Ky. Independent Oil Co. v. Coleman, Auditor

• Decision Date: 16 December 1930
• Parties: Kentucky Independent Oil Company v. Coleman, Auditor of Public Accounts.
• Court: United States State Supreme Court — District of Kentucky

236 Ky. 592

Kentucky Independent Oil Company v. Coleman, Auditor of Public Accounts.

Court of Appeals of Kentucky.

Decided December 16, 1930.

1. Commerce. — That buyers from oil company used gasoline in interstate journeys did not involve "interstate commerce," so as to invalidate gasoline tax (Acts 1924, chapter 120; Constitution U.S. article 1, section 8, paragraph 3).

Evidence showed that charge of three cents a gallon imposed by Acts 1924, c. 120, was included in sale price of gasoline paid by buyers and was collected by company as agent of state; that gasoline was not sold in tank cars or original packages in which it was brought into state, but was at rest in company's storage tanks or at its service stations and was part of common property of state.

2. Commerce. — Tax on gasoline sold by oil company held not invalid as including gasoline allegedly used by company's trucks in interstate commerce; keeping of separate record not being impracticable (Acts 1924, c. 120; Constitution U.S., art. 1, sec. 8, par. 3).

It appeared that company paid taxes on almost 1,220,000 gallons of gasoline and that one of witnesses who estimated amount of gasoline used in making interstate deliveries at about 15,000 gallons testified it was not possible to separate gasoline used by company's trucks from that sold to others, but it appeared further that company kept no separate account, although it could easily have done so.

3. Licenses. — Oil company's recovery of taxes on gasoline used by its trucks in interstate deliveries held unjustified under either pleading or evidence (Acts 1924, chapter 120; Constitution U.S., art. 1, sec. 8, par. 3).

It appeared that company's petition contained no allegations seeking recovery on ground that any of gasoline was used by company in interstate commerce; that no separate account was kept of gasoline so used; and that there was no

separate demand for repayment of tax thereon, and auditor was given no opportunity to refund before suit.

Appeal from Franklin Circuit Court.

H.B. MACKOY, R.T. BURKE, W.A. BERRY and C.C. GRASSHAM for appellant.

J.W. CAMMACK, Attorney General, and JAMES M. GILBERT and CLIFFORD E. SMITH, Assistant Attorneys General, for appellee.

OPINION OF THE COURT BY JUDGE CLAY

Affirming.

Chapter 120, Acts 1924, imposing a state tax of three cents per gallon on all gasoline sold in this commonwealth "at wholesale," as thereinafter defined, became effective on June 18, 1924. Between that date and January 1, 1925, the Kentucky Independent Oil Company paid to the state gasoline taxes aggregating $36,581.64. This action was brought to require the auditor to issue to the company his warrant for that amount. The ground relied on in the original petition was this: The gasoline tax was a tax on the privilege of doing business in this state, and inasmuch as the company by complying with section 4189a, Kentucky Statutes, had already paid for that privilege, it could not be taxed again for the same thing. The auditor filed an answer in three paragraphs containing certain averments not necessary to be set out. The demurrer interposed to the petition was not passed on, but the demurrer to each paragraph of the answer was sustained, and the auditor having declined to plead further, the court awarded a mandamus directing the auditor to issue his warrant for the sum demanded. On appeal we upheld the validity of the tax on the ground that it was an excise tax and not a tax on the privilege of doing business in this state, and therefore did not amount to double taxation, and remanded the cause with directions to sustain the demurrer to the petition. Shanks v. Kentucky Independent Oil Co., 225 Ky. 303, 8 S.W. (2d) 383.

On the return of the case the action was revived in the name of Clell Coleman, who had succeeded William H. Shanks as auditor, and the demurrer was sustained to the petition as directed.

Thereafter the company filed an amended petition challenging the validity of the tax not only on other grounds not necessary to be considered, but on the further ground that, as construed by this court, it was a burden on interstate commerce, and therefore violative of the commerce clause of the Federal Constitution. With respect to this phase of the case the allegations of the amended petition are these:

"Plaintiff further says that it was and has been at all times mentioned herein and in said original petition, engaged in the business of selling and distributing gasoline at wholesale and that it sold said gasoline for use in both intrastate and interstate commerce; that a very large portion of said gasoline, the amount of which plaintiff is unable to state and has and can have no knowledge of or means of stating, was and is sold and distributed to persons to be used and consumed and was and is used and consumed in interstate commerce; that it was and is not possible for plaintiff to ascertain or determine or report to the state of Kentucky, which of the persons to whom said gasoline was sold or distributed by it were intending or going to or would use or consume said gasoline in interstate commerce or in intrastate commerce, or what portion or portions of the gasoline so sold and distributed by it would be or was or is used or consumed in interstate commerce, or in intrastate commerce.

"Plaintiff says that, by reason of the foregoing facts and premises, the said Act hereinbefore mentioned and referred to, by its terms and as so construed, interpreted and enforced by said Court of Appeals, and by its operation and effect, and the tax imposed and collected thereby and thereunder, were and are invalid, illegal and unconstitutional and in violation of paragraph 3, section 8, article 1, of the...