State Board of Equalization v. Stanolind Oil & Gas Company

• Decision Date: 27 September 1939
• Docket Number: 2116
• Citation: 94 P.2d 147,54 Wyo. 521
• Parties: STATE BOARD OF EQUALIZATION v. STANOLIND OIL & GAS COMPANY
• Court: Wyoming Supreme Court

94 P.2d 147

54 Wyo. 521

STATE BOARD OF EQUALIZATION v. STANOLIND OIL & GAS COMPANY

No. 2116

Supreme Court of Wyoming

September 27, 1939

ERROR to the District Court, Laramie County; SAM M. THOMPSON Judge.

Suit by the Stanolind Oil & Gas Company against the State Board of Equalization of the State of Wyoming to review action of the Board in imposing a tax upon certain transactions of the plaintiff under the Selective Sales Tax Act of 1937. To review a judgment reversing the Board's action, the Board brings error.

Modified and affirmed.

The cause was submitted for the plaintiff in error on the brief of Ray E. Lee, Attorney General; Thomas F. Shea, Deputy Attorney General; and Wm. C. Snow, Assistant Attorney General, all of Cheyenne.

The case involves the validity of seventeen assessments made by the State Board of Equalization against sales of Stanolind Oil and Gas Company under the Selective Sales Tax Act of 1937. The company appealed to the District Court and the cause was there submitted upon the pleadings and an agreed statement of facts. The District Court reversed the ruling of the Board and the Board prosecutes error. The objections urged by the company to said assessments in its appeal to the District Court are separately stated in the record, and the plaintiff in error seeks a reversal thereof. The record shows that defendant in error owns a pipe line for the transportation of crude oil, casing head gasoline and natural gas. Its plan of operations is to purchase and gather said commodities, transport them through its own pipe line and then to sell and dispose of them to the Stanolind Oil Company at Casper, Wyoming. The Stanolind is a pipe line company and under the Wyoming Constitution is without authority to engage in any business except transportation by pipe line as a common carrier. It cannot be heard to plead its own wrongful acts in conducting another line of business in defiance of law, as a defense to the assessment. That is, it cannot be allowed to take advantage of its own wrong. It does not appear whether the company purchased the transported commodities on its own account or whether it acted as an agent of the Standard Oil Company, except that the company contends that it carried its own oil in its own pipe lines in each instance. The company contends that it is not a common carrier. The fact that the company has domesticated in Wyoming under Article X, Section 5, Constitution, and Section 28-201, W. R. S. 1931, as a foreign corporation, does not authorize it to engage in business prohibited by the Wyoming Constitution. The company has no standing in any Wyoming court until it shall have specified the business in which it is engaged. Some of the objections urged in the District Court were not made before the Board, viz., (1) That the company was a common carrier; (2) That it is not a public utility; (3) That the items sought to be taxed were used in the manufacture of gasoline and other petroleum products. We therefore contend that no objection not made before the Board may be considered on appeal. The United States Supreme Court in the pipe line cases decided in 1913 held that even though the defendants carried no oil except their own, they were common carriers within the Interstate Commerce Act. But, the Wyoming Constitution makes pipe lines common carriers, so the allegation as to carriage of defendant's own oil is immaterial. U. S. v. Ohio Oil Co., 58 L.Ed. 1459-69; Pierce Oil Company v. Phoenix Refining Company, 66 L.Ed. 855. A pipe line company is a public utility. 94-101 W R. S. 1931. The terms "public utility" and "common carrier" are interchangeable. Stanolind Oil Company has exercised the right of eminent domain in securing rights of way for its lines, thereby placing itself in the position of a public utility. It is contended that all of the transported commodities were purchased by the Stanolind Company, transported by its own lines and sold to the Standard Company at Greybull, for purposes of manufacturing but this defense is not available to a common carrier. The Sales Act has been amended since the decision of this court in Board of Equalization v. Stanolind Oil and Gas Company, 51 Wyo. 237. The law now in effect is the amendment of the sales act made in 1937. The burden of proof is on the taxpayer to show that the tax is wrong. 2 Univ. Chicago Law Review 82; Wiseman v. Gillioz (Ark.) 96 S.W.2d 459-462. Before a court can act on an agreed statement of facts, it must have the ultimate facts. Raimon v Parish of Terrebonne, 33 L.Ed. 309; North Platte Lodge Company v. Board of Equalization (Nebr.) 252 N.W. 313. The ruling of the Board should be upheld. Byers-Campbell Company v. Fry (Mich.) 260 N.W. 165. A common carrier cannot be a dealer in anything which it carries. Attorney General v. Great Northern R. Co., 29 L. J. Ch. N. S. 794; N. Y. N. H. & H. R. Co. v. Commerce Comm., 50 L.Ed. 515; U. S. v. Delaware Company, 53 L.Ed. 850 and other cases cited. Decisions of the English courts on the English Railway Acts will be adopted. Texas Ry. v. Interstate Comm., 40 L.Ed. 940; U. S. v. Handley (Ill.) 71 F. 672; Tift v. So. Ry. Co. (Ga.) 123 F. 789. A sales tax is chargeable against Stanolind Oil Company on a reasonable charge for transportation, even though no money was paid. Meishke-Smith v. Wardell, 286 F. 785. Section 38-303, R. S. 1931 provides for the exercise of the right of eminent domain by pipe line companies. Grover Irrigation Company v. Lovell Ditch Company, 21 Wyo. 204. An agreed statement of facts does not supplant the pleadings. Hudson Oil Company v. Board of Commissioners, 49 Wyo. 1. The defendant in error cannot take advantage of its own wrong. Groves v. Slaughter, 10 L.Ed. 810.

For the defendant in error, the cause was submitted upon the brief of Hagens & Wehrli of Casper.

The imposition of a sales tax is governed by certain constitutional and statutory provisions. Article I, Section 28; Article XI, Section 13; Article III, Sections 24 and 36; § 112-101 (1) W. R. S. 1931; Chapter 102, Laws 1937. The title of the act indicates that it is an excise tax upon retail sales of commodities, admissions and services. The law cannot be broader than the title. 59 C. J. 599; Ward v Board of County Commissioners, 36 Wyo. 460; Weeze v. Railway Company, 211 F. 254, 25 R. C. L. 267. Revenue laws are strictly construed in favor of the taxpayer. Edwards v. Cuba, 69 L.Ed. 1124; Doby v. State Tax Commission, 174 So. 233; State v. Grimshaw, 49 Wyo. 192; Cooley on Taxation, Volume 3, 4th Edition; Gould v. Gould, 62 L.Ed. 211; Philadelphia Storage Battery Company v. Lederer, 21 F.2d 320; Arbuckle v. Pflaeging, 20 Wyo. 351; 59 C. J. 670; Mills v. State (Ga.) 125 S.E. 728; Somers v. Corporation (Mass.) 139 N.E. 837; Board of Equalization v. Oil Well Supply Company (Wyo.) 65 P.2d 1093; State Board of Equalization v. Stanolind Oil & Gas Company, 65 P.2d 1095. The Stanolind Oil and Gas Company, as is shown by the evidence, is in all respects an independent contractor and did not make a sale of the facilities upon which the tax is sought. 2 Thompson on Negligence, p. 899; 14 R. C. L. 67, 71, 31 C. J. 473. The company is not a public utility as defined by Chapter 94, Wyoming Revised Statutes 1931. The line of business in which the company is engaged is not an issue in this case. There is nothing in the Wyoming Selective Sales Tax Act of 1937 making the Stanolind Company liable for the payment of any sales tax whatever, whether it has complied with the incorporation laws of the state or not. A company purchasing oil and transporting it through its own pipe line is not subject to sales tax. Pipe Line Cases, 234 U.S. 548; Tidewater Pipe Company v. Board, 143 N.E. 87. Nor does such transportation make it a common carrier. There is a difference between the Wyoming Selective Sales Tax Act and the Federal Transportation Tax. 26 U.S.C. A. Sec. 731, and note to Section 1481, page 436; Alex Company v. Pipe Line Company, 78 L.Ed. 452. Unless the terms of a statute require interpretation imposing a double tax, such tax should not be imposed. Green v. Taylor, 212 S.W. 925; Anaconda Company v. Ravalli County (Mont.) 158 P. 682; Nye Company v. Boone County (Nebr.) 169 N.W. 436; State v. N. R. Company (Tenn.) 201 S.W. 738; see also Franzen v. Surety Company, 35 Wyo. 15; Tolton Investment Company v. Casualty Company (Utah) 293 P. 611; Eagle Oil Company v. Altman (Okla.) 263 P. 666. The above cases illustrate the inclusion of items covered by bonds given in connection with public contracts. The 1937 Selective Sales Tax is a consumer's tax. Texas Company v. State (Ariz.) 254 P. 1060; Oil Company v. Brodie (Ark.) 239 S.W. 753; Pierce Oil Company v. Hopkins, 254 U.S. 137; Standard Oil Company v. Jones (S. D.) 205 N.W. 72. The term "manufacture" is given a comprehensive meaning by the trend of modern authority. 38 C. J. 965, 966; Lamborn v. Bell (Colo.) 32 P. 989; Beggs v. Edison Company (Ala.) 11 So. 381; Burk v. Mead (Ind.) 64 N.E. 880; McMillian v. Noyes (N. H.) 72 A. 759; Utah Power & Light Company v. Pfost, 76 L.Ed. 1038; State v. Ernst, 40 Wyo. 64. Transportation cost of oil through the pipe line of the company became a part of the cost of accrued oil, delivered for manufacturing purposes to the Standard Oil Company of Indiana and is therefore not taxable. There is no statute precluding a foreign corporation from maintaining an action in Wyoming courts. Gould L. & C. Co. v. Telephone Company, 17 Wyo. 507. Under the provisions of the Interstate Commerce Act, a company buying oil in one state and carrying it into another, through its own pipe, is not a common carrier. Pipe Line Cases, 234 U.S. 548. A corporation of one state may exercise its powers in another state, unless the latter state by its statutes, decisions or policy forbids. 3...