           OFFICE   OF   THE   A-I-T’ORNEY   GENERAL    OF   TEXAS

                                   AUSTIN




a. Wallace Rughston, Direator
Uotor Transpoxtation Division
Railroad CoMlission of Texas
AuatLn, Texas

Dear Xx.    EUghetOnI




             inquire whether
            YOU                                          any of Brownwood
is a mtojc carrier. subfeot t                            ne of the Rall-
road Commlsslon under the Tell                         ier Aot, Article
911b, V. A. G. g.
                                                      t the lnroraEtion
                                                      oanrere,noeand
                                                 way, counsel for The




                                  youx request, I sqbtit
                                otenent of our fjndings 80 far


              "1. As to the partloular case riled at
      Dayton, Texas, on Way 13, 1943, against D. Vaughan,
      driver of a truok owned by the Butane Co., of Brown-
      wood, Texas, our Fnveatigatioa dlsoloses the follow-
      ing:
              "a. 2265 gallons of oommerolal butane WEB
      transported from Baytown, Texas, to Port Arthur, Texas.
      A copy of the Railroad Commission of Texas Motor Vehi-
      cle idanifesttaken from the files of the Gil and Gas
Division of the Railroad Co.:lmissfon
                                    of Texas office
at Houston, S~OOWSthe shipper of this cargo to have
been EU~FJ!J~CJ
            oil and Refining Co., Daytown, Texas, and
the consignee of the shipment to have been the White
Gas Co,, Port Arthur, Texas, aad that shipment was
s&e by truck owned by the Butane COQWUW Of BZXYW-
wood, Texas, driven by D. vaughan.
         "b, an examination of the records of the
White Gas %o., Port Arthur, Texas, show that this load
of Butane was purchased by the Pmite Gas CO. iroi%I
Anchor Petroleum Corporation of Tulsa, Oklahoma, and
that payment $or same was made to the Anchor Petrole-
co., of Tulsa, Oklahoma, lndioating to us that The
Butane Compxq of Browlwood, Texas, was not involved
fn the transaction ln any maauer except as the tz%mv-
portation agent.
         "2. The same facts as to cmirests, ooatraots,
purchases and agmenta apply to a number of other cases
lnvolvlug the s anuers Butane Gas Coupany of Houston;
Winton Automtic Gas Oompany, Denumnt, Texas; Automatis
Gas Co., of Beauuont, Texas; and the Crown Central
Petroleum Oorporatioti,Pasadena, Texas.
        "'3
          . The records of the Geir-Jaokson Re-
oycll.~.~g
        Plant at Grapelaud di'sclosethat the entire
output af this plant is oontraated to the Anohor
Petroleum Co., Tulsa, Oklahoma, andthata   largema-
jmlty qf the gas from this lant is transported to
the Gulf Gil Oorporattoonat %art Arthur, Texas, in
trucks owned by The Dutaue Company of Brownwood,
Mr. Blgglnbotham, of the Gulf Oil Corporation, advised
one of our inspectors that they had a contract with the
Au&or Petroleum Company, Tulsa, Gklahowa, for the gas
from Geir-Jaokson Reoyoling Plant and did not.kaow,the
Butane Company in aonneation with the oontraot. He
farther stated that the Gulf Oil Corporation is in-
voioed by the drnohorPetroleum Company and that suoh
invoice8 are paid to the Author Petroleum Company.
        "4. One of our lcspectore has ohecked the reoords
of the Distillate Production Corporation aud these disclose
a contract by and between Distillate Produotion Corporetion
aad the knehor Petroleum Corporation, wherein it is oontraoted
that Distillate Produetlon Corporation agrees to sell and de-
liver to Anohor Petroleum Corporation from Distillate Produo-
tiou Corporation tanks at the loading dook Into tank trucks
to be rurnlshed by mahor Petroleum aorporatiou. Produots uu-
der this aontract are being delivered by The Butane Company of
Drownwood to the Crown Central Petroleum Corporatiou atePass-
      dena, to storage of that corporation.
                   "5. In the reoords of the Cistillate Produc-
      tlon Corporation, our inepeotor examined a letter ad-
      dressed by the An&or Petroleum Corporation to Distillate
      Production Corporation whioh read aa follows: 'As to
      trucking equipment for Liquefied Gas Products, we be-
      lieve that our company owna or has more equipment available    4
      than any other concern. This equipment includes one large
      new propane transport, having a working pressure of 200 lbs.
      and a capacity of 4,000 gallons whioh we contemplate using.    1
      Our trucking   faoilities together with those of a large
      truoking ooacern In the State of Texas, with whom we
      have a close working arrangement,   approximate 75,000
      gallon capacity.'                                              1

                  "6. The Anchor Petroleum Corporation is
      an Oklahoma Corporation and has a permit to do busl-
      nesa in Texas.  Nothing in the files of the Seoretary
      of State's office show any oonneotlon between the
      Anohor Petroleum Corporation and The Butane Go.,
      of Prownwood.
                 "7. The charter of the Butane Company of
      Brownwood has been cancelled aooordlng to records of
      the Secretary of State.
                 "In conolusion, our investigation disoloses
      that the produote transported by The Butane Company
      of Brownwood are produots that have been purohased
      from various oonoerna by the Anchor Petroleum Corpora-
      tion, that the purchasers of these producta are in-
      voioed by the Anohor Petroleum Corporation, and that
      payment is made to the Anchor Petroleum Corporation.
      The manifests covering these truck shipments are made
      by the produoer to the Anchor Petroleum Corporation
      and that the Butane gempang of Brawnwood la not known
      ;r*r$$ognized other than a8 the transportation agent.


                  Mr. Holloway has made tha following explanation
of the activities of The Butane Company and the Anohor Petroleum
Company, its associateI

                  Mr. Thurman Cole does business under the name
of The Butane Company and is engaged in buying,  selling and
transporting Butane gas. A few years ago when he entered this
business butnne g.28was a by-product of oil refineries;  its
                                                                952   ,
k&c.irallaceHoghston, page 4




production was irregular and the de,mnd therefor fluctuated
with the weather. At times the refineries would have a surplus
and would shoot it into the alrl an other occasions, when a
local distributor would send his truck for a load the refinery
would have none. Mr. Cole by oontracting la advanoe with a
large number of refineries and securing the business of a large
number of looal dealers, haa been able to spread supply and de-
-%      aranteeing to refiners minimnm sales and to local dealers
a regarar eapply.
          The Butane Company has storage in several West Texas
towns and in others. It sells to dealers having their own
storage. The prioe to the oustomers is based on the oost of
the product to The Butane Oompany plus the cost of transporta-
tion, whioh varies with the distance. Whenever the local dealer
sends his own truck to the refinery ror gas, which he buys through
The Butane Company, he raoeives a reduction in prioe based upon
the company's saving on the oost of transportation.
          The foregoing operations are oarried on by The Butane
Company by itself+.

            JOIWT OPBBATICMS OF TBB BUT&BE COYPhBY ABD TBE
                      kblCIiOB
                             mJ!RoLETJbi
                                       couipANy

          In addition to the business oar&d on by The Butane
Company in West Texas, it also carries on an extensive business
jointly with the anchor Petroleum Company, an Oklahoma oorpora-
tion with a permit to do bueineas in Texas. Principally, this
business is earried on in this way:
          Xr. Baten, for and in the name of Anchor Petroleum
Gontpany,oontraots ror the purchase or butane from a refinery
and, usually later, for its sale to a dealer. The oontraot la ao-
tually for the joint aooount of Anohor and The Butane Company, but
only the nataeof the Anohor Petroleum Company la known to the re-
finer and the dealer. Anohor operates no butane trucks  in Texas;
The Butane Company operates ao!nethirty suoh truoks. All expenses
of the transections suoh as ooste, purohase, sale, and tranaporta-
Man, are kept in a joint aoooant.    The total expenaae are de-
duoted from the reoeipts from sales and the resulting prorit or
loss is equally shared. Sometimes hr. Cole of The Butane Company
doea the buying himself.   In either event, the oontraot ror the
purohase or sale is entered into by Anchor or The Butane Company
only after securing the advioe and oonsent of its assooiate. Suoh
approval is usually given by long distance telephone. The tele-
phone bill of The Butane Company runs $300 or $400 per month.
                  Storage tanks are awned jointly by the aon-
federates at aaveral points, while other storage facilities are
owned by one aompany or the other. kiowever,as far as the joint
acoount is coaoerned all plants are owned and operated by the
joint amount.
                  An exception to the procledureof aeouring ad-
vance approval or both associates for eaoh contract appears to
exist in Laredo where the superintendent of the jointly operated
teraina~lmakes sales without aeouring separate approval ror eaah
traaaaotion.




                  The question is whether under the foregoing
faota The Butane Company isoperating trucks for compensation
                                                ,            or
hire. If it is, it is a motor carrier.

                  Counael for The Butane Company bases his con-
tention that it is not a atotorcarrier upon the following parts
or the Texas Motor Carrier Act, V. A. C. s., Article Bllb, Sea-
tlon la:

                 "(1) Provfded, however, that the term
          'Mctor Carrier’ and the term 'Contract Carrier'
          as defined in the preceding seotlon shall not
          be held to lnolude:


                      ll+* *

                  “(a) Where merely inoidental to a regular,
           separate, fixed and established business, other
           than a transportation bwiness, the transportation
           of eaployeaa, petroleam produots, and lnoidental
           supplies used or aold in oonneetion with the whole-
           sale or Istail sale of suoh petroleum products from
           the refinery or place of production or plaoe of
           storage to the plaae of storage or place of sale
           and distribution to the ultimate   consumer,   in a
           motor vehicle owned and used exaluaively     by the
           marketer     *   *   *-
hlr. tiailaoeHu+iton,       p:ige0




                 In our view, transportation of butane for
the joint aoaount ia not "merely inoidental to a regular,
separate, fixed and established b-other          than a trans-
portation bueInesaX" If the traneportation for the joint
aoeount were iaolated, oocaslonal, Irregular, oaeual and desultory,
(~otatlo~.     125 A. L. R. MB), The Butane Company might not be
aoting am a carrier) but where,.ae here, it employi some thirty
trucks latenaively in transporting for the joint undertaking,
where auah business ie so extensive as to require several hun-
dred dollars telephone ealle a month for the ooordlnation of
the operation of the two oompanie.e,wa are impelled to the view
that the transportation ie not "merely Inoidental" to a buei-
ne8s  "other than a transportation business" but that as to the
joint operation the principal businese OS The Butane Company
is that 0r transportation.
                  In our view the transportation la for compensa-
tion, notwithstanding the tact that the extent of the remunera-
tion is uncertain and oontlngent upon profits. IP the opposite
were   true, a truak operator might engage to transport for any
number OS ooncerna and,be free of the supervision of the Rall-
road Co~uslon     as long a8 hIa uoapenaation wae a percentage
or   aontingent proffta. This would utterly destroy all attempt@
or the State to maintain uniform freight rates.
                Counsel for The Butane Company haa also suggested
that The Butane Company may fall within ,thestatutory exoeption,
rea(lingt

                       *(d) Any utility aompany asing ita own          I(
                equipment transporting Its own property over the      :!
                highwaya."
                                                                      1
Pretermitting  the question of whether It la a utility, The Butane    ~
Company doee not fall within this reotlon, for In the joint op-
eratlon it doee not own the gas if transports, but at best has
an ondivided intereet  therein.    This laok of ownership prevents
hi8 falling within eroeptfon    (a) of the eame subseotlon.           ‘I


                It Is our opinion that you aoted properly
In filing a complaint against the driver of The Butane Com-
.       .




            &?r. tie.llaceHughston, page 7




    i       pany for operating uuithouta permit from the Railroad Com-
            tiSSiOL

                            Our opinion file contains additional ln-
            formation on the aatlritiee of these aompanies. Kindly
            aaU on us if you require it.

                                                  Yours very truly,
                                             Al'T-ORNEYGENERAL0FTEXAS



                                             BY
