Quick Service Tire Co. v. Smith

• Decision Date: 21 November 1927
• Citation: 299 S.W. 807,156 Tenn. 96
• Parties: QUICK SERVICE TIRE CO. v. SMITH, CLERK OF COUNTY COURT, ET AL.
• Court: Tennessee Supreme Court

299 S.W. 807

156 Tenn. 96

QUICK SERVICE TIRE CO. v. SMITH, CLERK OF COUNTY COURT, ET AL.

Supreme Court of Tennessee.

November 21, 1927

Appeal from Chancery Court, Washington County; S.E. Miller Chancellor.

Suit by the Quick Service Tire Company against Jess G. Smith, Clerk of the County Court of Washington County, and others. Decree for complainant, and defendants appeal. Affirmed.

Miller & Winston, of Johnson City, for complainant.

Epps & Epps, of Jonesboro, for defendants.

COOK J.

The bill was filed against the defendant, clerk of the county court of Washington county, to recover state and county taxes alleged to have been illegally exacted and paid under protest.

The chancellor held that the tire company was not subject to the tax because it did not maintain an oil depot, defined and taxed by the Revenue Act of 1925 (Acts 1925, c. 134). He also found that the tax was paid under circumstances amounting to duress and under protest, and decreed a recovery under section 1061 of Shannon's Code.

The defendant appealed, and through assignments of error insists that (1) the chancellor's conclusion of fact that complainant was not operating an oil depot was erroneous (2) that the tax was not paid under duress and protest conditions essential to the right of recovery; (3) that recovery on behalf of complainant should have been denied and defendant decreed a recovery under the cross-bill for $4,453.75, delinquent taxes and penalty.

The undisputed facts are that, prior to June 24, 1926, complainant was exclusively engaged in the business of operating a service station and gasoline filling station, and retailed gasoline to consumers at its filling station. At another place, by a railroad siding, the complainant kept a storage tank into which it unloaded gasoline from the railroad, where it remained until drawn for use in its business at the filling station. The storage tank had a capacity of about 10,000 gallons, but gasoline was purchased only in single car lots of about 6,000 gallons, and was transferred from the car to the tank, and only taken out by complainant, carried to the filling station, and placed in smaller tanks, from which it was drawn for delivery to customers in retail lots. None was delivered or sold from the larger tank. Complainant's object in buying gasoline in car lots was to avoid brokerage charges on purchases of small quantities, and to enable it to obtain the benefit of wholesale prices, so as to increase the profits of its business at the filling station. Complainant could not buy in carload lots without a container, either at its filling station or elsewhere, into which the car-lot shipment might be unloaded and kept pending sale in its retail business.

The revenue law (page 479, Pub. Acts of 1925) provides:

"Each and every person, association of persons, firm, copartnership, corporation or agent having or maintaining an oil depot as above defined within this State shall pay a special privilege tax for such place or depot (and shall keep on display to public view at each such place the original or certified copy of receipt showing payment of said special privilege tax) as follows: * * * If located in an incorporated city or town of less than 30,000 but more than 10,000 population, or within ten miles of the limits of such city or town, each depot, per annum, $250.00."

Johnson City, where complainant is engaged in business, falls within the foregoing classification.

The act further provides:

"The term 'oil depot' shall be understood to mean and include any place within this state where petroleum products or substitutes therefor are received in quantities equal to or greater than a railroad carload, and at or from which place said products are delivered, sold or offered for sale, to dealers therein or consumers thereof, in railroad carload quantities or less, including any railroad car, railroad depot, boat, barge, public or private storage warehouse, used for such purpose: Provided, it shall not apply to automobile service stations or oil and gas filling stations."

Express provisions of the act exclude, as the subject of taxation, complainant's storage tank, which it maintained, not as an independent business, but as an integral part of its business of operating a gasoline filling and service station. The act defines "oil depots," which are taxed, as places where gasoline is received in car lots, and at or from which it is delivered, sold, or offered for sale to dealers or consumers. The complainant did not transfer the gasoline from cars to its storage tank, to be sold or offered for sale to consumers. The transfer from the car to the tank was a step in the transition from the car to the filling station.

It would require a strained construction, not justified by the language of the act, to hold that a storage tank, used as a measure of thrift and profit as...