Thompson v. Eastern Air Lines

• Court: Georgia Supreme Court
• Citation: Thompson v. Eastern Air Lines, 200 Ga. 216, 39 S.E.2d 225 (Ga. 1946)
• Decision Date: 09 January 1946
• Docket Number: 15318.
• Parties: THOMPSON, Revenue Commissioner, v. EASTERN AIR LINES, Inc.

39 S.E.2d 225

200 Ga. 216

THOMPSON, Revenue Commissioner, v. EASTERN AIR LINES, Inc.

No. 15318.

Supreme Court of Georgia

January 9, 1946

Syllabus by the Court.

1. The Code, § 92-1402, which expressly imposed an excise tax upon motor fuel 'imported and withdrawn for use within the State,' was by the 'Motor-Fuel Tax Law' of 37 expressly repealed.

2. The provisions of the Motor-Fuel Tax Law (Ga.L.1937, p. 167), imposing an excise tax 'upon the sale or use of motor fuel,' does not impose the tax upon storage and withdrawal within the State of such fuel purchased outside the State and imported in tank cars and stored within the State and subsequently withdrawn only for fuel in airplanes operated exclusively in interstate commerce.

3. The action of the legislature over a period of more than six years amending the above act in other respects, but refusing to amend the same to overrule interpretations by the administrative officials which held that it did not impose the tax upon storage and withdrawal, and finally, by the amendment of 1945 (Ga.L.1945, p 158), expressly prohibiting the collection of the tax upon storage and withdrawal clearly demonstrates a legislative intent to relieve storage and withdrawal from the tax. Being a tax statute, under the rule of construction the act must be construed most strongly against the State and in favor of the taxpayer.

This case was an appeal from a motorfuel tax assessment made by the State revenue commissioner against Eastern Air Lines Inc. The tax assessment was in an aggregate amount which included principal, penalty, and interest of $582,321.46, and covered the period from May, 1938, through January, 1944. The commissioner based the assessment upon the provisions of the 'Motor-Fuel Tax Law' of 1937 (Ga.L.1937, p. 167; Code, § 92-1401 et seq. (Ann.), which imposes an excise tax upon distributors for the 'sale' or 'use' of motor fuels. The motor fuel here involved was purchased by Eastern Air Lines, Inc., outside of the State of Georgia and shipped by rail in tank cars to Candler Field in Fulton County, Georgia, where it was unloaded into storage tanks belonging to Eastern Air Lines, Inc., and from the storage tanks was transferred to the planes of Eastern Air Lines Inc., and consumed in propelling such planes exclusively in interstate commerce.

The assessment was made by the State revenue commissioner after due notice to Eastern Air Lines, Inc., the filing of its objections thereto, and a hearing by the commissioner. Eastern Air Lines, Inc., objected to the assessment and urged in opposition thereto many grounds. It was contended that the provisions of the statute relied upon by the commissioner did not impose the tax claimed by him, and that the word 'use' found in the statute meant 'consume.' It was further contended that, shortly after the approval of the law relied upon by the commissioner, the comptroller general, whose duty it was to collect the taxes thereunder, requested an opinion from the attorney-general as to whether or not the law imposed a tax upon motor fuel handled in the manner now employed by Eastern Air Lines, Inc., that the attorney-general, on July 19, 1937, furnished the comptroller-general with an opinion holding that the law did not impose a tax upon such transaction, and that the comptroller-general thereupon notified Gulf Refining Company, from whom Eastern Air Lines, Inc., purchased all of the motor fuels here involved, that no tax would be claimed on such transaction, and instructed Gulf Refining Company as to the manner of making monthly reports to the proper State official on all motor fuels sold in such manner. Each month since that time, Gulf Refining Company has made monthly reports in the form and manner directed by the comptroller-general, and Eastern Air Lines, Inc., has, during the period here involved, filed with Gulf Refining Company in its Atlanta office an affidavit showing the disposition it has made of the motor fuels thus purchased. It was further contended that the legislature has three times demonstrated its construction of the 1937 act, supra, and the legislative intent not to impose the tax here claimed by the commissioner. It is pointed out that the 1937 motor-fuel act, which was repealed by the act here relied upon, expressly imposed a tax upon storage and withdrawal for use, and that the 1937 act omitted this language. In 1943 an act was passed, Laws 1943, p. 339, providing in substance that the legislature intended that the motor-fuel tax be paid by the consumer; and the act approved in 1945 expressly provided that no tax was imposed upon the transaction of storing and withdrawing for use; and these collateral interpretations of the 1937 act had given it a meaning which the court should approve, and thus hold Eastern Air Lines, Inc., not subject to the assessment. It was further contended that, whether the collateral interpretations be considered or not, the language of the statute imposing a tax is at least doubtful as to whether it embraces the transaction covered by this assessment; and that such a doubtful statute must be construed most strongly against the State and in favor of the taxpayer, and that Eastern Air Lines, Inc., should be thus relieved from the assessment made. It was further contended that the State is estopped, because of its interpretation for more than six years by its official charged with the collection of taxes of the law, which held Eastern Air Lines, Inc., not subject; and it was further contended that, Eastern Air Lines, Inc., having made reports as required by law, the commissioner, under the terms of the statute, has no authority to make the assessment or at least that portion beyond the two-years' period prior to the date of the assessment.

Various official documents showing the course of the matter were introduced in evidence. It is shown by some of these documents that in 1937 the comptroller-general requested and received an opinion from the attorney-general; and that the comptroller-general then ruled that the motor fuel handled in the manner here involved was not subject to the tax, and directed Gulf Refining Company as to the form and manner of reporting such sales; and that such reports had thereafter been made monthly by Gulf Refining Company to the proper State officials, and that Eastern Air Lines, Inc., had filed with Gulf Refining Company an affidavit showing that the motor fuel was being handled in the manner above outlined. The evidence comprises a written stipulation of facts, documents, and testimony of three witnesses. It was shown that Eastern Air Lines, Inc. has handled the motor fuel here involved in the manner above described since May 1, 1938, the date on which it was incorporated by the North American Aviation, Inc. Up to that time it has been operated as The Eastern Air Lines division of North American Aviation, Inc., and North American Aviation, Inc. had operated its Eastern Lines division in 1937 and up to May 1, 1938, in the same manner. There was no disagreement upon the material facts in the case.

The trial judge, sitting without a jury, ruled that the 1937 act did not levy a tax on storage and withdrawal of motor fuels; that the word 'use' in the act was, because of legislative interpretation and practice for more than six years, and because of the 1945 amendment, construed to mean 'consumption;' that the said motor fuel was used solely in interstate commerce, and hence the assessment here was in violation of the commerce clause of the Federal constitution, article 1, section 8, paragraph 3; that, since the law did not impose the tax claimed, the assessment by the State revenue commissioner was in violation of the due-process clause of both the State and the United States constitutions. Judgment was rendered sustaining the appeal and setting aside the assessment. The State revenue commissioner's amended motion for new trial was overruled, and he excepted.

T. Grady Head, Atty. Gen., Marshall L. Allison, Asst. Atty. Gen., Eugene Cook, Atty. Gen., and Fred B. Davis, Deputy Asst. Atty. Gen., for plaintiff in error.

Smith, Kilpatrick, Clay & Cody and Smith, Kilpatrick, Cody, Rogers & McClatchey, Powell, Goldstein, Frazer & Murphy, and Gambrell & White, all of Atlanta, for defendant in error.

Lindley W. Camp, of Atlanta, for party at interest, not party to record.

DUCKWORTH, Justice (after stating the foregoing facts).

The act of 1937 (Ga.L.1937, p. 167) imposes an excise tax 'upon the sale or use of motor fuel * * * within this State.' There is no sale involved here, and consequently the tax assessment depends for support in law upon whether or not there has been a 'use' of motor fuel in contemplation of that word as employed in the statute. Thus, at the very threshold of our consideration of this case, we encounter the necessity for a determination of the meaning of that word 'use' as employed in the statute. That the motor fuel here involved was in interstate commerce at the time of its transportation from without this State to the place of storage within the State, and also while used as fuel in the defendant's airplanes which were engaged exclusively in interstate commerce, and therefore not subject to the tax here claimed, is settled law. Article, 1, section 8, paragraph 3, United States constitution; Helson v. Kentucky, 279 U.S. 245, 49 S.Ct. 279, 73 L.Ed. 683; Bingaman v. Golden Eagle Lines, 297 U.S. 626, 56 S.Ct. 624, 80 L.Ed. 928. This narrows the period and the place where the tax claimed could be constitutionally imposed to its storage and withdrawal. The tax could be imposed upon storage and withdrawal without offending the constitution of the United States. Nashville C. & St. L. Ry. v. Wallace, 288 U.S. 249, 53 S.Ct. 345, 77 L.Ed. 730, 87 A.L.R....