Case Title: Lakefront Lines, Inc. v. Tracy

Citation: 1996-Ohio-50

Docket Number: 19951216

State: ohio

Court: Ohio Supreme Court

Date: 1996-06-26T00:00:00Z

Document:
Lakefront Lines, Inc., Appellant, v. Tracy, Tax Commr., Appellee. 
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[Cite as Lakefront Lines, Inc. v. Tracy (1996), _____ Ohio St.3d _____.] 
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Taxation -- Motor vehicle fuel tax -- R.C. 5735.14 does not exempt from 
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taxation fuel used in operating a motor vehicle’s air conditioning 
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equipment or in idling the vehicle. 
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(No. 95-1216 -- Submitted February 1, 1996 -- Decided June 26, 1996.) 
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Appeal from the Board of Tax Appeals, Nos. 93-H-1125, 93-H-1126, 94-
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H-69, 94-H-70, 94-H-71 and 94-H-72. 
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Lakefront Lines, Inc., appellant, carries passengers in its charter coach 
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business.  The engine that powers the coach bus also runs an air conditioning 
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compressor that cools the passenger compartment for the comfort of Lakefront’s 
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passengers.  The compressor is mounted near the engine compartment and is 
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driven by two high-horsepower belts that take power from the binary cylinder or 
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directly from the crankshaft of the coach engine.  The air conditioning 
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equipment also acts as a defroster because it dehumidifies the vehicle in winter 
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or summer. 
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Lakefront purchases fuel to run the buses.  Operating the air conditioning 
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equipment increases fuel consumption for the bus.  Lakefront also consumes 
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fuel while running its buses at idle.  The buses spend considerable time off the 
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road while its passengers are out of the buses visiting tour sites.  Lakefront idles 
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the engines to operate the air conditioning equipment to maintain a comfortable 
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temperature for the return of the passengers. 
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R.C. 5735.05 imposed an excise tax on motor vehicle fuel.  R.C. 5735.14 
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allows reimbursement to a person who uses fuel on which the tax has been paid 
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for “any purpose other than the propulsion of motor vehicles upon highways” 
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within Ohio.  Lakefront claims that the fuel consumed in operating the air 
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conditioning equipment and idling the buses was not for the propulsion of the 
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buses upon public highways.  Accordingly, it applied for refunds of motor 
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vehicle fuel tax under R.C. 5735.14.  The commissioner denied the refunds, 
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ruling that operating air conditioning for the comfort of a motor vehicle’s 
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passengers was part of operating the motor vehicle.  The commissioner did not 
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address the claims for refunds for idling the buses.  Lakefront appealed the 
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commissioner’s denials to the Board of Tax Appeals (“BTA”). 
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At the BTA, Lakefront presented tests and a study attempting to establish 
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the amount of fuel consumed under typical conditions in operating air 
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conditioning equipment and idling its buses.  Lakefront did not present any 
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evidence measuring how much fuel it actually consumed in these two activities 
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during the refund period. 
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Nevertheless, the BTA affirmed the commissioner’s order.  First, the 
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BTA ruled that Lakefront had not raised the issue of the exemption of “idling 
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time” in its applications for refund or in its appeals to the BTA.  Thus, the BTA 
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declined jurisdiction over this issue.  
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Without deciding whether Lakefront could claim exemption for the fuel 
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consumed in air conditioning the buses, the BTA found that Lakefront had not 
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met its burden of proof.  The BTA questioned the tests and study Lakefront 
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presented.  It concluded that the tests and study only approximated the fuel 
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consumed and did not accurately measure it. 
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The cause is now before this court upon an appeal as of right. 
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Leonard A. Carlson, for appellant. 
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Betty D. Montgomery, Attorney General, and Janyce C. Katz, Assistant 
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Attorney Generaly, for appellee. 
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Per Curiam.  We hold that Lakefront specified all the errors it claims, but 
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we rule that motor fuel used for air conditioning and idle time is used for the 
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propulsion of or driving motor vehicles upon public highways.  Thus, we hold 
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that R.C. 5735.14 does not exempt the fuel consumed for these uses from the 
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motor fuel tax. 
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First, as to raising the issue of idling consumption, Lakefront supported 
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some of its applications for refund with calculations that included refund 
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amounts for fuel used while the buses were idling.  Furthermore, in paragraphs 
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11 and 12 of its notices of appeal to the BTA, Lakefront claims that the 
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commissioner failed to distinguish between fuel used to propel the motor 
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vehicle and fuel used to operate the motor vehicle while stationary.  Lakefront 
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thus set forth its claim for refund for idling in its applications and specified the 
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commissioner’s denial of this as error under R.C. 5717.02. 
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Next, as to the merits of the exemption, R.C. 5735.05(A) levies “an 
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excise tax * * * on all dealers in motor vehicle fuel upon the use, distribution, or 
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sale within the state by them of motor vehicle fuel” to, among other purposes, 
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“distribute equitably among those persons using the privilege of driving motor 
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vehicles upon such highways and streets the costs of maintaining and repairing 
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them.” A user of motor vehicle fuel may seek a refund of the tax paid under 
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R.C. 5735.14: 
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“Any person who uses any motor vehicle fuel, on which the tax imposed 
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by section 5735.05 of the Revised Code has been paid, for * * * any purpose 
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other than the propulsion of motor vehicles upon highways * * * of this state, 
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shall be reimbursed in the amount of the tax so paid on such motor vehicle fuel 
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as provided in this section * * *.” 
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Lakefront relies for support on Shafer v. Glander (1950), 153 Ohio St. 
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483, 41 O.O. 490, 92 N.E.2d 601.  In Shafer, the court exempted fuel consumed 
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by highway builders to propel vehicles used to build and repair highways.  The 
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vehicles did not convey freight or passengers on highways.  The Shafer court, in 
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paragraph two of the syllabus, stated:   
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“The use of diesel oil is exempt from the excise tax except where such oil 
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is used for the purpose of generating power for the driving or propulsion of 
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motor vehicles on the public highways.”  (Emphasis added.) 
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After declaring this refund provision to be an exemption, the Shafer court 
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then applied an inappropriate principle in analyzing the exemption.  It declared 
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that “[a]ny ambiguity in a law imposing a tax shall be resolved in favor of the 
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taxpayer.”  Id., paragraph three of the syllabus. 
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However, we apply this interpretive principle when an ambiguous statute 
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defines a subject of taxation.  Zalud Oldsmobile, Inc. v. Limbach (1994), 68 
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Ohio St.3d 516, 628 N.E. 2d 1382.  For statutes that exempt items from 
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taxation, the type of statute at issue in Shafer  and here, we strictly apply the 
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statute against the exemption.  Vought Industries, Inc. v. Tracy (1995), 72 Ohio 
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St.3d 261, 264, 648 N.E. 2d 1364, 1366.  “[T]axation is the rule, and exemption 
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is the exception.  Since the reduction depends on legislative grace, the statute 
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must clearly express the exemption, Cleveland v. Bd. of Tax Appeals (1950), 
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153 Ohio St. 97, 99-100, 41 O.O. 176, 178, 91 N.E.2d 480, 482, paragraph one 
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of the syllabus, and a taxpayer must show his entitlement to it, Natl. Tube Co. v. 
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Glander (1952), 157 Ohio St. 407, 47 O.O. 313, 105 N.E.2d 648, paragraph two 
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of the syllabus.”  Ares, Inc. v. Limbach (1990), 51 Ohio St.3d 102, 104, 554 
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N.E.2d 1310, 1312.  See, also, Kroger Co. v. Lindley (1978), 56 Ohio St.2d 138, 
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141, 10 O.O.3d, 319, 320, 382 N.E.2d 1359, 1361, which also calls the R.C. 
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5735.14 refund an exemption from the fuel excise tax.  Since R.C. 5735.14 
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exempts fuel from the fuel excise tax, we strictly apply its terms. 
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The Shafer court concluded that the General Assembly, in levying this 
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tax on the use of motor fuel, intended “to distribute the cost of road construction 
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and repair equitably among those persons using the privilege of driving motor 
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vehicles upon such highways.”  (Emphasis sic.)  153 Ohio St. at 487, 41 O.O. at 
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492, 92 N.E. 2d at 603.  The Shafer court considered the definitions of “drive” 
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and “propulsion.”  It did not regard these terms as “words of art” but words “to 
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be given their generally understood meanings.”  153 Ohio St. at 489, 41 O.O. at 
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493, 92 N.E.2d at 604. 
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While both terms connote, as the Shafer court stated, “forward 
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movement,” id., these terms have more comprehensive meanings.  Webster’s 
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Third New International Dictionary of the English Language (1986) 1820, 
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defines “propulsion” as  “2:  the action of driving forward or ahead: action or 
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process of propelling.” 
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This same dictionary defines "propel" as “2:  to impel forward or onward: 
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push ahead by imparting motion:  give motive power to: drive onward.” 
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Of particular interest to us is this dictionary’s definition, id. at 1817, of 
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“drive”: “vt * * * 2 * * * c:  to operate the controls of (a locomotive) or to 
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operate the mechanism and controls and direct the course of (as a motor vehicle 
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or speedboat) * * * vi * * * 5 * * * b:  to operate and steer a motor vehicle.”  
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(Emphasis added.) 
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Thus, these definitions mean more than providing forward motion to a 
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vehicle.  They mean to operate and steer a motor vehicle.  Included in operating 
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the buses at issue is running their air conditioning equipment and idling the 
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buses for the comfort of the passengers.  Therefore, we hold that R.C. 5735.14 
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does not clearly state an exemption from the motor fuel tax for fuel used in 
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operating a motor vehicles’s air conditioning equipment or in idling the vehicle. 
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Accordingly, we affirm the decision of the BTA. 
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Decision affirmed. 
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MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, PFEIFER AND COOK, JJ., 
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concur. 
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WRIGHT, J., not participating. 
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