*1
Before
HAND,
AUGUSTUS N.
CHASE, and CLARK,
Judges.
Circuit
CHASE,
Judge.
Circuit
cases,
These
were consolidated for
below,
brought to recover
trial
trans-
assessed,
portation taxes
3475 of
§
the Internal Revenue Code 26 U.S.C.A. §
paid
collectors within the
of New
The
Southern District
York.
precedent
bringing
complied
the actions have
sole issue now is whether the
may be recovered. The
taxes
district court
complaints
on the merits and
dismissed
appeal
followed.
presently
above statute
so far as
provides
pertinent
“(a)
that:
There shall
imposed upon
paid
within
States
the effective date
section
* *
* * *
*
motor
* * *
vehicle,
equal
per
a tax
3to
* *
paid,
centum of the amount so
*.
apply
tax shall
to amounts
Such
person engaged
in business of
hire,
including
transporting property for
CLARK,
Judge, dissenting.
Circuit
freight forwarder,
to a
ex-
**
company,
press
*.”
Metropolitan Distributors,
wholly
subsidiaries,
Inc. has two
Renting Corporation
Bridge Auto
*2
excerpts
The
plain,
following
from the trial
Corporation.
It is
opinion
judge’s
as
purposes of
were treated below
for the
conceded,
and
findings of
are
and
one business
fact and
accurate
in
appeal
engaged
all
are
comprehensive.
The first shows how the
should
and
the two subsidiaries
major portion
appellant’s
the
business
departments
parent cor-
of
the
of
treated
was done.
refer to them all
poration. We shall
appellant.
the
agreement
“The
form of
used
standard
by Metropolitan
many years
recited that ‘the lessor is
appellant
owned
has
The
owner
engaged
in
the
of and is
in the busi-
garage facilities
the
and
motor vehicles
renting
leasing
ness of
and
certain motor
metropolitan
York
area of New
appurtenant
many
supplying
vehicles and
services
other business
has furnished to
thereto’ and that ‘the lessee desires to lease
vehicles, which
shall
we
concerns motor
such motor
and services.’ The
vehicles
under so-called
hereinafter call
term,
specified
for a
transportation leases were
one or
leases to be used
years,
more
with
extension for
principally
automatic
“lessees”
of
the
of
year,
party
either
unless terminated
customers
delivery
goods to their
notice,
days’
option to
on 60
with
City of
York. Most
within the
New
truck
purchase
the lessee to
the leased
have been “leased”
appellant’s trucks
payment
of the
di- and terminate the lease
engaged, paid
who
customers
in
forty-
initial cost value
as fixed
But
own drivers.
'for
rected their
lease,
depreciation
agreed
pro-
less
at an
appellant
customers the
two
those
usually
service,
The rent
rate.
reserved
and it
vided a so-called
average
per week for a
fixed amount
stated
receipts from such customers
is on
plus
sought
weekly mileage,
minimum
stated
to be recovered
taxes now
which
in
re- amount for each mile
excess of the
collected. These
were assessed
minimum.
ceipts
substantial
comparatively
small
but a
they were
agreed
“The lessor
to cause the leased
appellant.
gross revenue
duly
comply
registered
laws;
good
traffic
to maintain the truck
precise problem is whether
The
fuels,
repair;
lubri-
meaning
to furnish all
oil and
within
taxed were
cants;
keep
painting
lettering
language,
“amounts
* * *
good
so that the
prop- on the truck
condition
[‘for
appearance
present a neat
truck would
at
person engaged
erty’] to
times;
space,
garage storage
furnish
property for hire.” The
service,
complete garage
in-
together with
complicated nature of the relation-
rather
cleaning, oiling
washing, polishing,
cluding
operation
ship of the
repair
promptly
greasing;
trucks makes
solution
“leased”
'its
and,
truck or to substitute another one
true of close
as is so often
disabled
difficult
impractical
repairs
therefor,
depends upon
if
cases,
result
correct
supply additional trucks for
promptly;
emphasis correctly should be
lessee;
requested by
appellant’s
temporary use
conten-
put.
sum
weekly
a statement
furnish
lessee
the facts show it to have been to
tions is
chauffeur leaves and
time the
re-
it main-
merely a “lessor” of
garage, including
lessor’s
good condition for the
of its turns to
tained
day;
miles run each
and to
transported
prop-
their own
number
responsibility
liability
erty.
sole
court held that on
assume
trial
persons (excluding
injury to
em-
a contract carrier which death or
shown it was
facts
engaged
lessee
in its
while
ployees
statute
virtue of
within the
sub-
damage to
business) and for
(d)
143.1
(b) and
of Section
divisions
by,
rented to or
applicable
(except
113 issued to be
Regulations
lessee) resulting
charge of the
from
February
statute
What it
in the
of the truck
negligence
depends necessarily upon a considera-
operated
being
in the lessee’s
relationship.
used
whole
while
tion of the
driving
insurance obtained his
own
usual course
license and was
responsible
obtained
covering liability of
for his own
traffic
violations of
expense regulations.”
lessor,
the lessor’s
approval as to
subject
the lessee’s
*3
second shows
the
how
manner and
carrier and the
the insurance
receipts
conducted the business
the
coverage.
amount of
which were taxed.
truck
agreed
the
to cause
“The lessee
payroll
agree-
“The so-called
service
operated
by
solely
a safe and careful
be
‘to
oral,
ments were sometimes
but were
by
and
chauffeur selected
licensed
usually in
accepted
form
by
of letters
pay
directions, employment
orders,
and
the lessee. There were two forms of
lessee’;
any chauffeur
to remove
form, signed by
The first
letters.
complained
against
whom the lessor
Metropolitan, appears to have
used
reckless,
or
careless
abusive
because of
prior
other,
to some time in
incompe-
handling of
or other
signed
Bridge Leasing,
thereafter.
competent
tence,
chauf-
to substitute
and
provided
“The first form
facili-
that ‘to
feur;
chauffeur for the
to
not
substitute
tate the
our
leasing
truck
except upon
truck
took out the
who
-
agreement dated
we shall
lessor;
permit
not
to
notice
helpers
chauffeurs
for the vehicles
and/or
adj
any repairs or
to
chauffeurs
leased,’
yrork
wages,
therein
hours
and
on
operate
flat tires
to
the truck
ments or
all other
governing
em-
their
pressure;
insufficient air
or tires with
ployment
pre-
to be in accordance with
truck;
immediately
to
to
overload
vailing conditions of
the union having
any
acci-
notify
lessor in the event
jurisdiction,
pay
the lessee ‘to
wages
us all
truck;
dent,
disablement
collision or
paid’
‘together
and overtime
to
with
garage
to the lessor’s
return the truck
to
compensation insurance,
our
cost
social
day;
each
least four hours
for at
security
unemployment
and
taxes on
exclusively in
usual course
the truck
payroll.’
and not to allow it
of its
any illegal purpose or outside the
used for
“The later form
language
used the
‘We
area;
Metropolitan
to use it on
New York
agree to obtain
helpers
chauffeurs and/or
consented
weekdays
unless the lessor
only,
your
operate
account
the vehicles
use;
pay any
Sunday
sales and
you’
leased
Metropolitan.
from the
‘any
or addi-
and also
other new
use taxes
provided
‘you
also
shall have exclusive
imposed
on
taxes that
tional
control and direction over’ them and ‘shall
operation of
leased truck.’
option
have the
of discontinuing these
arrangements
time.’
In
specific
re-
or
“Each lease covered a
spects the two
substantially
forms were
trucks,
not taken over from
(where
built
same.
special
lessee) to
needs of the
fit
lessee,
painted
lettered
in accord-
payroll
“These
agreements
were
ance with its instructions.
entered into at
time
Metropolitan
plaintiffs picked
up
“None
over the
customer,
took
a new
merchandise,
public
delivered
carriers
thereupon
lessee,
became a
or were
They
public
were not
do.
licensed as
presently
made
existing
lessee. The
by the Interstate Commerce
carriers
Com- only reasons appearing in the evidence are
or
the New York Public
mission
customer or
lessee desired to be
Nor were
Service Commission.
re-
annoyance
rid of the
and work involved in
quired
obtain a license
engage
in the preparing payrolls
payroll checks,
ar-
public carting
ranging
get
checks,
drivers
their
People
Bridge
New York.
Auto Rent-
requirements
attending to the
Corp.,
369;
N.Y.
N.E.2d
payroll
requiring
deductions,
various laws
People
Co.,
Trucking
v. Heckman
277 N.Y. or, if the drivers had been unionized or
480,
had recognized supplied it any chauffeurs etc., given lessee; they as were did employees. it its participate the benefits af “Metropolitan by Metropolitan public carried liability forded in- except they surance on all its insuring against to their employees, it larger damages of others liability for where it furnishes to its except to the personal injuries, op- customers trucks and for which it maintains erating also carried insur- It condition by repair drivers themselves. either or substi- liability prescribes for loss against tution and ance own ob- fire, over- through collision or served the “lessees” merchandise as to the apparently prior of In turning, and, period the trucks. operation performs a it large very insurance a trans- it carried the function portation, $1,000. covering the stops it of supplying limited amount short liability feature therefor. But this essential to the lessee’s trans- duplica- portation generally anything by being means discontinued as provide by failing insurance. of the lessee’s own driver. If it tion did requested way theft carried insurance addition employees drivers, billed own cases and in such with direc- carry tions to the lessee therefor. of its customers where, directed, when it would Metro- “Less than of the lessees of 10% perfectly seem money clear that agreements. ex- politan For *5 received so doing for performing for 520 ample, 1946, Metropolitan had carrying property. of service It agree- lessees, of had whom 43 such would be doing then almost all that Metropolitan operated in 1946 a ments. carrier for does its customers. only were total of 1885 of which 87 to who used the rented lessees In the just situation stated the paid in service. The total rentals owner would be none the transporting less Bridge Leas- 1946 who used the lessees paid property because he a time of service total of 6.8% plus mileage basis for the use of the truck $3,329,585. rentals collected.” operate had no immediate to incentive efficiently. The appellant result was a would that the be the conclusion same though the truck owner upon an was merely contract carrier was reached reim- out-of-pocket analysis bursed for the light expense of these facts providing the drivers and following Com- decisions the Interstate could have no opportunity to Commission; profit phase Truck make H. Church a merce B. on that operation. 1940, 191; is Co., It Service M.C.C. inconceivable 27 that J. transporter .such Casale, property not, 1946, Inc., 44 would 107; M.C.C. aas of business, matter Haulage have Motor to States, 1946, Co. United drivers, acceptable suitable 107; Id., 46 his M.C.C. to custom- D.C.E.D.N.Y., 70 F. ers, for performing 17, transporta- kind of Supp. affirmed 331 U.S. S.Ct. efficiently. tion undertaken Nor would L.Ed. 1815. While it is true that fact that one or more person a contract carrier is engaged in itself insured its it the business transporting saw fit property for being transported while it was hire within the terms it of this taxing statute transporter. applicable regulations, is but that transporters classification of prop- it So would seem that decision erty whose are taxed and we here turn should the correct answer shall attempt support make no to judg- easily question. stated Did the by tagging ment appellant a contract appellant in fact substantially furnish all carrier. question is whether what it for, perform the facilities substantially actually pursuant did to the various terms of, of the functions transporting agreements of the performed it made forty-two of the customers whose up enough adds be substantially payments it were taxed? It is in person what it aby done paid hired and connection that decisions above cited transport property by truck. Act, the Motor Carrier 49 U.S.C.A. helpful We seq., well start with 301 et are that analogy. § of its business which it is it true the purpose conceded does is that While of that make it a transporter. Act is different and is language, That is so erty solely delivery re for hire for it
problem in that the same is much important property according itself instruc essentially quires separating -the tions of and draw the customers. non-essentials features from the arbitrary between line ing more or less suggests Appellant no event slight differing complex fact situations apply should tax to more than the what the1 in detail ly. repeating Without to it in would excess what receipts which earn the appellant did to concededly non have all that taxed, aggregate did it taxable rental However if the service. necessary to be done reasonably applies any part receipts here tax ' Indeed, property. customer’s transport its question, applies it in their customers, enough plain it is entirety. All of what was done for the do, fit to they saw of what else regardless part of service customers was transport, for goods only provide all what business take them the drivers direct received for trans was received it was the trans appellant performing pay' the actually portation. done What was be said portation cannot service. parties pay how the is what counts pay not make did such service pay by Agreement fit to allocate the saw whole particular parts -to ments even extent for hire to that performed appellant. The greater doing the anomaly, any, in the scheme inherent may be engaged. While was otherwise classification. above decisions M.C.C. some *6 must realize that circumstances While we fact that part in cited rest in doubtful and that control in each case already person engaged the business is “right” is final ones the decision hire, some transporting for one, above stated we the reasons hold for special for arrangement it makes not erroneous. below was decision transportation facilities of its Judgment affirmed. readily recognized as more be the change in without a variation form CLARK, Judge, dissenting Circuit regular what substance from separate opinion. transporting ever fact does .to brings hire although CLARK, Judge taxing (dissenting). statute Circuit does it within no of his business does so Appellant me completely seems to so For reason so. Boston has done trucks, renting the business of rather than Railway Malley, D.C., v.- Elevated Co. hire,” “of F. is an illustration correct I not do believe the decision below should problem. It must be solution Admittedly that stand. is so far true -cases seem to per two cent its business some 90 that as to Com contrary. Ohio River Sand Co. taxability. v. is not there even claim F.Supp. missioner, D.C.W.D.Ky., 60 rest, unpaid As to services look- do indistinguishable we ing seems after some details the personnel ap-— Lyle be followed. United parently appellant’s think it should valuable because of D.C.N.D.Ga., 787, dealt States, F.Supp. ability arrangements to make with the un- by a removal of dirt sub employers with the ions and to afford insulation an limits airfield negotiations within the contractor from such not seem to —do “transporta construction and change significance under me to the essential operations plainly outside the statute and the final control over seems tion” appellant’s into the left with customers. regulations. When one looks payments arrangement made and noted that the carried were based detailed is seen, time-mileage out, use of the entirely is to be we think that upon carriage specific goods. under performed significant to show quite nontaxability is This was payroll arrangements different per business; the 90 cent of the prop as to of another’s small to this should not be overlooked as surely anom- Further
balance. there gratuitous
aly in saying that this small group
service for this limited them, rent- as to
renders the entire service all, completely taxable. A. Okrand, L. Wirin and Fred Los An- geles, Cal., appellants. FISHERMAN’S SOUTHERN CALIFORNIA Vanech, A. Atty. DeVitt Gen., Asst. v. UNITED STATES. ASS'N et al. Carter, Atty., M. U. Angeles, S. Los James No. Calif., Cotter, F. Fred W. Smith and Appeals States Court Dudley, Attys, Dept. Elizabeth of Justice, Ninth Circuit. C, Washington, appellee. D. May 19, 1949. STEPHENS, Before ORR, BONE and Circuit Judges.
ORR, Judge. Circuit Appellants, permits from the Angeles, California, of Los im- erected provements upon land situate at Terminal Angeles Island in Los permits Harbor. The pleasure city were revocable of said *7 appellants privileged to remove improvements erected thirty thereon within days receipt of notice of termination city permit. served notice of termi- permits appellants nation oil Febru- ary 1942. After service of said notice appellants and before had taken action n relative to the improve- removal ments, the United States took Government possession of improvements, the land and pursuant to a court order immediate taking. The complaint amended in the con- proceeding demnation included both n improvements and the land. Prior to the trial case States Government made a settlement with City of Angeles Los relative to the price city said for the land. The question compensation paid ap- pellants improvements for their was sub- mitted to the trial court determination. That court found fair and reasonable compensation improve- was their ments reasonable value removed from the land.