
    STATE v. HUMBLE PIPE LINE CO.
    (No. 3901.)
    (Supreme Court of Texas.
    Jan. 31, 1923.)
    1. Constitutional law <§=>48 — Courts hold statutes invalid with great reluctance.
    . It is with great reluctance that a court will hold a statute invalid..
    2. Commerce <§=72 — State tax levy against interstate. commerce is void.
    A tax levied by a state against interstate commerce is invalid as violative of Const. U. S. art. 1, § 8, giving power to Congress to regulate commerce among the several states.
    3. Licenses <®=>7(3) — Occupation tax operating unequally on similar classes of intrastate business is void.
    If an occupation tax operates unequally upon the same class of subjects and is applied to intrastate business, it is invalid as contrary to Const, art. 8, § 2, requiring occupation taxes to be' equal and uniform upon the same class of subjects w-ithin the limits of the authority levying the tax.
    4. Commerce <§=>70 — Pipe line occupation tax affects both interstate and intrastate business.
    The occupation tax of 2 per cent, of the gross receipts of a pipe line company whose line is entirely within the state, or 2 per cent, of the proportion of its gross receipts which its lines within the state bear to its total lines, levied by Rev. St. art. 7374, is levied against interstate as well as intrastate business, and provides no way to separate them, since the proportion of lines within the state does not control the proportion of intrastate business.
    5. Statutes. <§=>47 — Workable means of ascertaining the amount of the tax is indispensable.
    A workable means of ascertaining the amount of taxes to be paid is indispensable, otherwise uncertainty would prevail, and an action at law become necessary for the ascertainment thereof in each instance.
    6. Licenses <§=>7(3)— Method of apportionment between interstate and intrastate business held' unequal.
    If Rev. St. art. 7374, levying an occupation tax upon pipe line companies, was intended to apply the 2 per cent, gross receipts tax against intrastate business, and to designate companies whose lines lie partly within and partly without the state as a class of subjects, and-to provide for ascertaining amount of tax on intrastate earnings by making the amount such proportion of the gross receipts as the line within the state bears to ‘the whole line, the method of apportionment was unequal and discriminatory as among the same class of subjects.
    7. Licenses <§=7(3) — Provision for adjustment by controller held not to obviate inequality.
    Thd provision of Rev. St. art. 7374, authorizing the controller, if he finds any other proportion of the gross receipts more fairly represents the proportion of the gross receipts from a pipe line within the state to the total gross receipts of the pipe line company than the proportion fixed by the statute, which was the proportion of the lines within the state to its total lines, to apply that proportion, does not obviate the inequality of the statute, since it still contemplates levying and collecting the tax upon both interstate and intrastate business.
    8. Statutes <§=>64(8) — Provision for tax on interstate business held inseparable.
    It was the intention of the Legislature by article 7374 to levy a tax upon both interstate and intrastate business, in view of the fact that that'article was obviously' patterned upon a prior statute imposing a similar tax upon railroads which had just been upheld by the Supreme Court of the state, but which was later declared by the. Supreme Court of the United States to impose a tax upon interstate commerce, and the court cannot hold that the Legislature would have passed it as applicable to intrastate business alone so that it is invalid as a whole.
    Certified Questions from Court of Civil Appeals -of Third Supreme Judicial District.
    Proceeding by the State of Texas against the Humble Pipe Line Company to collect an occupation tax. Judgment for the defendant, and the state appealed to the Court of Civil Appeals, which certified to the Supreme Court four questions as to whether the statute levying the occupation tax on pipe lines violated the United States and state Constitutions.
    Questions 1 and 2 answered in the affirmative, and the other questions not answered.
    W. A. Keeling, Atty. Gen., and Bruce W. Bryant and Prank M. Kemp, Asst. Attys. Gen., for the State.
    John C. Townes, Jr., of Houston. (Robt. A. John, H. M. Garwood, T. J. Lawhon and E. P. Smith, all of Houston, amicus curite), for appellee.
   PIERSON, J.

The certificate of the Court of Civil Appeals gives a comprehensive statement of the case'as follows:

“Owing to the importance of the case, the nature and character of the questions involved necessary to be determined in order to arrive at the proper decision in said appeal, we deem it advisable to certify the following material questions to this honorable court for decision.
“Statement of Pacts.
“This is a proceeding brought by the state of Texas against.the Humble Pipe Line Company for the purpose of collecting an occupation tax on appellee’s gross receipts derived from its earnings in transporting petroleum oil through its said pipe line, under and by reason of article 7374, Revised Civil Statutes of Texas. The district court of Travis county made the follo_wing findings of fact, which were not excepted tosby the state of Texas, and said statement of facts are accepted as true by this court:
“Findings qf Fact.
“(1) The defendant, Humble Pipe Line Company, owns, manages, and operates a pipe line or pipe lines which lie wholly within this state, and is engaged in the business of transporting petroleum oil.
“(2) The oil transported by the said defendant is in part intrastate commerce and in part interstate commerce as follows, to wit: Intrastate commerce $569,586.96, interstate commerce $1,491,314.75, for the period beginning July 1, 1922, and ending September 30, 1922.
“(3) The defendant has competitors engaged in the same class of business as it is engaged in, but whose pipe line or pipe lines lie partly within and partly without this state as follows, to wit, the Texas Pipe Line Company has 2,777.58 miles of connecting pipe lines and that of said connecting pipe lines 89 per cent, lies within this state and 11 per cent, lies without this state; that the Sinclair Pipe Line Company has approximately 1,090 miles of connecting pipe lines and that of said connecting pipe lines less than 24 por cent, lies within this state, and more than 76 per cent, lies without this state; that both of said companies do some intrastate business and some interstate business.
“(4) That the defendant, the said Humble Pipe Line Company, if article 7374 of the Revised Civil Statutes of Texas is a valid enactment, is indebted to the state of Texas in the sum of $41,338.06, together with a penalty of 10 per cent, on said amount for taxes on its gross receipts derived from its earnings as a pipe line company ‘from every source whatsoever’ for the three months beginning July 1, 1922, and ending September 30, 1922, and if said article 7374, supra, is invalid in so far as it attempts to levy a tax on both intrastate and interstate commerce, but is susceptible of the construction that the Legislature only intended to levy a tax on intrastate commerce alone, then the amount due by the defendant, the said Humble Pipe Line Company, is $11,-391.73, together with the penalty of 10 per cent on said amount.
“(5) That the defendant, the Humble Pipe Line Company, owns real and personal property situated in the state of Texas, and it has paid all ad valorem taxes levied by the state of Texas, or any political subdivision of the state of Texas, on said property, and in addition has paid all franchise taxes levied by the laws of the said state of Texas, and is not now in default in the payment of any of said taxes required of it, and that the tax prescribed by said article 7374 is not in lieu of but is in addition to all other taxes required of the defendant to be paid to the state of Texas.
“After making the foregoing findings of fact, the district court found, as a matter of law, that article 7374 of Revised Civil Statutes of Texas was unconstitutional, in that it was in violation of section 1 of article 8 of the Constitution of the United States and of sections 2 and 3 of article 8 of the Constitution of ⅛⅞ state of Texas, and entered its judgment that the state of Texas take nothing by reason 6f its said suit, to which sáid judgment of the district court the state of Texas duly excepted, and on December 5,1922, gave notice of appeal to the honorable Court of Civil Appeals for the Third Supreme Judicial District of Texas.
“The appeal is predicated upon propositions, all of which involve, directly, the construction and the validity of the provisions of said article 7374, Revised Civil Statutes of Texas; all of said questions being material to the disposition of this appeal. That the issues in this case involve'the revenues of the state of Texas, and are of paramount importance to the public interests.
“Hence the following questions are respectfully submitted and certified to this honorable court for examination and answer, to the end that this litigation may be properly and speedily terminated:
“Questions Certified.
“(1) Is article 7374, Revised Civil Statutes of the state of Texas, under the facts above set forth, in so far as it attempts to levy a tax on the gross receipts, from every source whatsoever, of the Humble Pipe Line Company, in violation of that clause of section 8 of article 1 of the Constitution of the United States known as the ‘commerce clause’ thereof'?
“(2) If it is held that said article 7374 levies a tax on interstate commerce, then and in that event does said statute so construed remain a valid enactment and levy a tax on intrastate commerce under the facts set out?
“(3) In the event question No. 2 is answered in the affirmative, then and in that event does said article 7374 levy an occupation tax that is equal and uniform and nondiscriminatory within the meaning of section 2 of article 8 of the Constitution of Texas, under the facts above set forth?
“(4) Is that clause in said statute which purports to authorize the comptroller of public accounts to adopt some formula arriving at the amount of the tax other than the one prescribed in said statute a delegation of legislative authority in violation of section 3 of article 8 of the Constitution of Texas?”

The construction and the validity of article 7374 (Vernon’s Complete Texas Statutes) being involved, we quote that article, as follows:

“Each and every individual, company, corporation or association whether incorporated under the laws of this state, or of any other state or territory, or of the United States, or of any foreign nation, which owns, manages, operates, leases or rents any pipe line or pipe lines within this state, whether such pipe line or pipe lines be used for transmission of oil, natural or artificial gas, whether such oil or gas be for illuminating or fuel purposes, or for steam, for heat or power, or for any other purpose, and whether such pipe line or pipe lines be used for the transmission of articles by pneumatic or other power, shall, on or before the first days of January, April, July and October of each year, pay to the state of Texas an occupation tax equal to two per cent, of its gross receipts, if such pipe line or pipe lines lie wholly within this state;, and, if such pipe -line or pipe lines lie partly within and partly without the state, such individuals, companies, corporations and associations shall pay a tax equal to two per cent, of such proportion of its gross receipts, as the length of such line or lines within the state bears to the whole length of such line or lines; provided, that if satisfactory evidence is submitted to the comptroller of public accounts at any time prior to the date fixed by this article for the payment of the tax herein imposed, that any other proportion more fairly represents the proportion which the gross receipts of any pipe line or pipe lines for any quarter within this state bears to its total gross receipts, it shall be his duty to collect for such quarter from every such pipe line or pipe lines a tax equal to such other proportion of two per cent, of its total gross receipts. Eor the purpose of determining the amount of such tax, the individual or the president, treasurer or superintendent of such company, association or corporation, shall quarterly, on the dates aforesaid, make a report to the comptroller of public accounts, under oath of the individual or of the president, treasurer or superintendent of such company, corporation or association, showing the gross receipts of such pipe line or pipe lines from every source whatsoever for the quarter next preceding, and shall immediately pay to the state treasurer an occupation tax for the quarter beginning on said date, calculated on the gross receipts so reported.”

It is with great reluctance that a court will hold a statute invalid. As said by this court in the case of Smith v. Patterson, 242 S. W. 749:

“It has been repeatedly held by this court and the courts of all jurisdictions that a legislative enactment will not be held unconstitutional and invalid unless it is absolutely necessary to so hold.” Solon v. State, 54 Tex. Cr. R. 261, 114 S. W. 350; Koy v. Schneider, 110 Tex. 369, 218 S. W. 479, 221 S. W. 880.

An analysis of this article discloses, however, that it is subject to the objections raised against it. It is so clearly violative of the Constitution of the state of Texas and of the Constitution of the United States that only a careful analysis of it and an application of its practical effect is necessary to show its invalidity.

The questions of law involved are now fairly well settled. Therefore it is not deemed necessary to enlarge upon them further than in their application to the case at bar.

It is admitted by the state that a tax levied by the state against interstate commerce would be invalid as violative of section 8, article 1, of the Constitution of the United States, wherein it provides that Congress shall have power to “regulate commerce with foreign nations, and among the several states, and with Indian tribes.” G. H. & S. A. Railway Co. v. Texas, 210 U. S. 217, 28 Sup. Ct. 638, 52 L. Ed. 1031; Houston Belt & Terminal Co. v. Texas, 108 Tex. 314, 192 S. W. 1054; Meyer v. Wells Fargo & Co., 223 U. S. 298, 32 Sup. Ct. 218, 56 L. Ed. 445; U. S. v. Union Stockyards, etc., Co., 226 U. S. 296, 33 Sup. Ct. 83, 57 L. Ed. 226; Southern Pacific, etc., Co. v. I. C. C., 219 U. S. 498, 31 Sup. Ct. 279, 55 L. Ed. 310; Railroad Commission of Ohio v. Worthington, 225 U. S. 101, 32 Sup. Ct. 653, 56 L. Ed. 1004; United States Express Co. v. Minnesota, 223 U. S. 335, 32 Sup. Ct. 211, 56 L. Ed. 459.

It is also admitted that if it operates unequally upon the same class of subjects as applied to intrastate business, it would be invalid as violative of section 2, article 8, Of the state Constitution, which provides:

“All occupation taxes shall be equal and uniform upon the same class of subjects within the limits of the authority levying the tax.”

The state presents that at the time the act was passed the law was well settled that a state could not tax interstate business, and therefore it was the legislative intent to levy a tax only upon intrastate business; that the article can be, and should be, so construed as to separate the provisions of same, separating the part taxing interstate commerce from that taxing intrastate commerce, and as applied to intrastate commerce is not discriminatory against appellee, but would be equal and uniform as to all persons of the same class.

Appellee asserts that the article is inseparable; that when it is held invalid as to interstate earnings there is nothing left, and that it is so clearly discriminatory in its method of application, if-* applied only to intrastate earnings, that it is obnoxious to our state Constitution, section 2, article 8. While the law is now settled that the state cannot include interstate business in its tax levy, it was not so at the time of the enactment of article 7374 in 1907. At least the Legislature had good reasons to believe it had such authority and was enacting a valid law.

On November 7, 1906, the Supreme Court of Texas rendered its opinion in the case of State v. G., H. & S. A. Ry. Co., 100 Tex. 153, 97 S. W. 71 (being the same case G., H. H. & S. A. Ry. Co. v. Texas, 210 U. S. 217, 28 Sup. Ct. 638, 52 L. Ed. 1031, supra), sustaining the act of 1905, which levied a gross receipts tax upon railway companies. That act provided that each railroad company should pay a tax equal to one per cent, upon its gross receipts, if its line lies wholly within the state; if partly within and partly without the state, then a tax equal to such proportion of 1 per cent, as the length of its line in Texas bore to its whole length. The provision for reports in that act were very similar to the one before us. The similarity of the two acts is such that it is a reasonable inference that the act before us was modeled from the other. The court in that case held the tax to be an excise tax and valid, though the method provided for assessing and ascertaining the amount to be paid was based upon receipts from both interstate and intrastate business. This decision was before the Legislature at the time of the enactment oí article 7374 two or three months after its rendition. Afterwards, in 1908, the Supreme Court of the United States reversed the judgment of this court; however by a divided court of five to four. G., H. & S. A. Ry. Co. v. State, 210 U. S. 217, 28 Sup. Ct. 638, 52 L. Ed. 1031. But the majority opinion has been maintained, -and is now the settled law. See Houston Belt & Terminal Co. v. State of Texas, supra, and other cases cited.

Article 7374 provides that each pipe line company whose lines lie wholly within this state shall pay an occupation tax of 2 per cent, of its gross receipts, and the concluding sentence of,the article requires report showing gross receipts from every source whatsoever — this without distinction as to the nature of business, whether interstate or intrastate. It provides that if a pipe line company’s lines lie partly within and partly without the state, it shall pay a tax equal to 2 per cent, of such proportion of its gross receipts as the length of its line within the state bears to the whole length of its line — this, too, without distinction as to the nature of business, whether interstate or intrastate, and also without regard to whether such proportion will work equally and uniformly upon the amount of tax required to be paid by persons or companies of the same class on either interstate or intrastate business.

It is readily seen that the law and its plan or method of assessing and ascertaining how much tax a company is required to pay makes no distinction as between interstate and intrastate earnings, but assesses the tax 'against both. The language of the article discloses that it was the purpose of the act to impose, against persons and corporations "who operate pipe lines in Texas, an occupation tax equal to 2 per cent, of their gross receipts “from all sources whatsoever,” and to‘provide a means for ascertaining the amount of such tax in any given case. If the line lay wholly within the state, the tax was simply “a tax equal to two per cent, of its gross receipts.” If the line lay partly within and partly without the state, the tax was simply “a tax equal to 2 per cent, of such proportion of its gross receipts,” etc. In providing the means for ascertaining the business done upon which tax was to be figured, it provided for a report to the comptroller of public accounts, “under oath * * * showing the gross receipts * ■ * * from every source whatsoever,” and provided for immediate payment to the state treasurer, “calculated on the gross receipts so reported.” No other means or method of determining the amount of tax is provided than that based upon the gross receipts from all sources.

A workable means of ascertaining the amount of taxes to be paid is indispensable. Otherwise uncertainty would prevail and an action at law become necessary for the ascertainment thereof in each instance. Western Union Tel. Co. v. State of Texas, 62 Tex. 630. In the case last cited Judge Stay ton said:

“It is of the utmost importance, for the protection of the taxpayer, that tax laws should be certain, both as to the thing taxed and as to the amount of the tax, and the manner for its ascertainment; that the taxpayer may have an opportunity, without the expense of litigation, to pay such taxes as he may-owe; and a tax law which does not accomplish this purpose ought to be held invalid, whether this results from an attempted exercise of power not possessed, through which the law becomes uncertain by both proper and improper subjects being combined and selected for taxation, or by the failure of the Legislature for any other reason to furnish the rules by which taxes may be levied, assessed and collected.”

Thus we find the article levied a tax against interstate business as well as intrastate business, and provided no way to separate them.

If it be assumed that the Legislature intended the article to apply only to intrastate commerce and to name companies whose lines lie wholly within the state as a class of subjects, then there was no means provided for ascertaining the amount of the intrastate business, the tax assessed being 2 per cent, of gross receipts from all sources, and the act would fall because incapable of separation as between interstate and intrastate earnings.

If it was intended to apply the 2 per cent, gross receipts tax against intrastate business and to designate companies whose lines lie partly within and partly without the state as a class of subjects, and to provide for the ascertaining of the amount of the tax upon intrastate earnings by providing the amount to be such proportion of 2 per cent, upon gross receipts as the length of line in Texas bears to the whole line, then the act would fall because the method provided would be unequal and discriminatory among the same class of subjects. This is easily illustrated from the facts found by the trial court: Upon $100,000 of business the 2 per cent, tax would produce $2,000. The Texas Pipe Line Company’s line lies 89 per cent, within Texas and 11 per cent, without. Under the proportion provided, upon $100,000 of intrastate business the 2 per cent, tax under the terms of the act would be 89 per cent, of $2,000, or $1,780, to be paid by said company. The Sinclair Pipe Line Company’s line lies 260 miles within this state and 830 miles without the state, or nearly 24 per cent, within the state and about 76 per cent, without the state. Upon $100,000 of intrastate business the 2 per cent, tax would be 24 per cent, of $2,000, or $480.

A division based upon a proportionate mileage is only an arbitrary one, and has no relation to the actual amount of oil, gas, etc., carried within the state or without the state. or the earnings thereon. No means is provided for ascertaining the gross receipts from intrastate business or interstate business within the state or without. The difficulty is in no sense obviated by the provision that—

“If satisfactory evidence is submitted to the comptroller of public accounts at, any time prior to the date fixed by this article for the payment of the tax herein imposed, that any other proportion more fairly represents the proportion which the gross receipts of any pipe line or pipe lines for any quarter within this state bears to its total gross receipts, it shall be his duty to collect for such quarter * * ⅜ a tax equal to such other proportion of two per cent, of its total gross receipts.”

It contains the same vice, and, besides, it contemplates and provides for levying and collecting the tax upon both interstate and intrastate earnings.

We are of the opinion that it was the intention of the Legislature to levy the tax upon both interstate and intrastate business, and this intention so clearly runs through all the provisions of the article, and its parts are so connected and interdependent and inseparable, that we must hold that the Legislature would not- have passed it as applicable to intrastate business alone, and the article as a whole is invalid. W. U. T. Co. v. State of Texas, 62 Tex. 630.

We answer question No. 1 in the affirmative.

To question No. 2 we answer that the act levies a tax upon both interstate and intrastate commerce; and, inasmuch as it is impossible under the terms of the act to separate the interstate business from the intrastate business, it is invalid as to both.

Our answer to question No. 2 disposes of question No. 3, and our views expressed in the opinion make it unnecessary to answer question No. 4. Besides, the clause of the article mentioned in that question is not involved here; no action having been taken thereunder by the Comptroller. 
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