Untitled Texas Attorney General Opinion

  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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