Motor Cargo, Inc. v. Division of Tax Appeals

92 A.2d 774, 10 N.J. 580, 1952 N.J. LEXIS 273

• Court: Supreme Court of New Jersey
• Decided: November 24, 1952
• Status: Published

Opinions

The opinion of the court was delivered by

William J. Brennan, Jr., J.

Is a licensed transporter who is the innocent victim of the theft of an interstate shipment of alcoholic beverages owned by another liable to pay taxes upon the stolen goods under the Alcoholic Beverage Tax Law? We think not.

Two sealed trailers loaded with cases of whiskeys en route across New Jersey from Kentucky and Indiana to New York upon through bills of lading were.stolen by persons unknown in the early morning hours of December 9, 1949 from the Fairview, New Jersey Terminal of Wilson Freight Forwarding Company, a licensed transporter, B. S. 33 :1-13, while parked temporarily over night awaiting pick-up for delivery in New York by tractors manned by crews affiliated with a New York Teamsters Union Local. A sealed trailer of Motor Cargo, Inc., also a licensed transporter, loaded with whiskeys shipped upon through bill of lading from Illinois to New York was stolen by persons unknown in the early morning of March 15, 1950 while parked temporarily over night at Motor Cargo’s Hoboken terminal awaiting pick-up for delivery in New York. Both of the Wilson trailers were recovered later in the day of December 9, 1949 in New York State, one near Newburgh and the other near Goshen. The first named still contained about one-fifth of its cargo, but the second was empty. The Motor Cargo trailer was found deserted, and empty, on a New York City street on March 15, 1950.

The Beverage Tax Bureau assessed Wilson a tax of $5,173.20 upon the stolen liquor, exempting from the tax only the portion recovered in the trailer found near New-burgh. Motor Cargo, Inc. was assessed a tax of $2,448 upon the entire contents of its trailer. Each paid the tax against it under protest, and appealed to the Division of Tax Appeals, which affirmed both assessments. The transporters’ appeals to the Appellate Division from the respective judgments of the Division of Tax Appeals have been certified to this court of its own motion.

The primary question on the appeals is whether the Legislature provided for a tax against licensed transporters in the circumstances presented in the instant cases. B. 8. 54:43-6 imposes the tax in respect of beverages involved in “illegal acts in this state,” but that section is not applicable nor is it invoked by the State. It applies only to persons who-manufacture, possess, distribute, transport, or offer for sale alcoholic beverages in violation of a federal or state statute or who conspire to do any such acts. The State admits that appellants were duly licensed transporters legitimately carrying on their business within the terms of their licenses and that they were not culpably involved in the thefts. The State relies upon R. 8. 54:43-1, which imposes the tax upon any “sale” of alcoholic beverages within this State or upon any “delivery” thereof made within this State. There may, of course, be a “delivery” without a “sale.” The statutory scheme to tax either event occurring in this State is obvious recognition that an individual taxpayer may in given circumstances reasonably be taxed as upon the one and not as upon the other.

It is an elementary rule that taxes “cannot be imposed upon an individual unless he is explicitly brought within the terms of the taxing act.” Public Service, etc., Transport v. State Bd. Tax Appeals, et al., 115 N. J. L. 97 (Sup. Ct. 1935). Are the appellants in the instant circumstances persons contemplated by the Legislature as taxable upon a “sale”? 'We find nowhere in the statute any evidence to support the State’s contention that such was the intent, and much to oppose that contention. A “sale” usually imports a transfer of property in the goods by the owner or by one authorized in his behalf to transfer such property. 46 Am. Jur., Sales, p. 194. Here appellants were not the owners of the stolen liquoTS and had no authority to sell them. Moreover they could not lawfully sell or offer them for sale with or without the permission of the owners without violating the terms of their licenses which authorized them only “to transport alcoholic beverages into, out of, through and within the state of New Jersey and to maintain a warehouse.” R. S. 33 :1-13. Authority to “distribute and sell” is reserved to such as manufacturers, wholesalers and retailers licensed so to do. . R. S. 33:1 — 10, 11 and 12. Whether one licensed only to transport attempting to sell in violation of his license would be taxable as upon a “sale” under B. 8. 54:43-1 or under B. 8. 54:43-6 as being involved in “an illegal act,” or under both sections, is a question not before us. It is sufficient that we think that there may fairly be inferred from the context of the statute as a whole a purpose to tax a licensed transporté!’ of the beverages of others, sought to be taxed in circumstances which involve no claim of a violation of his license, not as upon a “sale” but, if at all, as upon a “delivery” of such beverages within the State. The care taken by the Legislature in several sections of the statute to distinguish between “transportation” and “sale” buttresses this interpretation. See R. S. 54:42-2, B. 8. 54:43-2, B. 8. 54:43-6, B. S. 54:45-1.

This construction of the statute disposes of the State’s contention that the statutory definition that a “sale” shall include a “theft,” and the provision that stolen beverages “shall be deemed to have been sold” within this state, B. 8. 54:41-2, support the assessments. Indeed, to interpret the statute as making such definition applicable to these carriers, who were the innocent victims of the -thefts, who were not the owners of the goods and had no authority to transfer the property in them, and whose trailers, one still partly loaded, were recovered in the State of New York, would constitute such application of the statute a clear denial to appellants of the equal protection of the laws in violation of the Fourteenth Amendment to the Federal Constitution. The statutory inference, if applied'to the carriers in such circumstances, is so strained and so utterly without a “reasonable relation to the circumstances of life as we know them,” Tot v. United States, 319 U. S. 463, 63 S. Ct. 1241, 87 L. Ed. 1519 (1943), as to be plainly arbitrary and unreasonable. Such a palpably fictitious measure of the tax must be rejected as clearly arbitrary. See Ring v. North Arlington, 136 N. J. L. 494 (Sup. Ct. 1948), affirmed 1 N. J. 24 (1948), appeal dismissed 335 U. S. 889, 69 S. Ct. 250, 93 L. Ed. 427 (1948); Lane Distributors, Inc., v. Tilton, 7 N. J. 349 (1951); In re Vanderbilt’s Estate, 281 N. Y. 297, 22 N. E. 2d 379 (Ct. App. 1939), affirmed Whitney v. State Tax Comm., 309 U. S. 530, 60 S. Ct. 635, 84 L. Ed. 909 (1940).

Furthermore, the application of the legislative fiction upon the facts admitted here constitutes the taxes a material and onerous obstruction of the free flow of interstate commerce, in contravention of the commerce clause of the Federal Constitution. The commerce clause ordinarily operates to exempt from state taxes goods actually in transit in interstate commerce. State of Minnesota v. Blasius, 290 U. S. 1, 54 S. Ct. 34, 78 L. Ed. 131 (1933). The interstate movement of the beverages in the instant cases did not cease when the sealed trailers were temporarily parked awaiting pick up. Lehigh & Wilkes-Barre Coal Co. v. Junction, 75 N. J. L. 922 (E. & A. 1908); State, Detmold & Cox v. Engle, 34 N. J. L. 425 (Sup. Ct. 1871); United States v. Gollin, 166 F. 2d 123 (3 Cir., 1948), certiorari denied 333 U. S. 875, 68 S. Ct. 905, 92 L. Ed. 1151 (1948); cf. Independent Warehouses, Inc., v. Scheele, 134 N. J. L. 133 (E. & A. 1946), affirmed 331 U. S. 70, 67 S. Ct. 1062, 91 L. Ed. 1346 (1947). It is in high degree arbitrary to deny the transporters the immunity from the tax which by force of the commerce clause they enjoyed to the time of the thefts by the application of a legislative fiction that, although they were innocent victims and were not the owners of the goods and were without authority to transfer the property therein and the stolen trailers were recovered in the State of New York, the stolen beverages are to be “deemed to have been sold” by them within the State of New Jersey.

And there is no merit in the State’s argument that the Twenty-first Amendment to the Federal Constitution has entirety relieved' the states of the limitations of the commerce clause and of the Fourteenth Amendment by prohibiting “the transportation or importation into any state * * * for delivery or use therein of intoxicating liquors, in violation of the laws thereof,” the State contending that, since importation of intoxicating liquors into the state may be absolutely prohibited, the lesser step of strict regulation is manifestly authorized and further, that as there is judicial recognition in our cases that the liquor traffic is “a subject by itself, to the treatment of which all the analogies of the law, appropriate to other topics, cannot be applied,” Hudson Bergen Ass’n v. Hoboken, 135 N. J. L. 502 (E. & A. 1947), our determination of the question of the constitutional sufficiency of the application of the statute must be made “without regard to the limitations contained in the commerce clause or the provisions of the Fourteenth Amendment.”

In the first place, the legislative history of the provision that a “sale” shall include a “theft” and the stolen goods “be deemed to have been sold” shows that the Legislature purposed the provision as a revenue measure and not as a regulatory measure. It was not in the statute as originally enacted, L. 1933, c. 434, p. 1160. It was added by an amendment made by L. '1938, c. 319, •p. 795. A like provision first appeared in the Motor Fuels Tax Law when added by an earlier 1938- statute, chapter 283, p. 610. This followed a decision of the former State Board of Tax Appeals in 1937 that a distributor of motor fuel whose fuel was stolen was not obliged to pay a tax upon the stolen fuel as upon a “sale.” Weinstein v. State Board, N. J. Tax Reports 1934-1939, p. 466. Such a provision also appears in the Cigarette Tax Law enacted by L. 1948, c. 65, p. 153. The fair implication is that the provision was adopted in aid of the collection of taxes and is not truly regulatory in character.

Assuming a regulatory purpose, however, the result proscribed by both the commerce clause and the Fourteenth Amendment in the instant circumstances is not sanctioned by the Twenty-first Amendment. The United States Supreme Court has said that “shipment through a state is not transportation or importation into the state within the meaning of the (Twenty-first) amendment,” Carter v. Commonwealth of Virginia, 321 U. S. 131, 64 S. Ct. 464, 88 L. Ed. 605 (1944); Collins v. Yosemite Park Curry Co., 304 U. S. 518, 58 S. Ct. 1009, 82 L. Ed. 1502 (1938). The cases in which that court has said that the limitations of the commerce clause and the Fourteenth Amendment do not inhibit state action in light of the Twenty-first Amendment have concerned legislation prohibiting or controlling the sale and use of alcoholic beverages within the state; imposing license taxes for the privilege of importing beer into a state for domestic consumption, State Board of Equalization v. Young's Market Co., 299 U. S. 59, 57 S. Ct. 77, 81 L. Ed. 38 (1936), or discriminating between domestic and imported intoxicating liquors sold therein, Mahoney v. Joseph Triner Corp., 304 U. S. 401, 58 S. Ct. 952, 82 L. Ed. 1424 (1938); or prohibiting the salé within the state of beer manufactured in another state in retaliation against the laws of that state, Indianapolis Brewing Co. v. Liquor Control Com., Michigan, 305 U. S. 391, 59 S. Ct. 254, 83 L. Ed. 243 (1939), Joseph S. Finch & Co. v. McKittrick, 305 U. S. 395, 59 S. Ct. 256, 83 L. Ed. 246 (1939); or limiting the transportation of liquors produced in the state to trucking by licensed carriers, Ziffrin, Inc., v. Reeves, 308 U. S. 132, 60 S. Ct. 163, 84 L. Ed. 128 (1939).

Nor is the State’s contention supported by the decisions which have upheld legislation touching interstate shipments of intoxicating liquors, not upon the basis of the Twenty-first Amendment but upon holdings that such legislation was not foreclosed by the commerce clause, at least in the absence of federal regulation. These were statutes requiring regulatory licenses for through shipments of alcoholic beverages, Duckworth v. Arkansas, 314 U. S. 390, 62 S. Ct. 311, 86 L. Ed. 294 (1941), compelling a carrier to furnish, information necessary for checking the shipment against unlawful diversion and requiring that the truck follow a direct, stated route, Carter v. Commonwealth of Virginia, supra, Chambless v. Cannon, 81 F. Supp. 885 (D. C. W. D. Ark., 1949), or requiring a reasonable bond of one who engages in the interstate transit of alcoholic beverages to assure the interstate journey is completed, California v. Thompson, 313 U. S. 109, 61 S. Ct. 930, 85 L. Ed. 1219 (1941). Such legislation ■ was deemed not to “Eorbid the traffic in liquor, nor does it impede it more than is reasonably necessary to inform the local authorities who is to effect the transportation through the state, and to afford opportunity for them to police it.” Duckworth v. Arkansas, supra, 314 U. S., at page 393, 62 S. Ct., at page 313, 86 L. Ed., at page 296. That the interpretation of the Alcoholic Beverage Tax Law urged upon us by the State applied to facts in the instant cases unreasonably burdens the free flow of commerce and arbitrarily denies appellants the equal protection of the laws is very apparent.

We come then to the question, Has the legislature evinced a purpose to make the provisions of the Alcoholic Beverage Tax Law applicable to these appellants as upon a “delivery” by them of the beverages within the State? We think the contrary is made evident in the statute itself. “Delivery” is used in the statute in its ordinary meaning. There is no artificial definition here that “delivery” includes “theft,” or that the stolen goods shall be deemed to have been delivered. Alcoholic beverages imported into this State “which are not intended for sale or delivery herein and which pass through this state in continuous transportation and are delivered to a point outside of this state” are exempted from the tax. B. 8. 54:43-2, as amended by L. 1942, c. 171, p. 527. Although the transit of the liquors was- temporarily interrupted by the parking of the trailers at the terminals awaiting pick-up, they were within the exemption as beverages “in continuous transportation” through the State. Lehigh & Wilkes-Barre Coal Co. v. Junction, supra; State, Detmold & Cox v. Engle, supra; United States v. Gollin, supra. And, while they never reached their intended consignees, the statute in such case subjects the transporter ta the tax only if he “fails” to complete the delivery “by reason of the delivery or other disposition” of the beverages to another within this State, in which circumstance the transporter “and' the person to whom he shall deliver” are liable for the tax. “Delivery” and “disposition” are words importing volition by the transporter in parting with the beverages within this state, that is, a knowing delivery or disposition to another. Here the liquors were stolen from appellants against their will and without their knowledge and they are thus not within the class of transporters subjected to the tax as upon a “delivery.”

The judgments of the Division of Tax Appeals are reversed with direction to cancel the assessments and to refund to the appellants the Alcoholic Beverage Taxes paid by each.