Cobb v. Harrington

• Decision Date: 14 November 1945
• Docket Number: No. A-512.,A-512.
• Citation: 190 S.W.2d 709
• Parties: COBB et al. v. HARRINGTON et al.
• Court: Texas Supreme Court

Page 709

190 S.W.2d 709

COBB et al. v. HARRINGTON et al.

No. A-512.

Supreme Court of Texas.

November 14, 1945.

Rehearing Denied December 12, 1945.

Error to Court of Civil Appeals of Fifth Supreme Judicial District.

Action under the Uniform Declaratory Judgments Act, Vernon's Ann.Civ.St. art. 2524-1, by W. O. Harrington and another against G. C. Cobb, Deputy State Comptroller, and another, for declaratory judgment determining whether plaintiffs were legally liable to pay occupation tax on motor carriers. A judgment in favor of defendants was reversed by the Court of Civil Appeals and a judgment rendered for the plaintiffs, 185 S.W.2d 133, and the defendants bring error.

Judgment of Court of Civil Appeals affirmed.

Grover Sellers, Atty. Gen., and George P. Blackburn and C. K. Richards, Asst. Attys. Gen., for petitioners.

Culbertson, Morgan, Christopher & Bailey and T. S. Christopher, all of Fort Worth, for respondents.

SMEDLEY, Justice.

This action, under the Uniform Declaratory Judgments Act, Chapter 164, Acts Reg. Sess., 48th Leg., Art. 2524—1, Vernon's Annotated Civil Statutes, was brought by respondents W. O. Harrington and Robert Ramp against petitioners George H. Sheppard, State Comptroller, and his deputy, G. C. Cobb, for the purpose of obtaining the rendition of a judgment declaring whether or not respondents are legally liable to pay and petitioners are legally authorized to demand, collect and receive from respondents an occupation tax measured by the gross receipts of "motor carriers" and levied by Section 1(a), Article XIV, of Chapter 184, Acts Regular Session, 47th Legislature, Article 7066b(a), Vernon's Annotated Civil Statutes.

Petitioners, represented by the Attorney General, and respondents, by their attorneys, made written stipulation of the facts. The trial court sustained a plea in abatement filed by respondent Sheppard, alleging that this is a suit against the State instituted without its consent, and dismissed the suit. This action of the trial court was based upon its conclusion from the stipulated facts that respondents are "motor carriers" and that the petitioner Sheppard was acting within the scope of his authority in attempting to enforce the collection of the taxes from them.

The Court of Civil Appeals reversed the trial court's judgment and rendered judgment "in favor of the appellants (the respondents), declaring their status under the statutes involved, to the effect that, under the facts as stipulated, they neither pursue the occupation of `motor carrier' or `common carrier motor carrier', nor are they liable as such for the payment of the occupation tax imposed by Art. 7066b(a)." 185 S.W.2d 133, 140.

The statute above cited imposes an occupation tax upon each individual, partnership, company, association or corporation "doing business as * * * `motor carriers' or `contract carrier' as defined in Chapter 277, Acts Regular Session of the Forty-second Legislature (Article 911b, Vernon's Ann.Civ.St.) over and by use of the public highways," etc. The Act last mentioned, in its subdivision (g) of Section 1, defines "motor carrier" as "any person, firm, corporation, company, co-partnership, association or joint stock association, and their lessees, receivers or trustees appointed by any Court whatsoever owning, controlling, managing, operating or causing to be operated any motor-propelled vehicle used in transporting property for compensation or hire over any public highway in this State," etc. "Contract carrier" is defined in subdivision (h) of Section 1 as any motor carrier "transporting property for compensation or hire over any highway in this State other than as a common carrier."

The Court of Civil Appeals, after full statement and careful consideration of the agreed facts, expressed the conclusion above stated that respondents are not motor carriers and are not subject to the occupation tax. It held, consequently, that in their attempt to force respondents to file quarterly reports and pay to the State Treasurer the occupation tax levied by the statute, the Comptroller and his deputy acted without legal authority, and that hence the suit is not to be considered as against the State. 185 S.W.2d 133, 138.

The facts as to the nature of the business or occupation in which respondents are engaged, shown by the stipulation made by the parties, are as follows: Respondents are the owners of certain motor trucks and trailers equipped for the transportation of goods, wares and merchandise over the highways. In the very language of the stipulation, respondents "are engaged in the business of leasing these said chattels to common carrier motor carriers as the terms `common carriers' and `motor carriers' are each defined in Article 911(b), Vernon's Annotated Civil Statutes". Respondents lease the trucks and trailers to motor carriers holding certificates of conveniance and necessity issued to them by the Railroad Commission of Texas under the terms of said Article 911b, the leases all being made on a standard form approved by the Railroad Commission. The leases provide for a flat compensation of 15 cents per mile for the use of the vehicles when operated under the terms of the leases. They further provide that respondents furnish at their own expense employees to drive and operate the equipment during the terms of the leases, the drivers remaining the employees of the respondents, but to be subject to the direction of the motor carriers, the lessees, for the limited purpose only of insuring the proper carriage and delivery of the cargo transported. The lessees agree to furnish in amounts not less than standard limits public liability and property damage and cargo insurance for the protection of the public. Respondents, lessors, agree to furnish at their expense workmen's compensation insurance for the drivers and to pay all social security, old age benefits and unemployment compensation taxes for the drivers. Respondents agree to pay all costs and expenses of operation and maintenance of the equipment and to indemnify the lessees against losses resulting from the injury or death of the drivers and against loss or damage resulting from the negligence, incompetency or dishonesty of the drivers, and that the lessees shall not be liable for loss or damage to the equipment while operated by the drivers.

It is agreed that all of the motor carriers to whom respondents have leased trucks are "motor carriers" or "contract carriers" as defined by the statute and have certificates of convenience and necessity as common carriers or permits as contract carriers, and operate under the jurisdiction of the Railroad Commission, that all motor carriers and contract carriers are required by the law to charge and collect rates as prescribed by the Railroad Commission, which rates so prescribed are expressed in cents per hundred, and that the Commission has never prescribed a rate in cents per mile for the use of a truck.

The agreed facts as to the method of the operation of the trucks and the relations of respondents and the lessees to the transportation of freight are as follows: Respondents' only relations with the movement of freight are with the motor carriers and consist solely in entering into the leases of the trucks. Respondents issue no freight bills or bills of lading, solicit no freight, collect no freight charges from any shipper or receiver of freight. Respondents do not hold themselves out to the public or to any individual as being in the business of transporting freight. When respondents enter into a contract leasing a truck to a motor carrier they cause the vehicle and driver to be delivered at such place as the lessee designates and thereafter until the expiration of the lease the truck and its driver are subject to the direction and control of the lessee. The lessee loads and unloads the truck and directs when and where the truck shall be operated; and it solicits and receives freight from the general public, issuing in its own name to the shipper bills of lading on all freight transported in the leased trucks and making out in its own name its delivery receipts upon which deliveries are made and which are signed by the receiver of the freight. Respondents assume no responsibility to shippers or receivers for the freight transported and make no collection of freight charges. The freight charges collected by the lessees are those prescribed by the Railroad Commission. Respondents receive no compensation except that provided under the terms of the leases, that is, 15 cents per mile for the use of the vehicles.

We agree with the Court of Civil Appeals that no other conclusion can reasonably be drawn from the facts stipulated by the parties than that respondents are not motor carriers as defined by the statute, that is, that they are not engaged in the occupation or business of operating or causing to be operated motor-propelled vehicles used in transporting property for compensation or hire over the public highways. The lessees of respondents are engaged in that business. Respondents' business is the leasing of the trucks, with drivers, to motor carriers. This court in three cases has had before it for construction Chapter 277 of the General Laws of the Forty-second Legislature (Article 911b) and the opinion in each of those cases construes the term "motor carrier", defined in the statute, to mean one who operates or uses a motor-propelled vehicle in transporting property for compensation or hire over the public highways. Anderson, Clayton & Co. v. State of Texas, 122 Tex. 530, 544, 62 S.W.2d 107; Anderson, Clayton & Co. v. State of Texas, 125 Tex. 453, 458, 82 S.W.2d 941; New Way Lumber Co. v. Smith, 128 Tex. 173, 180, 96 S.W.2d 282. By this test, the lessees of respondents, and not respondents, are motor carriers, because the lessees operate the trucks in transporting property for compensation. They hold themselves out as motor carriers of freight for compensation. They...