123 S.W.2d 797 | Tex. App. | 1938
The State of Texas, through its Attorney General and Criminal District Attorney of Dallas County, filed suit in a District Court of Dallas County, under section 16 of the Texas Motor Carrier Act (art. 1690b, Vernon's Ann.P.C.), alleging that appellant, Galveston Truck Line Corporation, during the month of April, 1937, transported over the State highways seven shipments of paint and allied products from Dallas, Texas, to Abilene, Eastland, Lubbock, and Sweetwater, Texas, as a motor-freight carrier, for hire, without first securing a certificate or permit from the Railroad Commission of Texas. Appellee sought judgment for penalties, a temporary restraining order, a temporary injunction, and a permanent injunction, prohibiting appellant from transporting such commodities in intrastate commerce.
Appellant filed answer, denying the intrastate character of the commodities transported, and in cross-action alleged that it is a contract-carrier engaged solely in the transportation of interstate commerce, authorized by the Federal Motor Carrier Act 1935,
The case was submitted to the court on an agreed statement of facts, resulting in the trial court rendering judgment against appellant and perpetually restraining and enjoining it from transporting wholly within the State of Texas commodities manufactured and processed in Dallas, Texas, from raw materials produced or purchased from various sources of supply outside of the State of Texas and shipped into the State; but refused to allow appellee the penalties for violation of the act.
The appellant, Galveston Truck Line Corporation, is an Oklahoma corporation, authorized to engage in the transportation of property as a contract-motor carrier, under special and individual contracts or agreements, over the public highways moving in interstate commerce. On and prior to April 1, 1937, appellant entered into and filed with the Interstate Commerce Commission separate individual contracts with each of the subsidiary companies hereinafter named. The contracts provide for the transportation from Dallas, Texas, to branch stores and retail distributors of paints and allied products which originate at out-of-state points, or are manufactured at Dallas, Texas, from raw materials shipped from out-of-state points for the purpose of manufacture or process at Dallas. Such contracts include transit-tariff covering goods stored in transit at Dallas, as well as goods milled, fabricated or manufactured at Dallas, and provide that the shipper shall furnish evidence at the time the goods are offered for transportation, the products or the raw materials from which they were made had moved from an out-of-state point, to Dallas, Texas, and had been on hand at the transit point not to exceed a period of twelve months. The transportation contracts name proportional rates applicable from Dallas, Texas, to the various named destinations, and provide that such rates shall apply on shipments subject to the transit tariff when moved in truck-loads of 7,000 pounds, or more.
Under the terms of said transportation contracts, appellant moved the seven truck-loads of paint from Dallas, Texas, to Texas destinations. The commodities were shipped by subsidiaries of Sherwin-Williams Company of Ohio and consigned to retail distributors at destinations. Appellant also transported under its contracts two shipments of paint from Sherwin-Williams Company of Texas at Dallas, to its branch houses at Wichita Falls and Brownsville, Texas.
It is admitted that appellant has the legal right to transport interstate commerce for hire over highways of Texas, and the sole question to be determined in this appeal is whether under the following facts and conditions the shipments involved in this suit and similar shipments constitute "interstate commerce" or "commerce among the several states" within the meaning of Clause 3, Section 8, Article 1, of the Constitution of the United States, U.S.C.A.
The Acme White Lead Color Company, Lincoln Paint Color Company, Martin-Senaur Company, and the Sherwin-Williams Company of Texas, are private corporations permitted to transact business in Texas. The Sherwin-Williams Company of Ohio has no permit from and does not do business as such in the State of Texas. Its business conducted in Texas is done through the above named subsidiary corporations, which are wholly owned and controlled by it. The plan of operation pursued by the Ohio corporation and its subsidiaries is substantially as follows:
The Sherwin-Williams Company of Ohio and its subsidiaries are engaged in the production or manufacture of paints and allied products. Eighty-five percent of their products sold in Texas are manufactured in a factory at Dallas, Texas, which is owned and operated by the Lincoln Paint Color Company. All raw materials used in the manufacture of those products are produced or purchased by the Ohio corporation from various sources of supply, all of which are outside of the State of Texas, shipped to Dallas by railroad, in car-load quantities, on requisition from the Dallas factory, and placed in storage until used in the manufacturing process. At the time the raw materials are requisitioned and shipped, the ultimate destination of the finished products is not known, but it is known that ultimately the raw materials will be processed and manufactured at Dallas into finished commodities, stored and thereafter shipped out to subsidiary branch stores or privately owned retail distributors for sale to the consuming public. *800
Every subsidiary has its own particular formula for each of its manufactured products, so, when the raw materials are drawn from storage, they are subjected to a manufacturing process according to the formula of the particular subsidiary for which the finished product is being manufactured, then packed and labeled with the label of the subsidiary whose formula was used, and statistically inventoried by the head of the statistical department of the Acme White Lead Color Works, located at Detroit, Michigan. Such finished products are held in the Dallas factory inventory until shipped out to various branch houses of the subsidiary for which the products were manufactured, or to retail distributors for sale to the consuming public.
Fifteen percent of the paints and allied products sold in Texas through the above named subsidiaries are manufactured in factories located outside of the State of Texas, owned and operated by the Sherwin-Williams Company of Ohio. Those commodities are also moved into Texas by rail in car-load quantities, placed in the Dallas factory warehouse, and commingled with the products manufactured at Dallas. Those finished products are shipped to Dallas with the intention of the shipper that they will be in storage at Dallas until sold to retail distributors through the sales organization of the subsidiaries, or until requisitioned by subsidiary branch houses in the same manner as products manufactured at Dallas. Such products manufactured outside of the State of Texas remain in the Dallas factory's storage warehouse for six (6) months; and are rendered for state, county, and muncipal taxation along with all materials and finished products, if physically in possession of the subsidiaries at Dallas, Texas, on the first day of January of each year.
Forty percent of the commodities passing through the Dallas plant, including those shipped to the Dallas plant for storage as well as those manufactured there, are sold to the consuming public by subsidiary branch stores, and the goods are forwarded from Dallas to the branch stores upon receipt of transfer requisitions; and sixty percent of the goods are sold to the consuming public by retail distributors, to which they are shipped by the subsidiary companies which sell and collect for the paint manufactured and sold under their respective labels. The freight charges on such shipments are prepaid, and all claims for loss or damage to goods thus shipped are made by the subsidiary shown as the bill-of-lading consignor, and not by the retail distributors.
From the above related record, it will be clearly recognized that there was an interruption of the shipments at Dallas, Texas, as a result of the manufacturing process. The raw materials came to rest, without guide or chart as to the ultimate destinations of the finished products, and as to where and when, if ever, and to whom the finished products would be sold, or how such products would reach the consuming public. The raw materials were shipped to Dallas under contracts or bill of lading, entered into with the railroad company, freight prepaid, without orders or transit arrangements, to deliver such shipments to Lincoln Paint Varnish Company; thus delivered, the undertaking by the railroad carrier was complete and the products then became a part of the general property of the state, subject to its laws and transportation regulations. Neither the fact that the raw materials had come from outside of the state nor the intention of the owner that the finished products eventually would be shipped from Dallas to other Texas destinations, can be deemed controlling on the character of the transportation, subsequently entered into with the appellant under arrangements not contemplated in the original shipments.
The raw materials were shipped and held by the Sherwin-Williams Corporation of Ohio, in Dallas, for its own purposes. It was manufactured and processed into finished products for itself and its subsidiaries, stored into its warehouses, inventoried and labeled to the subsidiary whose formula was used in the manufacture, and commingled with other property in storage belonging to them. Thus, we think, the products reached their final destination and became a part of the general mass of the state property, at Dallas, Texas. Its interstate character came to rest because the raw materials had no other particular destination at the time they were shipped or at the time they were received, manufactured, and processed, but were delivered to the shipper and stored at Dallas pending disposition. Mere intention by the owner ultimately to ship the finished products manufactured and processed in Texas from raw materials *801 shipped from out of the state does not put them in interstate commerce. The character of the shipment in such a case depends upon all the evidential circumstances, looking to what the owner has done in carrying out the journey.
In support of this view, attention is directed to the decision of the Supreme Court of the United States, in the Arkadelphia Milling Co. v. St. Louis Southwestern R. Co. et al.,
The remaining 15% of the traffic handled by the Galveston Truck Lines for the paint companies is of a slightly different character. The manufactured products, instead of the raw materials, moved into Dallas in interstate commerce, was placed in storage, commingled with the products manufactured and processed at the Dallas factory. The shipments are sent to Dallas with the intention that they would remain in storage for an indefinite period not to exceed six (6) months, for the purpose of finding a market at other interior points in Texas. The ultimate destination to interior points in Texas is not known, and until a sale is made and the ultimate destination determined, the products remain in storage, subject to transportation arrangements, and the quantity of products requisitioned or sold. We are of the opinion the transportation from the warehouse to other points in Texas is intrastate commerce.
In this connection, attention is directed to the decision of the Supreme Court of the United States in the case of the Atlantic Coast Line R. Co. v. Standard Oil Co. of Kentucky, 1927,
Appellant contends that the publication of proportional rates under transit tariffs providing for a hook-up between inbound and outbound movements are themselves evidence of an intention on the part of the shipper to continue the interstate journey to a point beyond the transit point within the period provided in the transit tariff. Indeed, the intention of the shipper is an important factor in determining the character of the transportation *802 beyond the point of transit; but, in the case at bar, it will be observed that the acts done were inconsistent with the intention of the shipper that the movements of the goods would be a continuous journey. The continuity of the journey evidently was broken, notwithstanding the intention of the shipper. The commodities were shipped to Dallas as their final destination, no leg of a continuous journey; and, to carry them on beyond the point of transit, a new and independent contract, under different shipping arrangements and mode of carriage, was made and acted upon, and was not within the contemplation of the shipper at the point of origin. The actual reshipment under such transportation contracts and transit tariffs was not a consummation of the original intention and, under such conditions, the journey was not interstate commerce.
In State of Florida v. Seaboard Air Line R. Co.,
A "transit" is a stop-over privilege on a continuous journey granted by a carrier by which a break de facto in the continuity of carriage of goods is disregarded, and two legs of a journey are treated as though they were covered without interruption; it unites both legs into a through route for which a joint rate can be published. It is recognized that "transits" may, and often do, determine a continuous carriage. Baltimore Ohio S.W. R. Co. v. Settle, 1922,
*803Affirmed.