Digest, "Statutes," § 212.

Viewed in the light of all of the foregoing, we see no conflict between § 4 and § 6 of Act 383 of 1941. The first part of § 4 levies the tax on all motor fuel "sold or used in this state, or purchased for sale or use in this state." In the preceding sections, the Act made reference to distributors, dealers, tank cars, tank farms etc. Read in the light of these preceding sections, it is clear that the first part of § 4 is the general levying section. The concluding parts of § 4, and all of §§ 5 and 6 take up various exemptions and special situations in order to...