Untitled Texas Attorney General Opinion ( 1942 )

Dr. Geore Y. 00x State Health Offloor Stab Board of-Heal+& AueJtln, exam Dear sir: opinion Ho. o-4935 Rer Should deductions be me& from the salariee of employeea of the Saltwater Control offioe for Social Seonrliq* ~ purposesl Your request for an opinion as to whether a stenographer and clerk employed in the Tyler field a?fice of the Governing CamnIttes far SaZtUater Control setup in e~pliance with an agr!33IItent between ths plaintiffs and the defendants In the case of the State of Term ve. Stzu Oilccmgany, HO. 46,%5-F in the District Court of Dallas County, Texas, 1.l6t.b Judloial District, is subject to Federal Social Security taxee, has be,m received. The laquag of the plan !3ubmittedpumlantto the agre~t setting up the governing ocmimittee ie ae follow: "The plalnti.ff Stat.8 of Texas is represented by the AttornsJ General'e Department, the State Board of Health, the Board of Water Engineers and the State Game, Fish & Oyster Ccmulsslon. ;I These four departments will constitute a governing omittee tc3 supervise and. enforce the administration of the agreement op, b@iklf of the plaintiffi Dr. George U. Cm, State Health Of'f$jer; will serve aa chainnan of the committee, and he shall have the respousiblllty of administering the plan umber the direction of thb ccamittee. All plane and reports required by this lnetrtwmt to be filed witi the plaintiff ehallbear an identification file Ho. AG 385, and ehallbe forwarded to the State Health Officer, Austin, ~Texae. The field office was eetabliehed at Tyler in caiplianoe with the provlsiona of the plan under the direction of a field engineer for the purpose of a&klnieterlng the plan. The general terms of the plsn agreed upon are a8 follows: - - Dr, George U. Cox, Page 2 (O-4935) "(1) To provide adequate storage In pits or other containwe, 80 construoted a8 to pmiveat maepage euch a8 would reeult in the pollution of public watere. “(2) To oontraot with salt water holding oanpanies or ooneervatiou dletriota, whioh have adequate and approved etorage faoilitier for handling the ralt water p&duoed by the dlaoharglng wells, pro~lded there faailtier oonfo~ to the requirmentm’and objeotlres of thin lmtmaent; or "(3) To proride lnjeotlon well8 adequate 3n oapacity to dlepoee of the ealtwater produoed on their reepeotive lea.sen and with adequate lmpenlonm etoauge oapacl+g to hold the saltwater during necessary nhutdowne. “(4) To employ my other method or oombiaation of methodm to effect the objeotlvee and intmmlmente of this instrcment." With this preliminary &et& and year letter, which we quote below ae a baels of the facts, we have reached the oonclurtion that this employee ie not subject to FederalSocialSeourlty tax. We quoti your letter a8 followet *I&e. Katherine Drumwright, nee Williams, haa been ermployed ae etenographer and clerk in ae Tyler field office of Salt Water Control under the Governing Costimittee for about 11 or l2konthe at a ealary of $112~50 permonth. During this time no deductions have been made fram her salary for Social Security. "The fund6 fran which her sal&ry ie paid are derived fram fees collected frcp oil operators, defendante in the above named oause. !&em feea are paid into the treasury of the 116th District Court, Dallae County, Texas, at a rate of $1.50 per well that is produoing 5 per oent or more of salt water o "The budget of the field office is itied by the Governing Camnfttee on Salt Water Cent&-o1 ccmsgosed of Dr. George Ii. Cox, State Health Officer, ae Chai-, and Honorable,Mrald C. Menu, Attorney General of Texas, b!r. C. 5. Clark, Chairman, State Board of Wster~Engineere, and Mr. Willicun J. Tuoker, Executfve- Secretary,Oame, Fish,& Oyster Ccpmalesion. When the budget fa fixed, It la tranemltted to tha Judge of the 1~6th District Court for approval, and if it is approved by him an Order ie directed to the Clerk of the court to pay the emount of the monthly budget to the engineer in charge of the field office. ‘. 1 Dr. George W. Cox, Page 3 (O-4935) "l&en these funds are received by the engineer from the Clerk of the court he deposits &em in a local bank to his owu credit and draws checke a&nst the account for payment of salaries and other of-floe and operating expermes. * * *” Every pereon le an mployer under Tltla 42&b-Title VIII, Vol. 40-42, U.S.C.A. of the Booial Security Aot with whloh we are here oouoerued, if he employa 0110 or more employeee, but it doe6 not follow that all eervloes performed for tie employer are subject to tar. Certain eervioes me epeolfically exempt mder the Social Security Act. lie need here be ooucerned with only or&e of theee exoeptlm, for tmlees this employee falb within the purview of this exoeption, her employment aud services 16 subject to the Act> and, therefore, texable. Roue of the other exceptima expressed in tbe Act could possible have any applicatiou. This exceptiou ia ae follows: %ervice performed in the employ of a state, a political subdivisiou thereof, or au imtmmentality of one or more statee or political subdivisions.” Title 429ub-section VIII, loll U.S.C.A., Vols. 40-42, page 239. If the service of the stenographer aud clerk is performed in the employ of the state, or au ilLstrmentallty thereof, her aervioe is specifically exempt under the provisloua of the Act noted above and need not be reported. She Is, in our opinion, an employee of au iustrumentality of the state; ncwnely~ the Goveruiug Committee 011 Salt Water Control ccm- posed of the Attorney General08 Departamut, the State Board of Health, the Board of Water Engineers and the State Game, Fish & Oyster Comuissiou, a8 provided in the plau uader the headiug of ‘Governing Committee”. You are Oonditutea, under the plau, Chairmu of the Cmmlttee aad ves,tea wi& the reeponelbiPfty of admirnfetering t&e plan under the dire&ion of the Cmuittee . The Attorney GeueralOs DepaPlxneut is established by the Consti- tution, end hiti office is, therefore, a constitutional office. The State Board of Health, (Art. 4415A9 Vernon% Revised Civil Statutes), the Board of Water Engineers, (Art, 7477$ 74.88, Vernon’s Revised Civil Statutes), aa the State Game, Fish & Oyster &emuiasion, (Art. 4016-4018, Vernon’s Revised Civil Statutes), are oreated and their duties aud activities are prescribed by statute. The StateBoard of Health, theBoard of Water Engineers and the State Game, Fish & Qyater Cam~iesion are all appointed by the Governor and confirmed by the Senate, and you, ae State Heal% Officer, are, of eouree, appointed by a majority vote of the State Board of Health. The Attorney General is the legal representative of the State in all litigation in whioh the state ia a party in eonnectlou with the admiuiatratim of the affaira of these atate departmenta, parties to the plau. We a0 not aearn it necessary to cover in detail the work and activities of ,theee various deparizuents to supportthe statemeut that they are imtrmeutallties of the state. Artiole 4444 of Vernon's Revised Civil Statutee haa a direct bearing upon the work perforaedby the Eltate Board &Health and the Game,Fieh& OyeterCcvn- mission in oonnection with pollutlou of public bodies of water. It Dr. George W. &IX, Pcge k (O-4935) read6 aa foYPaopf3: “Ho pereon, firm a- e~rporatfm~ private or iumlofpal, ahalP pollute my water couree br other public b&y of water, by t&reving, caatirmg or depositing or cauelng to be thrown, oaet or depoeited any made petmUumt oil or atier like rubetdmoe tierein, or pollute any water OQU``C,, or other public body of water fxxaa which water la taken for the u,eee of farm Piveetoak, drinking end dc-meatic purpoeee, in this State> by the dieclharge, direotly or iriabeat3.yy, of any eewage or mlean water or unohua Or pOtitbg matter or thing ~&IePeina,or iu euch prOXi- mity tiersto that it will probablyma&, 6nd po3.lut.e the watem of au& water OQUEU~or a tier publtfc body of water from whfeh water ie taken, for said woes- Drab di&hefl, where waste oil finds ifs way f~to water course6 ox public bodies of water, &all be equipped with trap of mfYiefent oapcclty to arrest t&e flm of oil, InaoP~ a0 emeems the protection of ffah and oysters9 tie Gsme, FPsh & Oyster Ccmmfsaioner or hfs deputies, may have jurledfctlon in the enforceme& hereof. * * * Upon the conviction of aany percon for violating this paw, the court or judge themof in whfeh sppeh eonviatkm is had, shall. issue a rrft of in$unction enjoining and restraining the person 01”eorporat.ion responsible for ew.& poPlIlt Ion.0 For A vi~I.aat%on of e-it& ,tijunotion, the said court an& the jwlge thereof’ shal.1 have tie power of fine and impr~ieo``~& as Par ~x3ntempt of court within the Lirnfts preserihe~ by 3md in other oases, ma ttnfs re``edy by ti``tm;r;r`` ~3. p``f~$nasrat for vblati0n therecf shall. be ewmalcctPre 0P tie fire Smposed. The state maPa Qf HeaEth k&a:%& enrfraB:c thAQa3iOnE!-z -``%*-. thfs artielea, We do not quote thfs provfsion of the sta%uts upon the aesump- tion you are not fadifar with 02, but as an sid fn mpport of our conclusion. The preveotiou of poUwt$on 0f ~oumee of water supply such as rivers, lakes, mr.c9.3~, reserooim 9 etos ,9 if3 Q:Pvital fntereat to the public welf’are and health of the s,&t.e ana, .se wf9,1 be obeerved from. Arti,ole @&4, the eontzol au& preven~+Lon thereof is espeefally delegated to your department. Iti is true +ihat the salmq OP this3 emp3lo~ee is not paid frmn state funds, but by .the operatcra far. the fieLB upon a prorate baais, the details of which are ee,t acxt, in your Letter, But this, in OUT opfifom., in not a con.ta~ll.lf``g facstor, The Committee Es a feasible end convenfent Ins~exgtalfty to aceomp:%f& a p&lfe servfee, Bo one derives any prfvcte OF personal benefft from ftdl cotiv8ities. The operatore exe;Ps:fse no contzol, whatsoever o+er the operat,fons Wf the offfce or its ermployees. The Federal So&al Seawrity Beard has mlaa in a ease in which the Licensed Carrrmfseion of 8, eEty, stationed. polfoe officers at a place of amusement, fixing +&e r3munerstian for the services of the Dr. Oeorge W. Cox, Page 5 (o-4935) offloem whhieh MB paid by the muaement ocmpany, that such policemen are employeea of tlae oity and are exempt under the Soolal Seourity Aot. They WBM subjeot to the oontrol of the Pollee Departnmnt of the city not only aa rem the resulta to be acmaupliaheb, but also ae to tie detalle and meam by which the reenlte were to be 8oocmpllahecL !Fhe fact that euoh offloera were pai& by the amusamnt ormpany wa@ held not euffiolent to oonatltuta them employees of the company. (Opinion Sooial Security Tax Division, Bureau of InternalRevenue, 327). In a case involving the employment of utility inepeotors where the utilities are required under their franohise from the city to pay for the inspection of all their construction work, and where the inepeotors, thou&~ paid by the utltpfty are appointed by the mayor and subjeot to the control of the city, it wa8 held that such inepeetom were exempt under the statute9 (Opinion, Social Security Tax Division, Bureau of Internal Revenue 9 339) o Inaoaae involving inJletnzotom teaching olaseea in industrial plants under the Ohio VooationaP Education System (Estebliahed under the Smith-Hughes Aot), the inatruuetom were fomer employeea of the ocnnpany and were reoasmnerndedby it but in this work they were held to be employed by the Board of Education and not by the oanpany. The Board controlled their services end had the Bole right to &fs&arge them if their services were unsatfsfaetory, The Board ffxed the salary, although the oompany paid half of such salary, The ruling of the Social Seourity Board in this inetanoe wa8 that the Board of Education wae an instrumentality of the State of Ohio. There hae been little @dieial determination of this question, s hence we have had to rely main3.y upon, rulinsngs of the Social Security Board a8 you wfll note above. One PaBe, however, hae: ~QW uncier our observation, not b cdl mespecta pm?wlLeP %o the faota here under considaratian, but we think with enough aualogy to be helpful. This ia the case of Cayne, Colleetir of Internal Revenue ~8~ Brueh, in re CuUen Hardware Corporation. 30 Federal Supplement, paga 71ke The Cullen Hardware Corporation wae adjudged a bankrupt upon an tivoluutary petftion filed by ita creditors. Larkin M. Brush was appointed by the Referee ti Bankruptcy truetee and he duly qualified a8 such+ Mica Isabel1 E. Shea, a former employee of the Cullen Hardware Corporation, was by pernisafon of the Court, engaged in a clerical capacity to assist the truetee in 0olPeoting the aooounts. Her wages were paid out of funds belonging to the bankrupt estate in the hands of the trustee. The eolleotcr of Internall Revenue filed with the Referee in Bankruptcy a claim for taxes on aocount of the employment of Mrs. Shea. The Court ruled t&at the Clerk06 salary was exempt under the Social Security Act sirme the trustee wae ex~ instrumen~lity of the United States, the Clerk employed to help him was likewiaeiexempt. The ScmlaB Seeurlty Tax Division, in Qpiaion Bo. 127, found in Unemnp~oyment Ccmq3emsation &umf85ion Serviffie, Volume 3> Ilo. 2> April 15, 1939, page 2.224, ruled that the Lower CcJ.ora&o River Authority in tbia eta% is an innstrumenta;Pty of the State of Texas within the meauing of the exoeptiona expressed in the Section of the Act, eupra, that neither the Iower Colorado RSvar authority or i@ employee8 were eubjeot to the tax Imposed by ,thneSocial Seourity Aot. True, the CoPomdo River Authbnority 18 create& by I). eeparate a& of the LegieLatnre, end the 0cmrpePPeationof the o%fi”ioera ati employeea ie paid fran State fundu, md ie mom 01LIBppLy an Inatnaeeutaalif;~ of the etatxi ~tban the Qavemlng Camittee, but no more ded’inibly 0~0 fn&rwnentaaPity of the state than the State Board 0 FLaaEth, the State Board of Water Engineers and the State &wne, Fdeh b Qyster @~snalesi,mn, We are of tie opinion that this Goveruing Cmmfttee, aetirng within tke mope of the work of all three of tbeee instzuaental%t%ea of the state ia PtsebP none the Pees an fnetru- mentality of the stats, Im the ir&``ee we have here “t$is etenogrqnher ami clerk is employed by the @-ittee ~&VU& i% Ezeoutive Searetary and dire&or, the resident engineer, who is m employee of the Stati Boar& of Health, Her salary is fixed by “the dIrector and tinbJect at al1 timea to the Cover- ning Camn&tb?e mder the direc,ti,m of the Exeeutfve Dfreetor Bnd: could be dfsoharge~ br tie acmn&ttee or t&e Executive Director at any time. In other WQP&``the f.hvsmXr~ @cllmnl.L:es aud Exeeutfve Dereetcr have oomplete and absolute eontr~l ov.sr ,&la smp:Lo~ee, and her services fall within the exemption expressed ti!. ,tke Soe:ial Security Act, ff we are correct in our statement that thi.8 Gwern~g C~nnafttee is an fnLst.runentalitg of the state, aud we th4nak it 1.``