White Eagle Oil Co. v. Gunderson
| Decision Date | 28 October 1925 |
| Docket Number | 6042,6030 |
| Citation | 48 S.D. 608,205 N.W. 614 |
| Parties | WHITE EAGLE OIL & REFINING CO., Plaintiff, v. GUNDERSON, Governor of the State of South Dakota, et al, Defendants. STATE OF SOUTH DAKOTA ex rel MUTUAL TANK LINE CO. et al, Plaintiffs, v. CARL GUNDERSON, Governor of the State of South Dakota, et al, Defendants. |
| Court | South Dakota Supreme Court |
These are original actions brought to test the validity and constitutionality of chapter 184, S. L. 1925, relating to the sale of gasoline by the state of South Dakota. They are before us upon demurrer to the complaints. As the same questions are involved in both cases with only slight differences in the facts stated, we consider the cases together. The complaint in the case, White Eagle Oil & Refining Company v. Gunderson et al, alleges the corporate capacity of the plaintiff that it is a non-resident of the state but a taxpayer within the state paying general taxes, and the tax levied upon users of gasoline as provided by chapter 225, S. L. 1923, and amendments thereto; that the defendants are officers of the state of South Dakota holding the respective offices as follows: Carl Gunderson, Governor; James L. Driscoll, Treasurer; E. A. Jones, Auditor; Buell F. Jones, Attorney General; and Carl Gunderson, Joe W. Parmley, John E. Peart, and Chauncey T. Bates, member of the state highway commission; that on or about the 18th of July, 1925, the defendants Carl Gunderson, as Governor, and James L. Driscoll, as Treasurer, met, and at such meeting (called by telephone on one day's notice and unattended by the Attorney General of the state) decided that the retail prices exacted by dealers in gasoline in the state of South Dakota were unreasonable and excessive, and directed the state highway commission to buy gasoline and to sell the same at retail throughout the state, and further decided at said meeting to establish by, and through, the state highway commission, stations for the sale of gasoline at retail in the county seat of each county in the state, and elsewhere within the state; that the said members of the highway commission, purporting to act under said order and direction, are planning and threatening to enter extensively in the retailing of gasoline throughout the state and have placed orders for large quantities of gasoline to be bought for that purpose, and are about to purchase a large amount of equipment and material for the purpose of erecting and maintaining storage and service stations for the sale of gasoline at more than 25 stations; that said defendants are planning to pay for the gasoline so ordered, and for the material and equipment from the public funds of the state, to wit, from the state highway funds which have been or are to be paid into the treasury from the motor fuel license tax imposed by chapter 225, S. L. 1923, and amendments thereto; that said defendants are planning and threatening to use such funds to the sum of $50,000 for the purpose of purchasing material and equipment; that such material and equipment is being bought for no other use or purpose or service to the state; that such officers are planning and threatening to use at least $40,000 or $50,000 additional in the business of selling gasoline, and maintaining of stations and in paying the costs and expenses of their operation; that the members of the state highway commission are threatening to approve claims for the paying out of said funds, and the defendant E. A. Jones, auditor, is threatening to approve and allow such vouchers and to issue warrants upon the treasurer therefor, unless restrained by this court; that plaintiff has been for many years engaged in the business of producing, refining, selling, and distributing gasoline, and is now so engaged in this state; that plaintiff has approximately 65 service and tank stations in the state and owns and operates valuable properties, equipment, and facilities for the sale of gasoline to the general public at retail; that plaintiff has invested in such properties over $300,000; that many of said stations are located in the same communities and will be in direct competition with those about to be established by the defendants; that the yearly sale of gasoline by plaintiff approximates 9,000,000 gallons; that plaintiff has established and now owns in the state a successful growing business to which is attached a valuable good will and the patronage of a large number of customers; that plaintiff is a substantial taxpayer of the state, its properties are assessed within the state, and it pays the general property tax thereon; that plaintiff owns numerous motor vehicles and pays to the state of South Dakota the three cent gallon tax on each gallon so used and thereby becomes a contributor to the motor fuel license tax fund; that plaintiff has since October 1, 1921, paid $261,176.77 as a motor fuel license tax and is continuing monthly to make further payments of such tax; that said tax is paid to the state auditor, which the auditor is required to pay over to the treasurer, except such as may be refunded under the provision of said chapter 225 and amendments; that such defendants have sold, are now selling, and will sell at retail gasoline for a charge or price no more than the cost thereof to the state plus the cost of handling and contingencies without anything by way of profit; that in such retailing of gasoline defendants will use money raised by the motor fuel license tax, including that contributed by plaintiff, and will conduct said business on premises and in buildings and with the use of property belonging to the state which were purchased and acquired in part for other purposes and paid for with money collected from taxpayers for other purposes; that such business will be conducted and managed in part by officers and employees of the state whose salary and wages are paid out of funds raised by general taxation; that the inevitable effect of the engaging of the state in the selling of gasoline, as it has engaged in, is now engaging and will engage in, will be to exclude from said state this plaintiff and all other persons, firms, and corporations for the reason that private business and enterprises engaged in selling gasoline cannot survive in competition with the state on the basis it has sold, now is selling, and purposes to sell, and for the further reason that the properties, facilities, and money employed and used by the state is, and will be, exempt from all taxation and the properties, facilities, and money employed by the plaintiff and other persons is and will be subject to taxation; that said business carried on by defendants has been, is being, and will be conducted and managed in part by officers and employees whose salaries and wages will be paid out of moneys raised by general taxation including property of plaintiff, whereby said business in a large measure relieved of that cost and expense commonly known as "overhead cost" will be less to the defendants than to the plaintiff and others engaged therein; that the prices at which plaintiff has sold and is selling gasoline in the state are not, and have not, been exorbitant, nor have they been excessive over an amount equal to the cost of said products plus the cost of handling, overhead and a fair profit on the capital invested; that the engaging in and carrying on of the business of selling gasoline by the defendants is illegal and without authority of law; that the engaging in and carrying on of the business of selling gasoline, as now engaged in or proposed to be engaged in by the defendants, is confiscatory of the property and business of this plaintiff in the state of South Dakota, and a taking of its said property and business without compensation and without due process of law, in violation of the Constitution of the United States and in violation of the Constitution of the state of South Dakota; that plaintiff has no adequate remedy at law; that defendants threaten to, and will hereafter, unless restrained therefrom, continue the operation of said unlawful business as the result of which further, greater and irreparable damage to plaintiff will occur; that plaintiff and other private corporations and persons engaged in the lawful business of selling and distributing gasoline products in the state of South Dakota are sustaining and will, if defendants' acts aforesaid are not restrained, continue to suffer great and irreparable financial loss and damage by reason thereof; this suit is brought on behalf of all others similarly interested who may join herein. The complaint sets out in full chapter 184, S. L. 1925, and numerous constitutional provisions which it is claimed said act violates.
The complaint of the plaintiffs in case, State ex rel Mutual Tank Line Co. v. Gunderson, is similar in purport and effect to the foregoing except in the following particulars. These plaintiffs allege that they are resident taxpayers, while in the former case the plaintiff is a nonresident; that they stated to the Attorney General of this state the facts set forth in their complaint and requested such officer to commence and prosecute this action, and that the Attorney General refused to do so; that no notice of the meeting of the Governor, Treasurer, and Attorney General was given to plaintiffs or any other persons...
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