# GENERAL

Hon. Gee. H6,Sheppard Comptroller of Fublic Accounts Aw tin, Texas

Dear ~78r.

Sheppard8 Opinion No. 04068 Re: Under the faet6 EUhnitted, i6 the agent of an oil company a %otor oarriar" or "contract oar~ier6.liahle for th6.grossr606ipt6 tu provid6d in Article 7OGCb, R.C,S. of TEX~E?

**YOU** present for the Opinion Of thi6 departmsolt tWo qUOEtiOX,E which appear atthe oonolusioa of your letter,whio~h we quot6 in full a6 fOl1OlI68

“Articl6 7066b, Sec. (a) prolridEE~a6 fOll~61'
:-~*V,&oh

individual6 partnership, company, assooiatl6a. or oorporatiofe doing :'bue%&666

a6 a "mator bu6 company" as defined in Chapter'270,~AoLob Boylar Seasion of the Fortieth Legislature, as amended bythe Aot6 of 1922; -Et Called Se66ion of the For+first Legislature, Chapter 78,'or a6 saotor oarrier" or "contract oerriers as defined in Chapter 277,Acts Regular Session.of the Forty-seoond Legislature, over and by u6e of the pub110 ~highwaysof this State, ,shall make quvterly'on the first day of January, April, July. and Ootobar of eaoh year, a report to the Comptroller, 

### under oath, of the individual,partnership, company, assooiations~oroorporation ,' by its president ed from intrasta e business done within thie Stat6 in the payment of

E treasurer; or Eeoretame, sharing th6 gro66, a6Ionnt

r6eOiW
charges for transportingpersons for oomR6ncration and any freight 6r oo6n modify for hires or from **other** 6ouroe6 of rwsnu6 reoslv6d fro61intraEtat.6 busin66swithin this Stat6 during the **qUart6r** next pmo6ding* Said i+irid-
,, ual, partnership, company, assooiation,,or corporationat the'&se Of making said reports, shall pay to the State **TmaEUmr** an **OOOUpatiOn** taX for the quarter beginning on said date aqua1 to trro,alid tW-tenth6 (2.2) per oent Of said gross reOeiptS* as shown w said report. Provided, hw6v6r. carriers of persons or property who ar6 required to pay an intangible assets tsx under the laws of this State, **are** hereby exempted **from the**  provision6 of this Article of this Aat.*

"III defining **Hotor** 

### Carrierand Contraot C-Wrier6 Soor la of Art. Sllb &6+X6:?;On, COO. !I.Sheppard, page 2 (C-6068)

.i I.’ "*Provided,however, that the term "Motor Carrier" and the term "Ccntraot Ca,riera as defined in t&e preceding section shall notbeheld~ ,'.~' to ineltder su&sec, (.s) of the s- se&ion 6+ &ticls

.. . pm&d&~?~T~.‘i ‘.- ::.,A.:?:. 'Wheremerely incidental to a regular, separate, fixed gnd established business, other tban a transportationbusiness, the transportationof employees,petroleumproducts,and incidental suppliesused or sold in connectionwith tile wholesale or retail sale of such petroleum products fromthe refiner or place of production or place of storage to the place of storage or place of sale and distribution to the.ulti,mate.nousumers~ in a motor vehicle owned and used exolusivalyby themarketer-or 'refiner,'
or ouned in whole or in part and used exolusively by the bonarffde oongignee or agent of such singlemarketer orrefiner, as wellas :.shere merely incidentalto~<a reylari~~separate,fired and establiqhed ln16lnes6, other thana ,transportati% lxxtness, the transportationof petroleum, employ?es,,~

mater.ial~:supplies , and equipment for use in the deparbents of lttdq~~~~leupl.~~s~e~~:'hy.~~~:~bons fide consignee or agent as used heroin being he2leby,defiaed:Pnd,,construed, for the purpose of this Act, to mqan~a persc& Underoontr$ct%i.th a single principal to distribute petroleum products in a limited territory and only for such single princQx$,,:,..~.,,~..~.~

-:,;c.- ~1;:,.~I y .! ,.~.?,

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. .i::.~, ,- '. 61 have a ease in mind where's party is agent of one of the majoniJ:hompanics and said agentwith his own truck hauls petroleumproducts from the oil ~061~~6 refinery to .hi+wh.olesal:e lbulkst%ation,

and th$ oil company pays &he agent for such hauls at the same rate as they would pay some other

___ . -~Eq?ntq$ct

siotom.,~a@.qp~;:

fin makingthe~ba~sto his',- bulk sxatlon or" reta$&etation;-&+motor .oarrier.passes through orecontacts t6qo ~ormore ih&pornted t%vne*;~ :.:; .:.t,~

. ,~~ .; ~'~ : -~,,,' .~ ..;i.

. . '; slJn& the o,bn&a~t~w&h the oil.'company+.tbe 6gent is responsibl'e:for: the:p~duc:tBfFOrmthe time~~it is 1oaded~:on

his truck at the refinery until pold...?

,, .: '.

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.

. 7,~, :-: "I .,^~

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.-> "Pleasete1Lm.e &? the motor carrier>~is liable for,the~grossreceipts tax :,. as .pr,rovjded;

f&&n &rt.',7;C66b.'

,.;~..aPor

~,ol~r;co~eniezlce~~you-~ill find.attaoh&eopy of. contract form be~,.I tween;the;oi.l

~mpanyand.:srpent~? L ..!~. :~.;...‘- r _~,y,.:,,<. ” (

Supplementingyour letter you submit certain da&consisting of "~&olesale CESSION Agent's Contract,"riders to CosmissionAp@s Con~trgct,~"Consi~eg~.~Agre.ement;,'~and whqrt.1~

designated 48 "SdnedtieA," and letter attachedthereto, in use by oertain oil companies coreringthe.

,- -

Hon. Geo. H. Sheppard, page 3 (O-6068) -.. : I <.~

operations of their distributingagents, all of which are to be considered in oonneotionwith this opinion. .'

,hourproblem is to determinewhether or not **the** transportation of the petroleum products~under the circumstances <revealed in your opinion request is taxable under Article 7066b,R.C.S.6 whioh.is a part of the Omnibus Tax ~11 passed by the 47th Legislature, .xhichis H.B~;6,,6h.. 184,whichwas approved
on May 1, $941, a@ beoame efr'ective.on.the- samedate. : : :.;; : i,. ThisArticle;.as it appears.~in V,RiC; Si reads as follows: (Herefollows a verbatum oopy0f: theArtiale:as given on pnge:.one

of this Opinion and:fs'omitted~herefor.brevity)

. _.,~ .:~ '..,‘
Legislature,

The above tax act refers to Ch. 277, Acts, Regular Session, 4&d Article:9llb,~V.R.C.Sb, .forthe:definition--Of "motor carriers and "contract ~;rrie~":sibject~to~the~:tax~th~l?eby~lmried. We quote said definition from the stat&e referred to:: ,":-':~.:i:. :

_ -:~"..

~.: "The term Qnotor:aarriar'.meansany person;, firms 00rporation,.company,oopartnership,ass6ciatd.on,or joint~stock.assooiatesi~~.andd-their lessees, reoeivers ort.rustees appointed.byaqy.Courtafiatsower,.Bnning, controlling, managing, operating:er ,cauaingto be operated anymotorpropelled vehicle used in transportitig:properQ~.for compensation:orhcre~.over any publia highway in this:!~tate; wherd~in:the 0ourseof sudh~-.transportation a highway I& tieen two or more.indorpprated::citi0s, towns .orvillages, is traversed; provided thatthe ters~~~motor oarriert::aa:.ased.fn thisAct shall not include and thisAct.shall notapply, .L &motor vehicle&:operated:emolusivelywithin the inoorpoisted limits of cities or~towns.?;-~(Enphdsisours)

"The term 'contract carrier'mesns anymotoroarrier:as hereinabove defined transportingproparty for compensation or hire'overany highway in this State other than as a consnon carrier."

At the same~sessionof the.Leg~&burethat passed the Omnibus Tax Bill, of which the tax act here.under consideration is a part, but at a subsequentdate, the above.definition'o&a "motor carrier' and soontract carrier"was amended eo as to exclude aertain~~type,s of transportation by adding the subsedtionsas follows: .'~ .-_ ., ;~_:f,i
; (~':,I. .:.. '~ "Sec+i.on

la (1) Provided,.howeTr&, that~'the~teivn~~!Mo~r Carrier' and the term 'ContractCarrier* as defined finthe preceding sect& shall not be held to include:
"(a)Ary persnn'havin;; a re~ular,,sepnrate,~fixed,and establishedplace of buriness, other than a 'transportation ~siness,;whBre,-goods,sares, and merchandise are kept instock and are prir?arily-and regularlybought from the public orsold to~the public ormsnufactured,or',prooessed bw:such person in the ordinary course of the mercantile,manufacturing, or processing business,ond who, merely incidental to the operation of such business, transports over the highways of this State such goods of which such person is the bona fide ownerby means of a motor vehicle of which such person is theHon. Gee. H. Sheppard,,pge 4 (O-6068)

bona fide owner;nor
"(b)Anv person transportingfum Implements, livestook, livestook feedstuffs, dairy produots,horticultinalproducts, floral products, aericultural products, timber in its natural state, orwool and m&air of which such person is the bona fide cwner on a vehicle of which he is the bona fide owner to an from the irea of produotion and to and from the market
or place of storage thereof; provided, however, if such person (other +hpa
a transportationcompany) **has** in his possessionunder a bona fide consignment contraotlivesfook~ wool, mohair, milk and cream, fresh fruits and vegetables, or timberinlts natural state under oontraot as an incident to a separate,fixed, and established~businessconduotedby him the said possession shall be deemed ownership under this Act.

L2!is. ere merely incidental~toa regular, separate, fixed, and established

other than a trans$ortationbusiness, the transportation of emplcyees, pet:oleumproducts; and incidental suppliesused or,sold in connection with the wholesale oreretail sale of such petroleum products fromtha refincry or place of produotion or.plaoe of storage to the place of storage or place of sale and dietriI.utioq~to-the ultimate consumer, in a motor vehicle owned and used exolusivelyby the,marketer or refiner, or wwned in whole er in prt and used exclusivelyby the bona fide consignee or agent of such marketer or refiner; as well as where merely incidentalto a regular, separate, fixed, and established business, other than a transportationbusiness, the transportationof petroleum~employess, material, supplies, and equipment for use in.the departments ,ofthe petroleumbusiness by the bona fide owner thereof in a whiole &which he is the bona fide owner;bona fide consigneeor agent as used herein being hereby defined and oonstrued, for the purpose of this **Aot,** tomean a person under oontraotwith a single principal to distriwte petroleum products in a limited territory and only for such single principal) *

Me must of neaessity, in considering the questionpresentlybefore us, determinewhether **or** not we should be governed by the definition of "motor carrier"and'"contraot carrier' as it appears in the originalAct before it was amendedby adding the .twoforegoing subsections. The amendment as passed finally by the Senate on May 14, 1941, and approvedMay 16, 1941, becani:

~z'feative

ninety days after July 3, 1941, date of adjournment. This amanclm6~~~

WLS, therefore,passed thirteen days after the Omnibus Tax Bill was pass& and approved, and became effective on October 3, 1941, following the effeotivedate of the Omnibus Tax Bill on May 1, 1941.

We have concluded that ne must be governed by the definition of "motor carrier"and "contract carrier" contained in the original act speoifically referred to in the taxing act. Xe believe the weight of authority, and indeed the holding of the Supreme Court of this State, supportsthis conclusion. Sutherland on Statutory Construotion,Vol. 2, page 648, is as followsrHon. Gee. H. Sheppard, Rage 5 (O-6066)

"A statute of apeoific reference incorporatea..t&~.previsions referred ix. from the statute as of.the~time of adoptionn~~eut,,eubsequent s,mendmer&s, unless the legislaturehasexpressly or by strong impltcation shcwn its intention to inoorporqte subsequent amendmentswiththe statute. In the absence of such intention subsequent amendment of;the‘.referred statute will have no effeoten the reference stptuteb-,- #.:.:."*

Chief Juatioe~Curaton **in** the ~caeeof:fcMer v".Carlton (Supreme Court) 296 S-W. .lOTO,laid dcwn tbe~rule.'aa;feUuwss >;;y .-,:!:,,.' ,':I... : ',: "Stat&es uhieh referto oth6r statutes and make $hemapplioable to the sub Sect of legislation are.oalled .*referencestafuteq;tand.are a familiar amd valid mode of legislation" The-general rule is thatwhen a statute is adop ted by a,speoifiodescriptive zsPerence,ltihe:,ad?~~oa takes the statute as it exists at that time;.and.,the subsequent.~n~~tr.thereoP would not'be

w within the terms of the-adoptingact. " l '".:,: I .;':>I.~. .: .., Hnving,thas~~bon~luded,'ne.rprss to the more&f&cult question as to whether or nctdn p9v~c~ent .theLegtdIatuve@&nded.that this tax be dmposed only-apo*,*motorcarriers"and ~~~ontrarrt~asrrie~?~~su~jeot to regula-- tion by the ,Railroad,.C L%m$i ssion under.~e,ie~ti~ns.~rid by Chr 277,Aete of the 42nd LegislatureN in,whioh the erigin&definihionssre feund" RisPoe constrained to the view that the Legislat~.diP.not.~iotend by this **referenoe** to make the imposition of the tsx dependentupca whether or not such "motor carrier" and~woontraat.carrier"**as** therein defrnsdmere subjeat to regulation by the Railread'Cemmiasi'on~There.is-no,Ie~s.sla~~ve~~~esaion in either a& making the one .dependentupon the other;~otie-:is.~a-~regn~atory measure" the other a taxingmeasure. The reference inthe tsxingaotto the regulatory act for a definition oP,"motcr carrier" and "contraat oarrier is the same as if these definitions had-been incorporated in the taxing aot direct instead of by reference. Had this been done, obrriously it oouldnot be logically argued that sn amendment subsequentlypassed to the regulatory rot l&iting the preexisting definition of "motor carrier" and "oontraot carrier"would also operate to limit these same terms as defined in the taxing pot" As stated above; the.aots oover different subjeots, one regnlat%e8;:%he~.W&er taxation. They are not in pari materia" **We** think the real test iswhether
or not such "motor oarrier" or "contract carrier,"p defined in the taxing act,, transports propepty for compensation**or** hire.over any public highway in this Statewhere the transportationis **over** a highway between two or more incorporated cities, towns, or villages"

Liability for,the tax imposed by virtue of Article 7066b, eupra, must first depend upon whether or not the "motor carrier" or "conlraot oarrier" transports for compensationor hire.. Your first question, read in connectionwith the preceding statementmade in your opinion request, that the agent of one of the major oil companieswith his ovntruak hauls petroleum products from the oil oompaqy~s refinery to his wholesale lmlk station, and the oil companypays %&I agent for such hauls, at the same rate it would pay some other coatraormotor carrier,presupposes that such **aa** agent is inHon. Gee. H. Sheppard, page S(O-6066)

effect transportingfor compensationor hire. Such being the oases it is
our oonolusiou that the gross reoeipts received by such agent would be subject to the tax imposed by virtue of this article of the statutes. More clearlywould such au agent,who hauls petroleum produots from the refinery to other parties, othorn than his om concern, andreceives oompensatiouor hire therefor, is engaged in ~U%SpQr~tiOn as a "oontraotoarrier," and the receipts receivedby him in such oprationswould be subject to the tax imposed by virtue of this statute. If we are correot in oux asswption that such transportationis oanpensatod for either direotly or indireotlyby an adjustment ia the prioe,oP the product so transported from the refinery to the agent's bulk sales station,and where such agent transports for others for aompensationor hire both operationswould be subjectto the gross rsoeipts tax fixed w th s article of the statutes. 2

In othofwords, en agent as designated in your letter, in the language of the foregoing definition of scontraot oarrier" or "motor carrier," is a "person, firm, or corporation"; suoh agent "owns, oontrols, manages, operates or OWSM to be operated a *motor propelledvehiole used in tramporting property for compensation or biro between twc.er more ~inoorporatedcities,towns, or villages," as distinguishedfrom exclusive operationwithin oit+os or towns. We think such operation falls squarely vithin the purview of the statutory definition,whether treated as a smotor oarriers or sobntraot carrier,! and henoe, as above stated, is sub jeot to thetas imposed by Artiole 7066b, supra.

We think it fair to say, h-er, that the question presented by you is one of first impression,and it has notboen definitelypassed upon ly the courts of our State? but whatever doubt existswe **feel** compelled to resolve itin favor of the tax.
v&y truly yours

APP3Ovi3DSEP 22, 1944 /d Grover Sellers ATTORITEY

GEiVERAL

OF TEXAS ATTOBBEII GElWHAL OF TEXAS

Py /s/L, P. Lollar

L. P; LolIar Assistant

Approved opinion Comaittee