Tennessee Trailways, Inc. v. Butler

• Decision Date: 11 October 1963
• Citation: 373 S.W.2d 201,213 Tenn. 136,17 McCanless 136
• Court: Tennessee Supreme Court
• Parties: TENNESSEE TRAILWAYS, INC., Appellant, v. G. Hilton BUTLER, Commissioner, etc., Appellee. 17 McCanless 136, 213 Tenn. 136, 373 S.W.2d 201

Page 201

373 S.W.2d 201

TENNESSEE TRAILWAYS, INC., Appellant, v. G. Hilton BUTLER, Commissioner, etc., Appellee.

17 McCanless 136, 213 Tenn. 136, 373 S.W.2d 201

Supreme Court of Tennessee.

Oct. 11, 1963.

Rehearing Denied Dec. 5, 1963.

Anderson & Snepp, Knoxville, for appellant.

George F. McCanless, Atty. Gen., Milton P. Rice, Walker T. Tipton, Asst. Attys. Gen., Nashville, for appellee.

WHITE, Justice.

The question involved in this case is the right of complainant corporation, appellant herein, the operator of an intrastate and interstate bus company, to apportion its registration fees for the year 1962-63 upon the basis of the Tennessee mileage experience of its predecessor corporation during the year 1961-62.

From the argument heard at the bar of this Court, we entered upon the investigation of this matter convicted that the appellant should be entitled to the apportionment benefits of T.C.A. 59-437, which would have been allowed to Tennessee Coach Company, a wholly owned subsidiary of Tennessee Trailways, Inc., had it continued in business. However, for the reasons hereinafter stated we are compelled to reach a different conclusion and to affirm the chancellor in his dismissal of this cause.

Appellant is a Virginia corporation presently engaged in business in Tennessee as a motor carrier of passengers having been so engaged since its merger on January 11, 1962, with Tennessee Coach Company, a corporation whose entire stock had been acquired in December of 1961 by purchase from the stockholders thereof.

Tennessee Coach Company had duly registered the vehicles in its fleet, pursuant to T.C.A. 59-421-22 at the outset of the year commencing April 1, 1961. Upon the acquisition of said vehicles by appellant, by virtue of the merger on January 11, 1962, appellant did not re-register them, but operated them upon the registration of the predecessor until April 1, 1962. On March 27, 1962 it registered them, that is, the fleet of vehicles, in its own name for the first time, paying to appellee fees of $45,331.50.

Thereafter, appellant filed with appellee a claim for a refund in the amount of $27,262.36, claiming said amount as the share of its fees apportionable to its non-Tennessee operation. Said apportionment was sought upon the basis of the Tennessee and total mileage experience of the predecessor, Tennessee Coach Company, during the preceding year.

Appellee rejected said claim by letter dated September 25, 1962, and on October 2, 1962 this suit was instituted to recover said disallowed apportionment. The appellee concedes that appellant has the right to maintain this suit.

The case was heard and determined in the lower court upon bill, answer, and deposition of witnesses, whereupon the chancellor, in a memorandum opinion, held that complainant was not entitled to the recovery sought and dismissed the bill stating that 'there are many facts in this case which arouse the sympathy of this court but I feel that the statute involved is clear and that the telephone case (General Telephone Company of the Southeast v. Boyd, 208 Tenn. 24, 343 S.W.2d 872 (1961), controls. Therefore, I have no alternative other than to dismiss complainant's bill at its cost.'

Appellant is an interstate motor carrier of passengers operating a fleet of two or more vehicles under the authority of the Interstate Commerce Commission. On March 27, 1962 it registered its vehicles and paid the fees as aforesaid. The same fleet of vehicles was registered in Tennessee during the preceding year by Tennessee Coach Company.

It is alleged in the bill that the appellee's denial and refusal to pay the claim was predicated upon the following occurrences:

(a) On December 19, 1961 the complainant, Tennessee Trailways, Inc., a corporation organized under the laws of the State of Virginia in February 1961, purchased from each of the stockholders of Tennessee Coach Company, all of their stockholdings in said Tennessee Coach Company, and thereby complainant became the 100% owner of the issued and outstanding stock of Tennessee Coach Company, a Tennessee corporation, which for many years had been, and was then, engaged in business as an intrastate and interstate motor carrier of passengers operating a fleet of two or more vehicles under and pursuant to the authority of the Interstate Commerce Commission and other regulatory bodies having jurisdiction over its operations.

(b) At all times prior to, and at the time of the purchase of the stock aforesaid, and up until January 11, 1962, Tennessee Trailways, Inc., was a mere paper corporation, owning no physical properties and conducting no operations or business of any nature or kind whatsoever.

(c) On January 11, 1962 Tennessee Trailways, Inc., pursuant to and as authorized by T.C.A. 48-518 et seq., as the parent corporation of its wholly owned subsidiary, merged said Tennessee Coach Company into Tennessee Trailways, Inc. Since that time complainant has owned the same fleet of vehicles and in the same manner conducted therewith the identical operations and business, and none other, as did Tennessee Coach Company prior to said merger, and at all other times material hereto.

It also was averred in said bill that said fleet was registered and operated by Tennessee Coach Company during the preceding year and that complainant was entitled to have the cost of the 1962 registration places therefor apportioned in accordance with T.C.A. Sec. 59-437, regardless of the occurrences aforesaid.

The position of appellee is that T.C.A. 59-437 is applicable only 'to carriers having an operating experience of their own during the preceding year', and that because of said merger appellant was not entitled to 'utilize any experience incurred by another corporation.' Appellee also argues that on January 17, 1962 appellant was advised by appellee that it would be necessary to obtain new title certificates and new registration and that such registration would be necessary for the purpose of affording appellant with operating mileage experience of its own upon which apportionment could be made of its 1962 registraion.

After the merger was accomplished an official of appellant conferred with the then Assistant Commissioner of Revenue and 'again told him that the sale of the stock and the eventual merger into Trailways had taken place, and that in my opinion it was one and the same operation that I can see no need for re-registering the equipment under the circumstances'. He was then asked:

'Q. What view did Mr. Murphy (the then Assistant Commissioner of Revenue) take concerning the matter?

'A. At that time Mr. Murphy stated to me that they were giving consideration to it, would take it under advisement, and not to take any action until advised to the contrary.

'Q. Were you ever advised to the contrary?

'A. No, sir.'

The chancellor disposing of this case said that prior to this examination of General Telephone Company v. Boyd, supra, he 'had proceeded on the theory that the mileage experience of the predecessor corporation was an assert to this corporation, an accumulation of credit of the corporation, therefore coming within the words of the merger statute 'all of the estate, property, rights, privileges and franchises, etc. (48-519, T.C.A.)'.'

In General Telephone Company it was held '...