Court Opinion

ID: 9767465
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:20:16.882967+00
Date Added: 2024-06-11T07:30:31.297050
License: Public Domain

GONZALEZ, Justice,
dissenting.
I am concerned that the court’s opinion will create uncertainty and confusion in this area of the law and am surprised that the court has reversed the judgment of the court of appeals on a theory not argued, briefed, or preserved by the parties. I would hold that the court of appeals correctly decided the case as a matter of law and I would therefore affirm its judgment.
The Interstate Commerce Commission (ICC) regulates motor carriers that transport property in interstate commerce, however, the states retain authority to regulate intrastate transportation provided by motor carriers within their respective borders. See 49 U.S.C. § 10521(b)(1). The key question presented here is whether an interstate commerce shipment of scrap rail retains its interstate commerce character when there is no intent at the time the rail is shipped from its out-of-state origins to Texas for the shipment to continue to particular locations beyond its original destination in Texas.
The facts are relatively simple and undisputed. W. Silver, Inc. (Silver) bought scrap steel rail from several railroads in the United States. The railroads delivered the rail to Silver’s plant in Vinton, Texas where the rail was melted and processed into a commodity called “rebar.” Southern States Transportation, Inc. (Southern) then transported the rebar by truck from Vinton to various locations in the country including various Texas locations. It is the subsequent shipments from Vinton which occurred wholly within the State without a Texas Railroad Commission permit that are at issue here.
The State brought this action against Southern for failure to obtain the permits required under the Texas Motor Carriers Act, Tex.Rev.Civ.Stat.Ann. art. 911b § 3 (Vernon 1964). The Act requires motor carriers to obtain a permit or certificate of public convenience and necessity from the Texas Railroad Commission if they transport property for compensation or hire over public highways of the State between two or more incorporated cities, towns, or villages. Failure to obtain such permits can result in misdemeanor conviction, fines, and/or an injunction against further violations. Tex.Rev.Civ.Stat.Ann. art. 911b § 16 (Vernon Supp.1989).
At trial and on appeal, Southern defended the suit on the basis that the shipment of rebar in Texas was a continuous shipment, moving in interstate commerce. Thus, Southern contended that it was not subject to state regulation. After a non-jury trial, the trial court agreed and rendered judgment for Southern. From the trial court’s findings of fact and conclusions of law, it is obvious that the trial court decided the issue as a matter of law. The court of appeals, relying on Galveston Truck Line Corp. v. State, 123 S.W.2d 797 (Tex.Civ.App.—Dallas 1938, writ ref’d) cert. denied, 308 U.S. 571, 60 S.Ct. 85, 84 L.Ed. 479 (1939), held that interstate movement ceased at Vinton, Texas. It thus reversed the judgment of the trial court and held that as a matter of law, the shipments in question were intrastate shipments and that the trial court erred in not finding that Southern had violated the Texas Motor Carrier Act. This court now reverses the court of appeals on a theory that was not argued or briefed by Southern. I disagree with this disposition and would hold that the court of appeals correctly decided the case.
In Galveston, the State brought an action against a truck line alleging that it transported paint over state highways from Dallas to other Texas locations as a motor carrier for hire without first securing a permit from the Railroad Commission. Id. at 798. The truck line argued that the shipments of paint consisted wholly of interstate commerce which moved into Dallas by rail and moved out of Dallas by motor carrier under transit arrangements published and filed with the ICC. Thus, like the present case, the key question in Galveston was whether the shipments constituted interstate or intrastate commerce.
The shipper in Galveston had shipped raw materials to be used in the manufac*643ture of paint to Dallas from sources outside Texas. The materials were placed in storage until they were needed in the manufacturing process. The shipper had also transported paint manufactured outside Texas to Dallas where it was placed in a warehouse and commingled with the paint manufactured in Dallas. In reaching its conclusion that the shipments of paint from Dallas to other Texas locations were in intrastate commerce, the court in Galveston addressed several factors which are applicable to the facts of the present case.
The first factor was that at the time the raw materials for the paint were initially shipped to Dallas, the ultimate destination of the finished paint product was not known. Similarly, in this case, when the inbound shipments of scrap steel rail were received by Silver in Vinton, they had no particular known destination.1
Second, the raw materials and finished products in Galveston were rendered for taxation in Texas by the shipper. Likewise, Silver paid state taxes on its inventory of scrap steel rail and rebar.
Third, in Galveston, the reshipments from Dallas to other Texas destinations were under new and separate contracts of transportation by a different mode of transportation. Correspondingly, Silver received shipments of scrap steel rail from railroads via rail. After processing, South-em, under a separate contract, transported the rebar by truck from Vinton to other Texas cities.
The Galveston court also placed some emphasis on the fact that the raw materials shipped to Dallas were processed into finished paint products in Dallas under the exclusive control of the paint manufacturer. Similarly, in the present case, the railroads relinquished their rights in the scrap steel rail to Silver in Vinton. Under Silver’s exclusive control, the rail was heated to a softening point and then converted into rebar.
In the trial court, the court of appeals, and in its brief and oral argument before us, Southern placed great importance and emphasis on the fact that it possessed an ICC permit. Southern asserted that this somehow exempted it from being regulated by the Texas Railroad Commission for shipments wholly within the State. I disagree. Once the railroads delivered the rail to Silver’s plant in Vinton, the railroads’ task was complete. The State of Texas had and continues to have the authority to regulate subsequent shipments of the rebar within the State. Southern should not be permitted to “kite” or “piggyback” its ICC permit in order to circumvent state law.2 No amount of subterfuge or legal mumbo jumbo will convert these shipments from intrastate commerce to interstate commerce. *644Also, I think that it is ill-advised for the court to hold that in every instance the issue of whether a shipment is in interstate or intrastate commerce is a question of fact. This will yield different results on identical facts and will create havoc on the State’s efforts to regulate intrastate commerce. For all of these reasons, I would affirm the judgment of the court of appeals.
HIGHTOWER, J., joins this opinion.

. The majority opinion misstates the facts when it states that it was Silver’s intent "to import scrap metal rail from outside Texas, store it temporarily in Vinton while it was being rerolled, and then continue it on to its ultimate destinations in Texas.” (emphasis added). Southern’s witness, Cornelius Hoffmans, testified as follows during cross-examination by the State:
Q Isn't it true that the rail was shipped to W. Silver and held by W. Silver for its own purposes?
A Yes, sir.
Q And isn’t it true that the rail was manufactured and processed into a finished product, stored and inventoried by W. Silver?
A Yes, sir.
Q Isn’t it true that when the rail came to W. Silver's plant, it had no particular destination at the time it was received?
A Other than back-orders, that’s correct.
Q Isn't it true that W. Silver retained exclusive control of the shipments of rail after it received it, and of the outbound rebar? Well, when you got—
A Until it’s given to a carrier?
Q When you got the rail, it was yours to keep, was it not?
A Yes, sir.
Q And you exercised exclusive control over it at that point, did you not?
A Yes.
Q And you also exercised complete control over the outbound rebar before it’s shipped out, did you not?
A Yes, sir.
This conclusively shows that the shipments in question were not continuous interstate commerce shipments. They lost their interstate character in Vinton.

. All of the shares of Southern and Silver are owned by the same persons and a witness for Southern conceded at trial that Southern was created in order to avoid paying state freight charges.