H. T. Luthy, George W. Baines, Jr., H. S., avoidance and constituted no grounds of deWigle, and J. H. Derrick, upon three prom-fense to the notes, which was sustained, and issory notes for $250 each, with interest and judgment was entered for the balance due attorney's fees. The defendants, for defense, upon the notes, interest, and attorney's fees, alleged: from which judgment George A. Baines, Jr., appeals. That Luthy was indebted to plaintiffs upon open account in the sum of $1.000, or near that sum. That George W. Gittins, as agent of plaintiff, proposed that the account should be 'evidenced by promissory notes, with security. That said Luthy was then and now insolvent, which was well known to plaintiffs. That it was further proposed by said agent that if he would execute the notes with security, that as a consideration therefor plaintiffs would ship to Luthy a player piano. That by a parol contemporaneous agreement it was further agreed "that plaintiffs would furnish to defendant Luthy principal on said notes) pianos of any and all varieties as they might be ordered and requested by said Luthy after he (said Luthy) should find and procure purchasers therefor upon terms of cash or credit, or partially in cash and on credit, and if on credit terms to be satisfactory to and with plaintiffs, and, further, to open to, and confer upon, defendant Luthy a general line of credit with plaintiffs (plaintiff's being piano dealers of a wholesale nature) which would, it was then and there agreed, enable said Luthy to deliver pianos to purchasers after sale thereof upon terms of cash or credit, or partially cash and credit, as the cases might be, and that all profits so made by said Luthy should be, it was then and there agreed, credited upon said notes. That it was furthermore understood and expressly agreed then and there by and between all defendants and plaintiffs (plaintiffs acting through their said agent) that said notes and none of them should in any manner or in any respect be or become effective or binding until the conditions named above were met by plaintiffs, to wit, until the extension of credit in accordance with the agreement had been actually made to defendant Luthy, and opened to him by plaintiffs, as before alleged. "Sixth. Defendants Baines, Wigle, and Derrick aver that prior to delivery and execution of the notes mentioned unto plaintiffs on said day and as an express condition precedent thereto which they and each of them agreed and understood with plaintiffs, and to which plaintiffs then and there agreed, they, the said de fendants, relied upon and were moved solely by the dependent collateral agreement, mentioned in the preceding paragraph hereof, as well as the further agreement that said notes should not be effective or binding until said agreement was met by plaintiffs; that the material fact constituting the basis on which said three defendants signed said notes as sureties was the parol contemporaneous agreement mentioned in the preceding paragraph thereof, and that plaintiffs, through their said agent, then and there expressly promised defendants and represented unto them that said agreement would be in all things met and carried out on plaintiffs' part, further representing to defendants that they had always extended a line of credit to said Luthy, principal, as their salesman, and would do so as per the agreement herein, he being their salesman at such time." That Luthy procured purchasers as provided by the agreement, but plaintiff refused to comply with the said agreement and ship the pianos ordered, etc. The plaintiff filed demurrers to this petition upon the ground that the matters alleged were in the nature of confession and The proposition which is asserted by appellant and denied by appellee is: "Where notes were made and delivered under a parol contemporaneous agreement that they should not become binding except on certain conditions, to allege and prove the conditions is a good defense to the notes sued upon." In Watson v. Rice, 166 S. W. 108, the rule applicable is clearly stated as follows (quoting Elliott on Contracts, § 1636): "The general rule which excludes parol evidence, when offered to contradict or vary the terms, provisions, or legal effects of a written instrument, is subject to many qualifications. Among these qualifications is one to the effect that conditions relating to conditions precedent may be shown by extrinsic evidence. A party who concedes that the instrument evidencing the contract was placed in the possession of the party seeking relief, but claims that the latter took it with the understanding that it was not to go into effect until the happening of some other or further event, and that such event has not transpired, is not considered as one seeking to vary or contradict a written contract, but is one endeavoring to show that no contract between the parties ever in fact came into existence. For this reason evidence of such conditions precedent is held admissible. The cases which so hold merely give recognition to the well-settled rule that an instrument may be delivered by one party to another to take effect on the happening of a contingency, and that, by such collateral agreement, the legal operation of the writing is merely postponed until the happening of the contingency. * We think the court did not err in admitting the testimony and in overruling the exceptions and submitting the question to the jury. Merchants' Nat. Bank v. McAnulty, 31 S. W. 1091; Id. 89 Tex. 124, 33 S. W. 963; Downey v. Hatter, 48 S. W. 32; Pope v. Taliaferro [51 Tex. Civ. App. 217] 115 S. W. 309; Mfg. Co. v. Powell, 78 Tex. 53, 14 S. W. 245; I. & G. N. Ry. Co. v. Dawson, 62 Tex. 262." See cases there cited; also Burke v. Dulaney, 153 U. S. 228, 14 Sup. Ct. 816, 38 L. Ed. 698. It will be noted that the allegation is: "That it was expressly agreed and understood then and there by and between all defendants and the plaintiff that said notes and none of be or become effective or binding until the condithem should in any manner or in any respect tions named above were met by plaintiff, to wit, until the extension of credit in accordance with the agreement had been actually made to defendant and opened to him as herein before stated." This does not tend to vary the terms of the writing, but to postpone its legal operation until the happening of the contingency, so it presents a good defense to the notes. Therefore it was error for the court to sustain the demurrer. The cause is therefore reversed and remanded for a rehearing. The wholesaler buys the oil, stores it in tanks, GENERAL REFINING & PRODUCING CO. and sells it at the wholesale price for a whole v. DAVIDSON COUNTY et al. (Supreme Court of Tennessee. March 20, 1918.) PRIVILEGE TAX -- LICENSES 16(9) Bill for injunction by the General Refining & Producing Company against Davidson County and others. From a decree of dismissal, complainant appeals. Reversed, and injunction granted. Douglas & Norvel, of Nashville, for General Refining & Producing Co. M. P. O'Connor and Norman Farrell, Jr., both of Nashville, for Davidson County and others. LANSDEN, J. The bill in this case was filed to enjoin Davidson county from proceeding to collect a privilege tax from the complainant and to recover back a privilege tax of like amount which it had paid to the state under protest. The Chancellor held that complainant was liable for the tax under consideration and dismissed its bill. It appealed to this court and has assigned er rors. We take the following statement of the facts of the case, together with the reasons assigned in support of the claim against complainant, from the brief of defendant's learned counsel: "The appellant is engaged in manufacturing and refining petroleum and its by-products in Nashville. It maintains storage tanks in which the manufactured product is stored until sold. It sells its product at the refiner's price, not at the retailer's price. "The only question presented in the record is: Is appellant liable for the privilege tax imposed by the Revenue Act of 1915? "That act, so far as it is applicable to this controversy, reads as follows: "Coal Oil, Illuminating Oil, or Lubricating Oil, or Petroleum Products. "Each and every person, firm, partnership, corporation, or local agent having oil depots, storage tanks, or warehouses for the purpose of selling, delivering or distributing oil of any description, * shall pay a privilege tax as follows: "In cities, towns or taxing districts of 30,000 inhabitants or over. or in territories within five miles of the limit of such town, or taxing district, each per annum $500.' "It is the insistence of the appellees that the keeping of storage tanks for the purpose of selling, delivering, or distributing oil is a privilege to be taxed within the meaning of the act, no matter whether the storage and sale be by a manufacturer, who gets only a manufacturer's profit, or by a wholesaler or retailer who gets only a selling profit. The appellant in this case makes or refines the oil, keeps tanks in which it stores the oil, and sells the oil at the manufacturer's price. saler's profit only. The retail dealer buys the oil, stores it in tanks, and sells at the retail price for a retail profit only. "Each of the three maintain storage tanks from which they sell oil, for only one profit each. The wholesaler and retailer pay the tax. Why should the manufacturer escape the tax merely because he refines the oil and puts it in tanks, while the others buy the oil and put it in tanks? The source from which the refined oil is derived, i. e., manufactured or bought, can make no difference. They are all equally covered by the language and intent of the act." From this statement it will be observed that complainant uses storage tanks for the purpose only of storing crude oil, and the manufactured product, as containers for the purpose of confining the oil in order that it may sell it as a manufacturer. Oil is an elusive substance which must be confined in tanks as containers in order to preserve it. Open tanks are dangerous on account of fire, and the tanks employed are merely in use as containers. Thus it will be seen that the tanks and the storage of the oil in them are integral parts of complainant's business as a manufacturer. It cannot be denied that the refined oil is stored in the tanks for purposes of sale, but it is agreed that the sale contemplated by complainant is a sale for the purpose of realizing the manufacturer's profit. The complainant has paid a manufacturer's tax. Bell v. Watson, 3 Lea, 328; Druggist Cases, 85 Tenn. 449, 3 S. W. 490; Memphis v. American Express Co., 102 Tenn. 336, 52 S. W. 172; Chattanooga Plow Co. v. Hays, 125 Tenn. 148, 140 S. W. 1068; Gulf Refining Co. v. Chattanooga, 136 Tenn. 505, 190 S. W. 463. The principle underlying the above cases is that, if a construction can be given the statute levying the tax consistent with the language employed by the Legislature so as to avoid double taxation, this construction will be given. In the case under consideration, the Legislature levied a privilege tax for having oil depots, storage tanks, or warehouses for the purpose of selling, delivering, or distributing oil. The fact merely of having oil depots, storage tanks, and warehouses is not sufficient to make one liable for the tax; but the depots, tanks, and warehouses must be kept primarily for the purpose of selling the oil. In this case, under the agreed statement, the tanks are owned by the complainant as an integral part of its business of manufacturing oil and for the purpose only of containing the oil in order that complainant may realize the profits earned as a manufacturer. The oil tanks in this case are not different from the warehouses in the case of Chattanooga Plow Co. v. Hays, and the complainant is no more liable for a tax for keeping the tanks than the plow company was for a tax for having its warehouses. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes LECTION. 525-TRANSFER TAX-COL upon property extending through several counties, the tax need be paid only to the clerk of the county court of the county in which the deed to the land involved is first registered. We are not considering the power of the | 9. TAXATION Legislature to make the ownership of oil tanks in connection with the refining busi-estate tax imposed by Revenue Act 1915, § 8, Where a railroad pays the transfer real ness a separate privilege, but what we are saying is that the language employed in the act under consideration does not do so. The tanks must be kept for "the purpose of sellAppeal from Chancery Court, Davidson ing, delivering or distributing oil" before the taxpayer is liable for the tax. County; Jas. B. Newman, Chancellor. If they are kept as an integral part of a business up-relation of H. T. Stewart, State Revenue Bill by the State of Tennessee, upon the on which the tax has been paid, we think the Legislature did not mean to tax them. ROADS. Under Code 1858, § 51, defining land, a railroad acquiring the property of another corporation is liable for the tax imposed by Revenue Act 1915, § 8, on all transfers of realty, although railroad property is merely incident to its use as a highway. 7. TAXATION 592 COLLECTION SUFFICIENCY OF BILL. A bill to enforce a transfer tax upon realty imposed by Revenue Act 1915, § 8, which alleged that the property was mortgaged for a certain sum and was worth considerably more, held not insufficient because not stating the property's true value. - 8. TAXATION 593(3) — COLLECTION-PRIMA FACIE EVIDENCE. In a suit to collect a real estate transfer tax imposed by Revenue Act 1915, § 8, the value of the property stated in the deed is only prima facie evidence of its true value. Agent, against the Louisville & Nashville to the bill was overruled as to the first- Barthell, Howell & O'Connor and W. P. Cooper, all of Nashville, for appellant. Keeble & Seay and F. M. Bass, all of Nashville, for appellee. LANSDEN, J. The bill was filed by the state of Tennessee upon the relation of its revenue agent for the purpose of collecting from the defendants, the Lewisburg & Northern Railroad Company and the Louisville & Nashville Railroad Company, a transfer tax provided for by section 8 of the Revenue Act of 1915. The bill alleges that on October 1, 1915, the Lewisburg & Northern Railroad Company executed a deed to the Louisville & Nashville Railroad Company for its entire line of railroad situated in Davidson, Williamson, Rutherford, Marshall, Giles, and Lincoln counties, and particularly described as follows: "First. A double track main line railroad, commencing at the junction of the main line of the Lewisburg & Northern Railroad with the main track of the main stem, second division, of the Louisville & Nashville Railroad at or near Maplewood Station in the county of Davidson and state of Tennessee, and extending in a general southerly direction a distance of 10.62 miles to the connection of said main line with the main line of the Nashville & Decatur Railroad at or near Mayton in said Davidson County, on which portion of its line the said Radnor Yards is located, embracing approximately forty-four miles of track, and an area of property of approximately three hundred acres, said yard lying between Mayton and a point two and three-fourths miles north therelocated the property of the company secured of. Contiguous to this portion of the line, is in connection with establishing reservoir supplying water to Radnor Yards and between the Granny White Pike and the Franklin Pike, fronting on the Granny White Pike, and embracing an area of approximately 800 acres of land for drainage area and reservoir site together with an easement for a pipe line connecting said reservoir with Radnor Yards, 10.62. "Second. A main line of railroad commencing at the junction of the main line of said Lewisburg & Northern Railroad with the Nashville & Decatur Railroad at Brentwood junction in Williamson county, and extending in a general southerly direction, a distance of 78.99 miles For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes through Williamson, Rutherford, Marshall, Giles whether the tax has been imposed, and the and Lincoln counties to a connection of said scope of such statutes will not be extended main line of the said Lewisburg & Northern Railroad with the main line of the Nashville & by implication beyond the clear import of Decatur Railroad at the Tennessee-Alabama the language employed. Memphis v. Bing, State Line, 79.99. The total mileage of said 94 Tenn. 644, 30 S. W. 745; English v. Crenlines being 89.61 miles, together with right of shaw, 120 Tenn. 531, 110 S. W. 210, 17 L. R. way along said lines, side tracks, spur tracks, depots, section houses, and other buildings, sit- A. (N. S.) 753, 127 Am. St. Rep. 1025; Knox uated in or upon the right of way, and includ- v. Emerson, 123 Tenn. 409, 131 S. W. 972; ing all the terminal facilities on said lines all Crenshaw v. Moore, 124 Tenn. 531, 137 S. W. locomotives, engines, tenders, cars, rolling stock 924, 34 L. R. A. (N. S.) 1161, Ann. Cas. 1913A, and equipment of every kind, also all. rights, privileges, immunities, franchises (except the 165. And words employed by the Legislature franchise to continue to exist as a corporation), are to be taken in their natural and ordicontracts, choses in action, and other property, nary sense. O'Neil v. State, 115 Tenn. 427, legal or equitable now belonging or pertaining to line of railroad of the party of the first part 90 S. W. 627, 3 L. R. A. (N. S.) 762; Wingand embracing all the property of the party of field v. Crosby, 5 Cold. 241. Statutes in pari the first part of every description." materia are to be construed together, and the whole statute is to be taken into consideration in arriving at its true meaning. Lewis v. Mynatt, 105 Tenn. 508, 58 S. W. 857; State v. Railroad Co., 16 Lea, 136; State v. Manson, 105 Tenn. 233, 58 S. W. 319; Pond y. Trigg, 5 Heisk. 533; Graham v. Gunn, 87 Tenn. 458, 11 S. W. 214; Heiskell v. Lowe, 126 Tenn. 475, 153 S. W. 284. There was a demurrer to the bill filed by both the defendants, and the Chancellor sustained the demurrer of the Lewisburg & Northern Railroad Company, and overruled the demurrer of the Louisville & Nashville Railroad Company. There was no appeal from his action in sustaining the demurrer as to the Lewisburg & Northern, and the Louisville & Nashville has appealed and assigned errors to that part of his decree which overruled the demurrer as to it. Section 8 of the Revenue Act is as follows: "That on all transfers of realty there shall be levied and paid in a lieu of all other taxes a state tax of one dollar per one thousand dollars on the consideration which shall in no case be less than the value of the property, which shall be collected by the clerk of the county court; and the county register is hereby required not to record said deed until the clerk certifies that this tax has been paid, but no fee shall be charged for such certificate or registration of the same and such certificate need not be registered, but the county court clerk shall receive as a fee for each deed probated the sum of 15 cents, to be paid when the transfer tax is paid." Section 10 is as follows: "That whenever hereafter any corporation organized under the laws of this or any other state, foreign or domestic, shall, by lease, purchase, consolidation, or merger, acquire the property of any other corporation having a franchise derived from this state, and shall, by virtue of such lease, purchase, consolidation, or merger exercise such franchise, then the corporation on so acquiring such property and exercising such franchise shall pay unto the state of Tennessee a privilege tax of onetenth of one per cent. on the amount of the outstanding capital stock of the corporation whose property and franchise shall have been so acquired, after such lease, purchase, consolidation, or merger shall have been effected, said privilege tax shall be collected by the Secretary of State and by him paid into the treasury." It is insisted for the railroad company that the taxes provided in the two sections above copied are taxes for the same transaction, or for a transaction of the same things, and, the company having paid the tax provided for by section 10, the imposition of the tax provided for by section 8 would be double taxation. [1, 2] It is a well-settled rule in this state that statutes providing for the levying and collecting of taxes are to be construed most [3] The taxes provided for in sections 8 and 10 above quoted are privilege taxes. Mabry v. Tarver, 1 Humph. 94; French v. Baker, 4 Sneed, 193; Clarke v. Montague, 3 Lea, 277; State v. Schlier, 3 Heisk. 281; Jenkins v. Ewin, 8 Heisk. 456. The two cases last cited held that the definition of the word "privilege" as given by this court prior to the adoption of the Constitution of 1870 was in effect adopted by that instrument and must be understood as having been used in that sense. It was defined as the exercise of an occupation or business which required a license from some proper authority designated by law and not open to all or any one without such license; but the later cases cited above did not restrict the definition of privilege to the exercise of an occupation or business which required a license from the state, but expanded it to include a single transaction which the Legislature had made a privilege. [4] It is also well settled in this state that statutes creating privileges will be construed so as not to impose double taxation unless such construction is required by the express words or by necessary implication. In Bell v. Watson, 3 Lea, 328, Justice Cooper said that: "A safe and sound rule of construction of revenue laws is to hold, in the absence of express words plainly disclosing a different intent, that they were not intended to subject the same property to be twice charged with the same tax, nor the same business to be twice taxed for the exercise of the same privilege." In that case it was held that, where a taxpayer had been required to pay taxes as a livery stable keeper, he could not be required to pay taxes for letting his vehicles for hire. The reason given was that it was necessary to have vehicles and let them for hire in order to operate a livery stable. In the Druggist Case, 85 Tenn. 449, 3 S. W. 490, a Express Co., 102 Tenn. 336, 52 S. W. 172, amount of the outstanding capital stock of it was likewise held that an express com- the corporation whose property and franchise pany which had paid its taxes for exercising shall have been so acquired. The tax is such a privilege could not be taxed separate- to be collected by the Secretary of State. ly upon its teams and wagons. In Chatta- [5] We think the two taxes are not the nooga Plow Co. v. Hays, 125 Tenn. 148, 140 same. The first is a tax on the transfer of S. W. 1068, it was held that a manufacturer realty' whether the transfer is made by a of plows who had paid his taxes as such corporation or an individual; the second is could not be required to pay an additional a tax upon the privileges of one corporation merchant's tax for selling his manufactured acquiring the property of another corporaproducts. In General Refining & Producing Co. v. Davidson County et al., 201 S. W. 737, this term, it was held that a refiner of oil that had paid its taxes as such could not be required to pay a separate tax for storing its manufactured products in tanks, etc. In the last two cases it was shown that the only sales made were sales for the purpose of realizing profits earned as a manufacturer. These cases are given as illustrations of the construction by the court of the acts of the Legislature levying privilege taxes in accord with the rule stated in Bell v. Watson, supra. In neither case was it intended to express an opinion as to the power of the Legislature to levy such taxes. Reverting now to sections 8 and 10: It is said by the state that the deed of the Lewisburg & Northern Company to the Louisville & Nashville Company transfers real estate and falls within the literal terms of section 8; that the state is not concerned in this case with the collection of the tax provided for in section 10. The railroad company insists that the taxes provided for in the two sections are the same. It thus becomes necessary to construe the two sections, and in doing so we are necessarily governed by the foregoing rules. The tax required by section 8 is a tax upon all transfers of realty. It is a state tax; it is levied upon the consideration paid and promised for the transfer of the realty which in no case can be less than the value of the property; it is collected by the clerk of the county court; the county register is forbidden to record the deed evidenc ing the transfer until the clerk of the county court certifies that the tax has been paid. The tax is levied upon the transfer of realty, and, in order to prevent evasion of its pay ment, the transferee is not permitted to reg ister his deed until he pays his tax. While an unregistered deed is valid and binding between the parties, it is void as to creditors and subsequent purchasers without notice and also to purchasers who have their deeds first registered. tion and exercising the franchise so acquired. The results of the two conveyances are widely different. The transfer contemplated by section 8 transfers the title of realty from one person to another, and for this priv ilege a tax is levied to be collected by the county court clerk. The tax provided for in section 10 is for the privilege of one corporation absorbing in whole or in part the property and franchises of another. It may be true that as an incident to the consolidation or merger, purchase or lease, of the property of one corporation by another, the title to real estate is transferred, but it does not follow as a consequence of this that the privilege created by section 10 is the same privilege as that created by section 8. Real estate may or may not be transferred by the act contemplated by section 10 which must necessarily be transferred by the act contemplated by section 8. By section 10 one corporation is permitted to acquire not only the property of another but to acquire and exercise the franchise granted by this state. This privilege is extended to foreign corporations as well as domestic. It is conceivable that a foreign corporation might have powers granted by its charter far be yond those granted by the laws of this state and, by exercising the privileges granted by section 10, could acquire any franchise granted under the laws of this state. A case is also conceivable where a railroad of large wealth might desire to construct a parallel for its own convenience and at the same time avoid the responsibility of such an undertaking. It could organize another corporation of, say, $10,000 capital stock, but possessed of all the franchises provided for by the laws of this state, and have this auxiliary corporation to construct the line of railroad which it desired. When the construction work should have been completed, the large corporation could require the small one to transfer the railroad property and franchises to it. It would thus accomplish at least two things if the construction contended for by appellant is the sound one: would acquire property in this state worth, say, many millions of dollars by paying taxes under section 10 on the limited capital stock of the auxiliary corporation, and it would have had a limited liability during the period of construction work. It Section 10 provides for a tax whenever a corporation organized under the laws of this or any other state, foreign or domestic, acquires the property of another corporation having franchise derived from this state by lease, purchase, consolidation, or merger, and shall, by virtue of such lease, purchase, But neither section 8 nor section 10 is limconsolidation, or merger, exercise the fran-ited to railroad corporations. Section 8 prochise so acquired; the amount of the tax vides for a tax on "all transfers of realty," shall be one-tenth of one per cent. of the and section 10 covers transactions between |
