Title: Inland Nav. Co. v. Chambers

State: oregon

Issuer: Oregon Supreme Court

Document:

Modified September 15, 1954.
Petition for rehearing denied October 13, 1954.
*341 Jay E. Jordan, of Portland, argued the cause for appellants. On the brief were Hickson, Dent & Coblens, of Portland.
Theodore W. de Looze, Assistant Attorney General, argued the cause for respondents. With him on the brief were Robert Y. Thornton, Attorney General, of Salem, Samuel B. Stewart and Howard E. Roos, of Portland.
MODIFIED.
ROSSMAN, J.
This is (1) an appeal by the Inland Navigation Company, The Upper Columbia River Towing Company, and Columbia-Snake River Towing Company from an order of the circuit court; and (2) a cross-appeal from the same order by the three officials of this state who constitute the state tax commission. The three corporations and the three officials are the only parties to this proceeding. To promote convenience, we will speak of the three companies as the taxpayers and of the officials as the commission. The taxpayers own and operate watercraft which engages in interstate commerce upon the Columbia and Willamette rivers. Each of them is a Washington corporation and each maintains its principal office in Vancouver, Washington. The vessels of the taxpayers regularly enter Oregon ports along the Columbia river for commercial purposes. Prior to January 1, 1950, the watercraft of the three taxpayers and of similar water transportation companies were not assessed for taxes. As of *342 January 1, 1951, the commission assessed the operating properties of the three taxpayers. Its action in so doing precipitated this proceeding. Section 110-505, OCLA, as amended by Oregon Laws 1949, ch 414, § 1, subsection 14, rendered it the duty of the commission:
The assessment which was made, pursuant to the duty which we have just noted, eventually led, as we have already indicated, to the institution of the proceeding which is before us. We will now describe the procedure to which the taxpayers resorted to challenge the assessment.
After an assessment had been made of the operating properties of the three taxpayers, each of the latter presented to the commission a petition which stated that (1) the taxpayer is a Washington corporation; (2) the taxpayer is engaged in interstate commerce; (3) the tugs and barges which constituted the subject matter of the challenged assessment entered Oregon only for the purpose of receiving and discharging cargo; (4) the commission "has no authority to assess the property of your petitioners"; and (5) if the commission has power to assess "the authority extends only to assess such proportion of the property of the petitioners as is reasonably allocable to the State of Oregon." Each petition terminated with a prayer that the commission cancel the challenged assessment, or, in the event that it refuse to do so, reduce the amount of the assessment.
*343 After receipt of the three petitions the commission granted the petitioners a hearing June 25, 1951. The petitioners were represented at the hearing, not only by their officers, but also by counsel. According to the orders which the commission entered July 10, 1951, the petitioners submitted to the commission "briefs, arguments and other statistical data." The orders entered in the three cases reduced the valuation of Columbia-Snake River Towing Company, but sustained the valuations of Inland Navigation Company and Upper Columbia River Towing Company.
After the commission had taken the action which we just mentioned, each of the petitioners, on July 24, 1951, filed with the circuit court a notice of appeal which read:
The circuit court consolidated the three causes for the purpose of trial and upon the conclusion of the trial entered its decree. The latter sustained the commission's power to assess the property, but made a modification of the amount of the assessment. May 15, 1953, each of the taxpayers filed notice of appeal to this court.
We call attention to the fact that the taxpayers sought in the circuit court a review of the commission's *344 order by the process of appeal, and did not resort to injunction, prohibition or some other form of remedy.
The taxpayers, that is, the appellants, have presented no assignments of error, but the nature of the contentions which they make is indicated by the following propositions which we quote from their joint briefs:
The findings of fact entered by the circuit court, in referring to the watercraft of each of the taxpayers, says: "The barges, tugs and other vessels are present in Oregon with consistent continuity and not on a temporary basis." The assessment orders of the commission which the taxpayers challenge, after first finding the value of the property of each taxpayer, determine the part of the total which was assessable in Oregon by means of an apportionment basis. The latter employed a percentage ratio derived through comparison of the ton-miles of business done in Oregon with the taxpayer's total ton-miles.
Each of the three taxpayers argues that (1) the tax which has been assessed is, in effect, a toll, and *345 since such is its alleged nature it is invalid by virtue of § 2 of the Congressional enactment which admitted Oregon into the Union (Vol 9, OCLA, pp 71, 72); and (2) the property which has been assessed had no tax situs in this state and, hence, could not be taxed in Oregon. The commission contends that the statutes which authorize appeals to the circuit court from assessment orders entered by the tax commission enable the court to determine nothing except the value of the appellant's property and the share thereof which Oregon may tax. We will now take note of the statutes which govern appeals from orders entered by the commission in instances of the kind before us.
Before beginning our examination of the pertinent statutory provisions which govern appeal we will first take notice of the enactments which prescribe the duties which the commission must perform in the assessment of watercraft of the kind with which this proceeding is concerned.
1, 2. In proceeding we will employ the sections of OCLA as amended, although Oregon Laws 1951, ch 586, repealed the provisions which we are about to quote, and in so doing provided through § 30 thereof, "This act shall be given effect retroactively to include the tax year commencing on, and the assessment of, January 1, 1951." The 1951 enactment became effective August 2, 1951. Notice of appeal in the cases at bar were given July 24, 1951. Although the 1951 statute appears to repeal the preceding legislation, yet sections 2 through 24 thereof are in the main a rewriting of the previous enactments. For example, § 1 of the 1951 measure, in enumerating the repealed sections, says: "In lieu thereof there are enacted sections 2 to 25, inclusive, of this Act." Whether this proceeding is governed by the antecedent legislation or by the 1951 enactment is unimportant *346 in this case, for so far as the latter is concerned the antecedent and 1951 enactments are substantially the same. We shall, however, assume that this case is governed by the appropriate provisions of OCLA as amended. See Newsom v. Greenwood, 4 Or 119, and 82 CJS, Statutes, § 435, p 1010, where it is said:
Section 110-512, OCLA, as amended by Oregon Laws 1941, ch 440, said:
Section 110-513, OCLA, provided:
*347 Section 110-517, OCLA, as amended by Oregon Laws 1941, ch 440, § 15, rendered it the duty of the commission to publish notice
Section 110-519, OCLA, read:
Section 110-520, OCLA, as amended by Oregon Laws 1941, ch 9, § 1, said:
Section 110-521, OCLA, provided that the commission while "sitting for the purpose of reviewing and apportioning the said roll" shall continue its session "until the examination, review, correction, equalization and apportionment of the said roll shall be completed". Section 110-522, OCLA, prescribes the manner in which the commission shall manifest the result of its deliberations.
The above are the parts of our statutes which have relevancy to the issues before us and which prescribe the duties of the commission. It will be observed that the commission is charged with the duty of assessing properties such as those which these appealing taxpayers own. After it has compiled its assessment roll, the commission, through the medium of a published notice, must make announcement that on the second Monday of June it will sit as a board of review and that in the course of its session it will make all needed corrections in the assessment roll and in its apportionment orders. Applications for the reduction or change of assessments and apportionment must be disregarded, as we have seen, unless they are in writing, verified and on file.
We now turn to the provisions of our laws which provide for appeal to the circuit court from the commission's rulings and which prescribe the nature of the relief which the court may grant.
Section 110-524, OCLA, as amended by Oregon Laws 1941, ch 9, § 2, provided:
The foregoing are the statutory provisions which govern the issues before us.
*350 3-6. Due process of law does not demand inexorably that the state make provision that owners may appeal to the courts from assessments entered by the tax commission. If the administrative agency had adequate powers to deal openly, fairly, justly and impartially with the subject matter entrusted to its jurisdiction, the state generally need not provide for an additional hearing in its courts: 42 Am Jur, Public Administrative Law, § 137, p 479. In Cohn v. State Tax Commission, 118 Or 92, 245 P 1085, this court said: "Appeals are not allowed as a matter of right but only in pursuance of and to the extent as provided by statute." See, to like effect, Smith Securities Co. v. Multnomah County, 98 Or 418, 192 P 654, 194 P 428. Further, although the circuit court has general jurisdiction and is possessed of both law and equity powers, the state need not grant to a litigant whom it authorizes to resort to that court by way of appeal the benefit of all of that court's powers: Wadhams & Company et al. v. The State Tax Commission et al., 202 Or 132, 273 P2d 440; Quinn v. Hanks, 192 Or 254, 233 P2d 767, and Garner v. Garner, 182 Or 549, 189 P2d 397.
The taxpayers-appellants do not claim that the commission failed to afford them an open, fair, just and impartial hearing upon all phases of the assessment of their properties.
One who wishes to challenge an order made by the tax commission and who chooses the remedy of appeal granted by § 110-524, OCLA, as amended, is confronted with the fact that the circuit court can go no further in redressing his alleged grievances than that section of our laws permits it to go.
This court has twice in recent years construed statutes similar to § 110-524, OCLA, as amended, for the purpose of determining the powers which the circuit *351 court may exercise in disposing of appeals to that court from assessments entered by the tax commission. Wadhams & Company et al. v. The State Tax Commission et al., supra, and In re GeBauer Apartments, 170 Or 47, 131 P2d 962. The statute which governed the outcome of those two cases was enacted in 1939 and read as follows:
The property which was the subject matter of the challenged assessment in In re GeBauer Apartments was an apartment house. The properties in the Wadhams case were stocks of merchandise owned by the several taxpayers who were the plaintiffs in that suit. Obviously, the tax involved in those cases, as the tax assessed in this case, was an ad valorem or property tax.
In In re GeBauer Apartments, the taxpayer challenged the assessment upon a direct charge that it was excessive. In the Wadhams case the taxpayer made no contention that their merchandise stocks were assessed at sums greater than their true value, nor did they claim that they were assessed in amounts disproportionate to similar property owned by others, but they averred that the values which the challenged assessments placed upon the merchandise stocks were *352 disproportionate to values which the assessor placed upon real property.
The very first words of the decision in In re GeBauer Apartments were these: "This is a special proceeding". Those words were quoted in Wadhams & Company et al. v. The State Tax Commission et al. and to them that decision added some elucidating passages. The Wadhams decision quoted as follows from In re GeBauer Apartments:
The Wadhams decision, referring to the words just quoted, said:
The similarity between the part of § 110-524, OCLA, as amended, which prescribed the jurisdiction of the circuit court when it decided this case and the statute which controlled In re GeBauer Apartments, supra, *353 and Wadhams & Company v. The State Tax Commission, supra, is evident.
7. We believe that § 110-524, OCLA, as amended, authorizes the circuit court, when it adjudicates an appeal from an assessment made by the tax commission, to consider nothing but valuation and apportionment. The court is empowered by that section to alter an assessment and to adjust an apportionment in the event that the evidence convinces the court that the assessment does not reflect the property's true value, or that the apportionment is erroneous; but the court can go no further than to adjust valuations and apportionments.
The taxpayers-appellants present no issue of valuation. In fact, while this proceeding was pending in the circuit court, the parties agreed upon the value of the properties of each of the three taxpayers. Since we need devote no time to value, we pass on to the issue of apportionment.
As we have indicated, the commission determined the fraction of the value of each taxpayer's property which is assessable in Oregon by employing a percentage derived through a comparison of the ton-miles of business done by each taxpayer in Oregon with that concern's total ton-mile business. By ton-miles we mean the total tonnage moved multiplied by the number of miles for which it was carried. After the commission had made the calculations just indicated it disposed of apportionment in this way:
8. The taxpayers argue that although their tugs and barges constantly make recurring visits to Oregon points for the purpose of receiving and discharging freight, they acquire no tax situs in this state and that, therefore, they were not assessable in Oregon. For the reasons which are set forth in preceding paragraphs we do not believe that the remedy of appeal for which § 110-524, OCLA, makes provision authorizes the circuit court to entertain issues of situs. Hence, we disregard that contention.
We will now consider the commission's cross appeal. The circuit court reduced the apportionments represented in our schedule by numerals 3 and 4 by awarding to both Oregon and Washington, not 100% of the total miles in the instances represented by numerals 3 and 4, but only 50%. For example, if a barge brought oil from Portland to Umatilla, both of those points being in Oregon, the commission's apportionment awarded the total ton mileage to Oregon, but the circuit court's apportionment awarded to Oregon only one half of the tone mileage. Likewise, if a barge brought wheat from Stevenson to Vancouver, both points being in Washington, the circuit court's apportionment awarded to Oregon 50% of the ton mileage although the commission had awarded no part of it to this state.
*355 The evidence fails to disclose the distance which the taxpayers' watercraft travel on either side of the unmarked boundary line in the Columbia while they travel, let us say, between Arlington and The Dalles or between Stevenson and Vancouver.
Pullman's Car Co. v. Pennsylvania, 141 US 18, 11 SCt 876, 35 L ed 613, sustained the validity of a Pennsylvania statute which rendered taxable by Pennsylvania the proportion of the capital stock of the Pullman Company which was invested and used in Pennsylvania. The manner in which the proportion was ascertained is described in the opinion as follows:
Having described the method of apportionment, the court continued:
In Ott v. Mississippi Barge Line, 336 US 169, 69 SCt 432, 93 L ed 585, the court held that the principle which was employed in the Pullman Car case enabled the State of Louisiana and the City of New Orleans to impose ad valorem taxes upon watercraft which, in transporting freight in interstate commerce along the Mississippi and Ohio rivers, came to pause in New Orleans to unload and reload freight. The owners of the vessels had offices or agents in Louisiana but their *356 principal places of business were elsewhere. From the description given in the decision of the manner in which the several companies conducted their business, we infer that their operations did not differ in any material manner from the methods employed by the three companies which are the appellants in the case at bar. The watercraft of the companies remained in Louisiana only long enough to discharge and take on cargo and to make needed repairs. Louisiana and City of New Orleans levied their ad valorem taxes upon the operating properties of the companies "on the ratio between the total number of miles of appellee's lines in Louisiana and the total number of miles of the entire line." Seemingly, Oregon's formula in employing ton-miles instead of resorting only to miles traveled is calculated to yield a more equitable result. The decision, in sustaining the validity of the challenged taxes and of the apportionments, said:
The quoted passage indicates that the justification for the local tax upon watercraft which moves in interstate commerce has its basis in the opportunities, benefits and protection afforded by the taxing state or municipality.
It appears reasonable to infer that the opportunities, benefits and protection which are afforded to transportation companies, such as those which were involved in the Ott case and that are before us in the proceeding now under consideration, are available to the carrier principally at the ports to which its watercraft resort. It is at those places where the carrier is presented opportunities to secure business and an adjustment or adjudication of its rights if the latter become involved in controversy. Likewise, at those places the carrier is granted police, fire and other protection for its operational facilities.
The taxpayers depend upon Greyhound Lines v. Mealey, 334 US 653, 68 SCt 1260, 92 L Ed 1633, and New York ex rel. Cornell Steamboat Co. v. Sohmer, 235 US 549, 35 SCt 162, 59 L Ed 355. The Greyhound Lines decision held invalid a tax levied by New York on the gross receipts of the carrier for transportation between two points in New York but over routes which lay 42.53% in New Jersey and Pennsylvania. Only 57.47% of the route was in New York. The New York tax was levied upon the entire receipts. In holding the tax invalid, the court mentioned, "There is no dispute as to feasibility in apportioning this tax." It ruled:
We have mentioned the fact that the three taxpayers cite New York ex rel. Cornell Steamboat Co. v. Sohmer. In the Greyhound Lines case, the court made the following comment concerning that decision:
It will be noticed that the court stated affirmatively in the Greyhound Lines decision that apportionment of the tax under scrutiny in that case was feasible. One can readily understand that apportionment in *359 that case must have been feasible. Of the total mileage which the carrier traveled 47.53% of it was run upon roadways and pavements which Pennsylvania and New Jersey had constructed; yet New York proposed to tax the entire fare. Presumably, the mileage run in the three states could have been used as a basis for apportionment of the tax. But in the instant case the record affords no means of determining how many miles a barge travels in either Oregon or Washington on its way, say, between Arlington and The Dalles. Any apportionment of the ton-mileage of the business done between such points would have to be based upon guesswork.
The commission resolved the difficulty involved in apportionment by giving to Washington the total ton-mileage for shipments that move between Washington points located on the Columbia, and accorded similar treatment to Oregon for cargo moving between Oregon points on the stream.
As we have seen, the justification for exacting a tax on watercraft and other instruments of interstate commerce is the benefit, protection and opportunities which the several taxing states accord to the carrier. It must be manifest, as has already been indicated, that those benefits are offered largely at the ports where the watercraft calls. The difference in the service which motorcarriers obtain from the use of paved roads, built at the expense of the state, and that which watercraft obtains from using the water of streams is obvious.
We do not believe that Greyhound Lines v. Mealey, supra, and New York ex rel. Cornell Steamboat Co. v. Sohmer, supra, require a conclusion that the apportionment which is attacked by this appeal is unfair and unjust.
*360 Although many decisions are called to our attention in the briefs submitted by the parties, we believe that those which are reviewed in the preceding paragraphs suffice to develop the principles of law which govern apportionment.
9. Taxation is a very practical matter. The reasons for apportionment can be readily understood, and the legal rules which govern the apportionment of value are few. They have their origin in fair play and good sense; but the practical application of the rules is difficult. To make an apportionment which will be entirely just cannot be done easily. One who undertakes to apportion value for taxation purposes and who wishes to be precisely just would have to take into consideration some factors which received no mention in the record. For example, he might find it necessary to consider, not only ton-miles, but also the number of days which the carrier's equipment stayed in the various ports where it called and the facilities which it used while there. Factors of that kind apparently would be more important to a precisely just apportionment than the number of miles which the equipment moved along a given stream. In truth, since apportionment is a very practical matter, the man on the bench finds it difficult to envision all of the factors which are worthy of attention. It seems certain that the tax commission, which is daily confronted with the practical problems attendant upon taxation and apportionment, is best equipped to resolve problems of the kind which this case presents. As we have seen, the tax commission is charged with the duty of making the assessment roll for properties of the kind which these three appealing taxpayers own. Next, the commission sits as a board of tax review before its assessment roll becomes final. When it sits in that quasi-judicial capacity it is required *361 to entertain all complaints which are preceded with petitions. The record indicates that the commission bestowed studious attention upon the very problem which this appeal presents to us. The law presumes that the commission faithfully performed its duties. One who wishes to challenge an order entered by the commission has the burden of proof and he must come forward with presuasive evidence in support of his claim of error: Appeal of Kliks, 158 Or 669, 76 P2d 974.
10. We are not satisfied that the ton-milage traveled along the Columbia between two Oregon ports should be divided into halves and that each of the bordering states should be apportioned a half. We think that the formula adopted by the commission is fair and just. In view of our belief, it follows that the circuit court erred when it modified the apportionment made by the commission. To that extent the decree is set aside. In all other respects it is affirmed. The challenged order of the commission is free from error. Costs and disbursements will be awarded to neither party.