Javor v. State Board of Equalization

Decision Date13 November 1974
Citation117 Cal.Rptr. 305,12 Cal.3d 790,527 P.2d 1153
CourtCalifornia Supreme Court
Parties, 527 P.2d 1153 George JAVOR, Plaintiff and Appellant, v. STATE BOARD OF EQUALIZATION, Defendant and Respondent. L.A. 30295. In Bank

Erwin Sobel, Los Angeles, and Leonard Sacks, Pico Rivera, for plaintiff and appellant.

Evelle J. Younger, Atty. Gen., and Philip C. Griffin, Deputy Atty. Gen., for defendant and respondent.

SULLIVAN, Justice.

Plaintiff George Javor appeals from a judgment of dismissal 1 entered upon an order sustaining, with leave to amend, the general demurrer of defendant State Board of Equalization to plaintiff's complaint, plaintiff having thereafter declined to amend.

The genesis of this lawsuit is found in the repeal by the Congress of the United States on December 11, 1971, but retroactively to August 15, 1971, of the federal manufacturers' excise tax imposed on the sale of specified new motor vehicles and accessories. Congress at the same time required the manufacturers to refund the federal tax to those persons who had purchased the vehicle or accessories during the above period of approximately four months. California purchasers, however, had also paid California sales taxes calculated on the total sales price of the vehicles and accessories, which sales price included the above federal tax. The refund of the federal tax, therefore, effected a pro tanto reduction of the total sales price, thereby giving rise to the claim that a greater sales tax had in fact been paid by the above purchasers than was eventually found to be due.

Plaintiff George Javor, individually and on behalf of all consumer-purchasers of certain new motor vehicles and accessories in California during the above four-month period, brought the instant class action for money due and an accounting against the State Board of Equalization (Board), the State of California, Hamilton Buick Incorporated (Hamilton) and all California retailers of such new vehicles and accessories. 2

The complaint sets forth two causes of action. The first cause alleges in substance as follows: Plaintiffs are consumer-purchasers in California of new passenger automobiles, new passenger automobile trailers and semitrailers suitable for use in connection with passenger automobiles, new lightweight trucks with a gross weight of less than 10,000 pounds, accessories on said trucks and new buses weighing under 10,000 pounds during the period from and including August 15, 1971, to and including December 11, 1971, from defendant retailers doing business in California during said period. This class of plaintiffs consists of approximately 500,000 persons or more. It is impractical to bring all members of the class before the court because they are not now known to plaintiff Javor, they are too numerous to be individually joined, it would be too great a burden on each individual plaintiff in view of the amount claimed by each, and the entire class can be correctly ascertained only from the records of defendants.

Defendant retailers are too numerous to be brought before the court but as a class represent a common interest of law and fact. Only through their records, can the names of the plaintiff class be ascertained. Defendant retailers class may be ascertained from the records of the Board. Unless they are sued as a class, plaintiff purchasers will be forced to bring a multiplicity of actions and plaintiff Javor will be without an adequate remedy at law. Defendant Hamilton is one of defendant retailers.

The purchase price of the above-mentioned vehicles and equipment purchased by plaintiffs from defendant retailers during the above period included the federal manufacturers' excise tax then imposed by federal law. 3 During said period, California law 4 imposed on defendant retailers a sales and use tax based on the gross receipts of said retailers, which included within its base, any federal manufacturers' excise tax. Pursuant to such law 5 defendant Board collected from defendant retailers on the sale of the above- mentioned vehicles and equipment to plaintiffs a 5 percent sales tax in certain counties and a 5 1/2 percent sales tax in certain other counties. Pursuant to law 6 defendant retailers collected from plaintiff consumers and the latter paid to said retailers the above sales tax. Said tax included 5 percent or 5 1/2 percent (according to the particular county) of the federal excise tax. Defendant retailers have paid said sales tax to the Board, or have retained it, or owe it to the Board.

The United States Internal Revenue Act of 1971 (Pub.Law 92--178, § 401), effective December 11, 1971, provides for consumer refunds of the 7 percent excise tax charged on new passenger automobiles and automobile trailers during the period from August 15, 1971, to December 11, 1971, and of the 10 percent excise tax on new light-weight trucks and equipment and new buses during the period from September 22, 1971, to December 11, 1971. These refunds have been received by plaintiff purchasers.

Under the authority of section 7051, defendant Board has promulgated rules contained in title 18 California Administrative Code, section 1617(d) which provide: (1) that repayment of the federal excise tax by the manufacturer to the retailer shall be regarded for sales tax purposes as a reduction of the retailer's cost of goods sold; and (2) that repayment of said tax by the manufacturer to the consumer will be regarded as a price adjustment, that taxable gross receipts of the retailer will be reduced accordingly and that the sales tax will be refunded to the retailer provided he also repays to the consumer the amount collected from him as sales tax reimbursement. 7

The sales and use tax charged on the above sale of vehicles and equipment was collected without crediting plaintiff with the refunded federal excise tax originally calculated in the entire sales price. On information and belief plaintiff alleges that defendants, and each of them, are now holding and have not refunded to plaintiff, any portion of the sum equal to 5 percent or 5 1/2 percent of the refundable federal excise tax. Defendant retailers are under no statutory obligation to claim any refunds from the Board for the benefit of plaintiff and have no financial interest in doing so. Defendant Board is under no statutory obligation to voluntarily refund said taxes to plaintiffs and has no financial interest in doing so.

It would require a suit by each member of plaintiff class individually to compel defendant retailers to file a claim with defendant Board for a refund of the erroneously collected tax. Such demands would result in a multiplicity of actions. The amount due each member of the class is relatively small and when compared with the costs of suit, would discourage individual legal action. Unless this class action is permitted defendant Board and defendant retailers will be unjustly enriched at the expense of plaintiff class.

Defendant Board, as a constructive trustee now holds the monies due and owing plaintiff class which on information and belief is in excess of $10,000,000.

The second cause of action by plaintiff George Javor individually, after incorporating by reference the allegations of the first cause of action pertaining to the inclusion in the sales tax base of the federal manufacturers' excise tax and to the subsequent refunding of the latter tax, alleges in substance as follows: During the four-month period above mentioned, 8 plaintiff purchased a new Rolls Royce automobile from defendant Hamilton for $18,500. This sum included the federal excise tax in the sum of $1,195, which was refunded to plaintiff. Defendant Board collected and received from Hamilton 5 1/2 percent of the total sales price of the automobile. There is now due plaintiff 5 1/2 percent of the sum of $1,195 or $65.72 as erroneously collected sales tax. Plaintiff has made a demand on Hamilton for a refund of $65.72 but has not received it.

As to the first cause of action, plaintiff prays for the following relief: judgment in an amount in excess of $10 million, according to proof; that defendant Board notify defendant retailers of the pending action; that defendant retailers produce all records covering all sales consummated between August 15, 1971 and December 11, 1971 of the relevant automobiles and trucks; that defendant Board deposit the monies due and owing with the court; that defendant retailers deposit any refunds collected from defendant Board but not yet paid to plaintiffs and that the court notify each member of plaintiff class of their right to the refund.

As to the second cause of action, plaintiff prays for judgment in the sum of $65.72.

Defendant Board filed a general demurrer to the complaint asserting that each of its two stated causes of action fails to state facts sufficient to constitute a cause of action against the Board. The demurrer was sustained with leave to amend. Plaintiff elected to stand on the complaint and an order of dismissal was entered. This appeal followed.

We shall examine the complaint for its legal sufficiency according to well settled principles governing our review of a ruling on demurrer which we deem it unnecessary to restate here. (See Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 572, 108 Cal.Rptr. 480, 510 P.2d 1032; Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713, 63 Cal.Rptr. 724, 433 P.2d 732; and cases cited in the foregoing.) In addition, as well appear Infra, we shall refer to relevant material contained in publications of state offices or agencies which was brought to the attention of the trial court and presumably judicially noticed. (Board of Education v. Watson (1966)63 Cal.2d 829, 836, 48 Cal.Rptr. 481, 409 P.2d 481, fn. 3; see Evid.Code, § 452, subd. (c).) We take judicial notice of these matters since they were properly noticed by the trial court (Evid.Code, § 459, subds. (a)...

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