Eureka Pick Line Co. v. Walter S. Hallanan. United Fuel Gas Co.

• Decision Date: 26 November 1920
• Docket Number: 4196, 4201.
• Citation: 87 W.Va. 396
• Court: West Virginia Supreme Court
• Parties: Eureka Pick Line Company v. Walter S. Hallanan et al. United Fuel Gas Company v. Walter S. Hallanan et al.

87 W.Va. 396

Eureka Pick Line Company

v.Walter S. Hallanan et al.

United Fuel Gas Company

v.Walter S. Hallanan et al.

4196, 4201.

Supreme Court of Appeals of West Virginia.

Submitted November 9, 1920.

Decided November 26, 1920.

1. Constitution at. Law A Permissible Construction, Making Statute Valid Rather Than Invalid, Will be Adopted.

There is a presumption that the legislature in the passage of an act 'did not intend to violate the constitution of this state, or of the United States, and if such an act is susceptible of two constructions, one of which would make the same invalid as in violation of the constitution of this state, or of the United States, and the other give validity to the act, the latter interpretation will be adopted upon the theory of legislative intent not to violate any provision of either of said instruments, (p. 404).

2. Same Presumption That Legislature Intended Act to be Effective Will be Adopted.

There is a presumption that the legislature in the passage Nov. 19201 Pipe Line Co. v. Uallanan 39"

of an act intended that it should be effective, and if such an act is susceptible of two constructions, one of which would render the act invalid as being in violation of the constitution of this state, or of the United States, and the other sustain the validity of the act, the latter will be adopted upon the presumption that the legislature intended that construction to be given to the act that would make it effective, (p. 404).

Commerce State Cannot Impose Tax on Interstate Commerce.

A state may not impose a tax upon the privilege of engageing in interstate commerce within its borders, (p. 404).

Samp: State Tax on Interstate Commerce, Measured by Per Ce.ntage of Business Within State. Cannot be Imposed.

A state may not impose a tax upon the privilege of engaging in intrastate commerce, and measure the amount thereof by a certain percentage of all of the business transacted within the state, whether interstate or intrastate, (p. 404).

Same Tax Upon Transportation of Oil and Gas by Pipe Lines Relates only to Intrastate Commerce.

Chapter 5 of the Acts of the Legislature, Extraordinary Session, 1919, imposing a tax upon the business of engaging in the transportation of oil and gas by pipe lines, properly construed, imposes such tax on those engaged in the transportation of such commodities in intrastate commerce, measured by the amount of such commerce, (p. 408).

Constitutional Law For Taxation of Pipe Lines Held Not to Deny Equal Protection of the Laws.

The classification, for the purpose of taxation, of pipe line companies engaged in the business of transporting oil and gas into those whose systems are under ten miles in length, and those whose systems are over ten miles in length, is founded upon a substantial distinction, and is not violative of that clause of the fourteenth amendment to the Constitution of the United States guaranteeing to all persons the equal protection of the laws, nor of section 1 of article 10 of the Constitution of this state, the tax imposed applying alike to all in the same class, (p. 408).

Statute Statutes Taxing Transportation of Oil and Gas by Pipe Lines Held Not Invalid Because Not Specifying Pressure at Which Gas Should be Measured.

Chapter 5 of the Acts of the Extraordinary Session of the Legislature, 1919, imposing a tax upon the privilege of engaging in the business of transporting oil or gas by pipe lines is not invalid because it does not specify at what pressure the gas shall be measured for the purpose of the imposition of such tax. Any difficulty in administering the law on this account may be overcome by a regulation which the State Tax Commissioner is authorized by the provisions of the act to make. (p. 413).

8. Licenses Tax on Privilege of Transporting Oil and Gas by Pipe Lines Over a Certain Length of System Held Valid.

Chapter five of the Acts of the Legislature. Extraordinary Session, 1919, imposing a tax upon the privilege of engaging in the business of transporting oil or gas by pipe lines over ten miles in length, properly construed does not violate any provision of the Constitution of the United States or the Constitution of this state, and is a valid and binding legislative act. (p. 414).

9. Commerce Commodities in Transit Not "Interstate Commerce" Until it is Found that They Are Destined to Points Beyond State.

Commodities in transit cannot be said to be interstate commerce until it is definitely determined that they are destined to points without the state, even though past experience and the course of business in which the owner of such commodity is engaged may justify the assumption that a large part thereof will ultimately be transported beyond the borders of the state, (p. 414).

10. Same-Transportation of Oil Through State to Point Beyond is "Interstate Commerce'' Though Contaminated by Contact With Other Oil in Pipe Line.

Oil being transported through this state to a point beyond its borders does not cease to be interstate commerce because it may as an incident of its transportation through the pipe line tome in contact with other oil, and to some extent thereby be contaminated. Such contamination is merely an incident of the transportation, and does not change the character of the oil as interstate commerce, (p. 414).

11. Same Pipe Line Company. Receiving Oil and Transporting it in tl > e Slate for a Charge, is Engaged in "Intrastate Commerce."

A pipe line company doing business in this state which receives the oil produced at numerous wells and transports the same to its main pipe lines or tanks within the state, and makes a definite charge for such service, is engaged in intrastate commerce, as to the oil so transported, where it appears that at the time such oil was so received and transported to its main lines or tanks by it it was not definitely determined that the same was destined to points without the state, even though past experience may indicate and justify the belief that a large part of the same will ultimately be shipped with-

oul the state in interstate commerce, (p. 420).

(Williams, President, and Lynch, Judge, absent.)

Appeal from Circuit Court, Kanawha County.

Suits for injunction by the Kureka Pipe Pine Company and by the Chi ted Fuel Gas Company against Walter S. Hallanan, State Tax Commissioner, and others. Decrees for plaintiffs, and defendants appeal.

Reversed in pari. Affirmed in pari.

!']. T. England, Attorney (ieneral, Frank Lively, assistant Attorney General, John 7". Simms, S. B. Arts, Win. Gordon Mathews and Fred 0. Blur, for appellants.

Frank L. Crawford, A. / >. Fleming, Charles Powell, Kemble While and //. C. Dorworlli, for appellee Eureka Pipe Line Co.

R. ■. Allizer and Malcolm Jackson, for appellee [Inited Fuel Gas Co.

h't'l'Z, d vdgk:

These appeals bring up for review decrees of the Circuit Court of Kanawha county entered in the above entitled causes holding invalid an act of the Legislature providing for a tax on the transportation of oil and gas by means of pipe lines, and enjoining the defendants from collecting the tax levied by said act.

The acl in question is chapter five of the Acts of the Fxtra-

ordinarv session of the Legislature of 1919, the pertinent provisions thereof being:

"AN ACT to levy a privilege tax on any person, firm or corporation engaged in the transportation of crude oil or petroleum: ' the distillates thereof, or of natural gas, by means of pip« lines, authorizing the state tax commissioner to provide rules and regulations for the collection of such tax, and defining the duties of the state tax commissioner hereunder.

Be il enacted by the Legislature of West Virginia:

Section 1. No person, firm or corporation, hereinafter called company, after the first day of duly, one thousand nine hundred and nineteen, shall engage in or continue in the business of the transportation of crude oil or petroleum, or the distillates thereof, or of natural gas, by means of pipe lines, withouf the payment of an annual privilege tax hereby imposed for engaging in such business; prodded, however, that nothing contained in this act shall apply to any person, firm or corporation engaged in the business aforesaid where the crude oil, petroleum or distillates thereof, or natural gas, is by the entire system of such person, firm or corporation, transported a distance of less than ten miles.

Sec. 2. Every person, firm and corporation engaged in this state in the transportation of either crude oil or petroleum, or the products and distillates thereof, or of natural gas, or both, by means of pipe lines for sale to consumers within or without the state, or use within or without the state in the making of any products derived therefrom, shall pay to the state, as an annual privilege tax for engaging in such business in the state, two cents for each barrel of crude oil or petroleum, or the distillates thereof, and one-third of one cent for each thousand cubic feet of such natural gas as is so transported or conveyed within this state. Provided, that only one such tax, annually, shall be required to be so paid.

Sec. 9. Any company engaging or continuing in the business aforesaid, without having first secured a license, as hereinbefore provided, shall lie liable to a fine of not less than one thousand dollars nor more than ten thousand dollars."

The contention of the complainants is that this act is in violation of the commerce clause of the Constitution of the United States, for the reason that the tax therein provided to be collected is a burden upon such commerce. Further that it violates the provision of the fourteenth amendment to the United States Constitution guaranteeing the equal protection of the laws, as well as section 1 of article 10 of the Constitution of this state, providing, among other things that the legislature may levy a tax on privileges and franchises by equal and. uni- form laws. And the gas company also claims that it is invalid upon the additional ground that it does not prescribe...