State v. Crane Hook Oil Storage Company

• Decision Date: 13 February 1941
• Citation: 18 A.2d 427,41 Del. 194
• Court: Delaware Superior Court
• Parties: THE STATE OF DELAWARE v. CRANE HOOK OIL STORAGE COMPANY

18 A.2d 427

41 Del. 194

THE STATE OF DELAWARE v. CRANE HOOK OIL STORAGE COMPANY

Superior Court of Delaware, New Castle County

February 13, 1941

Superior Court for New Castle County, January Term, 1941.

Case stated.

Judgment for the plaintiff entered in the sum of $ 4,639.95 without interest as was stipulated.

W Reese Hitchens, Deputy Attorney-General, for the State.

William H. Bennethum (of Marvel and Morford) for the defendant.

LAYTON C. J., RICHARDS and TERRY, J. J., sitting.

OPINION

LAYTON, Chief Justice:

The State of Delaware has sued to recover from the defendant motor fuel taxes in the sum of $ 4,639.95. The demand consists of two items: 1. the tax at three cents a gallon on 148,043 gallons of gasoline during the period from July 1, 1930 to June 30, 1933, amounting to the sum of $ 4,441.29; 2. the tax at the same rate on 6,622 gallons from September 1 to September 30, 1933, amounting to $ 198.66.

During the first period the statute in force was Chapter 14, Volume 33, Laws of Delaware, as amended by Chapter 10, Volume 35, Delaware Laws. During the second period the statute in operation was Chapter 31, Volume 38, Laws of Delaware. By the first Act the term, "Dealer" was defined to be "any person * * * who imports or causes to be imported gasoline * * * for operating or propelling motor vehicles, as herein defined, for use, distribution or sale and delivery in and after the same reaches the State of Delaware * * *". Each dealer was required to render monthly statements of all motor vehicle fuel sold or used by him in the State, and by the amendment a license tax of three cents a gallon was imposed. By the second Act, the term, "Distributor," was defined as including "any person * * * wherever resident or located, who imports or causes to be imported into the State motor fuels as herein defined, for use, distribution, storage, or sale after the same reach the State", and a like tax was levied on all motor fuel, sold and delivered or used in the State which was not under the protection of the interstate commerce clause of the Federal Constitution. By both statutes the taxes collected were allocated to the State Highway Fund, and to each Act was a long preamble declaring, inter alia, the purpose of the Legislature more equitably to distribute among those actually benefiting the burden of constructing and maintaining the public highways of the State, and asserting the police power of the State to enact legislation to aid the successful operation of motor vehicles on its highways.

From the stipulation of facts filed it appears that the defendant is a Delaware corporation, with its principal office and place of business in Wilmington, Delaware. For several years prior to the dispute, its business consisted solely in purchasing outside the State and having shipped to Wilmington by tank steamers, gasoline, kerosene and fuel oil. From the defendant's deep water oil terminal in Wilmington the oils were pumped through pipe lines to the defendant's storage tanks in that City. The defendant sold all of the oil, except the gasoline used for the propulsion of its tank trucks, to Schock Independent Oil Company, a Delaware corporation, having its main office and place of business in Mount Joy, Pennsylvania. From this office it received its orders and shipping instructions; and it made deliveries of the oils, in part, by auto tank trucks over public highways to the Schock Company at the destinations named by it. All of the deliveries were at points outside the State except a relatively small part which were made to the Schock Company at the defendant's storage tanks in Wilmington for sale by that company in Delaware. The title to all of the oils remained in the defendant until delivery to the Schock Company at the delivery and destination points, when the title passed to the customer; and the defendant bore all costs of delivery.

The gasoline involved in the action was that consumed in the defendant's auto tank trucks in making deliveries as directed by the Schock Company from Wilmington to points outside the State; and it was stipulated, if deemed material, that fifteen percentum only of all interstate movements of the defendant's trucks was over the highways of Delaware.

The parties agree that the sole question presented is whether the tax on the gasoline withdrawn from its storage tanks in Wilmington and consumed in transporting by its trucks the oils to destinations in other states is imposed in violation of the interstate commerce clause of the Constitution of the United States. Art. 1, § 8, Cl. 3.

Lexicographers and courts agree that the word "use" is one of the most comprehensive words in our language. 66 C. J. 65. As a noun, the primary definitions are, inter alia, the application of anything to an end, the act of employing anything, or of applying it to one's service. The exercise of any right of ownership over property is a use of it. Possibly the word may have the meaning of "consume", but such is not its usual significance. See In re Moor's Estate, 163 Mich. 353, 128 N.W. 198. As we view the sense of the word in its relation to the language of statutes, we think it was not meant that the incidence of the tax should be restricted to gasoline actually consumed in the operation of motor vehicles on the public highways of the State. This is implied in the first Act, for there is no provision for rebate of the tax on gasoline placed in this State in the fuel tank of the motor vehicle, but actually consumed in another State; and in the second Act it is expressly declared that a dealer shall not be exempt from the tax imposed on motor fuel used in making distributions. The exercise by the dealer or distributor of his right of ownership over the gasoline in withdrawing it from the storage tank and putting it in the fuel tank of a motor vehicle for the purpose of propulsion is a use or event which evokes the operation of the tax. There may be expressions in the preambles of the Acts which may be seized upon to indicate that the tax was levied only as a toll or charge for the use of the highways in this State but it is sufficiently clear from the bodies of the Acts that the levy was intended as a license tax on the use of the property within the broad primary meaning of the word use. Where the enacting part of the statute is unambiguous, its meaning will not be controlled or affected by anything in the preamble. Lewis's Sutherland Stat. Cons., 2d Ed., 653; 59 C. J. 1004; Black, Interp. L., 2d Ed., § 84; United States v. Webster, 28 Fed. Cas. page 509, No. 16,658.

The regulation of interstate and foreign commerce is within the exclusive control of Congress, and the rule is settled that a state law which burdens such commerce or its free flow is outside of the regulating power of the state; but in determining the question there is a necessary and well defined distinction between direct and indirect effects. If the commerce clause were construed to reach all transactions which could be said to have an indirect effect upon interstate commerce, the Federal authority would embrace practically all of the activities of the people, and the authority of the State over its domestic concerns would exist only by sufferance of the Federal Government. A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A. L. R. 947. Every tax on personal property, occupations, business or franchises, affects to some extent the subjects and operations of commerce. The transit of persons and property from one state to another may always be said to be impeded in some degree for the reason that the expense of transit is necessarily increased by the tax; but the increased cost to the interstate operator is not, of itself, significant. The prohibited burden on interstate commerce is interference with that commerce, a matter quite distinct from the expense of doing business. Delaware Railroad Tax, 18 Wall. 206, 21 L.Ed. 888; Southern Pacific Co. v. Gallagher, 306 U.S. 167, 59 S.Ct. 389, 83 L.Ed. 586.

The regulatory power of Congress does not attach until the transit begins, and conversely, the power ceases when the movement reaches the point where the parties originally intended that it should finally end. The crucial question to be settled in determining whether personal property moving in interstate commerce is subject to local taxation is that of its continuity of transit, Carson Petroleum Co. v. Vial, 279 U.S. 95, 49 S.Ct. 292, 73 L.Ed. 626; and if property is detained for an indefinite time during transit, at least for other than natural causes or lack of facilities for immediate transportation, it is not during that time the subject of interstate commerce but is subject to the operation of state laws. Susquehanna Coal Co. v. South Amboy, 228 U.S. 665, 33 S.Ct. 712, 57 L.Ed. 1015. Even practical continuity does not always make an act a part of interstate commerce. Southern Pacific Co. v. Gallagher, supra.

It appears from the stipulation of facts that almost all of the gasoline purchased outside the State and placed in the defendant's storage tanks in Wilmington was destined ultimately for points in other states; but at the time of the shipments from points of origin no definite destinations had been arranged for other than the defendant's storage tanks in Wilmington. The final destinations in other states were undetermined, and the Schock Company was at full liberty, and the...