Town of LaPointe v. Madeline Island Ferry Line, Inc.

• Decision Date: 26 October 1993
• Docket Number: No. 93-0861,93-0861
• Citation: 179 Wis.2d 726,508 N.W.2d 440
• Parties: TOWN OF LaPOINTE, Plaintiff-Respondent, d v. MADELINE ISLAND FERRY LINE, INC., Defendant-Appellant.
• Court: Wisconsin Court of Appeals

Page 440

508 N.W.2d 440

179 Wis.2d 726

TOWN OF LaPOINTE, Plaintiff-Respondent, ^d v. MADELINE ISLAND FERRY LINE, INC., Defendant-Appellant No. 93-0861.

Court of Appeals of Wisconsin.

Submitted on Briefs Sept. 7, 1993.

Opinion Released Oct. 26, 1993.

Opinion Filed Oct. 26, 1993.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

LaROCQUE, Judge.

Madeline Island Ferry Line, Inc. (the Ferry), appeals a trial court judgment concluding that it was not exempt under sec. 70.111(3), Stats., from personal property taxes on its three ferry boats. On appeal, the Ferry argues that sec. 70.111(3) exempts from personal property taxes any boat employed in interstate commerce, and that because its boats are employed in interstate commerce, its boats are exempt from taxation. We agree and therefore reverse.

The Ferry owns three vessels that it operates exclusively in Wisconsin between LaPointe on Madeline Island and Bayfield between April and December. In 1990, LaPointe assessed the boats for personal property taxes. When the Ferry failed to pay the taxes in full, the town filed suit to recover the unpaid portion. The stipulated facts indicate that during the months it operates, the Ferry provides an indispensable link to all vehicular trips where the island is either a starting point or destination. Surveys of vehicles using the Ferry on an average August day indicate approximately 50% do not have Wisconsin license plates. On average, the Ferry transports nearly 100 tour buses to the island each year, and between 47% and 66% of these are out-of-state tours that prearrange their transportation on the Ferry. The Ferry has a contract with the United States Postal Service to carry mail to and from the island, and also serves as a parcel carrier and pickup and drop-off point for United Parcel Service (UPS). It also ships packages for Federal Express. A large number of these shipments either originate or are headed outside Wisconsin. The Ferry also ships large amounts of cargo to the island, including construction, energy and restaurant supplies. A significant amount of this cargo is shipped to the island by out-of-state distributors from locations throughout the United States, Canada and Europe.

At trial, the Ferry argued that its vessels were employed in interstate commerce and consequently exempt from personal property taxes under sec. 70.111(3), Stats. Section 70.111(3) exempts all "watercraft employed regularly in interstate traffic." The trial court concluded that to be exempt under the statute, a boat must move between states and that none of the Ferry's boats moved between states. It further concluded that the boats were not employed in interstate commerce. Accordingly, the court entered judgment for LaPointe, and the Ferry filed this appeal challenging both of the court's conclusions. Other facts will be discussed as needed.

The Ferry first argues that the term "interstate traffic" as used in sec. 70.111(3), Stats., is synonymous with interstate commerce. We agree. The interpretation of a statute presents a question of law that we review de novo. L & W Constr. Co. v. DOR, 149 Wis.2d 684, 688-89, 439 N.W.2d 619, 620 (Ct.App.1989). In interpreting a statute, we are to give effect to the intent of the legislature. Id. at 689, 439 N.W.2d at 620. We must ascertain intent by first looking to the language of the statute itself and giving the language its ordinary and accepted meaning. Id. However, if upon examination we conclude that the statutory language is ambiguous, we may resort to judicial construction to ascertain and carry out the legislature's intent. Kelley Co. v. Marquardt, 172 Wis.2d 234, 247-48, 493 N.W.2d 68, 74 (1992). A statute is ambiguous when capable of being understood by reasonably informed persons in two or more ways. State v. Moore, 167 Wis.2d 491, 496, 481 N.W.2d 633, 635 (1992).

In addition, Wisconsin courts apply special rules when construing tax statutes. Normally, statutes dealing with tax exemptions are to be strictly construed against granting an exemption unless a claimant can point to an express provision that clearly brings the claimant within the terms of the exemption. Gottfried, Inc. v. DOR, 145 Wis.2d 715, 719-20, 429 N.W.2d 508, 510 (Ct.App.1988). However, if a statute exempting property from taxation is only one part of a general statutory scheme substituting a license or other impost in lieu of general taxation, then the statute is to be liberally construed in favor of the person required to pay taxes in the substituted license form. Wisconsin Tel. Co. v. Milwaukee, 85 Wis.2d 447, 456, 271 N.W.2d 362, 366 (1978). Under sec. 70.15, Stats., any watercraft employed in interstate traffic is only required to pay to the town where the boat is assessable a sum equal to one cent per net ton of its registered tonnage, and it is exempt from further state or municipal taxation. Section 70.15 is thus a duty on watercraft regularly employed in interstate traffic that is in lieu of general taxation. Consequently, sec. 70.111(3) is entitled to liberal construction.

Section 70.111(3), Stats., states that the exemption only applies to watercraft "regularly employed in interstate traffic." The Ferry argues that "traffic" is synonymous with commerce, and that the phrase "interstate traffic" therefore means the same thing as "interstate commerce." The statutes do not define the phrase "interstate traffic." Nontechnical words used in a statute are given their ordinary and accepted meaning when not specifically defined; this meaning can be ascertained from a recognized dictionary. Cuna Mut. Ins. Soc'y v. DOR, 120 Wis.2d 445, 450, 355 N.W.2d 541, 543 (Ct.App.1984). Webster's Third New Int'l Dictionary 2423 (unabr.1976) defines "traffic" as "the circulation (as of vehicles or pedestrians) through an area: passage to and fro...." Relying on this definition of traffic, the phrase "interstate traffic" suggests the movement of vehicles between states. However, the dictionary also defines "traffic" as "commercial activity, usu. involving import and export trade ... the activity of exchanging commodities by bartering or buying and selling...." Id. at 2422. Under this definition, traffic is synonymous with commerce, and "interstate traffic" can be read to mean "interstate commerce."

It is evident the statute is ambiguous; it is capable of being understood by reasonably informed persons to exempt watercraft either employed in moving between states or employed in interstate commerce. We therefore resort to judicial construction in an attempt to ascertain and carry out the legislative intent of sec. 70.111(3). In determining the legislative intent, we must examine the scope, history, context, subject matter and object of the statute. State v. Pham, 137 Wis.2d 31, 34, 403 N.W.2d 35, 36 (1987).

Section 70.111(3), Stats., was originally enacted in 1949. Section 2, ch. 63, Laws of 1949. Prior to its enactment, watercraft regularly employed in interstate traffic were still exempt from personal property tax under sec. 70.15. Wisconsin Transp. Co. v. Williams Bay, 207 Wis. 265, 267-66, 240 N.W. 136, 137 (1932). Section 70.15 was enacted in 1911 as sec. 1042b, Stats. (1911). ¹ Section 1, ch. 324, Laws of 1911. Section 1042b, Stats. (1911), reads in part:

Assessment of vessels. Section 1042b. 1. That in consideration of an annual payment into the treasury of any town, village or city where such property is assessable by the owner of any steam vessel, barge, boat or other water craft, owned within this state, or hailing from any port thereof, and employed regularly in interstate traffic in the navigation of international waters, of a sum equal to three cents per net ton of the registered tonnage thereof, such payment shall be received in lieu of all taxes, and said steam vessel, barge, boat or other water craft shall be and the same is hereby made exempt from all further taxation, either state or municipal.

2. ... All vessels, boats or other water craft not regularly employed in interstate traffic in the navigation of international waters, and all private yachts or pleasure boats belonging to inhabitants of this state, whether at home or abroad, shall be taxed as personal property.

To help place this statute in context, we turn to a brief review of the law of taxation of vessels as it stood in 1911.

In 1911, it had been settled that a state could tax a vessel used in interstate commerce as personal property without offending the commerce clause of the United States Constitution, art. I, § 8, cl. 3. See, e.g., Old Dominion Steamship Co. v. Virginia, 198 U.S. 299, 25 S.Ct. 686, 49 L.Ed. 1059 (1905). This included taxation of vessels engaged in interstate commerce even though they remained wholly within the waters of a single state. Id. The frequent disputes during this period did not involve whether these vessels could be taxed, but rather which state had the power to tax this property. The general rule in force at the time was that the vessel was taxable by the state in which its owner was domiciled unless it appeared the vessel had actual situs elsewhere. Southern P. Co. v. Kentucky, 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96 (1911); Ayer & Lord Tie Co. v. Kentucky, 202 U.S. 409, 26 S.Ct. 679, 50 L.Ed. 1082 (1906). For a time it was thought a vessel might be taxed exclusively at its home port, whether or not it was also the owner's domicile, but this view was rejected in both Ayer and Southern P. Northwest Airlines, Inc. v. Minnesota, 322 U.S. 292, 314 n. 2, 64 S.Ct. 950, 961 n. 2, 88 L.Ed. 1283 (1944) (Stone, J., dissenting).

A vessel had actual situs in a state where its owner was not domiciled if it was used exclusively within that state. Old Dominion. In Old Dominion, the Court was faced with the question whether vessels owned by a Delaware corporation, but engaged in interstate commerce exclusively within the state of Virginia, could be taxed as personal property by Virginia. The court concluded that the...