Sheppard v. Musser

• Decision Date: 13 March 1936
• Docket Number: No. 7051.,7051.
• Citation: 92 S.W.2d 219
• Parties: SHEPPARD et al. v. MUSSER.
• Court: Texas Supreme Court

Page 219

92 S.W.2d 219

SHEPPARD et al. v. MUSSER.

No. 7051.

Supreme Court of Texas.

March 13, 1936.

Error to Court of Civil Appeals of Second Supreme Judicial District.

Suit by Glenn W. Musser, doing business as the Texas Tobacco Company, against George H. Sheppard and others. To review a judgment of the Court of Civil Appeals [89 S.W.(2d) 222], modifying a judgment which granted an injunction to the plaintiff, the defendants bring error.

Affirmed in part and reversed in part, and injunction peremptorily dissolved in part.

William McCraw, Atty. Gen., Pat M. Neff, Jr., William C. Davis, John W. Pope, Jr., and T. F. Morrow, Asst. Attys. Gen., and Will R. Parker, Cr. Dist. Atty., and Cecil C. Rotsch, Asst. Cr. Dist. Atty., both of Fort Worth, for plaintiffs in error.

Samuels, Foster, Brown & McGee and Carl Goerte, all of Fort Worth, for defendant in error.

GERMAN, Commissioner.

The defendant in error, Glenn W. Musser, who will be referred to herein as plaintiff, brought this action in the district court of Tarrant county against George H. Sheppard, in his capacity as comptroller of public accounts of the state of Texas, and certain of his deputies, and against the district attorney of Tarrant county. These parties will be designated herein as defendants. The purpose of the action was to obtain an injunction against the defendants to restrain them in the collection of taxes under what is known as the Cigarette Tax Law, which became effective May 11, 1935. See Acts Regular Session, c. 241, p. 575 (Vernon's Ann.Civ.St. art. 7047c — 1; Vernon's Ann.P.C. art. 131c — 1). A temporary injunction was issued by the district court, which injunction was in part dissolved by the Court of Civil Appeals and in part sustained. 89 S.W.(2d) 222, 227. Judge Martin filed a dissenting opinion.

As presented here, it may be said that plaintiff's action is predicated upon the claim that he is engaged in interstate commerce, and that the various acts of the defendants in their efforts to enforce the provisions of the Cigarette Tax Law are unlawful and should be restrained, because they amount to an unjustified restraint upon and an interference with, interstate commerce. As briefed and submitted in this court, the case has been reduced to practically one point, and for that reason we shall not make an extended statement with reference to the pleadings or the facts.

Plaintiff, Musser, is a citizen of the state of Texas and resides in the city of Fort Worth, Tarrant county. He is doing business under the name of the Texas Tobacco Company. He employs a large number of salesmen, whose business it is to solicit orders for, and make sales of, cigarettes. Plaintiff also employs several distributing agents, who reside in some of the leading cities of the state. In conducting his business, plaintiff orders large quantities of cigarettes from several of the leading manufacturers in the United States, whose places of business are located in states other than Texas. These cigarettes, before being applied to orders, are kept in a warehouse or storeroom located at Ardmore, in the state of Oklahoma, a short distance from the Texas line. This warehouse is in charge of an employee of plaintiff, who is a citizen of the state of Texas. The various salesmen take orders in different parts of the state of Texas for quantities of cigarettes of different makes; the quantities being designated by cartons. Apparently no sales are made of less than one carton. A carton consists of 10 packages and a package contains 20 cigarettes. When orders are taken by salesmen, these orders are turned over to the distributing agent, and are by him sent to the storeroom at Ardmore, Okl., or they are sometimes sent by the individual salesman direct to Ardmore. When orders reach the warehouse at Ardmore, the cartons necessary to fill same are tied together in one package, and a sticker showing the names and locations of the purchasers is put on the packages. In some instances only the address of the purchaser is on the sticker. The various packages are then put into empty cases, which cases have been used in shipping the cigarettes from the factories to Ardmore. A case contains 10,000 cigarettes. The cases are then loaded on the trucks belonging to plaintiff, which trucks make frequent trips from Ardmore to the principal cities of Texas and return. When a truck reaches the city of Fort Worth, for instance, the cigarettes are taken to the residence of plaintiff, where they are separated, and the various packages intended for different purchasers in that city are delivered to the salesmen who took the respective orders, and by the salesmen are delivered to the parties who gave the orders. Apparently a like procedure is followed in other cities, except that the packages are separated and allotted to salesmen at some place other than the residence of plaintiff. Upon delivery by the salesman, he collects the purchase price, and remittance is made by him to plaintiff, or in some instances to the distributing agent, who in turn remits the money to plaintiff. No sale is completed until delivery has been made and the purchase money paid. The salesmen are instructed to make no delivery until the purchase money is paid, and, if it is not paid, the cigarettes are returned to the warehouse at Ardmore. The salesmen and the distributing agents are paid a commission upon the sales made, which commissions are not paid until the purchase money is paid to plaintiff at Forth Worth, Tex. When cigarettes have been delivered and the money paid, plaintiff has nothing further to do with the transaction.

Plaintiff admitted on the hearing that he had adopted this method of doing business in Texas solely for the purpose of claiming the protection of interstate commerce laws and to evade payment of the taxes under the Cigarette Law of the state.

For the purposes of this decision, we shall assume that plaintiff, up to the time he makes delivery of cigarettes to a purchaser and collects the purchase money, is engaged in interstate commerce, but we wish it to be distinctly understood that we are not making such a holding upon the facts. We are merely declining to interfere with the presumed holding of the trial court on the question, and leave it open for determination upon a final hearing upon the merits of the case.

Plaintiff in his petition alleged many acts of interference with himself and his agents in the transaction of his business. On the assumption that he was engaged in interstate commerce, some of the acts complained of were improper. However, upon a hearing there seems to have been but very little, if any, proof offered tending to show interference with plaintiff's business prior to the time cigarettes were delivered to purchasers. The case apparently resolved itself into one controversy, and the briefs and argument of counsel in this court have been confined almost exclusively to that controversy. The real point now at issue here appears to be the contention of plaintiff that the provision of the Cigarette Tax Law of Texas which seeks to impose a tax upon cigarettes, to be paid by the person who makes the first sale thereof in intrastate commerce, unlawfully interferes with his business, when "first sale" is given the meaning which the Legislature has declared it shall have.

The act (Vernon's Ann.Civ.St. art. 7047c — 1, § 1 (h) in question provides: "`First Sale' shall mean and include the first sale or distribution of cigarettes in intrastate commerce, or the first use or consumption of cigarettes within this State."

The provision (Vernon's Ann.Civ.St. art. 7047c — 1, § 2) fixing the taxes is as follows:

"A tax of One Dollar and Fifty Cents ($1.50) per thousand on cigarettes weighing not more than three (3) pounds per thousand and Three Dollars and Sixty Cents ($3.60) per thousand on those weighing more than three (3) pounds per thousand is hereby imposed on all cigarettes used or otherwise disposed of in this State for any purpose whatsoever. The said tax shall be paid only once by the person making the `first sale' in this State and shall become due and payable as soon as such cigarettes are subject to a first sale in Texas, it being intended to impose the tax as soon as such cigarettes are received by any person in Texas for the purpose of making a `first sale' of same. No person, however, shall be required to pay a tax on cigarettes brought into this State on or about his person in quantities of forty (40) cigarettes or less when such cigarettes have had the individual packages or the seals thereof broken and when such cigarettes are actually used by said person and not sold or offered for sale. Payment of such tax shall be evidenced by stamps purchased from the Treasurer and securely affixed to each individual package of cigarettes covering the tax thereon as imposed by this act; provided that such stamps may be purchased and affixed to such individual package of cigarettes by a manufacturer of cigarettes outside this State, in which case no further payment of tax shall be required.

"Provided, that the tax imposed shall be in lieu of any other occupation or excise tax imposed by the State or any political subdivision thereof, on cigarettes."

The Court of Civil Appeals in a majority opinion says:

"Accordingly, the majority are of the opinion that, in so far as the restraining order protects appellee and his agents in soliciting bona fide interstate orders, and in his and their lawful possession of goods brought into Texas, under such orders, and in his and their right to deliver such goods, so ordered, to bona fide purchasers, and protecting such purchasers, in the use and consumption thereof, and in their possession, for such purposes, as against the state comptroller, and those acting under him and by his order and direction, same should be affirmed; but that the restraining order, in so far as it seeks to enjoin the district attorney of Tarrant county and his...