City of Sedalia Ex Rel. Bauman v. Standard Oil Co. of Indiana

WOODROUGH, Bеfore STONE and Cir- Judges, Judge. MUNGER, cuit District

Judge. MUNGER, District suit, Sedalia, Mo., plaintiff, appellant, sought now to collect defendant, appellee, from the now claim for taxes due For that purpose equity, it filed a bill in containing two causes of action. The defendant’s ‍‌​‌​‌‌​‌​​‌‌​​​‌​‌​​‌‌‌​​​‌‌​​‌‌​‌‌‌‌‌​​‌‌‌​​‌​‌‍motion sustained, bill ap- to dismiss the and this peal proceedings was taken. Similar were had similar cases where the Shell Petrole- Skelly Company, Company, um Oil Eagle Refining. Sinclair Company, the White Refining Company & Mid-Con- al., Oil et Company, Petroleum and the tinent Nation- Judge, dissent- WOODROUGH, Circuit By Refining Company al defendants.

ing. stipulation parties and an order of this appeals pres- court the were consolidated for court, entation in this with leave that transcript of the record in the Standard Oil printed appeals case should be and that the in the other eases should abide the decision of this court in this ease. In the first cause of action the plaintiff right recovery based its the terms city passed an ordinance of the in 1924 and “An providing entitled for li- censing persons, corporations firms or en- gaged selling gasoline in the businеss of transporting same streets Sedalia, Missouri, providing per gallon tax of one-half of one cent on all providing penalties so sold and (E. Hayes, Sedalia, Mo. Frank W. W. violation said ordinance.” O’Bannon, Ross, Fred M. Jones, D. W. 2, and 6 of Sections the ordinance were Barnett, Sedalia, ‍‌​‌​‌‌​‌​​‌‌​​​‌​‌​​‌‌‌​​​‌‌​​‌‌​‌‌‌‌‌​​‌‌‌​​‌​‌‍Mo., all of Lawrenee as follows: appellant. brief), for (Buell person, firm Montgomery, “Section No or corpora- Lee Chicago, Ill., engage in, carry or Jones, Eben H. Jones, of tion shall conduct the F. Peery transport- Cleveland, Ohio, Cliff V. and Walter business barrels, wagons City, Mo., tank Brown, of Kansas or other E. both having capacity John of more than Montgomery, Martin and Z. containers John T. having gallons without first Sedalia, Mo., brief), (5) obtained ap both of five from the pellee Co. of so to do Clerk. Standard Oil Indiana. a license * * * corpo- firm Every person, merchants, “Section wholesale merchants defined Sec- all kinds” ration, the business and that this is limited Treasurer a terms tion 1 hereof shall' section which is as follows: quarter-annual one one-half municipal “No corporation in this statе day of 15th gallon on or before the per cent power impose have the a tax license September of December, March, June, and upon any business pursuit call- avocation, or of three period year preceding each for the ing, avocation, unless such business pursuit ending as aforesaid.” months and calling or specially named as taxable in the municipal corporation, charter of such or of this Or- provisions 6. The “Section power unless by be conferred statute.” gasoline shipped apрly to shall not dinance out, vil- cities, towns and other of this It was the view of the trial court that the payment persons lages the avocation named in the ordinance of those 2 provided for in Section of the license tax “engaged selling business of hereof.” the of streets Missouri,” was not one of spe relat- provisions ordinance contained The cially named as taxable sales of under section keeping of records ing the Campbell Bailing Co. v. of city, reports to the Tlarrison making gasoline, of the ville, Mo., 50 E.(2d) 670, 674, the of it was deter for violation imposing penalties mined court, after a review alleged of the de plaintiff that ordinance. Supreme cisions of the Court of 31, 1928, Missouri, 1924, March until September 1, grant po that a wer to a carrying impose engaged in Sedalia defendant tax “merchants of all kinds” trans- authorized an city imposing of a other ordinance a wagons, and ban-els, tank porting it in persons, firms, corporations, or “engaged more than having capacity containers any goods delivering or or merchan only part paid had gallоns, but five any dise of kind” keep at wholesale or failed to retail to it had city; that due to any city, notwithstanding one in the lim Missouri, of its sales record an accurate expressed itations in section 7287 Re reports required by file the failed to and had vised alleged 7287], Statutes St. Ann. This § [Mo. plaintiff also that the ordinance. “Appellant court urges that, said: if this neces- in the case would issues a trial of the may regarded he taxing a call long and intricate of a examination sitate the which is included within avo and the exami- parties, account between eations statute, enumerated in the between does this transactions nation thousands by subdividing such avocation, and others, customers, and that such and its the defendant permissible is not because the should be re- classifications defendant prayed that purposes for license tax are made gallons number of stat quired for the to account ute itself. It cites several Missouri eases. of Missouri within the state We have all of examined these judgment for citations as ordinance, and under expressions well as others. There are in sev should he found of taxes the amount opinions which, eral alone, support taken -due. (see City this contention of St. Bas Louis v. sought a sim- of action cause second 870; kowitz, 543, 563, 564, 273 Mo. 201 S. W. subsequent recovery the taxes ilar Miksicek, v. 225 Mo. 561, State 125 S. W. of this aft- terms under period 507, 511, 135 Rep. 597; Am. St. Kansas by increasing amended had been er it Crush, 151 Mo. 52 135, v. 286), W. 2 from one-half cent section imposed under but all of these eases the snbelassiiieation gallon. cent to one regarded arbitrary. was in itself Unless he these decisions held to mean that no sub- opinion court was The triаl classification is allowable where such is ar under the were void terms of ordinances bitrary, it is difficult reconcile them with to llighfill, 7287 of Revised 6840 and Stat sections Springs Eldorado 268 (Mo. St. Ann. 6840r, §§ of Missouri utes S. W. which is later than the Grush 7287). conceded only Cases, slightly Miksicek older than impose tax of Sedalia this kind Baskowitz Case decided powers found conferred must Attempting High court. to reconcile fhe fill portions of section which read as cases, with the other Case we think the rule follows: may to ‍‌​‌​‌‌​‌​​‌‌​​​‌​‌​​‌‌‌​​​‌‌​​‌‌​‌‌‌‌‌​​‌‌‌​​‌​‌‍bo deduced that there not he sub- “The [city] power council shаll have of an classifications avocation enumerated in authority levy and collect a license unless tax on the statute such subclassifieation be capacity natural; gallons, of less than is, not arbi five whereas sec- reasonable and tion 3 of article 10 trary.” of the Constitution requires Missouri that taxes shall be uniform Nothing in the eases is found subjects the same class of within the Hammond, 329 S. W. Ozark v. authority levying territorial limits of the Joslyn (Mo. (2d) Lebanon v. or Assuming tax. there have been 289, decided since the Sup.) S.W.(2d) transported others who sold this commod- Baking opinion in the Campbell was written ity circumstances, require- under these requires different Case, Company uniformity ment of is met if the tax falls to subdi right of conclusion as to the substantially persons alike on all who are in of all “merchants named as vide a class illustrating prin- the same situation. this by this adopted Applying the rule kinds.”- ciple v. the court said in of St. Charles mentioned, the classification in court the ease Schulte, 654, 305 655: 124, Mo. 264 S. W. “engaged in the business in this case of those transporting Legislature delegated same selling gasoline and “The to cities up class, must be for through competent of the third as it was it the streets” s,election authority is arbi do, levy of the class held, and collect unless the trary the vendors of soft drinks. Under or unreasonable. general City of power delegated so it the the ordinance appellee claims The levy St. was not Charles bound to be it discriminates is unreasonable upon amount all vendors of soft drinks. It gasoline and haul it may sell tween those who could, discretion, any in upon its them divide in the or are described in containers such reasonable classes, as, example, basis into it in containers who haul others dinance and (City volume business done of Aurora between those size, and discriminates less 469], v. McGannon 39 38,Mo. S. W. [138 transport gasoline as may both sell and who supra), specific drinks character of the within described in the ordinance (In 486, sold 97 re Watson S. D. N. W. [17 but may city, it within the sell others who 463, 2 Ann. fix a 321], supra), Cas. city, into, of, or transport it out (1 Cooley, different tax for each class. Tax’n is whose whole business and between 353.) Upon principle [4th Ed.] gasoline, transportation the sale and peddlers long in have bеen classified this state gasoline. than articles others who sell other purpose 9259, for the of taxation. Section case, appeal, on this presented As the is E. 1919 S. St. Ann. § [Mo. 13318]. only the bill and the mo we are advised that, can “There be no doubt but under alleges de bill that the The tion to dismiss. principles, respondent well-settled was not engaged in of Sedalia fendant was levy upon bound and collect a license tax selling gasoline and trans in business of drinks, if im vendors of all kinds of soft it barrels, wagons, and oth tank porting it in any. posed upon a tax the vendors capacity of more than having a er containers imposed up could in its discretion have appear that there not gallons, but it does five engaged selling beers, on those who in near any who other vendors imposing any upon without at all the ven presump in manner. The transported it dors of Wright, other soft drinks. Carroll v. validity ordinance, in of an tion of the 728, 260; 131 63 Ga. S. E. Coca-Cola Co. v. may laws, not overthrown case of other Skillman, 91 44 677, Miss. So. 985.” suggestion discriminations that See, also, parte 810, Ex Asotsky, 319 Mo. proved. Knott, Pullman Co. never be v. 235 S.W.(2d) 22; 5 Automobilе Gasoline Co. v. 2, 105; Hodge S. Ct. 59 L. Ed. 23, U. 35 S. Louis, 326 32 435, S.W.(2d) St. v. Cincinnati, Drive-It-Yourself Co. 284 U. 281. 144, 52 76 L. Ed. 335, 323; S. S. Ct. Louis Finn, & E. Co. v. 235 ville Nashville U. S. appear On this record made to not 601, 146, 379; 35 S. 59 L. Ed. Ct. Standard that there was not reasonable basis for the Wright, 225 U. 540, Stock Food Co. v. S. 32 adopted. suggestion classification 784, 1197; Corp. Ed. 12 S. Ct. L. Jur. adopted against the classification offends also the Fourteenth Amendment to the Constitu sufficiently tion of the United States is met opinion The trial court was also of the Campbell in what was said the ordinance was invalid for lack of Baking City Harrisonville, (C. Co. v. uniformity operation in its because it omit F.(2d) A.) 50 C. impose ted to similar those who suggestion gasoline, transport did There is a further that the it, but undertook transported those who it in invalid because it containers out those to whom business conducted defendant sold dur- upon a impose taxa period question, in because the limits territorial side report the defendant did sold un- that defendant alleges ‍‌​‌​‌‌​‌​​‌‌​​​‌​‌​​‌‌‌​​​‌‌​​‌‌​‌‌‌‌‌​​‌‌‌​​‌​‌‍bill conducting agree of der the terms business ordinance. We of Sedalia present it also with gasoline, but the trial court that these facts duty grounds eq- defendant’s for maintenance a suit alleges it was uity accounting. by it, under the for an v. United States Bit- gasoline sold for all account ter Co., state of Dev. Root S. 26 S. Ct. within U. terms of 550; ordi Considering Equitable 50 L. the title Ed. Assur. Life Missouri. it, Soc. expressed Brown, general purpose U. S. nance, Ct. exempt L. Ed. 682. in section of dismissal in limitation stated decree each and the gasoline shipped reversed, the cases: operation will be ing from its directions villages, towns, and cities, docket, transfer causes to the law Sedalia other ordi interpretation proceedings. further a reasonable question that it included nаnce in tax. Sedalia, conduct who, dealers WOODROUGH, Judge (dissent- Circuit selling gasoline and both ed ing). city, manner transporting it within majority city The conclusion is the in the upon dealers who mentioned, also and Sedalia, Mo., of power, had the under the of both the business city conducted of Sedalia decisions, Missouri laws lay and to its tax transporting it from selling gasoline and gasoline way on certain vendors in a such as state of city within the points to within the get to gallon a of so much a in revenue challenge made of has been the No Missouri. spect gаsoline of sales of carried such city impose to the authority of the territorial territory city, to vendors outside the the as class, but it is asserted upon tax the first gasoline well in respect as to their sales of upon tax the impose the city not the city. That is, city inside the the could re- delivery of the of the class, second quire companies operating oil Lhe within its city. The gasoline of the outside limits to tax at a cent half a cent the the measure tax does undertake to per gallon them, though they sold even city Sedaliа. transportation outside the gasoline many away the miles trucked municipal corporation to im The of a city the and it there delivered and consum- occupation an upon kind pose tax mated the sales. decision is also that the is conducted within the or business which controversy ordinance in herein, properly city although portion the busi limits, impose construed, respect did a tax in gen city, ness was carried on outside gasoline appellant to the sales the oil com- erally recognized. Telegraph Postal Cable panies city; outside of the that the enormous City Charleston, 153 U. S. Co. v. Council of companies the business carried from the 871; 1094, 14 Ct. 38 L. Ed. Western S. city years for in fleets of motortrucks seven City Fremont, 39 Union Co. Neb. Tel. v. tax, was and 698; Corp. 26 L. A. N. W. R. may now maintain actions at law to recover Express 181; Co. Jur. American Union v. I not concur. same. do 675, 27 Am. Joseph, Rep. of St. Blystone, agree 382; I do of Carterville v. that under the laws and deci- 701; Mfg. App. 191, Missouri, 141 W. American sions of set out in majority Louis, 270 Mo. 192 S. opinion, of St. had power impose Co. and delivery respect W. outside the tax in gaüon collect of each gasoline gasoline did not invali the city, sold within the sold inside but I doubt the power particular date that ordinance. extend this kind of a tax gasoline territory. sales outside Nu- brought eq This suit was as a suit cases to, holding merous are referred that a uity accounting. allega for an There city may impose occupation an tax its tion of mutual accounts or of other sub respect inhabitants of the total volume of ject equitable cognizance, but it was the by them, done though part business even theory accounting of the bill that an is au city. extends outside But, thorized because will be necessary con although the tax involved here is in the form many sider transactions between the occupation defend is ostensibly of an laid customers, ant and its and to examine occupation business, really it is transport books and records of who distinguishable carriers a sales tax and from those oc- gasoline defendant, ed to the and of those taxes in the cupation considered eases relied gasoline defendant, who sold thе as well gal- on. Here wo per have a at so much very patible acquiescence and the amount is sold, complete gasoline Ion of It is selling price. city’s part part perfect mutuality of under- substantial operation apparent that in the successful standing seven'years; is, from the city, producer for revenue this tax as a passage fil- of the ordinance in to the companies the oil contemplated that it is ing of these the settled bills-in at their customers tax on to pass should interpretation of that the tаx the.ordinance required by the Then, as the time of sale. did apply outside the ' ac- quarterly they must make city. money in pay the counting of the sales and Turning my taxing ordinance, opin- to the in kind from city. tax is different to the ion is that never intended to to be intended which are taxes occupation outside business. The ordinance and amend- As a business. the overhead absorbed margin,1 appended ment full in are companies are, to gasoline tax, the oil to this very wording ambiguous. through which agencies intents, the practical taxpayer, the the real city collects from 1 Ordinance No. 2417entitled: is in- the tax consumer, upon whom Licensing providing persons, An Ordinance for ttie not, directly. a tax is Such to fall tended corporations in the business firms or of expense up- ahe, mere not intended and is Sedalia, Mis- the streets of the privi- companies incident on the oil providing souri, tax of onc-half of one gallon pro- sold, cent so in- on all It is lege doing business ' viding penalties of said Ordi- violation burden put a direct tended to nance. Therefore, gasoline. who consume Be of Se- It Ordained the Council city to raise revenue dalia, Missouri, as follows: power of the I doubt corporation No firm or person, Section 3L way. in that own confines from outside its engage ing gasoline carry in, on or the business of sell- conduct my upon the Though I not rest dissent do transporting barrels, and the same in plac- wagons having because, if a point, limine, it in I raise capac- tank or other containers gallons (5) ity of more than five without first hav- at an oil station exhibited ard should be ing the, City a license do obtained to so Clerk. many сountry, “Gasoline in the miles out Every person, corporation firm en- Section or cent; Tax 2 gaged in the business defined in Tax 1 State cents; Federal Section hereof pay quarter-annual shall cense tax of one-half the Treasurer li- cent,” Tax 1 I think cents; City of Sedalia gallon per cent on or of one suggest pass- itself to'most point the would day December, March, before the 15th June and preceding September year ending of each for the period of ers-by. baronial Politik of of the It smacks three months and aforеsaid. Ages. the Middle Every person, firm, corporation, Section 3. or en- gaged in the business defined in Section 1 hereof arose, and ever no No such situation gaso- keep an accurate record of all sales shall country. showing gallons in the out placards were exhibited line, sold, the number of shall, and day the 15th December, March, on or before June Clerk raise a half city its ordinance to passed September year, and a sworn each file with the gasoline in 1924 gallon on sales a cent gallons gas- statement of number the duly oline sold. The Clerk or his authorized amount to a cent increased the and in 1928 deputy be and hereby shall is authorized to inves- apparent from the facts gallon. is It tigate accuracy the correctness and of the returns city equity in in these bills pleaded the reports required purpose and for that shall ac- have cess at all reasonable times to the books, documents companies the oil that both against the oil bearing gallons reports and gasoline 'on the number of city construed authorities companies аnd the purchased and sold. only mean that the tax was the ordinance to Every person, corporation Section 4. firm or fusing neglecting report or to make the or return gasoline sales of respect of the collectible in hereof, for in provided a false affidavit or return or Section or who shall make conclusively appears the made inside interfere with the deputy performance in or his the du- Clerk of their understanding of the ordi- the that s#eh was guilty ties, upon be deemed shall of a misdemeanor and itself, of the сouncil part nance punished by conviction thereof shall be fine ($10.00) not than Ten Dollars amending ordinance when the of One Hundred Dollars less nor more than in the ($100.00). tax rate described the raised the Council engag- Any person, corporation firm Section or regu- original ordinance as the “Ordinance in the business as defined in Section hereof refusing failing or and to the pro- license tax paid gas- be lating the amount of 2 hereof as provided for in Section vided in Section Sedalia, Mis- sold within the oline ‍‌​‌​‌‌​‌​​‌‌​​​‌​‌​​‌‌‌​​​‌‌​​‌‌​‌‌‌‌‌​​‌‌‌​​‌​‌‍guilty be deemed of a 2, shall misdemеanor and companies there is punished thereof shall be As the oil conviction souri.” a fine ($10.00) Ten of not less than One Hundred lay* Dollars nor more than they took into account or tried claim ever ($100.00), Dollars day and each of de- pass on the tax to their customers payment in the of said license tax be a separate offense. city. They the never outside rendered ac- provisions Section 6. of this Ordinance shall count to the of their in sales the out- gasoline apply shipped out of this City to oth- territory alleged sidе the and facts are com- villages cities, persons er towns and the busi- and of the intent of the description ordinance in Tlie its title. 1 the In section selling says title provides that tbe ordinance “for li- “tbe business licensed is be ness to censing bar- corporations in same in the business transporting gasoline and selling gasoline efforts of transporting of all total ultimate rels,” etc. The through de- streets of the fall within would companies gasoline.” Missouri.” selling There is not another word else- scription “business as where transporting, stating in the ordinance wherе the They business have no confusing in business has to be done to be taxable. is The ti- phrase used tbe such. But goes rela- tle then say on to specify what the ordinance exactly that it fails provides “a transportation gallon tax of half a one cent tionship be between must gasoline of on all gallon so sold.” any particular selling of tax. give rise gasoline order to in gasoline words “on all pre- sold” so amount only where specific sent the in section declaration within the Neither body in the else four anywhere corners specified, nor enactment is tax is tbe tax say whether respect sales, in does and I think that the words in re- or sold gasoline gasoline “tax' respect of sold,” so taken in connection payable is transported is in with the words, other spect of which “business of sold both respect of Sedalia,” streets of body of the carry implications nowhere transported, conclusive in favor of the where the said about anything companies oil is, here. That to- clauses to make gether order particular mean that a gasoline must gasoline selling business is taxable when the applicable. business is con- selling- summated transportation provision for ac- 3 there is section through the city streets; but, compa- quarterly counting be made tbe business which consists hauling whether the the case is crux of nies, and the beyond outside and city is in- outside companies’ streets is a business, different outside the accounting; no included tended to be purview of the ordinance. Gasoline trans- in this section. being found light ported and sold out on highways state we have section exception As quoted sold” “sо language; within the about what briefs many pages of is, the selling, the consummation of the am- ambiguous, and the patently It is mean. whole effort of the business, finally is not ef- any analysis be upon ought biguity by transportation fected through city tax- prejudice of worked out Manifestly, streets. licensing of the oil payer. companies by and imposition Sedalia meaning real light on the most I find the particular was to cover and af- provided for in fect all the of tlie business of these oil com- payment to tbo 2 hereof. Section panies. Presumably thеy recover crude become effective shall ordinance 7. This Section lakes; oil from subterranean they take passage ap- and its after from and in force and be proval. to refineries gasoline; and they refine effect 2886 No. entitled: Ordinance transportation high seas and repealing 2 of Ordinance Num- Section An Ordinance through pipe lines and over railroads enacting a new section in lieu there- 2417and ber highways; and 2: is but bo known Section phase there one toof by the Council of Seda- It Ordained Be their businеss within tbe scope of li- tbe Missouri, as follows: lia, taxing ordinance, cense and and that is the That Section of Ordinance Number Section by business consummated transpor- (cid:127) Sedalia, the Council passed 241.7, September, 1924, ap- day 1st Missouri, on the city tation sales. streets — Mayor day said on the 1st proved regulating Whether such is the true construction said Ordinance September, of amount the repealed paid to be sold within of tax not, the ordinance or at least equity bills hereby is Sedalia, Mo., be and City of are clear that the conclusion is the one as- enacted in lieu a new Section there- be known Section section to of, said new serted to be tbe council itself as follows: read and applied in the administration tbe or- person, corporation Every firm or en- Section throughout dinance its existence. decla- gaged business of as defined Section . Treasur- Number Ordinance ration of the council in 1928 that “said gal- license tax of one cent quarter-annual er a (was one) regulating ordinance the amount day December, March, 15th on or before lon June preceding year paid of tax he September of each sold within the ending on day three months and the 1st period of of Mo.,” directly comes within March, September. June and December, language of Chief Justice Al- Marshall in S. This Ordinance will take effect and Section passage L. approval. its Alexandria, Craneh, 1, exander force from after subsequent “If a act Ed. when he said: complete demon- on the same affords its own legislative stration of sense of stated, language, rule which has been subsequent be incоr- quiring should that the act, a direction porated foregoing into the provisions of expounding the to courts in subsequent declaration the law.” The complete demonstra- council does afford own lan- legislative sense of its tion of the different sense guage, ground and on destruc- now when such should be attributed consequences inevitably result. tive that, in- when a law Also, it is elemental neces- functions volves administrative upon! the sarily put the construction reflect administration, charged with

law great has interpretation such administrative courts; and, if acted weight disturbed years, not be will a number Logan v. cogent reasons. very except for 685, 58 L. Ed. 613, 34 S. Ct. Davis, U. account- under this 1121. As rendered to be had companies accounting would very first quarterly and the sales outside disclose no reasonable excluded, there can be being interpretation of the there doubt that was acted statute; construction day. late upset at this cannot be peculiar bear with force doctrines These is here involved. If tax as a sales upon such have to account for going to a mеrchant one; know he must as this such a sales sales, his ruin his he makes before about it penny a possible that the is certain. the total exceed equal or even gallon would enterprise involved. whole profit net properly the ordinance I conclude companies to require did construed sales; accounting of their outside render legislative and admin- alleged show the facts no suf- there are istrative construction from; and that the depart reasons ficient they were) dis- (as been should have suits missed. THE G. L. CO., Inc., v. GRAIN TOWING

COWLES et CORPORATION al. TRANSIT No. 432. Appeals, Second Circuit Circuit. Court Aug. 1, 1933.

Case Details

Case Name: City of Sedalia Ex Rel. Bauman v. Standard Oil Co. of Indiana

Court Name: Court of Appeals for the Eighth Circuit

Date Published: Aug 3, 1933

Citation: 66 F.2d 757

Docket Number: 9653, 9652, 9654-9658

Court Abbreviation: 8th Cir.