Clary v. Basalt Rock Co.

• Decision Date: 18 September 1950
• Citation: 99 Cal.App.2d 458,222 P.2d 24
• Parties: CLARY v. BASALT ROCK CO., Inc. Civ. 7812. Sac. 6092.
• Court: California Court of Appeals

Page 24

222 P.2d 24

99 Cal.App.2d 458

CLARY v.BASALT ROCK CO., Inc.

Civ. 7812.

Sac. 6092.

District Court of Appeal, Third District, California.

Sept. 18, 1950.

Riggins, Rossi & King, Napa, for appellant.

C. A. Stromsness, Corning for respondent.

VAN DYKE, Justice.

This appeal is from an order of the trial court denying a motion by defendant for a change of the place of trial.The action was begun in Tehama County Superior Court.The complaint alleges the corporate capacity of the sole defendant; the making of a written contract between plaintiff and defendant effecting a sale of a business and certain machinery and equipment used therein; that no provision was made in the agreement of sale relative to the payment of any State sales tax which might accrue to the State; that plaintiff, as seller, had been notified that there was due to the State of California a sales tax upon the sale of the equipment; that plaintiff had requested defendant to pay the tax which defendant had refused to do; that plaintiff had not paid the tax, and interest and penalties were accruing; that the tax should be paid by the defendant to plaintiff to be transmitted to the State.After referring to various provisions of the Sales Tax Act of this State, the complaint then alleges that there is an actual controversy between plaintiff and defendant as to liability to pay the tax assessed and judgment is prayed declaring the rights and duties of the parties under the agreement relative to the payment of sales taxes and declaring that defendant should pay the same to plaintiff, together with penalties and interest accrued to be by plaintiff in turn paid to the State.

The defendant, Basalt Rock Company, Inc., a corporation, noticed a motion for change of place of trial and supported the same by an affidavit of its president.That officer averred the corporation's office and principal place of business at all times had been and still was in the County of Napa.He averred nothing further factually concerning the proper county for the trial of the action and his affidavit concluded with the usual statement of merits.

An affidavit in opposition to the motion was filed for plaintiff declaring that the sales contract was to be performed in Tehama County and was completed and performed therein.The affidavit contained the conclusion that by reason of the foregoing the 'obligation was incurred in said county * * * and the venue should be retained therein.'

The principal place of business of appellant is in Napa County, which fact was established without dispute in the trial court, and therefore appellant was entitled to have the cause moved unless the action is upon a contract made or to be performed in Tehama County or unless an obligation or liability arose or a breach occurred in that county.Hammond v. Ocean Shore Dev. Co., 22 Cal.App. 167, 133 P. 978;Ward v. Great Western Power Co., 135 Cal.App. 687, 27 P.2d 937;Byrum v. Stockton Comb. Harv. & Agr. Works, 91 Cal. 657, 27 P. 1093;Calif.Const., art. XII, Sec. 16.

When appellant proved that its principal place of business was in Napa County the question arose whether or not the county of original venue was still the proper county.Appellant contends that it was not for the reason that no facts permitting it to be sued in Tehama County existed.With this contention we agree.

Respondent, while not stating the matter directly, assumes that when he sold machinery and equipment to appellant the transaction was taxable under the Sales Tax Act of this State.We make the same assumption.The essence of respondent's suit, therefore, based upon defendant's asserted obligation under the Sales Tax Act of this State, is to compel appellant to pay to respondent the amount of this tax.So far as the State of California be concerned, it has and had no claim against appellant arising out of the sale.The State Sales Tax Act'contemplates the imposing of the fixed rate of the tax on the gross receipts, as defined by the act, and not on the individual sale of merchandise; * * *.'That in ultimate effect the fund out of which payment [of the tax] is made may be or in fact has been obtained by the dealer from his customers does not make the tax a levy upon the consumer.' * * * the act creates the relationship of sovereign power and taxpayer between the state and the retailer, and not between the state and the consumer.* * * The method of listing the price and the tax separately and defining taxable gross receipts as the amount received less the amount of the tax added, merely avoids payment by the retailer of a tax on the amount of the tax.Under such provisions the effect stated in the case last cited still obtains, namely, that 'the purchaser does not pay the tax.He pays or may pay the seller more for the goods because of the seller's obligation, but that is all,'and 'the amount added because of the tax is paid to get the goods and for nothing else.Therefore it is part of the price.'The tax being a direct obligation of the retailer and, so far as the consumer is concerned, a part of the price paid for the goods and nothing else, it is neither in fact nor in effect laid upon the consumer.It does not become a tax on the sale nor because of the sale, but remains an excise tax for the privilege of conducting a retail business measured by the gross receipts from sales.'Western Lithograph Co. v. State Bd. of Equalization, 11 Cal.2d 156, 163, et seq., 78 P.2d 731, 735, 117 A.L.R. 838.The court further said in the cited case11 Cal.2d at page 162, 78 P.2d at page 735, of the reported opinion: 'In...