Bigelow v. Department of Taxes

BIGELOW_V_DEPT_OF_TAXES.93-515; 163 Vt 33; 652 A.2d 985

[Filed 14-Oct-1994]

[Motion for Reargument Denied 10-Nov-1994]


       NOTICE:  This opinion is subject to motions for reargument under
       V.R.A.P. 40 as well as formal revision before publication in the
       Vermont Reports.  Readers are requested to notify the Reporter of
       Decisions, Vermont Supreme Court, 109 State Street, Montpelier,
       Vermont 05609-0801 of any errors in order that corrections may be
       made before this opinion goes to press.

                               No. 93-515


       Ogden Bigelow, Jr.,                      Supreme Court
         d/b/a Topknits
                                                On Appeal from
            v.
                                                Washington Superior Court

       Vermont Department of Taxes              March Term, 1994



       Alan W. Cheever, J.

       Andrew H. Neisner, Barre, for plaintiff-appellant

       Jeffrey L. Amestoy, Attorney General, and Mary L. Bachman, Special
       Assistant Attorney General, Montpelier, for defendant-appellee



       PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


        GIBSON, J.   Taxpayer Bigelow appeals from a superior court
       order, which affirmed the decision of the Commissioner of the
       Vermont Department of Taxes ("Department") assessing a use tax
       against a vessel taxpayer purchased in Rhode Island and brought to
       Vermont.  We affirm.

       Taxpayer, a Connecticut resident, purchased a 36-foot motorboat
       named "Topknits" in Rhode Island in May 1989.  He did not pay Rhode
       Island sales tax at the time of purchase, claiming an exemption as
       a boat broker/dealer.  Taxpayer sailed Topknits from Rhode Island
       to Vermont, arriving in Charlotte, Vermont on July 17 or 18, 1989.
       He rented a mooring at 

       

       Bay Point Marina for the summer of 1989, and
       sailed Topknits around both the Vermont and New York portions of
       Lake Champlain throughout the summer.  He did not register Topknits
       with the Vermont Department of Motor Vehicles, although dealer
       registration certificates are available under 23 V.S.A.  3305(b).
       Instead, taxpayer possessed United States Coast Guard documentation
       indicating that the boat's primary use was recreation.

        Taxpayer removed Topknits from Lake Champlain sometime in
       November 1989.  That same month, the Department assessed a use tax
       against Topknits under 32 V.S.A.  9773(1) for $3,371.20.  Taxpayer
       appealed the assessment, and a hearing before the Commissioner was
       held on January 25, 1990.

        At the hearing, taxpayer challenged the Department's authority
       to levy the tax, but not the amount or the method of assessment.
       He claimed that (1) he was not subject to tax under 32 V.S.A. 
       9773(1) because he did not purchase the boat at retail, (2) the
       Department could not prove that he used the boat in Vermont for at
       least thirty days, the statutory period giving rise to liability
       under 32 V.S.A.  9744(2), and (3) the tax violated the
       Constitution's prohibition against tonnage taxes, and the equal
       protection and privileges and immunities clauses.  Taxpayer argued
       that he was a Vermont boat dealer and that Topknits was his only
       inventory.  The Commissioner found that taxpayer purchased the boat
       at retail, and that he used it in Vermont for at least thirty days.
       The Commissioner also rejected taxpayer's constitutional claims. 
       Taxpayer took an appeal pursuant to 32 V.S.A.  9817 to the
       Washington Superior Court, which affirmed the decision.

        Taxpayer raises several issues on appeal.  Taxpayer argues that
       the Commissioner erred in finding that taxpayer purchased the boat
       at retail and that Topknits had been in Vermont 

       

       waters for at least thirty days.  Taxpayer also raises two 
       constitutional challenges to the tax.  First, he contends that 
       32 V.S.A.  9773 is a tonnage tax prohibited by Article I,  10, 
       clause 3 of the United States Constitution.  Second, taxpayer argues 
       that the tax violates the commerce clause.  U.S. Const. art. I,  8, 
       cl. 3.  We find no error or constitutional infirmity, and therefore 
       affirm.
                                          I.

        Taxpayer argues that the Commissioner erred in finding (1) that
       he purchased the boat at retail, and (2) that he used Topknits in
       Vermont waters for at least thirty days.  On appeal, we will not
       set aside an administrative agency's findings unless clearly
       erroneous.  In re DeCato Bros., Inc., 149 Vt. 493, 497, 546 A.2d 1354, 1357 (1988); Grievance of Brileya, 147 Vt. 280, 282, 515 A.2d 129, 131 (1986).  We view the evidence in the light most favorable
       to the prevailing party and exclude any modifying evidence.
       Brileya, 147 Vt. at 282, 515 A.2d  at 131.  So long as the findings
       are supported by credible evidence, we will not disturb them.  Id.;
       Vieweger v. Clark, 144 Vt. 630, 632, 481 A.2d 1268, 1270 (1984).

        Taxpayer was assessed a use tax under 32 V.S.A.  9773(1),
       which imposes a tax on the use within this state of property
       purchased at retail, unless a sales tax has already been paid.  The
       tax is imposed on the privilege of using, storing, or consuming the
       property within Vermont.  Frank W. Whitcomb Constr. Corp. v.
       Commissioner of Taxes, 144 Vt. 466, 469, 479 A.2d 164, 166 (1984).
       Section 9744 of Title 32 excepts from the use tax property on which
       a sales tax was paid to another state, or property purchased while
       the user was a nonresident.  32 V.S.A.  9744 (2) & (3).  A vessel
       does not, however, qualify for the nonresident use tax exemption if
       it was used in Vermont waters for thirty days or more.  32 V.S.A.
        9744(2).

       


       Thus, an individual who acquires a vessel out of state through a
       retail purchase, does not pay a sales tax on that purchase, and
       uses the vessel in Vermont for at least thirty days, is subject to
       Vermont's use tax.

        Taxpayer claims that he is not subject to the tax because he is
       a broker/dealer of boats and did not purchase Topknits at retail;
       rather, he contends he purchased the boat at wholesale for resale
       in Vermont.  See 32 V.S.A.  9773(1) (tax imposed on "tangible
       personal property purchased at retail").  The Commissioner found
       that taxpayer purchased Topknits at retail.  Although finding
       taxpayer to be a dealer in Rhode Island, the Commissioner found
       that taxpayer did not purchase Topknits for resale in Vermont.  The
       evidence shows that taxpayer used the boat for recreation in
       Vermont, did not advertise the boat for sale, and did not register
       with the Department as a dealer to collect sales and use tax as
       required under 32 V.S.A.  9707.  In addition, taxpayer did not
       obtain a dealer registration for Topknits from the Department of
       Motor Vehicles, nor has he ever sold a boat in Vermont.  The
       Commissioner's findings are supported by credible evidence and are
       not clearly erroneous.  Taxpayer has failed to show he is not
       subject to the use tax.

        Taxpayer also contends that he is not subject to the tax
       because the Department failed to show that he used Topknits in
       Vermont waters for at least thirty days.  The hearing officer found
       otherwise, stating that defendant used the vessel for at least
       thirty days "as of August 19, 1989."  The record supports that
       finding.  Indeed, at the hearing taxpayer admitted that "in all
       likelihood" his boat had been at the Bay Point Marina on Lake
       Champlain for more than thirty days that summer.  The
       Commissioner's findings were amply supported, and therefore, we
       will not disturb them.   

       
                                     II.

        Taxpayer next argues that the Vermont tax imposed on his vessel
       is a tonnage tax, specifically prohibited by Article I,  10,
       clause 3 of the United States Constitution, and not a use tax, as
       the Commissioner found.   Unlike a tax on "use," a "tonnage" tax
       refers to the internal cubic capacity of a vessel.  Clyde Mallory
       Lines v. Alabama, 296 U.S. 261, 265 (1935).  A duty on tonnage
       cannot be imposed so as to restrict imports or exports, or to pay
       for illusory services.  Steamship Co. v. Port Wardens, 73 U.S. (6
       Wall.) 31, 32-34 (1867); see also Clyde Mallory Lines, 296 U.S.  at
       263 (contested fee found to be charge for policing harbor to insure
       safety of vessels and therefore not duty on tonnage).

        The prohibition against tonnage duties includes all taxes that
       operate to impose a charge for the privilege of entering, trading
       in, or lying in a port, but does not extend to charges for services
       actually rendered to or enjoyed by a vessel.  Clyde Mallory Lines,
       296 U.S. at 265-66; see Inman Steamship Co. v. Tinker, 94 U.S. 238,
       243-44 (1876) (tax must relate to some benefit or service, not
       merely to tonnage of vessel or privilege of entry).  Tonnage taxes
       are distinct from state taxes on property used in the state, the
       latter being wholly within the state's taxing power.  State Tonnage
       Cases, 79 U.S. (12 Wall.) 204, 213 (1870).

        Vermont's use tax is not a tonnage tax because it is a tax on
       personal property used within Vermont.  It does not tax the
       privilege of using Vermont ports, but, rather, taxes the property
       used.  The tax relates to police, fire, and environmental
       protection afforded to those who use vessels in this state.
       Therefore, we are unpersuaded by defendant's tonnage tax challenge.

       
                                    III.

        Taxpayer also challenges Vermont's compensating use tax as
       unconstitutional under the commerce clause of the United States
       Constitution.  U.S. Const. art. I,  8, cl. 3.  In his original
       brief to the superior court, taxpayer asserted that imposing a use
       tax on Topknits "would impede interstate commerce."  He neither
       cited authority, nor made an argument to support his assertion.
       Only in his reply brief did taxpayer brief the commerce clause,
       citing V.R.A.P. 28(i), which permits a party to supplement its
       brief with authority for arguments already made in its original
       brief.  See Reporter's Notes, V.R.A.P. 28 (Rule 28(i) "does not
       provide for an opportunity for additional argument").  The
       Commissioner argues that taxpayer failed to preserve this issue by
       raising it too late.  We agree.

        It is a basic rule of appellate procedure that issues not
       briefed in the appellant's or the appellee's original briefs may
       not be raised for the first time in a reply brief.  See Vermont
       Nat'l Bank v. Dowrick, 144 Vt. 504, 509, 481 A.2d 396, 399 (1984)
       (issues not raised in appellant's or appellee's briefs may not be
       raised in reply briefs).  Moreover, issues not fairly raised at the
       earliest opportunity, are not preserved on appeal.  Hall v.
       Department of Social Welfare, 153 Vt. 479, 487, 572 A.2d 1342, 1347
       (1990); cf. Prescott v. Smits, 146 Vt. 430, 433-34, 505 A.2d 1211,
       1213 (1985) (although claim was pleaded, failure to present
       evidence or request findings on issue precludes appellate review of
       that issue); Fyles v. Schmidt, 141 Vt. 419, 422-23, 449 A.2d 962, 965 (1982) (issues not fairly presented to trial court are not
       preserved on appeal).  Based on this record, we find that this
       issue was not adequately preserved, and we decline to address it. 

       

       Affirmed.
                                              FOR THE COURT:


                                               _______________________________
                                               Associate Justice