William Clairmont, Inc. v. State
| Decision Date | 19 December 1977 |
| Parties | WILLIAM CLAIRMONT, INC., a corporation, et al., Plaintiffs, Appellants, and Cross-Appellees, v. STATE of North Dakota et al., Defendants, Appellees, and Cross-Appellants, and Standard Oil Company, an Indiana corporation, et al., Defendants. Civ. 9364. |
| Court | North Dakota Supreme Court |
Lyle W. Kirmis, of Zuger & Bucklin, Bismarck, for plaintiffs, appellants, and cross-appellees.
Kenneth M. Jakes and Robert W. Wirtz, Special Asst. Attys. Gen., Bismarck, for defendants, appellees, and cross-appellants State of North Dakota and State Tax Commissioner; argued by Mr. Wirtz.
This appeal involves the taxation of "special fuel," 1 principally diesel fuel. The appellants are contractors who have been engaged in construction for the Federal Government on Federal projects, not including highways. The contractors sued the State of North Dakota and the State Tax Commissioner for a refund of special fuel taxes which they assert were erroneously collected. A large number of special fuel dealers, from whom they purchased the special fuels and to whom they paid the special fuel tax, are included as defendants, presumably for the reason that the tax was collected from the dealers by the State and refunds can be made only to the dealers. Some of the dealers answered and asked that the State be compelled to repay any sums they are held liable to pay to the contractors.
The contractors appealed from that portion of the judgment which held that the State need not return taxes collected prior to the service of the summons and complaint in this action but must pay back all sums collected thereafter. The State cross-appealed from the judgment and from the order denying a new trial.
The judgment provided that the State should retain from any funds ordered repaid a sum equivalent to two percent of the sale price, since all special fuels exempt from the seven percent tax imposed by Chapter 57-52 are taxable at the rate of two percent of sale price under Chapter 57-53. This provision is not challenged by either party.
For clarity, we will refer to the plaintiff-appellants as "the contractors" and the cross-appellants as "the State."
Both parties agree that the contractors are "industrial" users, within the meaning of subdivision 7 of Section 57-52-03, N.D.C.C., which read, prior to the 1977 amendment:
Chapter 57-52, called the "Special Fuels Tax Act," is a comprehensive scheme of taxation of special fuels, and parallels the statutes which tax gasoline, Chapter 57-54. During times pertinent to this appeal, the Special Fuels Tax Act, Chapter 57-52, provided for a tax of seven cents per gallon on special fuel. The exact language imposing the tax is:
(Emphasis added.)
It is the position of the contractors that they are "exempt" from the imposition of the tax, and that the Tax Commissioner for many years has exceeded his authority in requiring them to pay the tax and that they are entitled to reimbursement for taxes erroneously collected.
It is the position of the Tax Commissioner that the word "exempt" does not mean that the tax cannot be collected, but only that the tax may be assessed and collected, subject to refund by the Tax Commissioner if the industrial users, such as the contractors, come within the terms of the refund statute, Section 57-50-05.1, which provides:
Thus the main issue in the case is the correct interpretation of the above statutes as they apply to industrial users who utilize the fuel in performing government contracts.
Secondary issues presented by the parties are, first, whether principles of unjust enrichment preclude recovery by the contractors of any refund due if we find the tax to have been illegally assessed; second, whether the trial court was correct in limiting the recovery of illegally assessed and collected taxes to those collected after the date of service of the original summons and complaint; and, third, whether the court erred in denying the State's motion for a new trial.
We affirm the decision of the trial court on all issues.
The statutes quoted above are those in effect from July 1, 1975, to July 1, 1977. The action was commenced and tried during that period of time. However, the analysis of the meaning of the relevant statutory provisions requires reference to the many amendments of the original statutes, dating back to 1955, which created the language in effect during the period of time covered by the pleadings.
As we have stated, the first Special Fuels Tax Act was enacted in 1955. It was Chapter 335, 1955 Session Laws. It defined "special fuel" as "all combustible gases and liquids suitable for the generation of power for propulsion of motor vehicles, except that it does not include motor fuel as defined in section 57-4101 . . ." It defined "sale" as the "receipt, delivery or transfer of title to special fuels by a special fuel dealer to a special fuel user except that it shall not include the receipt, delivery, or transfer of title to heating fuels when such fuel is delivered into a fuel tank connected with a heating appliance; . . ." And it imposed an excise tax of six cents per gallon on the sale or delivery of special fuel to any special fuel user, "except that special fuel for heating purposes which is delivered into a fuel tank connected with a heating appliance shall be exempt from the tax imposed by this Act."
In 1959, by Chapter 404, 1959 Session Laws, the definitions of "sale" and "special fuel user" were changed so that "sale" did not include "receipt, delivery, or transfer of title to special fuels to be used for heating, agricultural and railroad purposes;" and provided that "special fuel user" shall "not include a person purchasing or receiving special fuels when such fuel is to be used for heating, agricultural or railroad purposes . . ." Likewise, the amendment provided that the tax of six cents per gallon was imposed "except that special fuel to be used for heating, agricultural or railroad purposes shall be exempt from the tax imposed by this chapter."
The latter provision was again amended in 1963, by Chapter 409, Session Laws 1963, so as to impose the tax "except that special fuel to be used for heating, agricultural, industrial or railroad purposes shall be exempt from the tax imposed by this chapter." (Emphasis added.) 2 Prior to 1963, industrial users of special fuels could recover special fuel taxes paid under a refund provision. See Peter Kiewit Sons' Co. v. State, 116 N.W.2d 619 (N.D.1962).
In 1967, by Chapter 467 of the Session Laws, "special fuel user" was redefined so as to exclude users of fuel for industrial purposes, along with fuel used for heating, agricultural, or railroad purposes.
Finally, in 1969, by Chapter 535, 1969 Session Laws, the tax was raised to seven cents per gallon.
This history shows that the Legislature first exempted from the special fuels tax certain fuel used for heating, then extended the exemption to fuel used for agricultural and railroad purposes, and finally added to the list of exempt fuels those special fuels used for industrial purposes.
The word "exempt" has a plain and common meaning. As applied to taxation it means "freedom from the burden of enforced contributions to the expenses and maintenance of government, or an immunity from a general tax." Kroger Co. v. Schneider, 9 Ohio St.2d 80, 223 N.E.2d 606, 610 (1967). It is a special freedom from taxation imposed upon others, a dispensation. P. Lorillard Company v. City of Seattle, 8 Wash.App. 510, 507 P.2d 1212 (1973).
This is the sense in which the word "exempt" is customarily used in the statutes of this State. in 1969, by Chapter 528, Section 18, 1969 Session Laws, certain kinds of milk, meat, and fish products were exempted from sales tax. A long list of exemptions from sales tax is found in Section 57-39.2-04, N.D.C.C. Exemptions from estate tax are listed in Section 57-37-11. Exemptions from property taxes are found in Section 57-02-08. The list could be extended, but the point we want to make is simply that in none of these cases are taxes collected and then refunded. Instead, the word "exempt" is used to signify that no tax is payable in the first instance.
Furthermore, the tax is imposed only on "special fuel users" (Sec. 57-52-04, N.D.C.C.), and persons who purchase or receive special fuels for...
To continue reading
Request your trial
-
Okla. Auto. Dealers Ass'n, an Okla. Corp. v. State, Case Number: 116143.
...2004 OK 48, ¶ 10, 98 P.3d 1061, 1064 (describing a tax exemption as a "matter[ ] of legislative grace"); William Clairmont, Inc. v. State, 261 N.W.2d 780, 783–84 (N.D. 1978) (describing an exemption as "a special freedom from taxation imposed upon others"). It does not, as Petitioners' argu......
-
Metropolitan Life Ins. Co. v. Commissioner of Dept. of Ins.
...Although this consideration may not in itself be sufficient to deny a refund of taxes illegally collected [see William Clairmont, Inc. v. State, 261 N.W.2d 780, 785 (N.D.1977) ], we believe it properly may be taken into account in weighing the equities to determine whether or not a decision......
-
Service Oil, Inc. v. State
...in the form of injunctive relief through a declaratory judgment action under Ch. 32-23, N.D.C.C. Relying upon William Clairmont, Inc. v. State, 261 N.W.2d 780 (N.D.1977), the State also asserts that Service Oil voluntarily paid the taxes because it failed to seek alternatives to payment of ......
-
Minot Farmers Elevator v. Conrad, 11105
...of this legislation. A tax exemption "is a special freedom from taxation" and "implies that no tax is payable." William Clairmont, Inc. v. State, 261 N.W.2d 780, 784 (N.D.1977). Accordingly, we conclude that the taxable moment concept has no application to this exemption. We now reach the u......