# Prologue — Esso Standard Oil Co. v. Evans > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386407_0235%3A0 ## Record - **Collection:** Supreme Court brief - **Document type:** Prologue - **Published:** January 1, 1953 - **Citation:** 345 U.S. 495 ## Text ~ LAIR RE ig ALT LALOR TREES ESM ° ¥ ‘ ° e TAO AOL OO Rt RONNIE a AED Ha onan TT Ta. esha enna ** ys ~—— : Y * ca os PREME COURT, U.S. Ate Eee te a OS \ : ye 4° TRANSCRIPT OF RECORD: ae Axles es ° co Reay > Hi Sage Court Za the United States. : “OCTOBER TERM, 1952 .. ¥ ; - _— ° No. 330 a _ ESSO st Soahty OIL, APPELLANT, © = vs. ¢ Oo ve. : JAMES CLARENCE EVANS, - COMMISSIONER ‘OF FINANCE AND TAXATION OF THE STATE OF - ve TENNESSEE, ET AL. ° e \ ; . : —_ a a APPEALS FROM THE SUPREME COURT OF THE STATE OF TENNESSEE ? P t - . . <> = . ? No, 330-FILED SEPTEMBER 11, 1952 No. 378—FILED OCTOBER 6, 1952 Prpbable J urisdiction Noted November 10, 1952 - \ . 7. | SUPREME COURT. OF THE UNITED STATES ere OCTOBER TERM, 1951 bi ." o te No. 330 = __ES80 STANQARD OIL, APPELLANT, - r ees vs, — JAMES CLARENCE EVANS, COMMISSIONER OF - FINANCE AND TAXATION OF THE STATE OF TENNESSEE, ET AL. No. 378. X. us. ie - JAMES CLARENC E EVANS, | COMMISSIONE R OF FINANCE’ AND TAXATION OF THE STATE OF TENNESSEE? ET Aly . APPEALS FROM THE SUPREME COURT OF THE STATE OF TENNESSEB © Be oe - © SNe pee Bt, (1 Ua Rada 5 bye : . INDEX a Original Print Prine in ‘Gane me Court of the State of MES beaces fh 1 Stipulation as to record 1 1 Order-direeting transmittal of original exhibits to Supreme Court (omitted in printing) 3 oes Petition of Esso Standard Oil C ompany for appeap 4 2 Order allowing appeal 6 3 Bond. "(omitted i in printing) 8 Citation _.. (omitted in: printing) Ade Assignmént of errors and prayer for sit chee ead | eee THE UNITED STATES, OF AMERICA, APPELLANT, Jupp & DerweiLer (Inc.), Manrers, Wasninoton, D.C., Jas. 16, 1953. 281 oS Opinion on petition a a, Siete a Judgment denying petition. to volver. .- tiers t teatt - 290°. ? Transcript, of record from Qavidson ; ‘County Chaneery Copa Eee eA T pend teehee See rth = he gen Sg 291 Cantina (omitted i in’ printing). 291 a Original bill | .- TPT enid eG we Eee 291 : Exhibit A-list showing amount of ee : SCOTT; =: - shipped and received ... 00:00... “. $07a Subpoena. to. answer and” sheriff's return ‘(omitted ix eerie pep ick, EL Ped CEE Re EOE ee ae Answer of dcfendant: James Cliceuns Evans _... ee Ie = Order of April 11, 1950 granting the United. States . . leave to intervene *. ike Soa RG Weenie eete es . 319 Petition of the United States for leave to intervene’ and . intervening pétition’.............- EN eae eee ks 320: Transcript of evidence.-......:.02.......0¢ 002205. 322 is ; Stipulation re Gopomtions eee Sua ae +. 322 aS ppearances Jp ae caged, 3S Fetes mates MORNE ees 323 Offers in evidence > -———-; 2 . $23 Deposition of -— he ‘Paul C. Stratton .. Re Neon a ty * 329 ‘ -W.-Randolph Pietsch»... ..:..0..%...:..° . 362 us C. E. Bradley ......°.:..... eae seiede oe 395. + F. VY. Thompsiin . *. pease ts 418 A. W. Goldsehmid 0. Me 452 avn ey Me se eee ee cue 476 a. J. M. Myrick ..... Sure cian ote 500 ‘Ober ie Oven or eS 518 Stipuldiion re depositions : ‘523 © Offer in evideiice . - 525 — —, » » Deposition of— aS : f Johan P, Knight ees eh ae sade : Gieero -C, Sessions: .........:. pS: 545 hat R. L. Weakley Sweeer ices Stipulation re deposition 598 . “Deposition of — , , th | _ R. L. Weakley 599 5 .H. E.: Desaix. e 617 Stipulation re deposition 624 Deposition-of James Clarence Evaris - 625 640 Stipulation re deposition a Print od . eo ere | f. t Bf a tN te ieee Pe ieee Coane ries 4 a Supra S ° Yi ers Sete: or AN Cie) sbi gn 4 8 er ~ 3 i Transeript of reeprd from Davidson County, Chaneery a tend Pet a +, Wourt—Continned “eee SRO Se in Revd weeg 4,” Transeript of evidenee-—Continued? coe _ Original = “Print : ’ .. Deposition ef- = >, eae ; Rig tein , eS George F; MeCanless”) 22... GR. 66 rics} Deposition’ of Cletis Greene 0.0. 0S 653: 274 Complainant Exhibits. No. 47 & No. 48—Let- __ s Sopp terfrom J: C, Greene to Standard Oil Com: aa pany dated’ December 29, ‘1943 and reply . } of December 30, 1943... 05 0... Pee ae’ A 291 : '’- Deposition of George F. Me(Canless (Recalled) 692. 302 Stipulation, re depdsition . } ; ce (omitted in printing). 723 ; _ ‘Justice’s certificate re clerk... (omitted in printing) .- ce, Species «, Petition of the United Stat s of America for appea].’.... . 728 ~~. 321° . _. Order allowing appeal nb hee Poe ieee Cae os & TQ goo —~ . Citation’ on ‘appeal. 77 | _. >> (omitted in printing). > cS é Assignment of. errors and prayer for reversal’. 6,’ a S| 323 Service of appeal papers under Rule 12 {omitted in print- . 3 Se 1 ae We a Pea Nonna eas Un female Ty ge aia 734 : a *Praecipe for record “| ~ \.... (omitted in printing) © 736 . oS Clerk’s certifieate:.. 2.’ + (omitted in printing). . 737. ° a Justice's certificate regclerk .____ (omitted in printing) °- “738 — . Statement by Esso Standard Oil Company of points to be he nies acc OE as LE RL enn ee et ae one eee Spare 8 tet Wee BOR Statement by the United States of points to be relied upbn : _and designatton of parts of dcord to be printed..:..... 742 °" gos _ Stipulation as to the printing of the record. _ nee . 745 :32@ . Griders noting probable jurisdiction. -« -__ Pera; eeNee de | -VOL.H.. . Of the® Defendant, /- In the Chancery Court, because cert overtimental | ‘immunity was asserted, the Chancellor per “mitted the United States Government. to file an intervenify petition. For brevity and to conform with the method -adopted Bw. the parties, ‘we will refer, in this opinion, to the » Complainants as* “Bh s0;"’. to the Defendant yas “*State;” “und te the. intervenor as the. “United States. oO ~. The contraversy rises out of services ‘perfornied by Esso for. the United States under written .contraets which are exhibited, These contracts between the United States an & ”. fol. 256] Esso contained indemnifying clauses which’ pro- ‘vide for payment by the United States of any stata taxes for Which Esso.may he made Hable on account of its activi- ties under the contradts : | : During the war years the U ited Sates was purchasing at the. refineties, all 100-octane andAhigher octane gasoline “used in aviation, From the refineries, the gas Was dnoved,. usually*hy cominon, carrier, and prince ipally by river barge, ints. The United States had no stor-° age fiilities nor pedsonnel to store and handle‘the gasoline, ¢ontracted with private cor porations, Esso’ owned cevtain storhge tanks at Memphis, and rented others ‘from! tie fon Oil Company, and. then contracted ‘With vy nited States toAtore the 3 aviation gasoline helonging to the United States, in these tanks, and. with Esso per- sonnelto distributd the gas from these tanks on order= of the United States, v— - “The gasoline ¢ame: np the Mississippi River by bate’ from Lowisiana, where it had been purchased by the United States. When it arriv vd ait Memphis, and while it was stil] on the barges, it was int vected by State officers, and there: peas . ecover ce ai ae gi spline a e 2° _ rendering services und its contra@s. The State, on the -— ‘Other hand, insists that the matter of liability was held in’ - . , Yo &, : . : ‘ . ie Pesos : r a ' oy ~~ = . ', after pumped by Esgo from the baxges into its storage tanks, or in gome cases, into tank trucks, and thereafter. delivyred. to various Afmy ‘posts on order of the United. Stat¢s. Somewtthege ‘my posts wefe ‘in Tennessee, and othefs:were in-Arkatsas and Mississipi, oy [ fol! 257] Activity under. the céntrattk here involved, com- menced in 1943, and continued. throug the-years 1944, 1945 and 1946, . Since, the Statute of Limitatyons had run on any | ‘taxes which acerned for the year 1943, tke presant suit was filed to recover taxes in the amount os 295,810:10, which had been paid under protest for the month isa test case; and will determine liabiltty for tax balance of the year P44, and for the years 1945 and 1946. During the years when the contracts were in operation and Esso was rendeting its serwces to. the United States; inspec- ¥ : : ® ; : 2 a P \ tion reports were rendered,the Department of Finance and | Tagation, and ‘discussions weré had with the State regard- ing tax liability. Ne formal decision of such liability ‘was | . ems . Fi . ~ he “ ever made,-either by the then Commissioner, or by the At- ., torney General. Esso insists that‘it relied on the econtem- porareous and continued administrative construction of qthie then officers of the State, ‘and that they coneluded that . Esso was not liable for any® gasoline taxes in connection - with the gasoline of the United States uponswhich Esso was _ abeyance and was uncertain, and that Esso was never for- mally advised*by any. responsible authority, that it was not . liable for these taxes; ~* Under the contracts, Esed received as~compensation, amounts ranging from 18/100" of accent to 6 3/10 eents a ' [fol. 258 j gallon. for yeceiving and storing in its agyn facili- . ties and those leased from others, the -gasoline belonging: | ° tq the United States. Also it received varying amounts for *. gasoline. slistributed by its own facilities, or, delivered to carriers on order of the United States-.- he - Froin thisgwe conclude that the questions: presented for decision by this litigation are three, namely: Sue fe (1) On the facts. stated, was Esso liable for inspee- fion fees under Code sec, 6821? ty 4 4 . ox ; ‘ . ° @ , ‘ January 1944, after the State had prepared a distress warrayt and thré@at- ened to have,it served. / It is agreed that fhe esent suit. - es forthe” SF - 2 8 . ‘ “1 ; 7 : } ¥ . : : y e ioe i « (2) Was Esso liable for privilege tax for such opera- ‘tions under Code see, 1126.1, et seq. } (3) Was Ess@ liable for interest and penalties? *& . % The Chancellor‘held that Esso was not liable for (1) and (3), but was liable for (2), and from those parts of the -@ detree which we adverse, all parties have perfected appeals. * es ees ah. rm We consider first, the. question of liability of Esso under Code see. 6821, forthe iaepestion/icen : That section pro- * vides thatevery consignment of ‘volatile substances, as such _ Substanees, are defined in previous sections of the Code, shall-be inspected, and for such inspection, a charge shall -[ fol, 209]* be made to’ ‘the consignor or’ consignee,’’ of ~ ~20 certs a barrel. Fifty gallons shall constitute a barrel, “- cand the fall charge made for any fraction of such barrel, That this inspection fee is not merely a service charge, . but is a. revenue measure and an excise tax on the con «. modity, has beer held.in a number of our reported cases, - State, ex rel Fort vs. City of Jackson,.172@enn.,.119; Texas _ Co. vs, MeCaQless, 177 Tenn., 238, a. “. From Judge Cogk’s discussion of ‘the nature of the tax and its. purpose inWState.vs. Reed Oi Co., 176 Tepn., 10, 19-20, it is clear that the tax is laid upon the commedity itself, as an excise.” In the present case, the gasoline, while it was inthe barges on ‘the river, and also while it was in, the storage tanks ‘on the bank, was admittedly the property of the United States. The inspections were made hefore the contract of Essé came. into play, and before Esso had pumped the gasoline from the barge inte. its storagé tanks, . ; We, therefore, agree with the Chancellor, tat the State has 620 power ‘to levy a tax on ‘property of vite States uuder these admitted og sh Oe CTE Roars eae “We come next to the consideragion of the second question, and Esso’s liability for the pri¥ileze tax under Codé sees,: 1126, et seq. This privilege tax has.also been defined by » Teported decisions of this Court.. rade os . aes « [fol. 260]* “This case (Foster & Creighton Co. vs, Graham, 154 Tenn; 412). , . settled the proposi- ~ tion that the tax , [> isa privilege tax on the en. gaging iff théebusiness of storing gasoline based 6n the > J WV ere | INDEX a ie ; ey - 9 ‘ we iginal - Prigt cd > - f° 800 © 378 © e * ‘815 ° 395 Sou PEER EES ROE REE a he PO ae No. 31—Government bill of lading WT-343187, eover- ing shipment of 91 octane gasoline from Memphis ‘BIB terminal to Grena a;, Mississippi gated Janua 16, 1944 Saves al ae Se a aR comtry ee oe Bolt Se ou No. 32—Government bill of lading WT-343690Acover- - Memphis terminal to Little Roek, Arkansas dated January 7, ONO To eee Sel anis Nos. 33 & 33A—Standard Oil Company_ef Louisiane Abhipping notice dated January 25, 1944, covering | 91 octane gasolirie transferred from Meniphis- ter- ty minal to United States Army 70th sub-depot, Mem- phis, See, eS | SURES RS ea meh ee Pa eS ‘No, 34—Lease cominencing: January 12, J944 of three .storage tanks from Lion Oil Refining: Company to Standard Oil Company of Louisiana ____ ng} Ree ena “No. 35—Fixed price service contract W535 ae-36457 and Supplemental Agreements Nos. 6 and 7 between the Governinent and Standard Ou Company. of .. : Louisiana for the period January 1, 1943 thru June 30, 1943 for storage, handling and delivery of air- craft engine fuel and other miscgllaneous services, ” Nos. 36, 37, 38-—Standard Oil Company of [wuisiana invpices to the Government for performance of sery- lee contracts during the month of January 1944 (without the aécompanying’ sheets showing the de: tails) . No. 39—Yonthly Gasoline Tax and Inspection. Fee re- — port to the State of. Tennessee, Departmest of Finance ‘and Taxatio: for the month of January. 1944 by Standard Oil Company of Louisiana No, 46——Memorandugfor the Jadge Advecate General from Cicero U. Sesfions dated September 14, 1943 - No. 49—Letter from Ry L. Weakley to Mr. Joe Hol- +» brook dated Jannary 28, 1943 oy 818 308 - bes 819 309 $26 403 862° 44) 863 442 5 R76 455 . S7S 456 “i *t . "32. INDEX > : * 2, omplainanit’ 8 E xhibits—Continued ' Weakley dated February 23, 1943. No. 55—Letter from George ‘Ss. Hale, Je. to R: «Lis Weakley dated July 19, 1943. -. Company of Louisiana dated Octobef 29, 1943 . No. 58—Letter ffom R. L. W eakley to Standard Oil Company of Louisiana dated October 29, 1943 with Se ae A.F aes 7 ___—_No.:60 & 61—Eel ter om J. ¢. ‘Greene to rh 2048. Oil” bce pel of Louisiana dated: March bet 1943 pat dated February 29, 1944 Se a ¥>. The parties to,the nbove entitled cause stipulate as fol- — lows with respect to the portions of the record to be omitted i ‘drom, the transeript transmitted to the, Supreme Court: * ~ - Complainant’s: Kixhibits 4-28 sifclusive, 40-45 inclusive, | ] Y “hg. : ' ae | 47,48, 00-5-Finclusiye, 56 and 62-66 inclusive shall be omitted ‘forthe reason that some are already copied in the testi- of the witnesses are substantially -correet, so that their inclusion; verbatim, would be unnecessa ry to a proper pres- sentation 6f the case-dn appeal. It-is stipulated that title ‘to the gasoline here involved became vested in-the United States at the refneries and remained in the: United States. at All times thereafter and that -such.gaseline, was trans- ‘ported on government bills of lading by common ‘carrier barges to the bank on he: Mississippi. River at ‘Mémphis. ‘{fol. 2] For that. addi onal reason such of the foregoing ° -exliibits as were introduced taprove saidfucts are unneces. sary to a proper presentation of the case'on appeal, “There shall also be’ omitted\the depositions of Joe Hol. brook, T. B. Bunn and. Willie: Waller (pp. 316-228) and . the rebuttal deposition of R. Li: Weakley (pp, I-00), same -being unnecessary to a proper presentation of thé. case on appeal. The deposition of R. LL, Weakley (pp. 396: B39)" and Pps 248-263 will fellow the deposition OF Clears C. Cessions (pp. 206-215) and will he copied. iti thi order in which the testimony wis taken father than the stderr jy whieh “it. Was filed” : ails tee AEE a, 2 :-: gan “aha” eee . a ]. oreo), , a * ie, oa mony and the desgriptiorfs of the others in the testimony “e -_°o There will ale ‘be omitted, the cost bond, subpoena te. — answer; appeal bond, certificate of Clerk & Master and. bill of costs. . -+« Ae ‘ “With the foregoing exceptions, the entire record shal] be}ineluded i the anseript) inclaiding thjs stipulation, his August 9, ee Grae Ve William Waller, @ounse for Appellant: o/ mene Walker & Hooker, by K. Haflat Dodsou, Jv. + sel for Appellee. Rar ete as oo. ii 3] Order directing transmittal of original exhibits to es Sapreme Coart tNemipted j in printing). AEs - : eB A z es Z , ’ « OF “ A s Reira yae ma . @ a ; ol 4y° ee [File. endorsemedt omitted] | = : a. o : = , Iw Supreme Cou RT OF Tex wHSsER pie = Reh nr é [Title omitted] ae, ; San Perition § FOR Avprat—Filed August 8, 1952 To the Honorable A:’B, Neil, Chief Justice of the i ns Court of the State of. Tennessee ; (, ‘onsidlering itself’ aggrieved by the final 1 ded and jude- ‘ment of this Court entered June 7, 1952, @nd order denying petition for rehearing: entered July 11, 1952, Esso Standard Oil Company, complainan}.appellant, does hereby pray that. an appeal be allowed’ td the Supreme. Court of the United States from said final déeree : and judgment and order deny- ing the petition for relrearing and from each and é¥ery part thereof; that citation be issued-in aceordance with law. 4 that an, order” he ente red with respect*to the appeal bond to be given by isaid complainant- -appellant; and: that the material parts of the record, proceedings and papers wpon Which said final .judgment and. ‘decree and order denying pegition 9x rehearing were: based, duly anthenticatd, be sent to the Supreme Court ofthe U nifed States in accord. ifoi. 5] ance with the rules j PACH Cases mace inl prov “hded, Respectfully submittag Villiam W aller, 0 ‘OUnse | for Eihy: Coniplainant-A ppéllant, Esso Standard il Vom. sy) pany. Anieriean Tras t Bujlding,. Nastine 3, ChveSssee, . : T 10 . e a or “e « Be oT ° Lor . : °, a Pe has ‘ : 3 a ~~ ~ Ss * “ ‘ 0 =g > = : :& ~ ce a o ~) Xt : ere « 4 t ° ? - 4 ° fe ¥ \ 7) “a ~ : = > re : om i “ oN e ‘ \ i . © > * os : é x . a. . : ‘s \ aes SEE Pree eps ewes INT a Pee eee eins - a\ “fol. 6] * — {File endorsement omitted] es) . « == ot he oa. 6 1 : ° =a8 ° ‘ ee : - Ly Supreive Covrr OF TENNESSEE | zt . = Z c - [Title omitted ] Sara re ae eae ‘ es ae Se Ears Re ee ° oy - es ‘ -, with good and sufficient surety, and shall be conditioned. as may be required by laws ~ Pes ak ogee eee at It'is fu rther ordered thag citation shall issue in accordance with law. fe 2 RGF gin oe « ; ea, ete ~ -* ALB. Neil,-Chief Justice. Adgust 8, 1963." "> 88 3s 3 ES ae ae @ . * . ° . a - . FP Nag a = 3 atic e- ° : e ee & ; - 2 S . . ; [fol. 8} Bond sn appeal) for $1y0610,00 approved an® fied >, August 8, 1952, omitted iff printing. : . ' [fols. 9-10]. Citation-in usyal fork showing service on Ky _ *, . Harlan. Dodson, Jr, omitted in printing. : is e : mak . . * s o bs = ~ a I. a q q fetes’ ae _ [Bile etidorsement omitted] . 2 : ; ; & a ° . } 9 = *¢ ; 0° e> © ‘~ 6 “s 2 « o o? ‘\ ; gett : e § % ". . . ” > © * a % . . 2g ¥ : .% = ; ;: « te t f° . : ¢., ee] | - “3 — Te oC a * « Eft > ie : f : - ‘ rs . = ¢ é Ls Sveneate Corr OF Test ESSER ? = = {Title omitied) o ae Zs “Assiow freer OF Eixnors AND ‘Peivan FOR Reyensat—Filed Beg August'8, 1952 Te Esso. Standard Oil Company, complainant- -appellang in the above cause, in connection with its appeal to the Su- _\preme’ Court of the Unitet States, here thy filefthe following . order denying. petition for rehearing eytered July 11, 1952.- assignment of errors upon which it will rely-in its prosecu- ‘tion of said appeal-from the final sacar and decree of . fhe Supreme Court of Tennessee enté¥ed June 7 7, 1952, and - The Suprenie Court of Tennessee erred as follow Sie: a Having construed the* Tennessee gasoline tax laws (secs. 1126 et. seq. vf the Code of ‘Fenncssee (1932) as. amended) as requiring the inelusion in the measure of Esso Standard Oil Con) yany’s gasoline tax of gasoline belonging if , [ fol. 12] exclusively to the Unged States,.the Court erred ast _in not holding that, as so construed-and applied, said Tennes- “seé gasoline tax laws ‘ire repugnant to the Constitution of “the United States and vo oe under the penne of roe sipaudnelgatcne: immunity. ie : The C ourt erred in. failing to hold that the assessment to en Standard Oil Company, for the: purposes of said Tennessee gasoline tax ‘s, of gasoline belonging exely- sively to the United States, by ineluding the quantity of such vasoline in the measure of the tax. assessed, is illegal’ al — voul for the Season that such Assessment is apon or meas- ured by the exchisive property of the United States, whieh” is immune from taxation by the State of Tennesse © under ate Constitution of the United States. © |, ~ Having construed said Te NHessee gasoline t tax laws as - ‘requiring the inclusién | in the measure of Esso Standard Oi). ‘Company's gasoline t tax of gisoline belonging e ‘xclusively to the United States, whic hy was the property of the Mnited States when if came te rest in The State of Tennessee, aud baving at the-same time adh ered to its devisign in Te NNeSSEee Gul e oanrpany v. Vv. Gow 1 issioner, 1787 Penn. 805, lof. S, W.-2d e + ee ) , { > , tae iets o _@ mae, Ss & ‘ . « 6% 5 . 267, construing éaid "a gasoline distributor's ga hathidled by. such distributé ‘it came to rest in the State . @ dasoline tax laws are repu not holding that, as so coustrued and applied, the Tennessee ' : : ° * is “ a K : . . 7) 3 a ay a ° ° ve * a 2 e » Z & . ee ; is v laws as not -pequiring the inelugion in“ soline tax of gasoline storfd-and r which did not belong to i when of Tennessee, the Court#rred in gnant to the Fourteenth Amend- 2, ment to the Constitution of the Unitéd States,and, void ‘as. ¥ _ denying to Esso Standa rd Oil Company the equal protection | ‘of the laws for the reason. that the classification made by Said laws, as, so construed. arid applied, is. Grbitrary and >* [fol. 13] wwithoft reasonab !e’or substantial basis. ‘ . ; > e tae 72> ‘ i fi * 4. The Court erred iu failing to’-hold that the assessment © Esso Standard Oil? Company, for the purposes of the : rly tthe Cait tax: liiws,"of gasoline belonging -exelu-° *. sively tot United States when it cine “by including the quatitity 0 * Pa) * 1e United States, wig was the property of thie to rest in the State of Tennessee, f such gasoline in the measure of - . thé tax assessed, is illegal and void, for the reason that such assessment denies to Esso protection of the lays, con Standard Oil Company the equal: trary to the Fourteenth: Amend. - ment to the Constitution of the-United States, in that the Caurt, in upholding such assessment, adhered ta the con- > struction placed upon said: laws-in Tennessee Oil Company v. Commissioner, 178 Tenn, 683, 157 S. W. 2d 267, and the . ¢lassification made by_4ah I, laws, as so construed and ap- plied, is. arbitrary. and without, reasonable or substantial basis. 5 3 Wherefore, :compiaitiant-appellant: Esso Standard . Oi] - Company, prays that the judgment of the Suprenie Court 2 of Fennessee be reversed, Court: may deem fi* and p aud for such other religs: as the POR 8 eae ae | 4 William Waller, Counsel for Complainant-A ppeHant. , seg [fols. 14-254]-. Service of ‘(omitted in printing)”. ‘ . : hea appeal papers under Rule 12 sr? e the Obion County Board: of Education rented -a storage tank from the Tennessee Qi) Company, with an agreement that lit would pay the Ten- nessee Oil Companyan fee’ of two cents a gallon for dis- tributing ‘the vas.on order of the Board.” In gal effect, : the Board of Education, which 4was exempt, Was storing gasoline in its. own tauk. Although the fental of the storage | tank was a nominal amount, it had the effect of changing independent contractor to that of. an agent or ‘servant of the Board: In the present case, the charge which Esso made the United States @r storage alone, was @ very sub- the status of the Tennessee Oil Cowpany from that of an stantial. and luerative business considerjng the. vast Amount - [fol. 262] of gasoline involved, since the. contracts show . that Esso charged from 18/100-of a tent to 6 3/10 cents a e Sea rate ; ae ‘ ‘ ‘ . . . 2 per gillon for re@iving and storing the gasoline in its tarike | This was partieularly true, as the State insists, since at the - time of these contracts the United States owned all gasoline of this quality, 4nd without this Governihent business, sso -wéuld have had no lucrative return on its tanks, and nade no money with which to pay its personnel. apna ~ We conclude, therefore; that Esso ‘was properly assessed ‘with privilege taxed led in Code sec, 1126, et seq. .Esso further insists that some of the gasoline received in the Memphis tanks was later, on order’ pf; the United . Stattes,-exported to Mississippi and Arkatisas. As to the exported gasoline, it is insisted-that if liable at all for the privilege tax, it is liable only for the tax at the export rate : of 1/20 of one cent per gallon. Esso kept no figures of the amount of the exported gasoline, and made noacturm show- ing those figures to the Department of Pinance and Taxa- tion, as the law requires. Apparently, it is impossible at ethis pgint,to establish with any accuracy, what those figures were. Since,-under the frame of the Act, the assessment , for the tax is made on the returns of the taxpayer, and since the taxpayer is claiming the exemption, the burden Was on thé taxpaypr.te show the exact amount of the gago- line exported, in Order to-avpid the higher rate. Hamilton: '~- Natl. Bank vs. Me€ ‘anless, 176 Tenn, 570; Fidelity-Bankers [fol. 263].Tr. Co. vs. MeCanless, 181 Tenn., 476, a As to Esso’s insistence that by reason of the fact that: the State made no demand for the taxes when they Beeame due, and that State officers acquiesced. in the non-payment of taxes, that the State is now estopped and precluded frome ‘collecting the taxes, it is only necessary ‘to say that there was never any formal remission of these faxes by any re- sponsible authority, and there is ‘substantial evighgnce inthe record that the matter of taxability was held in- abeyance. and never decided. In any event, it ‘is general law. (31 C. J.S8., Estoppel, p, 412, sec. 140-b), which has many times: . been fMlowed by this Court; Natl. Life & Ace. Ins. Co, Vs.. Dempster, 168 Tenm, 446: Reynolds Tobacco Co, vs. Car- son, 187 Tenn., 157; American Bemtherg Corp. vs, Carson, @ 188 Tenn: ae that a mistaken construction of the law by public ofi2rtannot work an estoppel against the State in. the collection of its revenue. Phe record does not show that i / 11 Esso wag prejudiéed in any way by a failure to collect the. tay. State vs. MePhail, 156 Tenn., 459, 460, \ Finally, we consider tke third question, and the assign- “ment by the State, that the Chancellor committed error: in ‘remitting interest and penalties on the taxes. Under-the , facts of this case, where there had been no formal.demand . by collectors at the time the taxes were due, antl -when there " Wak a bena fide doubt of tax liability, the remission of inter- {fol. 264] est. and penalty was within the sound discretion of the Chancellor on principles of equity; Brewing. Co. vs. Currier, 126 Tenn., 535, where at page 551 af the opinion, Judge Green cites with approval, the following statement from Cooley on Taxation: ees if Ahe penalty should not be exacted: if the de- -lay came from serious doubt of the validity of the tax.”’ ‘(Cooley on Taxati&n, Vol. my fs SOR 3. oF : oP his contréversy.is béing waged in-a court of equity . and this Court, since Mast Tenn. Brewing Co. vs. Cur: - rier, 126 Tenh.; 930, has exercised the power of remit- ting penalties imposed upon taxpayers when the equi- » ‘ties of the case seem to demand. See also Shipp v- Cummings, 158 Teny., 526, and State et Vs. Rowan, | ef al., 171 Tenn., 612.9". Memphis Natfias'@o. vs. Me- & Gefinition’ ‘of the term ‘‘distributor’” in, Code Section 1126.: Esso did ‘not contend that this statutory condition was also to Ve . fSund in the cases cited by the, Court. In all the cases cited, ow nerf the-gasoline had/not only stored the casoline but had previously imported. the gasoline into Tennessee from outside the State. ( - [ fol. 271)" The primary . meaning of the wor, import? e > ‘*to bring from a foreign country mto one *s own county: we import wines from France. * Twentieth Century Die. “Cort of the United States-in Canton R. Co. v. Rogan, 340 U.S. 511, 95 L. Ed, 488, as follows (340 U.S, at p. 515): To: export means to carry or send abroad; to import means to bring into the country. Thos@acts be gin and e nd at iwate r’s edge. eee » \ ° Importation hae one sfate into another i is analogous. to ‘the eondifion precedent ‘was in fact satisfied because the | ae: The word was recently defined by the Supreme importation | from, ,one country into another.” W hen the’ barges tied up "at ‘the docks on the Mississippi River the -. gasoline in them was already inside the State of Tennessee. Arkansas v. Tennessee, 246 U.S. 158.. In fact, as found by — the Chancellor, the gasoline had been inspected by the State (R. 363) and had, therefore, become subject to’ the jurisdic- tion. of the State of .Tennessee before Esso took possession the gasoline. ate ° ‘ A ease closely in point is State v. Fidelity & Depesit Co, of Maryland, et ‘als 78 P. 2d 1090, decided by the Supreme Court of Washington in 1938. In that case.the State of ‘Washingtm attempted to collect the. “fuel oil tax from a railway company for the privilege of distributing oil. The - . court ‘analyzed the statute in question MS follows (78 r. yi at p. 1092) : [fol. 272] “It appears, ‘upon analysis of sec we 79 of the act, that taree classés of distributors are taxed, namely :, (a) Persons whe refine, manufacture, pro- duce, or compound fuel oil and se 1; distribute it, or in any manner use the same‘ within the State; (b) persons who. import any fuel oil into the State, and store, sell, be . . e a «a ”™ &® y ; ’ i withdraw, distribute, or in any manner use the same within. the State; (c) persons why, having acquirgd fuel, - oil in original packages or containers, distribute ®r sell the same, whether in the original package or container or otherwi ise, ‘or in any manner use > the same, . It then held that the railway company was not liable for the tax becanse, although it had received and stored the oil in question, the oil, had keen imported | into the state by another party. The Court said: ‘‘The word ‘import? when used as a verb, means, by ~ derivation, “to gear. or carry into,’ and by common usage, ‘to bring in.’ In its technical meaning, it is usually ‘employed to designate the bringing in of arti- cles from a foréign country. In this statute, it evi- . Tennessee Oil C ompany from that’ of, an independent contractor, to that of an agent or.servaht of the Bonri, ° ’ the. In ‘the present case, the charge which Esso made the. United States fer storage alone, was a very substantia] and lucrative business and consklering the vast amount . of gasoline involved, since the contracts show that: Esso _ charged from 18/100 of a cent fo 623710 cents per . gallon for ‘receiving and storing the gasoline in its tanks. This was particularly true, as the Gate insists, | _since at the time of these contracts te United States owned all gasoline’ of this quality, and without this. Government Business, Esso would have Yaad no Tuera-. tive return on jts tanks; and made no: money with which to pay its Personnel. OF ae .° In the fase at bar’ ‘the Court: hold for the Virst time, in construing Code Sections 1126 et seq., that the ownership of the gas@line is immaterial. In the Tennessee Oil Com- pany case the Court: held that the determinative question was ‘¢To whom does the gasoline belone when it comes to rest in the State of Tennessee’’ (1178 Tenn. p. 691). As now construed, Code Sections 1126 et seq., impose a tax of seven | cents per gallon under the facts disclosed by the:record in c: 3 ‘ . 8 ~ rd [fol. 274] the case at bar, but no tax under the facts of the oes Tennessee Oil Company casg, -@8-s0 construed Code See- "> tions 1126 et seq., deny Esso The equal protection of the laws guaranteed by the Fourteenth Amendment and are unconstle, tutional and ‘void: because there is no reasonable basis for ~ the’ classification made’ by the Court, es ee Your Honors did not undertake in the. opinion filed to ‘sp@@,out in detail the distinction or. distinctions between the two wy sses of Gases, “the one where the tax is not due, awn - the oher where the taxis due. Your Honors did hold, as wh read the opinion, that the dis ‘titiction or distinctions between 2330, 338 9 eres ae > \ : : . go hi “ a eat iy the two-clissHic@tions are not such that Esso \ ay a . . \ ae ge and the United * States could have chosen to come. within. the exempt class, — '~ rather than in the .won-exempt. class, and fave: made this choige effect ive by a formal thange in the contracts, such as * a provision for the payment of a nominal flat-renfal for the Bons ~ fise of the tanks in addition to the #@arge. per gallon., We say this because Your Honors held that Esso was not ‘‘preju- diced dn any way’? by the State's failure to collectd the tax -ascand when it became due! Obviously if Esso ‘and the ° “themselves in the Tennessee Oil Cempany classifieutton, the _ Stnte’s failure to cellect theetax‘as and when it beCame“due, misled Esso and did préjudiceit. The collection-pf: the tax for one month would have,enubled. thé parties tofavoid the _tax:for all succeedittg months: © 5 0°: 0 = - Since Your‘Honoys did not spell out the distinetion or dis- finetions betwéen the two classifications, we can do no more “in this petition for ‘rehearing than .urge, as we do; that & A fol. 275] whatever thé distinction or distinetions ate, they oS a re-se anreasontble and a rbitrat-and (feking in substance. void because they deny Esso edual-protection. of the laws, — We deem it proper té-point out in. this connection that the statutor@Mancuage itself: gives no su¢evestion of a distinction or distinctions now made by the Court andythat no prior \ decision of the Court suggests such distinction’ or distine-. — ~~. tions, Bees [hans td eee . a Nore " \; We further deem it proper ta point out that the charge of : _ to cents per gallon made in the Tennessee Oil Comphny > * case-coveted hoth storage and distribution (withitr Obion County) atid the ramge of fees in the efse at bar, 18/100 of’ avcent per gallon to 6-3/1) eent-per gallon, is based mainly ‘upon the mileage involved in distribution, where such Jistri- bution was ta be made in.Esso’s own equipment. Inthe éase 4 cat bar (in volving Jannary 1944) the only distribution-from the Memphis Terminal in Exso’s qwn ¥ehields was of gaso: line going to\Memphis Airport: All the other gasoline was delivered by Ksso to common earriers and the total charée made by Exo was a fraction of a eent per-gallan: The facts in this regard ark clearly set forth invthe briefs heretefore _ filed, with specific veferences. to the record. Fig oe agri It is well settled that ana rbitrary classification for pur-., as to render Code*Sections 1126 et seq., unconstitutional and a) Ma 5 irs Of | ‘ ‘ al \ rath ay a “ : J - 8 =a x ; : : iS e “ ‘ United Statex could, by, Some such formal change, have put . oo? ° -3 - > \ : ca ; ° e are: ° 19 “ P ‘ . . - ‘ a . ‘ poses of* taxation conilicts with the Fourteenth-Amendment. Schlesinger v. Wisconsin, 270 U. §. 280. The Fourteenth -Amendment requires that the classification be riot arbitrary, {fol. 276} but baséd on a real and substantiat difference having a reasonable relationtothe subject of the particular: 6 “se . * Safehy : y ? end ? legislation. Qnaker ‘City Cab Co. v. Pa. 277 U. S. 389, Phrasing the same principle differently : a : ~- « » °*; The; equal protection clause of the. Fourteenth - Amendmst_nrotects the individual from state action which selects him out for discriminatory treatment by subjecting him to.taxés not imposed en ethers of ‘the _ same class.. The right ts the right to eqnal treatment. Se ates ieee (Hillsborough v. Cromwell, 326 U. S. 620). 7 eave at 2 Section {126 et seq. of the Code of ' nnessee,s now con- strued by the Court,. is wg a to amount to no classification af all, and Esso specifically relie’ upon the, . “equal protection of the laws clause of the Fourteenth . Amendment as a ground for-this petition for rehearing. ° . O29::"3 ~ Itis respectfully submitted that the classificatien-nfade hy 3. Export gasoline. - . Ie oe ae ” In the opinion of this Cogrt, it was. stated ‘that ‘Esso’ : kept no figures of the amount of the exported gasoline, and>, - made no return showing ¢lose ‘figures to the Department of "’Finagee and Ta:;ation, as the law required, Apparently, it. ©. is infpossible at tuts point, to establish with any acenraty, ~‘ what those figures weyeé.’?) gga 7% There has been no dispute as to the amount of export gasoline involved inthis case. Esso did keep the figures and: (fol. 277] the exa@t amount for the -menth of Jantiary 19% was 1,005,832 gallons This was the exact amount alleged in the complaint (R. 7) and proved=yithout contradiction ~ (R.159, 174), and is the amount pec Ra in Exso’s third . assignment oBerror., * Sei ts Pe cee Boog Cine It is true that in Esso’s monthly report to the Commis. sioner of Kinance‘and Taxation whieh included all the gov- _ ernment oWned gasoline for January 1044, Esso did not five separate figures on the 1,005,882 gallons‘of- export gasoline, ° "The reason for this was obvious. At the.time the gasoline “in question was inspected, stored for export and exported, - s ey 2 “4 {- . ry te F . . : t e : : ° © ae A o . : oO ¥ t 8 eee aah tin ese iee -Evenif this Wee not true, appellant's argument is fallaci- » Qus for two reasons. In the first place, this Court*and the - ~-, Supreme:Court of the Untited States, as we pointed cut.in >" our original reply brief (pp, 14-18, ‘*Reply to the Assign- ments of ‘Error, Brief and Areument Filed by Appellant, . Esso Standard Oi] Company’’) have, previously found that our. Statute imposes. a privileye tax on the ‘business of _ Storing gasoline-which Esso admittedly did.’ N. Cvd Nt.L. Ry. v- Wallace, 288 US. 249, 52.8. Ct. ; haa NPs hy & Gees preeere etrtes : ee pi F 283] \Texras Co. v.Fort, 168Wenn. (4 Beeler) 679, as SOB. W. (28) G58 I . le? Quick Service Tire Co.°v. Smith, 156 Tenn. (3 Smith) ae 96, 299-8 W. 807 . eatin ¢ ; ‘~ ". Poster &. Creighton v. Graham, 154 Penn. (1 Smith) “412 985 8, W\ 570. . ; ° 8 +; Seeodndly; as the appellee pointed out in its brief and” , 2H oral argument, to-which argument. appellant attempted to reply when the case was heard, and as found by this Court, (p. 7, Opinion of\the Supreme Court—of Tennessee by Mr. .Fustice Gail6r),*Rsso did import the gasoline-into Tennessee’ by removing it\ from the-channel of interstate. . gommerce into Exsois storage facilities. “e . wae: results, therefore, that under: either theory, as pointed out by Mr. Justice Gailor iIn\ thé: Court’s Opinion.(p. 7), * . . e ° ‘ ‘ P es this ¢ . “22 © * ee ee eet " : this Court wes ergmiently correct in-its response to this” ° assertion made -by Bxso on theoriginal hearing, | 8 . ; ; ake i me ae * A) ie #2 te ate tee : &-y ' P ss ‘ - 93 = ¥ a 3 3 : J 2. Appellant's insistence that * The grounds given in the’ - . - y : 1 ‘ , eel 4 Ree ie ~ 7 a Sah eal ak ry , opinion of the Court for distig.guishing J ennessee Oil Co, wv.’ McCanless, 178 Tenn. 683 raise new issues’ of constitu: tional law.”’ Re - : e . Appellant, now for the first time, seeks te raise a new Toke Sie . "3 . 3 : . >/ > e eonstitutional question; ofie not raised in the Court below or in this Court on the main hearing of qe cause, ’ This, of course, cannot be done; this Court having previously. held that it will not consider a Federal constitutional ques- [| fol, 284] tion raised for the first time in the litigation on a petition to reheag. - | ay ae Tenn, Ou Co. v. 'McCanless, 178 Tenn. (14 Beeler)_683 at 703, 162 8. Wy (2d) 1084, app. dis. 68.8. Ct. 34, 317 —s. U: S. 588, 87 L. Bda4so. Ane Even if this were not the: law, petitioner's C@cTusion ‘would be without merit, being based upon spurious reason-. ing. This Court properly held in its Opinion by Mr. Pastice: Gailér that thé case of Tennessee Oil Co, uw. McCanless, 178° Tenn. 683, was completely distinguishable on the facts.” In , o the Tennessee Oil Co. ease the Court found that a vovern-- mental agency, complétely exempted from the tax, was storing in its owm tanks. There is no tax on the privilege of owning tanks, but only on the storage of vasoline in such tanks. It is true in that case that Tennessee Oil Com. pany owned the tanks, but it was not exercising the privi- lege of storing gasoline, the privilege taxed, Here Esso. Was exercising the* privilege of storing the vasoline, the taxable privdege, from which it received substantial revenue, and therefore the tax was properly. imposed. : There is, we respectfully submit, no‘merit in the angu- ment that because,’one, whe is found by the Court aot to. Me exercising the privilege taxed, is not. taxed, whereas [fol.. 285] one, who is found th be exercising the. privilege taxed, is subjected to the statutory tax. — bard 3. Appellant ’s insistence as respects “‘Edport gasoline”. Again, appellant is confronted with Rule 32 of this Court requi¥ing a refusal of the petition to rehear for the reason that the. argument now made isathe same as that made 2) s @o ee renee | before, even though it be couched in slightly different lait guage (pp. 36-37, ‘*Assignments of Error, Brief and Argn-- . thent of Appellant, Esso Standard Oil Company. ~ Certainly, Esso cannot now elaim the benefit of an exemp- tion when it did not furnish any records to the Department at the.time fropi which the epartment could. make any ' ”. considered determination of the accuracy of the same. Nor — is it any answer for Esso to say that at this late date they . can now.come forward and furnish such. | Ea. : Based on the returns filed by Esso with.the Department, q from which the assessment here complained of was made, the assessment was entirely proper and legal, and in fact was the only assessment which could have been made from the records furnished Oy Ringp. 05 ee ‘[fol. 286]" Wherefore, we respectfully submit that the petition to rehear is totally without: merit; and the same should be forthwith denied. ; ones Respectfully | submitted, Cummines -& Crabtree, ~~ Walker, Hooker, Keeble, Dodson & Harris, by: re ee K. Harlan Dodson, J r., Solicitor for the Respond-. ent, the Appellee. . ; | ed ? ‘Proof of bervige (omitted in printing), © ° A -(fo]. 287] . Ix SUPREME Corr or Tren Sesser Davidson Equity * - .Ksso Stanpakp Or Company ? | . ope Re ares F SAN eM eat tag ay ne ea ND 6 James Cuarence Evans,‘Commr., ete, ‘ Ovrxtoy on Petition to Rewear a ' Petition to%ehear has been. filed secking a hineidcen: tion of our former opinion. The petition'is divided ‘into three parts. - | «- a E ; es By the first part, it-is insisted that Esso did‘not ‘“*import?’. the gasoline upan which the tax was laid. In our former ¥ ° pecs | | = 35 . opinion, we’ held that it was unnecessary td-a deéision, to _ decide whether or not Esso had imported the gasoline, and | expressly so stated. . aoe SE Oe kK. : . —_— “*Nsso contends that it is a condition precedent to liability for this tax, that the taxpayer shall have im: ui ported.the gasoline. While we find no support for this. . >. [fol. 288] argument’in the eases cited above, in the present ease, it is unnecessary to decide that question since technically Esso did import the gasoline into’ ‘Tennessee by removing it from the channels of inter- * state commerce on the- barges on the river into its Poy ‘trueks and tanks on the bank.” Oe iigs . . ; p ? : a . , We reaffirm that holding. i eee i By the second part of the petition te rehear, it is re- argued that we should apply the rule ni@® in Tennessee Oil > Co. vs. NCanless, 178 Tenn., 483. -We' fully considered that case in our former-opinion (pp. 7 and 8) and fonnd and held that it was clearly distingalishable from the, case - at Bar. We find nothing iit the re-argument to change our _ former opinion,.and the re-argument itself, clearly does not _ justify: a rehearitig under Rulé 32 of this Court. 185 Tenn., “ 1p eee eee nies = By the third and final part of the petitioh to rehear, Esso "claims that we should modify our former opinion, and make - a a ~ 7 : a's 7 * of Louisiana was a distributor of gasoline in the State of ‘s Tennessee as defined in Section: 1126 of the Code of Tei. nessee. and was properly qualified as such, and since the - ** merger complainant has been a distributor of e¢usoline in the State of Tennessee as. defined in Section 1126 ef the ‘o #Code and,has been properly-qualified ‘as such. The word ‘complainant’? as used in this-complaint means Standard Oil Company of Louisiana whenever references are mace to a period of time priogge the aforesaid merger. fol 298) 222 ZF Il ; This is a suit’ brouctt to recover $295,810:10 alleged to have been due and owing by the complainant for gaseline. 7° taxes and inspection fees for the month of January, 1944, together with penalty and interest thereon, and gaid under protest by complainant on-November 30, 1949,-atfer a dis- tress warrant had been prepared and signed by the defer ant, Commissioner of Finance and Taxation of the State of Tennessee, and itseissuance and service threatened, : 1 Pe * (a) During the entire year 1943,-or for the greater part of that year, the complainant was engaged in the perform. ance of a contract entered iito by it with the United States of Ainerica, to wit, Contraet No. W 535 ae 36547, and duly. g AZ recuted supplemeuts thereto. . ba ga? a ? _ (b) During the entire month of Jannary,-1944, and suh- . Sequently thereto through June 30, 1944, the complainant _ was engaged in the performance of contracts into which if entered with the United States of America, being contracts » Nos! W-33:038 ae 1683, W-33-038 ac 1863 and W-33-038 ae - _ 1669, and.duly executed supplements thereto. isha Nek -(c) During the balance of 1944, the entire year 1945 and: during part of the year 1946, the complainant was éngaged in the performance of contracts.entered into by it with the United States of America, . being Contracts Nos. W. 33038 -- ae 13022 and'W-33-038 ac 12046, awl duly executed slpple- ments thereto. =. @ : foe ors as fncae siewa _ (fol. 294] (d¥ 44] the above mentioned ¢ontraets are. in “all relevant respects similar in form; nature and effect. co) AD of the above mentioned ‘contracts were entered into @ the United States in thé Purtherance of its prosecu-, - tion of World War IT which was then iti progress. | : Serit if pas | : a av Ey rian ae eae Under the provisions of the cqntracts mentioned in, para: graph Il hereof, the eomplainant, for fixed considerations Fanging from eighteen one hundredths of a tent to 6.3 cezits per gallon, undertook to, and did, recewe from the United States, in. Tennessee, aviation gasoline which it was to, and: _ dil, place in its own facilities and in facilities belonging to others and leased by the ¢omphinant for thegspecifie pur- pose of its performance.under the mentioned contracts. 21] located in Tennessee, and which it was to,.and did, deliver to the United States at points within the St&te of Tennessee or to common carriers or cofitract Garriers employed by the United States for “transportation to points without the State of Tennessee, all in accordance with directions given - to it hy the United States as provided in seh contracts. ” . : , . Vv ot eee ae . . Under the provisions ofthe contraets mentioned in this '. bilb of complaint all applicable and valid State or Jeeal. taxes, fees and charges required: tobe ‘paid by. .the ‘cone _ [fol 2957 plainant because ofits performance thereunder are made reimbursable Yo the complainantas am obligation of the United States under, the ‘terms of. the yespective rt ° . ° ¢ d J u ; \ 7 contracts, Therefore complainant alletes thay the United States-is direetly and immeidately affected by the. prosecn- tion af this'eause” | i: : tate : . . , Dureing.the period of time involved in this suit and dur- _ ing all of the periods when this complainant Was engaged in the performance of the contracts hereinabove mentioned, this complainant at- the tine of its receipt of government . owned gasoline in Tennessee, had no interest or equity “in, or other ownershtp of; or independent control ‘over, any government owned gasoline delivered to it by thé United States. - , Atk ae op | eye : 73 ia — Vili Rr oaieg | ‘Complainant alleges that with respect to all government owned gasoline received by it in Tennessee under the” pro- : Visions of the contracts mentioned above, employees of the Gasoline Tax and @il Inspection Division of the Tennessee - . Department of Finanee and Taxation signed inspection reports showing the receipt of such gasoline. These reports _ were filed with the Department of Finance and Taxation at > Nashville, Sei pee ean : . | . id # os Re ices Complainant alleges that upon the written request of the Tennessee Department of Finance and Taxation, ‘this com- ~ .. [fol. 296] pldinant, beginning with the month-of December, 19483, made monthly .reports ‘to ‘said Department of all of its receipts of. government owned gasoline and continued to make monthly reports of similar receipts for the entire years.1944 and 1945 and for the year i946 up to the time the performance of said contraéts had been completed. ° ° | : ; = - IX '¥ At no time during any of said years, nor at any time until Rugust ‘10, 1949, did the defendant in this cause, or bis predecessors in office, make any demand upon this complain- ant forthe payment of any -tax_or inspection fee on account of government owned gasoline received by the complainant as, aforesaid, but to the contrary the. defendant and Ms - * ptedecessors in.office, with full and actual knowledge complainant's perfo&iance of the contraets above men- . 3p a, Ses . tioned, treated the receipt, storage iad delivery of govern- thent owned gasoline in conformity with the contracts agove mentioned as being free from tax and not subject to any exdction under the Tennessee gasoline tax ahd oil inspec- tion. Jaws. rs fei % Pate [In refance upon the sclibetaubranenes and continued adininis rative construction placed on the Tennessee gaso- flue ta and oil inspection laws by the State of Tennessee and th & officers of that State charged with the ndministra- ‘tion and ‘entarcement thereef to the effect that gove ica owned gasoline received, stored and delivered in TO - “eitras yot subject to the Tennessee gasoline fix or to the payment of any Tennessee inspection charge, Ybe— . complainant and the Qnited States entered into and’ per- ‘ formed for the) year 1944, and subsequent years, contracts "similar to the/ contract applicable | to the year 1943, and neither eomspiainaal nor ‘the: United States woykb have ‘entered into such’ contraets except in reliance upon that - recoznized construction. ~ ; , - 4 ® 3 "Pitas Veer i - : es | 31 Pfol..298] by aviation gasoline owned by the United States and brought by it into the State of Tennessae and in which the complainant had no interest or’ ownership, Upon the delivery to it-by the United States in the State of Tennessee of such gasoline, the complainant beeame, under the provi- sions of the contracts hereinabove mentioned, a bailee ‘of the United States for hire. | (b) Complainant pArade no deliverjes from the aviation gusoline owned by the Unifed.States and received by it us aforesaid, other than at the direction of the United States and at no time“did complainant divert to itsown use, or to ‘the use-of any other, any of the aviation gasoline so received by it. With respéct to such gasoline the complainant was’ at all times subject to the directions and control. of the - United States. d : Oe Oa ; Complainant alleges that during the morith of January; - 1944, the government ow aviation gasoline,-upon or by Which the tax, penalties, interest and inspection fees. men- tioned and -deseribed in paragraph IT of this bill’ of ecom- plaint were based. and. measured, aggregated 2,840,529 vallons and-was received as will appear from attachment . hereto marked Exhibit A to this bill of complaint.. *: - fog i eae Complainant, allege*that during the month of January, - 1944, upon or at the direction 6f duly authorized agents _[fol. 299] of the United States, complainant made deliveries to the United States as follows : | ° o ae ‘At points within: the State of Tennessee—1,760,213 ‘gallons | Reha aT : . To common carriers for’ transportation ‘for the United States to points without the State of Tennessee ~-1,005,832 gallons. _ ad ape Complainant? further alleges that both before and after -the month of January, 1944, deliveries of covernMent:owned gasoline were similarly made at the direetion of duly au- thorized agent sf the United States, Hata ° i \ | XV : tna Complainant alleges that included in its receipts of gov- ernment owned gasoline during the month of January, 1944, and ‘upon which the tax mentioned and described in para: graph IE of this bill was based and measured, wer™recei pts of $2,198,915 eflons of aviation gasoline purchased ‘by’ the UniteStates from competitors of coniplainant without the “State of Tennessee... Complainant had no-part in the refin- ing, manufacture, production or compounding, and no part in the shipment, transportation or importation into Tens nessee, of such gasoline and‘at no time did complainant have any interest whatsoever im such gasoline except that of a baileé for hire. . e eg NE \ | [fol, 800} - - XVI Complainant alfeges that ineluded in the “receipts by coquuplainant during the month of January 1944 of govern- ment owned gasoline as se¥forth in Paragraph XIII of this bill of complaint, were 2,833,987 gallons of aviation gasoline ,:- - Feceived by-complainant at Memphis, Tennessee as follows: ~ (a) 995,082 gallons were punsped into three tanks woned “by Lion (Oil Refining Company, designated Tanks L-1, L-2, ‘and L-3) located adjacent to complainant’s .own storage facilities,-which three. tanks were leasedLgy complainant’ - for the sple purpose of containing govegiment owned -gaso- line and) were not otherwise utilized Hy comphainany. In - -accordanté with its contracts, the United States paid éom- -plainant for handling this gasoline, in addition to a specified rate per fallon, fixed amounts which were exactly equal to — - the rental’ paid by complainant for said tanks plus its ex- penses in| connecting them to its pumping facilities, (i) 79),744 gallons were pumped inte a special tank of ~ “complainant, désiguatéd Tank 17,. which was not otherwise utilized by complainafit but which, at thé time. government owned. vasoline was-first-introduced theréin, contained a small amount of. complainant’s gasoline of like grade and’ quality upon which Tennessee gasoline tax and inspection fees were duly paid, that.could not be removed from the bottom of the tank. @ ; -, [fol 301] (ce 1,058,161 gallons were pumped into two tanks of complainant, designated Tanks 7 and 8, that also +. ss Ae contained_a quantity gf complainant's gasoline of like grade. y ee J a ‘and: quality placed therein during 1943 and upon which ,- ‘Tennessee gasoline tax and inspection fées were duly paid. During the!month°of January 1944 no company owned gasoline was placed in any of said Tanks, L-1, L-2, L-3, 7, Sorl7. Alleustodyot govermnent owned gasoline by com- plainant ceased when déliveries thereof during January were made (1) from the foregoing’ tanks to government - owned carriers or to common carriers for transportation contracted for by the government, or (2). from com plainant’s tank trucks to government owned storage sfacilities in Ten- nessee. Throughout the remainder of the period in which complaimant handled government owned gasoline, the same: tanks were used to contain such gasoline and the manner of, utilizing such tanks continfed as hereinabove alleged for the month of January, with the exception that company owned gasolirfe of like grade and quality upon which Ten- nessee gasoline tax and inspection fees were duly paid, was - placed in Tanks 7 and’ 8 at times during 1944, has ie XVI un eyo Complainant alleges Yat included ‘in the receipts by com- plainant during the month of January, 1944, of voveru- ment owned gasolimre as set out in paragraph XIIT_ of this bill of complaint were 6,542" gallons of aviation gasoline - received by it -at Knoxville, Tennessee, This receipt was | fol. 302] from a common ‘arrier tank car, shipped on gov- ernment bill of lading from outside the State of Tennessee. Upon receipt of this government: owned gasoline it Was placed in a tank of complainant along with gasoline of the’ Same grade and quality owned by the complainant inewhieh the United States had ‘no interest, During the month of | January, 1944, deliveries of government owned gasoline were made to the United States from complainant’s tank by fu@ling geverninent owned airplines at the Kn rille, Ten- nessee, airport, by use of complainant’s tank Wee Ae : ° ey ° . CA Sac es eae Wholly aside from any Federal question, complainant ailéges that the gasoline involved in’ this suit conld not ; > “3990 ‘390 © ’ . be made the measure of gasoltne tax or dil Hispection fee - & liability of compjainant\ under the provisions of the’ Terr- nessee gasoline tax and bil inspection laws, properly, con- struéd and applied, for the reason that such wasoline was tke’ property of the United States prior to and at the time — @t its impottation into tha State of Tennessee; that’ none of it was refined, manufactured, produced or compounded within the State of Tennessee »that.none of Tt came do rest ' ~~ in Tennessee_as the property of complainant; that the ° : - United States’ was the owner of ‘such gasoline at the time: it was shipped, transported ‘and imported infio thé State of Tennessee; that it was shipped, transported and imported '. into the State of Tennessee by ,the Vhited States ‘and yone [fol. 303] of it was shipped, transported: or imported by = complainant into the State of Tennessee, within.the mean- ing of Section 1127 of the: Code of Témessee, as amended ; and that the Unjted States as the owner of sugh gasoline’ ” was both the consign and the consignee of sueh gasolige 4 Nd te NT aA and complainant was neither the eonsigner nor the ‘eon- : signee thereof, within the meaning of Section 6971 of| the Code of Tennessee. Seer Pats els ae sb Ce ade ers = Complainant alleges that under the Tenntssee gasoline tax and oil inspection laws the gasoline delivered .by it to “common carriers for transportation for the United States to points without the State of Tennessee, including that set _ forth in paragraph, XIV of this bill‘of coniplaint, to wit 1,005,832 gallons, was not, in any event, includille in the. measure of tax liability by the State of Tennessee and that the inclusion of such .gasoline'in the measuré of the tax mentioned and deseribed in paragraph IT of this bill is il- - legal and void, under the provisions of Chapter®56, Public: > Acts of 1943, as amended by Chapter 147, Publie Acts of 1947 (Williams Code, Sees. 6850.7-6850-11). Under said statutory provisions, not more than oné-twentieth sof one cent per gallon inspection fee was collectible’ on. such gasoline. as pes . ~~. : e XX i “a / ae ‘ HE 3 é ‘ 2 - _ ‘Phe Tennessge gasolint tax law. if construed ‘as requiring? iy" _ the inclusion in the méasure of*the’complainar's tax, to be ff e ; Sanh, - 39 computed: under that law, gasoline belonging to the United [fol. 804] States-exel sively and merely if the possession - of the complainant as a baileé is repugnant to the Consti- ‘tution of the United States ‘and void. ° z . os eee erate | ge Moa 4 : 3 ‘The assessment to the complainant for the purposes, of the Tennessee gasoliné tax law of gasoline belonging ex- ) clusively tothe United States, by ‘ineluding the- quantity , of such gasoline in the meas re-of ‘the tax assessed, is illegal and void for the reason-t)at such assessment is upon. the exclusive property or instrunfentality’ of the United iat i which is immune from, taxation by the State of Tennessee under the Constitution of, the sre States! - * > . XXIT eee . The assessment to the comiplair ant and the exactionfrom it of the taxes mentioned in parigraph IL of this bill of ~ complaint imposes a tax ujjon_ property which is ai instru-\_ mentality of* the United: States amyl constitutes an uneon-* stitutional imposition ‘upon the United Sfates. TG ARR ee: 0 411 eee . The sere ugant” by inchiding gasoline @wned: exclusively’ . o\. by the United States int the measure‘of the tax alleved to be : \ Pane ; -. pn = Me F} | \due by the complainant’ for -the purpose of the, Tennessee asolinetax law has applied the,provisions of the Tennessee gaXoline tax law in a-manner Which renders=thattaw Invalid under the Constitution of the United States. | a = ; ae : Memphis ~ St. Rose. La. ™ Barge ROR-103 Jan. 11 L-2 216,563 - ates 5 “i ~ Memphis St. Rose, La. ie Barge ROR-103 winiree: Se 4 | - LB * 291.9779 nd CDE Sete: tet Memphis St. Rose, La. - - “¥Barge ROR-103' Jan. 11 Line Fill . 3,099- a rf . . Memphis Baton Rouge, La: ge DPC-425 X °° Jan. 15 17 # eit Peas 393,225 lfol. 307b-308] ae fad ae ee J Pid a Memphis Port Arthur, Texas Barge LTC- bd . » 4 a we / + sco e . ‘ ne : mine ~ f- v ed | ~ ‘ ! 5 : * 39 . . ‘ we Reh ‘ _ i. « ; e [fol. 309]. SuspdtNa to A NSWER Issurp DeCemper 20,7049 | AND Suenire’s Rerurn (omitted in printing) ee. *, * ¥ i: e | fol. 310] In tue Chancery Cotrr or ws Country {fel 3107 Ix THE Crancray Cotrr or -Davips is. ( OUNTY “ “A: Tay : [Title omitted]. 32 [Title omitted] +f. Pre RES ” ANSWER OF ‘THE Dgrenvant, James CLARENCE Evans, goa -MISSIONER—-Filed February.9,1950 °°. * The defendant, James Clarence Evans, Commtissioner of Finance & Taxation of the State of Tennessee, for answer . ‘fo so much and such parts of the bill filed against him in this cause.as he is advised ‘it ig Necessary and material for. him to answer, and answering says: . 2 ante : - @ : ¢ 5 . . : ; a iar SH nar ee Fhis defendant adinits the allegations contained in See- tion.1 of the bill. eet is aes is pike This defendant admifs that this is a suit brought to recover $295,810.10, which said amount this defendant eb)- lected from the complainant as‘a_ privilege tax for the ‘privilege of storing gasoline.in the State of. Tennessee and *« . e . a ° " s * dguy 4 . as an inspertion fee on gasoline stored ley the complainant [fol.311] in the State of Tennessee for the month. of JRun: ary, 1944, together with penalty and occa Rasa Thy Ss defendant’ further jdmits that the same w s paid “under? - protest’ by the complainant on November 30, 1949, after dis- , tress warrant had been prepared ind signed by this‘degend- ant and its issuance and service threatened. Sie o 4 ; 25 Semen ; een ° vey 4 This defendant admits all the allegations’ of Section Lil “of the bill. : Bb 3 ae This, defendant : admits the allegations ‘of Section Iv at Of the bill. Ps = a s ¥ - *] ~ Fie °40 ry ? ete This defendant is not advised as to the-effect of the pro- ‘Visions contained in ‘the contracts referred to in the bill of complaint with respeet to whether or not the United States. —. must reimburse the complainant for the taxes here involved — - Insofar as this defendant,is advised, turing the period of and demands strict proof of the same if it be is Adan ’ ONE Pe a ye time involved in this suit the complainant batl Ho interest er: equity in or ownership of the gasol{ne delivered to it by ihe United States, but stbmits that the ee of whether or not the defendant had any independent con ‘ol over the gasoline delivered to it is a question to be determined by: f fol, 312] the Court from a proper construction of the cor . ‘tvacts between the complainant and the United States’ In this connection defendant would show that at least a portion of the gasoline delivered ‘to the complainant by the United States was commingled by the complainant wit? gasoline Which cowiplainant did own. 4 _ the bil. .. So ey. . Vit. : The defendant admits the allegafions of Section VII of WHE, 2 . . - | This defendant admits the allegations of. Section VIII of. the bill! . , 4 . . . | ae This defendant admits that he af'no time prior to August 10, 1949, made any demand, upon the complainant for the 2 payment of the privilege tax and inspection fees here’ in- . volved, and is advised that his peedecessors in office made no suchi ped es demand, This defendant, however, denies that tle reéeipt, storage and ‘delivery of the rovernment ~ owned gasoline pursunnt to the contracts referred to in the milk of. coniplaint was. free from tax and not subject’ fo the privilege tax and Mspection. fees levied on the privilege . fendant demands strict proof of the same if they become material. o sient Reo aR ome eS ray : : ea 3 ? Peer. ali Ae owe ety) Sept nea eat a > “ In like manner, this defendant is not fully advised as to - the ‘allegations contained. in Section XVIP %f the bill and, While insofar.as this defendant knows, the allegations con-: tained therein “are true, defendant demands strict proof if the same be material. mS BATS * .° This defendant expréssly denies the areument contained in Seetion XVII of the bill; denies that the owhership of “the gasoline by the United States. prevents the same under the statutes from being taxes: and denies that the United : : N : 43 + @ Bog gee ates shih ey States was both the congignor and thé consignee of the gas- oline withire Section 6821 of Nhe Code of Tennessee, [ fol. 316] = ecm XX. ie SE Peet This defendant is not advised as to whether or not the’ Cwnplainant delivered 1,005,852 gallons or any other amount to Common carriers for transportation to points without the State of Tennessee, as alleged in Section XIX of the bill * and, therefore, ‘neither admits nogMenies the same but de-. » mands striet proof thereof. I yg: hiv’ event, this defendant . would show to the Court that the complainant did hot com- _ply with Chapter ,50, Public Acts of 1943, as amended liy . Chapter 147, Publie Acts of 1949 (Williams Code GR50.7, 6859.11) ‘in, that the complainant did not niake proper re- _ ports conéerhing such gasoline to the Commissioner of Finance & Taxation und did not pay the inspection fees in . accordance with law, so that complainant is not entitled to "any of the benefits, exclusions or credits: provided for in said Acts, ia - : ‘ = op Defendant'denies that the laws of Tennessee taxing the privilege of storing gasoline as applied in the instant case ° are repugnant to the Constitution of the United States and void. - ~ oa met , XXI This defendant denies that the assessment to the com- plaitiant is iNegal and void for the r ‘ason-that such assess- ment is upon the exelusive’ property or instrumentality of the United States and, on the contrary, would show that {fol: 317] no-attempt is: made or-could be made to tax the property of the United States, this tax being simply a“#yx _ upon the privilege éxercised by the eqmplainant of stofiig fasoline, ‘ > XXH Rear eas ; ‘ RAVI Soret, This defendant denies that the complainant is entitled to recover of him the sum of $295,810.10, together with inter est, or any other sum. ° | XXVIII ae ve "All other allegations of theeriginal bill not hereinbefore ‘admitted,-explained or denied, are here and now generally — denied as fully us if set out and specifically denied, And, now, ‘having fully answered, this defendantsprays to be hence dismissed with his reasonable costs. TK. Hatlan Dodson, Je Joe Brown Cummings, Seth M. Walker, Solicitors for tie Defendant, James Clarenee Evans, Commissioner, ‘[fol. 326). IN THE ( ass. : > (fol. 319] Ix THE Cuixcent Covurr Sr Davipson. County ~ [Title omittal] make Bae Okper. ees THe Unirep Srates Leave TO Inrerver ae az) April 11, 1950 ‘ This caise éante on to be heard.this day upon the petition of the United. States for leave to intervene in the thoy. e ‘ayse and was argued by coulsel, Upon consideration w Mociet the Court doth order and de¢ree that the United Suites be and it hereby i is granted leave te intervene in this ause. It is further order ‘ed, adjudged and decreed that the . petition for interventions filed herein on behalf of the United States be and the same is filed in this cause as the interven- ing petition of the United States, and that the answer: here- totore filed by the defendant will stand as the : answer to the intervening petition, Approyed for: entry’: W iltiaim W aller, Solicitor for Com.” plainant; Walker & Hooker, by K. Harlan Dodson, Jr., Solicitors for Defendant: Berryman (ireen,; Solici tor for Intervenor, United States. . ass ; . - _ 7 NERY Court or Davipson County itle omitted] iececa \ es Soy P ETITION OF THE U NITED States ror Leave to Ix TERY vENE, AND* Interv ENING Petition The United St: states of ‘Aniovt ica, by its attorneys, J. HHoward MeG ‘ath, Attorney Gene ‘ral of the U nited Stites, Theron Ih. Caudle, Assistarit: Attorney Genera} of the United St: ites, and Berryman Green, as Speci ak Assistant to the Attorney Generaly respestfully alleges that it has a-real and sub- stantial interest in ‘the. matter in litigation and therefore desires to become. a patty to the [i wtion by-nitine. with the complainant in the furtherance of Ay claim for refasid and its recevery in this action for the us »and benef it of the United States, and as grounds therefor alwyes: - : aac I “2 a That the intervention for whieh teave is prayed herein is authorized by the. Attorney General of the United States and is at the request’ of the Department of the Air Force. ~~ & ‘ 46 Le Aad ; MOL SN ee i ae That the intervenor adopts and incorporates herein by reference dll of the allegations and conelnsions contained. in the original bill herein. | - it aetna, Phat by Feason of the facts so alleged, | your petitioner has .an interest in this cause which it is entitled to protect by intervention’ herein. Wherefore, your petitioner, United Statesof America, respectfully prays that leave be granted to it to intervene in this cause; that an order be entered ‘illowing intervention; and that this petition for leave to _ intervene be considered and adopted by this Court as the. intervening petition of the United States, ' Your petitioner further prays that the judgment prayed fer by the complaint in tts original bill be entered and that the Court grant such other and further relief as it may deem proper. . : ‘Caudle, Assistant Attornév General: By Berryman orem Spe ‘ial risptecicsseh Attorney General. . hel ¢ $ o& J. Howard Mé Yrath, ae Geese Theron L. i ; . fol 322] IN THE CHANCERY Court or Davipson County ear ae ‘Rule N +O. 68050 - : Cis = ° 7 a >. a Exhibit $—W-33-038 ac 4485, covers storage at Knoxville, period ES oh through 6-30-45, - Exhibit tanks and Lion tanks, period 7-1-45 through 6-30-1946. Exhibit 7°~W-33-038 ‘ac 12046, covers storage at Knox- ville, period 7-1-45 through 6-30-1946. te Exhibit 8—Certified copies of letter dated December 30, — 4942, from Defense Sypplies Corporation to P. A. W., with [fol. 325]-+attachnient£.and. DS. ¢. 56, dated January 4, _ ° Exhibit 18: (Government Bill of Ladine No. WT 343860, ' covering shipment 91 ovetane aviition-gas, Barge DPC 115, from Baton. Royre, Louisiana, to Memphis, Tennessee, + ‘ [fol. 826] . Exi ee) t M—Govermnient bill of lading, VW Q) * 16739508, Barge ROR 103, fronr St. Rose to Memphis (di- fee verted from Greenville, Mississippi.) and letter relatine | ete thereto.dated Jhnjia ry 1d, 1944, from Husky Transit. ( ‘orpo-’ Noe ration to Standard Og Company of Louisiana, aes « Exhibit 17—Government bill of lading, WT-343864, Barge PC-425X, from Baton Rote do Memphis, a -\Exhibit 18—91. and $7 octane aviation gasoline supply putract bet wega Gulf Oil Corporation and War Depart-_ ment, No, W33-038, ae 1008, period October 1, 1943 .to0 ‘June 30, 1944.0. * on ae q Exhibit 19--Gulf Oil Corporation inveice dated January | v 7, 1944, to U. S: Army, covering 87 octane shipped by Barge - _ LTC—24, from Port Arthur,-Texas, to Memphis. ma Exhibit 20—Government bill of lading, WT-2 2891, cover- . _eing shipment 87 octane aviation gasoline by Barge LPC.94 from Port Arthur, Texas, to Memphis, Tennessee. i Lively ‘Byhibit 21—Gulf Oi ¢ ‘orp. Invoice, dated Janua ry 7, 1944, | tee es « to Wnited States Arm Vv, Covering | octing gasoline shipped————— by DPC-494X, from Port A rthur, Texas, to Memphis, Tenn. * ° \ Exhibit 22—Government bill of lading, WT-342885, ecov- - | - ering Shipment 91 octane aviation gasoline by Barge DPC " 494X, from Port Arthur, Texas, to Memphis, Terinessee. Exhibit 23—Sales iInvelee dated January 7, 1944 from Gulf Ogk Corporation to United States Army, covering 91 , octane, Shipped by Barge DPC-424-X from Port A rthur, Texas, to Memphis, Tennessee, ; [fol. 327) Exhibit 24-—Government bill of lading. WT- 3422886, covering Shipment of 91 octane aviation ensoline °* by Barge DPC-424-X, from Port A rthur, Texas, to Meniphis, Tennessee, : Exhibit vo-—Bill of Jadine. W'T-S322998), covering ship- . 4330, 338 : ate ae \ \ . 5 | TAG Worker —#fent LOO octane av. gasoline (diverted froin Louisville, Ky.): from East St. Louis to Memphis, Tenn. by Barge DPC-409X, ‘Exhibit 26-—Pumping contract between U.S. Army Air: Forees and Standard. Oil Company of Louisiana, No. W- 33-040 ae 61, : ' Louisiana, dated March 31, 1944, covering pumping servicers for the month of January, 1944, at Memphis, Tennessee, fur. nished under, above contract... ~ Exhibit. 28--Monthly: fuel release by Army Air Forces HQ., A. S. C.. Patterson Field, to Standar Oif Com; any of \\ Louisiana fér Memphis terminal for January 1944 relating - \ J ks ’ ! ‘to 190 eetane gas, i “Exhibit 29-—Monthly fuel release by Army Air. Forées HW®., A. 8. C., Patterson Field, to Standard Oil Company of Louisiana, for. Menrphis terminal for. Javuary, 1944, relating 40 91 octane gas. : i Exhibit 830—Government.bil] of lading WT-343183, cover- ing shipment 91. octane gasoline from Memphis terminal to '- Smyrna, Tennessee (typieal bill of lading covering ship- ments from terminal to destinations in Tennessee by eom- [fol. 328] mon carrier.) , (upto er Exhibit 81-Government bill of lading No, WT-343187, covering shipment of::91 colane aviation gasoline from Memphis terminal to Grenada, Mississippi, dated January’: 10, 1944, (typical bill of lading covering movements from Memphis Terminal to destinations in Mississipi} by comnson— Garrier) 3725. ! ~ . Exhibit 32—Government bill of lading, WT-343690, eoy- ‘ering shipment of 91 oetane vasoline from Memphis terminal to Little Roek,: Arkansas (typical bill-of lading coverine shipments by common, earriers:into Arkansas.) Exhibit 83-—Standard Oi] Company of Louisiana shipping notice, dated Janna rv 25, 1944, covering 91 octare gasoline transferred from Memphis terminal to United States Army “Oth sub-Depot,. Memphis, Tennessee (typical Shipping notice covering transfer of Government gasoline by Stand. ard Oi} Company of Louisiana tank truck from Memphis terminal to United States Army Sub-Depot at Memphis.) “Exhibit 34-—Lease commencing January 10,1944. of three Storage tanks from Lion Oi] Refining Company to Standard Oil Company of Louisiana, . C Exhibit 27-—Invoiea from Standakd Oi ‘Company 6f. uma _Devosrtion or. Pavi C. Srratrrox-—Filed P October 30, 195 0 Paur ( Srna TTON, the first witness, hatine fitst duty” sworn, ie deposed as follows: * ° 4 Mr. Waller: This witness will be examined. first, if it is axreeable, by.Mr. Green; representing the [ntefvenor, al. _ though perhaps the “more arderly procedure would be for the ( ‘omplainant?s ‘Counsel to examine him. Howeve r, Mr, Green is more familiar with the ¢ testimony of these wit- nesses, and-1 prefer that -he ¢ onduct the direct exm@uination, Mr. Cummings : There Ts no obiecti ion, Direct examination, ‘ By Mr. Green: Q.1. Mr. Stratton, state your: ee, es present ocen pation? A.1. Residence is W ashington, D. (., on the stall of the Munitions: Board Petroleun, ommittee, Q. 2. St ie for the record the purposes and duties of that Sera The Munitions - Riera Pe troleur Committee is Sates with the responsibility of-all logistic planning for the military Forces, fina “Q.3. W ith respect to petroleun “A. 3. With respect to parce ° (Q.4. How long have you heen assoviated « r emploved by the United States? _ - A. 4. Since October, 1941, ies Q.5. Beginning t that tinie, will you st: ite the several positions. whie - you have held? f [fol 330] ~A.5 Beginning fronr 1941 until May, 1943, { was,with the F va Division, Air Material Command, Wrieht Field, Dayton, Ohio. IT left there in 1943, and wet to the Petroleum Administration for War. I was associated with the Petroleum Administration for War, in the ‘Refining ° Division, until November, 1945, at whieh tim eT went tothe Army- N: avy Petroleum Roawd: whie lis now the Munitions Board Petrole ‘um Committee. (). 6. In what capacity, were vou emiplore din those se sical agencies? have in front of you_there-’ " fe At: At W tight Fic Mi " was the Assjstant Unit C hief of the Overseas Fuel 1 nit. At the Petroleum Administration for W arel was P etroleuni- Tee ‘hnologist i# the Aviation Re- fining’ Division. We diad responsibility of allocation and ‘ntrol of all aviation gasctine and components thereof. Q):7. Do you know when fhis Petroleum Administration Jor 7 ar came into being? rt ..The Office of Petroleum Coordinator was éstab- Wicca by «x letter from the President in-late 1941. It had no .définite authiorify at. that time. Later there was an ‘¢ xecntive order issued after the declaration of war. It Was . ‘an executive. order issued. giving definite responsibility to the Petroleum Administration for W ar and: (Petroleum Directive 77 was ine Orporsiga | into the’ rocerd hy agreement as follows :) : «Petroleum Directive Br iv # Part 1535.—Petroleum | Processing and ‘Refining. ee nS . “* High- Octane Avi lation Gasoline. - . “The ons of the. requirements for the dle ferse of | _ the United Statés has ereated in certain areas-a shortage. in the supply of aviation gasoline for defense, for Private aceount, and for. export; and the; following directive is deenjed necessary for the prosecution’ of the war and to pro- vide adequate: suppliesiof av iation gasoline, for militar v and other essential uses. / 1950.4 Petroléum Directive 77.+(a) Scope and Purpose: This directive: governs the manufacture, bleriding, transfe kT, and delivery of high-octane aviation gasoline and its com: ponents, It also deseribes the functions of. tle two woy- yrmmental agencies which exercise coordinate jurisdic tion in this field, And specifies how to make. applic ation to them for ‘The Petroleum: Administration for W: aris an executive - ageney derivi inig its authority from: Executive Ordérs 9276 and 9319, ‘The Aviation’ Petroleum Products Allocation [ fol. 3334 Committee is ao subcommittee of the Munitions . Assignme nt Committee “( (air) and derives its authority : from directives-of-the ( ompined ( ‘hiefs of Staff dated: June 2, 1942, and: September 25, 1943. ear: ‘*The ‘Petroleum Administration for: War controls all .transfers within the pet roleum, ingtustry he harerh rrade "> base stock, blending agents, anWhich-setane avia tion fuel. Fie Te trole um, Administration for War ‘instructs industry /. ’ , , . . ; , : . i * 54 Tea Y Ji? . i: , Wriation Petroleum Products Allocation’ Committee PAs * made an assignment to the War Departanent, the Navy De- partment, or for export to any person, the delivery cannot be made until, in addition to the assignment to the War De- partment, the Navy: Depa rtment, or for export fo any per- son, the delivery cannot be.made until, in addition fo the assignment by. the Aviation Petroleum Products Allocation’ ‘[fol. 334] Committes, a release for eath specific quantity té _be assigned has %een issued by the Petroleum Administra-. _tion for War. .An assignment by. the Aviation Petroleum Products Alloéation Committee is deemed to carry such reléase hy the. Petrolenm Administration for War anto- matically in all-eases other than-deliveries to the Waf De- _* partment, the Navy Department,-or for export. — | es © ‘‘Consumption of ‘finished high-octane “aviation. fuel within the petroleum iMdnstey (for instanee, in researeh j | Fequires release in advance by the Petroleum Administra. ‘tion for, War, which is deemed to carry with it automatically the approval of the Aviation Petroleum Products Alfoea- tion Committee. ”* ae : (4) ‘High octaneggvia fuel’ means finished’aviation — gasoline which has an oot: rating of. 87 of more (ASTM 1) 397-42 T), or which would have an octane rating of &7 or more by said’ method after the addition: of sufficient actraethyl lead to bring the total thereof up forthe tofal tetraethy] lésd: content tien authorized by current Army... Navy specifications for number, Craig STE ° . ‘ . “ig ose A. aviation ie of Sé octane 7 t ib of i . : sf . &- Par af oe | acts Soe MS ‘‘(c) Limitations upon transfers,.- No person shal! de. liver or transfer blending agents, avéation- grade base stock, or high- octane aviation fuel Jo any other person exce Pt As - authorized or directed by the ageneyv having jurisdiction, iis set forth in Paragraph CY ra : [fol 355] **(d) Limitations upon use. No person, unless ~~ otherwise authorized by the age ney having jurisdiction as Wace hey _ set forth in Paragraph (a), shall ‘us® or consume ble nding + "agent? and blending of the regular types: and grades of high-octane aviation fiiel as directed by the Petroleum Ad- /Ministration for War. No person shall use. or consume hfch-octane aviation ‘fuel unjess, and until, assignmént of such fuel has been made by the agency having jurisdic tion as set forth in Paragraph Cy elena aro ‘ Q.13. Mr. Stratton, are youstfiniliar with what is Hola me pine larly ee the 4- Party Agreement? ‘ ie ee Q. te eof Tiegernher 19, 19422 - Retin c A.14.: Yes, sir. «8 Lata ; | Q. ‘To. That 4-Party Ag rreement is forge technically. re- ferred to asa gontract, i is it not? : A.15, Phat.is right, sir. : (). 16. Being Contract No. W-535AC270007 ~ ' x16. That is-Nght. ~ ‘© Q.17. 'To.what does that contract relate? -A.17.. To the purehase of 100/130 aviation gasoline and Mn at portion of it one other erade,-namely 91 oe tane, under certain conditions, 91 ottane as covered. “> QL 1S. Betvegen whom was that agreement ente red into? i IS. The Peywroleun | ‘Administration for W ar, Defense -Supplins Corporation, the Departme nt of Air Force, and’ Department of Navy. . Meri * » 19. That is carried on the list of. xhibits as RFC? {fol 536] A.19% The Defense Siipplies Corporation wee an agency/of the RED. Sy ES: (). 20. T hand you duly aiitheitic: ‘ated copy of that. con- j tract, and ask you te ‘ook at that: contract, Exhibit No. 9, and and ask vou to state whether ‘or not that i Is a true copy of the contract popularly ealled AC “870902 A:.20. Yes sir it is a true copy, certified by the Secretary . of the Air Force, f | | Ys 7 4 : ae s _ 06 Ta ey Neen rhe wt # (). 21, Aré you familiar with that contract? Rae ‘A.21. Yes sir. I was on the original discussions which lead—— eed (). 22. Wait’a minute now. Did you have any associa- . tion with the evolution or ultimate dévelopment. of tliat % contract ? ‘A, 22. When I was employed at Wright Field. I sat in on - ' the original disensstons which led to the writing of this contract, ? Tene @. 23. Will you state the ciréumstanees which led up to a negotiation of the contract known as AC-870902 - e ; [fol. 889] A. 29. That brings out the RFC's directives to these companies to the provedure that would b fiollowed, It was—xasoline was produced ‘at these refin Cries and at the time it was run off into storage tanks by the companies a uw a and the quantities determined, the Air Forces Inspector, | ‘acting as an agent for Defense Supplies Corporation, would determine the quantity and sign, as agent of Defense: Sup-_: plies Corporation that he received the Quantities that went, 9. into the tanks. THAt awa} done on this DSC-50, . He was - / a “o Fs SS « . ¥, 2 tn 8 as @ : eM ; " Ds : E % ‘pe . “ ps .?} authorized to do so by Defense Supplies Corporation. On the same form, the Air Forees would take’ title, the same inspector, Inspector for the Départment of Air Forces, the Inspector would sign on this same form for the Department of Air Forces, taking title from, Defense Supplies Corpora- ‘+ tion, and the Air Forces’ was in control of the gasoline until it was finally used ‘up. The Air Ferees handled all the transportation themselves after it- left the refinery; On - the allocation side of the-—— | Q. 50; Wait a minute, heforé vou get to nlloeation, As I ‘understand jt then, Defense Supplies Corporation, acting under Contract AC-37000, purchased from the refineries at the points of refining? an hee A. 30. That is correct. (). 31. All 100 octane gasoline? : A. 31. That is right.° © cater ak seg yr Q. 32. And at-the time of the refining at the refinery, all. 100-octane, gasoline hegame, under this contract, and the - several executive’ orders mentioned, ‘thie property of the _ Defense Supplies Corporation? . aa Apion [fol. 340] A, 32. That is correct, > Mat, +. Q.33. You have made inenioe of this inspection by. an’ agent of Defense Supplies Corporation, who was ‘also an é igent or Air Foree Inspector at the Refinery, is that true? . »A.33. That is true. ; oe, . > Q. 4. Is that what, is popularly referred to as D.50? A. 34, DSC. Form 50. «| ¢ Se Sa ()..35, i have made mention.of a letter from Degbense- . a ‘Supytlies Cofporation with respect to present and future n mayufacturing of 100 octane aviation, gasoline? A. 385. Yes‘sir. ‘ _2 + Q. 06. behand you a document duly authentieated by the: Seerétary of tha REC, marked Complainant’s Exhibit 8, in: which there are: photostats of certain documents. IT will. ask you to look at those documentsand state whether or not. you are familiar with those ‘documents? AL 36. Yos lt be familiar with these, : coi YQ. 37. Lwill afk you to describe; those. photostats? - »* ALS7. Here. is a letter dated SO December, 1942. to Mr. Fie ai ‘B. Gragin, Assistant Director of. Refining, Petrs- eum Adniinistration for_War, signed by George Hil, Jr., Vice President-of Defense Supplies Corporation, forward- 6 ‘ . - 3 . , - ‘ ~ i) a9 “ing to him copies of correspondence which KAd heen sent to | the preSent and future manutaeturers of 100 octane easo- line, which describes the procedure that would be followed. Also attached are sample copies of DSU Fernt 20, and one copy of-a shipment whiceh- was raised itt question in this . ‘ase, re : (fol. 341} Q.38. Then the photostatic copy of the DS Form dated January 4, 1944, is a receipt ‘signed by the single man acting as agent for Defense Supplies Cor- poration, | : A. 38. It is signed by L. T. Carson, as agent for the De- fense Supplies: Corporation. «Then he ‘has further siened it at the bottom of the page as ‘*Army Air Forces" In- | spector,”’ : os Q. 39. T believe you said that shipments involved in this. case? A. 39. Phat is right, sir, e's effected one of nk Q. 40. Do vou have in mind the shipment made in Janua ry — * and: reeeived_at the Memphis .Plant in January, 1944? eo A. 46. That issright, sir, Me ~ Q. 41. Now, Without interruption, if you will just proceed -with allocation, with whom vou are familiar. programn, ; a 61 (). 48. And under the cont ract? A, 48. Under the AC-37000 in the ease of 100 octane. 549. Who reéeived the allocations when made? A. 49. The Department of Air Force and Department of Navy. -#: ould immediately get them on ‘the phone, tell them—after allocations were’ made, L would get them ‘on ‘the phone, tell them their total quantity of aviation -fyel that they were allocated for’ use in individne! theaters of operation, also the RGe boas that they were allowed to use here in the United States. At the saine time T would [fol. 344] ‘assign refinery sourees ‘to’ the Air’ Forces, would nerely state that they could withdraw “X" barrels from -this refinery in accordance with a yorked-out distribution plan, which was worked out hy Wright Field, Department of Navy, and The Petroleum ; dministration for War, and Bic Office of Defense Trangportation, He a (). 90. That is the allocation made, not only in gallons, but the refinery source was designated? ; A. 50. The refinery source was designated, not by the Aviation Petroleum Produets Allo ‘ations Committee! but. by Petroleum Administration for War. Ss! Q.5f. Petroleum Administration for Wart. A. ol.’ Yes sir... - . * Ps 52. Did the’ refinery g¢t notice of the alloeation? =: A. 52. The refineries were notified: We always contacted the main. offices of the yarioys companies, and thay in turn would notify th refiyeries how much fuel had heen au- thorized for bree \ ase from their plants. Further notifiea- tion was made by the Air Force, which f think some of the Air Force .people-are more familiar with than I am. ().53. From January 1, 1945, until the termination of the war, V-J Dav, was it possible for anyone to purchase gaso- line which T have mentioned, covered_in the letter -aeeem- panving Complainant’s ve ae it possible for any _ pérson to purchase this typé oP Mine without an alldca- - tion? : , sales s aby wef ~ A958. No'sir they could nof. 5 | SPATE on [fol. 345] .-Q. 54. F will ask vou this question, from the date nientiéned and up to the date later mentioned. by way, ‘Gf description, could Standard OiJ Company of Louisiana, ds : producer of 100-octane gasoline, retain title to that vasolind ‘from the tise of production ? tee Pale ees: : ; ae , 62 « n . A. 54. No sir, they could not. Q. 55. In other words, your testimony is that from the time of production at’ the refinery, all 100-oetane gasoline, and the others which you have mentioned under Contract. OD hard HL OOU, and the letter set forth in Complainant’s Exhibit 9, at the instant of production, that gasoline became whose? A. 55. It became the property of the United States Gov- ernment. ° PERS : (56. Acting through whom? . A. 56. Through its Defense Supplies C orporation, Mr. Dodson: Let the ree ord show that thé Defendant i the one case objects, that is, the case of Esso Standard Oil Company vs. James Clarence Evans, Rule No. $8050, United States of America, -Intervenor, Part I, Chancery Court. of ~ Davidson County, objects to the three « preceding questions and answers, on the vround that the cortracts and letters themselyes are the best evidence. There will be additional objections at the time of the hearing,-but those objections are net being reserved-and we are initerposing them at this time. Let the record show further that we tre objecting on. the ground that the questions are leading, all three ques- tions, fe [fol 346} s By Mr. Green: te Ee . 7 [ mae, sf. During the period mentioned,. in your testimony, he donstituted the PAW? The secretary of Interior was. designated hy the r sealdest as the Petroleum meyoys! esprit for War. ()..58. Harold Ickes: It was further staffed by cAyvil serv- ice employees, a great portion of them being on Idan to the’ » Government from various oil companies in/the United States. Q). 59. Ln'yeur testimony you mentioned the Joint ¢ ‘hief's of Sti “\ i Saale im . 2 AL OD. cabbhiad: Chiefs, of Staff, | (. 60. Will you'state for. tlie reeord who the Com: ined Chiefs. of Staff were? T'don’t mena by name; who consti- tuted the ¢ ‘ombined Chiefs of. Staff? AAV. The € *ombined Chiefs oft Staff were the Chief of Stat U ee shes i Arny, [United States NAVY. ‘: pet of I don i ‘kaa “ho be ided ti British Sa ne i / i / , . df yr > l/ e: .Q: 61, Was that mil{tary, or both? ~ “As 61. It was militany. : iH _ 4). 62. Who constitutkd the organization referréd to as APPAC? Se es A. 62. Departitent of Air Force Representation, Depart- ment of Navy, Department of: Army, The Office of: British Petroleum Representative in thé United. States; and it was Chairmaned by a member of the Department of Air Force. Q. 63. The Secretary? wens cies A. 63. The Secrefary was a civilian from the Petroleum * ’.” Administration for War. ‘ era [fol. 347] -Q. 64. Under whose authority did APPAC fune- tion? eae | es ST A. 64. Cider the Combined Chiefs of Staff. _ |. 65. Combined Chiefs, of Staff? Ren aeencis WN. 65. Yes sir. In the early. days of the wa r, the Russians did. not Have. representation oni APPAC. However, in the ‘latter stages, they did have representation. “A’ United tates Naval Officer, was designated to represent the Russians on - the Allocation Committee. © * ‘ ieee wae oe (66. “Were the Army Air Forces notified from time to * * time of allocations made to the Air Force by APPAC? ‘ NX. 66. Copies of the minutes of the APPAC meetings -were furnished to-the Military Services; and they, were notified officially by copies of the minutes of the meetine> Of course the refinery source, that was not developed that: way, We merely: advised them by telephone and as‘ there were clianges that came so fast in availability as to sources. 4 —herause of various changes in their plans, that it was neces- sury to keep in Gonstant contact with the Air Forees and’ Navy by phone, giving them any changes in the various refinery production. Fee RN, - ee (. 67, Of your own knowledge, do*vou know whether dur- _ing-the périeds involved ‘in this suit, it would have been possible to’ stockpile or build uy reserves of aviation Tuel? - A. 67.-We were always short of aviation gasoline through- ‘out the entire war. As new refining facilities ¢ameé into 3 Operation, we were able to increase our operating stocks ‘in the overseas thette s, and also our operating stocks in the #. [fol. 8348] United States. Howes r, it was still something * that had to be watehed daily becanS> we were in ne position at any time, where we had surplus stodkdé or anything that we.could call reserve storage, It was not until-the spring of - 1945 that the Joint Chiefs of Staff directed that it appeared that the Kuropean wir was to be terminated, and it appeared that if we could build up a reserye-in the United States af “any size, we could possibly shut down; based ona one-front war, that is, with Japan, tha’ we could shut down possibly “some of the very very high-cost operating plants, and as of V-J Day, .we had been able to put into storage’some 13,000,- 000 barrels of 1U0-octane aviation gasoline, but the majority | of that gasoline was'placed. in storage between V-E Day and \-J Day, after the requirements in Hurope had gone down. Q. 68. Prom your association with thé Greanizations which you have mentioned in your testimony, and your duties, are you able to state that you,were familiar with, or will you say. you-were familiar with the operation ef the’ Memphis Terminal of. Statidard O# Company of Louisiana? ~ AL OS. Twas familiar with it, yes sir. The detailed operat-. > ing’ procedure, however, I am not familiar with all the details. Genérally, I knew how the’terminal was operated. Q. 69. Prom—yeur knowledge of the operdtions at. the _. Memphis Plant of the Standard Oil Company of Louisiana, — are you able’ to state whether or not there was a storage area? Gite eae ee (fol. 349] A. 69. Tt was merely a ternfinal for use to ‘ship aviation fuels to using airfields in this area, in the Memphis area, ¢ hae rae eta (). 70. How did the in-put and out-¢o a} the terminal com- pare, if you know? ii : A.71. What was the question? A). 71.. Tow did the in-put aml dut-eo ‘it ‘that terminal compare, if you know? peta cea A.71. I don’t believe [ could answer that question. ()..72. Mr. Stratton, I will ask von to look again At Ex. hibit 9, whicli Wwe have been calling AC-37000, and’ fell us What the date of that 4Party Agreement wis? - |) - / A.72.-The original, document is dated A9 December, 1942. o). 73. Now, in the later contract. ACC37000 can yon state ©@ =how the methoWof payment was ride yr provided fora *A. 73. The Defense Supplies Corpordtion would tabulate all of the DS6 Form 50's that were. purchased by.the De-- } partment of Air Force, and the. Department lof Navy, and a . e a Ce 65 would bill the Departments monthly for the total quantities of fuel that they purchased, . | + Q. 74. To whom did the Air Forces and the Navy Depart- “ment make payment of the amounts billed to them under _thesDSC Form 50’s? hc _ A. 74. To the best of miy knowledge, direét to the De-. fense Supplies Corporation. Inasmuch as -that is a Gov-, ernment Corporation, I wouldy’t imagine that they would go back into the Treasury. TI aim reasonably sure that they were billed direet. Some of your Air Force people. ean [ fol. 350] probably answer that better than I. ; Q.75, In what manner was’ the payment to the refineries of the gasoline made, mentioned and covered in AC 37000? A.75. The-Defetise Supplies Corporation paid ai re- finery direct. toe FES . |) ( Further direct examination, . Se > By Mr. Waller: _Q..1. Mr. Stratton, you mentioned in your testimony the Petroleum Administration for War, and the PAW, were they one and the sane? eae ‘ ye They were one and the same. — aa OS. You mentioned Aviation Petreleum Proditets Allo- cations Committee and the APPAC, were they of@ and the “same? ee mt | “A. 2. They were one and the same. cS Oe aba Q.3. You mentioned Wright FE l...Was that the Head- quarters of the démestie Army Air Forces, or what was, Wright Field? = | >: : : : : A.3. Wright Field, well it had quite a few names. fi was” Air Materials. Command and Air Technical Service Command and Air Service Command at different -stages> during the war, but it was one and the sanie/ Q.4. So, when you mentioned that: you -notified Wright . eo . Field, whom did*you notify? FS _ A.4. Headquarters.of the Air Forces which handled the * stribution and purchase of aviation gasoline. eA Q. 5, Por the Air Forces within the United States77 A. 95. Yes sir, * fad bean -[fol. 351} Q.6. You tmade some. mention between grade 5—330, 338: . SNA : here dj y » : = e a > .@. s Of allocation was abso utely only difference was that the Air Forces bought 87 octane = e ~~ - 2 t * ° : ; : oy A ° ¢ ' . » . * . . os ; at =; | Rt . ¢ “4 e tinction in the method of,control? See os } 3 _ A. 6. There was no distinction with fegard to the method -of control. The Petrolegm Administration for War under Directive 77, had absolute contro} the authority contained i of all ayiation gasoline a nponents thereof. The.method the satue for all grades. The 100 aviation gasoline and lower grades, what was that dis- themselves, directly from the producer. In a case of 91 § octane, the Air Forces purchased directly from the. refinery, | or from the producer. With the exception of the smail increment that was purchased by the DefenseSupplies Cor-. poration, because it was yery high-cost. gasoline: The refinery. would sulamit¢to RFC a claim and he was reim- \ bursed for the“extraordinary cost by the Defense Supplies “Corporation for the extraordinary cost involved in produe- ing that gasoline... : ; - Q.7. So far is control was cope Tied, there was ng dis-. tinction between .the different ‘g#ides of aviation gasoline? A. 7. That is correct. ats : * Further direet examination. By Mr. Green: . . 7 1s 1 . 160/430. - releas bstrefinery location. 8 ; J X4#719. Ent] the refinery had receiyed*that telegram or. official notice, yas it necéssary. that thes-retain that gaso- line atthe refinery? Sean Supe are Moreen tee tee. A.19. At the time the zasoline went -in the stordge and the quantity was determined, the Air Force People, atthe time it was turned over to the Air Foreé Inspector, usually > he Imd his instructions from the: Air Force. I don’t know [fol. 359] too much about how that part worked. Soine of - . the other Witnesses know more of that detail on that thant Ido. - ‘ Be ar ed ee “p retaeasormens XQ. 20. Pot a little lost with you, so lets ‘go again, please. At the refinery the gasoline is refined and who advised then APPAC how much gasoline was there refined as 100 octane? : BE Pty, Oe ee gis A. 20. Petraleum . Administration for War advised APPAC the estimated quantities that were going te be made available for the following month. ° . > | X Q. 21. They advised them in advance? by A.21. That i8 right. 4\ X_Q.22, What Was to be expected? ’ : &. A. 22. That is right. ~ oe | | _X Q. 23. Then did APPAC then make their allocations, or / did they wait until: the gasoline had been reftfned to make. their“allocations? ° A. 23. No, it was all done on an estimate, and they would »'y ry Pad o 2 ae ¥ Cee ee ‘s ; = o ve . - . 3 Ww allocate on an estimated basis: Then ig production in- treased or decreased, Petroleum Administration for War would make the proper adjustment and on prac ieally ‘every. month the allocatfons were eith er decreased or increased. Certain theaters would -have to decrease. Usually avia- \ ' tion training in the-U8ited States was cut-back whenever we,had ‘a shorfage, ‘that is, from our estimated quantities, : x Q.24. After that allocation had been made of estimated quantities, at that time didg the -- A.24. Phat is right. - PAW advise the refinery? ; et ‘ ~ {fol 3604-0. 25.-The gasoline-remainé ‘tat the refinery ? 3 -* . . . . . ® bd after the allocation until the designated unit to use it went there to receive delivery, is that correct ? A. 25. That iscorrect:) .¢ : pe , . ; ’ : i t 4 Sy & Redirect examination. - - -_ . e = . By Mr.Green: /. ace pats + -R.D.Q.1. Mr. Stratton, in your * cross examination; you ee aan = ~~ nade mention of allocations of | lines and engine manufacturers. scribe the mechanies of the purchase of 91-octane gasoline td A.k. Enginemanufacturers and“airlines, each individual éase even down to airplane numbers; gasoline was made available to them only after the necessary information to ARPAC that they were pr es- sential var, production, and th y were able to furnish -the ey had to ddcumen? with _APPAC that information. . Then APPAC would-authorize - release by whoever they wanted to purchase the gasolfne from, and they would merely make their contracts with the producer with whoniever thee de source on that. Quantities were insignifieant anyway, and * - -wé didn’t desigiate the source R. D.Q. 2. If I understood y sired. .We didn’t name the of it. our direct testimony, im~ ‘mediately upon production, gasoline went to the Govern- ment gr certain instances? _ , A. 2. Yes sir. ff . refiner? A.3>That is ricci. eds = a R. D.Q.3. On the Y1-octane, they dealt direetly withthe ° ‘fol. jor} R. D. Q. 4. spon allocation? =. = A. 4. Yes, aR PSs | ’R.D. Q. 5. W ere there purchases by airline companies and motor manufacturers of 100 octane sascline? : ene A. 5. Yes, sir. " . ben a _ B.D.Q. 6. Deseribe how that allocation \ was made and how - that. purchase was accomplished? i : ' A.6. We would authorize: the. company “th, -pepurchase _ + from Defense Supplies Corporation, . eee ay Rk D: Q. 7. You. sav you would authorize the company to ‘“‘repurehase.?? By “that “company”? you mean the refining company? . NATE Yes, sir. “We would authorise ‘lie’ refining company. to repurchase gasohine from ge Defense Supplies Corpora- _tio®y in order to take care of this airline busisiess and motor ° . Manufacturer basiness. = Nei — -RLD.Q.8. In short, before Tefinerseoutd deliver 100, ae octane _gasolineto-an-aitline’ or an engine thatufacturer "having * allocation,’ he. had first, the refiner had first tee: purchase the gasoligt from Defense. Supplies Corporation? ee - A.8, That is or t, heeciuse Defense Sipplies C orpora- tion owned all 100 Octane: av lation*® gasoline, ge , . F mither: Dépohent s saith not. Paul C, ‘Stratton, By T. Roy Hix’. : Seen. to before | me wher taken, the 13th day of April, 1950, T. Roy Hix, Notary Public. Seal.) : rag . My commission expires April 6, 1954. ! | 8 y . . a A “ , See ti . [fol. 36: 2]. Deposition | or W. Ranpow PH ‘Piersc ‘ wo! : The ne: t witness, W. Raxvoien Pretsen, being first duly f sworn, ‘deposed, as follows: reas ig gaye re icy ease Direct examination. et 9 eae : By Mr. Green: ae >. “7 Q 1. Will you please state’ your residence and present .- _ occupation ? A. I live in Washington,..D.- c." { dim a residont of 4) ‘and Patterson. Field are. disfinguishtd? A. They_are> adjacent and ‘the retiial: hes adquartexs is” 74. z Lee: 3 | a | om Nevada. - My present. occupation -is : eumparaty: indefinité. I'am in the office of the Seéretary of Defense with the. Munitions and Pe ‘troleum Gommnittee : and the policy divi ision ~* beets RSE, eee W hen did. vour first assocjation as: an i, efiployee Q: of the federal government begin? |: ~AMn January, 1943.- sae Bets Q73. Wil you ‘describe the positions. you’ ‘ane e had and the successive positions up to the last-one stated? A. From.January, 1945 until July, 1943 Twas Assisjant Civilian Supervisor of: the. Allocations and ‘Requirements - Undt of the Fnetfs : Branch of the Air Service Command’ with headquarters at-—— .-- (). 4.. Where was that command? : A. At Pattersot Field at wae time. Later it beea: amie Wright Field: : Q.5. Will ‘you explain for the record. how iv right’ Moth: _ between the two félds.: ee : Q). 6. How long did you remain there? i fol. 363 A. T remained there yutil May, 1946 and during’ _ that time from July, 1943 to May, 1946 i was Supervisor - of the. Allocations. and _itequiremants Unit. Q. 7. Now, the allec#ions branch or unit which vou nien— tioned in your testimony, did fhat have anything to-do with the alloc ‘ations. testified to by Mr. Stratton by the. APPACI. $2 - It was ‘direc thy connected with it. : 8. I mean ~vith the allocations of Wright’ Figdd « © . A. They wefe agpart’. of it. Tey hada share. or they . : had a part of the allocattons. . Pee ~Q. 9. E will put, the question this Wi ay. Will you deséribe’ “the duties and responsibilities of your position at W right - Field? : A. As Supervisor of the Allocations Unit my Feajontt: ‘Tilitvy was to plitn, coordinate and control the allocation of aviation gasoline for the Army Air Forees-in the eoh-- tinental U nifed, States, That control is exercised or done’ - in fie name of the military officer: Howey rer, at the time . B.. z ~. 4 : Fe ne 8 F ie . 75 I was in-that position T had eleven-different military super- ~~ “visors $0 the aetual resfonsgbility rested’ primarily onmmne, ° og -Q.-10. Now, describe in your own way what you did. oe ae ‘A.2Yes, sir. At the time an allocation was made hy e APPXC I receivednotice faayn PA W, Petroleun’ Admini- * - stration for Wa# and-fronr ieakgeertcs ot the Ariny:-Air NS Forces ip Washingtgn sipiultaneously of thy altoegtton. The SEN Air Foree notification was throwgh their represihlative on (fol. 36$] APPAC. ‘The notification. that came from PAW was in the form of what we at that tine termed ‘refinery * a Bee eT Ne - assignment sources.’ In other words, ip Was broken down by « 2 quantity and by ‘grad? of product. When we had recejved ’ that or the assignments: or sources trom PAW under.the. @' .. allocation which had béen made by APPAC we started * planning distribution of the products during the sueéecding *month.- This planning, which started about the 10th of the preceding month, wa? on a basis of What the different Air ; 4— = > Force commands within the ae inental United Stytes had. “. “submitted tous. Those.requbrements gertrally were con-’ siderably in excess of what was later allocated. We would screen those submitted, for headquarters Army’ Air Forees* ard at thestime the allocation was made headquarters Army _' Air Forees would advise us-what would be allocated to each * AiraForce command, pare ; | |, To clarify that a little bif, these Air Féree and cominands o . “4. Were fot alloted aviation: gis geographically. In. other ¥ words, there may have been two of three operating at ote’ Memphix but they- also operated at. some training bases. -Fuelfeonsumption agninst these allotments was a matter of statistical record whenever the issue was made and con- solidated: ineyeports that’ came in three times\a month to Wright Field; and the consumption wis reported country-- , Wide. Wehadla consumption sheet made so tliat we could.on the 10th of a’giten month know, whether a&-command was. exceeding its rate of allotment. In other words, if their ba allotment was 300,000"barrels*fof the month and they had . {f01.°365] used 150,000 ‘by the 10th, it was-our job to get - hold of the Army Air Forces and they would issue ordgs to dot down-on the fuel for that comnfand but not at any particular air field, rs ; Ge ° » 7 ; field. The Air Trans ort Cénunand o verated through. I I - | as 7) aa” _ Of petroleuin ‘prodnets, After-we got or atsthe samé time practically that we had» @ oe 9 SEN peta fe er ea es ¢ . : : te . ? © PRS € ‘ - o% [fol. 3G8] ‘plan had -been -outlined and ‘item utlinggs in Atrings trom*each | fupply from tlie \ ¥° refinery and -similarly from. the terminals. ee this at by using “diffegent colores refnery. soured We had.it planned, the ° The reason. fog this control, or another: effect of, this control rather, on the Air ‘Forces was, we were not per- -, mitted to.4hip from a certain ‘geographical district: into ® ail the activity allotmd another one without the approval ‘of the PAW and the. ODT so that in our plans if we found that it was necessary } } todo that, we shad to justify itgby planning ‘shipment in that manner. When they had approved. tltis distribution _plan we generally telephoned the’ refinery or its head office and also generally the grininats and ‘notified them about t releases. during the ‘following niénth. That usually ocettrred around the 28th, 29th, or (30th. Those notifications were confirmed by release form.. ~.We had a covering farm of letter that spelled. out specifi- vally what the contractors were permitted to do or limited from doing. Those forms did not generally reach thecon- traetors until- possibly the. ‘3rd,*4th or 5th of the month» ° - but they started ghipment. on the basis of our. authorized telephonie release, plus any action: taken by the supply _ Officers at the fields that were authorized, because we didn’t order shipment. We only authorized .release on ealt’ of these other ‘attivities.. iS ee + \ a . ie Ys ray o } ‘Now, one other point that should be made clear. In this release of this plan so that the contractor, the refineries could plan I§w: this product was to be shipped, indicated ‘[ fol. 3697 the type of delivery that was to be made on this release form, whether by tank truck, tank cq or. for water loading. They also advised the ‘Air Forces transportation people that the ODT had authorized whatever ‘type of - transportation was required, It allowed the refineries to store thé finistied product.in the type of loadme tanks that were necessary. In order for water liffing it may be an entirely different tank to what they would have if they .were loading. tank cars or trucking it-down to New Orleans.- The quantities that were set up for water loading were only as indicated by the Guantities on these various - sheets. “These quantities were not strictly limited but they were - liméted.to this-extent in that the people that took oversthe ‘ © . Y - . i * ‘ es ee 3 @ : i hee doe 3 ; eo : 79 4 e. ve . FS a . Venta ee el ak 2 aa ty ae ie et actual moéverient of the product ta be moved by water, the. ‘3 distribution unit at Wright Field} they arranged Tor the transportation of t he product and they determined actual] y the quantity to be logded. If for some reason ‘an air field. -, Would be extra busy, the distribution people Would -éome- J ; ' to us and cadl for a release of an extra 10,000 or: 20,000. - .sbarrels.” That might make ws in short supply of the quantity >, ‘we had-available to supply from that particular refinery, 2, In other words, there would be a re-shuffling alk the way o. . through. That is all I think of ow that point, — | Sv YAS. Now, Mr. Pietsch, you in your testimony mentioned “ when you got.an. allocation and you said the refinery assigh- _ ment. Whatsdo you niean by the réfinery assignment? nies o's ‘Well, it? Was oan assignment by PAW, of the. seurce ~ (fol. 370]. of suppfy wigh the quantity, type of the:prodict, ‘for lifting frém this ‘Source during ‘the month designated... Q. 16. Did the. fact that a given terminal was operated by a particular oil company.mean that the assigned refinery. - would be the refinery of the company operating the termi-°* & a e@ ot Bee ee : _. A. No sir, In faet, further than that, on this release we did not designate what terminal the shipment might be . made to. The distribution ‘peopis determined, when they ‘- . eame to the a ual shipment, whether you got a barge and _ that sort of+hihe antl the point they- would. litt from-but ‘no consideration, as far as] know, was-ever given to who the | owner gf the terminal was or the*refinery because all govern. , ment movements were on what weeall theogistic basis, the ~ , shortest and most economical Voul, > ; ae Q. 17. {ou'mean.to say that because the: Memphis Terini- nal involVed ‘in this case Was operated Wh? the Standard Of. . Company’ of Leuisiana that did not mean that the Standard leer A) Company's. refinary-or any ‘one of its refineries did know who Would be the assigned. refinery in the alloeation:: in each case? ce pa arte Ak A. No sir. . In fact, the allocation did-not extend as far | astheterminal = > oy 2 Pe ~ Q.18. So the PAW not. only told” yon, the. gallons vou could obtain but where you would obtain it? — . A, Yes sir. hg : ri % a ) aie it .- ‘ ie Poveceere rrr A al us rn . > e e e 6 ° 4 ~~ ° s s ; 7 3 , . 2 * aA . ) : . & ; wf 80. ‘ hah eg seh i ‘ 4 ts ¢ my . eke ee ti : : Q.19. You determined? the © terminal into which ‘it © would go? | ’ Bp en lean, . A. Yes.'-The PAW had.nothing to-do with deteritining NIBP on Bi walmantarn cE gare eee OE aT ee 3 ° "[fol. 371]. Q. 20. In your testimony. you have discussed: at some lengths transportation and your. arrangements a. : ay ‘ . ‘ . made for transportatign from. th¢ assigned refinery? : A. Yes. . “ : . f ~ Rs . ayes 3? . . ¢ & . . . 89 : o ° . of deleyery the refinery would be expected té make, whether in tank ear, tank truck or into barge. It also stated on the’ release, forms: that “w ent to the refineries what the: PAW allocation, as it is termed: here, was ‘for the month,:’ o b J Mfally that letter came j avoid confusion\with. the n the form of an assignment to APPAC allocation but on the form. it says PAW. allocation. On the release to terminal. -operdtars there wk no j nformation on that line at all .. because there was no allocation to a terniinal as such. Q. 31.-Now, was that conventional procedure? - . % ; » 7, ; oi ae? Vea, ? ’ [fol. 374] Q,32. Now, wi | , will you look at the serments 2 labelled Complainant’s Exhibits 10, 11 and 134 and state ts whom those releases were. issued? | _. A. Exhibit ‘10 was issued to the Standard Oil Company of ‘Louisiana, address-. X- Baton Rouge refinery for the month of December, 1943.” Exhibit No. 11 was issned to . _ the Standard Oil Compan ~ Louisiana refinery for the insert, ‘*for grade. 100” Ix Wit 13 was issued to of Louisiana, X-Baton Rouge, monthgot Japuary, 1944, “May at the end of this statement? the Standard OileCompzny of Louisiana, X-Baton Rouge, Louisiana refinery. for theo ~ * month of December, 1943 for grade 91, ' . Q. 383. Will you look it Complainant's Exlibit No. 12 , and explain what the entry ‘water lift restricted yea SS “” OOO estimated required gal lons’” means, and explatn that A. The reason that water lifting was restricted was that - the ai fields that are listé ‘from that’ point, could be’ Wanted Yo protect their es order to\avoid the possibilit) ° \ 2g “ . them by tank ear from som amount of the Grfile. 91 we indicated ‘under the restric ‘d above as also being supplied supplied by tink truck and we fisted requirements in full in “that we might have to ship e more distant. point, if.a larger. re to’be lifted by water.than we - A al e ted amount.” > , -Q. ad: Then I take it that’ these three Exhibits respec. tively numbered Complaipant 's Exhibits 10,11, and 13 are ‘what are know- as .refinery releagses% \ v 9 \ 6 6. = | to! 375 in A. They Hee. aif. Q. 35. Arid are releases to the refinery the papers Wpon + / ~ whach ‘the amounts of the accomplished fo the Air F wee.“ ee i i . ot ‘ allotments ‘at the refinery are | orces? on" wD | : ane Se of 83 Q. 36. Now, look at Complainant's Exhibits 28 and 29 and. state to whom they are directed and at what points, _ AL Exhibits 28 and 29 were directed to the Standard Oil Company. of Louisiana, ex Meniphis, Tennessee terminal, -Q. 37. For what do they prévide? Do not go inte the : detailed amounts. aN a : A. For the release :of grade 100 under Exhibit: 28 and . grade 91 under Exhibit 29 for the month of January, 1994 . to various activities in the State of Tennessee and other states adjoining, various Air Foree activities, - * .Q.38.-That is knewn asa release to the—._ | . A. To the consuming installation, to the Air Forces _ installation. ae FW Gee Q. 39. And it goes to whoni? #252 * AL It goes to the terminal through the home office, - Q. 40.. It-is known as the terminal release? “A. Yes sit, «: ie eee wae eee Q. 41. Now, on each of these Exhibits.the following lan- guage appears: “Quantities shown are estimated require"; “ments only but are-not restrictive.’’ Will you explain the “meaning of those words and why.those words were placed upon these documents? . | Sate eas te Sep teens “” -A. Those Wprds .were placed upon. these documents be- — Tol 876] ‘cause’ we don’t resfriet the quantities- to he - shipped to any. individuat activity, and in addition, the ‘release in these {wo" instanées was made on the tersninal. .The préduet already had been purchased by the Air Forces and was beyond the allocation restriction, in order words, | " it was in #he Air Force's possesstyg, in the Air Foree’s. “pipéline bei hg sent to the Air Force activities for Aip Foree consumption. . Aa teres : Ses cutey . - Q.42. Am TI correct jn understanding your destimony’ when | undertand that .these refinery releases of necessity were required .to’ be supported by PAW dilloeations? A. yes sir, IS poet ae a oan Le rae ss - Q.42.. ice it——~ - ac * : A. No shipn#nt could be made. : ‘JQ. 45. And that. these allotments’ are mere estimates projected into or the anticipated needs in the following nionths? — - Fn at a ; ks A. In the. particular months, sir.’ : ; Q. 46. Now, changing the line of it for a.moment, look at | Comptatrut’s Exhibit No. 10, which is terminakgrelease of Standard Oil Company of Louisiana at X Baton Rouge and releasing water lifting of 1,080,000. gallons followed sg . by the word ‘‘barge’* and explain what that Watertifting =e . _[fol. 377] to the barge means, |. 5 gins . a o® . A. The wafer liftiny was so indicated so that the refin- — ery woild’place the product, when manufactured, in storage eee tanks. that [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386407_0235%3A0. Public record. Not legal advice.