Opinion
No. 30333.
March 6, 1933.
1. LICENSES. Where manner in which filling station operator as agent of unincorporated association organized to permit members to obtain gasoline without paying privilege tax differed in no material respect from that in which operator would have handled gasoline as ordinary retail dealer, operator held liable for tax ( Code 1930, section 4786).
Filling station operator was liable for privilege tax under Code 1930, section 4786, on gasoline handled as agent of the unincorporated association, since it appeared that although members of the association who desired gasoline would give written order therefor, and that when the operator had received orders for gasoline sufficient to fill a tank car he would order such car from nonresident dealer; that when the car arrived the gasoline was transferred to tanks set apart by operator for that purpose; that the quantity ordered by each member of association would then be delivered to him; that when delivering gasoline to members who had made orders members who had not given orders would be called on and gasoline delivered to them if they wanted it; and that if any one not member of association should desire gasoline the operator would take order and deliver gasoline if party desiring it paid therefor and became member of association.
2. ASSOCIATIONS.
Unincorporated association could not, as such, own property.
3. ASSOCIATIONS.
Contract in unincorporated association's name made by agent thereof would not bind members personally, but only agent.
4. COMMERCE.
Privilege tax on gasoline neither sold nor distributed in package in which it was shipped from sister state, but only after it had been transferred therefrom and in broken quantities, held not objectionable as burden on interstate commerce (Code 1930, section 4786; Const. U.S., art. 1, section 8, cl. 3).
5. LICENSES.
Promise, voluntarily made in bond executed for privilege of selling gasoline, to pay attorney's fees and other expenses incurred in collecting privilege tax and penalty held enforceable, although not required by statute (Code 1930, section 2901; section 4785 et seq.).
APPEAL from Chancery Court of Monroe County.
D.W. Houston, Sr., D.W. Houston, Jr., and E.E. Holley, all of Aberdeen, for appellants.
The property and title to the gasoline in question was in the Tax-Free Gasoline Co-operative Association, the individual members thereof constituted this association and were necessary and constituent elements of same, and the property and title in said gasoline being already in them, the logical and inescapable conclusion is that they could not buy from themselves that which was already their own.
There is no showing that said association was either a distributor or wholesaler of gasoline. The proof is that it was an association of individuals joined together under a valid, legal and subsisting agreement for the purpose of furnishing to its members gasoline for agricultural and industrial uses by the association itself ordering through its agent from without the state to be shipped to it within the state in cooperative tank car lots, and there distributed to them as needed, and to them and alone and not to some third person not a member of said cooperative association.
It was on the point of whether a sale was committed within the state that the court below made its decision. In other words, the testimony was so overwhelmingly clear in favor of our contention that no part of this gasoline had been used on the streets, roads and highways of the state that that question of fact was decided in our favor, and that the only question for decision was one of law as to whether a sale or sales were committed in this state, which the court held against us.
The statute says "for sale," and when it says "for sale," it means just what it says and no more and no less, for this statute fixing a tax must be literally and most strictly construed against the taxing power and most liberally in favor of the person or persons against whom the tax is sought to be fixed or assessed.
Petroleum Co. v. Miller, 154 Miss. 576; R.R. v. State, 62 Miss. 106; Simmons v. State, 70 Miss. 845, 12 So. 477; Wilby v. State, 93 Miss. 767, 47 So. 465; State v. Grenada, 123 Miss. 191, 85 So. 137; Sperry v. Harbison, 123 Miss. 674, 86 So. 455; Cuevas v. Cuevas, 145 Miss. 456, 110 So. 865; Board Levee Commissioners v. Howse, etc., 149 Miss. 843, 116 So. 92.
The lower court is in error and misconceived the testimony adduced on the trial of this case when it held that the evidence rebuts the theory that the Tax-Free Co-operative Gasoline Association was a legal entity or that the members so ordering had no common interest in the gasoline shipped to said association, and that the appellants were not designated as the agent of the Tax-Free Co-operative Gasoline Association, an undisclosed principal, and that therefore said gasoline was received in Mississippi for sale.
In determining a sale, it, of course, becomes important where the sale was made of the gasoline. Our contention borne out by the undisputed facts on the record, and the record alone, is that there was only one sale made, and that sale was made, consummated and effected in Memphis, Tennessee.
Couret v. Conner, 79 So. 230.
Ordinarily where goods are sold to be shipped to the buyer by carrier, the title passes to the buyer on delivery to the carrier, he being regarded as the buyer's agent for the purpose of delivery, and this will ordinarily be deemed the place of sale.
23 R.C.L. 1256; Harper v. State, 91 Ark. 422, 121 S.W. 737; Sledge Norfleet Co. v. Hugh (Ark.), 247 S.W. 1077; Hendren v. Wing, 60 Ark. 561, 31 S.W. 149.
The title passed to and the same was the property of the Tax-Free Co-operative Gasoline Association.
Section 4789 of the Code says "Sale," it does not say bartering, exchanging or loaning. It says what it means and means what it says: "Sale," and for this court to apply the tax it would be necessary for it to interpolate into this statute the word "loan," which would be in effect judicial legislation, and including therein something that was never intended by the legislature, and which will not be permitted by our courts as has often been held.
R.R. v. State, 62 Miss. 105; Comrs. v. Howse, 149 Miss. 843.
A tax on such a transaction as the evidence in the instant case discloses would be a burden on interstate commerce and would be in violation of article 1, section 8, paragraph 3 of the Constitution of the United States, or the Commerce Clause thereof, which gives the right to any citizen of any state to take himself or his property out of or into any state, and that such a right cannot be taken away, nor can it be hampered by discriminative taxation in any degree whatsoever.
4 Riedman State, etc., pp. 490, 491; 2 Id. 1032, 1038; State v. Moore, 113 N.C. 704, 18 S.E. 342, 22 L.R.A. 472; State v. Wagner, 69 Miss. 207, 65 Am. St. 565; Walton v. Mo., 91 U.S. 275, 23 L.R.A. 347; State v. Bengsch, 190 Mo. 81, 70 S.E. 710; State v. Mitchell, 97 Me. 66, 54 A. 887; State v. Montgomery (Me.), 47 A. 165; 2 Tucker on Const., 528, 534, 552; Cook v. Marshall, 196 U.S. 261, 49 L.Ed. 471; Brown v. Maryland (U.S.), 6 L.Ed. 678; Stewart v. People, 232 U.S. 665, 58 L.Ed. 786; Crenshaw et al. v. Ark., 57 L.Ed. 565; Rogers et al. v. Same, 227 U.S. 401, 57 L.Ed. 569; Caldwell v. N.C., 187 U.S. 622, 47 L.Ed. 336; Rearick v. Pa., 203 U.S. 507, 51 L.Ed. 295; Dozier v. Ala., 218 U.S. 124, 54 L.Ed. 965; Tea Co. v. Carthage (Mo.), 165 S.W. 743.
Lotterhos Travis, of Jackson, for appellee.
The appellant, as a distributor, was not protected by the so-called "association."
If we treat and consider the said Tax-Free Co-operative Gasoline Association as a real bona-fide association, it still affords no protection whatever to the appellant in this case. This is true (to use the language of the supreme court) "because the association they essayed to represent had no legal existence and whether they so intended or not, they became individually liable."
Victor v. Adams, 106 So. 433, 140 Miss. 643; Evans v. Lilly, 95 Miss. 58, 48 So. 612; Alkahest Lyceum System v. Featherstone, 113 Miss. 226, 74 So. 151.
State v. Superior Oil Co., 156 Miss. 377, 119 So. 360, holds that the tax is due when there is a sale of the gasoline within the state regardless of the uses to which the gasoline is to be put.
The tax is a privilege tax imposed on the gasoline dealers or distributors and is not a property tax nor a tax on the person who purchases the gasoline.
State v. Panhandle Oil Co., 147 Miss. 663, 112 So. 584; City of Jackson v. State, 156 Miss. 306, 126 So. 2.
If any part of the gasoline was received for sale in the state, the tax became due on all the gasoline.
Williams, Personal Property (18 Ed.), p. 50; Blashfield, Automobile Law, p. 2486; Blashfield, Automobile Law, Supp., p. 674; People v. Sterling, 261 P. 1080; Miller v. Colorado (Colo.), 230 P. 603, 39 A.L.R. 269.
When the appellant Treas distributed the gasoline here involved in broken quantities he thereby became subject to an excise tax as a distributor of said gasoline.
State v. Yale Corp. of S. Dak. (Mont.), 295 P. 255; Hart Refineries v. Harmon, 263 P. 687; People v. Texas Co., 275 P. 896.
When a sale is to be made of a portion of a total mass of fungible goods the title does not pass until separation and delivery.
24 R.C.L., Sales, section 285; Thomas v. State, 37 Miss. 353; Berry v. Waterman, 71 Miss. 497, 15 So. 234.
A person acting as agent for the purchaser is treated as making a sale himself where the title passes through him to the purchaser.
State v. Jamison (Mo.), 199 S.W. 713; Allen v. United States (9th Cir. C.C.A.), 6 F.2d 199; Wiginton v. United States (C.C.A. 4th Cir.), 269 Fed. 125; Blackburn v. State (Tex.), 185 S.W. 581; Montgomery v. State (Tenn.), 188 S.W. 213; Mo Yaen v. State (Ariz.), 163 P. 135; State v. Baird (Wash.), 222 P. 218; Commonwealth v. Gallo (1918), 70 Pa. Super. 548; Commonwealth v. Opolka, 69 Pa. Super. 230; Arrington v. State (Ala.), 69 So. 385; Walters v. State, 127 Miss. 324, 90 So. 76; Horton v. State, 105 Miss. 333, 62 So. 360; Wiley v. State, 74 Miss. 727; Simmons v. State, 102 Miss. 605, 59 So. 849; State v. Superior Oil Co., 156 Miss. 377, 119 So. 360; Krnavek v. State (Tex.), 41 S.W. 612; Harper v. State, 85 Miss. 338, 37 So. 956; Anglin v. State, 96 Miss. 215, 50 So. 492.
The imposition of the excise tax on the transactions here involved does not contravene the commerce clause of the constitution of the United States.
Burke v. Bass et al. (Nebr.), 242 N.W. 606; Bowman v. Continental Oil Co., 256 U.S. 642, 65 L.Ed. 1139; Sonneborn Bros. v. Keeling, 265 U.S. 506, 67 L.Ed. 1095; Woodruff v. Parham, 8 Wall. 123, 19 L.Ed. 382; Brown v. Houston, 114 U.S. 622, 29 L.Ed. 257; American Steel Wire Company v. Speed, 192 U.S. 522, 48 L.Ed. 547.
The appellant cannot justify his deliveries of gasoline to members for cash by calling these transactions loans.
Howard v. State (Tex.), 163 S.W. 429; Jenkins v. State (Tex.), 155 S.W. 531; Veach v. State (Tex.), 159 S.W. 1069; Keaton v. State (Tex.), 38 S.W. 522; State v. Lemons (N.C.), 109 S.E. 27.
Hannah Simrall, of Hattiesburg, for appellee.
If we admit that the said association was a bona-fide organization of the members thereof, still the argument on behalf of the appellants is absolutely fallacious because it is squarely in the teeth of the very unequivocal and emphatic holding of the supreme court of our state in at least three cases.
Alkahest Lyceum Company v. Featherstone, 113 Miss. 226, 74 So. 151; Victor v. Adams, 140 Miss. 643, 106 So. 433.
We submit that able counsel for appellants meet themselves coming back when they maintain in the one breath that the Tax-Free Gasoline Co-operative Association is a "separate and distinct entity," and in the next breath maintain that there has not been a sale of gasoline. Distinguished counsel argue that the gasoline was bought by this entity and was shipped to this entity and owned by this entity. How could the legal title pass from this legal entity into the respective so-called members of this association unless there was a sale?
5 C.J., Title, Associations, page 1342, par. 30.
If the title to the gasoline vested in this association as a separate entity, as contended by counsel for appellants, there had to be a sale of it before it reached the individual member. If the title to the gasoline vested in the two hundred fifty members, then there had to be a sale of that part resting in the two hundred forty-nine members in order for the two hundred fiftieth one to acquire title to any part of the gasoline. So it makes no difference where the title rested, because there was most assuredly a sale of the gasoline when it was delivered to the individual member.
Instead of this being a tax "upon all gasoline," it is a privilege tax imposed (a) upon persons selling or distributing gasoline, and (b) upon persons using the gasoline on the streets or highways when the gasoline so used has not been purchased from a dealer or distributor who has already paid the privilege tax. The amount of the privilege tax required to be paid by such persons is computed at the rate of five cents per gallon.
Sections 4785, 4786, 4799, Code of 1930.
The legislature was attempting to forestall such an operation on the part of the large gasoline companies, as well as to forestall the very operation which appellants have carried on, when the legislature enlarged the definition of the word "distributor" so as to include "selling or distributing gasoline." And when the legislature also provided that the word "person" shall mean "every person, corporation, copartnership, company, agency or association."
The appellee sued and obtained a decree against the appellant, Charles Treas, for gasoline privilege tax under section 4785 et seq., Code 1930.
Section 4786 of that Code provides that: ". . . Every person, firm, copartnership, association, corporation or association of persons purchasing or acquiring in any manner for use on streets, roads or highways, sale or distribution, by retail or otherwise, from any source other than from a distributor or wholesale dealer of gasoline, duly licensed as such in this state, shall be deemed a distributor of gasoline and subject to all the provisions of law pertaining to distributors, or wholesale dealers of gasoline."
Under this statute one who purchases gasoline for his own use at places other than streets, roads, or highways, is not a distributor thereof within the meaning of the statute, and therefore not liable for the privilege tax for purchasing and distributing gasoline imposed by other sections of the statute; but one who sells or distributes, within the statute's definition thereof, gasoline to others is liable to the tax therefor without reference to the use to which the purchaser or distributee puts the gasoline.
The appellant purchased gasoline in Memphis, Tennessee, and therefore not from a licensed dealer in this state, and distributed it to others in the manner hereinafter set forth: and his contention is, that in so doing, he acted solely as the agent of the distributees, who paid for the gasoline and compensated him for receiving and distributing it, and who did not purchase it for use, or use it, on streets, roads, or highways.
The case made by the evidence is substantially this: The appellant is doing business at Aberdeen, Mississippi, under two trade-names, namely, Aberdeen Lumber Company and Alco Service Station; the latter being a filling station at which gasoline is sold to the public at retail, for the privilege of doing which he executed and delivered to the appellee's predecessor in office the bond required by section 4787, Code 1930. Several farmers requested the appellant to devise a plan by which they could obtain gasoline, through him, not for use on streets, roads, and highways, and escape paying the privilege tax thereon. He consulted a lawyer, who furnished him with a form for articles of agreement for an unincorporated association, and advised him how to operate thereunder so as to accomplish this purpose, which articles of agreement the reporter will set out in full. These articles of agreement were signed by a large number of persons living in four counties, some of them signing the agreement voluntarily, but many of them being solicited by the appellant or his agents so to do. The appellant set apart two tanks at his Alco Service Station for the storage of gasoline purchased by him under this agreement. Members of the association who desired gasoline would give the appellant, or his agents, a written order therefor in the following form:
"Purchase Order.
"Tax-Free Co-operative Gasoline Association.
"(This order subject to rules and regulations printed on reversed side).
"Aberdeen, Mississippi, 19__
"Aberdeen Lumber Company "Alco Service Station, Aberdeen, Mississippi
"You are authorized and directed by me, as a member of the Tax-Free Co-operative Gasoline Association, of Aberdeen, Mississippi, to purchase for my account from without the state ____ gallons of gasoline, and are to be shipped care of you, or either of you, in tank cars to Aberdeen, Mississippi, to be there unloaded by you in a tank and/or tanks owned by you for storage and to be delivered to me as and when needed at cost, plus freight, and a reasonable charge to you for unloading, storing and distributing to me at and from said tank and/or tanks as and when called for by me, being a price of ____ cents per gallon, said gasoline or any part thereof, is not to be sold within this state or used on the streets, roads or highways thereof, and is not to be commingled with any such gasoline in said tank and/or tanks.
"_____________, Member "By ____________."
The price the member of the association was to pay for the gasoline was inserted in his order, and payment therefor was made by him to the appellant at the time the order was given. When the appellant had received orders for gasoline sufficient to fill a tank car therewith, he would order such a car of gasoline from a dealer in Memphis, Tennessee, by telephone, and direct him to bill and consign it to the Tax-Free Co-operative Gasoline Association, Aberdeen, Mississippi. When it arrived at Aberdeen, it was delivered by the carrier to the appellant, and the gasoline was transferred to one or both of the two tanks set apart by him for that purpose. The quantity ordered by each member of the association would then be delivered to him at the tank on being called for, or, if he preferred, at his residence, in a motor tank of the appellant, who charged him a compensation therefor. When a member would give an order for gasoline, it would be delivered to him then, if he wanted it, out of the gasoline then in the appellant's storage tank without waiting for the appellant to purchase it; the appellant stating that so to do was agreeable to the other members of the association. When the appellant delivered gasoline to members of the association by his motor tank, the driver thereof would call on the members of the association who had not requested such delivery, and, if they wanted the gasoline, would deliver it to them; and if any one not a member of the association should request him so to do, he would take his order for gasoline, and, if he wanted it, deliver it to him then, if he paid therefor, and signed the articles of agreement.
The appellant's compensation for this service was the difference between the amount paid by the members of the association for the gasoline, and that which it cost him to purchase and deliver it. Fluctuations of the market were not taken into consideration; the members always paying a stipulated price per gallon for the gasoline when placing their orders therefor, without regard to what it would cost the appellant. A large quantity of gasoline so handled was delivered by the appellant to one man who owned and operated a filling station, on receipts therefor signed in the names of members of that association by him as agent. The gasoline was then transported to this person's filling station, and there delivered to members of the association represented by him, either direct from the motor tank, or after being transferred therefrom to a tank set apart by him for that purpose. What his compensation for this service was, if any, does not appear.
When gasoline was delivered to a member of this association, he would sign a receipt therefor in the following form:
"Phone 84 Delivery Receipt 00554.
"Tax-Free Co-operative Gasoline Association "Alco Service Station | Agents "Aberdeen Lumber Co. |
"State of Mississippi, Monroe county, City of Aberdeen
"Personally appeared before me, the undersigned authority in and for said city, county and state, ____ the person signing this verification, who is personally known to me, and who being duly sworn, deposes and says:
"1. That he is a member of the `Tax-Free Co-operative Gasoline Association' of Aberdeen, Monroe county, Mississippi, and that as such he has this day withdrawn from the tank, or tanks used by said association in storing and distributing gasoline to its members ____ gallons of gasoline as a member of such association.
"2. That said gasoline will not be sold by him within the state of Mississippi, or be used on the streets, roads or highways thereof or in violation of any of the laws of the state of Mississippi.
Gal. Ordered ___________ Gal. Rec'd ___________ Gal. Due ___________ ___________, Member. ___________, Agent.
"Sworn to and subscribed before me this the ____ day of ____, 19__.
"___________, Notary Public."
The only requirement for admission into the association was the signing of the articles therefor. No meeting of the association was held for any purpose, and no officers were elected until after the institution of this suit.
The money paid the appellant by members of the association for the gasoline was deposited by him in a bank to the credit of the association, but was subject to his check only; he was not required to, and did not, give any account thereof to the association, but drew checks on it whenever he desired with which to pay for the gasoline purchased, and for his own personal use.
It will thus be observed that the manner in which appellant handled this gasoline differed in no respect from that in which he would have handled it as an ordinary retail dealer therein, except that it was sold and delivered to a select class of which any person who desired could become a member; his compensation for handling the gasoline in each case being the same; that is, the difference between the price for which he sold the gasoline, and that for which he purchased it, plus the expense incurred by him in storing and delivering it. In other words, his compensation in each case consisted of the net profit realized by him from the business.
The association, being unincorporated, could not, as such, own property. Any contract in its name, made by an agent thereof, did not bind the members of the association personally, but only the agent; and in contemplation of law, as well as in fact here, the sale of the gasoline by the Memphis dealer was to, and on the credit of, the appellant in whom the title thereto vested, subject only to a possible equity which members of the association might have therein, as to the existence of which we express no opinion; it not being here material. The Tax-Free Co-operative Gasoline Association was simply another trade-name under which the appellant was doing business.
This opinion must be limited to the facts on which it is based, and must not be understood as expressing any views on the right of persons co-operating with each other in purchasing gasoline not for use on streets, roads, or highways, and dividing it among themselves after its receipt, either by themselves directly or through an agent in fact appointed for that purpose.
But it is said by counsel for the appellant, to hold the appellant liable for the tax here would impose a burden on interstate commerce, and therefore would violate the interstate commerce clause of the federal constitution (article 1, section 8, clause 3). This contention seems to be without merit. The appellant neither sold nor distributed gasoline in the package in which it was received by him, but only after it had been transferred therefrom and in broken quantities, after it came to rest in this state and had been mingled with the property therein. The interstate commerce clause, therefore, had ceased to operate on the gasoline when the appellant did that which subjected him to the tax here sought to be collected. Compare Burke v. Bass, 123 Neb. 297, 242 N.W. 606; City of Jackson v. State, 156 Miss. 306, 126 So. 2, and Barataria Canning Co. v. State, 101 Miss. 890, 58 So. 769.
The bond executed by the appellant for the privilege of selling gasoline at his Alco Service Station was conditioned as follows: "On notice of the auditor of public accounts of the state of Mississippi that said principal is delinquent under the laws above referred to, said principal will immediately upon this evidence pay to the auditor of public accounts for the benefit of the state of Mississippi all taxes, penalties, and such other expense, including attorney's fees and any and other expense, as might be incurred in collecting this tax and penalty, and on failure so to do said principal and the said United States Fidelity Guaranty Company, as surety, hereby agrees to immediately pay the same."
The court below included in its decree an award to the appellee on this bond of one hundred fifty dollars, attorney's fee, of which appellant complains on the ground that the statute required no promise or bond from the appellant to pay "the expense, including attorney's fees and any other expense that might be incurred in collecting this tax and penalty," and did not authorize the auditor to exact such a promise and bond therefor. The condition of the bond required by the statute is, "that the licensee will fully comply with all laws pertaining to distributors or wholesale dealers of gasoline and pay all excise taxes and penalties provided for or required by this act," and the statute does not elsewhere provide for the payment by a licensee of the expense incurred by the state in collecting the tax and penalties.
Section 2901, Code 1930, provides that: "All bonds or recognizances taken by any officer in the discharge of his duty shall be valid and binding on the obligors therein, whether taken in the form prescribed or not, so that the substantial matters required be contained therein; and such bonds shall only be void so far as they may be conditioned for the performance of acts in violation of the law or policy of the state." The promise and bond by the appellant to pay the expenses of collecting the tax, while not required by the statute, is not expressly prohibited thereby and is in furtherance of the purpose it seeks to accomplish; and when such a promise and bond has been given voluntarily and without coercion, as is the case here, and the licensee was given, and exercised, the privilege which he sought to obtain thereby, it is too late for him to object thereto on the ground that the statute did not require him to give such a promise or bond. U.S. v. Hodson, 10 Wall. 395, 19 L.Ed. 937. Compare State v. Bartlett, 30 Miss. 624; Stowell v. Clark, 152 Miss. 32, 118 So. 370, and Adams v. Williams, 97 Miss. 113, 52 So. 865, 30 L.R.A. (N.S.) 855, Ann. Cas. 1912C, 1129.
Affirmed.