Chrysler Corp. v. City of New Orleans

• Decision Date: 25 June 1959
• Docket Number: No. 44521,44521
• Parties: CHRYSLER CORPORATION v. CITY OF NEW ORLEANS.
• Court: Louisiana Supreme Court

Page 579

114 So.2d 579

238 La. 123

CHRYSLER CORPORATION v. CITY OF NEW ORLEANS.

No. 44521.

Supreme Court of Louisiana.

June 25, 1959.

Rehearing Denied Cot. 9, 1959.

Charles K. Rice, Asst. Atty. Gen., Myron C. Baum, H. Eugene Heine, Jr., Mark S Charwat, Washington, D.C., Milling, Saal, Saunders, Benson & Woodward, R. E. Milling, Jr., David J. Conroy, New Orleans, M. Hepburn Many, U.S. Atty., Lloyd C. Melancon, Asst. U.S. Atty., New Orleans, for appellants.

Richard Alsina Fulton, Frederick S. Haygood, Levi A. Himes, Chapman L. Sanford, Baton Rouge, for amicus curiae.

Alvin J. Liska, City Atty., Ernest L. Salatich, Asst. City Atty., New Orleans, for defendant-appellee.

HAWTHORNE, Justice.

This suit was instituted by Chrysler Corporation against the City of New Orleans to recover a use tax paid by Chrysler under protest. The United States of America intervened in the suit and prayed that there be judgment in favor of Chrysler and against the city as prayed for in Chrysler's petition. To the original and supplemental petitions filed by Chrysler as well as to the petition of intervention filed by the United States the city filed exceptions of no cause of action. The exceptions were maintained, the suit was dismissed, and Chrysler Corporation, plaintiff, and the United States of America, intervenor, have appealed to this court.

The use tax involved in this appeal, which was assessed against Chrysler and paid by it under protest, and which it seeks to have refunded, is $401,712.81, plus interest amounting to more than $130,000.00. The assessment of the tax by the city was based on the Use by Chrysler Corporation in the City of New Orleans of tangible personal property, and the city assessed and levied the tax under its ordinance No. 15,201 C.C.S. as amended, which fixes the tax at the rate of 1 per cent of the cost price of each item or article of such property. Attached to and made part of plaintiff's petition are numerous documents including the ordinance above mentioned and a so-called facilities contract which we shall discuss later.

The pertinent provisions of the ordinance under which the assessment was made are as follows:

'Section 1. * * * That the following words, terms, and phrases when used in this Ordinance have the meanings ascribed to them in this section, except when the context clearly indicates a different meaning.

'(e) A 'Retail Sale', or a 'sale at retail,' means a sale to a consumer or to any person for any purpose other than for resale in the form of tangible personal property, and a sale of services, as herein set forth * * *.

'(l) 'Use' means and includes the exercise of any rights or power over tangible personal property incident to the ownership thereof, except that it shall not include the sale at retail of that property in the regular course of business.

'(p) 'Tangible personal property' means and includes personal property which may be seen, weighed, measured, felt, or touched, or is in any other manner perceptible to the senses. The term 'tangible personal property' shall not include stocks, bonds, notes or other obligations or securities.

'Section 2. That there is hereby levied from and after January 1, 1941, for general municipal purposes a tax upon the sale at retail, The use, the consumption, the distribution, the distribution and the storage in this City, of each item or article of tangible personal property, as defined herein, and upon the lease or rental of such property and the sale of services, within the City of New Orleans; the levy of said tax to be as follows:

'(b) At the rate of one per cent (1%) of the cost price of each item or article of tangible personal property when the same is not sold, but is used, consumed, distributed, or stored for use of consumption in this City; provided there shall be no duplication of the tax.

'Section 3. That the aforesaid tax at the rate of one percent (1%) of the retail sales price, as of the moment of the sale, or one percent (1%) of the cost price, as of the moment of purchase, or one percent (1%) on sales or services, as herein defined, as the case may be, shall be collectible from all persons, as defined herein, engaged as dealers, as hereinafter defined, in the sale at retail, The use, the consumption, the distribution, and the storage of tangible personal property, and the sale of service, as herein defined. * * *

'The term 'dealer' is further defined to mean every person, as used in this Ordinance, who imports, or causes to be imported, tangible personal property from any State, or other political subdivisions of this State, or foreign country for sale at retail, For use or consumption, or distribution, or for storage To be used or consumed in this City. * * *

'On all tangible personal property imported, or caused to be imported, from other states or other political subdivisions of this State, or foreign country, and used by him, the 'dealer', as thus defined, shall pay the tax imposed by this Ordinance on all articles of tangible personal property so imported and used, the same as if the said articles had been sold at retail for use or consumption in this City. For the purpose of this Ordinance, use, or consumption, or distribution, or storage of tangible personal property, shall each be equivalent to a sale at retail, and the tax shall thereupon immediately levy and be collected in the manner provided herein, provided there shall be no duplication of the tax in any event. * * *

'Section 4. * * *

'(a) The tax herein levied shall be collected by the dealer from the purchaser or consumer.

'Section 16. That the liability of any person, or dealer arising from any tax, interest and penalty or any of them imposed by this Ordinance, from the time they are due, shall Be a personal debt of such person, or dealer to the City of New Orleans, recoverable in any Court of competent jurisdiction in an action at law by the Commissioner of Public Finance in the name of the City. Such debt, whether sued upon or not, shall be a lien on all the property of such delinquent person, or dealer, except as against an innocent purchaser for value without notice in the actual course of business, and shall have preference in any distribution of the assets of the person, or dealer whether in bankruptcy, insolvency, or otherwise. The proceeds of any judgment or order obtained hereunder shall be paid to the Commissioner of Public Finance. * * *' (Italics ours.)

As a device for supplementing or complementing the sales tax, resort has been made to use or compensating taxes. A use tax is an intergrated part of a sales tax, one of its purposes being to prevent purchases of tangible personal property outside the city in an effort to escape the payment of a tax on local sales, and this is one of the purposes of the use tax imposed in the New Orleans ordinance involved in this suit.

The ordinance of the City of New Orleans provides for a tax upon retail sales of tangible personal property in the city, and upon the use, consumption, distribution, and storage of such property in the city, and upon the leasing or rental of such property and the sale of services within the city. This ordinance in Section 3 provides that a 'dealer' means every person who imports or causes to be imported tangible personal property from any other state or other political subdivision, etc., for sale at retail or use or consumption in this city, and that upon all such personal property imported and used by him the dealer, as defined in the ordinance, shall pay the tax imposed by the ordinance on all articles of tangible personal property just as if the articles have been sold at retail for use or consumption in this city, and that for the purpose of the ordinance use of tangible personal property shall be equivalent to sale at retail.

The pertinent facts as disclosed by the petition and the documents attached to it are these:

In 1951 the United States government leased, let, and demised to the contractor, Chrysler, a certain parcel of land together with all the buildings and improvements, equipment, machinery, etc., designated as Michoud industrial facilities. In this contract the contractor was given for the duration of the lease the right to have, hold, use, occupy, and enjoy the leased premises without any suit, trouble, or molestation, eviction, or disturbance. Pursuant to this contract, which was designated as a facilities contract, Chrysler prepared plans and specifications for the rearrangement, restoration, and modification of the Michoud industrial facilities in order to adapt them to the tank engine production capacity required by the United States. Under this contract the contractor, subject to approval of the government contracting officer, installed in the rehabilitated plant the tools, machinery, and equipment necessary for the production of tank engines. The equipment, tools, and machinery were acquired for government account by Chrysler, mostly from vendors outside the State of Louisiana, and under the terms of these procurements title and ownership passed to the United States, remained in the United States, and at no time was in Chrysler. Chrysler paid the sellers for the machinery, tools, and equipment, but was promptly reimbursed by the United States. Chrysler was required to maintain a marking and identification system, and upon the arrival of the equipment, tools, etc., at Michoud, they were marked as evidence of their ownership by the United States. There was no liability on Chrysler for the loss, damage, or destruction of the government-furnished plant or of this equipment and machinery. Furthermore, Chrysler was not entitled to any fee or profit for the acquisition or installation of the equipment, machinery, and other facilities. Chrysler used the property so installed, which had been acquired by it for the government, in order to perform supply contracts it had entered into with the United States government for the production of...