Sneed v. Shaffer Oil & Refining Co.

• Decision Date: 30 September 1929
• Docket Number: No. 8409-8412.,8409-8412.
• Citation: 35 F.2d 21
• Parties: SNEED, Treasurer of the State of Oklahoma, v. SHAFFER OIL & REFINING CO., and three other cases.
• Court: U.S. Court of Appeals — Eighth Circuit

35 F.2d 21 (1929)

SNEED, Treasurer of the State of Oklahoma, v. SHAFFER OIL & REFINING CO., and three other cases.

Nos. 8409-8412.

Circuit Court of Appeals, Eighth Circuit.

September 30, 1929.

Fred Hansen, Asst. Atty. Gen. (Edwin Dabney, Atty. Gen., on the brief), for appellant.

S. B. Flynn, of Oklahoma City, Okl. (G. Earl Shaffer, of Tulsa, Okl., and Rainey, Flynn, Green & Anderson, of Oklahoma City, Okl., on the brief), for appellee Shaffer Oil & Refining Co.

Victor C. Mieher and R. Y. Stevenson, both of Tulsa, Okl., for appellee Amerada Petroleum Corporation.

John H. Brennan, G. J. Neuner, and Thomas J. Casey, all of Tulsa, Okl., Foster V. Phipps, of Muskogee, Okl., and Jack Paden, of Tahlequah, Okl., for appellee Barnsdall Oil Co.

J. C. Monnet, Jr., of Oklahoma City, Okl. (B. A. Ames, of Oklahoma City, Okl., John R. Ramsey and J. H. Hill, both of Tulsa, Okl., and Ames, Cochran, Ames & Monnet, of Oklahoma City, Okl., on the brief), for appellee Texas Co.

Before LEWIS and VAN VALKENBURGH, Circuit Judges, and SYMES, District Judge.

LEWIS, Circuit Judge.

The main issue in each of these four cases, argued together, is whether an act of the Oklahoma Legislature (chapter 113, Session Laws 1927), requiring an annual license fee from corporations that do business in that state and fixing the basis on which the amount thereof is to be ascertained is enforceable against appellees, plaintiffs below, all Delaware corporations. The complaints challenge the act on the ground that it discriminates between domestic and foreign corporations and thus denies to the latter equal protection of laws. Fourteenth Amendment U. S. Constitution. Each of the plaintiffs is and has been engaged continuously in the oil business in Oklahoma. One of them was there and so engaged prior to statehood. The others were regularly admitted before the passage of the Act of 1927. Each has acquired and owns within the state property of great value, tangible and intangible, much of it immovable, and they have like kinds of property in other states — all needed and used in the production, transportation and sale of oil and gasoline. Some have refineries, storage tanks and pipe lines that carry oil in the state and the products of all enter directly into both intra- and interstate commerce. Domestic corporations are doing the same kind of business and have the same kind of property there as plaintiffs. These facts are pleaded in more detail in the complaints. Each answer starts out with a general denial, but subsequent admissions therein seemed to make it unnecessary that plaintiffs adduce any proof. We so understood the arguments. Plaintiffs, on their motions, were each given judgments on the pleadings for the amount each had been compelled to pay under the Act of 1927 as a license fee for the year July 1, 1927, to June 30, 1928, as having been made under duress and protest.

Prior to 1910 the laws of Oklahoma did not require the payment of a license fee by either domestic or foreign corporations for the privilege of doing business. In that year an act was passed, now found in Comp. Okl. St. 1921, as sections 9946 et seq., which prohibited both domestic and foreign corporations doing business in the state without a license therefor. A pertinent section of that act, being section 9947, Comp. St. 1921, reads thus:

"It shall be the duty of every corporation incorporated under the laws of this state, and of every foreign corporation doing business in this state, to procure annually from the Corporation Commission a license authorizing the transaction of such business in this state. Each domestic corporation shall pay a license fee of fifty cents for each one thousand dollars of its authorized capital stock or less, and each foreign corporation shall pay a license fee of one dollar for each one thousand dollars of its capital stock employed in its business done in this state: Provided, that the license fees provided for in this article shall not be required on that portion of its capital stock employed by any corporation in any business upon which a production, income or gross receipts tax is required to be paid under the laws of this state; but any corporation claiming exemption from the payment of the license fees on any portion of its authorized capital shall, in addition to all other statements required by the provisions of this article, file a statement under oath of its president, secretary or other managing officer showing in detail the different kinds of business in which it is engaged, and the portion of its capital employed in that part of its business upon which a production, income or gross receipts tax is required to be paid under the laws of this state."

Section 9952, Comp. St. 1921, reads:

"The license tax hereby provided for shall authorize the corporation complying with the provisions of this article to transact its business during the year, or for any fractional part of such year in which such license tax or fee is paid. The term `year' as used in this article shall mean from and including July first to and including June thirtieth, next thereafter."

This act, and especially said section 9947, remained unchanged until the Act of 1927, § 1, which amended said section 9947 by changing the second sentence thereof to read: "Each domestic corporation shall pay a license fee of fifty cents for each one thousand dollars of its authorized capital stock or less, and each foreign corporation shall pay a license fee of one dollar for each one thousand dollars of its capital invested in its business in this state." And the said act then defined the words "capital invested in its business," in relation to foreign corporations, thus: "The words `capital invested in its business' as used in this Act shall be construed to mean all the assets including money and property, tangible and intangible used or employed from year to year by such corporation in the transaction of its business in this state."

The state statute imposes penalties for failure to pay the fee and obtain a license from the Corporation Commission, the most severe being cessation of business within the state, inability to make valid contracts therein, and ouster therefrom. The Commission prepared blank forms for reports pursuant to the requirement of the Act of 1927, sent them to plaintiffs and demanded that they be filled out, returned and the fee paid as the act requires. They protested and asserted that the act denied to them equal protection of laws. The Commission insisted that the payments must be made. Some of the plaintiffs protested to the treasurer of the state, to whom the exacted payments were to be made, asserting discrimination against them and the invalidity of the act. The Attorney General of the State was appealed to, and he notified at least one of the plaintiffs that if the fee was not paid its right to do business in the state would be forfeited and the state would have a lien upon its assets to compel the payment of the license fee, and that in addition thereto there was a penalty of ten dollars each day that the failure and refusal continued, which would also become a lien on the property of the corporation recoverable by the State, and that if payment was not made on a day fixed he would at once take the proper steps to forfeit the license, oust it from doing business in the state and collect the penalties. Each of the plaintiffs then filled out the form of report prepared by the Corporation Commission, returned it and paid the fee, and, as said, they each recovered judgment for its return. In Cause No. 8409 the plaintiff reported its total assets as $37,000,000 (figures below $100,000 are omitted), of which $22,500,000 are in the state of Oklahoma, consisting of lands held in fee, developed leases, undeveloped leases, buildings and structures, motor cars, intangible property and current assets. Property amounting to more than $14,000,000 was outside the state. After deducting from the $22,500,000 that part in Oklahoma which was claimed to be exempt, its return showed $5,500,000 in that state on which it paid $5380.00. The plaintiff in Cause No. 8410 showed in its return $19,700,000 assets, of which $11,600,000 was situate in Oklahoma, consisting of the same kind of property listed in the return just...