Appeal from the District Court of the United States for the Eastern District of Illinois; Fred L. Wham, Judge.
Before EVANS, Circuit Judge, and LINDLEY and BRIGGLE, District Judges.
The facts as gathered from the stipulation are:
Appellant is a foreign tank car company (not a transportation company) owning approximately 39,000 cars which it leases to shippers of liquid products. It maintains repair shops at convenient points throughout the country. Among its lessees is the Lincoln Oil Refining Corporation, which has a refinery located in Crawford County, Illinois, the taxing jurisdiction in question. The refining company uses the leased cars for transporting petroleum products from its refinery in said county to points in Illinois and surrounding states. The lease does not cover specific cars but provides for furnishing the kind and number of cars which the refinery requires. The refinery periodically gives notice of its requirements and appellant supplies the cars from its most available source. A particular car may be used by the refinery for one or for several trips. The cars are under the control of the refinery only from the time of loading (by the refinery) until unloaded by the consignee or the refinery. The tank car company does not itself operate any of the tank cars. None of the cars are permanently assigned to the refinery nor permanently located in the county. Appellant maintains "small repair facilities on property (on which a tax was paid) leased from the refinery where it keeps certain personal property, more particularly a little furniture and a small amount of tools and material for the purpose of making light repairs to its own cars." The repairs there made are "light or running" repairs. They are of a minor nature which can be and are made only at the loading track.
It is the practice to accumulate a number of tank cars in the vicinity because the refinery frequently needs cars on short notice. There are at all times some of appellant's cars in the county. There were 397 cars in the county on April 1, 1933, and 400 is a fair daily average of the number of cars in the county. The fair cash value of the cars for the purpose of assessment was fixed at $335 each.
The tank car company assails the tax on the ground that the cars have no such actual or constructive situs within the county as to render them taxable under the Illinois personal property tax law. Also, if the court should find them taxable, then at most only the number actually in the county on April 1 are subject to taxation. The appellant also invokes the rule of construction which obtains where a taxing statute is of doubtful intent. It should then be construed favorably to the taxpayer. McFeely v. Commissioner, 296 U.S. 102, 111, 56 S. Ct. 54, 80 L. Ed. 83. Finally it argues that the Illinois general personal property tax statute does not cover tank cars used in interstate and intrastate commerce such as appellant's cars are used.
Appellee contends that under the United States Supreme Court decision in Johnson Oil Refining Co. v. Oklahoma, 290 U.S. 158, 54 S. Ct. 152, 78 L. Ed. 238, the average number of cars in the state is the basis of taxation under a general tax statute; that the Illinois Supreme Court has approved that method in the case of Keith Ry. Equipment Co. v. Board of Review, 283 Ill. 244, 119 N.E. 302; and that the rule of taxation of intangibles or of vessel property does not apply.
We are satisfied that the District Court correctly determined the issue of taxability of appellant's tank cars. This conclusion is based upon the following: (1) The statutory terms describing the taxable property are most comprehensive*fn* and therefore are capable of encompassing rolling stock belonging to a foreign corporation, habitually found in the state. (2) The decision of the Illinois Supreme Coourt in the Keith Case, supra,*fn** is a definite interpretation of this statute and determines for us that rolling stock is taxable on the basis of daily average of cars within the state. (3) The Supreme Court**fn** has repeatedly expressed itself on the validity of taxes imposed on that basis. (4) The rule of daily average number of cars in the county is the means of determining the number of cars which do have a taxable situs within the state. (5) There were concededly the number of cars in the jurisdiction on April 1, which were taxed. An equal or greater number of cars could be found in the county, on an average, during any day of the year. Those cars derived governmental protection during their stay in the county. Sometimes they were used in intrastate commerce. They awaited use by the lessee refinery in the county. They were given minor repairs, if necessary, in a small shop of appellant's in the county. The lessee refinery has a contract with appellant whereby the latter agrees to furnish the former all the cars it should need. There is strong basis for the propriety of applying the average daily number rule in this case because of the regularity and constancy of the relation whereby these cars were in the county at the disposal of the lessee.
The perplexities arising out of the peculiar character of such property as tank cars, which seldom have a permanent situs in any one taxable jurisdiction, and the injustice of each jurisdiction's taxing each car were the motivating causes for the pronouncement of the rule and its acceptance in many jurisdictions. Through the uniform application of such a rule there can be no escape from just taxation and yet no possibility of imposition of unjust tax burdens.
The bill of complaint charged and the court found that the tax was imposed upon 397 cars found to be present in the county on April 1, 1933. This number is three less than the conceded fair average number (which was 400) of cars in the county each day in the year. Appellant was, of course, not prejudiced because assessed on three cars less than the number it should have been assessed.
Appellant's assault is especially directed to the fact that the Illinois statute taxing personal property is a general one and fixes April 1 as the day when situs of personal property must be determined. It is true the Illinois statute is a general taxing act and concededly does not cover specifically the taxation of tank cars of a foreign corporation. We are, nevertheless, of the opinion that this general tax act was properly construed to cover the average number of cars in the county throughout the year. This conclusion is necessarily based upon the fact that the average number of cars found to be present in the county is thereby determined to have such a situs on any one day, including April 1, as to render them subject to taxation. There might not actually be 400 cars located in the county on April 1, but the average number of cars having a taxable situs in Crawford County, Illinois, constructive in nature but based upon the actuality of average conditions, is 400 cars.
This method of determining the amount of taxable property has been approved by the Supreme Court and its practicability and fairness are self-evident. In Johnson Oil Co. v. Oklahoma, 290 U.S. 158, 161, 54 S. Ct. 152, 78 L. Ed. 238, the court was passing on a similar general tax law of Oklahoma, and it sustained the theory of an assessment based upon the average number of cars in Oklahoma.
The Supreme Court of Illinois in Keith Ry. Equipment Co. v. Board of Review, 283 Ill. 244, 119 N.E. 302, held taxable, under the statute here under consideration, the average number of cars of a domestic corporation found to be in Illinois and cited with approval the United States Supreme Court cases on this subject. This construction of the ...