*1 Company et al Rowan Oil et al. 17,1953. No. A-4013. Decided June 2,1953.
Rehearing December overruled 140) (263 2d. Series *2 Hyder, Hyder Law, Tilley M. Tilley, and Elton & Rice M. Jr., Worth, Fort for all of Petitioners. affirming the trial court’s of Civil erred Court peti-
judgment Employment for Texas because tioners, Companies, by stipulation the decision Oil establish any evi- the old law without of the Commission was acquire property companies did not new dence that 5221b-5 predecessor to Article amendment their until statute, statutory were met that all conditions Vernon’s complied
with, petitioners entitled to succession and that predecessor. Court also rate their Said established holding acquire petitioners did of the erréd in predecessor. organization, Parker of their v. trade or business Schrimsher, 165; Butler, 142 172 Texas S.W. Stanford v. 629; 269; Wright Tipton, 92 49 181 v. Texas S.W. S.W. Co., 52 122 Texas Federal v. Yount-Lee Oil Crude Oil Co. 56,57. S. W. 2d Attorney General, Amis, Jr., Shepperd,
John Ben J. A. Sam Attorney General, Lane, H. Lee G. Williams' and C. Assistants Austin, Employment Messer, Respondents, Com- Texas mission. Texas, Employ
In a review of an administrative order Commission, petitioners fail to the burden ment when sustain arbitrary, illegal, proof of capricious,. the administrative reasonably supported or not substantial court, in the trial the Commisison was entitled introduced Engi judgment under the substantial evidence rule. General neering Corp. Unemployment Comp. Co., v. 147 Texas 659; Raymond 503,217 Pearson Em Motor Co. v. Texas Anderson, ployment Com., 429; S. W. 2d United States 394,24 Sup. Ct. U. S. opinion
Mr. Wilson delivered the Court. Justice This is suit for refund of contributions the Texas Employment 5221b, Commission under Because V.A.C.S. doing powers corporation upon of limitations the charter of a reorganized Texas, Drilling Company Rowan Drilling Company, There into Rowan Oil the Rowan Inc. Co. and dispute companies seems be no that the two new will continue operations substantially the same old conducted as the doing employees jobs same with same under the the same ownership. practical effect of the is to elimi- possible nate ultra vires The Texas acts. Commis- greater companies sion fixed contribution rates for new Drilling Company than the rate of Rowan because that body ruled that new are not entitled under the rating company. law to the benefit of appeal We first proceeding must determine whether this is an *3 from an administrative tribunal the trial court’s func which ruling is by tion to test the Commission’s substantial the evi original dence rule or whether it is an action to an al recover leged improper levy of court taxes which the trial should use fact-finding ordinary procedure. its
The two new petition filed a court in the district seeking, among things, moneys paid other a refund of all under the new rate.
The
appeal
trial court treated
as an
this case
from an order
agency.
an
hearing
of
judgment
After
administrative
it
rendered
plaintiffs
nothing
take
because the administrative
reasonably supported by
decision was
substantial evidence. This
affirmed
the Court of Civil
on this one
ground.
Prior to the amendment in 1947 of the com- pensation Legislature (Art. 5221b) by statutes the Fiftieth (Acts Leg., aggrieved p. 769) employing 50th Ch. an unit aby against contribution rate assessed given right by
Commission was no Art. 5221b resort tax, courts. Because the “contributions” an are 149, excise Friedman Surety Co., 570; v. American 137 Texas 151 2d S.W. State Praetorians, 143 Texas 2d 158 A.L.R. S.W. remedy paying it had disputed contribution under governing general suing protest recover under the statute V.A.C.S). (Art. protest 75057b, payment taxes under Corp. James, Treasurer, v. Consolidated Steel The case of Ltd., State Austin, writ re- App., Civ.
Tex. bring for fused, n.r.e., employing an action unit to allowed the though request refund of contributions recovery for even 5221b, required by Art. as made to had not been 12(j) court said: then worded. The *“* * language (j) Art. quoted But the Sub. above relating to only provision Act we find in said is the 5221b-12 might recovery of employing have for any claim which an unit permissive prescribed The method therein contributions. hearing, appeal, procedure mandatory, prescribes aggrieved party dis- who be to the courts resort absence with Commission. satisfied * * *” think, significant. provisions is, we decision, amended the Fiftieth After the James inserting j (2) 5221b-12(j) by into subsection Section governing payment general of taxes under statute first, requires, protest taxes is Art. 7057b. It ninety and, second, protest; within the suit be filed significant days. change Art. 5221b made a Thus the 1947 amendment to employing in that it was not in the situation of unit pay protest. it had required to contribution under Instead 7057b) years (“notwithstanding” provisions of Art. four year request a one to “commence an action” refund then *4 request for refund had denied. after the been right to Art. 5221b did create The 1947 amendment agency. appeal It an an order of the administrative estab- from legally by paid procedure which contributions but not lished a under Art. without resort due could recovered 5221b original permitted 7057b. It follows that by suit is an action this money paid such, it is Art. 5221b to recover but not due. As (1) employing payment con- unit has made to the Commission of “When an years has, penalties alleged to due and within four from tributions he and/or penalties would have become due had the date on which such contributions and/or penalties legally Commission such collectible contributions and/or employing unit, application from Commission for refund such made Commission, application such thereof and such for refund has been denied (1) year employing such for unit within one the denial of any competent jurisdiction in Travis refund an in commence action Court of County, Texas, against contributions the Commission for a refund and/or (b), penalties paid Commission, provisions Article Revised so to the notwithstanding. contrary amended, Civil Statutes of Texas of to the novo; recovery, any, interest.” action de if shall be without Such shall be and such appeal an tribunal but in sense from an administrative brought recover to an action under Art. 7057b to taxes similar appli- protest. evidence rule has no The substantial cation in an action. pro- judgment for basis that this State moved
ceeding that: order and “review” of administrative
“* * * the in deci- burden cases of review of administrative imposes sions under the substantial rule burden on go the Plaintiffs forward and show illegal, capricious. arbitrary or There has been
no evidence offered of in that nature Plaintiffs this case. is, hand, on the There other substantial evidence in the record reasonably We, on which Commission’s decision was based. therefore, judgment.” move for
The trial judgment court recited its that: plaintiffs presented “After the had their evidence and rested case, judgment ground their moved for defendants on the plaintiffs discharge showing had failed to their burden that the administrative decision of the Texas Com- illegal, arbitrary capricious; is, mission was that said reasonably supported by administrative decision was not sub- stantial evidence introduced in trial court.” judgment upon
The trial court then based its its determina- tion whether or not the order of the Commission was reason- ably supported by Ap- substantial evidence. The Court Civil peals ground. squarely based its decision on this same holdWe this to be error. tersely
Petitioners stated the reason ain document filed with the Commission introduced in evi quote: dence from which we Drilling Company (the corporation)
“Rowan Delaware trans- acted business in Texas and other from Oc- states 1934 until During year period, provided tober employment security to Texas citizens furtherance of the public policy State, annually declared of this contributed to *5 Unemployment Compensation Fund, systematically accumu- experience rating. lated an account During balance and period, drilling purpose as an incident to its charter of oil gas basis, wells company acquired on a contract oil and gas properties. operation leases company The of an oil in- drilling contract on a of wells purpose. one charter
volves Texas our purpose. Since a different charter involves Basis single charter a exercise of corporations to limit statutes are cer- there and since in Article purpose as enumerated ownership estate against corporate of real prohibitions tain engaging Drilling ultra Company (Article 1359), Rowan company management of the activity; corporate and the vires requirement be law a deemed it therefore reorganized. of operate a either could Rowan Article Under drilling both.” could do an oil It or business. business (c) language of Art. 5221b-5 particular then worded is: are concerned with which we *
“* * change employing enter- (i) immediately such continued predecessor employing unit or units are prises of the ;***”. through single employing thereto solely a as successor unit Warehouse, Liquor Dallas In State v. out corporations formation of two we held carrying prevented employing forward unit one (c) (7), worded. as then
the old rate under 5221b-5 V.A.C.S. operate corporation requires to one It that if the law is obvious operate drilling separate to and another and one producing company for either oil and if it is an ultra vires act corpora- other, perform two then the new to the function of the single Liquor employing cannot unit under the Dallas tions be again falling very vires ultra Warehouse without into the case designed operation prevent. problem. Art. 5221b In 1949 the considered this way “acquires corporation was amended in that if the new organization, part predecessor or trade of its business” June, “subsequent day 1949”, 30th the test becomes: * * “* (ii) immediately acquisition succes- after such employing operation substantially sor unit continued acquired; organization, or thereof trade same language replaced language in that differs from the This longer reorganized operation of a business need no through “single employing unit” order retain its earned wording rate. the amendment Under operation split separate operations could be into or more two rate each continued and both be if successor entitled
613 Legislature part Apparently operate of to a business. Therefore, very presented at we had in mind the bar. situation companies acquired must determine whether either of the new they did, they part 30, If a 1949. of old business June are entitled to of the rate. a transfer proof establishes uncontroverted this case final become certain did not transfer of New Mexico oil leases Department approved by in December until of Interior U. S. might regarded parties, a trans 1949. As between the this 30, upon subsequent happening fer after June 1949. condition finally approved a But it did not by transfer of until become title Department of Interior. In fact that one the U. S. view of the purpose unemployment prevent of Art. to that the 5221b is employment by whole structure of the act tends re to stabilize warding employer provides employment, we con who stable “acquired” carry strue the word to so as out the announced policy Clearly policy give employer of the act. should this doing encourage of the benefit its rate earned so it to provide employment. Accordingly stable we hold the oil acquiring acquired predecessor of its business part of subsequent a within June is therefore the amendment and entitled its refund. evidence in There is finding support the record which would the transfer drilling company prior completed 30, had been to June 1949. However, testimony there also that the entire contingent upon assignment the federal Upon the New ques Mexico leases. this record we hold that the drilling tion of company acquired whether of predecessor subsequent to June 1949 is one fact. upon recently make no We comment enacted Senate Bill except say No. 34 III, that because of Article Section Constitution, any Texas Act cannot release contributions (i.e. which accrued liability) passage became fixed before its neither does one session of power have the to construe past the Acts or declare the intent session. Sec II, tion Snyder Article Texas Compton, Constitution. 1061; Plunknett, S. W. History A Concise Law, p. Common 292-304. cannot
We determine from this record the of the re- status fund nor how much should company. be allocated to the oil judgments of the trial court and of the Court Civil are reversed and development the case is remanded full the facts. dissenting. and Calvert Justices Griffin
Associate 17, Opinion June delivered *7 and Hickman joined Chief Justice Calvert, Mr. Justice dissenting. Griffin, and Brewster Justices a memorandum original I filed cause of this submission On rehearing in dis- leaves me on consideration dissent. Further agreement concluded I which have particulars on in a number of Accordingly, opinion length. greater my express at views original my dissent. for substituted will be holding disagree place, with the I In the first below erroneously in the courts and decided tried case was rule. evidence under the substantial rule, evidence the substantial be the merits of Whatever governing body deeply implanted of our law in the it judicial now is It has and decisions. administrative orders review of many so applied many and to the decisions of in cases so pointless all agencies to review it would be administrative recently applied order the review of an it was in of them. Most Engineers Engineers (Board of Water of of Board Water Municipal Dist., River Colorado Water spite provision in the statute 372), and that in legislative injunc- “de and that trial should be novo” involved independently “determine that on the trial the court should tion validity respect to the all and of law with issues fact complained Board of. of the acts of the reasonableness” prior pointed majority opinion, amend- is As out in the Legislature V.A.C.S., by 5221b-12(j), of Art. the Fiftieth ment Compensation provision Unemployment law there was no in the relating required recovery of and to the of contributions employer, James an and so it was held case that general procedure recovery governed by for tax thereof was light statute, 7057b, decision In the James V.A.C.S. knowledge presumptively with thereof incorporating pro- (j) amended Art. therein 5221B-12 majority opinion. vision shown in the footnote to the Under procedure quite pro- required different amendment the was from general pointed cedure under the tax statute. As is out right majority opinion, unnecessary protest was made to the recovery filing and the time for of suit was extended. The most significant change, however, prerequisite was that as a to the an right employer required to seek obtain sue the ruling pro- refund. It was an for on administrative employer only “com- could the after this was done vided that an action.” mence requirement statutory implement
In order to summary there- administrative which would not be provision abritrary, has made fore hearing applications, in this case for full and the record such hearing re-hearing plain- accorded reflects that tiffs, question basic with an administrative decision the fact right recovery plaintiffs’ to the the business —whether corporation acquired by corporations the two new just procedural It situ- before after June is in again that ations that this court held time and the substan- distinguishing applicable. tial rule I can find fea- *8 opinion point any. statute, majority ture in this nor does the opinion place emphasis provision seems to some on the employer that if the Commission denied the distinguishing “commence an But this action.” is no feature. 6049c, 8, V.A.C.S., provides any person sec. interested ruling dissatisfied with a or order of Railroad relating gas right to oil and matters shall have the “file taking appeal, suit.” That article does not mention the of an governed by but this court has held that trial of such a suit is evidence rule. Gulf Land v. Atlantic Re- Co. substantial. fining Co., 73; 134 Trapp v. Oil S.W. Shell Co., wording 145 Texas 2d 424. same is found Engineers in the statute in of involved Board Water Colorado River, Municipal List., supra, holding Water the same was and “commencing made. There distinction between an action” thing. phrases suit.” The mean the “filing same Moreover, if question proceeding whether this appeal completely nature of an or the institution of inde- pendent doubtful, caption dispel suit is of Act should caption specifically doubt. The pro- sets out that the Act “Providing vides penalties for refund of contributions and er- roneously paid, appeal payment to the courts alleged amending contributions to be due.” This Act the un- of employment passed by law was with full knowl- edge judicial of reviewing use of the substantial evidence rule decisions, administrative and if it had intended that the sub- arising applied there- in suits should not be stantial evidence rule provided. could have so disagree holding approval by majority I also with the government New Mexico leases Federal of the transfer of the Company, a matter 1949 entitles the new oil after June law, recovery. of a full court and the trial case was tried before the Commission
This presented in this and was in the Court of Civil only theory; that the court on one and one entire companies conse- and all into the two new contingent properties final quent transfers of law Mexico leases as a matter of of the transfer of the New acquisition there the new was therefore no property until De- any of business of the adversely cember, decided to the 1949. This was the fact issue plaintiffs by Commission, Court the trial court rejected court, Appeals. as is evi- It has been also Civil holding by the on the issue is conflict- denced that the evidence ing, creating court question the trial fact be determined applicable drilling company’s aon retrial of the suit under rules held, ordinary how- to the trial of civil suits. The leases) ever, “part” (the that since New Mexico company’s (all producing part of the of the old business) acquired oil com- after June the new recovery. pany is as a matter law to a full entitled *9 (Art. (c) (7), Acts of amended The statute 5221b-5 as 1949), “If, subsequent provides: to the 51st in * ** acquires day June, employing unit thirtieth organization, employer, part a trade or of an business predecessor employing acquiring unit and such such successor may application jointly to the Commission make written employer compensation experience predecessor of such that organization, or or which is attributable to the trade business ** ap- part acquired which shall be thereof “* ** (IV) in the proved by finds if it that employ- predecessor only part of acquisition a of the event business, part organization, acquisition such was trade or er’s pre- segregable part definitely of the and which identifiable to compensation experience and is attributable***.” decessor’s rate Actually, statute, contribution under the it is not the succeeds; compány rather; company which the new of the old to experience” “compensation experience.” “Compensation it is the composed is of two factors which defined the statute and is employer’s automatically rate, (1) wit: determine the to years pay preceding “on which total taxable roll for the three wages Commission,” paid contributions have to the year employees paid period who for the same three to former unemployment. have been for one full week of benefits right company Whatever of succession oil has only by foregoing it case has virtue of the of the statute. terms Properly interpreted the statute does mean that if a new company part organization, acquires a of the trade business predecessor employer 30, 1949, of a June before another 30, 1949, part subsequent company to June the new will succeed experience compensation company to the of the old attributable parts, majority simply such says both has held. It means any part it acquired subsequent what as to to June —that 30, 1949, company compensation new shall succeed of the may as the Commisison find is definitely segregable part and attributable to the identifiable subsequently acquired. only basis, me, conceivable on majority holding which rest the that the new oil recovery law, is entitled to aas matter of that conclusively acquisition by shows that the final new oil com- pany property of the prior business transferred to it contingent approval June of the transfer respect New Mexico leases. But the evidence in this is no stronger (actually same) it is the than the evidence that final acquisition by drilling company the new property of the prior transferred to it to June was also con- tingent on final of the transfer of the New Mexico leases, majority and the has said that phase the evidence on that conflicting. of the case is say
We cannot seg- the New Mexico leases constitute a regable “part” company’s business so as to divorce “part” part the business from the transferred to the drilling company saying done—without —as segregable at the same “part” time constitutes part company. transferred (the to the oil And if this New *10 leases) only part company’s Mexico is the of the new oil business say that acquired we can as matter of law was 30,' after June 1949, we are statutory then confronted provision with the that part as company to that the new is oil entitled to succeed to company’s compensation experience the old which is attributable therewith, part definitely rather than and to that is identifiable compensation experience defi- that attributable to and is the company’s nitely all the of the old busi- with identifiable production business) acquired new oil (all the oil ness the record majority company has held. there is in this as Since the segregable part” definitely and that “a identifiable no evidence (total experience” company’s “compensation taxable of the old pay year period contributions for the three on which roll wages” period) attributable is and “benefit same leases, plaintiff has to me that New Mexico seems to the completely recovery any proof failed to make that is essential clearly judg- error to render and that therefore whatever it is company. ment for the new oil should decided on same to me that this case be It seems is, that presented,
theory been tried and on which it has properties reorganization and and transfer of 30, 1949, company or that such final June was before contingent wholly reorganization and transfer final until after and therefore not Mexico leases of the New deciding theory By it has it on the on which June 1949. complications presented which we will avoid tried and noted above. have been evi- decided the subtsantial case be
I should think opinion rule, admin- if is of the and dence supported is not substantial evidence the decision istrative judgment and judgments the courts below should reversed be Personally, plaintiffs. I feel that the ad- for all here rendered supported by substantial evidence ministrative judgment be of the of Civil should Court I deem to be substantial and which affirmed. Evidence which briefly judgments summarized as supports below report plan stated (1) The follows: provided for transfer of all assets to the Commission made companies to the two new liabilities (2) a.m., All transfers at 7 o’clock October 1948. effective conveyances the new are absolute on their face (3) permit of dated October 1948. the old com- and are pany in Texas surrendered on October to do business Secretary-Treasurer com- Letters from drilling pany of the new 28, 1948, Commission, September dated stated that the reor- ganization inquired was effective October what the companies. each of the new new rate of contribution would be for *11 (5) In an for review and redetermination of con drilling company Mexico tribution rate filed with the New “reorganization January Commission in 1949 it was stated that accomplished 1, reorganization on October 1948.” If the complete application, was not at the time of this there no application. (6) for the basis After October old com pany Texas, being transacted no business in all business trans companies. acted two new All income for last three reported months of 1948 and for 1949 was as income of new companies, being reported by no income period. strong It is not to be denied that there also evidence that the pursuant conveyances and all transfers and made contingent approval thereto were on final of transfer of the Federal December, leases which did not occur until duty but it is not the preponderates; of the courts to determine which evidence duty only it is their to see if the administrative reasonably supported by decision is substantial evidence. Hawk Co., ins v. 146 Texas 209 S.W. 2d 340.
Even if refusing is correct to decide this rule, case under the substantial judgments courts below should be entirety reversed in their so that may try trial court reorganiza- critical issue—whether ensuing tion and conveyances transfers parts of the busi- ness of the two new was contin- gent on final of transfer of the New Mexico leases. If the trier of the they contingent facts finds that plain- tiffs would be entitled to company’s succeed to the old compen- sation and to a refund of the taxes in excess of legal rate based thereon. If the trier of the facts found that these contingent matters were not so plaintiffs then the would recovery. be entitled to a
Opinion delivered December Roosth & Genecov Company, Production Incorporated,
v. Loren Lee White et al. 4,1953.
No. A-4176. Decided November Rehearing 2,1953. overruled' December (262 99) Series