Case Title: La Crosse Queen, Inc. v. Wisconsin Department of Revenue

Citation: 

Docket Number: 1995AP002754

State: wisconsin

Court: Wisconsin Supreme Court

Date: 1997-04-18T00:00:00Z

Document:
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
95-2754 
 
 
Complete Title 
of Case: 
 
LaCrosse Queen, Inc., 
 
Petitioner-Appellant, 
 
v. 
Wisconsin Department of Revenue, 
 
Respondent-Respondent-Petitioner, 
 
 
 
 
 
 
 
 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at:  201 Wis. 2d 537, 549 N.W.2d 261 
 
 
 
(Ct. App. 1996) 
 
 
 
PUBLISHED 
 
 
Opinion Filed: 
April 18, 1997 
Submitted on Briefs: 
 
Oral Argument: 
January 28, 1997 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Dane 
 
JUDGE: 
Michael B. Torphy, Jr. 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
Abrahamson, C.J., dissents (opinion filed) 
 
 
Bradley, J., joins. 
 
Not Participating:  
 
 
ATTORNEYS: 
For the respondent-respondent-petitioner the 
cause was argued by Gerald S. Wilcox, assistant attorney general, 
with whom on the briefs was James E. Doyle, attorney general. 
 
 
For the petitioner-appellant there was a brief by 
Paul J. Munson and McDonald & Munson, La Crosse and oral argument 
by Paul J. Munson. 
 
 
 
No.  95-2754 
 
 
1 
 
NOTICE 
This opinion is subject to further editing 
and modification.  The final version will 
appear in the bound volume of the official 
reports. 
 
 
No. 95-2754 
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
La Crosse Queen, Inc., 
 
  
Petitioner-Appellant, 
 
 
v. 
 
Wisconsin Department of Revenue, 
 
 
Respondent-Respondent-Petitioner. 
 
FILED 
 
APR 18, 1997 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed. 
¶1 
DONALD W. STEINMETZ, J.  The issue in this case is 
whether a boat leased by La Crosse Queen, Inc. to Riverboats 
America, Inc. was used primarily in interstate commerce so as to 
exempt the gross receipts from said lease from sales tax 
pursuant to Wis. Stat. § 77.54(13)
1 for the years from 1989 
through 1991. Because we find that the La Crosse Queen was not 
engaged in interstate commerce during this time, we hold that 
La Crosse Queen, Inc., was not entitled to the tax exemption 
provided pursuant to Wis. Stat. § 77.54(13). 
                     
1 Wis. Stat. § 77.54(13) exempts from taxes "[t]he gross 
receipts from the sales of and the storage, use or other 
consumption in this state of commercial vessels and barges of 
50-ton burden or over primarily engaged in interstate or foreign 
commerce 
or 
commercial 
fishing, 
and 
the 
accessories, 
attachments, parts and fuel therefor." 
 
 
No.  95-2754 
 
 
2 
¶2 
On October 14, 1992, the Department of Revenue 
("Department") issued an assessment of sales taxes against the 
taxpayer on the gross receipts from the lease payments.  The 
taxpayer appealed, claiming that such gross receipts are exempt 
under Wis. Stat. § 77.54(13), since the La Crosse Queen has a 
burden of over 50 tons and is primarily engaged in interstate 
commerce.  The Tax Appeals Commission ("Commission") and the 
Dane County Circuit Court, the Honorable Michael B. Torphy, both 
held that La Crosse Queen, Inc. was not entitled to the 
exemption because it was not engaged in interstate commerce.  
Having concluded that La Crosse Queen, Inc. was not engaged in 
interstate commerce, neither the Commission nor the circuit 
court proceeded to address the issue of whether it was 
"primarily" engaged in said commerce.  The court of appeals 
reversed the circuit court decision on the grounds that the 
taxpayer was engaged in interstate commerce, and remanded the 
case to the Commission to determine if the taxpayer was 
"primarily" engaged in interstate commerce.  La Crosse Queen, 
Inc. v. Wisconsin Dept. of Revenue, 201 Wis. 2d 537, 549 N.W.2d 
261 (Ct. App. 1996).  We now reverse the court of appeals’ 
decision.    
¶3 
During the years in issue, 1989 through 1991, the 
taxpayer was the owner and lessor of a boat known as the 
La Crosse Queen IV (“La Crosse Queen”).  The boat, an excursion 
paddle wheeler exceeding 50 tons, was leased to a related 
corporation, Riverboats America, Inc., for the purpose of 
providing sightseeing and dinner cruises exclusively on the 
Mississippi River.  The boat is operated under Interstate 
 
 
No.  95-2754 
 
 
3 
Commerce Commission ("ICC") authority number WC-1172 which was 
transferred to taxpayer in 1975 when the boat was purchased from 
Roy 
A. 
Franz 
and 
the 
business 
was 
purchased 
from 
his 
corporation, Big Indian Boat Lines.  The taxpayer notes in its 
brief that until the time of deregulation, the vessel was 
required to file tariff charges with the Interstate Commerce 
Commission.   
¶4 
The previous owner of the boat, Mr. Franz, had 
challenged the imposition of the sales tax on its sales of 
tickets for the cruises on the Mississippi claiming, among other 
things, that the sales tax resulted in an unconstitutional 
burden on interstate commerce.  In an opinion authored by Dane 
County Reserve Circuit Judge, George R. Currie, the court held 
that the sales tax did not burden commerce because no interstate 
commerce was involved in Franz's operations. Franz v. Wisconsin 
Dept. of Revenue, Case No. 159-122 (Dane County Cir. Ct., July 
30, 1979).   
 
¶5 
The taxpayer's president, Linda Sayther, conceded that 
her method of operation and its purpose during 1989, 1990, and 
1991 was "basically the same" as that of Roy Franz, her 
predecessor. Thus, according to the La Crosse Queen's president, 
the primary purpose of the La Crosse Queen's operation during 
the period in question was recreation, entertainment, and 
dining.  The cruises on the La Crosse Queen were advertised as 
one and one-half hour cruises on the Mississippi River.  It is 
not contested that during her excursions from 1989 through 1991, 
the La Crosse Queen crossed between Wisconsin and Minnesota 
waters on the Mississippi River.   
 
 
No.  95-2754 
 
 
4 
 
¶6 
The La Crosse Queen's passengers are individuals and 
groups from Wisconsin and other states.  On her northern trip, 
the La Crosse Queen loads at a wharf in La Crosse, travels up 
the river several miles to the lock and dam north of the I-90 
bridge, turns around, and returns to the same wharf in 
La Crosse.  Since there are no facilities where the La Crosse 
Queen can dock on either her northern or southern trip, the 
passengers never disembark until their return to the wharf in 
La Crosse.  Thus, all passengers embark and disembark at the 
same dock in La Crosse, Wisconsin.    
 
¶7 
"Whether a person is engaged in interstate commerce is 
a question of law, and we review questions of law de novo."  
Town of LaPointe v. Madeline Island Ferry Line, Inc., 179 Wis. 
2d 726, 736, 508 N.W.2d 440 (Ct. App. 1993) (citation omitted). 
 This court may substitute our judgment for that of the 
Commission.  See Frisch, Dudek & Slattery, Ltd. v. Wisconsin 
Dept. of Revenue, 133 Wis. 2d 444, 446, 396 N.W.2d 355 (Ct. App. 
1986), citing Department of Revenue v. Milwaukee Refining Corp., 
80 Wis. 2d 44, 48, 257 N.W.2d 855 (1977).  However, this court 
will accord due weight to an agency decision where the agency 
possesses particular expertise in an area of law.  See id.  In 
the case at bar, the Commission possesses no special expertise 
because it has faced the task of interpreting the term 
"interstate commerce" in light of Wis. Stat. § 77.54(13) on only 
 
 
No.  95-2754 
 
 
5 
one previous occasion.
2  Therefore, we owe the decision of the 
Commission no deference. 
¶8 
Tax exemption statutes "are to be strictly construed 
against the granting of the same, and the one who claims an 
exemption must point to an express provision granting such 
exemption by language which clearly specify the same, and thus 
bring himself clearly within the terms thereof."  Ramrod, Inc. 
v. Department of Revenue, 64 Wis. 2d 499, 504, 219 N.W.2d 604 
(1974), citing Fall River Canning Co. v. Department of Taxation, 
3 Wis. 2d 632, 637, 89 N.W.2d 203 (1958); Comet Co. v. 
Department of Taxation, 243 Wis. 117, 123, 9 N.W.2d 620 (1943). 
Doubts are to be "resolved against the exemption and in favor of 
taxability."  Revenue Dept. v. Greiling, 112 Wis. 2d 602, 605, 
334 N.W.2d 118 (1983), citing First Nat'l. Leasing Corp. v. 
Madison, 81 Wis. 2d 205, 208, 260 N.W.2d 251 (1977).    
 
¶9 
The United States Supreme Court in Cincinnati P., B., 
S.& P. Packet Co. v. Bay, 200 U.S. 179 (1905) held that a 
contract governing a towing and barge business between various 
points in the state of Ohio did not involve interstate commerce 
simply because the boats "might sail over soil belonging to 
Kentucky in passing between two Ohio points."  Id. at 183.  
Likewise, the passengers in the instant case who embark and 
disembark at the same point in Wisconsin are in no way involved 
                     
2 See Washington Island Ferry Line, Inc. v. Dept. of 
Revenue, Wisconsin Tax Appeals Commission, Nos. 91-S-126, 91-S-
385 (March 16, 1993), aff'd, Wisconsin Tax Reports, CCH ¶ 400-
029 (Dane County Cir. Ct., December 4, 1993).  
 
 
No.  95-2754 
 
 
6 
"with commerce among the states" simply because they might sail 
over Minnesota waters during their excursion.  
¶10 When the taxpayer's boat picks up passengers at the 
wharf in La Crosse for the purpose of an excursion cruise either 
up or down the Mississippi River and then returns them to the 
same wharf in La Crosse, it is not conducting interstate 
commerce or interstate business.  Although the La Crosse Queen 
crosses over into Minnesota waters, there is no commerce or 
business carried on between Wisconsin and Minnesota as a result 
of the excursion cruises.  The people who use the taxpayer's 
boat are not using it for the purpose of being transported from 
Wisconsin to Minnesota, but rather for the purpose of recreation 
and entertainment. 
¶11 The court of appeals and the taxpayer in this case 
rely on several cases in support of the contention that the 
La Crosse Queen was engaged in interstate commerce during 1989, 
1990, and 1991.  These cases are all readily distinguishable 
from the case at bar. 
¶12 In Cornell Steamboat Co. v. United States, 321 U.S. 
634 (1944), the Court held that the ship’s transportation from 
one point in New York to another point in New York traversing 
New Jersey waters was subject to regulation by the Interstate 
Commerce Commission.  Similarly, in Central Greyhound Lines, 
Inc. v. Mealey, 334 U.S. 653 (1948), the Court held that 
transportation between points within the same state, New York, 
over routes utilizing New Jersey and Pennsylvania highways was 
interstate 
commerce. 
 
The 
Court 
provided 
the 
following 
definition of interstate commerce: 
 
 
No.  95-2754 
 
 
7 
 
The term ‘interstate commerce’ means commerce between 
any place in a State and any place in another State or 
between places in the same State through another 
State, whether such commerce moves wholly by motor 
vehicle or partly by motor vehicle and partly by rail, 
express, or water. 
Id. at 661 (citations omitted). 
 
¶13 The travel of the La Crosse Queen is distinguishable 
from that of the carriers in Cornell Steamboat and Central 
Greyhound Lines.  In this case, the purpose of the excursions on 
the La Crosse Queen was recreation and entertainment; it was not 
intended by anybody to serve as transportation.  Additionally, 
the voyages of the La Crosse Queen were not from one point in 
Wisconsin to another place in Minnesota, or even from one place 
in Wisconsin to another place in Wisconsin.  Instead, the 
excursions on the La Crosse Queen during the years in issue 
started and finished at the same dock in the same city in the 
same state.  Such a travel pattern is not within the purview of 
the definition of interstate commerce established in Central 
Greyhound Lines.   
 
¶14 The taxpayer and the court of appeals also rely on two 
Wisconsin cases in support of the argument that the La Crosse 
Queen was engaged in interstate commerce during the years in 
issue.  Town of LaPointe v. Madeline Island Ferry Line, Inc., 
179 Wis. 2d 726, 508 N.W.2d 440 (Ct. App. 1993); Washington 
Island Ferry Line, Inc. v. Dept. of Revenue, Wisconsin Tax 
Appeals Commission, Nos. 91-S-126, 91-S-385 (March 16, 1993), 
aff'd, Wisconsin Tax Reports, CCH ¶ 400-029 (Dane County Cir. 
Ct., December 4, 1993).  In each of these cases, the respective 
courts held that the ferry was engaged in interstate commerce 
 
 
No.  95-2754 
 
 
8 
even though it traveled between two points in the same state, 
Wisconsin.  However, the service of each ferry was “an absolute 
necessity 
because 
an interstate vehicular 
traveler 
cannot 
complete a journey to or from the island without taking the 
Ferry.”  Madeline Island Ferry, 179 Wis. 2d at 738.  In each 
case, the ferry had contracts with the United States Postal 
Service, United Parcel Service (UPS), and Federal Express.  Each 
ferry also served as the sole means of transportation for cars, 
buses, cargo, and people between the mainland and the island.  
In each case, the ferry was a necessary link in completing the 
chain of interstate commerce.  See id. at 729.  
 
¶15 The activity of the La Crosse Queen can be readily 
distinguished from that involved in these other Wisconsin cases. 
 First and foremost, the purpose of the La Crosse Queen’s 
excursions is different from that of the Madeline Island Ferry 
and the Washington Island Ferry.  The movement of the La Crosse 
Queen 
in 
interstate 
waters 
is 
not 
for 
the 
purpose 
of 
facilitating commerce among the States.  Passengers embark on 
the La Crosse Queen for entertainment and recreation, not for 
transportation from one point to another.  Further, the voyages 
of the La Crosse Queen do not constitute a necessary link for 
the completion of an interstate journey.  The La Crosse Queen’s 
journey ends where it begins, with no stops in between.  Her 
voyages do not constitute interstate commerce.   
¶16 The activities of the La Crosse Queen are best 
compared to those of the taxicabs in the case of United States 
v. Yellow Cab Co., 332 U.S. 218 (1947), overruled on other 
grounds by Copperweld Corp. v. Independence Tube Corp., 467 U.S. 
 
 
No.  95-2754 
 
 
9 
752 (1984).   Yellow Cab involved an action under the Sherman 
Anti-Trust Act by the United States against Yellow Cab and 
others for relief against an alleged monopoly conspiracy.  In 
discussing the theory that interstate commerce may have been 
involved when taxicabs in Chicago were used to transport people 
and luggage to and from railroad stations, the Court stated as 
follows: 
 
We hold, however, that such transportation is too 
unrelated to interstate commerce to constitute a part 
thereof . . . .  [I]n transporting passengers and 
their luggage to and from Chicago railroad stations . 
. . their service is confined to transportation 
‘between any two points within the corporate limits of 
the City.’ 
Id. at 230-231.  The Court proceeds to explain that “[I]n short, 
their relationship to interstate transit is only casual and 
incidental.”  Id. at 231.   
 
¶17 If the taxicabs described above were not engaged in 
interstate commerce, then certainly the activities of the 
La Crosse Queen do not constitute interstate commerce.  Like the 
cabs, the service of the La Crosse Queen is confined to only one 
city, and not even to two separate points within that same city. 
 The relationship of the La Crosse Queen to interstate commerce 
is, at best, “casual and incidental.”  The excursions on the 
La Crosse Queen are not a necessary link in the interstate 
travels of her passengers.      
¶18 In order for an activity to qualify as interstate 
commerce, there must not only be interstate movement but also 
interstate business.  There was none here involved.  See Mayor 
of Vicksburg v. Streckfus Steamers, 150 So. 215, 218 (Miss. 
1933).  See also Meyer v. St. Louis County, 602 S.W.2d 728, 738 
 
 
No.  95-2754 
 
 
10
(Mo. App. 1980).  The taxpayer's boat is not involved in the 
transfer of any goods, money, or people from Wisconsin to any 
other state.  The simple fact that persons from other states 
take excursions on the La Crosse Queen does not result in those 
persons being involved in the stream of interstate commerce.  
The voyages of the passengers start and finish in the same 
place.  While this may be considered “interstate travel,” it is 
not sufficient to rise to the level of “interstate commerce.”   
 
¶19 Because we find that the La Crosse Queen was not 
engaged in interstate commerce during the years in issue, we 
hold that La Crosse Queen, Inc., was not entitled to the tax 
exemption provided pursuant to Wis. Stat. § 77.54(13).  Since we 
have determined that the La Crosse Queen is not involved in 
interstate commerce, it is unnecessary for us to discuss whether 
the vessel is "primarily" engaged in interstate commerce.   
 
By the Court.—The decision of the court of appeals is 
reversed.   
 
 
 
No. 95-2754.ssa 
 
1 
¶20 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (dissenting). 
Although the majority's conclusion that the lease payments for 
the use of the La Crosse Queen are taxable under the Wisconsin 
sales tax may ultimately be correct, I dissent because I 
conclude, as did the court of appeals, that the cause must be 
remanded to the tax appeals commission.  
¶21 I would, however, state the issue on remand in a 
different fashion than did the court of appeals. I conclude that 
whether the La Crosse Queen was primarily engaged in interstate 
commerce within the meaning of Wis. Stat. § 77.54(13)(1989-90)
3 
requires interpretation of the Commerce Clause of the federal 
Constitution. U.S. Const. art. I, § 8, cl. 3. Because I believe 
that the parties should be afforded an opportunity to brief this 
issue, I would remand the cause to the circuit court for remand 
to the tax appeals commission to determine whether the Commerce 
Clause, and therefore § 77.54(13), requires that any portion of 
the payments for the lease of the La Crosse Queen be exempt from 
the sales tax imposed.  
I. 
¶22 The issue presented is whether § 77.54(13) exempts 
from sales tax the payments made by Riverboats America to La 
Crosse Queen, Inc., for the lease of the La Crosse Queen. 
Section 77.54 provides: 
 
                     
3 All further statutory references are to the 1989-90 
volumes unless otherwise indicated. 
 
 
No. 95-2754.ssa 
 
2 
77.54 General exemptions. There are exempted from the 
taxes imposed by this subchapter [relating to general 
sales and use tax]: 
 
 . . . .  
 
(13) The gross receipts from the sales of and the 
storage, use or other consumption in this state of 
commercial vessels and barges of 50-ton burden or over 
primarily engaged in interstate or foreign commerce or 
commercial fishing, and the accessories, attachments, 
parts and fuel therefor.  
(Emphasis added.) The parties' sole dispute is whether, during 
the tax periods in question, the La Crosse Queen was "primarily 
engaged in interstate . . . commerce."
4 The terms "interstate 
commerce" and "primarily" are not defined in the statutes.  
¶23 The parties, the majority opinion, the circuit court, 
the court of appeals and the tax appeals commission construe the 
phrase "interstate commerce" to be consistent with the meaning 
of the phrase "commerce . . . among the several States" in the 
Commerce Clause of the federal Constitution. U.S. Const. art I, 
§ 8, cl. 3. I see no reason to believe the legislature intended 
otherwise and I follow this approach.  
¶24 The meaning of the term "primarily" as used in this 
statute was not reached below and is a question of first 
impression. The court of appeals remanded the cause to the 
circuit court for remand to the tax appeals commission for 
further proceedings to determine whether the La Crosse Queen was 
"primarily" engaged in interstate commerce.  
                     
4 The taxpayer does not contest the propriety of applying 
the sales tax to payments on the lease of the La Crosse Queen on 
grounds other than the § 77.54(13) exemption. 
 
 
No. 95-2754.ssa 
 
3 
¶25 I conclude that the entire statutory phrase "primarily 
engaged in interstate or foreign commerce" takes its meaning 
from 
the 
Commerce 
Clause. 
The 
legislature 
intended 
that 
§ 77.54(13) exempt from taxation only those activities which the 
Commerce Clause prohibits the state from taxing.  
¶26 I address three questions: whether the operation of 
the La Crosse Queen was an interstate activity; if so, whether 
that activity was commerce; and, if so, whether the La Crosse 
Queen was primarily engaged in that interstate commerce.  
¶27 Although a determination of whether an activity is 
interstate commerce is not ordinarily treated as separate 
inquiries about what is interstate activity and what is 
commerce, I will follow this approach because it seems to be the 
approach of the parties, the tax appeals commission, the circuit 
court and the majority opinion. 
II. 
¶28 I first inquire whether the operations of the La 
Crosse Queen were interstate activities.  
¶29 The La Crosse Queen was leased to provide recreational 
excursion voyages of varying length embarking from and returning 
to La Crosse, Wisconsin. It made no stops during its journeys. 
It did, however, travel for approximately half of each voyage in 
the state of Minnesota. The State does not dispute that the La 
Crosse Queen "crosse[d] over into Minnesota waters," Brief for 
State at 6, and traveled on one leg of each journey on the 
Minnesota side of the Mississippi river. I think this fact is 
 
 
No. 95-2754.ssa 
 
4 
enough to demonstrate that the operations of the La Crosse Queen 
were interstate activities.  
¶30 The majority relies on a single authority, also the 
sole authority offered by the State, for the proposition that 
boats which "might sail over soil belonging to [Minnesota] in 
passing between two [Wisconsin] points," are not involved in 
interstate commerce. Cincinnati, Portsmouth, Big Sandy and 
Pomeroy Packet Co. v. Bay, 200 U.S. 179, 183 (1906); Majority 
op. at 5-6; Brief for State at 6-7. In Cincinnati, the Court was 
called 
upon 
to 
determine 
whether 
rate-setting 
and 
non-
interference provisions in a contract were antitrust violations 
under the Sherman Act. The parties to the contract operated 
freight and passenger boats which traveled between two Ohio 
ports through the waters of but without landing in Kentucky. The 
threshold question was whether the subject of the contract 
involved interstate commerce such that it was within reach of 
the Sherman Act.  
¶31 In the paragraph succeeding the one from which the 
majority draws its quotation, the Court concluded that it would 
be unwise to assume that the commerce at issue was not 
interstate commerce: "We will suppose then that the contract 
does not leave commerce among the States untouched." Cincinnati, 
200 U.S. at 184. Cincinnati, at a minimum, left open the 
question whether a boat which embarks from one state and travels 
through the waters of another to reach a point in the original 
state is engaged in interstate activity. 
 
 
No. 95-2754.ssa 
 
5 
¶32 In Cornell Steamboat Co. v. United States, 321 U.S. 
634 (1944), the Court answered the question arguably left 
unanswered in Cincinnati. Cornell operated tugboats which moved 
barges from one port in New York to a different port in New York 
by way of New Jersey as well as New York waters. Although not 
stopping in New Jersey or transferring goods or people for 
deposit in New Jersey, the Court held that this activity was 
interstate commerce subject to regulation under the Interstate 
Commerce Act. The Court found it sufficient that "[w]hile moving 
on New Jersey waters, Cornell's vessels are not at that time at 
'a place' in New York. Certain of its towing activities 
therefore actually move vessels from places in New York to 
places in New Jersey and thence back to places in New York." 
Cornell Steamboat, 321 U.S. at 638-39.  
¶33 Four years later the Court held that passenger buses 
traveling between points in the same state through other states 
are engaged in interstate commerce. Central Greyhound Lines, 
Inc. v. Mealey, 334 U.S. 653 (1948) (unapportioned state tax on 
bus company's gross receipts for such trips violates Commerce 
Clause). The Court stated: "It is too late in the day to deny 
that transportation which leaves a State and enters another 
State is 
'Commerce . . . among 
the 
several 
States' 
simply 
because the points from and to are in the same State." Id. at 
655-56 (citation omitted). 
¶34 The State contends that the rule set forth in these 
cases does not apply to the La Crosse Queen's journeys. "[T]hese 
cases require movement between two separate points. In the 
 
 
No. 95-2754.ssa 
 
6 
instant case, there was no such movement." Brief for State at 
10. The State properly characterizes the facts of the cases but 
I discern no intent of the Court to limit its holding to 
movement from one place to another in the state.  
¶35 Other courts have applied the rule of these cases to 
excursions embarking from and returning to the same port after 
moving across another state. Under circumstances similar to the 
present case, the Supreme Court of Missouri has said: 
 
"Of course we are dealing here with 'interstate 
commerce'." [Central Greyhound, 334 U.S.] at 661.  
 
The transportation of passengers in this case by boat 
on a boundary river in a continuous non-stop journey 
from and to the same point in Missouri during which 
the boat crosses the boundary line into and traverses 
waters of Illinois is interstate commerce. [citing 
Cornell Steamboat and Central Greyhound] To say that 
this transportation is confined to Missouri is to 
ignore a fact; to say that this commerce is not 
interstate would be to indulge in pure fiction. 
City of St. Louis v. Streckfus, 505 S.W.2d 70, 73-74 (Mo. 1974).  
¶36 While the majority opinion in the present case is 
arguably 
ambiguous, 
I 
read 
it 
as 
accepting 
what 
seems 
indisputable 
in 
light 
of 
Cornell 
Steamboat 
and 
Central 
Greyhound, that the operations of the La Crosse Queen may be 
considered interstate activities. Majority op. at 10. 
 
 
No. 95-2754.ssa 
 
7 
¶37 Because the La Crosse Queen traveled through Minnesota 
waters for approximately half of each voyage, I conclude that 
the La Crosse Queen was engaged in an interstate activity.
5 
III. 
¶38 I now turn to whether the interstate activity of the 
La Crosse Queen was commerce. The majority opinion concludes 
that because the purpose of the interstate trips was "recreation 
and entertainment" and not "transportation from one point to 
another" or "transfer of goods, money, or people," Majority op. 
at 7, 8, 10, the activities of the La Crosse Queen were not 
commerce.  
¶39 The majority opinion states that "[i]n order for an 
activity to qualify as interstate commerce, there must not only 
be interstate movement but also interstate business." Majority 
op. at 10. I agree. In contrast, however, I conclude that 
                     
5 The taxpayer points to Town of La Pointe v. Madeline 
Island Ferry Line, Inc., 179 Wis. 2d 726, 508 N.W.2d 440 (Ct. 
App. 1993), and Washington Island Ferry Line, Inc. v. Department 
of Revenue, No. 93 CV 1442 (Circuit Court for Dane County, Dec. 
4, 1993) to demonstrate that its activity was interstate. These 
cases rely on United States v. Yellow Cab Co., 332 U.S. 218 
(1947), overruled on other grounds by Copperweld Corp. v. 
Independence Tube Corp., 467 U.S. 752 (1984). I agree with the 
majority opinion that Town of La Pointe and Washington Island 
Ferry Line are inapposite. These cases and Yellow Cab stand for 
the proposition that transportation of persons or goods solely 
within one state may be interstate commerce when the intrastate 
activity is an integral step in interstate movement and its 
relationship to interstate transit is not only casual and 
incidental. Yellow Cab, 332 U.S. at 230-33. For the same 
reasons, however, I am perplexed by the majority opinion's 
proposition that Yellow Cab provides the best comparison with 
the facts of the present case. Majority op. at 9. 
 
 
No. 95-2754.ssa 
 
8 
operating an excursion boat for hire with the sole object of 
providing recreation or entertainment to its customers is a 
business 
and, 
as 
such, 
is 
commerce. 
If 
recreation 
and 
entertainment were not commerce, Congress might be powerless to 
regulate 
pleasure 
vessels 
which 
traverse 
interstate 
or 
international waterways.
6 
¶40 The term "commerce" for purposes of the Commerce 
Clause has been interpreted broadly to include recreational 
activities. As one court has put it: "Since pleasure and 
recreational activities are a vital part of the nation's 
commerce, the Commerce Clause, U.S. Const. Art. I, s 8, would 
reach pleasure vessels." United States v. LaBrecque, 419 F. 
Supp. 430, 436 n.7 (D.N.J. 1976).  
¶41 The 
United 
States 
Supreme 
Court 
has 
found 
transportation of persons for recreational purposes to be 
commerce under the Commerce Clause. In Bob-Lo Excursion Co. v. 
Michigan, 333 U.S. 28 (1948), the boat operator transported 
"patrons of the island's attractions from Detroit to Bois Blanc 
[in Canada] and return. The vessels engage in no other business 
on these trips. No freight, mail or express is carried; the only 
passengers 
are 
the 
patrons 
bent 
on 
pleasure. . . . No 
intermediate stops are made on these excursions." Id. at 29-30. 
The Court concluded: "There can be no doubt that appellant's 
                     
6 Congress would be powerless to regulate a multitude of 
other forms of interstate activity, such as sightseeing flights 
which cross the Grand Canyon, interstate balloon excursions, 
traveling circuses, and sport fishing boats in interstate and 
international waters.  
 
 
No. 95-2754.ssa 
 
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transportation of its patrons is foreign commerce within the 
scope of Art. I, § 8." Id. at 34. 
¶42 I therefore conclude that the activities of the La 
Crosse Queen were commerce.  
IV. 
¶43 I next consider the meaning of the word "primarily" in 
the context of the statutory language exempting a vessel 
"primarily engaged in interstate or foreign commerce." The word 
"primarily" is not defined in the statutes. 
¶44 The language of § 77.54(13) has remained unchanged 
since it was first enacted in 1969 as part of the General Sales 
and Use Tax. Section 260, Ch. 154, Laws of 1969. The drafting 
record is silent as to the intent of the drafters of 
§ 77.54(13).  
¶45 Two doctrines guide the court's interpretation of tax 
statutes in this context. First, it is well established that tax 
exemption statutes are matters of legislative grace and are to 
be construed narrowly against the granting of an exemption. 
Ramrod, Inc. v. Department of Revenue, 64 Wis. 2d 499, 504, 219 
N.W.2d 604 (1974); Comet Co. v. Department of Taxation, 243 Wis. 
117, 123, 9 N.W.2d 620 (1943). The legislature, therefore, 
drafts exemption statutes with the expectation that courts will 
resolve doubts against the granting of an exemption.  
¶46 Second, 
in 
the 
absence 
of 
persuasive 
contrary 
indication, tax statutes may be presumed to reach as broadly as 
constitutionally permissible. To this end, the court has 
construed other tax provisions which relate to interstate 
 
 
No. 95-2754.ssa 
 
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commerce by reference to Commerce Clause standards. Consolidated 
Freightways Corp. of Delaware v. Department of Revenue, 164 Wis. 
2d 764, 772-76, 477 N.W.2d 44 (1991) (discussing cases). In 
Consolidated Freightways, the court determined whether the 
operations of an interstate motor carrier were subject to tax 
under Wis. Stat. 
§ 71.07(2)(e)(1985-86) 
by 
construing the 
statute as coextensive with Commerce Clause limits. The court 
explained that it "has traditionally looked to the Commerce 
Clause to ascertain the limits upon Wisconsin's tax jurisdiction 
over interstate businesses." Id. at 773.
7  
¶47 Applying 
these 
doctrines 
to 
the 
language 
of 
§ 77.54(13) I conclude that the legislature, by exempting 
vessels primarily engaged in interstate commerce, intended to 
tax to the full extent permitted by the Commerce Clause.  
¶48 Having determined that the La Crosse Queen was engaged 
in interstate commerce and that § 77.54(13) exempts only those 
activities constitutionally immunized from taxation, the next 
step is to ascertain whether the Commerce Clause requires that 
any portion of the payments for the lease of the La Crosse Queen 
be exempt from the sales tax imposed.  
¶49 The modern test for the propriety of a tax on 
interstate commerce was first set forth in Complete Auto 
Transit, Inc. v. Brady, 430 U.S. 274 (1977). In that case the 
                     
7 See also K-S Pharmacies, Inc. v. American Home Products 
Corp., 962 F.2d 728, 730 (7th Cir. 1992) ("When dealing with 
laws having extraterritorial potential, such as tax legislation, 
[the Supreme Court of Wisconsin] has endeavored to conform the 
legislation to limits on state power."). 
 
 
No. 95-2754.ssa 
 
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Court, focusing on the effect rather than the language of the 
tax, applied a four-part test. A state tax will survive a 
Commerce Clause challenge only if it "is applied to an activity 
with a substantial nexus with the taxing State, is fairly 
apportioned, does not discriminate against interstate commerce, 
and is fairly related to the services provided by the State." 
Id. at 279. 
¶50 The Court has recently applied the Complete Auto test 
to uphold a state's sales tax on the full price of a bus ticket 
for travel from the taxing state to another state. Oklahoma Tax 
Comm'n v. Jefferson Lines, Inc., 115 S. Ct. 1331 (1995) 
(distinguishing Central Greyhound, 334 U.S. 653).  
¶51 The parties have not briefed this issue and the tax 
appeals commission, circuit court and court of appeals have not 
ruled on it. Although at first blush it may appear that under 
Oklahoma Tax no apportionment is required, I conclude that this 
issue should not be decided without giving the parties an 
opportunity for briefing.  
¶52 Therefore, I would affirm the decision of the court of 
appeals to hold that the cause should be remanded to the circuit 
court for remand to the tax appeals commission. I would have the 
tax appeals commission determine whether the Commerce Clause 
requires that any portion of the payments for the lease of the 
La Crosse Queen be exempt from the sales tax imposed.  
¶53 For the reasons set forth, I dissent. 
¶54 I am authorized to state that Justice Ann Walsh 
Bradley joins this opinion. 
 
 
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