Atlantic, Gulf & Pacific Co. v. State Department of Assessment & Taxation

Barnes, J., delivered the opinion of the Court. This 'appeal involves an exemption from tangible personal property taxation of the dredge Pittsburgh, owned and operated by the appellant, Atlantic, Gulf and Pacific Company (Atlantic) ¹⁷⁵ for the taxable year 1965. The appellee, State Department of Assessments and Taxation of Maryland (State) denied the exemption and was sustained in this action by both the Maryland Tax Court and the Baltimore City Court. The facts are not in dispute.

Atlantic, a West Virginia corporation, was incorporated in 1899. It is and has been- engaged in the hydraulic dredging business. It has no regular place of business in Maryland but is qualified to do business in this State. Atlantic’s dredge Pittsburgh worked in the Chesapeake and Delaware Canal in Maryland from April 23 to May 25, 1964.

Prior to that time it had not worked in Maryland. It worked on another job in that canal from April 2, 1965 to July 1, 1965. It worked in Baltimore Harbor from June 2 to August 3, 1964 and also from September 10, 1964 to March 11, 1965. Prior to April 23, 1964, when the Pittsburgh first worked in Maryland, it had worked in New York and Connecticut in 1955, in Connecticut and Massachusetts in 1956, in New York and Massachusetts in 1957, in New Jersey in 1958, in Virginia and West Virginia in 1959, in New Jersey and New York at various times during 1960, 1961 and 1962 and in Florida in 1964.

The Pittsburgh worked in Philadelphia, Pennsylvania from August 9, 1965 to October 5, 1965. The Pittsburgh is one of seven dredges owned by Atlantic on January 1, 1965, the date oí finality in this case. It was built m 1914 and is 192 feet long. It was revitalized in 1964 at a cost of approximately $300,000 in order to permit it to compete more favorably with more recently constructed dredges.

It is a registered vessel, with an official number assigned by the United States Collector of Customs; it is documented as a dredge and can be towed anywhere in the world. It carries all the equipment used by it in its dredging operations, except for two storage barges, which the State also assessed, and certain other vessels which accompany it as an operating unit. The Pittsburgh, when in operation, works 24 hours a day, seven days a week. When in operation, there are three shifts with a total payroll of between 85 and 90 men.

It has a commissary and sleeping quarters for 15 to 20 men. It widens or deepens the channel of the waterway by submerging a ladder, ¹⁷⁶ with a high powered cutter, to the bottom. The material that is dug up, whether sand, clay or rock is sucked up through a suction pipe, goes through a pump and is pumped out of the back of the dredge through a pipe, which may be as much as 2000 feet in length, to a designated disposal area. It has no motive power of its own but is towed from location to location.

When working, it is attached to anchors and is moved by the use of cables attached to a derrick winch. The State, finding the Pittsburgh in Maryland waters on the date of finality, January 1, 1965, entered a tangible personal property assessment in the amount of $786,500 for the taxable year 1965. This assessment in its entirety was certified to Baltimore City. The foreign corporation assessor for the Department testified that it had been the long practice of the Department to assess a dredge without proration if the dredge was found within Maryland on a date of finality.

He testified that during his 20 years of service as an assessor, the Department had always interpreted the provision set forth in Code (1957), Article 81, Section 9, subsection (26), which provides an exemption for “all ships, or other vessels, including aircraft which are regularly engaged in commerce, in whole or in part, outside the territorial limits of this State,” as not applicable to a dredge but only to vessels “that may be engaged in foreign commerce in the transport of goods and people.” He conceded that the Pittsburgh was a “vessel” within the meaning of the language of the exemption. Atlantic does not challenge the amount of the assessment; its challenge is addressed to the validity of the assessment. Atlantic advances two propositions in this appeal: (1) the trial court erred in finding that the Pittsburgh was not a vessel “engaged in commerce, in whole or in part, outside the territorial limits” of Maryland, and thus exempt from taxation pursuant to the plain and unambiguous meaning of the words of the statutory exemption either alone or as reinforced by the-history of the legislation and (2) that if the tax were otherwise applicable as the State contends, it would be unconstitutional as an unapportioned tax upon an instrumentality of interstate commerce and thus prohibited by the commerce clause of the Federal Constitution as construed by the cases. ¹⁷⁷ As we agree with Atlantic’s first proposition, we will reverse the order of the lower court, but accordingly, we do not find it necessary to pass upon the merits of the constitutional challenge to the statute advanced by Atlantic. (1) The language used in the statute itself is the primary source for determining the legislative intent.

As we stated in Maryland Medical Service, Inc. v. Carver, 238 Md. 466, 477-78 , 209 A. 2d 582, 588 (1965) : “The cardinal rule of construction of a statute is to discover and to carry out the real legislative intention. Barnes v. State, ex rel Pinkney, 236 Md. 564 , 574 ; 204 A. 2d 787, 792 (1962). Casey Development Corp. v. Montgomery County, 212 Md. 138 , 129 A. 2d 63 (1957). The legislative intent is to be sought in the first instance in the words used 1 in the statute and if there is no ambiguity or obscurity in the language used in the statute, there is usually no need to look elsewhere to ascertain the intent of the legislature.

Board of Supervisors of Election of Baltimore City v. Weiss, 217 Md. 133 , 141 A. 2d 734 (1958). See particularly the comprehensive review of the prior Maryland cases at pages 136 and 137 of 217 Md. If the legislative intent is expressed in clear and unambiguous language, this will be carried into effect by this Court even if this Court might be of the opinion that the policy of the legislation is unwise, or even harsh or unjust, if no constitutional guarantees are impaired by the legislation. Schmeizl v. Schmeizl, 186 Md. 371 , 46 A. 2d 619 (1946).” Article 81, Section 9 (26) as it appears in the Maryland Code is as follows: “(26) Vessels and aircraft engaged in interstate commerce — All ships or other vessels, including aircraft, which are regularly engaged in commerce, 1 in ¹⁷⁸ whole or in part, outside the territorial limits of this State.” To be entitled to the exemption, the property owner must under the statute establish three essential elements: 1. That the property is a vessel (or aircraft) 2.

That it is regularly engaged in commerce and 3. That this occurs in whole or in part, outside the territorial limits of Maryland. In our opinion, Atlantic has successfully established all three of the essential elements. The first element, i.e., that the property is a “vessel,” was conceded by the foreign corporation assessor for the State and by counsel for the State in the Maryland Tax Court as well as in the State’s brief and argument before us. 2 This element is therefore established by the property owner.

Nor is the third element, i.e., that its use and work occurs in part outside the territorial limits of Maryland, in dispute. The times and places of the Pittsburgh’s use and work in other ¹⁷⁹ jurisdictions have been fully set forth, and no argument is made by the State in regard to that element. The principal dispute and, in fact, the only issue contested in this case, is whether or not the Pittsburgh was “regularly engaged in commerce.” There is no question raised in regard to the regularity of the engagement of the Pittsburgh as the proof indicates that it is constantly used in dredging, 24 hours a day and seven days a week. This has been the usual and constant method of operation over the past five year period in the various locations in which the Pittsburgh was used.

In considering the meaning of the word “commerce,” it should be observed that the General Assembly used the general word “commerce” without limitation. There are no qualifying words. In Webster’s New Twentieth Century Dictionary, Unabridged, 2d ed, 1964, “commerce” is defined as: “1. An interchange of goods, wares, productions or property of any kind, between nations or individuals, either by barter or by purchase and sale; trade; traffic.

Syn. barter, business, communication, dealing, exchange, intercourse, trade, traffic.” “Commercial” is defined as “1. Of or pertaining to commerce. * * * 3. Made or done for sale or profit.” In 15 C.J.S. Commerce § 1, at 383-84 (1967), the following appears: “The question of what is commerce is to be approached both affirmatively and negatively, that is, from the points of view as to what it includes and what it excludes. While commerce includes trade, traffic, the purchase, sale, or exchange of commodities, and the transportation of persons or property, whether on land or water or through the air, according to various definitions of the term, and also, as indicated infra §§ 23, 26, according to judicial exposition apart from formal definitions, nevertheless commerce is broader than, and is not limited to, trade, traffic, transportation, or the purchase, sale, or exchange of goods or commodities.” - ¹⁸⁰ See also 15 Am.Jur.2d Commerce § 2 at 631-32 (1964).

It should also be observed that the word “commerce” is used in Article 1, Section 8 of the Federal Constitution in granting the power to the Congress: “To regulate Commerce with foreign Nations, and among the several States and with the Indian Tribes; * * The word “commerce” has been broadly construed by the Courts, both State and Federal, and we must assume that the General Assembly in using the word “commerce” without qualification intended that it receive a similar construction by the Courts. Cf. Maryland-National Capital Park and Planning Comm’n v. Silkor Development Corp., 246 Md. 516, 524 , 229 A. 2d 135, 140 (1967) ; St. Joseph Hospital v. Quinn, 241 Md. 371, 379 , 216 A. 2d 732, 736 (1966). In the Federal decisions, there is little doubt that the Pittsburgh was engaged in interstate commerce.

As the Supreme Court of the United States stated in Mitchell v. C. W. Vollmer & Co., Inc., 349 U. S. 427, 429-30 , 75 S. Ct. 860, 862 , 99 L. Ed. 1196, 1200 (1955)—a case involving the applicability of the Fair Labor Standards Act to employees working on construction of an embankment and concrete platform for a canal lock: “Repair of facilities of interstate commerce is activity ‘in commerce’ within the meaning of the Act as we held in Fitzgerald Construction Co. v. Pedersen, 324 U.S. 720 ,