Washington Oil Corporation of Texas v. State

Decision Date12 November 1941
Docket NumberNo. 3917.,3917.
Citation159 S.W.2d 517
CourtTexas Court of Appeals

Appeal from District Court, Travis County; Roy C. Archer, Judge.

Action for unemployment compensation tax, penalties, and interest allegedly due for 1936, 1937, 1938, by State of Texas against Washington Oil Corporation of Texas. From judgment for plaintiff, defendant appeals.


Saner, Saner & Jack, of Dallas, for appellant.

Gerald C. Mann, Atty. Gen., and Morris C. Hodges and Cecil C. Rotsch, Asst. Attys. Gen., for appellee.

WALKER, Chief Justice.

This suit was filed in Travis county by the State of Texas, appellee, against appellant, Washington Oil Corporation of Texas, for the sum of $567.30 alleged to be due for the period covering the years 1936, 1937 and 1938, beginning January 1, 1936, and ending December 31, 1938, as unemployment compensation tax, and penalties and interest thereon, under the Texas Unemployment Compensation Act, Vernon's Ann.Civ.Statutes, Articles 5221b-1 to 22, being Acts of 1936, 44th Leg., 3rd C.S., page 1993, Chapter 482, as amended by Acts of 1937, 45th Leg., p. 121, Chapter 67. The issues of this suit invoke the application of the following sections of Art. 5221b, V.A.C.S., of the Texas Unemployment Compensation Act. Section 17 (f) (1):

"Any employing unit which for some portion of a day but not necessarily simultaneously, in each of twenty (20) different weeks, whether or not such weeks are or were consecutive, within either the current or the preceding calendar year, has or had in employment eight (8) or more individuals (irrespective of whether the same individuals are or were employed in each such day)"; and Sec. 17 (f) (4):

"Any employing unit which together with one or more other employing units, is owned or controlled (by legally enforceable means or otherwise) directly or indirectly by the same interest, or which owns or controls one or more other employing units (by legally enforceable means or otherwise), and which, if treated as a single unit with such other employing unit, would be an employer under paragraph (1) of this subsection."

It was the theory of appellee's petition that appellant was an "employer" under the provisions of Sec. 17 (f) (4), supra, on allegations that appellant, Jenkins Oil Corporation, Control Gathering System, Inc., and Southern Oils, Inc., were owned or controlled (by legally enforceable means or otherwise) directly or indirectly by the same interest. There was no allegation that appellant, nor any one of the three other named corporations during the years in issue, was an "employer" under the provisions of Sec. 17 (f) (1), supra, but appellee alleged that the four corporations, being in fact a single employing unit under Sec. 17 (f) (4), supra, had more than eight employees for and during the number of weeks prescribed by Sec. 17 (f) (1), supra, and therefore, the four corporations were subject to the tax as an employer.

Appellant answered by plea of privilege to be sued in Dallas county, which was heard on the trial of the case on its merits, and overruled. On the overruling of the plea of privilege, appellant demurred to appellee's petition on the ground that Sec. 17 (f) (4), supra, was void as being in violation of Sec. 16, Art. 1, of our State Constitution, Vernon's Ann.St. which reads: "No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made."

On the merits, appellant answered that it was a private corporation chartered September 2, 1932; that the control and management of its affairs were solely with its board of directors; that its business had been conducted strictly in accordance with the statutes of this State as such legal entity; and that at no time it had more than eight employees.

All demurrers and exceptions were overruled, and judgment was for appellee for the full amount sued for, from which appellant prosecuted its appeal to the Austin Court of Civil Appeals. The case is on the docket of this court by order of transfer by the Supreme Court.

The venue of this case was properly laid in Travis county. This point was ruled against appellant's contention by the Austin Court of Civil Appeals in Lally v. State, Tex.Civ.App., 138 S.W.2d 1111 and Barrett v. State, 138 S.W.2d 1114.

The Texas Unemployment Compensation Act did not become effective until October, 1936. By the terms of the Act the tax was levied, and on authority of the Act the court's judgment was against appellant, for the taxes for all of 1936. On the ground that the Act levied taxes from the 1st of January, 1936, until the effective date of the Act in October, 1936, appellant contends that, in this respect the Act was a retroactive law and in violation of Sec. 16, Art. 1, supra, of our State Constitution. This point is ruled against appellant by the following proposition by our Supreme Court in Friedman v. American Surety Co., Tex.Sup., 151 S.W.2d 570, 577:

"Section 16 of Article I of our Constitution provides that no bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made. We can see nothing in this Act that even remotely violates this constitutional provision."

The following summary of the evidence supports the trial Court's conclusion that the four corporations named above, during the years in issue, constituted a single employing unit, in that they were owned or controlled by legally enforceable means or otherwise, directly or indirectly, by the same interest, within the provisions of Sec. 17 (f) (4):

(1) On January 1, 1936, each of the four corporations had the following named directors: R. E. L. Saner, John C. Saner, W. H. Jack, Jr., Roy Jenkins, Sr., and Wallace Jenkins. R. E. L. Saner died during the taxing years in issue, and after his death the remaining four named persons constituted the board of directors of each of the four corporations.

(2) The five directors, elected as such in 1936, and after the death of R. E. L. Saner, the interests holding his stock, as a unit, owned a majority of the stock in each of the four corporations, and the directors of each of the corporations were named by the joint action of these five several interests.

(3) The four named corporations were each engaged in the oil business; three of them were engaged exclusively in producing oil and the fourth one was engaged exclusively in transporting oil delivered to it by producers.

(4) E. W. Krizan, a field auditor for the Texas Unemployment Compensation Commission, who made a personal inspection of the four corporations in the discharge of his duties as field auditor, testified:

"Q. Do you mean that they (said four companies) all occupied the same offices? A. Yes, sir."

W. H. Jack, Jr., one of the four directors of each of the corporations testified: "all of them (said four companies) were on the twentieth floor" of the Republic Bank Building, and that part of the time they had a common reception room. Each of the four corporations, in their common suite of offices, had the same telephone number but each corporation had an extension line for its personal use; the costs of the telephone were divided among the four corporations. On these facts, we make the conclusion that the four corporations "occupied the same offices," as testified to by Mr. Krizan.

(5) We quote again from Mr. Krizan's testimony:

"Q. Did you or not find the books of each the Washington Oil Corporation, the Control Gathering System, Inc., and the Southern Oils, Inc., in the same offices? A. They were in the same offices. * * * The bookkeeper or auditor performed services for all of the companies during the time of my investigation. * * * At the time I made my investigation apparently the equipment was used by all the companies.

"Q. What do you mean by equipment? A. Machines, tables, desks, filing cabinets. * * * The bookkeeper or auditor performed services for all of the companies during the time of my investigation."

Again, we quote from the testimony of Mr. W. H. Jack, Jr., one of the directors:

"A. Oh, there naturally are books which are kept.

"Q. Did the Southern Oils, Inc., during 1938 have a little bit of paper work and accounting to be done? A. Very little.

"Q. Did they have some? A. There was some. The Southern Oils, Inc., owned six very small wells on the east side of the East Texas Field with a very small income, and its work was work that could be done once a year.

"Q. They had to send out a few reports, like the gross production oil tax reports to the comptroller, and things like that. A. Yes.

"Q. And that was done there in those offices in the Republic National Bank Building; those reports were prepared and sent out from there? A. They were prepared under my direction, yes, sir.

"Q. Were they prepared in the office of Saner, Saner & Jack, or in the three at the other end of the hall at the Jenkins Oil Corporation, Washington Oil Corporation of Texas, and Southern Oils, Inc.? A. Mr. Jenkins did some of it in our office and some down there.

"Q. Where was the stenographer? A. Some in our office and some down there.

"Q. Who was the stenographer during 1938? A. Miss Mattie Nowlin was there during 1938. Miss Winnie McGaw was there a few weeks in 1938, and my recollection was they hired a few occasionally, but those are the only ones. * * *

"Q. Miss Mattie Nowlin and Miss Winnie McGaw did most of the stenographic work during 1938? A. Yes, sir.

"Q. And who were the stenographers during 1937? A. Of course, the bookkeepers do a lot of the stenographic work.

"Q. But who were the stenographers? A. Well, we had Mattie Nowlin. She was also a bookkeeper, too, as well as a stenographer, and so was Winnie McGaw. She worked there several weeks. Mattie Nowlin worked the whole year, and B. V. Dooly is bookkeeper and also does stenographic work, and D. D. Brawley also. They do...

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