Untitled Texas Attorney General Opinion ( 1944 )

Grover Sellers
A’lTOHSKY OLENLcllAL.
Hpm;; ColMllssion C$lnion No. O-5851
: Whether specified transportation of
Lustin, Texas petroleum products is exempt from regula-
tions under the Motor Carrier 4ct by rea-
son of Section la (1) (c) of Article glib,
Gentlement . Vernon’s innotated Civil Statutes.
You have inquired whether the transportation of one
Mtinskl for the Magnolia Petroleum Company is subject to regula-
tions under the Texas Motor Carrier Act or whether he is exempt
by reason of Section la(l)(c) of Article 911b, Vernon’s Anno-
tated Civil Statutes, acts of the 47th Legislature, page 463,
H.B. 25.
Your Chief Law Enforcement Officer for the Motor Car-
rier Division, Mr. Hughes, h,‘s :!greed to the following Jmended
stA.ement of fclcts as more truly representing the situation con-
fronting the Commission than th..t contained in your opinion re-
quest:
FACTS
The &gnolia Petroleum Company owns bulk storage facl-
lities at McGregor, Gatesvi!.le, Belton and Waco.
The Company has z, contract with one Manski of McGregor,
McLennaa County. In this contract, termed 9holes~ale Comrnlsslon
Agents Contract ,‘I he is c:tlled the Company’s lCommisslon &gent
at McGregor and points deslgn&ed as tributaries thereto which
are subject to change by Compiny on thirty days’.notice 40 &gent,
~1s follows,” naming eleven small towns situated on radii out of
M.?Gre;or &z. varying distances up to some twenty miles, and situa-
ted in two or three counties.
An amended paragraph adds the following:
“la. Also, In addition, Agent is appointed for the
distribution of Company’s petroleum products as its Agent
and for and with Company as the single principal in the
following limited territory:
“From Ft. Worth to >Jaco, to McGregor, to Belton and to
Gatesvllle; and from Waco to McGregor.
“For the purposes of the paragraph next above, while
-- 1
Railroad Commission, page 2 (O-5851)
Company shall be the single principal of. Ogent, nothing
herein shall constitute Agent the single,_excluslve nor
sole Agent of Company in-the performance of said dls-
tribution.”
The duties of the Asen& consist of the care of stock
?ment , soliciting
and e %;u* and carrying on business under direc-
tion of the district manager, making deliveries, collecting ac-
counts,~ making reports; unloading cars and perfcrmlng such other
services as may be required of him.
The Agent must see that all receptacles ;re correctly
gauged and free from Jeaks, as the Company will not be responsl-
ble for any loss from leakages or incorrectness of measurements.
The t:gent assumes all liability for loss and damage
sustained by the ‘Company or third persons resulting from acts of
the Agent or his employees who are exclusive servants of the
Agent.
The Agent must remit all funds collected to the Com-
pany; he must sell at prices fixed by the Company; he may sell
on credit only when expressly authorized; he may not cash person-
al checks and is liable to the Company if loss, results therefrom.
By “rider” to the contract the Agent assumes all lia-
bility for loss of cash, checks, etc., resulting from theft, ac-
cident or loss for any cause.
No fre:ght allowance will be made the Agent on replen-
ishment of stock unless he can show that the depletion of stock
-,~;rsnot due to the Agent Is failure to make reports and place
orders for ro~lenlshmznts.
The contract cf agency cannot be assigned.
The Company has the option to purchase any service
stations that the Agent may acquire.
Looking beyond the printed contract, we find that the
Company has an employee at WZV:Oand storage facilities there to
handle Its distribution for that territory. Other employees of
the Compa.uyhave the duty of securing orders for large quantl-
ties of gasoline for the krmy bases near Waco. When Manski
transports gasoline from the company refinery at Fort Worth to
Its storage facilities at Waco, or to the Army bases under these
conditions he performs a service that is limited to transporta-
tion. He does not solicit the sale, make the sale, nor collect
for said sale. His duty is confined to receiving the fuel into
his tank trucks at Fort Worth and delivering it to the destina-
tion. This will be referred to as his nWaco-Army Bases Service.”
Railroad Commission, page 3 (O-5851)
In such cases he Is compensated at a different rate per gallon
from that obtaining where he stores the fuel at McGregor and
tistributes it out from there by obtaining orders from lndepend-
ently owned filling stations making dellverles and collecting
the purchase price. Thj.s.wl~l be refe,rred to as the “Commission
Agent Servlce.it .
Xanski owns and operates several tank trucks, paying
the drivers himself- and being under contract to the Company to
pay for all damages wh:ch he or the public may sustain by reason
of. any accidant for which he or !iis emljloyees are respbnsible.
The Company pays. social security i~nsurance on ~Manski, c,&lllng him
an employee.
$&?JiTZL’ICN‘GF THE QUESTION
.~
This ?$inicc xi11 i)e limited to ‘a consideration of
-‘lether the ~trans?ortstlon by the Agent, M&n&i, and his driv-
ers where he performs :I purely tr~ansportation service is aub-
ject to ragzlation 3y the Railroad Com;lilssion under the Motor
Carrier Act.
ORIGINAL STATUTSS
i:s ~origintiily written the Texas Motor Carrier Act,
-zticle 911.1, m&de mctor carri,ars subject to ths regulation of
the Com2is;ion. Sect!.on l(g). of that Act ‘def:~nas a “Motor Car-
rIeral~ asp on:: operating 1 motor vehicle used i;l ?,r?nsporting
property fcr cr2;:ensat:on or >;Lrri irhere in the course of such
transport&ic`` . highway ‘~ie?wzan two or more incorporated cit-
ies is travers-d.
&e:-,t?on l(h) defines a Vontract Ctisri;rl’ as being a
motor c ~.r..5.r ;ransi>orting’ property for hire -btl:fr :than as a
comon crrier. .
NEWWAY‘LUMBERCOMPANY
v. SMITH,
In 1.936, in the case of New %!av Lumber Comaanv v. Smith,
96 S.W.(Zd.j. 282;. thk Texas Supreme Court held that a lumber com-
pany was act Sng c.3 ; mtor carrier and was transporting for hire
where it del,ivered. it:: lumber to hits customers itr different
toktls, then Company having one. prsce’where the. customer called or
came to the lumber yard to get the lumber and another based on
distance from the yard, where~ th ‘. ,Lumber Company made the de-
livery. . . ‘I~
AN3NIbMENT‘OF ‘iS’t1 -.
In 1941 Acts of the 47th Legislature, page 463, H.B.
No. 25, the Legisiature’amended the Motor ‘Carrier Act as follows:
Railroad Commission, page 4 (O-58511)
n+ * *
%3e~ticin la(l) Provided, however that .the term
‘Motor Carrler’~ .and the ‘term ‘Contrac 4 Carrier’ as de-
fined la the .precedlng section shall not be~held to
include I
“(a) Any person having a regular, separate, fixed,
and established place of business, other than a trans-
portation business, where goods, wares and merchandise
are kept in stock and are primarily an4 regularly bought
from the public or sold to the public or manufactured
or processed by such person In the ordinary course of
the mercantile, manufacturing, or processing business,
and who, merely incidental to the operation of such busi-
ness, transports over the highways of this State such
goods of which such person is the bona fide owner by
means of a motor vehicle of which such person Is the
bona fide owner; or
“(b) Any person transporting farm implements, live-
stock, *** or wool and mohair-of which such person is the
bona fide owner to and from the area of production and to
and~from the market or place of storage thereof; pro-
vided, however, if such person (other than a transporta-
tion company) has in his possession under a bona fide
consignment contract livestock, + + * under contract as
an Incident to a separate, fixed, and established busi-
ness conducted by him the said possession shall be deemed
ownership under this Act.
“(c) Where merely incidental to a regular, separate,
fixed, and established business, other than a transporta-
tion business, the transportation of employees~, petroleum
products, and incidental supplies used or sold in connec-
tion with the wholesale or retail sale of such petroleum
products from the refinery or ~place of production or place
of storage to the place of storage or place of sale and
distribution to the ultimate consumer, in a motor vehicle
owned and used exclusively by the marketer, or refiner or
owned in whole or In part and used exclusively by the iona
fide consignee or agent of such single marketer or refin-
er; as well as where merely incidental to a regular, sep-
arate, fixed and established business, other than a trans-
portation business, the ~transportatlon of petroleum, em-
ployees, material, supplies, and equipment for use in the
departments of the petroleum business by the bona fide
owner; bona fide consignee or agent as used herein being
hereby defined and construed, for the purpose of this Act,
Rsllroad Commission, page 5 (O-5851)
to mean a person under contract with a single principal
to distribute petroleum products in a llmlted territory
and only for such single principal;
“(2) The term ‘person’ as used in this Act shall
include per sons, firms, corporations companies, co-part-
nerships, or associations or joint stock associations
(and their receivers or trustees appointed by any Court
whatsoever).
“Section lb. 4ny person who transports goods, wares,
or serchacdise under the circumstances set forth in the
foregoing Section 13 so as to be excluded by the terms of
said Section from the definition of ‘motor carrier’ or
* contract carrier’ shall be deemed to be a private motor
vehicle Owner j bnd such use of the highways by such priv-
ate motor vehicle owners, as herein defined, shall be con-
strued as use of the highways for the general public and
not for the use of such highways for the carrying on the
business of transporting property for compensation or hire.’
”MARKETER”
Ze R~+J tracsR0rti.n; Is exempt from classification
: : P:-;tr-r Carrier i? hz meets, :?ong other criteria, the test
?rhtit hr: be a refiner or marketer transporting in his own trucks;
since the petroleum co.ms:,ny does not own the trucks under con-
si?.er&isn, oe must look elsewhere in the statutes for an exemp-
tlon.
Manskl Is not a raf“.ner so th&t portion ‘of the statute
is inapplicable. Is he a marketer? If he is, since he owns his
own trucks, he will be exempt.
Webster defines “Marketer” as cne who attends a market
to buy or sell; one who carries goods to market.
We do not feel that we would be justified in acceding
to the view that “marketer” as here used is synonymous with
“carrier .‘I First, because the Legislature throughout this 4ct
repeatedly says tldt the transportation must be incidental to a
business other than a transportation business. And in the sec-
ond place %arketing” in ordinary usage connotesmore than trans-
portation. For example, in Its latest catalogue the School of
Business Administration of the University of Texas divides Its
subjects under thirteen major heads, including vMarketingv ‘and
Railroad Commission, page 6 (o-5851)
eTransportatlon and Industry; a under 9Iarketlnge It lists a doz-
en courses dealing with consumer purchasing, salesmanship, re-
tailing, wholesaling, chain’store systems, cooperative chains
but not with transportation. Under Yransportatlon and Industry”
are listed transportation courses in-air, motor and water trans-
portation. From the’Columbla Encyclopedia’s compendium on mar-
keting we quote the following:
“Marketing is promoted by salesmanship and by adver-
tiSlng . Mall-order houses sell by catalogue at retail,
especially the rural buyers. Some products are marketed
by house to house canvassing. Chain- stores eliminate
some of the expense of marketing by combining retail sales
with wholesale purchases or with manufacturing. Coopera-
tive organizations of consumers and of producers as farm-
ers, seek also to diminish the spread in marketing.”
The term %arketinge assumes the existence of trade so
buying and selling are necessary incidents to 9narketing.e 38
C.J. 1258, 1259.
II’To market’ has been defined judicially and by lexi-
cographers as ‘to buy or sell* * * * to sell in a market. 111
&&j.nrr v. San Saba National Bank, 13 S.W. (2d) 121, 122.
Insofar as Manski’s activities consist solely in trans-
porting from the Company’s refinery at Fort Worth and delivering
into its storage facilities at Waco where an employee of the
Company takes charge and wherever he delivers from the refinery
to a purchaser who has dealt directly with the Company and not
with or through Manski, the’ sale not having been solicited nor
procured by Manskl and he not collecting therefor, his sole duty
is that of a carrier.
Such transportation business is regular and substantial
and is not .occasional, casual, desultory and incidental. Ann 123
A.L.R. 229. We conclude that as to the activities above outlined
he does not come within such Section (c) of the amendatory Act.
Counsel for the petroleum company urges that Manski may
still come within subsection (c) as a “person under contract with
a single principal to distribute petroleum products in a limited
territory.”
We shall determine
(1) Whether the requirement that transportation must
be incidental to a business other than a transportation business
applies to a bona fide agent or consignee;
(2) Whether Manski as to his Waco and Army bases oper-
ation is a distributor.
Railroad Commission of Texas, page 7
I.
\UgrrSINlQSS
GTRBRTHAR A TRANSPORTATION BUSINESS”APPLICABLl$
-. ._. SO TO AGENT. _. .__a _.__-. _. -
. . .-.. :.
The answer to the -first:question Is made difficult by
the fact that subsection (c) is fragmentary within lt~self and
does not fit in with the leading clause of Section la(l) as do
subsections (a) and (b). Thus: - _
eSection la(l) Provided, however, the’term *motor
carrier’ and the term ‘contract carrier’ as defined in
the preceding section shall not be held-to include:
e(a) Any person having * * * a l * * business, other
than a transportation business, *** and who, merely incl-
dental to the operation of such business,
***
e(b) Any person transporting farm implements, ***
‘l(c) Where merely incidental to a ***business;other
than a transportation business, the transportation of ***
petroleum products *** In a motor vehicle owned and used
exclusively by the marketer or refiner or owned in whole
or in Tart and used exclusively by the bona fide consignee
or agent of such a single marketer or refiner***”
This clause does not contain an object tb~nlncludee
in the first part of Section (1). Structurally it presents no
ground for saying that the requirement that transportation must
be incidental to a business other than a transportation business
applies only to refiners and marketers end not to one under con-
tract as ;Ln agent or consignee.
II.
BISTR``E
To be exempt from regulation as a motor carrier the
agent or consignee must be, among other things, one who is under
contract to distribute petroleum products in a limited territory
for a single principal. Will transportation alone amount to dis-
tribution? Standing alone the word edlstrlbutlonll may have ref-
erence to .the physical conveyance of -commodities to the consumer
or it may refer to llmarketinge as defined in this opinion. Ref-
erence to the title of the Act shows what the Legislature had in
mind. It reads in part:
e&4 ACT amending Chapter 277, Acts of the Regular
Session of the 42nd Legislature, as heretofore amended
Railroad Commission of Texas, page 8
by adding Section. la and lb thereto~***exempting certain
persons, firms and corporations transporting under cer-
tain circumstances their own employeei and property, pi
&troDe~ C hav e an interest as cons1snee 0~
&g&***‘J
This shows-that the purpose of the statute ls to exempt under
certain conditions persons transporting property ‘I&-I hi h
they have an Interest.** A carrier would have an intetesi be-
cause he would have a lien for his charge but carriers are ex-
cluded so that cannot be the source of the interest. If Man&l
were selling on a commission basis as he does out of McGregor,
he would have an interest in his commission but here he has no
Interest in the commodity which he transpo& to Waco and the
Army bases other than whatever interest such transportation alone
may give him. If the Legislature had intended that his interest
should be whatever interest he might have as one transporting
and no more, the words “in which they have an interest as conslg-
nee or agent” would have been mere surplusage, adding nothing.
We ought not to adopt a construction which nullifies the lan-
guage of the Legislature when another construction which gives
effect to every word is equally plausible.
In Pa ,n Sil er Rod Stores, (N.J.1 18 At1.(2d) 576
the court said zLatvwhilevthe Act under consideration did not d&
fine “distribute” it might be taken as granted that a wholesaler
handles and distributes the products to retailers and that his
act in so doing is couple? with an interest.
We conclude that as used in the statute a contract to
transport is not a contract to distribute.
Counsel for the petroleum company Is of the opinion
that at the time of the passage of the iimendatory Act it was
customary for consignees and agents of the petroleum companies to
regularly engage In transactions of the Manski to Waco type where
their activity was purely that of a carrier and nothlng more;
that they devoted a substantial part of their efforts to this
work, that it was considered a part of the duties of an agent or
consignee, just the same as where the transportation was a part
of and incidental to marketing transaction carried on by the agent.
If this be true, we do not feel that we would be warranted in
looking to such a definition when the Legislature has defined the
term as it does here. Repeatedly, ‘in the amendment the Legisla-
ture specified that the transportation must be merely incidental
to a business other than a transportation business, and we find
such a requirement in subsection (c) pertaining to the transpor-
tation of petroleum products by bona fide agents or consignees.
Railroad Commission of Texas, page 9
Such an interpretation of the legislative intent
places subsection (c) in a better position to withstand an
a,ttack based upon an-alleged insufficiency of its title or of
the alleged unreasonableness of the classification.
You are informed that in our opinion Manskl~s Waco
operations do not come within the exemption of Axticle qllb,
sict1oiA I& (1) (c), Vernon's Annotated Civil Statutes.
Yours very truly
GENERAL
A!CTCFNJZY OF TEXiS
By is/ David W. Heath
Dav1.d W. Heath, kssistant
.iPPROVEDAPR 29, 1944
/s/ Grover Sellers
A!CTORNEYGENWALOF TEXAS
APPROVED:C@$IONC&%TTEE
BY: , s
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