O'Kelley-Eccles Co. v. State, KELLEY-ECCLES
| Decision Date | 02 May 1958 |
| Docket Number | KELLEY-ECCLES |
| Citation | 160 Cal.App.2d 60,324 P.2d 683 |
| Court | California Court of Appeals Court of Appeals |
| Parties | O'COMPANY, a Corporation, Plaintiff and Appellant, v. The STATE of California, The State Board of Equalization of the State of California, The State Department of Finance of the State of California, George R. Reilly, James H. Quinn, Paul R. Leake and Robert McDavid, as members of the State Board of Equalization of the State of California, et al., Defendants and Respondents. Civ. 9306. |
Hanna & Morton and James M. McRoberts, Los Angeles, for appellant.
Edmund G. Brown, Atty. Gen., by James E. Sabine and Irving H. Perluss, Asst.Attys. Gen., Edward P. Hollingshead, Deputy Atty. Gen., for respondents.
This is an appeal from a judgment denying recovery of taxes paid under protest. Appellant is a retailer within the meaning of the Sales and Use Tax Law, Revenue and Taxation Code, § 6001 et seq., and made retail sales in this state subject to sales taxes. It claimed that by virtue of its methods of doing business a part of its receipts which constituted charges for the delivery of items sold should be excluded from the computation of gross receipts from sales.
Appellant's methods of doing business which are pertinent here may be stated as follows: Appellant manufactures and sells concrete building blocks at 'FOB Plant' prices. If delivery is made by appellant to a place designated by the buyer a specific delivery charge is made in addition to the 'FOB Plant' price. About half of the blocks sold by appellant are so delivered. Appellant's price schedules set forth prices 'FOB Plant' for various sizes and styles of blocks and separately stated set forth the charges for delivery within a radius of thirty miles. Appellant grants discounts from its published 'FOB Plant's prices favoring customers such as contractors who buy large quantities, but discounts are not given on that part of the total cost to the customer which constitutes the delivery charge. In paying its sales taxes, appellant deducted from the gross amount received from sales, the amounts received for delivery. Respondents reassessed and demanded payment of the tax upon the excluded amounts. Appellant paid under protest.
The trial court made the following findings: That in all instances involved in the action the customers of plaintiff ordered that the concrete blocks be delivered to them at a designated place and that plaintiff delivered the blocks in its own trucks; that plaintiff made a transportation charge to offset the cost of transportation, which charges aggregated $39,610.91 during the period involved; that this amount constituted the measure of the sales taxes sued for; that plaintiff failed to show that in entering into any of the transactions involved any express agreement was made concerning the time and place where title to the blocks was to pass; that in order to inform its customers of the prices of the blocks and the delivery charges, plaintiff prepared price lists which specified the sizes and styles of the blocks listed and stated an 'FOB Plant' price and the charge for 'Delivery 30 Miles'; that a total of those two prices was applicable to all instances where plaintiff delivered blocks; that plaintiff failed to establish that the terms 'FOB Plant' and 'Delivery 30 Miles' set forth in its price list designated anything other than a statement of prices and failed to establish that such terms were stated separately for any reason other than to differentiate between the plant price and the delivered price, so that customers would know the plant price where they arranged for delivery themselves, and would understand that plaintiff allowed a contractor's discount only upon the plant price and so that the amount of the discount could easily be determined; that plaintiff further failed to establish that the term 'FOB Plant' in plaintiff's price lists had any reference to the time and place of the passage of title; that the term 'FOB Plant' was merely a pricing term and had no other significance; that, in dealing with its customers plaintiff failed to show that it communicated to them any intention it may have had that title to the goods sold and delivered by it was to pass other than at the time the blocks were received by the buyer or were delivered at the place designated by the buyer; that buyers who saw plaintiff's price lists believed that said price lists indicated only that plaintiff maintained a plant price and a delivered price; that plaintiff failed to establish that custom or usage of the trade supports its theory that title passed at some time prior to the delivery of the goods by plaintiff's trucks.
Conceding, as it must, that these findings support the judgment, appellant attacks the findings upon the ground that the evidence does not support them.
Section 6051 of the Revenue and Taxation Code imposes a tax upon retailers for the privilege of selling tangible personal property at retail. The section measures the tax by the gross receipts of the retailer from sales at retail.
Section 6012 defines gross receipts and provides for certain exclusions. The term 'gross receipts' mean the total amount of the sale price of the retail sales of retailers without deduction for the cost of the property sold or of the materials used, labor or service cost, interest paid, losses or any other expense and without deduction for the cost of transportation of the property prior to its sale to the purchaser. The total amount of the sale includes any services that are a part of the sale and all receipts, cash, credits and property of any kind. 'Gross receipts' do not include 'transportation charges' separately stated if the transportation occurs after the sale of the property is made to the purchaser. It was recognized by the parties hereto that the decision in this case must turn upon the question of when title passed in those instances of sale involved in the action. Appellant contends that the evidence conclusively proved that its only receipts from sales were made up from its FOB Plant prices; that its receipts from transportation formed no part of its sales receipts and were charges for transportation made after title had passed to the buyer, and that title passed at the moment the blocks were physically placed on board its trucks at the plant.
Appellants sought by testimony of its president and of some of its employees to show that title passed when the blocks were placed on its trucks for delivery to buyers by showing its general sales procedures. Thus its office manager and expediter, a Miss Frederickson, testified as follows:
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