State v. Shell Pipe Line Corp.

grounds sufficient constitutes this fact alone “We submit this suit. entered in judgment reversal levy argument, assume purpose of we “However, if, for the 1929, R. S. provisions of Section made under properly was void, conflict since said section is direct levy is nevertheless X, Missouri Constitution.” of Section Article provisions with theory not that Sec- appellant’s trial It is evident unconstitutional, levy also that was void but be- tion 8067 was authorizing levy not statutory proceedings had been cause necessary questions other case. to discuss followed. It is Cooley Bohling, CC., concur. judgment is reversed. C., adopt- foregoing opinion PER CURIAM: The Westhues, judges concur. opinion ed as the of the court. All the Appel a Corporation, Corporation, The State v. (2d) lant. 139 510. S. W. May 4, Two,

Division 1940. Mitchell, Thompson Young, Neill, Jr., Robert Thompson, & Berry appellant. P. C. General, Wasserman; Assist-

Boy McKittrick, Attorney and Max Jr., Attorney General, respondent; Harry Waltner, G. ant counsel. de- to recover of

COOLEY, by the of Missouri C. Action State year 1934. tax for the corporation franchise fendant, appellant, tax and Missouri, $2800 of Judgment plaintiff, State the agreed. facts are interest, appeals. The from which defendant $1000 which of facts with presented statement Appellant its brief a says the involved are shown Most of facts respondent it is content. may by other facts to which it filed at trial. Some stipulation a the truth which evidence, oral the of necessary to refer are shown be agreed In upon. disputed. We, therefore, is the facts as take legal issues involved it make the situation and order to clear summarizing necessary facts, quote most of the statement of will to be clarity: destroying may that done without where be tax in to said petition "The amended was drawn recover ‘engaged $2,800 theory in busi- amount of on that defendant is in this state.’ ness that defendant was petition

‘‘The answer ... to said denied meaning of section engaged in in this within business State up set defenses said the statutes above mentioned and that business, if apply statute does not nor to its defendant defendant, the un- attempted applied same is said statute transacting engaged solely in constitutional defendant because defendant, commerce, and, applied to this interstate in vio- impose upon statute interstate commerce said would burden I, Article as the Commerce lation of Section Clause known States, in violation of Clause, of the of the Constitution United Constitution, which 1 of said Section the Fourteenth Amendment depriving any person property prohibits the from without states denying every law, prohibits and which state process due any protection laws, and in violation of person equal Missouri, pro- 30 of II of Section Article Constitution person deprived property process no vides that shall be without due reason of the facts up Said further law. answer sets founded, stated, on and the above the tax bill which the suit attempted assessment of said tax are void. setting up petition sub-

‘‘Defendant also filed cross answer, stantially facts in the above mentioned stated same deny petition prayer recovery plaintiff’s under which was to annulling fran- setting for a decree aside and the assessment declaring year 1934, canceling bill, chise for the the tax tax tax said invalid, any do penalty and that the tax and interest thereon property a lien on the and assets of not constitute defendant State of Missouri.

1228

“A cross motion to dismiss and answer ... to defendant’s to by plaintiff. reply The answer or defendant’s bill filed were that the general denial, alleged a further cross bill consisted of and which Corporation, of and of the Shell Petroleum affairs defendant doing a company conducting latter busi- an intrastate and selling gasoline products ness of retail in State petroleum and this paying State, conducted, mingled a and franchise tax are so to corporate entity and disre- combined and directed that should be garded purposes fox the of suit. jury judge.

“A was . . . and the cause tried before the waived testimony by “There was Tax a member of State Commission against the assessment of as a tax $2800 defendant franchise for year 1934 made on a valuation of the assets of defend- was Commissioner,’ $5,600,000. ant ‘as found which valuation was A copy certified of assessment of this tax was introduced A, being plaintiff’s petition. Plaintiff’s Exhibit to same attached “STIPULATION OF FACTS. ‘‘ parties stipulation The writing entered into a of in facts and filed the same in the stipulated trial court at the time of the trial. The facts are as follows:

“Formerly Pipe defendant’s name was Corporation, Ozark Line changed Pipe year name was Line Corporation in the 1927. ‘‘ foreign corporation, a incorporated existing defendant is Maryland. January under the laws of 9, 1920, Under date of de- fendant Secretary was issued a license of of the State State of engage Missouri ‘to in exclusively the State of Missouri in the transporting petroleum by business of crude . pipe line. . .’ This license was issued to defendant in its former name of Ozark Corporation. July 9, 1928,

“On Secretary defendant filed with the State of of an State Missouri ‘Affidavit of of Extension Business Pur- ’ poses, to include the business of: “ locate, construct, ‘To operate maintain and pipe lines for the transportation petroleum petroleum of products; rights to obtain way of for said lines; transport petroleum petroleum products by pipe line; erect, operate and to maintain and telegraph and telephone lines used connection with the maintenance operation purposes said lines and for incident thereto.’ ‘‘ It the purpose defendant, applying for receiving engage Missouri, the license to in business in power secure eminent rights domain order to way condemn for pipe line, negotiate and to enable it to advantageously more purchase rights way. Defendant has power exercised the of eminent domain for said purpose Missouri on several occasions. for fran- Tax report the State Commission

"Defendant did year , provisions under the tax purposes chise Mo.'l929. Section R.'S. system pipe lines situated operates "Defendant owns Oklahoma, Missouri, Kansas, including Texas, states, number of solely of carrier Its business is a common Illinois and Indiana. always kept for hire. has on file with the petroleum for others It of Washington, C., its tariffs— at D. Interstate Commerce Commission petroleum of in inter- transportation the schedules and rates —for commerce, respects complied in all has the Federal state and with relating Transportation pipe carriers, line and com- Act Interstate plied with all rules and orders of the Commerce Commis- sion. produce, buy, petroleum, sell or own

"Defendant does except purchases pump a small which it for fuel for at .its amount use stations. petroleum

"Defendant receives no in Missouri for transportation, petroleum and delivers none in' Missouri. transported by The it by across the State of Missouri is it in received Oklahoma and states by Missouri, transported other than and the entirely across State of Missouri in and delivered Illinois and Indiana. . . .

". . . petroleum transported through All pipe line in Mis- in point souri moves . . . from some Oklahoma across State Illinois, of portion Missouri into of which is at delivered Wood River, Illinois, on and balance moves to Bast Chicago, Indiana. .the (Here are six pumping Missouri.) mentioned stations in These pump stations are petroleum through used to pipe line to its destination. The line consists one pipe extending of ten-inch entirely Missoriri, together across the State with another ten-inch" pipe parallel laid greater one first and which extends the dis- tance between several . . Except stations. . case acci- dent, petroleum continuously through flows both pipe; lines of pipe constituting two lines of pipe one line. . . . "The telegraph telephone line owned operated by de- extends;

fendant operation connection with the of its pipe line entirely across Missouri, and, the State of generally speaking, is on right way. line Defendant has a telegraph station at St. Louis, but no other such station in the State of Missouri. telephone line is used for communication between St. Louis and various other offices maintained in defendant connection with the operation pipe line, pumping with the line stations. "All of the corporation, of defendant except stock qualifying' shares, is -owned the Shell Corporation, Union Oil a Delaware corporation. stock, All of the except qualifying shares, of Shell- Petroleum Corporation, "Virginia corporation, is owned the Union Oil Corporation.

(cid:127) Mary- Baltimore, Light Street, an officeat maintains “Defendant charge Company. This Corporation Trust land, Maryland. statutory required kept under the laws office to be is a this office is necessary to be transacted Whatever Trust employee employees by an handled Maryland, Baltimore, Meetings are held of stockholders Company. Louis or New York. meetings are held in either St. of directors determined at the Louis company are sometimes St. Policies of being office, latter at the at the New York and sometimes Office Corporation. office of the Shell Union Oil Louis, principal maintains its office at St. Missouri. “Defendant records, personnel corporation records and All records financial Payments from customers on of trans- kept at this office. account accepted at All contracts are received this office. portation wages, material, taxes, payment supplies, in- checks or drafts greater surance, portion expenses of other are issued at de- Louis fendant’s St. office. deposited

“The funds the defendant are in a St. Louis bank. secretary charge the corporation records, of the books and them, together keeps books, with the stock transfer at the office All paid company at Louis. dividends on the stock of the St. are paid from the St. Louis office. n eighth St. Louis “The office of defendant is on the floor of the Building, streets, building Thirteenth and Locust . . . The by Corporation. Forty-four Shell Petroleum (44) persons owned employed by are defendant at this There depart- office. are several ments of the Shell Petroleum , . . . which also ren- der defendant, although some service to greater portion of the time employees departments of the of these is devoted to the business Corporation. Shell Petroleum pays only Defendant for the time employees said which is devoted its work.

“The officers and of defendant are directors also officers and di- rectors of Shell Petroleum Corporation. These are thirteen in num- ber, and of these thirteen six are officers or directors of Shell Union Corporation. Oil manager’s

“Defendant’s office is at the St. Louis office of de- fendant. ‘‘The real by estate owned defendant in the State of Missouri con- property acquired rights sists of way as for its (six) line and sites for pumping stations. At each pumping station site are located pump the main auxiliary house and building buildings. and other There are two tanks at pumping station, each 1,000-barrel one of capacity 37,500-barrel and one of capacity. everything When is in working normal goes order the oil to a pumping station- and then directly through pumps. The smaller tank is in constant use in this connection. If flowing the oil is to the pumping station faster in tbe smaller out, surplus tbe accumulates being pumped tban it is charge thereby gives engineer in of that fact notice to tank and tbe sufficiently up pumping operations at bis station speeds be flowing at accumulating keep on tbe oil from so prevent coming pump- If it is into bis station. bis station tbe raté that same carry necessary that tbe oil that ing at a rate in excess of coming station, his no oil will accumulate this tank tbe engineer adjust accordingly. Tbe pumping operations seeks to bis instance, larger emergency. If, only tank is used case of leak in the Station and Wood should occur between Oetters River, carriage through so that normal could not be maintained that line, portion large tbe at Station could be used tank Oetters If, to receive oil until normal conditions could be restored. circumstances, large these tbe tank at Station become Oetters should full the tank at then tbe next station toward tbe southwest could be purpose. large used for tbe same Tbe used in such cir- tanks are operation may cumstances so that the normal of the whole line not be paraphernalia, tanks, interfered with. There are other such water etc., operation used in are connection with the of each station. There on each of these station properties several residence houses owned employees. defendant for use These houses for the purpose they may having places employees to live for the so pumping stations, not have to live inconvenient distances from the they immediately will so available case accident or emergency. other forty-one There are total of of these houses on pumping properties occupying station in Missouri. The employees pay monthly these houses monthly; rent to the defendant the total rental received all of these houses is . . $216.00. . employees Missouri,

“The pumping each of the stations in , engineer, engineers, oilers, consist of one chief six five yardman one driver, truck and one line walker. In addition to these employees following defendant employees has re- the whose duties late to the entire line in superintendent, Missouri: division One supervisor, one mechanical maintenance one mechanical maintenance laborer, foremen, caulkers, three maintenance three maintenance fourteen laborers, maintenance and one maintenance truck driver. Defendant employed telephone also has in connection with its telegraph line, , superintendent, . . . one division three tele- phone foremen, foreman, linemen, one maintenance two maintenance one truck employees driver. The number of in mentioned above this paragraph total 116. E

“Exhibit shows that pumping connection with its stations and its pipe line telephone telegraph lines in Missouri de- owns trucks, fendant and uses five Dodge Ford two one-half ton trucks, Dodge four one trucks, and one-half ton three Chevrolet coupe, and one Oldsmobile Dodge coupe, Chevrolet

trucks, one one sedan. ‘‘ pumping of stations and each the by owned defendant The land stipulation. set out in the thereon are improvements Company spaee’for wires Ajax Line two rents “Defendant 240.6 telephone poles for a distance of miles between on defendant’s Missouri, Racine, Boles, miles of Franklin Coun- point two east Ajax annual Missouri, for defendant receives rental ty, mileage being mile, wires per (there the total wire two of wire $6.00 being by miles) of 240.6 481.2. These wires are used for a distance of Ajax Pipe Company in the State Missouri connection with transportation of oil interstate commerce. “During year through defendant carried the State of belonging Corporation. oil to Shell Petroleum . . Missouri always always assessed, has paid “Defendant been an- nually, general property upon all of its property taxes the State registration Missouri, paid and has also annual of of fee $5.00. question by of the tax in “The assessment was made the State Tax November, 1934, in the month of question Commission and no procedure by about the raised followed State Tax Commission in regard. ‘‘ stipulation All the facts stated during were true the en- year of 1934. tire stipulation

“The exhibits appear pages attached on 48 to 72, inclusive, stipulation abstract.” [End facts.] (cid:127) “OTHER EVIDENCE. “Plaintiff evidence, objection by offered in over defendant’s coun- sel, B, being its Exhibit the same by anti-trust affidavit filed de- Secretary with the fendant of State which was July 24, executed on 1933. This was on offered the theory that it contained an admis- by sion the defendant it 'has done business in the State ’ Missouri. “Plaintiff in evidence, introduced objection over of defendant’s counsel, C, its Exhibit being same an a principal agent affidavit of officer, filed iff behalf by defendant Mr. Carl principal Barker as officer,pursuant Secretary demand State, being same in statutory form. In this affidavit was stated property that the located and business transacted in Missouri for period covered by the affidavit $5,442,445.45. was This affidavit was sworn to on February 16, 1932. transcript

“A of the testimony of R. F. Smith, in behalf of de- fendant, agreement introduced parties, to be received the same as if the present witness were and testifying. . His testimony was as follows: “ 'I have been manager of Pipe Line Corporation for four and years. one-half I have been with corporation defendant for more buys oil pumping for fuel for its twenty years. Defendant sta- than both, outside of tions within Missouri. “ has no business other than ‘Shell principally petroleum. It carries oil for Shell transportation covering There is no written contract Corporation. Petroleum published oil. oil is offered to defendant under its carriage of The the Interstate Commerce on file with Commission. It carries tariffs published these the terms of tariffs. oil under “ company or individual transport oil, some other wants to ‘When they inquiry make to whether or not defendant can handle it— time, origin point of destination. If so, as to defendant can do shipments. Defendant is asked make advises them of the they When and then offer the oil is situation oil. received for trans- consignor issues to portation, defendant what is known as a ticket,” being “run shows the amount of oil transported, gravity. only thing That writing base sediment and is the is- sued defendant. “ ‘Concerning pole space rental of Ajax to the Pipe Line Company, this is in Missouri for the entire distance. No new contract year. The for primary is made each contract was years, term of five automatically renewing year periods itself for one unless canceled party anniversary either on the fifth subsequent anni- versary. “ has no ‘Defendant executive office Mary- outside Missouri and It has points land. division offices at several which are concerned- operation with the mechanics of the line. “ majority ‘The employees defendant’s office are employed at office, Louis accounting the St. and in for system. the entire There a, superintendent telephone telegraph, who supervision system. of the entire There two draftsmen for keeping up the mapping, etc. All of their duties relate to the line and car- rying petroleum through it. “ ‘As to the use of other trucks and automobiles mentioned in the stipulation: There is one at.each station to take care of the trans- portation hauling groceries around that station supplies for the men hauling material back and forth between stations—between stations points, delivering and railroad material to a point certain on the line maintenance work. The gang maintenance also hauling have trucks for tools, men and and the .telephone men each have a car for transportation to find trouble and inspection telephone of lines. ‘‘ ‘ telephone and telegraph line is used in connection with the operation transporting petroleum. “ ‘It takes engineers five and “five oilers at each pumping station, usually and there is man, an odd and a yard combination man truck driver. 1234

“ line, maintenance for the men maintenance 'There are .„ line. . . telephone men for “ living company-owned in the why employees ‘As to defendant in iso- all stations pumping These are stations: pumping at houses where from a location removed they are somewhat lated localities— might up where emergencies; come houses; rent employees could these fails man hurt or sick or help^ a is call need to extra we —where so the these houses are built around. So up his shift comes show when majority of these any time. While might subject to call at men be They are of houses, are some smaller. there are five-room houses For living pay rent. a The men in them construction. modern month, $6.00 four-room house a for a they pay $5.00 house five-room a month, $3.00 for a three-room house (obviously error) an a years pay men not rent these ago the did Prior to a few month. rent, appeared to be a charged there The reason that we houses. furnished, not so those houses could be against to whom discrimination living company- employees inaugurated all the rule was The rental equalize the situation. pay houses must owned rent nominal. purely “ are employees 'The of hire of some of the in Missouri contracts Cushing, (Okla.). in Missouri and are made made the balance relating employment. no written contract Contracts There is way telephone anything in the in connection with construction lines, A approved or are in St. Louis. contract for the lines pump of a tank at one stations be executed (cid:127)construction of the would Louis. . . . St. “ transported through ‘All oil is Missouri for Shell Petroleum All oil Corporation under tariffs —there no contracts. trans- ported through years during Missouri 1935 was for n ShellPetroleum Corporation, going River, to its refineries at Wood Illinois, Chicago, and East Indiana. " ship a man ‘If wants to oil he either a or comes to writes letter go us, him, telephone, see or us up we to see he calls over through asks us what condition of tariff our line is. We do give lading; give a bill as a ticket”, we what known “run receipt giving which is a for the received. The of these rim crude regulate commerce, pro- tickets is fixed act interstate shipper given receipt ticket, receipt vides that shall run or a a lading. given ship- bill of These receipts are made out to the per Cúshing, (Okla.). get any He does not written contract ns Louis in St. at all. . . . “ ‘We have Louis, Missouri, our main officein St. have a bank in Mississippi Yalley account Trust Company in St. Louis. That through pay one which we handle our roll. “ ‘The value system 1, entire as of 1934, defendant’s June 1, gross income June $63,159,849.88. The between in all states was $19,608,493.92. 1934, was and June “ Petroleum with the Cor- ‘Tbe Shell employees perform who serv- poration number of officers and have a general we companies. In the office force in St. Louis ices for both I of these forty-four persons employed. do not know have The Company pay roll. forty-four included in the Petroleum are Corporation performs Petroleum print department blue of Shell employees department this are not company. services for our The of forty-four. pay Louis. We our roll in St. included in these have forty-four employees perform their for the These all services who Pipe Pipe Company Line entire from the compensation receive their Company. employees Line The of the Petroleum receive Company compensation charge fheir Company. from the Petroleum is a There against Pipe Company performance made for the these the Line by services employees Corporation. of the Petroleum has been There an estimate made of the Pipe value these services to the Line Com- pany lump and it is handled in a sum each month. “ years ‘During Pipe 1934 and 1935 Line Corporation Shell transported neighborhood for Shell in the Petroleum 50,000,000 petroleum. Corporation pro- barrels of Shell Petroleum vided for receptacles receiving petroleum Payments at the refineries. transportation petroleum made to us for once a month. This is also set up company. on the books of the pay- There is no actual ment in cash that time. It a bookkeeping at is transaction. “ our space Building ‘We lease office in the Shell from the Shell Petroleum Corporation. a bookkeeping This is transaction The also. Pipe Company through go formality issuing did not actual having warrants drafts. “ purchasing ‘The department of Company the Petroleum also acts for Line Company. buy material, If we have occasion to we purchase requisition issue a I pur- initial it and send it to the chasing department, they purchase our name, it in and when payment becomes due a payment we issue check in of the account. I think that is done out of St. Louis bank account. “ ‘The payment of is dividends not a book transaction, by handled check. Our directors money declare dividends and the actually out paid I do in, check. not hold office perform (cid:127)any for, petroleum service company. “ provide groceries ‘Defendant does not employees, for its but n they permit equipment purpose bringing used for the (cid:127)such supplies station for the employees. . . . “ pumping ‘We have six plants in Missouri. We fuel obtain the for operating pumps these Corporation. Petroleum We off draw sufficient fuel from the operate line to these stations for several weeks. . . .

“ plants. most of these Gen- ground at twenty acres bave ‘We necessary operation plants. of these ground is for the erally all that station, but I Forty required at the Richland acres forty get ground required. The to take acres to we had think get quite even location we ground here is order to suitable forty acres. took the “ entirely We telegraph telephone line is owned us. ‘The right way wires, except and the wires poles own the they Ajax Company. Ajax owns the run belong to the wires they They along poles and own the insulators. have these attached our poles. on our our crossarms “ forty-one furnishing employees ‘There are houses we are to our state; there is one at for rental house each station known as dormitory, dormitory apply. single to which no rents The is for houses, today, men and of these if transients. value erected approximately lighting systems each. Ye have $2500 would be pumping these various stations these houses are furnished with lighting charge employees fixtures. No is made to the for that. The employees arrangements furnish their heating usually own — telephone stove. The houses have service, except do not the chief engineer. they If telephone they have provide service it themselves. We system have water at miniature these stations. These houses are charge furnished with water. A is made for that. The houses have been built with a sewer connection with a septic tank. employees The provide transportation their own to school. “ ‘The line was running a 10-ineh originally line from Okla- Illinois, homa to and it pumping stations, had five three Missouri. built, loops put in We three pump additional stations in Mis- souri. This work was started in 1925. I do not exactly know when completed 1927, is, was I up believe—that period. to this There — has been some additional work done within year. the last The work that was at done that time more than doubled the capacity of the line. exactly I do not recall the cost of these additions line, to the but I say would several million dollars. “ ‘As to the recently work that done, been we have added one pumping additional unit at each of the stations and completed the loop, so we have lines, two full and at two stations we have added a short section of third line. This improvement last began year (1937). piping The is done. pumping The equipment has not yet. been delivered “ have, times, ‘We various right exercised the of eminent do- main in this may state and we want to do it again, tomorrow or maybe years. ten “ Corporation ‘Shell Petroleum has refineries at East Chicago, Indiana; River, Illinois; Wood City, Arkansas Kansas; Houston, Texas, and these are the terminals of our pipe lines. . . . ‘‘4 Corporation payment Pipe for Line The services rendered the Corporation employees bookkeeping opera is a by the Petroleum by only temporarily. Ultimately up tion the balance is cleared cash give payment. We Shell Petroleum credit for the amount such charges carrying services no the amount it us. The oil for owes They during the are account Shell Petroleum is same. carried the ing is, period until the treasurer decides what the balance due us ’ paid. then it is by plaintiff.

“Thé deposition of Paul R. Chenoweth taken the This witness testified follows: “ secretary ‘I am Pipe assistant and assistant treasurer of Shell I Corporation. Line hold same offices in Shell Petroleum Cor- poration. Mississippi Defendant maintains a bank account with Valley Company Trust at St. Louis. It maintains other bank ac- City. counts in York pay New We roll accounts in half a dozen have territory. throughout banks our receipts The business, customers, line as they pass through received from our are rule, the St. general go Louis As funds which account. money these other accounts are transfers of from our Louis ac- St. locality count from which thereafter checks are drawn for the petty cash matters. “ ‘Our New York account is purpose. used a different Bills paid City are payments out New York require where New York exchange, and there special receipts deposited are certain are that account. I special items that can think of at this time as receipts by parent company, payments advances and interest might due Pipe Corporation, Shell Line pay- that would be through able New York office. The interest would be bal- Pipe ance due parent corporation. Line Shell Union Oil Corporation, which is parent company, pays Pipe interest Line money on owed Shell Union Company. every month, These are not they a fixed item but would run $50,000 around a month at times. Shell Petroleum pay- makes ment on account to Pipe Company, Pipe the Line Line and Com- pany collects interest on the balance remaining unpaid in the transportation account. . . . “ ‘Shell pays Petroleum so much on transportation account for the charges from to time. When pay time the time comes around to dividends, the Corporation Petroleum up enough will settle of its permit account to Corporation the Pipe Line to pay its dividends it that has declared. “ ‘The records of Shell Petroleum and the records of Pipe Shell kept Line are separately. The Pipe space rents Line office from Shell Petroleum, pays and Shell Petroleum for space. Pipe that Shell Line always paid Petroleum, for all of oil it that carries for Shell always pays Pipe Line charges. Shell transportation all of

paid tbe it. does for latter anything that the for Petroleum Shell “ money Petroleum to Shell advances Oil ‘Shell Union I spoke that interest Line. The Pipe pay to Shell latter for the Line owing Pipe money still Line is on paid to Shell that charges. transportation for “ borrow Pipe Line without pays the Petroleum Shell ‘Sometimes not Company has If the Petroleum money at hand. ing if it has the Union, money Shell money at it borrows hand sufficient obligations charges other and transportation on account pay to debts for its own look out to Petroleum Petroleum. Shell ” anybody else.1 to Shell Union or it which owes 4641, R. under Sec. is levied sought to be collected tax pertinent far as 2057, so 1929, Ann., p. provides, which Stat. S. Mo. this organized under the laws here, “Every corporation not annual state, pay this an state, engaged in shall in business- one equal of Missouri one-twentieth franchise tax to State in surplus employed per par capital value of its stock cent ” stat of our in There is another section business this state 2030), provides 4596, 1929, Ann., p. R. Mo. Stat. (Sec. utes S. every corporation pecuniary profit formed for substance con any to transact or must, permitted other before it can be State or State, public and- maintain a office tinue business have legal business, place in where this State for transaction of subject all may upon it, etc., service obtained shall be be may imposed liabilities, be restrictions and duties which general corporations organized laws upon of like character under the State, greater of this shall powers, shall no other or have engage expressly business other than that authorized in may its charter or the law of this under which it come and State years except longer shall not hold real than six such as estate may necessary proper carrying legitimate on its business.

Eespondent conjunction contends that 4956 must Sec. be read with Sec. sections, together, impose and that read two privilege on all corporations tax business in transact authorized regardless the State of whether business is intrastate transacted not. We think this answered, adversely respondent, contention is opinion v. Phillips Pipe this court en banc in State Co., 339 Mo. 97 S. W. 109. In that two (2d) case same sections there, our statute were considered. It was contended here, upon that the sections, together, impose two tax privilege read corporations all regard authorized transact in this State less of engaged whether or As actually not intrastate in. business is we read that case quote (339 that contention Mo. was denied. We 465, l. c. 97 S. (2d) 111, (1-2). W. l. c.

“Eeverting to Attorney Sections General’s contention that

1239 4641, 1929, impose upon 4596 and Revised Statutes a tax franchise privilege being corporation a and to conduct business as a corporation regardless privilege of whether or the exercised that may in question manner That be exercised. is not decisive slight may of this case. It is consequence that the State have the power levy foreign corporation a franchise tax on a authorized to unless, Missouri, may doing transact business in so, but which not be power by appropriate legislation. State exercised that [Pen noyer Neff, v. 95 U. S. Has it done so? Our conclusion is that 714.] it has not. that, Attorney It is true as the argues, General the statute- (See. 4596, supra) provides every corporation that pecuniary profit formed another state shall establish and maintain an office here subject and be liabilities, to all the restrictions and duties which may are or be imposed upon corporations like organized character under the laws of this foreign State before corporations such shall or permitted authorized State, yet transact business this general this act is of a dealing nature is not specifically#with levy (2) tax. 4641, supra, Section special dealing is a act particularly subject. with this The latter provides: act “ ‘Every corporation organized not under state,. the laws of this engaged state, pay shall an annual franchise ’ tax to the state. ‘‘ language This is clear and unequivocal, specifically deals with the subject matter here, under consideration and must control. To hold otherwise result, would permitting not general language, 4596, Section supra, specific provision to control the quoted, but would also result in imposition of a tax without a clear and ex- press statutory direction —a permitted. result not ex rel. [State Ford Motor v. Gehner, 24, Co. 324 Mo. 27 S. W. (2d) 1.]”

In Phillips Company case validity of the franchise upheld, tax was but because the court considered the activities there- shown to be the transaction of necessarily intrastate business and not incident to and part therefore transportation. of interstate court said, 339 Mo. l. c. (2d) 97 S. W. l. c. vital 112—that question operations performed by was—“were the respondent at its City Jefferson necessarily terminal incident part and therefore of the (interstate) transportation? they If were, respondent’s then entire business is interstate .” seems be conceded, It as we think it be, must the State- lay purely

eannot a tax on upon interestate commerce or privilege of engaging therein. v. Phillips Pipe Line Co., supra; Ozark [State Pipe Line Corporation v. Monier, 266 555; U. S. James v. Draco Con tracting Co., 302 134, 158; U. S. Cooney v. Mountain Co., States Tel. 384; Montgomery U. S. Becker, Ward & Co. v. 334 Mo. (2d) S. W. 674.] Respondent emphasizes original fact license is- State engage “to in the predecessor authorized it appellant’s to

sued transporting petroleum exclusively crude in the business of of Missouri by Extension that an “Affidavit of pipe in 1928 it filed line” any) rights (if quoted The additional Purposes,” Business above. substance, obtain were, in for asked the affidavit extension tele- erect, operate maintain and rights pipe its lines and to way for inci- with and in connection phone telegraph lines to be used call In we this connection operation pipe dent to of its lines. substance, ex rel. Cities in in State attention this court said to what 825, 85 Commission, 337 Mo. Service Gas v. Public Service Co. Pipe (2d) thing 890, 898, important W. is not what S. that the right its or “Extension Company Line under charter had do it exercised. See privilege Affidavit” it did but what do—the Company. Phillips Line quotation supra Pipe also from State v. extent, any, if then, discussing or to So, without or not what whether original powers of enlarged the the “Extension” affidavit charter controlling question before think the immediate appellant#we facts, engage in intrastate appellant, us is did under the conceded (cid:127) business Missouri f exercised and It several occasions is conceded it has on may again right to obtain exercise the of eminent domain in order obtaining rights way pipe its lines. facilitate the for interstate Comm., supra, In State ex rel. v. Public Cities Gas Service Co. Service plaintiff Pipe Company foreign licensed corporation Line right to do business in the State. The court held that it had lay lines, use, pipe public condemn land and if for without thus becoming citing tax, quoting liable for the from Ozark franchise Pipe Line Corporation Monier, supra, v. also that “because said Pipe (Pub. applied Line condemned land and to the Commission Comm.) estop lay Serv. for a not certificate to did lines denying engaged that it was in intrastate commence.” [See Ozark case.] Appellant Missouri, maintains six for the pumping stations in transpor- purpose only transportation, its interstate used in such being necessary tation and accomplish transportation. such It is stipulated solely “Its that of carrier of business is a common petroleum main- pumping for others for hire.” At these stations it storage tanks, etc., reasonably pumping machinery, tains certain in- appropriate, us, it seems to to insure the efficient and continuous pro- terstate petroleum through its It flow lines. does buy duce, relatively petroleum Missouri, any except or sell or own quantities purchased pumping small for use at stations. fuel its It petroleum transportation receives no and delivers Missouri for rights stations, none. It ways pumping its owns and the sites its necessary adjuncts transportation but these are interstate busi- of its Upon pumping ness. and owns each of station sites it has erected employees. “several” residence bouses for “These houses use purpose having places employees for the live for the may they so that not have to live inconvenient from the distances stations, immediately pumping they and so that will be available being emergency” case of pumping accident other stations —the localities, located “isolated from a somewhat removed location employees might up where these houses; emergencies could rent come we where need call or fails help to extra a man is sick or hurt —where up to show when his built comes around. So these houses are shift so the men might subject be to call at time.”

Appellant forty-one pump- owns a total of such houses its various ing Missouri, employees stations in charges occupying and it them a rental, aggregating per month, to be $216 shown the evidence only rental, buildings charged a nominal of for considered, cost and purpose equalizing of proportionately pay occupying those of the houses with that of employees. other At of the stations most appellant twenty land, reasonably necessary owns acres of an amount operation. its acres, interstate At forty one station it has manager its thought testified he he required was more than but appellant understood forty to get had take the whole in order to suitable location actually and the required. Appellant’ land not does provide groceries for employees, permits its but to be its trucks (apparently used charge) in bringing supplies without to the sta- tions for the employees. Eespondent regard contends that the in sketched above activities owning fully renting houses, (more etc. our state- detailed facts), doing of

ment constituted of intrastate business within meaning of our statute. We do not think so. The houses were not or purpose making profit by renting built maintained for the of and, them charged, at the rental they could have a profit not returned appellant. Appellant’s building purpose furnishing them employees to its transporta- was to its of facilitate business interstate tion operation and make more certain and efficient the of that business. As Phillips Pipe supra, said State v. Co., if such operations “necessarily part were incident to and therefore a of (interstate) transportation” then the Line’s entire is business interstate, so far as concerns this of think feature the ease. We “neces- sarily incident,” used, reasonably fairly as thus means incident necessary as a requirement complete for the efficient use of pipe transportation. line interstate On facts us we before furnishing think the regarded of purely such houses should be appellant’s incidental to transportation. business of interstate It respondent laying contended also that in an additional pipe appellant line more than doubled its facilities for “the trans petroleum action its transporting products by business of line,” digging ditches, laying which necessitated the of additional

1242 Respondent pumps, etc. of additonal pipe, installation

additional from in- distinguished essentially be activity “This argues that point on this Respondent it? cites But commerce.” terstate 828; 58 L. Ed. Sup. 578, Ct. 16, S. 34 Browning Wayeross, 233 U. v. 246 Virginia, S. U. Railway Signal v. Commonwealth Co. General including Na- cases, other 854; L. Ed. Sup. Ct. 62 290, Light Co., 288 Mo. Mo. Refrigerator Southwest tional Co. v. they are but think dis- the cases cited W. We have read S. 930. sustaining them as we do not consider tinguishable on the facts building appellant’s point. If the respondent’s contention on products petroleum transportation line interstate first purpose same extension building a second for the how could if first intrastate business of that constitute involve degree, prin- The difference would one did not? appellant interstate commerce ciple, the amount of a difference foreign if a business. And not in the character of the could do but through Mis- corporation to do in or is authorized under Federal law necessarily surely right it must have souri interstate commerce —a right right do essential to effectuate incident the things —to carry commerce, constructing the on the such as facilities interstate necessary To hold carrying for on the interstate commerce. other- law, say engage to right, wise be to that the under Federal would let' the State is in or hindrance from interstate commerce without empty thing but an substantial value. shell—a without withdrawing storage in from tanks a is contended that

It (relatively small) quantity fuel, oil as to be used —and of for use appellant engaged in in operating pumps, which was used—in its bought It that Corpora business. oil from Shell Petroleum trastate carry operate pumps tion. It had to have in order its and oil on to transportation, had it procure interstate of course to from buying some It was oil. transporting source. not its own oil of carrying transporta for fuel for the sole purpose of on its interstate necessarily tion Appellant might was incident that business. reasonably buy enough at hand last keep one time on “for do, (and several it did), weeks” as did that all it in this connection. bought If oil, it had a similar amount fuel for purpose, of like from wholly concern, some outside it engaging could it be said was thus in cites, intrastate think Respondent business? We not. on this point, Nashville, Chattanooga & St. Railroad Wallace, L. v. 288 Co. 345, Sup. U. S. 53 L. In Ct. 77 Ed. 730. case tax in that the question storage upon was laid the storage, or withdrawal from gasoline, “for or sale other use.” Not in the so ease bar. In this case foreign “engaged the tax is laid in upon corporations, business in this in proportion capital surplus “employed state” to their in engaged business in this state.” This think must mean in we intrastate capital surplus employed business and in intrastate

1243 interstate com cannot tax State, in because the State business laid, have etc., case, the we Nashville, supra, tax was merce. In the gasoline “for sale or other storage withdrawal of stated, upon the ’’ originally begun ceased shipment held interstate use. It that the was the continued storage and that the tanks gasoline when the reached commerce, if it should in with interstate gasoline use the connection said, tax court begun storage the accrued. The made, be not when had l;. c. 266: U. S. carrier, nor at the time appellant, shippers, “Neither the origin, arranged gasoline points shipment the. any storage than part appellant’s destination for oil other Although in usual tanks in Tennessee. course it, segregated purpose, variable of when that part and undefined again transported boundaries, appellant would was across state to distribute the oil either within without the free state use any purpose.” its business or for other

In question shipped before us the oil in was case or con- signed belonged appellant. Corporation It to Shell Petroleum purchased appellant corporation, was from that for use— necessary carrying in the on of its interstate used— anyone, transaction, business. It if seems us that that did in- trastate it Corporation, business was the Shell Petroleum owner oil, selling than, circumstances, appellant, rather under the buying appellant, may it— and we observe that Shell Petroleum pays a doing franchise tax for intrastate business Missouri.

Respondent operations asserts of appellant are so closely associated with Petroleum and so in termeshed and involved act of one constitute the acts of all. May In Department Stores Co. v. Electric Co., Union L. & P. 341 Mo. 299, 327, S. (2d) (11), 107 W. we read:

“Equity legally conveyances sets aside sufficient if their purpose is to defraud creditors. intercorporate If affiliation is devised being for or is used accomplish improper to an or unlawful purpose, certainly equity authority does the have to tear legal down technical beyond barriers and reach liability them impose grant to or proper relief. If purpose lawful, the and and equitable fair to those with whom deal, it is legal intended to and relationships forms should be observed. right Men have legal the use they forms which believe to be helpful in accomplishing proper purposes.”

The facts of that case are so different from those of the instant case as to make it not in point on the but general facts the principle of law agree we announced is sound. as particularly But more applic- able to the instant case see the following: v. Development —Martin Co. (C. of America 240 A.), C. 42, holding Fed. holding that a corpo- ration owning all or practically all of stock of corporation the another is to be separate treated as a entity “unless (or facts are averred

1244 a mere corporate separate existence

shown) which such show truth, or concealing the an used as instrument sham, or has been it to be as and control shown such organization the where instrumentality Pitts adjunct corporation;” another an of is but 587, hold A.), 584, 232 (C. v. Duncan Fed. burgh & Co. C. Buffalo corporate will be legal of ing, “True, the fiction distinct existence fraud, necessary prevent corporation or when a disregarded when ‘ make conducted as to organized and controlled and its affairs so is so instrumentality adjunct corporation.’ another only an of [Citing it equity a of requires strong induce court But ‘it case to cases.] one, owning all the of corporations two as on account one consider 317, (7 Ed.), sec. and Corporations other.’ Cook on stock of the [1 C., Ry. 393, Sup. Co., page R. I. & P. 205 U. S. at see Peterson v. Ed. v. Wardell Ct. 51 L. Consult also Meischke-Smith 841.]” re (C. A.), 286 Fed. in which a number of authorities are C. syllabus, of the reflects quote part paragraph viewed. We of holding the of the court: by corporation

“Where the stock of a pipe all of line was owned transported, of corporation for whom the oil was the officers companies large extent, two were the same to the accounts corpora- office company kept holding line were in the of the tion, though separate, its field force was and it bank separate had a account, corporations distinct, the two were .” Pipe .Monier,

In Corporation supra, Ozark Line v. plaintiff, seeking to restrain collection Missouri of the franchise tax was the (before corporation, changed name) defendant, same its official appellant, organization ease. carrying Its method on then, gather business was so far as we can from the facts stated opinion from the case, evidence in instant substantially employed. similar to those Pipe since In the Ozark Line case court did question disregarding entity, not discuss the corporate actually but it did hold that the carried on line company exclusively was commerce; interstate that “the mainte- office, nance purchase employment labor, an supplies, operation maintenance telephone and telegraph auto- lines and mobiles and . . other state, within the acts were all exclusive- ly in business; furtherance of its itself, interstate property however character, extensive or of whatever was devoted likewise They that end. were means and instrumentalities which that business was done and in proper constituted, no sense or contributed to, doing of a local against business. protection imposition The upon burdens practical interstate commerce substantial and extends to necessary complete enjoyment whatever is right protected.” subject held to the tax.

We have length stated facts at and shall repeat not further regarded to be appellant is is that point on this Our conclusion them. Corporation. entity Petroleum from Shell distinct separate a as privilege renting space or pole that the of Respondent contends doing of Ajax Company was telephone poles on its subject franchise to the appellant as to make business so intrastate orig agree Appellant’s contention. cannot tax assessed. We exclusively in business of engage in Missouri was to inal license “exten line. Pursuant its transporting petroleum crude errect, operate maintain and affidavit,” it authorized to sion was with the in connection telephone lines to be used telegraph purposes in operation of such lines and for maintenance and may facts, And, judge if from conceded cident thereto. we ordinary purpose for created and usual appellant which was its transportation petroleum products by pipe of line. business was telephone organized not a or telegraph company It was and was not purpose conducting for the telephone that kind of business. Its line in Missouri was not built or for fur purpose maintained nishing only or telephone telegraph service to others but own its conducting transportation use in its interstate business. It had some pole space which, being, need, extra time for the it did not and it space Ajax Company. testified, rented that to the Mr. Smith “We a do Ajax not make new contract with year. each The contract the. made primary automatically for a of five years, term renewing year periods itself one unless party cancelled either on the anniversary any the fifth subsequent anniversary.” In 12 R. C. L., 48, p. 69, sec. we read: “It seems to opinion be the consensus corporation, purview come within the of most prescribing statutes conditions on right foreign corporations to do state, business within the must

(cid:127)transact therein some part ordinary substantial business, its must be continuous the sense distinguished that it is merely cas- ual or occasional transactions.” ‘‘To doing business, however, constitute a the act must be such (cid:127)one appertains as ordinary to the business and purposes of corpora- ’’ tion, distinguished from an act within powers. its further,

And p. See. 71. frequently “It stated that the ‘doing words business,’ and ‘trans- acting business,’ as used in imposing statutes conditions foreign on corporations, refer to the transaction of the ordinary or custo- mary business in which a corporation engaged, and do not include acts not constituting any part ordinary of its business. In other (cid:127)words, applied is, the test Is corporation engaged in the trans- action of that kind of business, part thereof, for which it was organized? created and so, If it ‘does business,’ within the meaning of the constitutions and statutes. If not—if the act it doing or n doneis not within purpose grant general powers and

1246 or stat- constitutional to which the business is not franchises —it 1276, sec. 14A, p. J., also C. directed.” requirement utory [See 3982.] W. 435, S. 61 Ladd, 160 Mo. Mining v.Co. &Coal In Missouri purpose organized for the had been 191, foreign corporation a For selling coke. manufacturing and selling and coal mining and it coal from lands and sold mined 1895 it had years prior to some so, nor manufac done had not Missouri, after 1895 it but owned providing an act Legislature passed 1891 coke. In our tured or sold in this transact business could foreign corporation, before it a that established, maintain already should if State, business or continue it, copy file upon be had could place or where service an office do, etc., failing Secretary State, and so to with the its charter p. 75. maintain an action this State. it could not 1891, [Laws 4596, see Sections present in our statutes provisions For similar 1929, 4599, Ann., The p. Mo. Stat. R. S. supra, and Section 2040.] selling mining and coal Mining after it ceased Company, and Coal coke, agricultural manufacturing rented its lands to tenants and “doing doing was not busi The court held that so it purposes. meaning statute, it a of the “nor is corporation” ness as within for which it (such leasing) part purpose incorporated. was of the pay upon, corporations Non-resident business can do taxes state, incorporated pur their and when for other lease lands doing they poses it has never been considered that so were trans acting continuing any business in this state other than that for 442, they incorporated.” were Mo. l. c. 61 l. S. W. c. 192.] [160 Chapman (Mo. App.), 505, In Shields v. 240 W. S. the suit was given by foreign a a corporation Missouri, on note not licensed in plaintiff Chapman theory sued the defendant on the corporation since the was not licensed to do in Missouri business possessed corporate capacity it no in this persons State therefore assuming to transact business in this corporate State in its name were partners. (Chapman president liable as corporation was as such had executed the for and in the corpora note name of the secretary. tion. J. Marvin Smith had it Chapman, attested Smith Hanger, stockholder, and R. R. a named originally were as defendants but the action Hanger.) was dismissed as to Smith and The court contention, denied the plaintiff’s saying (240 506): S. W. l. c. into, “Under these statutes has been held a contract entered foreign in this state corporation that has not been licensed to do business in this state is void. Amusement Co.v. Amuse- [Tri-State Co., 404, ment 192 Mo. 90 1020, S. W. 4 L. (N. S.) 688, R. A. 111 Rep. 511, Am. 4 St. Ann. However, every Cas. contract 808.] corporation void, made such a contracts, but such that into corporation entered while such doing or transacting business merely while and not incorporated, corporation wbicb authority do. might transacting as it have snch “ works, an exercise of doing of some of ‘There must be created corporation was functions, for which the some ’’ ’ bring the within the clause. case Signal & Trust Co. v. court also cited Hurst Automatic Switch Armstrong Wulfing v. (Mo.), St. Louis S. W. Co. of Co., 615, quoting excerpts which seem 250 Mo. 157 S. W. Cork Appellate to sustain the Court’s statement. according points also out to the

In the Shields ease the court that otherwise, transactions, weight authority commercial or isolated foreign corporation a and citizens of between domiciled one State by doing foreign carrying another State are a on of not business State, corporation within the this we believe be the latter generally accepted question part doctrine where the act in was not corporation organized. of the business for which the [Consult J., 3979, 1273; renting 12 p. 14A. C. sec. R. The C. supra.] L. — pole space Ajax Company only to the was the transaction of by appellant that kind done in Missouri. Under the facts and cir being “engaged cumstances shown we do not think it constituted (cid:127) business” in this State within the intendment of the statute.

Eespondent further that appellant estopped contends is deny doing that it was because, intrastate business in 1932 and again 1935, Secretary it filed with the of State certain anti-trust affidavits, agent, and, made which were offered over the ob jections of appellant, were admitted as admissions that it had done intrastate We lengthen business. shall this opinion quoting* not affidavits full. we quote portion Illustrative a of the affidavit July 24, made “I, 1935: Barker, solemnly Carl do that I am swear agent principal corporation styled known and transacting . and now conducting busi in the ness State of Missouri.” The purported affidavit to be made in compliance with (Corporations) Sections 4614 (Pools, and 8728 conspiracies, etc.), R. 1929. Ann., S. pp. 6503, Stat. 2047 and [Mo. It respectively.] seems to be contended that statement “now transacting or conducting State Missouri” and the fact appellant that filed such estop affidavits denying now doing it was intrastate business. We think not.

Estoppel does not a action, create cause of if none otherwise existed. “It was never positive gain intended to work a to party. Its whole is protect office him from which, a loss but for the estoppel, he escape.” could not ex Hamilton, rel. v. Moss 303 302, Mo. [State 260 S. W. It seems us that the affidavits, if they 470.] any admission, amounted stated law, conclusions or amost statement of mixed law and Wright fact. In v. Quattrochi, 173, 181-182, 330 Mo. 49 (2d) S. (2-3), W. 6 we held that state- were not admissible of law were mere conclusions ments all the facts In case of facts. the instant evidence

substantial not the assessment the facts do authorize opinion In our shown. opinion appellant tax, and we are of collection of claiming. estopped from so reversed. ~Westimes of the circuit court judgment

The Bohling, GG., concur. by Cooley, C., adopted foregoing opinion

PER CURIAM: The judges All concur. opinion as the of the court.

Hugh M. F. F. John H. Reilly, Oram, Cutshall, Ward, Sam Vess Sugar Appellants, and James W. v. Oram, Creek Drummond Township of Harrison Charles O. Trustee Hagerty, County, Sugar Township, and Anderson and Buck Creek Foster Sugar Board, Township Members Creek Far Terry, Corporation, and W. P. Circuit Clerk Bank, Chambers, mers County. (2d)

of Harrison S. W. 525. Two, May 4,

Division 1940.

Case Details

Case Name: State v. Shell Pipe Line Corp.

Court Name: Supreme Court of Missouri

Date Published: May 4, 1940

Citation: 139 S.W.2d 510

Court Abbreviation: Mo.