City of St. Louis v. Mississippi River Fuel Corporation

• Decision Date: 05 July 1938
• Docket Number: No. 11087.,11087.
• Citation: 97 F.2d 726
• Parties: CITY OF ST. LOUIS v. MISSISSIPPI RIVER FUEL CORPORATION.
• Court: U.S. Court of Appeals — Eighth Circuit

97 F.2d 726 (1938)

CITY OF ST. LOUIS v. MISSISSIPPI RIVER FUEL CORPORATION.

No. 11087.

Circuit Court of Appeals, Eighth Circuit.

July 5, 1938.

Oliver Senti, of St. Louis, Mo. (Edgar H. Wayman, John G. Burkhardt, Michael J. Ebeling and Francis Finley, all of St. Louis, Mo., on the brief), for appellant.

Frank H. Sullivan and Hugh H. Sullivan, both of St. Louis, Mo. (William O. Reeder and Ralph T. Finley, both of St. Louis, Mo., on the brief), for appellee.

Before GARDNER, SANBORN, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

The City of St. Louis, Missouri, is here appealing from a decree of the district court declaring the city's ordinance No. 40787, as applied to appellee and its business, illegal and void, and perpetually enjoining the city from demanding the taxes sought to be imposed upon appellee thereunder.

Ordinance No. 40787 was enacted by the Board of Aldermen of the City March 19, 1936, and was approved by the Mayor and, by its terms, became effective March 20, 1936. Its pertinent parts provide:

"Ordinance 40787.

"An ordinance providing for a tax to be paid by persons, firms or corporations engaged in the business and distributing and selling natural, artificial or mixed natural and artificial, gas for heating, lighting, power, or refrigeration for public use in the City of St. Louis, as a tax for the use and occupation of the streets and other public highways of the City of St. Louis by such persons, firms or corporations for their distribution systems, and containing an emergency clause.

"Be it ordained by the City of St. Louis, as follows:

"Section One. Every person, firm or corporation engaged in the business of distributing and selling natural, artificial or mixed natural and artificial, gas for heating, lighting, power, and refrigeration for public use in the City of St. Louis, through pipe lines laid in the streets and other public highways of said city, shall pay to the City of St. Louis a tax equal to five per cent. (5%) of the gross receipts from such business as a tax for the use and occupation of the streets and other public highways of the City by such person, firm or corporation for its distribution system. * * *

"Section Three. The tax herein required to be paid shall be a tax on the use and occupation of the streets and other public highways of the City of St. Louis for the pipe lines of the distributing system of persons, firms, or corporations engaged in the business of distributing and selling natural, artificial, or mixed natural and artificial, gas for heating, lighting, power, and refrigeration for public use in the City of St. Louis, and nothing herein contained shall be so construed as to exempt any such person, firm or corporation from the payment to the City of St. Louis of manufacturer's and merchant's excise tax, nor from the payment of the tax which the City of St. Louis levies upon any real, personal property or franchise belonging to any such person, firm or corporation."

The bill of complaint, after alleging jurisdictional facts and the character of appellee and the nature of its business, prayed that the ordinance be adjudged invalid and void as applied to appellee and its business and that the city be enjoined from enforcing it against appellee, on the ground, among others, that the ordinance does not, by its terms, apply to the appellee or to its business.

The answer admitted the jurisdictional facts and the formal averments of the bill, and denied specifically each separate ground upon which appellee sought relief.

The court, after making findings of fact, based the decree upon the conclusion of law that "The ordinance in question applies only to persons, firms, or corporations engaged in the business of selling gas `for public use', and since under the facts found the plaintiff is not engaged in selling gas for public use, the ordinance, by its terms, does not apply to the plaintiff, and no tax can be collected against the plaintiff thereunder."

It is claimed by appellant that the court erred in so holding and in issuing an injunction.

To see the problem presented by the alleged error in its proper light requires a review of the material facts. Although appellant attacks some of the inferences drawn by the court below, the ultimate facts are not in dispute.

The appellee is a Delaware corporation owning and operating a gas pipe line system which extends from a natural gas producing field in the state of Louisiana through Arkansas into Missouri and Illinois. The total length of its line is 731.37 miles, of which 12.553 miles are within the city limits of St. Louis. Within the city 11.08 miles of line are laid on the right of way of railroads; but it traverses and crosses some 54 highways and streets. The total length of line across streets and highways in the city is .74 miles. In crossing streets the lines are laid from 2½ to 23 feet below the surface. Permits were obtained from the city for the purpose of laying the pipes.

By its charter appellee is authorized to purchase and acquire natural gas, to transport it in its pipe line, and to sell such gas by private contract, but not to transport as a common carrier for hire nor to sell such gas as a public utility. It has no power of eminent domain; nor has it any franchise to distribute or sell gas as a public utility.

Prior to beginning its operations in the state of Missouri appellee procured a license from the Secretary of State to engage in business in the state. Under this license appellee is limited to the transportation, sale and delivery in interstate commerce of natural gas purchased and sold by it; and its authority is limited to the sale of gas by private contract, and not as a public utility.

The appellee has two classes of customers in the state of Missouri: (1) Public utilities and (2) industrial customers. The public utility customers purchase gas for resale, and appellee has no other connection, directly or indirectly, with such customers. The only utility to which appellee sells gas in St. Louis is the Laclede Gas Light Company, which is a distributing utility operating only within the City of St. Louis. It purchases natural gas from appellee for resale to industries and for mixing for sale to domestic and commercial consumers.

Appellee sells and delivers natural gas to 14 industrial customers in St. Louis. Sales to industrial customers are always by special contracts, entered into after negotiations with the customer. The contracts vary as to terms and conditions. They all provide that the gas is to be brought from Louisiana and delivered to the purchaser. Appellee offers no gas to the public directly or generally for any use.

In addition to the tax here in question appellee is subject in St. Louis to an ad valorem property tax and a merchants' license tax levied by the city.

The correctness of the finding of the court to which exception is taken, that "the ordinance, by its terms, does not apply to plaintiff" (appellee), is to be determined by a proper construction of the language of the ordinance in the light of the facts just recited. The settled rule of construction, since this is a taxing statute, is that it must be construed strictly. Its scope can be enlarged neither by implication nor by judicial amendment. St. Louis & S. F. Ry. Co. v. Apperson, 97 Mo. 300, 10 S.W. 478, 480, 481; Smietanka v. First Trust & Savings Bank, 257 U.S. 602, 606, 42 S.Ct. 223, 66 L.Ed. 391.

By the provisions of the ordinance the tax is imposed only upon every person, firm or corporation engaged in the business of distributing and selling gas "for heating, lighting, power, and refrigeration for public use in the City of St. Louis, through pipe lines laid in the streets * * *." Selling gas "for heating, lighting, power, and refrigeration" is not enough to bring appellee within its provisions unless it sells "for public use." Neither is it sufficient if it has...