Case Title: Eagle Rental, Inc. v. State Tax Assessor

Citation: 

Docket Number: 

State: maine

Court: Maine Supreme Court

Date: 2013-05-21T00:00:00Z

Document:
MAINE SUPREME JUDICIAL COURT 
 
 
 
     
    Reporter of Decisions 
Decision: 
2013 ME 48 
Docket: 
BCD-12-254 
Argued: 
April 9, 2013 
Decided: 
May 21, 2013 
 
Panel: 
SAUFLEY, C.J., and ALEXANDER, SILVER, MEAD, and GORMAN, JJ. 
 
 
EAGLE RENTAL, INC. 
 
v. 
 
STATE TAX ASSESSOR 
 
 
MEAD, J. 
 
[¶1]  Eagle Rental appeals from a judgment entered in the Business and 
Consumer Docket (Nivison, J.) declaring that the company owes use tax on four 
Cadillac Escalades.  Eagle Rental argues that it does not owe use tax because 
Daniel Bickford, the company’s sole shareholder, and his wife operated the 
Escalades with dealer plates for their personal use in accordance with Maine’s 
dealer plate statute, 29-A M.R.S. § 1002(1)(B) (2012).  Specifically, the company 
contends that the dealer plate statute, which permits “personal use” of vehicles in a 
company’s inventory bearing dealer plates, see id., prevents the imposition of use 
tax when inventory has been withdrawn for the “retailer’s own use,” 36 M.R.S. 
§ 1861 (2012).  We conclude that Eagle Rental owes use tax on the Escalades and 
affirm the judgment. 
 
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I.  BACKGROUND 
 
[¶2]  The facts are established by the parties’ extensive stipulation of facts 
and the court’s findings of fact that are supported by competent evidence in the 
record. 
[¶3]  Eagle Rental is a Maine corporation with its principal place of business 
in Waterville.  Daniel Bickford is the company’s president and his wife is the vice 
president and treasurer.  Eagle Rental rents and sells for commercial and consumer 
use light and heavy construction and home improvement equipment, such as 
wallpaper steamers, carpet cleaners, water trucks, dump trucks, excavators, and 
boom lifts.  Eagle Rental is also a licensed used car dealer, which allows it to sell 
dump trucks and other vehicles.  Under that license, the company accepts used 
vehicles in trade.  Between 2004 and 2011, Eagle Rental sold fewer than ten 
passenger cars received in trade and averaged between three and five passenger 
cars in its inventory at any one time, including the disputed Cadillac Escalades. 
[¶4]  Beginning in 2003, Eagle Rental began purchasing Escalades and 
trading them in to dealers for newer models.  The company purchased its first 
Escalade, a 2003 vehicle with 6,763 miles, in 2003.1  This initiated the first series 
of vehicle transactions.  In March 2007, the company traded in the 2003 Escalade 
                                         
1  Although the 2003 Escalade was not assessed any use tax, the parties stipulated that the Bickfords’ 
use of the 2003 Escalade was consistent with their use of the four Escalades at issue. 
 
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when it had 54,650 miles for a used 2005 Escalade.  The 2005 Escalade had 12,278 
miles and was purchased for $38,500.  In September 2007, when the vehicle had 
21,075 miles, Eagle Rental traded it in for a used 2007 Escalade, which had 12,850 
miles and was purchased for $52,500.  It was sold in 2010, when it had 53,345 
miles.  At that time, Eagle Rental purchased a Cadillac STS for approximately 
$42,000. 
[¶5]  The second series of Escalade transactions began in 2005, when Eagle 
Rental purchased a 2004 Escalade with 12,225 miles for $40,500.  In 2007, it 
traded in that Escalade for a new 2007 Escalade with 10 miles that was purchased 
for $57,498.  As of November 2009, that Escalade had 42,123 miles.  None of the 
Escalades were sold at retail. 
 
[¶6]  The Bickfords drive Escalades because, in their opinion, these vehicles 
are favored by many of their customers in the construction industry.  The first two 
Escalades were not a popular color, according to Bickford, so he traded them in.  
Bickford testified that he has been unable to sell his Escalade inventory for the last 
several years because of the economy. 
 
[¶7]  The Bickfords live about two miles from Eagle Rental, and they drive 
the Escalades home most nights.  Bickford testified that they drive the Escalades 
regularly for both business and personal use, including going to the grocery store, 
the movies, out to dinner, commuting, and attending their children’s school and 
 
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sporting events.  He drove the Escalades to sales calls, auctions, and construction 
sites in Maine, Massachusetts, Connecticut, and New Hampshire.  The Bickfords 
do not own any passenger vehicles in their own names, and Eagle Rental paid for 
the fuel, maintenance, and insurance on the Escalades. 
[¶8]  Bickford testified that he intended to resell the Escalades.  He said that 
he had received some offers on the Escalades and took the cars on test drives, but 
he kept no records of these sales-related activities.  His primary method of 
advertising the Escalades was through word of mouth in a network of people, such 
as equipment sellers and used car dealers, who communicate regularly about what 
they have for sale.  Since 2005, the Escalades have been included on a “line card,” 
which is a list of the inventory featured for sale, that he posts in his Waterville 
showroom.  The 2007 Escalades were also posted for sale on the company’s 
website, but no pictures were provided.  Bickford testified that there were no 
pictures because he did not know how to add pictures to the website.  The 
Escalades never had “for sale” signs on them.  Although Bickford testified that he 
kept the required used car disclosure forms on the Escalades, see 10 M.R.S. 
§ 1475(1) (2012), a tax auditor did not see them when she observed the vehicles 
from a close distance. 
[¶9]  The Tax Assessor assessed use taxes on the 2004, 2005, and two 
2007 Cadillac Escalades and upheld the assessment upon the Bickfords’ request for 
 
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reconsideration.  Pursuant to M.R. Civ. P. 80C, Eagle Rental appealed to the 
Superior Court.  The Superior Court transferred the case to the Business and 
Consumer Docket, which affirmed the assessment of use taxes.  Eagle Rental filed 
this timely appeal, challenging both the court’s interpretation of the dealer plate 
and use tax statutes, and the court’s determination that the Escalades were 
withdrawn from inventory. 
II.  STANDARD OF REVIEW 
[¶10]  Eagle Rental has the burden of proof on all factual and legal issues by 
a preponderance of the evidence.  See Gannett Co. v. State Tax Assessor, 
2008 ME 171, ¶ 10, 959 A.2d 741 (citing 36 M.R.S. § 151 (2007)); Town of 
Poland v. Poland Spring Health Inst., Inc., 649 A.2d 1098, 1100 (Me. 1994) 
(holding that the party claiming a tax exemption must prove entitlement to that 
exemption by a preponderance of the evidence); Frank v. Assessors of Skowhegan, 
329 A.2d 167, 172 (Me. 1974).  We review the court’s conclusions of law de novo 
and its findings of fact for clear error.  Gannett Co., 2008 ME 171, ¶ 10, 
959 A.2d 741. 
III.  DISCUSSION 
A. 
Statutory Interpretation 
[¶11]  We begin our discussion by analyzing the plain language of Maine’s 
dealer plate and use tax statutes in order “to effectuate the intent of the 
 
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Legislature.”  Irving Pulp & Paper, Ltd. v. State Tax Assessor, 2005 ME 96, ¶ 8, 
879 A.2d 15 (quotation marks omitted).  To that end, we “consider the language in 
the context of the whole statutory scheme, and construe the statute to avoid absurd, 
illogical, or inconsistent results.”  Id. (citations and quotation marks omitted).  We 
do not find the statutes at issue in this case to be ambiguous, and thus we do not 
consider their legislative history.  See id. (providing that extrinsic indicia of 
legislative intent, such as legislative history, are only examined if we determine 
that a statute is ambiguous). 
[¶12]  Maine’s dealer plate statute is located in Title 29-A, which governs 
motor vehicles.  It restricts the operation of vehicles bearing dealer plates that are 
“owned or controlled by” a dealer to certain uses, and permits a dealer’s personal 
use.  29-A M.R.S. § 1002(1)(B).  The plain language of the statute limits the 
number of dealer plates allowed for personal use: “There may be no more than one 
dealer plate for the personal use of the manufacturer or dealer and one dealer plate 
for the personal use of the immediate family of the dealer.”  Id.; see also 29-A 
M.R.S. § 851(2), (6) (2012) (defining “dealer” and “immediate family”).  It does 
not, as Eagle Rental contends, allow a dealer to devote two vehicles in the dealer’s 
inventory primarily to personal use without paying use tax.  The dealer plate 
statute makes no mention of taxes.  See generally 29-A M.R.S. § 1002. 
 
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[¶13]  Separately, Title 36, governing taxation, provides in relevant part that 
sellers such as Eagle Rental are liable for use tax “[w]hen tangible personal 
property purchased for resale is withdrawn from inventory by the retailer for the 
retailer’s own use.”2  36 M.R.S. § 1861.  There is no express exemption for 
vehicles bearing dealer plates, and “[i]t is a well established law of property 
taxation [that] [t]axation is the rule; exemption from taxation is the exception.”  
Eagle Rental, Inc. v. City of Waterville, 632 A.2d 130, 131 (Me. 1993) (first 
alteration added) (quotation marks omitted). 
[¶14]  Because it is possible to read the statutes so they do not conflict, we 
will read them in harmony with each other.  See Michalowski v. Bd. of Licensure in 
Med., 2012 ME 134, ¶ 12, 58 A.3d 1074.  Read together, the dealer plate and 
taxation statutes provide that dealers and their immediate families may use dealer 
plates on vehicles in a dealer’s inventory for their personal use without being 
subject to use tax until the vehicles to which the plates are attached are withdrawn 
from inventory.  Whether the Escalades at issue are subject to use tax thus turns on 
whether they have been withdrawn from Eagle Rental’s inventory. 
                                         
2  “Use” is defined to include the “exercise in this State of any right or power over tangible personal 
property incident to its ownership, including the derivation of income, whether received in money or in 
the form of other benefits, by a lessor from the rental of tangible personal property located in this State.”  
36 M.R.S. § 1752(21) (2012). 
 
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B. 
Whether the Escalades Were Withdrawn From Inventory 
 
[¶15]  Accordingly, we next consider whether Eagle Rental withdrew the 
Escalades from its inventory.  This is a fact-driven analysis and it is unlikely that a 
single factor would be dispositive; rather, the analysis is based on the totality of 
circumstances in a given case.  Cf. Portland Gas Light Co. v. Johnson, 
244 A.2d 817 (Me. 1968) (undertaking a fact-intensive inquiry to determine 
whether fuel used in a manufacturing process was subject to use tax). 
 
[¶16]  In this case, the court considered appropriate factors in its analysis, 
including the nature of Eagle Rental’s dealership activities, the way it managed the 
Escalades in comparison with its other inventory, how the Escalades were 
advertised, Eagle Rental’s pattern of trading in the Escalades for newer models, the 
number of miles put on the Escalades, and whether the Escalades were ultimately 
sold at retail.  Other factors that might be appropriate to consider in a case like this 
include whether there are “for sale” signs or disclosure statements on the vehicles, 
the length of time the dealer owns the vehicle, where the vehicle is stored, and 
whether the dealer owns his or her own personal passenger vehicle.  The factors 
identified here are neither exhaustive nor exclusive, however, and the analysis 
necessarily depends upon the facts of the particular case. 
 
[¶17]  There is competent evidence in the record to support the court’s 
determination that Eagle Rental withdrew the Escalades from its inventory, 
 
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including that the company did not regularly sell passenger or luxury vehicles, the 
Bickfords had a pattern of trading in the vehicles for newer models every few years 
after devoting the Escalades primarily to personal use and after putting tens of 
thousands of miles on them, the Bickfords did not own passenger vehicles in their 
own names, the company did not sell the Escalades at retail, and these automobiles 
were only passively advertised for sale. 
 
[¶18]  We conclude that Eagle Rental did not meet its burden of proving that 
the Escalades were not withdrawn from inventory.  Accordingly, the trial court 
correctly concluded that they are subject to use tax. 
The entry is: 
 
 
 
 
Judgment affirmed. 
 
 
 
 
 
 
 
 
On the briefs: 
 
William D. Hewitt, Esq., and Catherine R. Connors, Esq., Pierce Atwood LLP, 
Portland, for appellant Eagle Rental 
 
Janet T. Mills, Attorney General, and Gregg D. Bernstein, Asst. Atty. Gen., Office 
of the Attorney General, Augusta, for appellee State Tax Assessor 
 
At oral argument: 
 
William D. Hewitt, Esq., for appellant Eagle Rental 
 
Gregg D. Bernstein, Asst. Atty. Gen., for appellee State Tax Assessor 
 
Business and Consumer Docket docket number AP-10-24 
FOR CLERK REFERENCE ONLY