Appeals, Nos. 22 and 25, May T., 1953, from decrees of Court of Common Pleas of Dauphin County, 1952, Equity Docket, Nos. 2015 and 2024, Commonwealth Docket Nos. 34 and 94, in cases of Shirks Motor Express Corporation v. Otto F. Messner, Secretary, Department of Revenue and Weldon B. Heyburn, Auditor General, and Interstate Motor Freight System, Inc. v. Same. Decrees affirmed; reargument refused December 30, 1953.
Frank A. Sinon, with him Rhoads, Sinon & Reader, John R. Norris, Baldwin, Jarman & Norris, George S. Norcross and Warner, Norcross & Judd, for appellants.
Harry F. Stambaugh, Special Counsel, with him Robert E. Woodside, Attorney General, for appellees.
Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.
OPINION BY MR. JUSTICE CHIDSEY
The appellants, Shirks Motor Express Corporation and Interstate Motor Freight System, Inc., filed seperate
bills in equity against the Secretary of Revenue and the Auditor General of the Commonwealth of Pennsylvania to enjoin them from enforcing the Act of June 22, 1931, P.L. 694, as amended by the Act of December 27, 1951, P.L. 1761, 72 PS § 2185 et seq., which imposes an excise tax on the gross receipts of common carriers by motor vehicle, on the ground that the Act, as amended, violates the Commerce Clause, the Equal Protection Clause and the Due Process Clause of the United States Constitution, and also violates certain provisions of the Pennsylvania Constitution. The defendants filed preliminary objections in the nature of a demurrer, which in each case were sustained, and the respective complaints dismissed.
Shirks Motor Expres Corporation is a Delaware corporation registered to do business in Pennsylvania. It is engaged in the business of transporting property by motor vehicle as a common carrier. It is engaged in interstate transportation, pursuant to certificates issued by the Interstate Commerce Commission, over various routes and between various points in seven States, including Pennsylvania. It is also engaged to a limited extent in intrastate transportation, pursuant to a certificate issued by the Pennsylvania Public Utility Commission, over certain routes within Pennsylvania.
Interstate Motor Freight System, Inc. is a Michigan corporation. It is a common carrier engaged solely in interstate transportation of property by motor vehicles, pursuant to certificates issued to it by the Interstate Commerce Commission. It operates over various routes and between various points in fifteen States, including Pennsylvania. This plaintiff's bill in equity substantially duplicates the bill of Shirks Motor Express Corporation, but also alleges that the tax is unconstitutional because it is levied upon transportation
over the Pennsylvania Turnpike, a State instrumentality, for which tolls are charged.
Both appellants pay to the Commonwealth taxes for liquid fuels and registration fees on their vehicles.
Appellants attack the constitutionality of the statute involved on many fronts. Their contentions may be roughly subdivided into two groups: (1) those aimed solely at the amendatory Act of 1951, and (2) those aimed at those portions of the original Act of 1931 which were not affected by the 1951 amendment.
In its original form the Act of 1931 imposed a tax of 8 mills on each dollar of the gross receipts of motor carriers as an excise for the use of the public highways. Intrastate carriers were required to pay eight mills of the gross receipts from all operations and interstate carriers were required to pay "... eight (8) mills upon the dollar upon such portion of the gross receipts of such company as is represented by the ratio that the number of miles of routes operated in this Commonwealth by such company, during the period for which the report is filed, bears to the total number of miles of all routes operated by such company during said period.". The original Act also provided for credits against the amount of the tax for any tax paid to a city for the use of its highways and for registration fees paid to the Commonwealth. The Act of 1931 further provided that the tax receipts collected from interstate carriers should be paid into the Motor License Fund, while tax receipts collected from intrastate carriers should be paid into the General Fund of the Commonwealth. The Act of 1951 made two changes, (1) it eliminated the credit for payment of local taxes and registration fees, and (2) it provided that all tax receipts be paid into the General Fund.*fn1
Appellants' first contention is that the Act of 1931, as amended, violates the Commerce Clause (Article I, Section 8) of the United States Constitution. Appellants' contention is based in part upon their construction of the above quoted portion of the statute to mean that the trucking companies are taxed upon the basis of physical location and extent of routes rather than miles operated. Such a construction is unwarranted. The title of the Act provides: "Imposing a tax on gross receipts as an excise on the use of the public highways by certain owners or operators of motor vehicles transporting passengers and property for hire." (Emphasis supplied). Use of the highways can be ascertained only from the number of miles operated, not from the physical layout of the routes. We adopt as correct the construction given to the statute by the Department of Revenue in administering the tax, that is, that the tax is based upon the number of miles operated, not the physical location and the extent of the routes. Cf. Commonwealth v. Brink's, Incorporated, 346 Pa. 296, 30 A.2d 128.
It is well settled that a State does not have the power to tax interstate commerce as such: Alpha Portland Cement Company v. Commonwealth of Massachusetts, 268 U.S. 203; Spector Motor Service, Inc. v. O'Connor, Tax Commissioner, 340 U.S. 602. It is equally well settled that a State may, consistently with the Commerce Clause, impose upon vehicles engaged in interstate commerce a reasonable, nondiscriminatory excise tax as compensation for the use of its highways: Dixie Ohio Express Co. v. State Revenue Commission et al., 306 U.S. 72; Hendrick v. State of Maryland, 235 U.S. 610; Capitol Greyhound Lines et al. v. Brice, Commissioner of Motor Vehicles, 339 U.S. 542. Both appellants and appellees concede these fundamental propositions, but disagree as to their application to the statute here involved.
Where an excise tax of such nature is imposed by a State upon carriers engaged in interstate commerce it must affirmatively appear that it is levied only as compensation for the use of its highways. This limitation upon the taxing power of a State has not been violated where the taxing statute discloses that the incidence of the tax is apportioned to the use of the State's highways or where the proceeds of the tax are apportioned directly or indirectly to highway purposes: Clark et al. v. Poor et al., 274 U.S. 554; Interstate Transit, Incorporated v. Lindsey, County Court Clerk, 283 U.S. 183; Morf v. Bingaman, Commissioner of Revenue for New Mexico, 298 U.S. 407; Aero Mayflower Transit Co. v. Board of Railroad Commissioners of Montana et al., 332 U.S. 495 (1947), and cases cited therein. This is merely another way of stating the rule previously referred to, that is, that the tax must be for the purpose of compensating the State for the use of its highways. Where the proceeds of the tax are allocated directly or indirectly for highway uses, there can be no doubt that the purpose of the tax is compensation for the use of the highways. Where the amount of the tax is reasonable and nondiscriminatory, and apportioned so as to reflect the use of a State's highways, a State does not abdicate its right to exact compensatory taxes from vehicles engaged in interstate commerce because the proceeds of the tax are placed in a general fund, as was done in the instant case, rather than in a highway fund. If appellants' argument were adopted, vehicles engaged in interstate commerce, which contribute largely to the depreciation of the highways, would pay only the motor fuel tax and registration fees, while similar carriers engaged in intrastate commerce, would, in addition, be subject to this excise tax. An interstate carrier may not base a constitutional objection solely upon the use made of the proceeds of the tax. This is a matter
for the exclusive determination of the Legislature. If the tax is otherwise constitutional, the use to which the proceeds of the tax are allocated will not render it unconstitutional: Morf v. Bingaman, supra, at p. 412; Aero Mayflower Transit Co. v. Commissioner, supra; Clark v. Poor, supra; Dixie Ohio Co. v. State ...