If a retail merchant gets Class 4 compensation plates for his truck and then uses the same truck on separate trips to haul previously sold merchandise to customers (an exempt use), does he violate the law, and can a police officer rely on the displayed plates as proof the load is lawful?
Plain-English summary
A retail merchant licensed under SDC 57.31 owned a truck under 26,000 pounds gross weight and used it for two kinds of hauls: (1) carrying materials he had not yet sold, which was a "compensated" use that required motor-carrier plates under SDC 44.0426, and (2) delivering already-sold merchandise to customers outside city limits, which was exempt from compensation requirements under SDC 1960 Supp. 44.0422(6). The merchant bought Class 4 compensation plates so he could lawfully do the compensated hauls. The state asked the AG five interlocking questions about whether the plates were required to be removed for exempt hauls, whether the same truck could do both kinds of work, and what a police officer could presume from the plates.
The AG's core move was statutory interpretation history. The Supreme Court in Mitchell Produce Co. v. Morrison had laid down the rule that exemptions from the motor carrier act had to be strictly but reasonably construed. Earlier opinions had read prior versions of the exemption to require "exclusive" use of the vehicle for the exempt purpose. But the 1957 amendment to SDC 44.0422, which restructured the exemptions as a list of "when operating" subsections, had shifted the focus. After 1957, what mattered was how the vehicle was being used on a given haul, not what the vehicle was used for as a general matter.
The 1961 amendment to SDC 44.0422(6), the retail merchant exemption, retained the use-based framing. So a Class 4 plated truck could lawfully do an exempt haul (delivering previously sold merchandise to a purchaser outside a municipality) on Monday and a compensated haul on Tuesday. The applicable rule for each trip was determined by the use on that trip, not by the plates on the truck.
The AG worked through the questions:
Question 1: Was a Class 4 plated truck carrying previously sold merchandise under 26,000 pounds gross in violation of SDC 44.0431 and 44.9927? No. The exempt use was lawful regardless of the plates.
Question 2: Did the compensation application bind the merchant to operate the truck only as a compensated carrier? No. The merchant could still operate the truck in exempt mode for qualifying hauls.
Question 3: Could the merchant remove the compensation plates when doing an exempt haul? Because questions 1 and 2 were answered no, the question of plate removal did not need to be reached, and the AG declined to answer it. The merchant was not required to remove the plates.
Question 4: Could a law enforcement officer rely on the displayed plates as proof the load was lawful? No. The officer had to actually look at what was being hauled and determine whether the use qualified for an exemption, or, if not exempt, whether the load fell within the weight class authorized by the plates. The plates were not a safe harbor for the operator's actual conduct.
Question 5: Could the truck carry a mixed load (8 tons compensated cargo plus 10,000 pounds of previously sold merchandise) on a single trip? No. A mixed load defeated the strict-construction rule for exemptions. The whole trip was either compensated or exempt, not partly each. If a portion of the load triggered compensation, the entire haul lost the exemption and was subject to the compensation rules (including weight-class limits) for the whole load.
Currency note
This opinion was issued in 1968. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The motor carrier compensation chapter has been substantially restructured since 1968. Modern South Dakota motor carrier regulation is governed by current SDCL Title 49 (Public Utilities) and Title 32 (Motor Vehicles), along with federal motor carrier regulations (FMCSA) for interstate operations. The retail merchant exemption (if it still exists in current form) and the mixed-load doctrine should be checked against current SDCL and DOT/DPS administrative rules.
What the opinion meant at the time
For retail merchants who hauled their own goods, the opinion was clarifying. They could buy compensation plates for general business hauling and still take advantage of the exempt-haul treatment when delivering already-sold merchandise to out-of-town customers. They did not have to maintain two trucks (one plated, one not) or keep removing and reattaching plates.
For law enforcement, the opinion was a discipline. An officer who pulled over a Class 4 truck and counted its load against the Class 4 weight limit might be misreading the situation. If the load was previously sold merchandise being delivered outside city limits, the trip was exempt and the weight class did not govern. The officer had to ask: what is being hauled, who sold it, where is it going? The plate display alone did not answer those questions.
For trucking-industry attorneys, the opinion solidified the post-1957 use-based reading of the exemption regime. Earlier "exclusive use" cases were no longer fully controlling. The new question was whether a particular trip fit the conditions of a particular exemption subsection, not whether the vehicle was dedicated to exempt use.
For merchants tempted to mix compensated and exempt cargo on one trip to maximize trip efficiency, the answer was no. The exemption was a per-trip determination, and any compensated cargo on the trip pulled the whole trip out of the exemption. The penalty was real: under SDC 44.0431, an overweight or improperly compensated trip exposed the operator to additional compensation owed for the higher class, plus criminal penalties under SDC 44.9927.
Common questions
Q: What was the difference between Class 4 and other compensation classes?
A: SDC 44.0426 set classes by gross weight, with annual fees scaled to the weight. Class 4 covered vehicles up to seven tons gross weight at $125 per year (1960 dollars). Other classes covered heavier vehicles at higher rates.
Q: How did SDC 44.0431's overweight penalty work?
A: If a carrier operated a vehicle that weighed (with its load) more than the gross weight specified on the compensation application, the carrier was deemed to have agreed to the higher weight class and had to pay the higher compensation for the full term of the certificate. This was treated as compensation, not as a penalty, so it did not bar separate prosecution for the underlying violation.
Q: What counted as "previously sold merchandise" for the exemption?
A: The opinion did not parse the phrase in detail, but the surrounding 1945-46 and 1959-60 AG opinions had construed it as requiring a bona fide retail sale to a consumer, with delivery being the subject of the haul. Speculative hauls (carrying inventory in case it sold) did not qualify.
Q: Why didn't the AG just answer question 3?
A: Because the AG had already answered yes to the underlying use question (the merchant could lawfully do both kinds of hauls without removing plates). Whether and where the plates could be stored during a removal was moot: there was no requirement to remove them in the first place.
Q: Could a merchant be cited for an exempt haul if the officer wrongly assumed the load was compensated?
A: The opinion implied yes; the operator carried the burden of showing the load qualified for the exemption. Mitchell Produce Co. v. Morrison required strict but reasonable construction of exemptions, and Paddock v. Balgord required the party claiming an exemption to "show itself clearly within the terms of the exception." If the officer wrote a citation and the merchant contested it, the merchant would have to prove the exempt-use elements.
Q: Did the opinion address what records the merchant should keep to prove exempt-use status?
A: No. As a matter of practical defense, sales receipts, delivery logs, and routing records would have been valuable; the opinion did not impose specific recordkeeping requirements.
Background and statutory framework
South Dakota's motor carrier compensation regime, codified at SDC 44.0420 to 44.0432, was a fee-based system that funded highway maintenance from the operators who used the highways most heavily. The basic theory was that commercial trucking imposed road wear costs that should be recovered through compensation tied to weight and use.
The "motor carrier" definition was broad ("any person, copartnership or corporation owning, controlling, operating, or managing any motor vehicle... for the transportation of persons or property over the public highways"), but the statute carved out twelve exemptions for specific kinds of hauls. The retail merchant exemption (subsection 6) was one of those, designed to spare small merchants from the compensation burden when they were merely delivering goods they had already sold.
The 1957 amendment that restructured the exemptions as "when operating" subsections was important to the AG's reading. Before 1957, the exemptions had been less consistently framed, and the case law had sometimes drifted toward an "exclusive use" requirement. After 1957, the statute's text made clear that the exemption applied to specific operations, not to specific vehicles. The legislature had not used "exclusively" in subsection 6 (or in the other 1957-style subsections), so the AG would not import that requirement.
Mitchell Produce Co. v. Morrison was the leading case on exemption construction. The Court there said that exemptions "should be strictly, but reasonably, construed; they extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provision rather than the exception." That formula governed.
The opinion did not address whether the same use-based reading applied to the other eleven exemptions in SDC 44.0422. Logically the same approach would govern, but each subsection's text would need to be checked.
Citations and references
Statutes:
- SDC 44.0420 to 44.0432 (motor carrier chapter)
- SDC 1960 Supp. 44.0422 (motor carrier definition and exemptions), as amended
- SDC 1960 Supp. 44.0422(6), as amended by Chapter 235 of the 1961 Session Laws (retail merchant exemption)
- SDC 1960 Supp. 44.0426, as amended (compensation classes and rates)
- SDC 1960 Supp. 44.0431 (overweight; higher class compensation owed)
- SDC 57.31 (retail merchant licensing)
- SDC 44.9927 (penalties)
Cases:
- Mitchell Produce Co. v. Morrison, 63 S.D. 127, 257 N.W. 47 (exemption construction rule)
- Paddock v. Balgord, 2 S.D. 100, 48 N.W. 840 (1891) (party claiming exemption must show entitlement)
Prior AG opinions:
- 1945-46 AGR 92 (earlier "exclusive use" reading of SDC 44.0422)
- 1951-52 AGR 240 (same)
- 1959-60 AGR 55 (post-1957 reading of subsection 6)
Treatises:
- 59 CJS 1092 (rules of exemption construction)
- 82 CJS Statutes § 384 (amendments may clarify or alter prior law)
Source
Original opinion text
Compensation Plates. Compensation Plates.
You have requested an official opinion of this office based upon the following factual situation:
"A merchant engaged in retail sales business, and licensed under SDC 57.31 operates a truck in course of such business for hauling of materials not previously sold and also of previously sold merchandise. Said merchant applies for, and obtains, a compensation certificate for such truck for Class 4 operations. After issuance of such compensation certificate and plates, the merchant uses such truck in transporting, in separate hauling operations, materials not previously sold (compensated hauls) and merchandise previously sold (exempt hauls.)"
You have then presented the following specific questions for consideration:
"1. If such compensated truck is used for hauling previously sold merchandise with gross weight under 26,000 lbs. but over 8 tons (Class 4), is such operation in violation of SDC 1960 Supp. 44.0431 and 44.9927?
"2. Is such merchant's application for compensation certificate in respect to such truck considered to be a definite election to operate such truck as a compensated motor carrier under SDC 44.04 and acts amendatory thereto, regardless of any exempt use thereof under SDC 1960 Supp. 44.0422 and acts amendatory thereto?
"3. Is operator of such truck entitled to remove from such truck the compensation plates issued when engaged in transporting previously sold merchandise under SDC 1960 Supp. 44.0422 (6) as amended by 1961 Session Laws, Chapter 235? If so, where should compensation plates be kept during such period of removal?
"4. Is a law enforcement officer entitled to rely upon the displayed compensation plates as evidence of lawful and authorized compensated weight when such truck is found transporting goods on the public highway, even if the particular operator of said truck claims the transported merchandise is previously sold merchandise and also claims the said truck is therefore exempt under SDC 1960 Supp. 44.0422 (6), amended?
"5. Can such merchant legally transport on such truck a load of materials consisting of 8 tons of compensated load and 10,000 pounds of previously sold merchandise?"
The controlling statutes for this situation are those statutes which require compensation for the unusual use of the highways (SDC 44.0420 to 44.0431) and more specifically SDC 1960 Supp. 44.0422 as amended.
This is a broad statute setting forth conditions which require the purchase of compensation plates followed by twelve exceptions. The pertinent portions of this section are as follows:
"The term 'motor carrier', when used in Sections 44.0420 to 44.0432 of SDC 44.04 and amendments thereto shall mean any person, copartnership or corporation owning, controlling, operating, or managing any motor vehicle, trailer, semitrailer, or motor propelled or trailed vehicle chassis for the transportation of persons or property over the public highways of this state.
"Provided, however, the following shall not be considered within the definition of 'motor carriers', to-wit:
"(6) when operating a motor vehicle of less than 26,000 pounds gross weight owned by a merchant licensed under SDC 57.31 and amendments thereto or his commissioned paid employee and used in transporting his employer's previously sold merchandise to a purchaser outside the limits of a municipality and in returning exchanged property."
SDC 44.0426 1960 Supp., as amended, provides:
"Every person or corporation except as otherwise provided in this section, desiring to operate a motor vehicle, trailer, or semitrailer, upon the public highways of this state as a motor carrier, in consideration of the unusual use of such public highways by such person or corporation and in addition to the regular license fee or taxes imposed upon motor vehicles in this state, shall, if a carrier of property, pay to the county treasurer of the county of which the applicant is a resident, or to the Department of Motor Vehicles, if applicant is not a resident of this state, the compensation provided for herein annually.
"Class 4, Gross weight seven tons or under, one hundred twenty-five dollars per year."
And SDC 44.0431 1960 Supp. provides:
"Any motor carrier who shall operate upon the public highway any motor vehicle the weight of which together with its load shall exceed the gross weight of such vehicle specified in his application and authorized in the compensation certificate, shall be thereby deemed to have specified such greater weight and to have agreed to pay compensation accordingly, and shall forthwith pay the amount by which the correct compensation therefor, for the full term of the authorized operation of such motor vehicle under his certificate, or permit, exceeds the amount of compensation actually paid. Such additional amount shall be compensation and not a penalty or fine, and the payment thereof shall not constitute a defense or bar to conviction for such, or any other violation of this chapter. The obligation to pay such compensation shall be calculated and incorporated in the judgment of any court wherein a motor carrier has been convicted of any crime involving the overweight operation of any motor vehicle upon the highways of this state, and failure to obtain the compensation and present the court with a receipt indicating payment therefor within a time specified by the court shall be punishable by contempt proceedings for the purpose of this chapter, in determining the gross weight of vehicles or vehicle, the load combined, a variation of five percent, but not to exceed one thousand pounds in excess of the maximum weights herein provided, is hereby allowed, without such variation constituting a violation of this chapter."
In the case of Mitchell Produce co v. Morrison, 63 SD 127, 257 NW 47, our Supreme Court has stated in the following language how the exemptions of 44.0422 are to be interpreted.
"The machinery adopted by the Legislature to accomplish its objects was to provide for the payment of compensation by motor carriers as defined in the act; to establish a broad and comprehensive definition of the term 'motor carriers'; and then to exempt out from the definition and operation of the act certain specific transportations. Respondent, being admittedly a motor carrier within the broad definition of the act, but claiming the protection of one of the exceptions, must show itself clearly within the terms of the exception. Paddock v. Balgord (1891) 2 SD 100, 48 NW 840. The canons of statutory construction with reference to exceptions from a general provision are well understood, and to cite authorities in relation to that point seems unnecessary. The applicable principle is well stated in 59 CJ 1092, as follows: 'Exceptions, as a general rule, should be strictly, but reasonably, construed; they extend only so far as their language fairly warrants, and all doubts should be resolved in favor of the general provision rather than the exception.' "
Exemption of No. 6 of SDC 1960 Supp. 44.0422 or the similar provision in the SDC of 1939 has been the subject of previous Attorney General opinions.
In 1945-46 AGR 92 this office interpreted the provision exempting from compensation plates, vehicles "exclusively used by a person who delivers in his own vehicle goods and merchandise in pursuance to bona fide sales at retail to the consumers thereof, residing outside the limits of cities and towns" (SDC 44.0422, as amended by Chapter 160, Session Laws of 1943) and held that such exemption did not include a vehicle which not only delivered sold goods but also carried goods to be sold directly from the vehicle. This holding was based upon the word "exclusively" in the above statute.
Again, in 1951, the above statute was the subject of an opinion of this office and again because it was not stated that the vehicle was used in the "exclusive" manner, it was held that the vehicle was not exempt. (1951-52 AGR 240)
In 1957, SDC 44.0422 was amended and exemption No. 6 was set out as it is presently, and since then has been subjected to interpretation only once from this office in which opinion it was held not applicable to the situation presented. (1959-60 AGR 55). The Supreme Court subsequent to this amendment had another occasion to interpret an exemption of SDC 44.0422 and although the exemption was not the one involved in the situation you presented, the language of the Court provides reasoning upon which this opinion can be predicated. The Court stated:
"An amendment is usually designed either to alter the operation and effect of earlier provisions or to clarify their meaning. 82 CJS Statutes S 384. There are in the 1957 amendment changes in substance, but they are not here material. It would also appear that the legislature intended a clarification of the prior statute. It sets out each of the eleven exceptions in a subsection beginning with the words 'when operating', which indicates a purpose to exempt motor vehicles primarily on the basis of their use."
Thus it can be reasoned that it is not the vehicle, but the use to which the vehicle is put that determines whether or not it comes within the exemptions.
Therefore, the requirements that must be met before a use can qualify under exemption No. 6 must be:
- A motor vehicle of less than 26,000 pounds gross weight;
Owned by a merchant licensed under SDC 57.31 or his... employee;
Transporting employer's previously sold merchandise (and in returning exchanged merchandise);
To a purchaser;
Outside the limits of a municipality.
If a vehicle complies with the requirements and is used in the above manner it is exempt from compensation. The fact that at other times the same vehicle is used for purposes which are not exempt and for which compensation plates are purchased and displayed on the vehicle does not remove it from the exempt status when used as above.
Upon the above reasoning your question No. 1 would be answered in the NEGATIVE.
Question No. 2 is also answered in the NEGATIVE.
For the reason that the first two questions are answered in the negative, it is unnecessary for the compensation plates to be removed when the vehicle is used for an exempt haul and question No. 3, therefore, need not be answered.
In answer to question No. 4 it is my opinion that a law enforcement officer cannot rely upon the displayed plates, but must determine if the use to which the vehicle is being put is exempt, or if not exempt, within the limits allowed by the compensation plates.
Question No. 5 is answered in the NEGATIVE for the reason that such a use, (hauling a load that requires compensation along with a load that would otherwise be exempt) removes the use from the strict interpretation to be given to the exception.