WM Webb, Inc. v. United States
| Decision Date | 13 July 1967 |
| Docket Number | 15215 and 15216.,Civ. A. No. 15170-15172 |
| Citation | 271 F. Supp. 249 |
| Parties | W. M. WEBB, INC., Carteret, Inc. and C. B. Dey, Inc., Plaintiffs, v. UNITED STATES of America, Defendant. LOUISIANA BUNKERS, INC., Plaquemines Bunkers, Inc. and Charles S. Wallace, III, Plaintiffs, v. UNITED STATES of America, Defendant. SANTOS MENHADEN CORP., Citation, Inc., and Novelty, Inc., Plaintiffs, v. UNITED STATES of America, Defendant. PATTERSON MENHADEN, INC. and Aggie & Millie, Inc., Plaintiffs, v. UNITED STATES of America, Defendant. G. B. L., INC., Merlin Inc., Frances Louise and Patricia Ann Webb, t/a Webb-Bunker Co., Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Eastern District of Louisiana |
Joseph J. Lyman, Washington, D. C., David E. Hogan, New Orleans, La., for plaintiffs.
Robert L. Waters, Atty., Tax Div. Fort Worth, Tex., Edward A. Copley, Atty., Dept. of Justice, Washington, D. C., Louis C. LaCour, U. S. Atty., New Orleans, La., for defendant.
These five causes involving similar issues of law and fact were consolidated for trial before the Court sitting without a jury.
These are actions under the Internal Revenue laws of the United States for the recovery of taxes paid pursuant to the Federal Insurance Contributions Act, 26 U.S.C.A. § 3101 et seq., and the Federal Unemployment Tax Act, 26 U.S.C.A. § 3301 et seq., for the period commencing January 1, 1956 through December 31, 1956, for all plaintiffs with the exception of the plaintiff Aggie & Millie, Inc., in Civil Action No. 15215. The suit for taxes paid in the latter suit covered the period from July 1, 1957 through December 1, 1958.
The issue to be determined is whether the fishermen, comprised of captains and crewmen, who performed fishing services on the plaintiffs' boats were "employees" of the plaintiffs under Sections 3121(d) and 3306(i), Internal Revenue Code; 26 U.S.C.A. § 3121(d) and § 3306(i).
Only that portion of Federal Insurance Contributions Act taxes (FICA), an excise tax, paid by the plaintiffs is sought to be refunded. No part of the fishermen's FICA taxes, an income tax, is sought in these actions. The Federal Unemployment Act taxes (FUTA), which are excise taxes, paid solely by the plaintiffs are also sought to be refunded.
Due consideration having been given to the pleadings, stipulations and evidence, together with exhibits and briefs of counsel on file, the Court enters the following findings of fact and conclusions of law in accordance with Rule 52 of the Federal Rules of Civil Procedure:
FINDINGS OF FACT
Each of the plaintiffs was a corporation, organized under the laws of the State of Louisiana, with the exception of the plaintiff partnership, Frances Louise Webb and Patricia Ann Webb, t/a Webb-Bunker Company in Civil Action No. 15216.
In Civil Action No. 15170, the plaintiff W. M. Webb, Inc. owned two menhaden boats. The plaintiff Carteret, Inc. owned one menhaden boat; Plaintiff C. P. Dey, Inc. owned one boat.
In Civil Action No. 15171, the plaintiff Louisiana Bunkers, Inc. owned two menhaden boats. Plaintiffs Plaquemines Bunkers, Inc. and Charles S. Wallace III, Inc., each owned one menhaden boat.
In Civil Action No. 15172, plaintiff Santos Menhaden Corp. owned five menhaden boats. Plaintiff Citation, Inc. owned two boats and plaintiff Novelty, Inc. owned one boat.
In Civil Action No. 15215, plaintiff Patterson Menhaden Corporation owned two menhaden boats and plaintiff Aggie & Millie, Inc. owned one boat.
In Civil Action No. 15216, plaintiff G. B. L., Inc. owned two boats. The plaintiff Merlin, Inc., owned one boat. The partnership, Frances Louise Webb and Patricia Ann Webb, t/a Webb-Bunkers Co., owned one boat.
During said period, each plaintiff was engaged in commercially fishing for menhaden, a non-edible fish. Their business activities embraced (a) the ownership of menhaden fishing boats, (b) the fishing for menhaden under arrangements with captains on the terms and conditions and pursuant to policies outlined in these Findings of Fact, and (c) the processing of menhaden into fish meal products for later sale on the open market.
There were several separate and distinct steps in the fishing and subsequent processing of the fish before the end products were marketed. First, the plaintiff boat companies contracted with the captains to gather the fish. To this end, a plaintiff furnished a boat equipped for fishing. The owner relinquished control of the boat to the captain who staffed and provisioned it as he saw fit, without interference by the owner. In return, the captain agreed without a guarantee of earnings of any kind to make fishing trips for the season, return the catches to a plant designated by the owner and unload and sell his fish to the owner at an agreed price per catch. The owner would then contract with a processing plant for processing the fish purchased from the captain. The fish would be processed into fish meal and related products and sold on the open market. The proceeds were then divided between the boat owner and the plant after crediting the venture with expenses and the cost of the fish. The captains had no part in the arrangements between the plant and the boat owner. All of the plaintiffs conducted their business in substantially the same manner.
The plaintiffs' boats were diesel powered and from 85 feet to 150 feet in length. The cost of the boats varied from $24,000 to about $157,000 depending upon age and size.
The plaintiffs' boats operated from docking facilities owned by fish meal processing plants, located in North Carolina and Florida on the eastern seaboard and in Louisiana on the Gulf of Mexico. During this period, the plaintiffs' boats operated from one or more processing plants located in the following ports: Wallace Fisheries Company, Morehead City, North Carolina; Mayport Fisheries Company, Fernandina Beach, Florida; Empire Menhaden Company, Empire, Louisiana; and Louisiana Menhaden Company at Cameron, Louisiana.
Neither the plaintiff boat companies nor the fish meal processing plants had financial or proprietary interests in one another. Individual stockholders of some plaintiff boat companies had a stockholder's interest in some of the plant companies, but not in others. On the other hand, some stockholders of the plant companies had no interest in the various plaintiff boat companies. All of the various entities, i. e., plaintiff boat companies and the plant companies, were separate and distinct operations with respect to business matters transacted among them. The individual stockholder interests in no way determined from which plants the various plaintiffs operated the boats or sold their catches of fish.
The plaintiffs' boats were equipped by them and operated solely for menhaden fishing. All repairs to the boats were made by, and paid for by, the plaintiffs. After the plaintiffs had equipped a boat for fishing for menhaden, from the fishermen in the community making application therefore, plaintiffs would select an experienced fisherman to whom a boat would be turned over for the purpose of fishing in the Gulf of Mexico or off the Carolina and Florida coasts in the Atlantic Ocean. It was understood that the fisherman to whom a boat was let would be its captain and he was so recognized by the plaintiffs. An individual so selected was one in whose honesty and integrity plaintiffs had confidence and in whom plaintiffs had trust in his ability to select, supervise and organize a crew of officers and hands to operate a boat and to conduct successful fishing operations.
The arrangement between the plaintiffs and each captain was entirely oral. The term of the arrangement was not specified, but it was understood to persist for a fishing season. It could be terminated by either party, voluntarily or involuntarily, at the conclusion of any trip during a season. This could occur only when a boat was in port and before another fishing trip was commenced. While the arrangement could be so terminated, custom and practice was for it to be continued for the season.
After a plaintiff had selected a captain and the arrangements between them had been concluded, the boat was turned over to the captain who then registered as captain of such boat with the Bureau of Customs as required by federal law.
While not formalized by the parties and designated as such, the arrangement between plaintiffs and the captains thus constituted an oral contract, pursuant to which the captains used the boats belonging to the plaintiffs to go out to fishing grounds, and by their own means and methods make catches of menhaden fish and return them to a designated processing plant for unloading and sale to the plaintiffs at an agreed price per unit of measurement. The plaintiff boat owners' interest in the arrangement was to obtain the largest quantity of fish possible, delivered to a designated processing plant. The plaintiffs in no way interfered with the captains as to the manner or method of accomplishing their result.
The fishing "season" in the menhaden fishing industry usually began in the Gulf of Mexico about April 1 and concluded about October 15. A fall season off the eastern coast of the Carolinas and Florida commenced about November 1 and concluded around January 15. There was also a summer fishing season at times on the Atlantic coast which usually began about May 15 and concluded about September 1.
The general area for fishing a boat, i. e., the Gulf of Mexico or Atlantic Ocean, was usually the plaintiffs' decision. This was guided by the seasonal presence and availability of the menhaden fish. If a boat owner had an option of two places to fish, the captain's preference where to fish was a factor in a joint decision.
Some captains fished only in the Gulf area by their own choice. Others fished only off the Carolina coast in the...
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