Fred McGilvray, Inc. v. Askew

• Decision Date: 09 December 1976
• Docket Number: No. 48754,48754
• Citation: 340 So.2d 475
• Court: Florida Supreme Court
• Parties: FRED McGILVRAY, INC., a Florida Corporation, Appellant, v. Reubin O'D. ASKEW, Governor, et al., Appellees.

Page 475

340 So.2d 475

FRED McGILVRAY, INC., a Florida Corporation, Appellant, v. Reubin O'D. ASKEW, Governor, et al., Appellees.

No. 48754.

Supreme Court of Florida.

Dec. 9, 1976.

Richard P. Kenney, Miami, for appellant.

Robert L. Shevin, Atty. Gen., and Caroline C. Mueller, Asst. Atty. Gen., for appellees.

SUNDBERG, Justice.

This cause comes before us on appeal from the Circuit Court in and for Leon County. Our jurisdiction vests under Article V, Section 3(b)(1), Florida Constitution.

The trial court, the Honorable Ben C. Willis, prepared a summary final judgment which even counsel for appellant describes as 'a model of clarity.' We adopt as our own the court's findings of facts and analysis of the law applicable thereto:

'This cause is before the Court on the Motions for Summary Judgment of both the plaintiff and the defendants, and the Court having considered the pleadings, depositions, affidavit and other papers on file and having heard argument of counsel for the parties and being otherwise advised, it is

'ORDERED AND ADJUDGED:

'1. The Court has jurisdiction of the parties and the subject matter of this cause, which presents a justiciable controversy within Chapter 86, Florida Statutes for rendition of a declaratory judgment.

'2. There is no genuine issue of material fact and summary judgment may be entered as a matter of law.

'3. The plaintiff contests an assessment totalling $6,848.95 plus interest for alleged accrued sales and use taxes under Chapter 212, Florida Statutes. The plaintiff was a subcontractor to Roberts Realty, Ltd. for a construction project in the Bahamas wherein the plaintiff supplied materials to the contractor and fabricated or installed these materials for improvement of real property in the Bahamas in connection with plumbing and air conditioning equipment on the construction project. The contract was a cost plus fee type of contract. The tax assessed is principally on tangible personal property ordered by the plaintiff from various vendors, both within and outside the state, which were shipped by the vendors to the plaintiff or to Roberts Realty, Ltd., in care of Transworld Marine in Miami where they were stored and/or later loaded onto barges chartered by the general contractor for shipment to the Bahamas. In some instances the property purchased in the Miami area and some from out of state vendors were either picked up by plaintiff from the vendor or shipped to plaintiff's Miami address, but all eventually reached the Bahamas in connection with the contract. There were no bills of lading or export declarations in connection with these items, and the barge transporting them is not a common carrier.

'4. Other types of property taxed involved a relatively small amount of money and are not in serious contention. They will be merely mentioned, but not discussed. They are: employee purchases for plaintiff reimbursed to employee by expense accounts but not showing initial payment of sales taxes; items claimed to have been taxpaid but invoices list no sum for sales taxes; freight charges on goods not shown to be sold F.O.B. shipping point; charges for labor sold along with sale and repair of property; and certain sales taxed at 3% When it should have been 4%.

'5. The question is whether or not goods purchased by plaintiff from various vendors and delivered to Transworld Marine at Miami and from there loaded onto a barge chartered by the plaintiff's prime contractor and shipped to the Bahamas in furtherance of plaintiff's construction subcontract are subject to sale and use taxes, or are they exempt as being a tax on exports forbidden by Clause 2, Section 10, Article I, U.S. Constitution, known as the Import-Export Clause. There is no issue but that the property involved is tangible personal property which would be subject to such taxes unless they are 'exports' within the Import-Export Clause above mentioned. The plaintiff contends that they are 'exports' and thus not taxable, in accord with State ex rel. Sunair Electronics, Inc. v. Green, Fla.App. 1st--1965, 177 So.2d 490; cert. denied, 180 So.2d 464. The state contends that they became taxable prior to their export, because the purchase or use activated the tax prior to their entry into the export stream.

'6. Section 212.06(5), Florida Statutes, states that it is not the intention of the sales and use tax law (Chap. 212) to levy a tax on property imported, produced or manufactured in the state 'for export', but expressed tests for this as the delivery of the property 'to a licensed exporter for exporting or to a common carrier for shipment outside of the state or mails the same by United States mail to a destination outside the state.' In the case at bench there is no contention that any of these conditions are met. However, the statutes further expresses an intention not to levy a tax 'on any sale which the state is prohibited from taxing under the Constitution.' This latter expression merely states what would be applicable regardless of the provisions of the statute.

'7. In the Sunair case, supra, it was held that the taxpayer's act of placing electronic equipment sold to a foreign purchaser aboard purchaser's aircraft, but not installing it thereon, committed the equipment to the export stream and effectively passed title thereof from the taxpayer to the purchaser so that this transaction did not constitute a sale by the taxpayer in the open market rendering it subject to the state sales tax.

'8. The case at bench differs from Sunair in that here the property is purchased and delivered and comes to rest at a storage place prior to being loaded onto the instrumentalities, i.e. the barges, which will move them outside the country to the foreign destination. This case is more analogous to, and is controlled by, Kosydar v. National Cash Register, 417 U.S. 62, (94 S.Ct. 2108) 40 L.Ed.2d 660 (1974). In that case NCR manufactured certain electronic machines especially for export which were not suitable in the domestic trade. Prior to shipment abroad they were stored in a warehouse in Ohio, which state sought to impose an ad valorem tax on them. The Supreme Court of Ohio ruled the tax was prohibited as the goods were exports and came within the Import-Export Clause of the Constitution. The Supreme Court of the United States reversed and in so doing stated the question to be whether a sufficient commencement of the process of exportation has occurred so as to immunize the articles from taxation. It was said that 'at least some such entrance (into the export stream), is a prerequisite to the Clause's operation', and that its 'protections are not available until the article at issue begins its physical entry into the stream of exportation.' This case cited the case of Empresa Siderurgica v. County of Merced, 337 U.S. 154, (69 S.Ct. 995,) 93 L.Ed. 1276, which in turn referred to the early case of Coe v. Errol, 116 U.S. 517, 29 L.Ed. 715. In the Coe case it was said:

'Do the owner's state of mind in relation to the goods, that is, his intent to export them, and his partial preparation to do so, exempt them from taxation?'

A negative answer was given with the comment that not 'until they have been shipped or entered with a common carrier for transportation to another state or have started upon such a transportation in a continuous route or journey' have they entered the status of being beyond the power of the state for taxation. Referring to the test in Coe, the Supreme Court of the U.S. in Empresa stated:

'Under that test (Errol v. Coe) it is not enough that there is an intent to export, or a plan which contemplates exportation, or an integrated series of events which will end with it. . . . It is the entrance of the articles into the export stream that marks the start of the process of exportation. Then there is certainty that the goods are headed for their foreign destination and will not be diverted to domestic use. Nothing less will suffice.'

'9. It is not perceived that Kosydar is inconsistent with or overrules Sunair. The latter case finds support in the U.S. Supreme Court decisions of Spaulding & Bros. v. Edwards, 262 U.S. 66, (43 S.Ct. 485) 67 L.Ed. 865, in which the goods were delivered to a common carrier for transport to the purchaser at its foreign destination, and Richfield Oil Corp. v. State Bd. of Equalization, 329 U.S. 69, (67 S.Ct. 176) 91 L.Ed. 80, in which oil purchased by the New Zealand government to be delivered F.O.B. Los Angeles was pumped from...