Pacific Intermountain Express Co. v. State Tax Commission

I dissent. There is no logical or practical basis for exempting from the excise tax required by Sec. 57-3a-133, U.C.A. 1943, trucks owned by the government but used by a private lessee even though such lessee contracts to perform service with the government with the leased trucks. That Section 57-3a-133 imposes an excise tax for the privilege of using the highways by charging a registration fee does not seem to be open to question. This is a tax for raising revenue and not a fee for regulation despiteCarter v. State Tax Commission, 98 Utah 96, 96 P.2d 727, 126 A.L.R. 1402. The fee varies with the weight of the vehicle thus relating it to the wear and tear on the highway and not the value of the vehicle. Secs. 57-3a-134, 135, 136, 137 all show a pattern which indicates that the legislature was not imposing an ad valorem tax but a tax on the privilege of using the highways. If the tax were on property "owned" by the government there would be no constitutional power in the state of Utah to so tax it. The statute has brought us to the same result by making ownership in the United States work an immunity from the excise tax. Sec. 57-3a-138, U.C.A. 1943. Since the tax is on the privilege of using the highway and since there appears to be no logical or practical basis for exempting the appellant from payment of this tax for the operating of government owned trucks upon the highway, we should not attempt to construe the various sections so strictly as to work the undesirable result of exempting the appellant from payment of the tax. Paragraph 16 of the lease provides that the appellant shall pay all taxes assessed or imposed on the Defense Corporation or lessee upon or with respect to the equipment, thus showing that taxes were taken into consideration in the contract. Exempting the appellant from taxes may give it a windfall besides giving it an unfair advantage as to competitors on private goods it may carry.

Sec. 57-3a-1 (u) makes a lessee who has the right to purchase upon the performance of conditions stated in the agreement coupled with immediate right of possession the "owner" for the purpose of this registration tax. This further demonstrates that the intent of the legislature was to look to possession and use as the controlling feature. In view of the above, I believe that Section 57-3a-1 (u) should be held to apply to the appellant under the lease agreement involved herein so as to make the appellant the "owner" within the meaning of that subsection. The right of the appellant is not an absolute right of purchase. But neither does Section 57-3a-1 (u) expressly so require. It provides merely that the term "owner" as used in the act should be defined to mean:

"A person who holds the legal title of a vehicle or in the event a vehicle is the subject of an agreement for the * * * lease thereof with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession vested in the * * * lessee * * * then such * * * lessee * * * shall be deemed the owner for the purpose of this act."

This section does not say that the right of purchase must be "absolute" or "indefeasible" as the opinion of Mr. Justice WADE construes it. To read the word "absolute" before the words "right of purchase" reaches an undesirable and illogical result. I do not believe that the section need be so construed.

The appellant under the lease agreement attached to the complaint did have the right of purchase. It could lose this right upon the happening of certain conditions. But none of the conditions were under the power of the other contracting party, Defense Plant Corporation. The Defense Plant Corporation could by writing cancel the lease (a) if the government requested a priority with respect to the use of the equipment leased and the appellant refused to give such priority (this clearly was entirely within the control of the appellant); (b) if a trustee is appointed for the appellant or its property or an assignment of its assets are made for the benefit of appellant's creditors (this also is without the control of the Defense Plant Corporation); (c) if the appellant loses its franchises, licenses, permits or authority necessary to the operation of the equipment (this also is beyond the control of Defense Plant Corporation); (d) if the appellant violates the terms of the lease agreement and does not cure the defect within 20 days after notice (again this is in the nature of a default on the part of appellant and thus within its control); (e) if the Office of Defense Transportation shall request Defense Plant Corporation to sell or lease the equipment (this power is with a governmental agency, but not with one of the contracting parties).

It is subsection (e) above that Mr. Justice WADE emphasizes in his holding that the appellant had no right of purchase within the meaning of Section 57-3a-1 (u). Clearly the complaint shows that the appellant has the right of immediate possession. It also shows a right of purchase. The right of purchase while not absolute, is subject to conditions over which the other contracting party, Defense Plant Corporation, does not have exclusive control. The control lies with the company on all of the conditions except (e). As to (e) the right to terminate the lease arrangement lies with the Office of Defense Transportation, not Defense Plant Corporation. To hold that the appellant does not have a lease agreement "with the right of purchase upon performance of the conditions stated in the agreement and with an immediate right of possession" is an extremely narrow construction. It reaches a result which has no logical or practical basis. I think the legislative intent is better followed to hold that the appellant did have "the right of purchase" and the "immediate right of possession" and that the appellant was therefore, under definition given in Sec. 57-3a-1 (u), the "owner."

I cannot accept the argument that "owned" in Section 57-3a-138 (a) should be given its ordinary meaning of one who holds the legal title and not take complexion from the special statutory meaning with which Sec. 57-3a-1 (u) invests the word "owner" because they have different geneologies. Although the two terms arrived in Chapter 3(a) of Title 57 by different routes, when they were integrated in that chapter, the word "owned" contained in Section 57-3a-138 (a) must be considered as gaining a harmonious meaning attributed by the definition of the word "owner" as defined by Sec. 57-3a-1 (u).

Nor am I troubled by any contention that the state of Utah cannot constitutionally collect this tax from the appellant because of the fact that it is operating government equipment under contract to haul government goods, especially when it is permitted to use the trucks under certain conditions to haul goods for private parties in competition with other trucking companies. The cases of James v. Dravo Contracting Co.,302 U.S. 134, 58 S. Ct. 208, 83 L. Ed. 155, 114 A.L.R. 318, and Stateof Alabama v. King Boozer, 314 U.S. 1, 62 S. Ct. 43,86 L. Ed. 3, 140 A.L.R. 615, should put this question to rest.