Court Opinion

ID: 5691657
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:28:02.168259+00
Date Added: 2024-06-11T08:40:09.436904
License: Public Domain

Vaughan, J. (dissenting).
It strikes me we are going a long-way in holding that the ‘ ‘ come to rest ’ ’ doctrine is applicable to the facts disclosed by this record. (See Union Pac. R. Co. v. Utah State Tax Comm., 110 Utah 99.) True it is, the locomotives involved completed their initial interstate journey from Erie, Pennsylvania, upon their delivery to the petitioner at Suspension Bridge but should we not consider other circumstances?
*310The locomotives when ordered were for use at the Niagara junction railway yards for the purpose of placing cars that came into Niagara Falls for delivery to the various industrial plants and transferring cars from such plants to the connecting-carriers serving the Niagara Falls district for transportation to destinations without the State.
It is stipulated that the locomotives, with one exception, operate solely within the city of Niagara Falls and none cross State lines. It does not follow, however, that such activity is local in nature and that the locomotives are not engaged primarily in interstate commerce in switching cars from the various industries to connecting carriers which, in turn, transport the cars without the State. As a matter of fact, it is stipulated that 81% of the loaded cars switched by petitioner, moved in interstate commerce.
Relator admits that respondent is subject to regulations as to rates and services by the Interstate Commerce Commission with which tariffs are filed. In the face of such undisputed facts, I seriously doubt if we can completely disregard the nature of the work in which the locomotives were engaged, and hold that the use tax is not a direct tax on interstate commerce. Respondent urges that it is a tax “ on the privilege of the corporation doing business within the State of New York With such contention I agree.
Southern Pac. Co. v. Gallagher (306 U. S. 167) involved the applicability of the California use tax to tangible personal property purchased without the State of California by the Southern Pacific Company, an interstate railroad, and installed or stored for future use as a part of its transportation facilities. The court upheld the tax on the ground that it was upon the ‘ ‘ use and storage ’ ’ of the articles purchased without the State before their consumption in interstate commerce had begun. The court was careful to point out that no new rolling stock was involved. It was then held that the tax was upon the local storage and installation of parts which, once installed, moved again in interstate commerce. Obviously this rationale cannot apply to new rolling stock, such as is involved in the present case, and in indicating that a tax on operation — and that is all we have in this case — would be bad, the Supreme Court clearly recognized the difference between parts or supplies withdrawn from local storage and installed, on the one hand, and rolling stock actually moving and functioning as an instrumentality of interstate commerce, on the other. The court also was careful to point out that “ The prohibited burden upon commerce between the states is created by state interference *311with that commerce, a matter distinct from the expense of doing business. A discrimination against it, or a tax on its operation as such, is an interference. A tax on property or upon a taxable event in the state, apart from operation, does not interfere ” (emphasis supplied) (pp. 177-178).
In the instant case, the tax imposed is “an excise tax for the privilege of using within such city [Niagara Falls] any article of tangible personal property purchased at retail ’ ’ (Local Laws 1951, No. 2 of City of Niagara Falls). The tangible personal property sought to be used is locomotives engaged in interstate commerce. The tax imposed is a direct burden upon the privilege of engaging in such commerce, and in my opinion, cannot be upheld upon the theory that it is a local activity in which the relator is engaged. The activity is interstate commerce in its most obvious form. The tax is upon the operation of petitioner’s railroad and constitutes a direct burden upon commerce between the States, and in my view cannot be sustained.
The purported assessment is null and void and should be annulled and the sum deposited by petitioner with respondent under protest directed to be refunded, with costs of this proceeding.
All concur, except Vaughan, J. P., who dissents and votes to annul the determination, in a separate opinion. Present — Vaughan, J. P., Kimball, Wheeler, Williams and Bastow, JJ.
Determination of the comptroller confirmed, with $50 costs and disbursements.