Price v. Independent Oil Co.

• Decision Date: 30 October 1933
• Docket Number: 30729
• Citation: 168 Miss. 292,150 So. 521
• Court: Mississippi Supreme Court
• Parties: PRICE, STATE AUDITOR, et al. v. INDEPENDENT OIL CO. et al

150 So. 521

168 Miss. 292

PRICE, STATE AUDITOR, et al. v. INDEPENDENT OIL CO. et al

No. 30729

Supreme Court of Mississippi

October 30, 1933

(En Banc.)

1 LICENSES. Gasoline sold members of unincorporated association not constituting partnership and having no capacity to own property or contract as entity held subject to tax.

Gasoline was furnished to members of unincorporated association pursuant to agreement whereby orders were placed with agent for all motor fuel used by them or agents in farming operations, such agent entering into agreement with oil company to furnish gasoline, which was shipped in tank car lots into state to oil company without bills or invoices sent to individuals or money collected prior to delivery of cars in accordance with estimated needs of association.

2 PARTNERSHIP.

Partnership may be implied or inferred from manner in which business is done.

3 PARTNERSHIP.

Status of parties as partners, under any written instrument or agreement, is to be governed by laws of state where parties reside.

HON JAS. A. FINLEY, Chancellor.

APPEAL from chancery court of Lee county, HON. JAS. A. FINLEY, Chancellor.

Suit by Joe S. Price, Auditor of the state, and others, against the Independent Oil Company and others. Judgment of dismissal, and plaintiffs appeal. Reversed and rendered.

Reversed and rendered.

T. C. Hannah, of Hattiesburg (of Hannah & Simrall, of Hattiesburg), and Lotterhos & Travis, of Jackson, for appellants.

It is, and has been, the theory and contention of the appellant that the "Farmers Association of North Mississippi" was merely a "scheme," "trade name" or "fence" used by the appellees to enable them to sell gasoline without paying to the state of Mississippi the excise tax provided for by law. But, that irrespective of whether or not said Association was a mere "fence" or "myth"--that the Lion Oil Refining Company and/or the Independent Oil Co. and R. C. Clark and W. H. Reed were liable, as sellers or distributors of the said gasoline.

Treas v. Price, 146 So. 630.

The holding of the court in the Treas case is in line with and in reality is a restatement of the law as announced by this court in the cases of Evans v. Lily, 95 Miss. 58, 148 So. 612; Alkehest Lyceum Co. v. Featherstone, 113 Miss. 226, 74 So. 151; Victor v. Adams, 140 Miss. 643, 106, So. 433.

This so-called Farmers Association of North Mississippi belonged to the Lion Oil Refining Company and the Independent Oil Company -- body, boots and breeches.

We submit to the court that one or two conclusions are inescapable: Either that the Lion Oil Refining Co. or the Independent Oil Co. shipped and delivered one hundred twenty thousand gallons of gasoline on the strength of, and as the result of, orders secured by their representatives as and when they obtained the signatures to these so-called articles of Association, or that the Lion Oil Refining Company and the Independent Oil Company sold and delivered this one hundred twenty thousand gallons of gasoline to these so-called members at the time, and as and when these respective deliveries were made. And, it doesn't make any difference under the statutes of Mississippi which conclusion is reached in so far as tax liability is concerned.

Watkins & Eager, of Jackson, Blair & Anderson, of Tupelo, and Jeff Davis, of El Dorado, Ark., for appellees.

Every presumption is in favor of the nonliability of the taxpayer.

State ex rel. Atty. Gen. v. Miss. P. & L. Co., 161 Miss. 829, 138 So. 567.

The appellees and each of them are entitled to a presumption of fair dealing and it is presumed that their contracts were legal and enforceable, free from wrong doing and fraud.

Wherry v. Latimer, 60 So. 563, 103 Miss. 524; Mecom, Adm. v. Fitzsimmons D. Co., 284 U.S. 183, 76 L.Ed. 233; Bing v. Bowers, 22 F.2d 450, aff. 26 F.2d 1017, C. C. A. 2; Iowa Bridge Co. v. Comm. Int. Rev., C. C. A. 8, 39 F.2d 777; Stimpson v. Comm. Int. Rev., C. C. A. 8, 55 F.2d 813, Cert. denied, 76 L.Ed. 1289.

The Lion Oil & Refining Co., appellee, under no circumstances would be liable for taxes for merely shipping into Mississippi in interstate commerce to the farmers association gasoline orders which were solicited in Mississippi, accepted in Arkansas, and the contract fully complied with in Arkansas by delivery to the carrier.

Brennan v. Titusville, 153 U.S. 289, 38 L.Ed. 719; West v. K. Nat. Gas Co., 221 U.S. 229, 55 L.Ed. 716; Real Silk H. Mills v. City of Portland, 268 U.S. 325, 69 L.Ed. 982; Weber v. Virginia, 103 U.S. 344, 25 L.Ed. 563; Di Santo v. Pa., 273 U.S. 34, 71 L.Ed. 524; Utah P. & Co. v. Pfost, 286 U.S. 165, 76 L.Ed. 1038; State Tax Com. v. Interstate Nat. Gas Co., 284 U.S. 41, 76 L.Ed. 156; Peoples Nat. Gas Co. v. Public Service Com. of Pa., 270 U.S. 550, 70 L.Ed. 726; Helson v. Kentucky, 279 U.S. 245, 73 L.Ed. 683; City Sales Agency v. Smith, 126 Miss. 202, 88 So. 625.

The independent oil company was not an agent of and for the Lion Oil & Refining Co., Inc.

60 C. J., p. 976; Philadelphia, etc. Co. v. McKibbin, 243 U.S. 264, 61 L.Ed. 710; Cannon Man. Co. v. Cudahy Packing Co., 267 U.S. 333, 69 L.Ed. 634; Consolidated Textile Co. v. Gregory, 77 L.Ed. 750; Cleveland Trust Co. v. Con. Gas, etc. Co., C. C. A., 55 F.2d 211; Kingston, etc. Co. v. Lake C. Trans. Co., 31. F. (2d) 275, C. C. A.; Texas Co. v. Roos, 43 F. (2d), Cert. denied 51 S.Ct. 216; Maj. Co. v. Orpheum Cir., 21. F. (2d) 720; Ind. Res. Corp. v. Gen. Motors Corp., 29 F.2d 623; Haskell v. McClintic Marshall. Co., 281. Fed. 166; Oldham v. Chicago, 52 F.2d 111, C. C. A.

The capacity of the parties to contract, their status, rights, and obligations are determined by the state Arkansas.

12 C. J., p. 464; Parsons Oil Co. v. Boyett, 44 Ark. 230; Ames v. McCamber, 124 Mass. 85; Mackey v. Pettyjohn, Kan., 49 P. 636; Hart v. Livermore Foundry, etc. Co., 72 Miss. 809; Rabun v. Rabun, 15 La. Ann. 471; Poole v. Perkins (Va.), 101 S.E. 240, 18 L. R. A. 1509; People's Outfitting Co. v. U.S. 58 F.2d 847; Chemical Co. v. Langsenkamp, 32 F.2d 725; Gaston, Williams & Wigmore v. Warner, 272 F. 56; Inter. Harvester v. McAdams (Wis.), 26. L. R. A. 774; Kohn v. Milcerh, 43, Fed. 641, 10 L. R. A. 439; Harris v. Potato Curing Ass'n (Ark.), 284 S.W. 775; Hendren v. Wing (Ark.), 31 S.W. 149; Schumpert v. Dillard, Pinson Co., 55 Miss. 348; Town of Gravette v. Veach (Ark.), 54 S.W.2d 704; Ferguson v. Crawford (Ark.), 236 S.W. 837; Guild v. Allen (R. I.), 67 A. 855; Edwards v. Old Settlers Asso. (Tex.), 166 S.W. 423; People v. Adelphi Club (N. Y.), 43 N.E. 410; Cuzner v. Cal. Club (Cal.), 160 P. 868; Evans v. Lily, 95 Miss. 58, 48 So. 612; Alkahest Lyceum Sys. v. Featherston 113 Miss. 226, 74 So. 151; Victor v. Adams, 106 So. 433, 140 Miss. 643.

The title to the gasoline in question passed to the members of the farmers association of north Mississippi upon delivery to the carrier in the state of Arkansas. The Independent Oil Co. acted merely as the agent, trustee, or bailee for the owners thereof in strong, protecting, and making delivery thereof to the owners. It was not engaged in making sales of the oil.

City of Owensboro v. Tobacco Growers Asso. (Ky.), 300 S.W. 351; Haarparinne v. Butter Hill Fruit Growers Asso. (Me.), 119 A. 116, 23 R. C. L. 1206-1213; Bretz v. Diehl (Pa.), 2 Am. St. Rep. 706; Com. of Internal Rev. v. San Carlos Milling Corp., C. C. A. 9, 63 F.2d 153; 6 C. J., p. 1106; 55 C. J., p. 48.

The association caused its gasoline to be deposited with the independent oil company under written contract. The independent oil company was not engaged in selling the oil to members of the association but re-delivering the oil to them upon their written requisitions. Neither was the association engaged in the sale of oil to its members but the gasoline was being divided among the members, owners thereof, in accordance with their written requisitions.

55 C. J., p. 41; Jackson v. McIntosh, 12 F.2d 676, Cert. Den. 71 L.Ed. 846; Arnold v. N. A. Chemical Co. (Mass.), 122 N.E. 283; State, v. Kline, 93 P. 237; City of Spokane v. Baukham, 103 P. 14; State v. Robinson, 146 S.W. 456; Feige v. State, 95 S.W. 506; Ada County v. Boise Com. Club, 38 L. R. A. (N. S.) 101; In re Cutting, 121 P. 304; Duff v. Keaton, 42 L. R. A. (N. S.) 472; People v. Adelphi Club (N. Y.), 43 N.E. 410; Commonwealth v. Ponphret (Mass.), 50 Am. Rep. 840; State v. Kline, 93 P. 237.

W. H. Reed is not liable for the tax.

Argued orally by T. C. Hannah and Fred Lotterhos, for appellant, and by W. H. Watkins, for appellee.

Ethridge, P. J., Smith, C. J., dubitatur. Anderson, J. took no part in this decision.

OPINION

Ethridge, P. J.

Carl C. White, formerly state auditor, instituted suit to recover gasoline excise taxes, imposed by the state of Mississippi, from the Independent Oil Company, a Mississippi corporation engaged in the sale and distribution of gasoline and fuel oil; the United States Fidelity & Guaranty Company, surety on its bond; the Lion Refining Company, an Arkansas corporation engaged in the refining and sale of gasoline and motor oil; W. H. Reed, and certain other individuals purporting to be organized under the name of the Farmers' Association of North Mississippi. The defendant W. H. Reed was the agent of the Lion Refining Company for the sale of its products in Mississippi, and also agent for the Farmers' Association of North Mississippi. He was to get a commission on all sales made for the Lion Refining Company.

The Independent Oil Company had its domicile at Tupelo, Mississippi, but the Lion Refining Company owned sixty-two per cent. of its capital stock. The activities of Reed had procured one hundred forty citizens of Mississippi who were the owners or lessors of the engines or motor equipment, etc., to enter into the following agreement:

...