Wilderness World, Inc. v. Department of Revenue State of Arizona

Decision Date18 April 1995
Docket NumberNos. CV-94-0122-P,CV-94-0501-PR,s. CV-94-0122-P
Citation895 P.2d 108,182 Ariz. 196
PartiesWILDERNESS WORLD, INC., a California corporation, Plaintiff-Appellant, v. DEPARTMENT OF REVENUE, an Agency of the STATE OF ARIZONA, Defendant-Appellee.
CourtArizona Supreme Court

CORCORAN, Justice.

We accepted jurisdiction of defendant Arizona Department of Revenue's petition for review of the decision of the court of appeals. The Court of Appeals, Division One, held that a transaction privilege or amusement tax was improperly assessed against Wilderness World, Inc. because guided river trips do not fall within the scope of the tax. We affirm the court of appeals' opinion and agree that the tax was improperly imposed.

We reverse the court of appeals' supplemental opinion, which denied attorneys' fees to Wilderness World, and find that Wilderness World is entitled to its attorneys' fees on appeal. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3), and rule 23, Arizona Rules of Civil Appellate Procedure.

Facts and Procedural History

Wilderness World is a California corporation that operated an oar-powered river rafting service through Grand Canyon National Park. Wilderness World's trips carried passengers down the Colorado River between Lee's Ferry, Arizona and Diamond Creek, Arizona. The typical river trip lasted 12 days and covered several hundred miles. Passengers met the Wilderness World guides and staff in Flagstaff, Arizona for orientation, and then were transported to Lee's Ferry where the trips began.

Professional river guides and employees conducted the river trips and provided first-aid if necessary. A typical river trip was guided by a lead guide, who was required to have a bachelor's degree and several years' experience guiding river trips. In addition, other employees, about one guide per four passengers, were present on the trips.

Wilderness World charged a single fee for a river trip, pursuant to National Park Service (NPS) concessionaire guidelines. The fee included transportation to the river, guide services, food, beverages, lodging, and necessary equipment. NPS regulations prohibit concessionaires from charging an admission fee for entrance to Grand Canyon National Park. River runner concession contracts do not give the company exclusive use or control over access to the Colorado River. The public also has access to the river. According to park service regulations, a trip is commercial rather than private "if any fee, charge or other compensation is collected for conducting, leading, guiding, or outfitting a river trip." 36 C.F.R. § 7.4(b)(3)(iii) (1991).

The Department of Revenue (the Department) audited Wilderness World for the period October 1982 through July 1985 and assessed an additional transaction privilege tax, together with interest and penalties. The tax was levied pursuant to former A.R.S. § 42-1314(A)(1), the current version of which is A.R.S. § 42-1310.13. Wilderness World filed an administrative protest, and the hearing officer abated the penalty, but upheld the assessment of taxes and interest.

Wilderness World appealed to the Board of Tax Appeals, but the board upheld the taxes and interest. Wilderness World paid the taxes and interest, a total of $57,735.08, under protest. Wilderness World then filed a complaint against the Department in the Arizona Tax Court for a refund of the taxes, and both parties moved for summary judgment. The tax court granted the Department's motion and denied Wilderness World's, and judgment was entered against Wilderness World on October 13, 1992. The tax court found that DOR v. Moki Mac River Expeditions, Inc., 160 Ariz. 369, 773 P.2d 474 (App.1989), was controlling, which case had previously held that this tax was applicable to river trips.

Wilderness World appealed this judgment to the Arizona Court of Appeals, Division One, which reversed the judgment of the tax court. Wilderness World Inc. v. DOR, 180 Ariz. 155, 882 P.2d 1281 (App.1993). In its original opinion, the court of appeals awarded Wilderness World its attorneys' fees on appeal pursuant to A.R.S. § 12-348(B). Wilderness World, 180 Ariz. at 158, 882 P.2d at 1284. However, in its supplemental opinion, it denied the award of attorneys' fees. Wilderness World, 180 Ariz. at 159, 882 P.2d at 1285 (App.1994).

A. Application of the Tax to Wilderness World
1. Standard of Review

We review de novo the tax court's ruling on the motion for summary judgment. No material issue of fact appears in the record. The tax court's ruling was a conclusion of law, which does not bind the supreme court. Gary Outdoor Advertising Co. v. Sun Lodge, Inc., 133 Ariz. 240, 242, 650 P.2d 1222, 1224 (1982).

2. Wilderness World Does Not Charge an Admission Fee

Former A.R.S. § 42-1314(A)(1) 1, the statute at issue, stated:

A. The tax imposed by § 42-1309, subsection A shall be levied and collected at an amount equal to two per cent of the gross proceeds of sales or gross income from the business upon every person engaging or continuing within this state in the following businesses:

1. Operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard and pool parlors and bowling alleys, public dances, dance halls, boxing and wrestling matches and any business charging admission fees for exhibition, amusement or instruction, other than projects of bona fide religious or educational institutions.

(Emphasis added.) The Department imposed the tax on Wilderness World pursuant to the portion of the statute encompassing "any business charging admission fees for ... amusement," and alleges that river rafting is an amusement that falls within the purview of this statute. Wilderness World argues that under the plain language of the statute, the tax does not apply to it because Wilderness World does not charge an admission fee.

When construing a tax statute, words must be given their "plain and ordinary meaning." Board of Equalization v. Jackson Hole Ski Corp., 737 P.2d 350, 354 (Wyo.1987). "Admission" is defined as "[t]he price required or paid for entering; an entrance fee." The American Heritage Dictionary at 23 (3d ed. 1992). The NPS prohibits Wilderness World from charging an admission fee to the Grand Canyon National Park, where the river trips take place. We reject the Department's argument that Wilderness World is charging an admission fee to sit in the raft. A river trip encompasses much more than just a raft ride. The fee charged its customers is for the skill, direction, and service provided by the guide, the food and equipment for the trip, and the transportation to and from the river. See Jackson Hole, 737 P.2d at 354-55. Therefore, we conclude that Wilderness World is not charging an admission fee, and, consequently, river trips are not taxable under the plain language of the statute. See Op. Arizona Atty. Gen. No. 50-279 (Dec. 20, 1950) (construing meaning of "admission" in amusement tax statute).

3. The Tax Does Not Apply Because of the Doctrines of Strict Statutory Construction and Ejusdem Generis

The statute also does not apply because river rafting trips are not an "amusement" under the statute. Tax statutes are interpreted strictly against the state, and any ambiguities are resolved in favor of the taxpayer. Ebasco Servs. Inc. v. Tax Comm'n, 105 Ariz. 94, 97, 459 P.2d 719, 722 (1969) (stating that "words will be read to gain their fair meaning, but not to gather new objects of taxation by strained construction or implication"), quoting Tax Comm'n v. Staggs Realty Corp., 85 Ariz. 294, 297, 337 P.2d 281, 283 (1959); see also RDB Thomas Road Partnership v. City of Phoenix, 180 Ariz. 194, 196, 883 P.2d 431, 433 (App.1994).

River trips could be an "amusement" under this statute if they were of the same kind or nature of activity as those specifically enumerated in the statute. The statute does not specifically list river trips as a taxable activity. Under the doctrine of ejusdem generis, "where general words follow the enumeration of particular classes of persons or things, the general words should be construed as applicable only to persons or things of the same general nature or class of those enumerated." White v. Moore, 46 Ariz. 48, 53-54, 46 P.2d 1077, 1079 (1935), quoting 59 C.J. Statutes § 581 (1932); see also Alvord v. Tax Comm'n, 69 Ariz. 287, 291, 213 P.2d 363, 366 (1950). The doctrine of ejusdem generis is a device for construing statutes when they are unclear, as in this case. See Fitzpatrick v. BOMEX, 96 Ariz. 309, 314, 394 P.2d 423, 427 (1964).

The issue in this case, then, is whether river rafting is of the same kind or nature as the activities specifically listed in the statute: theaters, movies, operas, shows, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, pool parlors, bowling alleys, dances, and boxing and wrestling matches. These activities are mainly spectator events of short duration or participatory activities requiring no supervision. None of these activities resembles a river trip, which can be best characterized as a journey or expedition of extended duration covering hundreds of miles.

The Department argues that the doctrine of ejusdem generis does not apply because the statute's general clause ("any business charging admission fees for exhibition, amusement or instruction") does not include the word "other." Both White and Alvord, which we find controlling, involved a statute with a general clause that reads "or any other business or occupation charging storage fees or rents." A...

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