Gough Industries, Inc. v. State Bd. of Equalization

Decision Date13 March 1959
Citation336 P.2d 161,51 Cal.2d 746
CourtCalifornia Supreme Court
PartiesGOUGH INDUSTRIES, INC. (a Corporation), Respondent, v. STATE BOARD OF EQUALIZATION, Appellant. Sac. 6879.

Edmund G. Brown and Stanley Mosk, Atty. Gen., James E. Sabine, Asst. Atty. Gen., and Ernest P. Goodman, Deputy Atty. Gen., for appellant.

Pillsbury, Madison & Sutro, Sigvald Nielson, Francis N. Marshall, Noble K. Gregory and Robert E. Miller, San Francisco, for respondent.

McCOMB, Justice.

Defendant appeals from a judgment awarding plaintiff a refund of sales tax and interest paid under protest.

Facts: Plaintiff is a California Manufacturer and seller of electrical products. During 1949 plaintiff sold goods to Arabian American Oil Company and Trans-Arabian Pipe Line Company for use in Saudi Arabia. The purchasers requested price quotations from plaintiff and other suppliers. Bidders were informed that all purchases were made strictly for direct export to scenes of operations in foreign countries and that it was anticipated bidders' quotations would show export prices or export discounts applicable. They were also informed that landing and receiving conditions in Saudi Arabia were such that specialized packing was required and that if they could not fulfill these specialized packing requirements with their own facilities they should so indicate on their quotations.

Plaintiff quoted prices for delivery of the goods to an export packer's plant. The purchasers then submitted an export purchase order requiring that the packages be marked with the name of the port of entry in Saudi Arabia. The purchase order showed that ocean transportation had been arranged for and that proof of export would be furnished. It also showed a required date of export and a special export number and contained the following condition: 'The property hereunder is for export and is to be delivered by you directly to a carrier or a forwarding agent for shipment to a point outside the United States, in accordance with shipping instructions hereafter to be furnished you.'

Plaintiff was then instructed to deliver the goods to 'Trans-Arabian Pipeline Co., Saudi Arabia, c/o Foreign Trade Export Pack. Co., 445 Figueroa St., Wilmington, Calif., for export packing and forwarding.' Plaintiff shipped the goods by truck carrier to the packer. Title passed at the time goods were delivered to the packer. The packer packed and crated the goods according to the purchaser's specifications and forwarded them by truck carrier to the ocean carrier, which transported them to Saudi Arabia.

As will hereinafter appear, if at the time title passed to the purchaser the goods were goods in export, the proceeds of the sales were not properly includable in plaintiff's retail sales in the determination of the amount of sales tax assessable against it by the State of California. On the other hand, if at the time title passed the goods were not goods in export, such proceeds were properly includable in plaintiff's retail sales.

The question for us to determine, therefore, is: Had a continuous export journey begun at, or prior to, the time the goods were delivered to the packer?

Yes. The export journey began when plaintiff delivered the goods to the truck carrier at its plant. The stipulated evidence, all the inferences therefrom, and the findings of the trial court establish the continuous and unbroken character of the journey. Therefore, the goods were goods in export at the time title thereto passed, and the transaction was not subject to the state sales tax.

Article I, section 10, clause 2, of the United States Constitution reads as follows: 'No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.'

Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 67 S.Ct. 156, 91 L.Ed. 80, involved the sale of oil in California to a foreign government, title having passed in this state. The Supreme Court of the United States held that the imposition of a California sales tax on the transaction was unconstitutional under the import-export clause of the United States Constitution set forth above and indicated that the important factor was that at the time of the delivery certainty of the foreign destination was plain.

In Matson Navigation Co. v. State Board of Equalization, 136...

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  • Farmers' Rice Cooperative v. County of Yolo, S.F. 23254
    • United States
    • United States State Supreme Court (California)
    • June 23, 1975
    ...steamships where it is 'loaded on board . . . and transported to foreign ports and countries'), and Gough Industries v. State Board of Equal. (1959) 51 Cal.2d 746, 747, 336 P.2d 161, 162 (goods delivered 'directly to a carrier or a forwarding agent for shipment to a point outside the United......
  • Shell Oil Co. v. State Bd. of Equalization
    • United States
    • United States State Supreme Court (California)
    • June 6, 1966
    ...(Richfield Oil Corp. v. State Board (1946) 329 U.S. 69, 82--83, 67 S.Ct. 156, 163, 91 L.Ed. 80; Gough Industries v. State Bd. of Equal. (1959) 51 Cal.2d 746, 748--749, 336 P.2d 161; see United States v. Hvoslef (1915) 237 U.S. 1, 13, 35 S.Ct. 459, 59 L.Ed. 813.) In the Richfield case oil wa......
  • Rice Growers' Association of California v. County of Yolo
    • United States
    • California Court of Appeals
    • April 28, 1971
    ...or service somehow related to and necessary for exportation, has not been accepted. In a sales tax case, Gough Industries v. State Board of Equal. (1959) 51 Cal.2d 746, 336 P.2d 161 (cert. den. 359 U.S. 1011, 79 S.Ct. 1151, 3 L.Ed.2d 1037), seven years previously, the court invalidated a sa......
  • Shell Oil Co. v. State Bd. of Equalization
    • United States
    • California Court of Appeals
    • September 28, 1965
    ...(Richfield Oil Corp. v. State Board of Equal., 329 U.S. 69, 82-83, 67 S.Ct. 156, 91 L.Ed. 80 (1946); Gough Industries, Inc. v. State Board of Equal., 51 Cal.2d 746, 749, 336 P.2d 161 (1959); Union Oil Co. of California v. City of Los Angeles, 227 Cal.App.2d 608, 613-614, 38 Cal.Rptr. 923 (1......
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