Carson Petroleum Co. v. Vial

• Decision Date: 07 May 1928
• Docket Number: 28543
• Citation: 117 So. 432,166 La. 378
• Court: Louisiana Supreme Court
• Parties: CARSON PETROLEUM CO. v. VIAL, Sheriff, et al

117 So. 432

166 La. 378

CARSON PETROLEUM CO. v. VIAL, Sheriff, et al

No. 28543

Supreme Court of Louisiana

May 7, 1928

Rehearing Denied June 4, 1928

Appeal from Twenty-Fourth Judicial District Court, Parish of St Charles; L. Robert Rivarde, Judge.

Action by the Carson Petroleum Company against Leon C. Vial Sheriff, and others. Judgment for plaintiff, and defendants appeal.

Judgment appealed from annulled, injunction dissolved, and suit dismissed with directions.

C. S. Lagrade, of Hahnville (Harry P. Sneed and Frymire & Ramos, all of New Orleans, of counsel), for appellants.

John K. Murphy, Harry A. Newby, and John B. King, all of Chicago, Ill. (Harold A. Moise, of New Orleans, of counsel), for appellee.

OPINION

O'NIELL, C. J.

This is an action to abate the levying of taxes on a quantity of oil in a storage tank, at St. Rose, in the parish of St. Charles, La. The taxes complained of are the ad valorem taxes levied by the state and the parish, generally, on all property subject to such taxation. There is no charge of discrimination against the property of the defendant in that respect. The property assessed was a quantity of oil belonging to the plaintiff, in storage tanks belonging to the Petroleum Import & Export Corporation, near the Mississippi river, being the estimated average quantity of oil on hand, and was assessed at $ 200,000. It was not charged in the plaintiff's petition that the estimate of either the quantity or the value of the oil assessed was excessive. The only complaint was that the taxing of the oil was deemed an interference with interstate and foreign commerce, and therefore violative of the third clause of the eighth section and the fifth clause of the ninth section and the second clause of the tenth section of article 1 of the Constitution of the United States. The district court gave judgment in favor of the plaintiff, annulling the assessment and abating the tax, on the ground that the oil which was assessed was in transit, or on its way, from another state to a foreign country, and was halted only temporarily at St. Rose, and had not a situs in the parish of St. Charles or state of Louisiana. The defendants, who are the tax collector, the assessor, and the Louisiana Tax Commission, have appealed from the decision.

There is no dispute about the facts of the case, so far as they are pertinent to the question at issue. The plaintiff, Carson Petroleum Company, is a Delaware corporation, engaged in buying and selling oils, and particularly in exporting the same. The Petroleum Import & Export Corporation is a subsidiary of the Carson Petroleum Company, and owns and operates the system of tanks and pumping equipment for receiving the contents of the railroad tank cars of oil into the tanks owned by the Petroleum Import & Export Corporation and afterwards loading it into ships for export. The Port of New Orleans has no facility or equipment for assembling or receiving from railroad tank cars cargoes of oil and loading it aboard ships for export. The tanks and equipment at St. Rose. a few miles above New Orleans, were constructed for that purpose. No oil is sold at St. Rose except what is exported. The only business conducted there is the unloading of oil from railroad tank cars into the storage tanks and the loading of the oil from the storage tanks aboard the tankers for shipment to England, France, and other foreign ports. The oil is bought by the Carson Petroleum Company from the refiners in the Mid-Continent Field, comprising Kansas, Oklahoma and Texas, and is shipped to St. Rose, La., in railroad tank cars consigned to the Carson Petroleum Company. The shipments are not on through bills of lading, but on an export rate, which is lower than the domestic rate. The oil is a higher grade of gasoline than is used in this country generally, and is made especially for export, because the automobiles in England, France and other foreign countries require a higher grade of gasoline than that which is used in this country. The Carson Petroleum Company takes orders for cargoes of oil from the foreign buyers, who charter the vessels to transport the oil from St. Rose to the foreign ports. The company always has orders on hand in excess of the quantity of oil at St. Rose, and buys the oil in the Mid-Continent Field for the purpose of filling orders already received from the foreign buyers. The oil in each railroad tank car, however, is not segregated or assigned or destined to any particular cargo or shipment abroad, but is pumped into the large storage tanks, having the capacity of many tank cars, and is held in the tanks until a ship arrives, or until a sufficient quantity of oil is accumulated to make up a cargo. A ship carries from two to three million gallons; hence it takes 300 to 500 railroad tank cars, or 10 to 16 trains of tank cars, to make up a cargo of oil. The buyers are allowed a 10 per cent. leeway on the quantity of oil bought for each shipment; which, as we understand, means that, if the capacity of the ship is either more or less than the quantity of oil contracted for, the buyer can demand a delivery of the ship's capacity, at the contract price of the oil per gallon, provided the quantity shall be not more than 10 per cent. above or below the quantity contracted for. A delivery of the oil thus sold is made by loading the oil aboard the ship chartered by the buyer. Until the oil is thus loaded aboard a ship it belongs to the Carson Petroleum Company and is insured in the name of the company, loss payable to the company. There are times when an accumulation of oil in the tanks is awaiting the arrival of a ship, and at other times a ship is awaiting the accumulation of a sufficient quantity of oil to make up a cargo. In order to save demurrage on ships, which amounts to $ 1,500 or $ 2,000 per day on a ship, the Carson Company endeavors to have a sufficient quantity of oil on hand at St. Rose to fill each order promptly on arrival of the ship. On account of the demurrage charges on tank cars, as well as on steamships, it would be impracticable to carry on the export oil business by any other method than by storing the oil in large storage tanks as the train loads of oil arrive, and shipping from the accumulation when the ships arrive. The oil is shipped from the storage tanks in the same condition in which it was received from the tank cars, without being treated in any way. The oil is never kept on hand at St. Rose any longer than is necessary. The quantity on hand is always awaiting either the arrival of a ship or the accumulation of a sufficient quantity to load a ship.

The plaintiff, appellee, contends that the interstate and foreign shipment of the oil, from the refineries in the Mid-Continent Field, into and across the state of Louisiana, and across the sea to the foreign ports, is a continuous interstate and foreign shipment, notwithstanding the stoppage and storage of the oil at St. Rose, where it has to await either the arrival of a ship or the accumulation of a sufficient quantity of oil to load a ship. The defendants, appellants, contend that there are two separate shipments of the oil -- the interstate shipment, which ends when the tank cars arrive and are unloaded at St. Rose, and the foreign shipment, which begins when the oil is loaded aboard a ship destined for a foreign port. Hence the defendants, appellants, contend that, while the oil is stored in the tanks at St. Rose, under the protection of the state and local government, it is subject to state and local taxation, notwithstanding it is intended and prepared for exportation.

The interstate and foreign commerce clause of the Federal Constitution does not exempt movable property from state or local taxation, if it is not discriminative, unless the property is in actual transit in interstate or foreign commerce; and the question of continuity of transit which will exempt property moving in interstate or foreign commerce, from state or local taxation, is to be determined by the various factors in the situation, among which are the intention of the owner, the control which he retains to change the destination, the agency or agencies by which the transit is affected, and the cause or occasion or purpose of the interruption during which the property is assessed for state or local taxation. Champlain Realty Co. v. Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A. L. R. 1195.

The mere intention of the owner to export the property, even when coupled with a preliminary shipment in preparation for exportation, does not constitute the beginning of an interstate or foreign shipment. To exempt the property from state or local taxation, it must have been shipped, or entered with a carrier for shipment, to another state or a foreign country, or started on a continuous route or journey beyond the state. Coe v. Errol, 116 U.S. 517, 6 S.Ct. 475, 29 L.Ed. 715; Diamond Match Co. v. Ontonagon, 188 U.S. 82, 23 S.Ct. 266, 47 L.Ed. 394; General Oil Co. v. Crain, 209 U.S. 211, 28 S.Ct. 475, 52 L.Ed. 754; Bacon v. Illinois, 227 U.S. 504, 33 S.Ct. 299, 57 L.Ed. 615; Champlain Realty Co. v. Brattleboro, 260 U.S. 366, 43 S.Ct. 146, 67 L.Ed. 309, 25 A. L. R. 1195; Rees-Scott Co. v. City of New Orleans, 124 La. 155, 49 So. 1012.

It is not possible to distinguish this case from General Oil Co. v. Crain, supra, in the application of the law to the facts of the case. The General Oil Company was a Tennessee corporation, having its principal place of business in Memphis, and engaged in the business of manufacturing illuminating oils and selling them in other states into which they were shipped. The company's wells and refining plants were in Pennsylvania and Ohio, from which the oils were shipped into the states in which ...