State v. Plantation Pipe Line Co., 3 Div. 735

• Decision Date: 02 August 1956
• Docket Number: 3 Div. 735
• Parties: STATE of Alabama v. PLANTATION PIPE LINE COMPANY.
• Court: Alabama Supreme Court

Page 549

89 So.2d 549

265 Ala. 69

STATE of Alabama v. PLANTATION PIPE LINE COMPANY.

3 Div. 735.

Supreme Court of Alabama.

Aug. 2, 1956.

Rehearing Denied Sept. 13, 1956.

Writ of Certiorari Denied Dec. 10, 1956.

John Patterson, Atty. Gen., and Willard W. Livingston and Wm. H. Burton, Asst. Attys. Gen., for appellant.

Cabaniss & Johnston, Jos. F. Johnston and E. T. Brown, Jr., Birmingham, for appellee.

STAKELY, Justice.

The State Department of Revenue made an assessment for franchise taxes under the provisions of § 348, Title 51, Code of 1940, covering the tax year 1952 against Plantation Pipe Line Company, a corporation, in the amount of $22,655. Plantation Pipe Line Company appealed from the foregoing final assessment to the Circuit Court of Montgomery County, in Equity. In the Circuit Court of Montgomery County, in Equity, Plantation Pipe Line Company filed its bill of complaint to which the State filed a demurrer. The court entered a decree in which the court sustained the demurrer to certain aspects of the bill of complaint which are now not under consideration and at the same time overruled the demurrer to other aspects of the bill. The aspects of the bill of complaint to which the demurrers were overruled are stated in the decree to be:

'(3) That the demurrers to that aspect of the bill which seeks to recover the franchise tax of $22655.00 paid to the Department of Revenue for the year 1952 be and are hereby overruled.

'(4) That the demurrers to that aspect of the bill which seek to recover interest on the franchise tax be and the same are overruled.

'(5) That the demurrers to all other aspects of the bill not specifically enumerated herein be and the same are overruled.'

Thereafter the State filed its answer to the foregoing bill of complaint. Attached to the answer of appellant were exhibits A, B and C, which were made a part of the answer. These exhibits were introduced in evidence as a part of the record through a stipulation wherein it was agreed that such documentary evidence could be introduced without objection as to form.

On a hearing of the issues made by the bill of complaint and the answer the court rendered its final decree and in doing so made certain findings of fact and conclusions of law. In substance the court declared the final assessment of franchise tax made against Plantation Pipe Line Company for the tax year 1952, was invalid in its entirety and ordered the Comptroller of the State of Alabama to refund to Plantation Pipe Line Company the amount of $22,655 which the company had paid for the sake of taking the appeal as provided in § 140, Title 51, Code of 1940, together with interest on the aforesaid amount from December 12, 1952, and ordered the costs to be paid by the appellant.

In its answer the State pleaded, among other things, res adjudicata to the bill, which was made a part of the answer. The State attached as Exhibit 'B' a copy of the bill of complaint which Plantation Pipe Line Company had filed in Case No. 13040 in the Circuit Court of Montgomery County, in Equity, setting up, in substance a cause of action claimed to be identical in all respects with the cause of action here involved, except that the tax involved was for the year 1942. In that case the court held that Plantation Pipe Line Company was due to pay the State of Alabama the sum of $7,849.73 as franchise tax for the year 1942. We shall consider the issue of res adjudicata separately from the other matters considered in this opinion and shall hereinafter outline the contention as to res adjudicata at greater length.

The case was tried orally before the court and we have given careful consideration to the evidence introduced in the cause. We find that the facts as summarized by the court in its decree are substantially in accordance with the facts introduced in evidence and will be stated by us as briefly as possible as follows.

Plantation Pipe Line Company is a corporation which was organized under the laws of the State of Delaware on July 8, 1940. On July 30, 1941, 55 Stat. 610, Congress enacted a law which provides in part, 'Whenever the President finds that the construction of any pipe line for the transportation and/or distribution of petroleum or petroleum products moving in interstate commerce, or the extension or completion of any such pipe line already wholly or partly constructed, is or may be necessary for national-defense purposes, he shall by proclamation declare such finding.' Section 2. The President, on August 23, 1941, issued a Proclamation, No. 2505, 55 Stat. 1670, to that effect, as to the pipe line proposed to be constructed by Plantation Pipe Line Company, which contained among other things the statement that the President does 'hereby find and proclaim (1) that it is necessary for national defense purposes that there be constructed and completed a pipe line system for the transportation and distribution of petroleum and petroleum products moving in interstate commerce, * * * commencing in the vicinity of Baton Rouge, Louisiana, and extending in a north-easterly direction through the States of Louisiana, Mississippi, Alabama, Georgia, and South Carolina, and into North Carolina to a point in the vicinity of Greensboro, North Carolina, with branch lines extending to Montgomery and Birmingham, Alabama, Columbus and Macon, Georgia, and Chattanooga and Knoxville, Tennessee, (2) that Plantation Pipe Line Company, a private corporation organized under the laws of the State of Delaware, has commenced to work necessary for the construction of such a pipe line system and represents that it is prepared to undertake the construction of and will complete said pipe line system * * *.'

The pipe line as originally contemplated and as described by the President of the United States in his proclamation was completed and put into operation during the year 1942. The pipe line could not have been financed, organized and the project completed and put into operation except by means of a corporation organized for that purpose and having the customary charter powers, such as the right to issue securities to represent the investment, continuity of existence, etc.

Plantation Pipe Line Company qualified to do business in Alabama in 1941.

Plantation Pipe Line Company was in 1952 and at all times has been a common carrier pipe line company within the meaning of the Interstate Commerce Act, operating solely under tariffs filed with the Interstate Commerce Commission.

Plantation Pipe Line Company has never filed nor sought approval of its rates and tariffs by the State of Alabama or any other state and the State of Alabama has never asserted any regulatory authority or jurisdiction over any of the rates or practices of the Plantation Pipe Line Company.

During the year 1952 Plantation Pipe Line Company owned and operated a pipe line running from Baton Rouge, Louisiana, to Greensboro, North Carolina, with lateral lines from Helena, Alabama, to Birmingham and Montgomery, Alabama, and from Bremen, Georgia, to Columbus and Macon, Georgia, and to Chattanooga and Knoxville, Tennessee. The length of the lines, with laterals, was approximately 1,968 miles, of which approximately 483 miles were located in Alabama. The total investment in carrier property, including construction work in progress as of January 1, 1952, was approximately $69,615,442.47 for the entire system and within the State of Alabama on the same date was approximately $17,095,063.34.

The business of Plantation Pipe Line Company is and was in 1952 conducted as follows. It receives at Baton Rouge, Louisiana, in tanks owned by it, gasoline and petroleum oil distillate for transmission to terminals, located in other states specified in its tariff. The capacity of its line has been at all times since its construction and was during 1952 and is now absorbed by shipments tendered at Baton Rouge. Plantation Pipe Line Company has never received in Alabama any petroleum products for shipment and has never maintained any facilities in Alabama for receiving such products for shipment. The products received at Baton Rouge are tendered by various shippers and differ in kind and specifications. From the tanks the products are pumped into its pipe line in lots or batches of sufficient volume to remain separate and distinguishable from preceding or succeeding lots. These basic requirements of the business are reflected in tariff I. C. C. No. 14 under which Plantation Pipe Line Company was doing business on January 1, 1952.

After the products are pumped into the pipe line at Baton Rouge, the flow gradually slows down as the product moves, requiring the use of pumps located at intervals to maintain the flow. Three pumping stations were operated in Alabama in 1952 with stand-by facilities at four points in the State of Alabama.

Plantation Pipe Line Company had four delivery terminals in Alabama in 1952, at Moundville, Birmingham, Montgomery and Oxford. It did not make delivery of any products shipped through its pipe line at any point in Alabama other than at these terminals. This was in conformity with its tariff. Plantation did not maintain any storage tanks at any delivery terminal or elsewhere in Alabama. As required by the tariff, shippers receive their products from the pipe line without delay.

The pipe line through Alabama consists of an 18-inch pipe line and a 12-inch pipe line. The line from Helena to Birmingham is an 8-inch line and the line from Helena to Montgomery is a 4-inch line. Due to the difference in size between the main pipe line passing through Helena and the branch lines to Birmingham and Montgomery, it is impossible to take the product directly from either main line into the branch lines. Accordingly, Plantation Pipe Line Company maintains at Helena seventeen tanks into which are diverted the products from the main lines destined for the terminals at Birmingham and Montgomery. This number of tanks is necessary to insure that the...