Hogan v. United States

• Decision Date: 26 November 1963
• Docket Number: No. 20490.,20490.
• Parties: M. H. HOGAN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

325 F.2d 276 (1963)

M. H. HOGAN, Appellant, v. UNITED STATES of America, Appellee.

No. 20490.

United States Court of Appeals Fifth Circuit.

November 26, 1963.

T. Baldwin Martin, Jr., T. Baldwin Martin, Macon, Ga., Martin, Snow, Grant & Napier, Macon, Ga., of counsel, for appellant.

Louis F. Oberdorfer, Asst. Atty. Gen., Dept. of Justice, Lee A. Jackson, Atty., Dept. of Justice, Washington, D. C., Donald H. Fraser, U. S. Atty., Savannah, Ga., Melva M. Graney and Alan D. Pekelner, Attys., Dept. of Justice, Washington, D. C., for appellee.

Before TUTTLE, Chief Judge, and BROWN and BELL, Circuit Judges.

GRIFFIN B. BELL, Circuit Judge.

Hogan brought suit against the United States seeking to recover taxes, penalties and interest theretofore paid which he contended were illegally assessed and collected. Jurisdiction is based on Title 28 U.S.C.A. § 1346(a) (1). The assessment was for excise taxes allegedly due on amounts paid for the transportation of property over a period of years under § 3475(a) of the Internal Revenue Code of 1939, and § 4271(a) of the Internal Revenue Code of 1954, 26 U.S.C.A. § 4271 (a).¹

Section 3475(a) of the 1939 Code lays the tax only on amounts paid to a person engaged in the business of transporting property for hire. This provision or exemption is carried forward in the 1954 Code. 26 U.S.C.A. § 4272. The sole assignment of error turns on whether there was sufficient evidence to warrant submission to the jury of the question of whether Hogan was engaged in the business of transporting property for hire under these statutes. The District Court directed a verdict in favor of the United States at the close of appellant's case.

Our review of this question must be in the light of the well established rule set out in Swift & Co. v. Morgan & Sturdivant, 5 Cir., 1954, 214 F.2d 115, 49 A.L.R.2d 924, that:

"On a motion for a directed verdict, it is the duty of the court to accept as true all the facts which the evidence tends to prove, and draw against the party making the motion all reasonable inferences most favorable to the party opposing the motion, and if the evidence is of such a character that reasonable men in an impartial exercise of their judgment may reach different conclusions, then the case should be submitted to the jury."

See also Turner v. Atlantic Coast Line R. Co., 5 Cir., 1961, 292 F.2d 586; 2B Barron and Holtzoff (Wright Ed.), Federal Practice and Procedure, § 1075; and 5 Moore's Federal Practice, §§ 5050.02 (2d ed.).

And it is well to note that the determination under this test does not turn on whether one side or the other has the better of the case, but whether there is any substantial evidence which would support a verdict, and a mere scintilla of evidence is not enough to require submission to the jury. Rutherford v. Illinois Cent. R. Co., 5 Cir., 1960, 276 F. 2d 330, rehearing denied, 278 F.2d 310, cert. den., 364 U.S. 922, 81 S.Ct. 288, 5 L.Ed.2d 261; Reuter v. Eastern Airlines, 5 Cir., 1955, 226 F.2d 443; White v. New York Life Insurance Company, 5 Cir., 1944, 145 F.2d 504.

The evidence in this case showed, or tended to show by fair inferences the following when considered in a light most favorable to Hogan against whom the verdict was directed. He was a commission buyer for Swift and Company at its Moultrie, Georgia plant, and for White Provision Company, a subsidiary of Swift, at its Atlanta, Georgia plant. He also purchased livestock for other meat packers. He resided in Dublin, Georgia and entered the livestock business in the early thirties. His modus operandi in connection with other packers was not put in evidence although it is clear that he purchased for or sold to others on a scale similar to his dealings with Swift, and hauled livestock to their places of operation on his trucks.

In the early years the livestock was moved by train but later, beginning in 1936 or 1937, Swift and White paid Hogan to transport its purchases by truck and he in turn hired a trucker out of payments made to him. This practice continued to the year 1944, the year the tax in question was imposed by statute, when the trucker for Hogan was called into the military service, and Hogan purchased trucks of his own. He obtained a certificate of public convenience and necessity from the Georgia Public Service Commission but never filed a tariff, and registered annually only three or four out of the total of eighteen trucks and trailers he finally acquired over the years. His certificate as a carrier was limited to hauling livestock. He obtained and carried carrier's cargo insurance. The years in question begin with the commencement of his hauling operation in 1944 and continue through 1958 when the statute imposing the tax was repealed.

Swift and White paid Hogan a commission of ten cents per hundredweight on purchases from him, plus fifty cents per hundredweight in some instances and forty cents per hundredweight in other instances for transportation depending on distance. With some specified exceptions, Hogan purchased the livestock with his own funds and was paid by Swift and White upon their purchase from him. He was responsible for losses in weight and grade between purchase and sale, and for losses occasioned by death, disease or damage during his ownership. The evidence showed losses sustained by him in these respects save by reason of death. Hogan owned a farm on which he fed out cattle to be later sold to Swift, and was not paid the commission or transportation charge on sales of these cattle. However, the testimony was that they were sold on a delivered basis.

His payments for transportation from Swift and White together averaged approximately $40,000 per year. There is no evidence as to what his payments were from other packers, but it is clear that they were considerable and that he was trucking on a large scale. For example, his truck drivers' salaries in 1957 were $121,295.80 and $77,584.02 in 1958. Expenditures for gas, oil and repairs exceeded these amounts.

His payments from Swift and White on each sale was in the form of two checks, one for transportation and the other for the cattle plus the commission. From the very beginning Swift and White included an additional three percent on the transportation payments to cover the transportation tax. The evidence was that Hogan advised those with whom he had contact as representatives of Swift and White that no tax was due since he was transporting his own cattle but that they continued to pay it over the years until it finally totalled $17,399.70. They were to give his advice to their superiors, but nothing further was heard from them in this regard, and he took no further action. These payments were included in his gross income and income tax was paid thereon. He failed to remit any portion of the sums collected as transportation tax. No transportation tax was collected by Hogan from any other packer, and there is no indication that any claim has been or is being made by the United States for tax with respect to those transactions.

The fact that Swift and White had paid Hogan the tax weighed heavily on the decision of the trial court. It was a relevant and a spectacular fact but not a conclusive one. The equities of that situation lie between Swift and White on the one hand, and Hogan on the other if the tax is not due.² Thus, putting aside the windfall to Hogan from these payments, the controversy lies between Hogan and the United States, and the nub of the controversy is whether Hogan was engaged in the business of transporting property for hire. His simple answer is that in the Swift and White transactions he was transporting his own property, and that as to it he was not engaged in the business of transportation for hire.

The evidence that Hogan paid for the cattle in question with his own funds, suffered such losses as might be incurred from casualty or disease prior to...