City of Richmond v. Petroleum Marketers, Inc., 781294
| Decision Date | 28 August 1980 |
| Docket Number | No. 781294,781294 |
| Citation | 221 Va. 372,269 S.E.2d 389 |
| Parties | , 30 UCC Rep.Serv. 145 CITY OF RICHMOND v. PETROLEUM MARKETERS, INC. Record |
| Court | Virginia Supreme Court |
William L. Wimbish, Asst. City Atty., for appellant.
J. Waller Harrison, Richmond (Joseph C. Wool, Jr., McGuire, Woods & Battle, Richmond, on brief), for appellee.
Before I'ANSON, C. J., and CARRICO, HARRISON, COCHRAN, POFF, COMPTON and THOMPSON, JJ.
In this appeal from the trial court's order granting an application for correction of an erroneous tax assessment, we decide whether Petroleum Marketers, Inc. (Petroleum) was "engaged in the business of a wholesale merchant" within the City of Richmond (City) for the year 1975, thus rendering Petroleum liable to the City for wholesale business license taxes for that period.
The facts are essentially undisputed. Petroleum is a wholesaler of fuel oils. Oil is shipped to Petroleum via pipeline, barge, and various other means, and is subsequently stored at terminal facilities located in the City. Petroleum leases these facilities from Fuel Oils, Inc. (Fuel Oils). Oil is dispatched to Petroleum's customers at the terminal facility by Fuel Oils in accordance with advance orders or instructions from Petroleum. Fuel Oils performs these services pursuant to its lease agreement with Petroleum. Further, no services are ever performed by Fuel Oils unless such services are specifically set forth in the lease.
During the tax year 1975 Petroleum maintained its offices in Henrico County. All contracts between Petroleum and its customers were made in the Henrico County Office. Petroleum invoiced and received payment from all of its customers in that office. Petroleum did not receive or accept a customer order at the City terminal facility.
The City contends that under City Code § 37-189 *, Petroleum was a wholesale merchant doing business within the City during 1975. Accordingly, the City claims that Petroleum is liable to it for wholesale business license taxes for that time. Petroleum contends that the controlling statute is Virginia Uniform Commercial Code § 8.2-401(3)(b) which states that "if the goods are at the time of contracting already identified and no documents are to be delivered, title passes at the time and place of contracting."
The ultimate question which we must decide is whether Petroleum's "sales" occurred where the contracts for the purchase of the oil were executed (Henrico County) or where the goods were, in fact, delivered (City). Our inquiry is whether there is a sufficient nexus between the activities of Petroleum and the City to justify the City classifying Petroleum as a wholesale merchant subject to the City's license tax. The relevant statutes are Virginia Code § 8.2-106(1) which says in part that "(a) 'sale' consists in the passing of title from the seller to the buyer for a price (§ 8.2-401)," and Virginia Code § 8.2-401(2) which says in part that "(u)nless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods . . ."
The obvious conclusion is that title passed when the product was pumped out of Petroleum's rented tanks and into whatever facility its customer provided.
For our purposes the "goods" were not "identified" at the time of contracting. In Geoghegan v. Arbuckle Bros., 139 Va. 92, 109, 123 S.E. 387, 392 (1924), we said:
In cases like these, where portions of a larger mass, liquid or solid, are sold,...
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