Standard Oil Co. of Texas v. State

• Decision Date: 14 June 1940
• Docket Number: No. 2100.,2100.
• Citation: 142 S.W.2d 519
• Parties: STANDARD OIL CO. OF TEXAS v. STATE.
• Court: Texas Court of Appeals

Page 519

142 S.W.2d 519

STANDARD OIL CO. OF TEXAS v. STATE.

No. 2100.

Court of Civil Appeals of Texas. Eastland.

June 14, 1940.

Rehearing Denied July 19, 1940.

Appeal from District Court, Howard County; Cecil C. Collins, Judge.

Suit by the State against the Standard Oil Company of Texas for the purpose of collecting "chain store taxes" on gasoline filling stations. From a judgment in favor of the plaintiff, the defendant appeals.

Judgment affirmed.

L. L. Moore and Frank J. Kockrits, Jr., both of San Francisco, Cal., and Burges, Burges & Scott, of El Paso, for appellant.

Gerald C. Mann, Atty. Gen., and Glenn R. Lewis, Billy Goldberg, and Cecil C. Rotsch, Asst. Attys. Gen., for appellee.

GRISSOM, Justice.

The State of Texas filed this suit against the Standard Oil Company of Texas for the purpose of collecting "chain store taxes" on twenty gasoline "filling" stations. (For convenience, plaintiff will hereafter be referred to as State, or plaintiff, and defendant as Standard, or defendant.) The cause was tried to the court upon an agreed statement of facts, under Art. 2177, R.S.1925. The court held defendant liable for said taxes and entered judgment therefor. Defendant has appealed.

At defendant's request, the court filed its conclusions of law, which are in part as follows:

"(1) All of the twenty filling stations in question are stores within the meaning of the Texas Chain Store Tax Act (Acts 1935, 44th Legislature, First C.S., p. 1589, ch. 400 [Vernon's Ann.P.C. art. 1111d]). They all come within the definition set out in Section 7 of the Act, which reads as follows:

"(2) `The term "store" as used in this Act shall be construed to mean and include any store or stores or any mercantile establishment or establishments not specifically exempted within this Act which are owned, operated, maintained, or controlled by the same person, agent, receiver, trustee, firm, corporation, copartnership or association, either domestic or foreign, in which goods, wares or merchandise of any kind are sold, at retail or wholesale.'

"(3) The Act provides for certain exemptions; but none of the twenty filling stations in question come within any of the exemptions, and none of them are exempt from the license fee and taxes provided for in the Act. Section 5 of the Act provides that `any place of business engaged exclusively in the storing, selling, or distributing of petroleum products and servicing of motor vehicles' is not included in the terms of the Act. This is really an exemption, which permits two things, (1) `storing, selling or distributing' of a certain kind, and (2) `servicing.' The only selling included in this exemption is the selling of petroleum products; and therefore when any article of merchandise such as tires, batteries, or anything else that is not a petroleum product, is sold by a place of business, that sale is more than is allowed by this exemption, and consequently the place of business does not come within the exemption. This exemption uses the word `exclusively', which means `solely' or `only', and therefore, in order for a place of business to be within the terms of the exemption the only `selling' it can carry on is the selling of petroleum products. The fact that the article sold is put on a motor vehicle at the time of the selling does not alter the case, because it is stilt a sale and selling is still going on. If an article other than a petroleum product is sold, even though it is put on an automobile at the time, the seller is not engaged `exclusively' in the sale of petroleum products, and consequently is outside of the exemption. As the facts show that merchandise, other than petroleum products, including tires, batteries, and automobile accessories, and other articles, were sold at each of the twenty filling stations in question, all of the stations are therefore stores subject to the terms of the Act, and are not within the terms of the exemption, regardless of the fact that said merchandise was placed on the motor vehicle at the time of the sale in the case of some of the stations.

"(4) The first eight filling stations described in the plaintiff's petition, and referred to in the evidence as Group A and Group B, during all of the times involved in this suit, were each owned, operated, maintained and controlled by the defendant, Standard Oil Company of Texas. Each of said eight stations and all of their equipment were owned by the defendant, and the defendant's agents were in charge and control of each of said stations.

"(5) The remaining twelve filling stations described in the plaintiff's petition, and referred to in the evidence as Group C, Group D, Group E and Group F, during all of the times involved in this suit, were operated and maintained under the same general management and controlled by the same person and corporation, to-wit, Standard Oil Company of Texas, the defendant herein, by virtue of the contract, referred to as a `distributor's agreement' between the Standard Oil Company and each of the persons in physical charge of said twelve filling stations, and also by virtue of the acts in evidence by which the Standard Oil Company of Texas actually exercised control and management over each of said twelve stations."

The applicable provisions of the Texas Chain Store Tax Statute, Art. 1111d, Vernon's Ann.P.C. (Acts 1935, 44th Leg., First C.S., p. 1589, ch. 400), are as follows:

"Sec. 5. Every person, agent, receiver, trustee, firm, corporation, association or copartnership opening, establishing, operating or maintaining one or more stores or mercantile establishments within this State, under the same general management, or ownership, shall pay the license fees hereinafter prescribed for the privilege of opening, establishing, operating or maintaining such stores or mercantile establishments. * * * Provided that the terms, `store, stores, mercantile establishment or mercantile establishments' wherever used in this act shall not include: wholesale and/or retail lumber and building material businesses engaged exclusively in the sale of lumber and building material; and/or oil and gas well supplies and equipment dealers; or any place of business engaged exclusively in the storing, selling, or distributing of petroleum products and servicing of motor vehicles; or any business now paying an occupation tax measured by gross receipts; or any place or places of business used as bona fide wholesale or retail distributing points by manufacturing concerns for distribution of products of their own manufacture only; or any place or places of business used by bona fide processors of dairy products for the exclusive sale at retail of such products. * * *

"Sec. 6. The provisions of this Act shall be construed to apply to every person, agent, receiver, trustee, firm, corporation, copartnership or association, either domestic or foreign, which is controlled or held with others by majority stock ownership or ultimately controlled or directed by one management or association of ultimate management.

"Sec. 7. The term `store' as used in this Act shall be construed to mean and include any store or stores or any mercantile establishment or establishments not specifically exempted within this Act which are owned, operated, maintained, or controlled by the same person, agent, receiver, trustee, firm, corporation, copartnership or association, either domestic or foreign, in which goods, wares or merchandise of any kind are sold, at retail or wholesale."

The twenty filling stations in question were referred to upon the trial and are referred to in the briefs, in groups substantially as follows:

Group A consists of six stations, admittedly owned and operated by Standard through its agent Standard Stations, Inc. (Both of said organizations are corporations.) These stations sell petroleum products. They also sell automobile tires, tubes, batteries, spark plugs, light globes and antifreeze liquid, etc. Such accessories are installed on the customers' automobiles at the time of sale.

Group B consists of two stations owned and operated by Standard, through said Standard Stations, Inc. They sell the same products as is sold by Group A. However, the agents in charge of said stations, in two instances, sold accessories without installing them on their customers' automobiles, contrary to defendant's instructions.

Group C consists of three stations which sell petroleum products and automobiles accessories. These stations are not operated by Standard Stations, Inc., as are Groups A and B, but are operated by persons designated as "Distributors." Automobile accessories are sold by these stations and some of the articles sold are not installed upon automobiles, but are carried away by the customers. Standard owns, or leases from a third person, these stations and the land on which they are located. Standard and the Distributors have entered into a contract called "Distributor's Agreement" under which, among other things, the distributor agrees to sell only Standard's petroleum products and only Standard's tires, tubes and batteries.

Group D consists of two stations. The facts with reference to said Group are the same as in Group C, except in addition to the selling of petroleum products and automobile accessories, they also sell merchandise not connected with an automobile, such as gloves, bath mats, etc.

Group E consists of five stations. The facts relative to this Group are the same as in Group C, except the station and the land on which it is located is owned, or leased from a third person, by the Distributor, instead of Standard. Otherwise, the "Distributor's Agreement" is the same as in Group C.

Group F consists of two stations. The facts relative to this Group are the same as in Group E, except in addition to petroleum products and automobile accessories sold by the stations in Group E this group sells merchandise not connected with an automobile.

We understand Standard's contention to be...