Untitled Texas Attorney General Opinion

OFFICE OF THE A-I-T’ORNEY GENERAL OF TEXAS AUSTIN a. Wallace Rughston, Direator Uotor Transpoxtation Division Railroad CoMlission of Texas AuatLn, Texas Dear Xx. EUghetOnI inquire whether YOU any of Brownwood is a mtojc carrier. subfeot t ne of the Rall- road Commlsslon under the Tell ier Aot, Article 911b, V. A. G. g. t the lnroraEtion oanrere,noeand way, counsel for The youx request, I sqbtit otenent of our fjndings 80 far "1. As to the partloular case riled at Dayton, Texas, on Way 13, 1943, against D. Vaughan, driver of a truok owned by the Butane Co., of Brown- wood, Texas, our Fnveatigatioa dlsoloses the follow- ing: "a. 2265 gallons of oommerolal butane WEB transported from Baytown, Texas, to Port Arthur, Texas. A copy of the Railroad Commission of Texas Motor Vehi- cle idanifesttaken from the files of the Gil and Gas Division of the Railroad Co.:lmissfon of Texas office at Houston, S~OOWSthe shipper of this cargo to have been EU~FJ!J~CJ oil and Refining Co., Daytown, Texas, and the consignee of the shipment to have been the White Gas Co,, Port Arthur, Texas, aad that shipment was s&e by truck owned by the Butane COQWUW Of BZXYW- wood, Texas, driven by D. vaughan. "b, an examination of the records of the White Gas %o., Port Arthur, Texas, show that this load of Butane was purchased by the Pmite Gas CO. iroi%I Anchor Petroleum Corporation of Tulsa, Oklahoma, and that payment $or same was made to the Anchor Petrole- co., of Tulsa, Oklahoma, lndioating to us that The Butane Compxq of Browlwood, Texas, was not involved fn the transaction ln any maauer except as the tz%mv- portation agent. "2. The same facts as to cmirests, ooatraots, purchases and agmenta apply to a number of other cases lnvolvlug the s anuers Butane Gas Coupany of Houston; Winton Automtic Gas Oompany, Denumnt, Texas; Automatis Gas Co., of Beauuont, Texas; and the Crown Central Petroleum Oorporatioti,Pasadena, Texas. "'3 . The records of the Geir-Jaokson Re- oycll.~.~g Plant at Grapelaud di'sclosethat the entire output af this plant is oontraated to the Anohor Petroleum Co., Tulsa, Oklahoma, andthata largema- jmlty qf the gas from this lant is transported to the Gulf Gil Oorporattoonat %art Arthur, Texas, in trucks owned by The Dutaue Company of Brownwood, Mr. Blgglnbotham, of the Gulf Oil Corporation, advised one of our inspectors that they had a contract with the Au&or Petroleum Company, Tulsa, Gklahowa, for the gas from Geir-Jaokson Reoyoling Plant and did not.kaow,the Butane Company in aonneation with the oontraot. He farther stated that the Gulf Oil Corporation is in- voioed by the drnohorPetroleum Company and that suoh invoice8 are paid to the Author Petroleum Company. "4. One of our lcspectore has ohecked the reoords of the Distillate Production Corporation aud these disclose a contract by and between Distillate Produotion Corporetion aad the knehor Petroleum Corporation, wherein it is oontraoted that Distillate Produetlon Corporation agrees to sell and de- liver to Anohor Petroleum Corporation from Distillate Produo- tiou Corporation tanks at the loading dook Into tank trucks to be rurnlshed by mahor Petroleum aorporatiou. Produots uu- der this aontract are being delivered by The Butane Company of Drownwood to the Crown Central Petroleum Corporatiou atePass- dena, to storage of that corporation. "5. In the reoords of the Cistillate Produc- tlon Corporation, our inepeotor examined a letter ad- dressed by the An&or Petroleum Corporation to Distillate Production Corporation whioh read aa follows: 'As to trucking equipment for Liquefied Gas Products, we be- lieve that our company owna or has more equipment available 4 than any other concern. This equipment includes one large new propane transport, having a working pressure of 200 lbs. and a capacity of 4,000 gallons whioh we contemplate using. 1 Our trucking faoilities together with those of a large truoking ooacern In the State of Texas, with whom we have a close working arrangement, approximate 75,000 gallon capacity.' 1 "6. The Anchor Petroleum Corporation is an Oklahoma Corporation and has a permit to do busl- nesa in Texas. Nothing in the files of the Seoretary of State's office show any oonneotlon between the Anohor Petroleum Corporation and The Butane Go., of Prownwood. "7. The charter of the Butane Company of Brownwood has been cancelled aooordlng to records of the Secretary of State. "In conolusion, our investigation disoloses that the produote transported by The Butane Company of Brownwood are produots that have been purohased from various oonoerna by the Anchor Petroleum Corpora- tion, that the purchasers of these producta are in- voioed by the Anohor Petroleum Corporation, and that payment is made to the Anchor Petroleum Corporation. The manifests covering these truck shipments are made by the produoer to the Anchor Petroleum Corporation and that the Butane gempang of Brawnwood la not known ;r*r$$ognized other than a8 the transportation agent. Mr. Holloway has made tha following explanation of the activities of The Butane Company and the Anohor Petroleum Company, its associateI Mr. Thurman Cole does business under the name of The Butane Company and is engaged in buying, selling and transporting Butane gas. A few years ago when he entered this business butnne g.28was a by-product of oil refineries; its 952 , k&c.irallaceHoghston, page 4 production was irregular and the de,mnd therefor fluctuated with the weather. At times the refineries would have a surplus and would shoot it into the alrl an other occasions, when a local distributor would send his truck for a load the refinery would have none. Mr. Cole by oontracting la advanoe with a large number of refineries and securing the business of a large number of looal dealers, haa been able to spread supply and de- -% aranteeing to refiners minimnm sales and to local dealers a regarar eapply. The Butane Company has storage in several West Texas towns and in others. It sells to dealers having their own storage. The prioe to the oustomers is based on the oost of the product to The Butane Oompany plus the cost of transporta- tion, whioh varies with the distance. Whenever the local dealer sends his own truck to the refinery ror gas, which he buys through The Butane Company, he raoeives a reduction in prioe based upon the company's saving on the oost of transportation. The foregoing operations are oarried on by The Butane Company by itself+. JOIWT OPBBATICMS OF TBB BUT&BE COYPhBY ABD TBE kblCIiOB mJ!RoLETJbi couipANy In addition to the business oar&d on by The Butane Company in West Texas, it also carries on an extensive business jointly with the anchor Petroleum Company, an Oklahoma oorpora- tion with a permit to do bueineas in Texas. Principally, this business is earried on in this way: Xr. Baten, for and in the name of Anchor Petroleum Gontpany,oontraots ror the purchase or butane from a refinery and, usually later, for its sale to a dealer. The oontraot la ao- tually for the joint aooount of Anohor and The Butane Company, but only the nataeof the Anohor Petroleum Company la known to the re- finer and the dealer. Anohor operates no butane trucks in Texas; The Butane Company operates ao!nethirty suoh truoks. All expenses of the transections suoh as ooste, purohase, sale, and tranaporta- Man, are kept in a joint aoooant. The total expenaae are de- duoted from the reoeipts from sales and the resulting prorit or loss is equally shared. Sometimes hr. Cole of The Butane Company doea the buying himself. In either event, the oontraot ror the purohase or sale is entered into by Anchor or The Butane Company only after securing the advioe and oonsent of its assooiate. Suoh approval is usually given by long distance telephone. The tele- phone bill of The Butane Company runs $300 or $400 per month. Storage tanks are awned jointly by the aon- federates at aaveral points, while other storage facilities are owned by one aompany or the other. kiowever,as far as the joint acoount is coaoerned all plants are owned and operated by the joint amount. An exception to the procledureof aeouring ad- vance approval or both associates for eaoh contract appears to exist in Laredo where the superintendent of the jointly operated teraina~lmakes sales without aeouring separate approval ror eaah traaaaotion. The question is whether under the foregoing faota The Butane Company isoperating trucks for compensation , or hire. If it is, it is a motor carrier. Counael for The Butane Company bases his con- tention that it is not a atotorcarrier upon the following parts or the Texas Motor Carrier Act, V. A. C. s., Article Bllb, Sea- tlon la: "(1) Provfded, however, that the term 'Mctor Carrier’ and the term 'Contract Carrier' as defined in the preceding seotlon shall not be held to lnolude: ll+* * “(a) Where merely inoidental to a regular, separate, fixed and established business, other than a transportation bwiness, the transportation of eaployeaa, petroleam produots, and lnoidental supplies used or aold in oonneetion with the whole- sale or Istail sale of suoh petroleum products from the refinery or place of production or plaoe of storage to the plaae of storage or place of sale and distribution to the ultimate consumer, in a motor vehicle owned and used exaluaively by the marketer * * *- hlr. tiailaoeHu+iton, p:ige0 In our view, transportation of butane for the joint aoaount ia not "merely inoidental to a regular, separate, fixed and established b-other than a trans- portation bueInesaX" If the traneportation for the joint aoeount were iaolated, oocaslonal, Irregular, oaeual and desultory, (~otatlo~. 125 A. L. R. MB), The Butane Company might not be aoting am a carrier) but where,.ae here, it employi some thirty trucks latenaively in transporting for the joint undertaking, where auah business ie so extensive as to require several hun- dred dollars telephone ealle a month for the ooordlnation of the operation of the two oompanie.e,wa are impelled to the view that the transportation ie not "merely Inoidental" to a buei- ne8s "other than a transportation business" but that as to the joint operation the principal businese OS The Butane Company is that 0r transportation. In our view the transportation la for compensa- tion, notwithstanding the tact that the extent of the remunera- tion is uncertain and oontlngent upon profits. IP the opposite were true, a truak operator might engage to transport for any number OS ooncerna and,be free of the supervision of the Rall- road Co~uslon as long a8 hIa uoapenaation wae a percentage or aontingent proffta. This would utterly destroy all attempt@ or the State to maintain uniform freight rates. Counsel for The Butane Company haa also suggested that The Butane Company may fall within ,thestatutory exoeption, rea(lingt *(d) Any utility aompany asing ita own I( equipment transporting Its own property over the :! highwaya." 1 Pretermitting the question of whether It la a utility, The Butane ~ Company doee not fall within this reotlon, for In the joint op- eratlon it doee not own the gas if transports, but at best has an ondivided intereet therein. This laok of ownership prevents hi8 falling within eroeptfon (a) of the eame subseotlon. ‘I It Is our opinion that you aoted properly In filing a complaint against the driver of The Butane Com- . . &?r. tie.llaceHughston, page 7 i pany for operating uuithouta permit from the Railroad Com- tiSSiOL Our opinion file contains additional ln- formation on the aatlritiee of these aompanies. Kindly aaU on us if you require it. Yours very truly, Al'T-ORNEYGENERAL0FTEXAS BY