Car-Fee Ruling Will Save State $1.5 Billion : Courts: Justices find high taxes on automobiles bought outside California unlawful, but say only a few who filed timely claims can get rebates.

In a victory for revenue-starved state government, the California Supreme Court on Monday overturned a lower court ruling that would have given $1.5 billion in refunds to 17 million motorists for fees and taxes on used-car purchases.

The high court agreed unanimously that a discarded policy imposing higher charges on vehicles bought out of state was unconstitutional. But the justices said that only the motorist who brought suit--and an apparently relatively few others who had filed valid claims--could actually collect refunds.

“This is marvelous fiscal news for the state of California,” said state Assistant Atty. Gen. Timothy G. Laddish. “It’s a relief from a major fiscal ghost hovering above us.”

Patrick G. Woosley, a Glendale lawyer and classic car owner who led the legal assault against the state, expressed disappointment with the court’s broad limitations on refunds.

“It’s very unfortunate that the court has erected procedural barriers to people who deserve to get their money back,” he said. “If the government collects taxes unlawfully, it should pay the money back. Any honest government should do so.”

Woosley brought the widely watched class-action lawsuit after he bought a 1936 Auburn Speedster for $25,000 in North Carolina in 1976.

Based on the purchase price, the state of California charged Woosley a $427 vehicle license fee and a use tax of $1,500. Had he bought the same car in California, the license fee would have been $2 and the use tax $6.

The difference stemmed from a move in 1974 by the state Department of Motor Vehicles to begin charging fees and taxes on out-of-state vehicles based on their last selling prices. Used cars bought in the state were typically charged much lower fees, based on the depreciated value of the original price.

Woosley contended that the state’s taxing policy was not intended by the Legislature and violated the federal constitutional prohibition on discrimination against interstate commerce.

In 1990 a state Court of Appeal in Los Angeles, upholding a trial court ruling, found that the 1974 policy was discriminatory. It also struck down a DMV policy initiated in 1976 basing the use tax on all used vehicles in private transactions--resident and non-resident--on the actual cost rather than the calculated market value.

The ruling left the state facing refunds to 2.8 million buyers of out-of-state cars and 14 million other purchasers subject to use taxes.

The state Supreme Court, in an opinion by Justice Ronald M. George, said Monday that while the state’s 1976 use tax revision was valid, its 1974 imposition of higher fees and taxes on vehicles bought outside California was a “patent violation” of the Constitution.

But the justices went on to say that while Woosley was entitled to a refund, the others he purported to represent in his class-action suit could not collect unless they had personally signed timely individual claims for refunds. The high court ordered the trial court in the case to hold further proceedings to see whether other motorists would qualify.

State lawyer Laddish expressed doubt that many individuals had previously filed claims enabling them to meet the high court’s test for refunds. In the meantime, he said, the state may ask the U.S. Supreme Court to overturn the state high court’s finding that the 1974 policy had violated the commerce clause.

Woosley said he still held out hope that significant numbers of motorists could still file claims for refunds. He is likely to receive a refund, including interest, of about $2,000, he said.