## Facts

- Dave Gustafson & Co., Inc. was a highway contractor working on interstate highway construction projects in South Dakota.
- The State had acquired the relevant interstate rights-of-way before construction began.
- During construction, the rights-of-way were not open to the public for vehicular travel and functioned only as construction sites.
- The contractor used fuel in internal combustion engines to propel vehicles and equipment on the project sites and paid use-fuel taxes totaling $31,845.24.
- The contractor filed a statutory refund action alleging the taxes were illegally or erroneously collected because the fuel was not used on “public highways” as defined by statute.
- The trial court denied a refund, and the contractor appealed.

## Issues

1. Whether fuel used to propel vehicles and equipment on interstate rights-of-way under construction, which were not open to public travel, was fuel used “on the public highways” under the Use Fuel Tax Act.
2. Whether the statutory definition of “public highways,” including ways “generally open” to the public “notwithstanding” temporary closure for construction, includes a roadway that has never been opened to public travel.
3. Whether state ownership and intended future highway use of the rights-of-way sufficed to make the construction sites “public highways” for use-fuel tax purposes.

## Decision

- The Supreme Court of South Dakota reversed the trial court.
- The court held the construction rights-of-way were not “public highways” at the relevant times because they were never generally open to public use as a matter of right.
- The “temporarily closed” clause was read to cover highways already open to the public that are later closed for work, not new routes never opened to public travel.
- Because the tax applied only when fuel was used to propel vehicles on “public highways,” the contractor’s fuel use on the unopened rights-of-way was not taxable.
- The court directed entry of judgment granting a refund of $31,845.24.

## Legal Principles

- Statutory tax liability turns on the statute’s defined tax base; courts apply the definition as written when it conditions taxation on use “on the public highways.”
- A “public highway” requires present public accessibility (“generally open to the use of the public as a matter of right”); future intended public use does not satisfy that condition.
- Language preserving “public highway” status during temporary construction closures applies to roadways that had been open to public travel, not to construction sites that have never been opened.
- State ownership of a right-of-way does not, by itself, make the location a “public highway” when the statute focuses on public access and use.
- Statutory refund provisions allowing recovery of taxes “illegally or erroneously collected” authorize repayment when collection exceeds the statute’s scope.

## Conclusion

The court concluded that unopened interstate construction rights-of-way were not “public highways” under the Use Fuel Tax Act, so fuel consumed there was outside the tax and the contractor was entitled to a refund of the taxes paid.


Dave Gustafson & Co., Inc. v. State, 169 N.W.2d 722 (S.D. 1969)