State of Minnesota v. Keeley, 11966.

• Decision Date: 30 March 1942
• Docket Number: No. 11966.,11966.
• Citation: 126 F.2d 863
• Parties: STATE OF MINNESOTA v. KEELEY et al.
• Court: U.S. Court of Appeals — Eighth Circuit

126 F.2d 863 (1942)

STATE OF MINNESOTA v. KEELEY et al.

No. 11966.

Circuit Court of Appeals, Eighth Circuit.

March 30, 1942.

Franklin B. Stevens, Sp. Counsel, State of Minnesota, of St. Paul, Minn. (J. A. A. Burnquist, Atty. Gen., P. F. Sherman, Asst. Atty. Gen., and Faner C. Wonderly, Sp. Asst. Atty. Gen., on the brief), for appellant.

Berryman Green, Sp. Asst. to Atty. Gen. (Samuel O. Clark, Jr., Asst. Atty. Gen., A. F. Prescott, Sp. Asst. to Atty. Gen., and Victor E. Anderson, U. S. Atty., and Linus J. Hammond, Asst. U. S. Atty., both of St. Paul, Minn., on the brief), for appellees.

Before SANBORN and JOHNSEN, Circuit Judges, and NORDBYE, District Judge.

JOHNSEN, Circuit Judge.

The question is whether the provision in section 10 of the Hayden-Cartwright Act of June 16, 1936, 49 Stat. 1521, 4 U.S.C.A. § 12, that "all taxes levied by any State * * upon sales of gasoline and other motor vehicle fuels may be levied, in the same manner and to the same extent, upon such fuels when sold by or through post exchanges * * * and other similar agencies, located on United States military or other reservations, when such fuels are not for the exclusive use of the United States", was intended to have application only to a technical "sales" tax, and not to any other form of state gasoline or motor vehicle fuel taxes.

The gasoline tax of the State of Minnesota, from its language, is a "use" or "privilege" tax. Section 2720-71, Mason's Minn.St.Supp.1940, provides: "There is hereby imposed an excise tax of four cents per gallon on all gasoline used in producing or generating power for propelling motor vehicles used on the public highways of this state. * * *" The practice is for the dealer or distributor to collect the amount of the tax from the purchaser at the time of sale.

The Post Exchange of the Fort Snelling Military Reservation, which is located in the State of Minnesota, had collected from purchasers, on private sales of gasoline, made by it upon the Reservation, for use upon the highways of that state, from June 16, 1936, to June 30, 1940, gasoline taxes under the Minnesota statute amounting to $36,682.39, but it refused to account for these taxes to the State, on the ground that the Hayden-Cartwright Act had not given consent to the collection by a state of a use or privilege tax, but to a technical sales tax only.¹

The State brought suit to recover the amount of the taxes thus collected and held, against the officers of the Reservation and Post Exchange having possession and control of the funds.² The action rested upon the provision in section 10 of the Hayden-Cartwright Act that "Such taxes, so levied, shall be paid to the proper taxing authorities of the State * * * within whose borders the reservation affected may be located". The defendants moved to dismiss the action, in effect upon the ground that the Minnesota gasoline tax was not such a form of tax as was within the language or purview of the Hayden-Cartwright Act, and that the State therefore was not entitled to any relief. The trial court sustained the motion, and, in a written opinion, D. C., 36 F.Supp. 3, 6, declared: "It is my opinion that the United States consented to the imposition and collection of `sales' taxes on motor fuels, and to such taxes only. It did not consent to the imposition of `use' or `privilege' taxes."

From the purpose and history of the statute, we do not believe that Congress intended that its language should be given such a rigid and narrow interpretation. The general purpose of the Hayden-Cartwright Act clearly was to further and extend the program of highway improvement which had been initiated by the Federal Aid Highway Act of 1916, 39 Stat. 355, through the matching of federal and state funds. Congress had previously sought to prevent any state seeking federal aid for highway construction, from diverting its "gasoline taxes", irrespective of their technical form, to any other use than the construction, improvement and maintenance of highways.³ Section 10 was not included in the Hayden-Cartwright Act as it originally passed the House. A separate bill, sponsored by the North American Gasoline Tax Conference, was at that time pending before the House, intended to correct the general unfairness in the sale of tax-free gasoline upon government reservations for use upon state highways.⁴ When the Hayden-Cartwright Act was being considered in the Senate, its sponsor requested that it be amended by adding section 10, which he declared to be in identical language with the separate bill pending before the House.⁵ He indicated that the amendment was being offered in response to a resolution adopted by the Western Association of State Highway Officials,⁶ which he had read to the Senate, and further stated that he had been informed by the Chief of the Bureau of Public Roads that "there is complaint in many parts of the country about the inability of the States to collect revenue on gasoline sold on Government reservations not for governmental use". The amendment was adopted without further discussion.

In the House the matter was sent to conference and was finally submitted to that body upon a written statement on the part of the members of the conference committee, in lieu of a reading of the conference report. No material change had been made in the Senate amendment. The statement read to the House, and upon which it acted, recited: "Amendment No. 14 proposes the collection of all taxes levied by any state, territory, or the District of Columbia upon gasoline or other motor vehicle fuels sold through post exchanges, ship-service stores, commissaries, filling stations, or licensed traders located on United States military or other reservations when not for the exclusive use of the United States as proposed by the Senate."⁷ One of the members of the conference committee further remarked, in part: "In post exchange stores and on Government reservations, gasoline and motor vehicle fuel is being sold free from local taxes. The conferees believe that all local taxes should be collected except when the gasoline or motor vehicle fuels are for the exclusive use of the United States. * * *"⁸

In no part of these proceedings is there anything to suggest that Congress was intending to draw a line of technical distinction between a sales tax, as such, and other forms of state gasoline taxes which were collectible from a purchaser at the time of sale. It was simply seeking to correct an unfair situation generally, and to assist the states thereby to obtain more revenue for highway improvement purposes. The Western Association of State Highway Officials, pursuant to whose resolution section 10 was added to the Act, could hardly be said to have been concerned about the problem in its relation to some particular, technical form of gasoline tax. Their interest manifestly was one of general increased revenue for all the several states. That, it seems to us, from the legislative history of the Act, also was the sole concern and purpose of Congress.

Defendants argue that a consent statute should be given a narrow legal construction. A purely legalistic focus, derived from artificial canons of statutory construction, ought not, however, to be allowed to blot out a patent remedial intent, if there is no abortive violence to the language which Congress has used. Here, it should be noted Congress has not used the technical language "all sales taxes", but the general expression "all taxes levied * * * upon sales of gasoline", which may reasonably and as a matter of lay interpretation normally would be held to mean "in connection with the sales of gasoline". Any tax which is intended to be collected from the purchaser at the time of sale is in a sufficient sense, for the purpose for which the statute was enacted, a tax in connection with the sale of gasoline.⁹ "Every technical rule", said Mr. Justice Story, in the early case of Wilkinson v. Leland, 2 Pet. 627, 661, 7 L.Ed. 542, "as to the construction or force of particular terms, must yield to the clear expression of the paramount will of the legislature".¹⁰

It is further contended that the subsequent amendment of section 10 of the Hayden-Cartwright Act by section 7 of the Buck Act of October 9, 1940, 54 Stat. 1060, 4 U.S.C.A. § 12, indicates a recognition on the part of Congress that the Hayden-Cartwright Act...