Burlington Northern Railroad v. Wyoming State Board of Equalization

THOMAS, Justice,

concurring specially.

I agree with the majority position in this case that the first use of the wheel assemblies did not occur in Wyoming. In reversing the judgment of the trial court, I would invoke an additional rationale to that articulated in the opinion of the court. The majority opinion does not address the availability of the rolling stock exemption. Yet, the end result is that these wheel assemblies are not subject to use tax in Wyoming. That result, of course, avoids any question as to whether there is a state tax burden upon interstate commerce.

I am disposed to approach the issue more directly. I would invoke the exemption from excise tax for “rolling stock” articulated in Section 39-6-505(a)(x), W.S.1977. In my view, the wheel assemblies appropriately are part of the railroad car that, I assume, even the Wyoming State Board of Equalization would agree is rolling stock. In this context, I cannot agree with the concept that somehow or other the whole of the railroad car is greater than the sum of all of its parts and, in my opinion, the several parts of that railroad car cannot avoid being identified as “rolling stock.”

A simple illustration explains my position. I am satisfied that, if Burlington Northern Railroad Company shipped into Wyoming via motor carrier all of the component parts of a railroad car and then assembled those parts on railroad trackage in Wyoming, the railroad car would be rolling stock. My intent is to make it entirely clear that the first use of the railroad car would have to occur in Wyoming, but the express statutory exemption would serve to insulate it from the use tax. Logic persuades me that the installation of a wheel assembly on a freight car that is otherwise exempt from taxation cannot produce a taxable event in Wyoming without infringing upon interstate commerce.

I find persuasive authority from other jurisdictions that supports this conclusion recognizing that, in each instance, there may be some difference with respect to statutory language or administrative rules. To the extent that those differences exist, I am satisfied that the legislative or executive branches of government in those other states were sensitive to a potential constitutional concern and wisely adopted the statute or the rules to lead to the appropri*997ate result of exempting rolling stock from the application of excise tax.

In Burlington Northern, Inc. v. Department of Revenue, 32 Ill.App.3d 166, 336 N.E.2d 170 (1975), the Illinois Court of Appeals recognized that diesel switching engines, passenger commuter cars, and shipping containers and tractor trailers, all came within a “rolling stock” exemption provided in the Illinois statutes. The court rejected an argument by the Illinois Department of Revenue that the appropriate exemption was the one providing the credit for use tax paid in another state. It held that, contrary to the argument by the taxing authority, the appropriate exemption to look to was the “rolling stock” exemption in the statute and that it did reach the several items of property in issue.

By contrast, in LeTourneau R.R. Services, Inc. v. Dept, of Revenue, 134 Ill.App.3d 638, 90 Ill.Dec. 64, 481 N.E.2d 864 (1985), the Illinois Court of Appeals recognized that equipment that had the function of loading and unloading containerized freight from rail cars was not “rolling stock” within the purview of the statutory exemption. In that case, the court made a point of noting the difference between equipment that travels on railroad tracks and equipment that does not. Even though there exists specific authority in a tax regulation in Illinois, I am persuaded that there is no question that the wheel assemblies would be “rolling stock” in Illinois.

In Missouri, the director of revenue assessed a use tax on certain flanged wheel equipment which was intended for the purpose of roadway and work equipment. The Supreme Court of Missouri looked at an exemption from state and local sales and use tax for “ ‘[rjailroad rolling stock for use in transporting persons or property in interstate commerce * * Burlington Northern Railroad v. Director of Revenue, 785 S.W.2d 272, 273 (Mo.1990). That court noted the restrictive construction given for tax exemption provisions but, invoking the rule of statutory construction that words are to be given their plain and ordinary meaning, it held that this equipment, used in constructing and maintaining railroad tracks and railways, came within the rolling stock exemption. Burlington, supra. Other cases cited by Burlington Northern in its brief would be consistent with those discussed above. See Ohio and Mississippi Railroad Company v. Weber, 96 Ill. 443 (1880). Cf. Duval Sierrita Corp. v. Arizona Department of Revenue, 116 Ariz. 200, 568 P.2d 1098 (1977); United Parcel Service, Inc. v. Comptroller of Treasury, 69 Md.App. 458, 518 A.2d 164 (1986); Tulsa Machinery Company v. Oklahoma Tax Commission, 208 Okl. 138, 253 P.2d 1067 (1953). I note that I would have great difficulty stretching this exemption as far as the Supreme Court of Montana did when it indicated that cooking utensils used by railroad employees on a boarding car was a “necessary and usual accompaniment” and, therefore, part of the rolling stock of the railroad. See Great Northern Railway Co. v. Flathead County, 61 Mont. 263, 202 P. 198 (1921).

Since I am satisfied that the Wyoming Board of Equalization, as a matter of law, erroneously failed to give to Burlington Northern Railroad Company the benefit of exemption from excise tax for “rolling stock,” I would reverse the judgment of the district court. I am satisfied that this approach is an appropriate ground for deciding this case, and it would not be necessary for me to discuss whether the first use of the property occurred within the state of Wyoming. In my view, the exemption for rolling stock reaches all rolling stock and applies wherever the first use might have occurred. I do agree that in this instance, however, the first use occurred in some jurisdiction other than Wyoming.