Untitled Texas Attorney General Opinion ( 1944 )

OFFICE OF THE ATTORNEY GENERAL OF TEXAS
AUSTIN ‘1
July 28, 1964
Honorable CWorgs ii. Sheppard
Comptroller of Public ;oaounts
Awtln 11, Tsx4s
Dear Sir:
In the n4na-
for the aooount
"!rhe ooatraot 4~oiflorlly prarldas that
all persons uumsglryl end opsrating.the plaat
or enmged in the perrornmnos or thl4 oontraat
by Blnolalr Iiubber Ino., shall be employed or
retained by the oontraotor and rhall not be
4mployees or Reserve for any purpo44 whatno-
'ever.
w%orabl.e Ceorr;? 8. Sheppard, &go 2
-The !iubbor 34serve Cow&my 4~rets to fur-
nish the Slncl4ir 2abber IAX., hereinafter re-
ferrc-d to 4% contractor. 1~1th surilolent work-
ing cepltal to met contractor'5 coots of opera-
tion and to psy all the aosts of opsratlon enu- I
rmereted in the contraot.
_
qh6 oontrect &ovr3e% thr contreotor will
p4rr0rikits 0bikpti0n vlitii0ilt p:ofit t0 lt9m
mu alth9ut surfcrlng or lnourr:ng ony 10%~.
The t$tlo to any nnrl all propartiso aoqulrcd or .I
used in connectlon with the opsmtlon of the
plant, the ao%t at which Is psld by the Subber
Heservs, vests dlreotly ln the iiubber Resorv6
or Dsfeooe Plant Cor?oozatlon, 4% the r6%puctive
lntcreots of saoh,mag sppser. A%orint% covering
~- ro7altiee in connectSon with tho op6rotion 0r :
the ploot ie Inolu3ed in the oantreotorgs
‘oocrts’ not to 6xcoe3 ono-oi&th of 4 aent
(Q0.1251 par porlaa or butefiiorrh~
pro$roe:d r0r
an& d4iivercP to the ?Ubber Reaa~~e Company, OF
u%3ar oezteln condltSon% thrtta-sixteenths of a
cent pbr pound.
RThe oontrnotor is ~lven atithority in the
aontract to 8411 comerolally, for the aooount
of Iiubber X6serve Cosrpaay, oertaln by-pro9aots
an.1 rcoida3s which am acqdred iii processing
the char,-& atooko f.ltci butndicuc ani it is
given suthorlty to sell oormrchlly the ri%-
ished buta3lene not aooept.able to 5ubber Re-
~Ol-vO G2npany. TUG p%06eea9 00m10t69 rS3m
such ~416% ahall bo de~uoted from contr6OtCr~%
ooets'ot ojzzv3tion.
~‘k%CE th6 full ipOrRtioE Or tht? phnt $8
not regdfrad ior ths pro?uctlon ol" b~&zIic%a
for Rubbe? SI%E~YC Coaqa~y, the Contractor my,
with consent ot iIubb6r Rerjcrm Cmgahy, operste
th6 piB:lt rOr it&! Glm hCOoll?ktEna 6t it% OWE
cost on3 cq~c;lsa for the yxd~zctlon OS b~~ttadl6ne
or othcr+&e cIurl%C such pGrioS9.
Vh6 Contraotor, Sinclair i?zbbbr, Inc., ' * "'
through its
Attornays, Qaker, Dotto, AndrewE de
Shnrton, of Houston, ha% e~lvloc~ u% that it A%
_- the
of _.~_opinion that tho azmay oonnsetio~ of'
thaa----.--- -.---.-- Inc.,
nclnir Xxbhr. - vrlth ths Raabbcr Re-
sbrvo Caapiny and tGa D6fense Plant Corpore::on,
/a--
.
.’
ifonoorable George H. Sheppard, page 3
.:.,
\
lrederai lnatruzentalitlsa, olearly exempts said
eoatraotor rroa the Tsxaa notor fuel use tax.
‘eti
oplnlon fron you or aciplitioatlon or
your Oplnlons O-4389 and O-5309-A has been re-
quested. I a,u snoloalng togcthor with oopy or
-the oontraat, thfj oorreapmdenoe with Baker,
Botts, Andrcwa and Wharton and rssRectfullp re-
quest. yo.ur opinion as to.whet&er or not the .i
Slnolalr Rabber, Ino., Is subject to the use
tax upon motor fuel used by lt upon the public
.hlghSayo la tho.perfomaaoo of its ooatraot
with Rubber Reserve Company.m
In our Oplnlons O-4389 and 0-5309A, this department
ruled that oertain oost-plus oontreotors ensaged ln the per-
ror.manoeOP vurlo;ra funotloaa for the federal goverment are
liable for the tax upon motor fuele used In connectlax with
rush work. With but one eioaption, the terma OP the oon-
tracts involved la thsse opinions are virtually identloal
with the term oi the oontreot between Slnolalr Rubber, Ino,,
and the Rubber Reaerva Company. Thus, in al.1 of these ooa-
traots, the title to aiIppllea purchassd by the oontraotore
Tests in an agmoy of the federal Goverment, but, szbbjoot
to an optional right on the part of such agenoy, the pur-
ohases are made in the names of the contractors end the oon-
trectora obligate only themselves in mkinf: such purchases;
koreover, in all of these contracts, the persons employed by
the oontraatora are employee5 of the oontrootors rather than
of en agenoy or the federal govcrllment; and the work which
ia p6rformed by the oontreotors an;l the cianner of its per-
roorcenoe are singularly rrtie from any control sxsroised by
the federal govermient. Tho one nignlfloent dlffcrenoe be-
tween the Instant oontract and those previously ooncidered
1s that in the present oltuatlon the oontmctor perform the
work at ho profit to himself, whllc in the prior oontraota
the contractors rect;ived profits or various kin3e. It re-
meins
-. to
. bF; aeon whether tbia dlrrorsnce
- .. aufrma to-exempt
elnclalr Rubber, Inc., Iron paymnt or the motor rue18 tax.
In our grlor oplalons, the licbllity of the oon-
tSaot,ore hes besn preliostcd upon the OCSOSOf Alabuza V.
King & Roozcr, 62 Sup. Ct. f+3, 06 Li Ed; 1, carry V. 3nlted i
States, 62 sup. ct. 48, 86 L. Ed. 9, and Jamea v, 3revo
COntractlng Co., 583up. ct. 208, 82 L. Ed. 155. In none
Of thCfJ6 ca*es h&y the Suprerae court mentloncd the existcnoe
Qf a profit es a rWJG3flfor l~~ponln~ liublllty upon a person
,’
,, ‘
.,,
..
: _
.
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mnoreble isOr&s'H. Sh&panl, page b s
*o 1s psriordng a contqt2ct nlth the r0deral gov6znEiSnt.
Bathor, the d6t6rXfIlStfV@ factor hes baen whether the COW
tmctor aats as an agent or tho United Stat69 or es an ln-
&p65?l65t CODtr6CtOr', t!5flthe d6ClSiO5S in these CBS68 are
.to thQ 6rf6Ct that COntIWtOrS Or the type her6 u5d6r OOn-
al&r6tlon sre 1536ps5d65t contraotors rather than mere
agent8 or sorvsnts. It is trU6 that in all. Of these Ca56s
the contraotors have recelvod a profit for tholr labor;
bowever, ~8 rt3dthat this rOOtor in no way oontrlbutru to
their status a8 independent contractors, 3s teei thet it
is a strange doctrlce which would say that a person who
pertom. certain work ln a certain afmn~r r0r pmrit is an
lndspsndeat contrnctcr while mother person who perrorfs
ld6ntlcal work in aa ldtntlottl Lttinner but without profit
. iS all t3gGllt Or S6lTtl5t. COUsSq465tly, it is our opinion
tbst the d6clslo5s in the sbovs-cited 08868 control the
instant sltuatloa an3 that Slnololr i'iubbar, Ino.,~ is lia-
bit for the ttix upon rotor fu6l.s used by it in the per-
forennoe of Its ~oontraot with Rubber Heeervtl Cqupany.
Gounsel for th6 taxpayer have sUggeSted thet
thCs6 cases have been overruled by the recent declalon of
'the Supreole Court in Unite& States a51 Zrestn ~eohlne Cou-
pany v. County or Allsgheny, ?ennsylvanla, 88 L. Ed. 845.
The entlrely dffr6r6Ut tact sltuetlon in this caa8, c0upi6a
with the faot that the Suprem Court sxpressly Ustlngiiahe%
the Bsta case fron the cases above alteb, persuades Us thet
the bfeota case in no way touches or 15ilU65CCs the qu6stion
pDd6r conslduratlon. .
T&tins that the toreSOl5g fully answers your i,
15QUil7, WYeire .
., .. .. ,- Yours wiry truly,
.
'ATWJRN~+GEZERAL OF TZXW
R. Dean Koorheab
Assistant