Earle, Collector of Internal Revenue v. Babler Earle, Collector of Internal Revenue v. Conley (Two Cases)

In these actions appellees have been awarded judgments for various amounts assessed and collected from them as transportation taxes under § 3475 of the Internal Revenue Code, 26 U.S.C.A. § 3475 .

Appellees, who were general contractors, undertook the construction and resurfacing of certain roads and airports, which work required the transporting of bulk construction materials from stockpiles and quarries to the job sites. To carry out this transportation, appellees entered into verbal agreements with various owners of trucks for the use of their trucks on an hourly, load or yard-mile basis. The trucks were operated either by the owners or by hired drivers. The Commissioner of Internal Revenue levied the tax on the theory that the truck owner-operators and drivers were not the employees of the appellees and that the truck owners were persons engaged in the transportation of property for hire within the meaning of the statute. The district court found that all of the truck drivers, whether truck owners or not, were subject to the direction and control of appellees, not only as to the work to be performed but as to the manner of its performance ; that appellees had the right to…