CALIFORNIA MOTOR TRANSPORT CO LIMITED v. STATE BOARD OF EQUALIZATION

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District Court of Appeal, Third District, California.

CALIFORNIA MOTOR TRANSPORT CO., LIMITED, v. STATE BOARD OF EQUALIZATION.

Civ. 7210. 5749.

Decided: April 01, 1947

Fred N. Howser, Atty. Gen., and John L. Nourse, Deputy Atty. Gen., for appellant. Norman A. Eisner, of San Francisco, for respondent.

Plaintiff brought this action to recover taxes paid under protest, said taxes having been assessed against it as a highway common carrier under the California Motor Vehicle Transportation License Tax Act of 1933. Stats. 1933, p. 928, and amendments, 1 Deering's Gen. Laws of 1937, p. 2160, Act 5130d. Plaintiff operates between San Francisco and Los Angeles, and Oakland and Los Angeles, and it is conceded that its gross receipts from such operations are taxable under the foregoing act. Plaintiff also operates a pick-up and delivery service in Los Angeles and in Oakland, and the only question in this case is whether such portions of its gross receipts as are received for picking up in one city goods to be delivered in the other, and for delivering in one of such cities goods transported from the other, are a part of its gross receipts from the operation of motor vehicles, subject to taxation under said act. Plaintiff contends that its business as a highway carrier—its intercity business—is carried on independently from its business as an intracity carrier, and that its receipts from its intracity activities are not a part of its gross receipts as an intercity carrier. The trial court sustained this contention of plaintiff and this appeal was taken by defendant.

The evidence shows that plaintiff corporation was organized in May, 1930, and that in June, 1930, it succeeded to the operating rights of E. Sunberg who held a certificate of public convenience and necessity issued by the Railroad Commission authorizing him to operate a van truck service between Los Angeles and San Francisco, for the transportation of property consigned to him by California Freight Forwarders, the latter being an express company operated by one Robert W. Lacey. Also during 1930, the California Motor Express, Ltd., a corporation, succeeded to the rights of California Freight Forwarders as an express company, and plaintiff entered into a contract with that company for carriage between San Francisco and Los Angeles.

In 1935 plaintiff's operative rights as a highway common carrier were extended to include operations between Oakland and Los Angeles and a contract for such carriage was made by it with the express company.

In April, 1941, plaintiff secured from the Railroad Commission a permit to operate as a city carrier in any city in the state under the provisions of the City Carriers' Act, Stats. 1935, p. 1057, amend. by Stats. 1937, p. 629, and Stats. 1939, ch. 683, Gen.Laws, Act 5134. Thereupon it purchased the equipment of the Red Line Transfer Company of Los Angeles, which company had been doing pick-up and delivery for the express company in Los Angeles, and acquired from Red Line Express Company of San Francisco the equipment with which it had been carrying on pick-up and delivery in Oakland. Thereafter plaintiff performed such pick-up and delivery in both cities, under contract with California Motor Express, Ltd.

Plaintiff's pick-up and delivery in San Francisco was and continued to be done by the Red Line Express Company of San Francisco, a copartnership; and while one of the issues in the court below was whether a portion of the revenue of that company should be considered as gross receipts of plaintiff subject to tax, that issue has been abandoned on this appeal and may therefore be disregarded.

The trial court made findings covering the foregoing facts, but it also found, and relied upon such findings as a basis for its judgment in favor of plaintiff, that plaintiff has at all times kept separate and distinct books and records covering said pick-up and delivery service and entirely independent books and records covering its intercity operations; that the vehicles used by plaintiff in said pick-up and delivery service have not been and are not used in highway transportation, and have not and do not operate outside the corporate limits of Los Angeles or Oakland; that the common carrier highway operations of plaintiff have not been confused with and have been conducted entirely separately and independently of its pick-up and delivery service; that after the acquisition of said equipment, and after obtaining said city carrier's permit, plaintiff operated its two activities as independent and separate services; that as a city carrier it had separate equipment, lighter and different from that which it employed in its capacity of a highway carrier; that it confined its business as a city carrier strictly within the limits for which it was licensed, and intruded in no particular within the field of the highway carrier; that it kept separate books of account and rendered separate and independent bills to California Motor Express, Ltd., for said city carrier service; that as a highway common carrier it did likewise; that its equipment never deviated from its devotion to the service for which it was licensed; that it kept accounts restricted to its character as a highway carrier and billed its customer solely for its highway carriage; that plaintiff is both a highway carrier and a city carrier and it exists in each of these characters by separate authority; that each business has a separate license or certificate from which it takes its existence and individuality, which certificates were issued at separate times and are authorized and are supported by different statutes; that neither is allowed to work or operate in the field which he other has been created to fill; that penalties have been provided for the violation of this prohibition; that the separate character of these two businesses is as definite as the law can make it; that the businesses were not confused or entangled and did not overlap; that the two operations, that of a city carrier and that of a highway carrier, are just as separate and distinct for all purposes of this case as if the two operations had been conducted by separate and distinct corporations or legal entities; that the Red Line Transfer Co., California Motor Express, Ltd., and California Motor Transport Co., Ltd., have at all times been operated from the same place of business and under the direction of the same individuals.

Regarding the findings that plaintiff has at all times kept separate and distinct books and records covering the pick-up and delivery service, and entirely independent books and records covering its intercity operations, and that it kept accounts restricted to its character as a highway carrier and billed its customer solely for its highway carriage, the trial court was misled, for the record does not support them. William J. Davis, general auditor for plaintiff, testified that plaintiff rendered bills to the express company each month on the basis of total tonnage moved in the pick-up and delivery in Oakland and Los Angeles, and also bills for the total tonnage moved between terminals, and that the revenues are set up separately in plaintiff's accounts. But on cross-examination he said that separate books were not kept for the intercity and intracity operations; that a segregation was made in the revenue account on plaintiff's books, but that not even separate pages were used for this purpose; that ‘just columns on the page would indicate the line haul and the other’; that the same bookkeeper made both entries. There is no evidence contradicting that testimony.

Regarding the bills rendered by plaintiff, there is no evidence that plaintiff rendered any bills except to the express company. Illustrative bills introduced by plaintiff show, for instance, that for the month of May, 1941, one bill was rendered for ‘Terminal to Terminal Line Haul Charges' ‘Northbound 5,709,572’; ‘Southbound 6,631,411’; total 12,340,983 lbs. at 31 1/212¢ $38,474.10; and another bill was rendered for ‘Pick up and delivery services at Los Angeles and Oakland,’ ‘Los Angeles, Northbound 5,709,572 Southbound 6,631,411,’ total 12,340,983 lbs. at 12 1/212¢ $15,426.23; ‘Oakland Northbound 2,072,222 Southbound 1,229,582,’ total 3,301,804 lbs. at 12 1/212¢ $4,127.26. It will be noted that the tonnage for which the bill for intercity transportation was rendered is exactly the same as the tonnage in the bill for Los Angeles pick-up and delivery, showing that all of the freight picked up or delivered in Los Angeles for which the express company was billed was carried in intercity hauls.

From this evidence it is apparent that the trial court erred in its finding regarding the keeping of separate books by plaintiff, and that, on the contrary, but one set of books was kept by it in which, in its revenue account the pick-up and delivery income was set out in a separate column. And therefrom it also appears, from its billing of its pick-up and delivery as ‘Northbound’ and ‘Southbound’, that such transportation was but a part of its highway transportation business which resulted in its carrying on what was, in effect, a store door to store door transportation business; in other words, that its intracity hauls were ‘feeders' for and incidental to its transportation between cities.

Conceding that the equipment used by plaintiff in its intracity operations was different from that used in its intercity hauls, that plaintiff confined its operations as a city carrier within the area for which it was licensed—as the law required it to do—that it had two different permits or licenses from the Railroad Commission, and that it had separate contracts with the express company for its intracity and intercity transportation, we are confronted with the question whether, in view of the decision of the Supreme Court in Bekins Van Lines, Inc. v. Johnson, 21 Cal.2d 135, 130 P.2d 421, and our own decision in Southern California Freight Lines v. State Board of Equalization, 72 Cal.App.2d 26, 163 P.2d 776 (hearing in Supreme Court denied), it follows therefrom that the revenue of plaintiff from its intracity operations may not be considered as a part of its gross receipts for tax purposes. In other words, does the evidence sustain the conclusion that plaintiff was carrying on two separate ‘businesses', and, even if it was, that said businesses were not so interrelated that it can be said plaintiff's receipts from the pick-up and delivery of goods which it also transported between cities are not a part of its gross receipts subject to the tax imposed by the act. We think that the evidence and the findings do not justify such a conclusion in view of the decisions in the two cases above cited. Merely calling the intracity part of plaintiff's operations a separate business does not make it such.

In the Bekins case one of the claims of the company was that the portion of its income derived from certain pick-up and delivery service in municipalities should not be considered a part of its gross receipts subject to taxation, because in such intracity hauls to and from its city terminals it used smaller trucks which did not go outside of city limits, it made a segregation on its bills, separating the pick-up and delivery charges from the charges for transportation between terminals, and its waybills showed such separation of charges. But the Supreme Court said, 21 Cal.2d at page 142, 130 P.2d at page 425: ‘Nor may any distinction be made by the plainitff on its returns between intercity hauls which require for convenience an intracity pick-up and delivery service, and those which do not require such service in the convenient method of initiating or terminating such intercity transportation. The plaintiff in this connection relies on Pioneer Express Co. v. Riley, 208 Cal. 677, 284 P. 663. In that case the plaintiff's activities were confined exclusively to intercity hauls. Another company, formerly a competitor of the plaintiff, abandoned all intercity activities and confined itself to intracity business exclusively, including the pick-up and delivery service required by the plaintiff. It appeared that the plaintiff in that case in good faith did not engage in intracity pick-up and delivery service as part of its intercity hauls. It was held that it had paid its tax in full, based on the report of intercity operations as conducted by it. No invalidity may be said to attach by reason of the fact that the plaintiff here is taxed on its intracity pick-up and delivery service in connection with its intercity hauls as distinguished from its strictly intracity business. In re Bush, supra [6 Cal.2d 43, 56 P.2d 511]. The trial court in the present case properly concluded that receipts from all hauls which originated in one city for transportation over the public highways or which terminated in a city after such transportation should be treated without distinction as taxable gross receipts from operation.’ (Italics added.)

In the Southern California Freight Lines case plaintiff, a highway common carrier, contended that it was improperly taxed upon what it claimed was the revenue of another corporation, the Southern California Freight Forwarders, an express company, because, by contract with this express company the latter was to do the intracity hauling within the cities which they served. Defendant Board argued that the express company had not in fact rendered the pick-up and delivery service, but that such service had been performed by the carrier. The trial court found that the pick-up and delivery service purportedly rendered by the express company was, in fact, done by plaintiff and constituted a return to plaintiff from its own efforts and upon its own capital investments, and that the relationship between plaintiff and the express company was merely colorable. This court sustained the findings of the trial court, and in support thereof pointed out evidence which showed that plaintiff actually did perform the pick-up and delivery, and that it was not done by the express company; and we concluded that, since plaintiff did the pick-up and delivery, the revenue derived therefrom was plaintiff's revenue upon which it was properly required to pay the tax assessed by respondent.

The decisions in these two cases certainly eliminate most, if not all, of the distinctions relied upon in the case before us. To be sure, in this case plaintiff had two different permits from the Railroad Commission, the one as a highway common carrier, and the other as a city carrier, but so did Bekins Van Lines, Inc. It does not appear in the Southern California Freight Lines case whether plaintiff had two such permits, but it may be assumed that it had, since city carrier permits and permits to operate as highway common carriers, are issued under different statutes. In neither of those cases was the question of different permits deemed relative to the question of the taxability of plaintiff's receipts; and we deem it unimportant in this case.

Respondent relies heavily upon Pioneer Express Company v. Riley, 208 Cal. 677, 284 P. 663, saying that there it was held that business as an intracity carrier is not in the nature of things inseparable from business as an intercity carrier, and that, therefore, though plaintiff here is a single corporate entity doing both, it could so separate its pikc-up and delivery business as to effect the same result as if such operations were carried on by separate corporate entities, and thus preclude the consideration of receipts from the intracity branch or department as gross receipts of the corporation itself.

We find nothing in the Pioneer Express Co. case which justifies such conclusion for no such situation was there presented. In that case the intercity and the intracity services were not performed by the one company. The intercity transportation was carried on by the Pioneer Express Company, a corporation, whose capital stock was owned in the main by C. S. McLenegan. The pick-up and delivery service was performed by the Gibson Express, Inc., the capital stock of which corporation was owned by the moher of C. S. McLenegan. While C. S. McLenegan was the manager of both companies, the books of the two companies were kept entirely separately and the net earnings of each corporation were distributed to the respective owners of the capital stock of the said corporations. Also, as pointed out in the opinion in the case, each corporation had its own set of stockholders and officers and maintained a separate existence. The claim of the State Board of Equalization in that case was that there was such an interlocking of control and ownership in the McLenegan family as bound the corporations together as an inseparable whole so that their earnings should be lumped together. But the court said that the business of the one was not in the nature of things inseparable from that of the other; and that a group of persons, whether belonging to one family or otherwise, could in good faith adopt and maintain separate corporate entities for the purpose of conducting several lines of business which, while in some degree connected, are not inseparable.

No such situation is presented here, for here there is but one corporate entity performing both services, separate books are not kept, the total business is carried on from one place, the San Francisco office, and the earnings go, not to different sets of stockholders, but to one alone. Separate corporate entities are not maintained. The Pioneer Express Company case was relied upon in the later Bekins case, but the distinction was there pointed out as appears from the quotation from that opinion above set forth, and in which it was said that plaintiff's ‘receipts from all hauls which originated in one city for transportation over the public highways or which terminated in a city after such transportation should be treated without distinction as taxable gross receipts from operation.’ Also the court there said that plaintiff's receipts were ‘receipts from [the] operation of motor vehicles' which language was sufficiently plain, and ‘was undoubtedly intended to be limited to the transportation activities of a company which might also be engaged in warehousing, selling, or other business not strictly related to transportation of goods or persons.’

The only other differentiation that can be made between this case and the above-cited cases is that here plaintiff's transportation operations were carried on ostensibly for the express company, California Motor Express, Ltd., with which it had contracts for carriage. But the intervention of this corporation does not, we think, so separate the one phase of plaintiff's operations from the other that it can be said that they must be considered as separate entities for tax purposes. See Buick Motor Co. v. City of Milwaukee, D.C., 43 F.2d 385, affirmed in 7 Cir., 48 F.2d 801, certiorari denied 284 U.S. 655, 52 S.Ct. 34, 76 L.Ed. 556; Palmolive Cl. v. Conway, D. C., 43 F.2d 226 affirmed in 7 Cir., 56 F.2d 83, certiorari denied 287 U.S. 601, 53 S.Ct. 8, 77 L.Ed. 524, both cited in the Southern California Freight Lines case, 72 Cal.App.2d at pages 31, 32, 163 P.2d 776. The facts remain that in this case the intracity hauls were but a part of the whole movement of the goods transported ‘Northbound’ and ‘Southbound’ from their point of origin in the one city to their point of delivery in the other. Here plaintiff is itself a corporate entity which is doing the pick-up and delivery and the intercity transportation between Los Angeles and Oakland. It is, in effect, doing a store door to store door business when it picks up merchandise from the place of business of the consignor in one city and delivers it to the place of business of the consignee in the other. Its bills show that the total receipts upon which the Board imposed the tax are plaintiff's own receipts for the transportation of goods in that manner, and we think that under the authority of the Bekins case and the Southern California Freight Lines case they were a part of plaintiff's ‘gross receipts from the operation of motor vehicles,’ and taxable as such; and that any difference between the facts in this case and the facts in those cases are not of sufficient substantiality as to justify a different conclusion or to justify the imposition of the tax on Bekins Van Lines, Inc., and Southern California Freight Lines, while absolving plaintiff therefrom.

The judgment of the trial court is therefore reversed to the extent that it gives respondent a refund of taxes on the receipts from its Los Angeles and Oakland pick-up and delivery business.

I dissent.

The controversy arises over a question of fact as to whether plaintiff conducted a highway transportation business and an intracity pick-up business as separate enterprises. Based on numerous determined facts the trial court found that it did conduct separate enterprises. The majority opinion disagrees with that conclusion and reverses the judgment. Clearly the question as to what constitutes the maintenance of separate enterprises depends upon the facts of a particular case. I am convinced the majority opinion invades the province of the trial court. It weighs the evidence. It draws an inference in conflict with specific findings. It disregards numerous important facts upon which the trial court determined that plaintiff conducted two separate enterprises. There is an abundance of evidence to support the trial court's conclusions. The judgment is in exact accord with the principle announced in Pioneer Express Co. v. Riley, 208 Cal. 677, 284 P. 663. A reversal of this judgment amounts to a repudiation of the principle determined in the Riley case. Nor is the case of Bekins Van Lines, Inc., v. Johnson, 21 Cal.2d 135, 130 P.2d 421, upon which the majority opinion relies, in conflict with the findings and judgment in this case. Peter J. Shields, the eminent jurist who tried this case, clearly distinguished between the facts of this action and those of the Bekins case in a logical and convincing opinion which might well have been adopted as the decision of this court. He is the able judge who tried both cases. He knew the facts of the Bekins case and the judgment which he rendered therein was affirmed. He significantly asserts in his opinion in this case that the principle determined in the Bekins case should not be further extended.

The essential facts of this case are not disputed. The record shows without conflict that plaintiff was organized and licensed in 1930 to conduct a highway transportation business in designated territories with specified equipment. The license precluded the operation of its equipment or business within the limits of cities. It conformed strictly to the terms of its license. In 1941 plaintiff purchased from the Red Line companies its intracity pick-up businesses and equipment for Oakland and Los Angeles. The Red Line businesses had been previously licensed and operated for several years in designated cities. Its licenses precluded it from hauling merchandise over the public highways. It conformed strictly to those terms. When the plaintiff purchased the Red Line intracity businesses and equipment, it procured separate licenses from the Railroad Commission, to continue to operate them with the specified light equipment within the limits of the cities named as separate intracity enterprises. The plaintiff thereafter performed the pick-up and delivery services in the cities, under contract with California Motor Express, Ltd. Neither the highway transportation equipment nor its crews of workmen were employed in the pick-up business. In the process of that service goods were called for and conveyed to terminal depots or delivered to their destinations in the same cities. If the goods were to be conveyed to another city separate contracts were executed for the intracity service, and for transfer over the public highways. The highway transportation service was conducted by means of heavy trucks and crews of workmen different from the equipment and men employed for the intracity service. In the highway transportation service the goods were received at plaintiff's terminal depot in one city and conveyed over the public highways to a similar terminal depot of another city. The different businesses of highway transportation and of intracity pick-up service were carefully conducted in every detail exactly like separate and distant enterprises, in the same manner as though they were separately operated by different corporations. While the plaintiff did not keep separate sets of books for the two enterprises, it did invariably make separate charges against its customers for highway transportation service, and for intracity pick-up service. The account books clearly indicate the intention of plaintiff to segregate all charges and credits for those distinct services.

The trial court found that, in conducting its separate businesses and in making its contracts for services to be performed by the different enterprises, ‘The two operations, that of a city carrier and that of a highway carrier, are just as separate and distinct for all purpose of this case as if the two operations had been conducted by separate and distinct corporations or legal entities,’ and that ‘There is no evidence of fraud or bad faith on the part of plaintiff’ in so doing.

The majority opinion disregards the foregoing material facts, and other evidence contained in the record, which support the findings and judgment, and it erroneously draws an inference that the two enterprises were not separately maintained or operated because the plainitff failed to keep separate sets of account books for the different transactions. That circumstances might be sufficient to warrant the affirming of a judgment, but it certainly does not afford ground for reversing a judgment based on numerous other determined facts indicating, as the court found, that plaintiff actually conducted different and distinct enterprises. The account books clearly show that plaintiff intended to and did keep the two transactions separate. But, even though that fact should not thereby clearly appear, the mere method of keeping books is not conclusive in this case of the issue as to whether plaintiff actually operated separate industries. The determination of that conclusion was the sole province of the trial judge, to be decided from all the material evidence adduced on that subject. The reviewing court is precluded from thus weighing the evidence. I am confident that the evidence in this case abundantly supports the findings adopted by the trial court.

In support of the reversal of the judgment in this case, the majority opinion relies on and quotes from Bekins Van Lines, Inc., v. Johnson, supra, and Southern California Freight Lines v. State Board of Equalization, 72 Cal.App.2d 26, 163 P.2d 776. The facts of those cases were entirely different from those of the present action. In the Bekins case it was not contended that plaintiff maintained and operated two distinct enterprises for different services performed, or that it executed different contracts for distinct services. The highway transportation carrier merely contended that when it made a contract to haul goods from a dwelling in one city, over the public highway, to a destination in another city it was entitled to deduct from the proceeds of that transaction the value of the services performed in packing, crating, warehousing, preparing for shipment and carrying the goods to the sidewalks or to points where they were picked up by the trucks for transportation over the highways. The trial court found that, under those circumstances, such services were parts of the same transaction of highway transportation, and that the entire proceeds from such contracts were subject to highway taxes. The Supreme Court affirmed that judgment. In holding that the packing, crating, warehousing and hauling of goods over the public highway were, under the particular facts of the Bekins case, parts of the same highway transaction, the Supreme Court said: ‘The trial court in the present case properly concluded that receipts from all hauls which originated in one city for transportation over the public highways or which terminated in a city after such transportation should be treated without distinction as taxable gross receipts from operation.’

The majority opinion in this case appears to construe that language to mean that, under any and all circumstances, when goods are received in a city and hauled over the highway, or are hauled over the highway and delivered within a city, all proceeds for handling the goods are subject to highway taxes. Apparently that is not what the Supreme Court meant by that language. If the goods are picked up under a completed contract by one intraurban corporation and delivered at a terminal depot in that same city, they are certainly not subject to highway taxes merely because they were intended to be subsequently hauled by another company under a different contract over the public highway to a destination in another city. The above-quoted language was intended to apply only to the determined facts of the Bekins case, as I believe the Supreme Court clearly says. It does not apply to the present case where different contracts were made for separate specified services, one of which was completely performed under a separate license by means of different equipment and crews of workmen wholly within the boundaries of that same city. To hold that, under the circumstances of this case, the intraurban pick-up services were a necessary and inseparable part of the highway transportation transaction, would require the overruling of Pioneer Express Co. v. Riley, supra.

Likewise, the Southern California Freight Lines case is not authority in support of the reversal of the judgment in this action. That case was determined on entirely different issues. The plaintiff in that case, which was a highway transportation corporation, entered into a written agreement with another company owned and controlled by it, called the Southern California Freight Forwarders, which was licensed to conduct an express business, by the terms of which contract each company was granted the use of the facilities and equipment of the other company, and each was to join in hiring and paying all employees; the last-mentioned company was to conduct an express business and perform the pick-up and delivery service within the limits of the named cities. But the Express Company did not actually perform the pick-up services. The Express Company collected all compensation for the services of both companies and paid the carrier company, by agreement, 40% of such receipts, as its share for highway transportation. This was an arbitrary division of receipts regardless of actual services performed. The trial court found that the plaintiff, and not the Express Company, actually performed the pick-up services, and that the relationship of the two companies ‘was merely colorable.’ Judgment was rendered against plaintiff for additional taxes on the receipts from the pick-up services, as incidental to the highway transportation business. In affirming the judgment in that case, this court quite properly held in accordance with the findings that the pretended agreement between the two alleged companies was fictitious, and that their claimed relationship was ‘merely colorable.’ In other words, this court determined, in effect, that there was evidence to support the trial court's finding that the pretended severance of the companies was false and untrue. In the present case the trial court specifically adopted a contrary finding. It found that ‘there is no evidence of fraud or bad faith on the part of plaintiff’ in maintaining and operating two distinct enterprises. I believe that fidning is adequately supported by the evidence. The distinction between the last-mentioned case and the present one is quite apparent.

The law clearly recognizes the right of one corporation, in good faith, to maintain and conduct different and distinct enterprises authorized by its charter, such as a highway transportation business and a separate intraurban pick-up enterprise, even though they are organized and operated with the intention of diminishing its burden of taxes. Pioneer Express Co. v. Riley, supra. The language of the last-cited case, in that regard, is pertinent to the chief issue of this case. On page 686, of 208 Cal., on page 667 of 284 P., of that decision, it is said:

‘* * * We conclude, therefore, that the business of a public transportation company in conveying freightage from one of its fixed terminal stations to another is not, in the nature of things, inseparable from the pick-up and delivery busienss which has to do with the collection of freightage at its terminal depots at the one end and the distribution thereof at the other end of the fixed termini which it is bound to establish and maintain in conformity with law.

‘The second problem is as to whether a group of persons, whether belonging to one family or not, who may choose to form themselves into one or more corporate entities for the convenient conduct of such business as they may see fit to undertake, may not in good faith and without fraudulent design adopt and maintain such separate corporate entities for the purpose of conducting several lines of business which, while in some degree connected, are not in the nature of things inseparable. We are satisfied, without going into further detail, that common knowledge and observation would serve to supply an answer to this problem which would also be adverse to the contention which the respondent makes in opposition to the issuance of this writ. * * * But we think it may be stated as a reasonable conclusion of this whole matter that any citizen or group of citizens seeking to engage in any single line or in several allied lines of business endeavor by which property is accumulated and profits derived may adopt whatever lawful means may exist for the lessening of the burden of taxes which in one form or other may be laid upon such properties or profits. In every case involving ‘the interpretation of statutes levying taxes it is the established rule not to extend their provisions, by implication, beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out. In case of doubt they are construed most strongly against the government, and in favor of the citizen.’ Gould v. Gould, 245 U.S. 151, 38 S.Ct. 53, 62 L.Ed. 211; Estate of Potter, 188 Cal. 55, 64, 204 P. 826.' (Italics added.) See, also, 33 Am.Jur. 329, sec. 4; 37 C.J. 180, sec. 21.

The Motor Vehicle Transportation License Tax Act, Stats. 1933, p. 928, and amendments, 1 Deering's Gen.Laws of 1937, p. 2160, Act 5130d, was adopted primarily to provide revenue with which to construct and maintain public highways. It does not apply to motor vehicles operated exclusively within incorporated cities or towns. Section 22 of the act provides that: ‘This act shall not apply to motor vehicles operating exclusively within incorporated cities or towns, nor shall it apply to such vehicles operated between incorporated cities or towns where no portion of the public highway outside of the corporate limits of said cities or towns is traversed in said operation, * * *.’

Exactly the same exemption appears in Section 9653 of the Revenue and Taxation Code.

Since it must be assumed that plaintiff, in good faith, maintained and operated separate and distinct enterprises, and that the $18,918.83, which is the subject of this suit, was derived solely from intraurban services performed wholly within the confines of the cities, it follows that such funds are not taxable for highway purposes, and plaintiff is entitled to judgment for recovery of that sum which was paid under protest.

The judgment should be affirmed.

ADAMS, Presiding Justice.

PEEK, J., concurs.

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