People v. Deep Rock Oil Corp.

• Citation: 343 Ill. 388,175 N.E. 572
• Decision Date: 14 April 1931
• Docket Number: No. 20549.,20549.
• Parties: PEOPLE v. DEEP ROCK OIL CORPORATION.
• Court: Supreme Court of Illinois

343 Ill. 388

175 N.E. 572

PEOPLE

v.DEEP ROCK OIL CORPORATION.

No. 20549.

Supreme Court of Illinois.

Feb. 18, 1931.

As Modified on Denial of Rehearing April 14, 1931.

Original action by the People of the State of Illinois against the Deep Rock Oil Corporation.

Judgment for plaintiff.Oscar E. Carlstrom, Atty. Gen., Montgomery S. Winning, Joel C. Fitch, and Harlington Wood, all of Springfield, for the People.

Malcolm D. Owen and John M. Campbell, both of Chicago, for defendant.

Samuel A. Ettelson, Corp. Counsel, and Edward C. Higgins, both of Chicago, for City of Chicago.

STONE, J.

This is an original action in debt filed by leave of this court to recover from defendant $69,872.75, arising on the sale to the city of Chicago of 2,376,624 gallons of gasoline, alleged to be due plaintiff under the Motor Fuel Tax Act. Defendant demurred to plaintiff's declaration upon four grounds: First, this court is not vested with original jurisdiction to hear and determine the matter in controversy; second, the cause involves questions of accounting between the parties, and in such matters this court has not original jurisdiction; third, the act under which recovery is sought (Motor Fuel Tax Act) is unconstitutional, invalid, and void; fourth, the money sought to be recovered is an alleged tax upon gasoline sold the city of Chicago and used for municipal purposes, and that such use is exempt by law from taxation. By leave of court the city of Chicago was permitted to file briefs in support of defendant's demurrer but did not become party defendant.

The question of jurisdiction in this court to determine this cause as an original action was determined by this court at the time leave to file the action was granted, but objection is further urged here. Section 2 of article 6 of the Constitution provides that ‘the supreme court * * * shall have original jurisdiction in cases relating to the revenue, in mandamus and habeas corpus.’ If the action here is one relating to the revenue this court has jurisdiction of it. The Motor Fuel Tax Act is ‘An Act in relation to a tax upon the privilege of operating motor vehicles upon the public highways, based upon the consumption of motor fuel therein, and making certain appropriations in connection therewith.’ Smith-Hurd Rev. St. 1929, c. 120, §§ 417-434. The act provides that the purchaser of gasoline for use in operating motor vehicles on the highways of the state shall pay, at the time of purchase, a tax of three cents per gallon on all gasoline so used. It further provides for the collection of such tax, its deposit in the state treasury, and the use thereof by the state and the counties of the state for the construction of highways by the state and the several counties. It cannot be seriously argued that funds so collected and paid to the state do not constitute revenue. They are to be used for the benefit of the public at large in accordance with the provisions of the act. A case coming more directly within the provisions of section 2 of article 6 of the Constitution is difficult to discover.

The second specification of the demurrer also attacks the jurisdiction of this court on the ground that an accounting is involved. The declaration alleges that defendant is a licensed distributor of motor fuel under said act; that it has under oath reported to the Department of Finance that it has sold to the city of Chicago 2,376,624 gallons of gasoline; that it has neglected and refused to pay in the tax thereon at the rate of three cents per gallon, less 2 per cent. as an allowange for the cost of collecting the same; and that the amount of such tax is $69,872.75. These allegations of facts are admitted by the demurrer, and it can not be said that there is a question of accounting involved in the suit. Counsel also argue that to permit this suit to be prosecuted is to open the door to many others of like character. The fact that original jurisdiction of this cause rests in this court does not mean that it or suits of like character may be filed as a matter of right. Leave to file this suit was granted because of the state-wide public importance not only of the subject-matter but of an early disposition of it. This court has jurisdiction of the cause.

The third ground of demurrer is that the Motor Fuel Tax Act is invalid because it contravenes certain provisions of the State and Federal Constitutions, (a) because it is double taxation; (b) the arbitrary exclusion of kerosene oil and electricity as a motor fuel from the provisions of the act is an unreasonable discrimination against persons using gasoline, contrary to the constitutional requirement of uniformity and the equal protection clause of the State and Federal Constitutions; and (c) section 13 of the Motor Fuel Tax Law (Smith-Hurd Rev. St. 1929, c. 120, § 429), relative to the reimbursement of a tax on motor fuel not used in motor vehicles on highways, violates section 20 of article 4 of the Constitution of Illinois forbidding the state to make donations or loans of credit and the due process guaranty of the Fourteenth Amendment to the Constitution of the United States. Counsel for defendant in their reply brief have expressly abandoned this last ground of demurrer and consideration of it becomes unnecessary.

It is also contended by counsel for the city that even though the act be held valid it has no application to a city when the gasoline purchased is used by such city for municipal purposes.

In support of the contention that this act provides for double taxation, counsel for the city of Chicago in particular argue that it in fact taxes gasoline as property under the guise of a privilege tax, while counsel for the defendant say that whether the act provides for double property taxation or double privilege taxation it is equally pernicious.

Section 2 (Smith-Hurd Rev. St. 1929, c. 120, § 418) provides: ‘A tax is hereby imposed on the privilege of operating motor vehicles upon the public highways of this State after July 31, 1929, at the rate of three cents per gallon of all motor fuel used in such motor vehicles upon such public highways.’ It is provided by section 6 (Smith-Hurd Rev. St. 1929, c. 120, § 422) as follows: ‘Each distributor who sells any motor fuel for any purpose after July 31, 1929, shall collect from the purchaser at the time of such sale, three cents per gallon on all motor fuel sold, and at the time of making the monthly return, the distributor shall pay to the Department of Finance, the amount so collected, and shall also pay to the departmentthree cents per gallon on all motor fuel used by him during the period covered by the return. * * * In each subsequent sale of motor fuel on which the three cents per gallon has been collected as herein provided, the amount so collected shall be added to the selling price, so that said amount is paid ultimately by the user of said motor fuel. However, no collection or payment shall be made in the case of the sale or use of any motor fuel which may not, under the constitution and statutes of the United States, be made the subject of taxation by this State.’ Section 17 (Smith-Hurd Rev. St. 1929, c. 120, § 433) is as follows: ‘It is the purpose of this Act to impose a tax upon the privilege of operating each motor vehicle upon the public highways of this State, such tax to be based upon the consumption of motor fuel in such motor vehicle, so far as the same may be done, under the constitution and statutes of the United States, and the constitution of the State of Illinois. If any of the provisions of this Act include transactions which are not taxable, or are in any other respect unconstitutional, it is the intent of the General Assembly that so far as possible, the remaining provisions of the Act be given effect.’

That a tax on the use of gasoline in motor vehicles on the highways is an excise or privilege tax and not a property tax, and that the state has power to select that use, as distinguished from others, upon which to impose an excise tax, has been definitely settled by the decisions of this court and courts of other jurisdictions. Chicago Motor Club v. Kinney, 329 Ill. 120, 160 N. E. 163;Foster & Creighton Co. v. Graham, 154 Tenn. 412, 285 S. W. 570, 47 A. L. R. 971;Standard Oil Co. v. Brodie, 153 Ark. 114, 239 S. W. 753;Gafill v. Bracken, 195 Ind. 551, 145 N. E. 312,146 N. E. 109;State v. Hart, 125 Wash. 520, 217 P. 45;Altitude Oil Co. v. People, 70 Colo. 452, 202 P. 180;City of Portland v. Kozer, 108 Or. 375, 217 P. 833;Bowman v. Continental Oil Co., 256 U. S. 642, 41 S. Ct. 606, 65 L. Ed. 1139;Texas Co. v. Brown, 258 U. S. 466, 42 S. Ct. 375, 66 L. Ed. 721. The tax under consideration here is not unlike, in this respect, wheel tax ordinances, which impose a tax for the privilege of using vehicles on the streets. The owner of such vehicles may be required to pay an ad valorem tax thereon and may likewise be required to pay a tax upon the right or privilege of the use of them, which is an entirely different thing. While the particular use taxed is an element of property it is but one of such elements, and does not, in and of itself, constitute property. Taxation upon values, an occupation tax or license, and a tax on the privilege of using vehicles on the public streets are different subjects and do not constitute double or triple taxation because paid by one person. City of Lincoln v. Gerard, 329 Ill. 501, 160 N. E. 839;Roe v. City of Jacksonville, 319 Ill. 215, 149 N. E. 812;Harder's Storage Co. v. City of Chicago, 235 Ill. 58, 85 N. E. 245,14 Ann. Cas. 536. The act imposes a tax on the privilege of operating motor vehicles upon the public highway and is not a property tax.

It is then to be determined whether the act under consideration imposes a double privilege or excise tax. It is a rule of statutory construction that double taxation will never be presumed, and before that effect will be given a statute it must unmistakably appear that the Legislature...