293 F.2d 953 (5th Cir. 1961), 18593, United States v. Fleming

Docket Nº:18593.
Citation:293 F.2d 953
Party Name:UNITED STATES of America, Appellant, v. T. S. FLEMING and James E. Fleming, Jr., d/b/a City Transportation Company, and City Transportation Company of Tyler, Appellees.
Case Date:August 29, 1961
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 953

293 F.2d 953 (5th Cir. 1961)

UNITED STATES of America, Appellant,

v.

T. S. FLEMING and James E. Fleming, Jr., d/b/a City Transportation Company, and City Transportation Company of Tyler, Appellees.

No. 18593.

United States Court of Appeals, Fifth Circuit.

Aug. 29, 1961

Paul N. Brown, U.S. Atty., Tyler, Tex., Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, C. Guy Tadlock, Attys., Dept. of Justice, Washington, D.C., Louis F. Oberdorfer, Asst. Atty. Gen., Attys., Dept. of Justice, Washington, D.C., Joe Tunnell, U.S. Atty., Lloyd W. Joe Tunnell, U.S. Atty., Lloyd W. Perkins, Asst. U.S. Atty., Tyler, Tex., for appellant.

Henry Schwartz, II, Tyler, Tex., for appellees.

Before TUTTLE, Chief Judge, and HUTCHESON and JONES, Circuit Judges.

JONES, Circuit Judge.

The question here is whether the drivers of cabs owned by the appellees received from the appellees wages, within the meaning of the Federal Insurance Contributions Act, 26 U.S.C.A. (I.R.C.1939), § 1400 et seq., as amended, so as to subject the appellees to a tax imposed with respect thereto under the terms of the Act.

There is no dispute as to the facts as found by the district court which were for the most part stipulated.

The appellees, T. S. Fleming and James E. Fleming, Jr., were, during the taxable year 1952 and the taxable quarter ended March 31, 1953, members of a partnership, doing business in Tyler, Smith County, Texas, under the name and style of City Transportation Company. The appellee corporation, City Transportation Company of Tyler, was organized on or about April 1, 1953, to take over and operate the business theretofore carried on by the partnership.

During the period here in controversy, the partnership and its successor, the Corporation (both of which are hereafter sometimes collectively referred to

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as the Company), were engaged in the business of carrying passengers for hire. The Company owned 20 and 25 automobiles which were licensed for use as taxicabs pursuant to the ordinances of the City of Tyler regulating the operation of automobiles for hire; fixing the fares to be charged; providing for a 2 per cent. gross receipts tax to be collected. The Company also applied for and obtained pursuant to the ordinances and amendments of the City of Tyler, a license to operate its taxicabs for hire. The Company further bore the cost of the bond or policy of insurance obtained to comply with Section 5 of an ordinance of the City of Tyler. The Company paid the 2 per cent. gross receipts tax due the City of Tyler. Gross receipts for the purposes of this city tax are defined to be 100 per cent. of the local fares received from the passengers by the drivers.

The automobiles owned by the Company bore either the name 'City Cab' or 'Yellow Cab'. Each cab driver operated a taxicab pursuant to an agreement entered into between the individual drivers and the Company. Each driver obtained a specific automobile for a 12-hour or shorter work period. During the taxable period in question, about 18 of the automobiles were so operated in the day time; about 7 or 8 at night. Approximately 4 or 5 of the automobiles had two drivers, one for the day shift and one for the night shift and thus were operated for the entire 24-hour period. The agreement between the individual daytime driver and the Company called for the payment by the driver to the Company of 65 per cent. of the gross receipts or fares collected from the passengers. In some instances the agreement called for the payment by the driver to the Company of 66 2/3 per cent. of such receipts. In the case of the night drivers, the agreement between the individual driver and the Company called for the payment by the driver to the Company of 60 per cent. of the gross receipts or fares collected from the passengers.

In practice, the Company kept the cabs serviced and in repair. The Company maintained its own garage where it serviced the cabs and kept them in general repair. In some instances individual drivers took their cabs home at night. Cabs not so taken home at night were parked on the Company's lot when not in use. Tyler City ordinance did not allow cruising on the streets of the City. No call stands were maintained by the Company on the streets of Tyler.

Each cab was equipped with a 2-way radio installed and maintained at the expense of the Company. In its Central Office, the Company maintained a switch-board to receive calls from customers and a radio transmitter to relay such calls to the drivers. The Company also maintained direct lines with the hotels and various restaurants . Customers were also obtained by personal solicitation of the individual drivers. Calls which came in for particular drivers were relayed to that driver.

The drivers were required to call the appellees' dispatcher after each passenger was delivered and report the location of the driver. The drivers were required to report that they had made a pickup after idling at a certain point. If an individual driver's car was in disrepair an official of the taxpayers would designate to the driver which vacant cab he was to driver that day. Before a driver could take time off for lunch he was required to report to the dispatcher. By the use of the radio the dispatcher attempted and did direct drivers to certain locations and instructed them to remain idling at these points. In this way the dispatcher was able to prevent the accumulation of cabs in certain areas of the City. None of...

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