Undercofler v. Colonial Pipeline Co., 42331

• Decision Date: 05 December 1966
• Docket Number: No. 3,No. 42331,42331,3
• Parties: Hiram K. UNDERCOFLER, Commissioner v. COLONIAL PIPELINE COMPANY
• Court: Georgia Court of Appeals

Page 768

152 S.E.2d 768

114 Ga.App. 739

Hiram K. UNDERCOFLER, Commissioner v. COLONIAL PIPELINE COMPANY.

No. 42331.

Court of Appeals of Georgia, Division No. 3.

Dec. 5, 1966.

Syllabus by the Court

Under Section 9 of the General Tax Act of 1935 (Ga.L.1935, pp. 11, 64), a corporation which has charter power to do a gas business is required to make returns of its property for taxation to the State Revenue Commissioner whether or not it engages in that kind of business.

The taxpayer in this case is a corporation organized in the State of Delaware and domesticated under the laws of this State. The nature of taxpayer's business, as set forth in its charter, is 'To build, construct, equip, purchase, lease, or otherwise acquire, hold, own, control, maintain, and operate pipelines, pipes, tubes, conduits, conveyors, tank cars, boats, barges or other conveyances, tanks, storage facilities, compressors, pump stations, booster stations, control stations, buildings, and improvements, and all other necessary or desirable facilities, equipment, and appurtenances * * * for the receipt, gathering, transportation, carriage, conveyance, storage, handling, measuring, purchase, sales, marketing, and distribution of crude petroleum and the products and by-products thereof, * * * artificial gas, natural gas, and the products and by-products thereof, * * * coal and all mineral or volatile substances and the products and by-products thereof, salt, brine, and other mineral solutions, both for itself and for other persons and corporations as a common carrier for hire or otherwise.' Taxpayer operates a pipeline system traversing the state of Georgia and owns property in 35 counties in the state. The business conducted by taxpayer is limited exclusively to the transportation of liquid petroleum products as a common carrier. Taxpayer filed this suit against the State Revenue Commissioner seeking a declaratory judgment as to whether taxpayer is required by law to make its annual ad valorem tax return to the Commissioner or to the tax receiver of each ounty in which it owns property in the state.

Arthur K. Bolton, Atty. Gen., William L. Harper, H. Perry Michael, Asst. Attys. Gen., Atlanta, for appellant.

Jack Vickery, Howard D. McCloud, Ross Arnold, Atlanta, for appellee.

BELL, Presiding Judge.

Section 9 of the General Tax Act of 1935 (Ga.L.1935, pp. 11, 64) provides in part: '(A)ll gas, water, electric light or power, hydro-electric power, steam heat, refrigerated air, dockage or cranage, canal, toll-road, toll-bridges, railroad equipment and navigation companies, person or persons doing a gas, water, electric light or power, hydro-electric power, steam heat, refrigerated air, dockage or cranage, canal, toll-road, toll-bridge, railroad equipment, or navigation business, through their president, general manager, owner, or agent having control of the company's offices in this State, shall be required to make annual tax returns of all property of said company located in this State to the Comptroller-General * * *.' ¹

The Commissioner contends that taxpayer is doing a gas business. This contention is without merit. Taxpayer neither produces the substances which it handles nor markets them, but instead it is engaged only in their transportation. As taxpayer performs only this limited function, and does not deal generally with the products, its business is merely that of a transportation company, or common carrier. Moreover, 'gas' is '(a)n aeriform fluid, having neither independent shape nor volume, but tending to expand indefinitely.' Roy v. Arkansas-Louisiana Gas Co., 200 La. 233, 7 So.2d 895, 896; Black's Law Dictionary (4th Ed. 1951) p. 811. In its operations the taxpayer handles liquid petroleum products exclusively, and in fact taxpayer does not have the present ability to transport gaseous substances through its pipelines as it is not equipped with the necessary pumping and compressive apparatus. Liquid petroleum products are not 'gas' within the meaning of Section 9 of the Act of 1935. See Vernon v. Union Oil Co., 5 Cir., 270 F.2d 441, 446. Thus taxpayer is not doing a gas business within the meaning of the Act. However, it is clear that the corporate purpose clause of taxpayer's charter authorizes taxpayer to engage in a gas business. Taxpayer is therefore a 'gas company' within the meaning of the Act. Southland Steamship Co. of Delaware v. Dixon, 151 Ga. 216, 106 S.E. 111.

The question decisive of this case is whether a gas company is required by the Act to file its return with the Commissioner irrespective of whether it is doing a gas business.

In the Southland Steamship Co. case, supra, the Supreme Court stated at p. 221, 106 S.E. at p. 113: 'It appears that one of the purposes for which the Southland Steamship Company of Delaware was organized, and therefore one of the objects of the subscribers of its capital stock, was to engage in business in Georgia as a navigation company, and that it had ample charter power; also that it had an agency in Georgia and money and other property in Georgia available as a basis of credit, or otherwise for carrying on a navigation business. To use the language of the witness, there was 'no immediate prospect of the plaintiff owning any ships or of doing the business of a navigation company'; but the fact that there was no such prospect would not destroy the power of the company to engage in such business or prevent it from being a navigation company.' Thus it was held that a corporation authorized by its charter...